.Nigerian airlines will crumble under the new tax policy, Onyema warns

A SHARP division has emerged among leading aviation professionals over a proposal for the merger of Arik Air and Aero Contractors, the two indigenous carriers under the receivership of the Assets Management Corporation of Nigeria (AMCON), as part of a new framework for Nigeria’s national aviation strategy.

Meanwhile, the Chairman of Airlines Operators of Nigeria (AON), Allen Onyema, expressed fears that Nigerian airlines might crumble with the new tax policy taking effect in January.

The controversy began after the former Commandant at Murtala Muhammed International Airport (MMIA), Lagos, Grp-Capt John Ojikutu (rtd), advised the Minister of Aviation and Aerospace Development, Festus Keyamo, to discontinue the pursuit of a national carrier and instead adopt a dual-flag-carrier model.

According to Ojikutu, Arik Air and Aero Contractors should be merged to form a regional and continental airline, while Air Peace should serve as Nigeria’s intercontinental flag carrier.
He argued that combining the two AMCON-managed airlines would create a stronger, more viable operator capable of competing across Africa, provided a comprehensive economic audit of their assets and liabilities was carried out.

He also recommended listing the merged airlines, limiting government participation to not more than 10 per cent.
Ojikutu said: “However, a thorough economic audit should be done on their assets and liabilities, both local and international. Invite credible local and foreign investors to buy 25 per cent shares and the Nigerian public through the capital market to take 30 per cent shares. Then, the Federal Government and states should not have more than 10 per cent and the balance of 35 per cent for the airlines’ owners.”

Ojikutu further canvassed the restriction of foreign airlines to either Lagos or Abuja, while the international airlines interline with indigenous carriers to transport transit passengers to their final destinations locally.
But a former pilot with the defunct Nigeria Airways, Capt. Mohammed Badamasi opposed the merger suggestion.

Badamasi, in a chat with The Guardian in Lagos, described the merger idea as “unrealistic and commercially unsound,” insisting that airlines should rather develop solid business plans that naturally attract investors to them.
He also doubted if Arik and Aero possessed the wherewithal to compete globally, pointing to the challenges faced by operators like Air Peace on international routes.
UNDER the Nigeria Tax Act (2025) and related tax reforms, airlines will no longer be exempt from import duties and Value Added Tax (VAT) on commercial aircraft, engines, spare parts and airline tickets.

Onyema, who is the Chief Executive Officer (CEO) of AirPeace, said airline operators, alongside the Minister of Aviation, would soon be meeting with the National Assembly to discuss the taxation policy as it affects the airlines.

Speaking yesterday in Abuja at the centenary celebration of Aviation in Nigeria, Onyema expressed optimism that President Bola Tinubu would listen.

He said: “We are going to meet members of the National Assembly very soon, together with our minister, to discuss the issues of taxation that are supposed to come into effect on January 1, 2026, as they affect the airlines. If it is allowed to stand, all of us will crumble. But I know the President will listen to our cries and do the needful.”

He, however, urged Tinubu and the minister never to stop listening to their voice.