Nigerian airlines are struggling to stay afloat, with shrinking routes and declining passenger volumes amid a depreciating tax base driven by unfriendly aviation policies.
According to Charles Grant, Chief Financial Officer of Aero Contractors, the sector is performing below its potential, with domestic passenger numbers dropping by about three million since 2022, despite rising travel demand.
He attributed the decline to multiple challenges, including fiscal charges, high operating costs, and regulatory bottlenecks. Grant noted that although demand for air travel remains high in Nigeria, local airlines are struggling to compete with foreign carriers that have built viable business models around Nigerian traffic.
Grant raised these concerns during his presentation at the recent Civil Aviation Cost Recovery and Revenue Optimisation Stakeholders’ Retreat in Lagos.
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Speaking on the theme “Strengthening collaboration for revenue optimisation and operational efficiency,” Grant examined fiscal turbulence in the sector and why enabling Nigerian airlines is essential to expanding the tax base.
He said that although demand is being suppressed, Nigerians still want to fly because cities are far apart, roads are long, and in many cases, unsafe. According to him, aviation should be expanding, but when ticket prices surge, fiscal charges multiply, and airline costs rise, passengers become priced out — or pushed out.
He noted that peer countries like Kenya, Egypt, and South Africa show consistent growth in domestic traffic, in contrast to Nigeria.
“One of the most ironic dynamics in West African aviation today is this: Nigerian demand is thriving — just not on Nigerian carriers,” Grant said.
“Airlines like ASKY, RwandAir, Air Côte d’Ivoire, and Africa World Airlines have built viable business models around Nigerian traffic. They’ve turned Lagos, Abuja, and Port Harcourt into core nodes in their regional networks — not because of bilateral planning, but because the market has allowed it. ASKY, for example, operates multiple daily flights into Nigeria from Togo — in some cases, more flights into Nigeria than Nigerian airlines operate to themselves.
“Ethiopian Airlines has nearly unlimited access and high dependency on Nigerian traffic. The same is true for Africa World and ASKY. This is not coincidence — it’s opportunity extraction.”
According to him, the issue extends beyond commercial competition to strategic leakage.
“The jobs, maintenance contracts, training, bookings, and forex flows linked to those operations are all occurring outside Nigeria’s borders — even though the demand is ours.
“We’re not asking for protectionism. We’re asking for a level playing field — one where Nigerian airlines have the tools and support to compete effectively using Nigerian demand. Because our policies should be enabling local growth — not underwriting foreign expansion.”
Grant broke down data showing that Air Peace currently serves only nine international destinations, while ASKY — based in Togo, with a population of just 10 million — serves 29 destinations; RwandAir, from a country of 14 million, serves 20; and Ethiopian Airlines connects to over 130 destinations globally.
He stressed that the issue is not ambition or capacity but structural constraints. While international demand to and from Nigeria remains strong, Nigerian carriers are increasingly spectators as foreign airlines dominate the market, some flying into Nigeria daily or even double daily.
Nigerian carriers, on the other hand, struggle to maintain frequencies, access aircraft, or navigate regulatory and bilateral hurdles.
“It’s not just about flag presence. It’s about economic opportunity,” he said.
“Every underserved route is a missed chance to earn foreign exchange. Every lost frequency is a lost job — in ground handling, catering, maintenance, tax revenue. Every limited footprint reduces our regional leverage.
“So the question isn’t ‘why aren’t Nigerian airlines flying more?’ It’s ‘how are we making it harder for them to compete?’ Until we address that, this imbalance won’t just persist — it will deepen. And the cost won’t just be commercial. It will be strategic.”
Grant listed multiple fiscal charges affecting airlines, including the ticket sales charge (TSC), passenger service charge, VAT, PAYE, ground handling fees, overflight charges, navigation charges, customs duties, and even levies on catering and in-flight services.
He said these are not isolated costs but cumulative burdens that erode already thin margins. Airlines cannot fully pass these costs on to passengers without sacrificing demand. As a result, he said, route networks shrink, aircraft utilisation drops, maintenance is delayed, and staff remain unpaid — forming a vicious cycle.
He added that while local carriers bend under these pressures, foreign airlines often operate under more favourable terms, supported by diplomatic leverage and tax arrangements that give them a cost advantage.
“The playing field isn’t just uneven — it’s tilted against the local operator. If we want Nigerian airlines to survive — let alone compete — we have to rewire the cost architecture,” he said.
As part of the solutions, he recommended reinstating the VAT exemption previously enjoyed by airlines, enforcing customs waivers consistently, eliminating tax-on-tax loops — such as VAT charged on the ticket sales tax — and streamlining fiscal charges across all tiers of government, while creating a national aviation growth framework.
