Reaction As AON Says No Nigerian Airline Makes $1m Profit Annually

Nigerian airlines are operating under severe financial pressure, with no indigenous carrier making $1 million in annual profit, as taxes, levies, high interest rates, and aviation fuel costs consume a significant portion of their operating income, the Airline Operators of Nigeria (AON) has said.

The vice president of AON and Chairman of Air Peace, Allen Onyema, disclosed this at the 30th Annual Conference of the League of Airport and Aviation Correspondents (LAAC), held in Lagos with the theme, “Towards a Sustainable Aviation Industry: Balancing Government Revenue Demands with Sector Growth.”

Onyema, who said even the country’s largest airline was yet to achieve such annual profitability, warned that the operating environment was making it increasingly difficult for indigenous carriers to survive and compete with foreign airlines.

“No airline in Nigeria makes a profit of $1 million annually, not even Air Peace, which is the biggest in Nigeria,” he stated.

Operators were, however, not forthcoming when asked by our correspondent about the level of profit they currently make and what the ideal level should be.

LEADERSHIP checks showed that according to the International Air Transport Association (IATA), global airlines’ net profit margin is expected to fall to two per cent in 2026, roughly half the previously projected 3.9 per cent recorded in 2025.

IATA also projected that net profit per passenger would decline to $4.50 in 2026, down from $9.10 in 2025.

Speaking on the financial challenges confronting Nigerian airlines, the president of the Aircraft Owners and Pilots Association of Nigeria (AOPAN) and second vice president of the Aviation Safety Roundtable Initiative (ASRTI), Dr Alex Nwuba, said the ownership and financial structures of many indigenous carriers lacked sufficient transparency.

Nwuba said stakeholders could neither clearly verify who controlled some airlines nor ascertain their true financial obligations, adding that weak corporate governance could make it difficult to hold management accountable when problems arise.

“More than 10 airlines compete for a domestic market that barely grew four per cent last year, and almost none of them have opened their capital to outside owners. That is not an accident of the market; it is a choice.”

“Debt lets an owner keep 100 per cent of the company while someone else takes the balance-sheet risk. Equity means giving up control. Faced with that choice, Nigerian airline owners have overwhelmingly chosen the loan, then chosen another loan to service the first one, and called the result resilience.

“Walk into most Nigerian airlines, and you will not find an independent board in any meaningful sense. You will find a founder, a family, or a small circle who sit as owner, chairman, and de facto chief executive simultaneously, with a management team that reports to them rather than to any structure that could tell them no.

“There is no separation between the person who owns the airline and the person who runs it, and no one in between with the standing or the incentive to insist on an audited balance sheet the market can rely on,” he stated.

Meanwhile, continuing, AON vice president, Allen Onyema, identified high interest rates, expensive aviation fuel, taxes, levies, and other operational costs as major challenges threatening the sustainability of local airlines.

According to him, Nigerian airlines borrow from domestic banks at interest rates as high as 35 per cent, although the rate has recently declined to about 29 per cent, while their foreign counterparts in some countries access funds at single-digit rates.

“Local airlines lend money from Nigerian banks at 35 percent but now, it has come down to 29 per cent. With this high interest rate, how will they survive and compete with other airlines in another country where they lend between three per cent and four per cent?” Onyema queried.

He said the operators were not opposed to government agencies generating revenue from the aviation industry, but insisted that a significant portion of such revenue should be reinvested in the sector to improve infrastructure, safety and operational efficiency.

“The airlines in Nigeria are not against funding government agencies. We only call on the federal government to ensure that the revenue generated should be used to develop the industry,” he stated.

Onyema also cited concerns raised by former President of the African Development Bank (AfDB), Dr Akinwumi Adesina, over the heavy tax burden on African airlines.

He noted that high taxes and charges across the continent were estimated to be between 12 and 15 per cent above the global average, thereby inflating ticket prices and weakening the competitiveness of African carriers.

According to him, international passengers departing Nigeria pay about $150 in taxes and fees, almost three times the African average, while airlines face as many as 54 different taxes, fees and charges across four major government agencies.

He further stated that taxes and levies could consume up to 65 per cent of an airline’s operating costs.

Onyema argued that the situation was ultimately counterproductive because an aviation industry unable to make sustainable profits would struggle to expand, create jobs or provide reliable services to passengers.

“This is because it is profitability that will sustain their existence and also sustain and grow air travel in Nigeria,” he said.

He backed calls for the government to use aviation revenue to improve airport facilities and safety equipment, while supporting the use of Public-Private Partnerships (PPP) to attract private capital into airport development.

“There should be intentionality on the side of government not just to look at the money it would make from the aviation industry, but also to look at how the airlines and other organisations that provide the essential services to air travel can survive and be profitable,” Onyema stated.

He said better technology and improved airport infrastructure would reduce waiting times, attract more passengers and ultimately expand the aviation market.

Also speaking, AON spokesman Professor Obiora Okonkwo said the surge in aviation fuel prices had compounded the financial difficulties facing domestic airlines.

Okonkwo said Jet-A1 prices had risen by more than 300 per cent, following disruptions linked to the crisis in the Gulf region, putting additional pressure on airlines that were already struggling with high operating costs.

“I can tell you that for every yield any Nigerian airline is making today, that you buy a ticket for N350,000 to one destination, that’s not the cost of the ticket for us on the back end. At the end of the day, we don’t get more than N150,000 when you make the yield,” he explained.

He said airline revenue from ticket sales had to cover different fare categories, including discounted tickets and empty seats, making the apparent ticket price paid by passengers different from the actual yield retained by airlines.

According to him, the operators had been forced to absorb the impact of rising Jet-A1 prices rather than pass the entire cost to passengers through higher fares.

“Until we come out of the impact of Jet-A1, which became suddenly 300 per cent higher due to the problem in the Gulf,” Okonkwo said.

He noted that the federal government had offered a 30 per cent waiver on legacy debts, but said discussions were still needed with President Bola Ahmed Tinubu on other outstanding issues affecting the sector.

“The only alternative is to apply all these effects of the A1 on their ticket fees. And when you do that, the country, the government, and the people we serve on board, we decided to absorb these things,” he stated.

Earlier, Chairman of the conference and Chairman of Bi-Courtney Aviation Services Limited (BASL), Dr Olawale Babalakin, said government revenue generation and aviation industry growth should not be treated as competing objectives.

Babalakin argued that a stronger aviation industry would ultimately create a bigger and more sustainable revenue base for government.

“Government revenue and industry growth should not be viewed as competing objectives. A thriving aviation industry ultimately creates a stronger and more sustainable revenue base for government,” he stated.

He urged the government to focus not only on immediate aviation revenue but also on creating an environment that attracts investment and makes Nigerian airports and airlines commercially viable.

“Our collective responsibility, therefore, is to create an environment that encourages investment, supports infrastructure development and enables airports and airlines to remain commercially viable,” he said.

Babalakin noted that airports had evolved beyond being mere points of departure and arrival, stressing that they offered significant opportunities in cargo, retail, hospitality, parking, advertising, property and other commercial activities.

He said such opportunities could only be fully developed through policy consistency, contractual certainty and trust between the public and private sectors.

“None of this can be achieved without policy consistency, contractual certainty and trust between the public and private sectors. These are essential foundations for attracting and sustaining the long-term investment that aviation infrastructure requires,” he stated.

Babalakin called for a broader approach to aviation policy, urging stakeholders to focus on building a stronger, more competitive and investable industry rather than concentrating solely on immediate government revenue.

“As today’s deliberations unfold, I hope we look beyond what the sector can contribute in revenue today and focus equally on what we can do to make the industry bigger, stronger, more competitive and more investable for the future.

“Nigeria has the market, the talent and the potential. What we need is the right framework to unlock that potential,” he stated.