Airlines to Pass New Tax Bill to Passengers, Yuletide Fares Poised to Rise

• The Nigerian government has stated that Nigerian airlines will resume paying import duties and VAT beginning January 2026
• The announcement signals the reinstatement of the policies, which were suspended by the government of ex-President Muhammadu Buhari
• Analysts have said the new policy could trigger a spike in airfares by airlines, which will pass the cost to passengers

Pascal Oparada, a reporter for Legit.ng, has over ten years of experience covering technology, energy, stocks, investment, and the economy.

The Federal Government has confirmed that from January 1, 2026, airlines will resume paying import duties and Value Added Tax (VAT) on commercial aircraft, engines, spare parts and air tickets.

At a recent FIRS–Aviation webinar, the Nigeria Revenue Service (NRS, formerly FIRS) said the full implementation of the 2025 Tax Reforms Act is non-negotiable and will apply across aviation services and operations.

Why the policy matters to travellers

Until now, the aviation sector has enjoyed exemptions on these charges, a relief that has helped keep operating costs and ticket prices lower.

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Reintroducing VAT (7.5%) and duties raises airlines’ input costs directly and will almost certainly be reflected in pricier fares, extra surcharges or reduced capacity as carriers scramble to protect margins.

Industry reaction: alarm bells and dire warnings

Operators and service providers have reacted angrily.

According to a report by Daily Sun, the Airline Operators of Nigeria (AON) warned the new regime risks collapsing fragile carriers; AON leaders say the cumulative burden of duties and VAT could push marginal airlines out of business.

Some industry executives argued the policy reversal will come at the worst possible time for an industry still recovering from pandemic shocks and high jet-fuel bills.

Fare hikes already here, Yuletide under pressure

Several carriers, including Air Peace and Max Air, have already announced fare increases for the coming Yuletide season, a move industry watchers link to the incoming tax measures and broader cost pressures.

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With holiday travel demand high, passengers may face the double impact of surging seasonal fares and new tax-driven price adjustments from January.

Government rationale and broader context

The government says the tax changes are part of a wider effort to modernise Nigeria’s tax code and enhance revenue collection.

The 2025 Tax Acts consolidate multiple tax laws and set new governance for the Nigeria Revenue Service and joint revenue boards.

Officials argue restoring VAT and duties on aviation will level the playing field and boost fiscal receipts at a time of growing public expenditure needs.

Short-term pain, long-term effects

Analysts warn of immediate consumer pain, higher ticket costs, fewer discounted seats and potential route rationalisation.

Long term, the move could trigger consolidation in the sector: smaller operators may seek mergers or niche positioning, while larger carriers adjust networks and capacity.

Policymakers face a delicate balancing act: raising revenue without stifling connectivity or making air travel unaffordable for many Nigerians.

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What travellers should do now?

Consumers planning holiday travel should compare fares early, watch for last-minute seat releases and consider flexible dates.

Business travellers and corporates should review travel budgets and negotiate group rates.

Finally, industry stakeholders urge continued dialogue between the government and carriers to design transition measures that soften the shock for both airlines and passengers.

Airlines release new ticket prices

Legit.ng earlier reported that Nigerians planning trips to the United States are facing several hurdles from new visa rules, especially travel costs.

Ticket prices in the last year have increased significantly, with the cheapest now costing at least N2 million.

BusinessDay reports that a return economy-class ticket from Lagos to Houston, which sold for an average of 1.5 million naira last year, now ranges between N2.7 million and N3.9 million, depending on the airline.

Source: Legit.ng