The Chairman and Chief Executive Officer of Air Peace, Allen Onyema, has warned that domestic airfares in Nigeria could rise above N1 million from next year if the Federal Government proceeds with the planned implementation of new tax reform laws scheduled to take effect in January 2026.

Onyema made this known on Sunday while speaking on The Morning Show on Arise News, where he linked the anticipated increase in airfares to the removal of tax incentives that have helped airlines manage their operating costs over the years.

He explained that the proposed reforms would reverse several exemptions currently enjoyed by airlines under the 2020 Finance Act, particularly the planned reintroduction of Value Added Tax on aircraft, spare parts and air tickets.

According to Onyema, the cost implications of the policy would be severe, noting that importing an aircraft valued at about 80 million dollars would attract a 7.5 per cent VAT, which would translate into billions of naira in additional expenses for airlines.

He added that the situation is worsened by the fact that airlines already operate under harsh financial conditions, including borrowing rates as high as 35 per cent, making it nearly impossible to absorb further costs.

Onyema warned that if the tax reforms are implemented as planned in 2026, the financial burden would inevitably be passed on to passengers, stressing that airlines lack the capacity to shoulder such expenses.

“By the time you bring these things in, at the end of the day, the cost of operation will be huge… your ticket fares will hit N1. something million soon,” Onyema said.

He further cautioned that the survival of local carriers would be threatened by the policy, stating, “If we implement that tax reform, Nigerian airlines could go down within three months.”

The Air Peace boss insisted that any increase in airfares would be purely a response to escalating operational costs and not an attempt by airlines to exploit passengers.

He cited persistent challenges facing the aviation sector, including high aviation fuel prices, foreign exchange constraints and the burden of multiple statutory levies imposed on airlines.