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How New Tax Laws Will Benefit Aviation Industry—Oyedele

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Aviation Sector

By Adedapo Adesanya

The federal government has defended Nigeria’s new tax laws, insisting that the reforms will ease, rather than worsen the financial pressure on the aviation industry.

According to the Presidential Fiscal Policy and Tax Reforms Committee, the new framework directly addresses several long-standing tax issues that have driven up airline operating costs over the years.

In a detailed explanation by the Committee’s Chairman, Mr Taiwo Oyedele, the government acknowledged the genuine challenges facing airlines, including multiple taxes, levies and regulatory charges.

This comes after the chairman of Air Peace, Mr Allen Onyema, cautioned that Nigeria’s domestic aviation sector faces a serious financial strain as the tax provisions set to kick start by 2026 risk pushing ticket prices beyond N1 million and forcing airlines to suspend operations.

In a lengthy post on X, formerly known as Twitter, Mr Oyedele noted that extensive consultations with airline operators have taken place and that engagements with stakeholders are ongoing to ensure the reforms deliver tangible relief.

He explained that at the centre of the reforms is the removal of the 10 per cent withholding tax (WHT) on aircraft leases, which has historically been the single largest tax burden on Nigerian airlines. Under the previous regime, airlines paid non-recoverable WHT on leased aircraft, significantly increasing costs and straining cash flow.

He said the new tax laws eliminate this automatic charge and replace it with a rate to be determined by regulation, opening the door for a full exemption or a substantially reduced rate.

“A $50 million aircraft lease previously attracted $5 million in WHT—an amount airlines can now avoid under the new framework,” he illustrated.

The reforms also overhaul the treatment of Value Added Tax (VAT) in the sector. While the temporary VAT suspension introduced after COVID-19 appeared beneficial, it effectively embedded VAT into airline costs because input VAT on assets, consumables and overheads could not be recovered. Under the new laws, airlines become fully VAT-neutral. VAT paid on imported or locally sourced goods and services will be fully claimable, with refunds mandated within 30 days where excess credits arise.

Mr Oyedele said the system is backed by a dedicated tax refund account and allows VAT credits to be offset against other tax liabilities, improving liquidity and reducing cost pressures.

On import duties, the government clarified that existing exemptions on commercial aircraft, engines and spare parts remain intact.

“The new tax laws do not introduce any reversal or additional burden in this area, preserving critical cost relief for airlines that depend heavily on imported equipment,” he said.

He also addressed concerns around ticket prices, noting that the committee is understands that aviation is a low-margin business and that a 7.5 per cent VAT on tickets, within a system of full input VAT recovery, has a much smaller net impact than widely assumed. Even in a worst-case scenario where VAT is not recoverable, the maximum increase would still be limited to the headline 7.5 per cent.

“For example, a N125,000 ticket would rise to no more than N134,375, while a N350,000 ticket would not exceed N376,250,” he said.

The tax titan also noted that further relief is expected from changes to corporate taxation. The new laws provide a framework to reduce corporate income tax from 30 per cent to 25 per cent, a move that would directly benefit airlines.

In addition, several profit-based levies—such as Tertiary Education Tax, NASENI, NITDA and Police levies—have been harmonised into a single Development Levy. This consolidation reduces complexity, lowers the cumulative burden and provides greater certainty for operators.

Addressing complaints about multiple levies and charges on airlines and tickets, the committee clarified that these are not products of the new tax laws. Rather, they are legacy issues that the government is working to resolve through collaboration with industry players and relevant agencies.

Mr Oyedele also maintained that the new tax laws offer a strong legal and policy foundation to resolve long-standing challenges in the aviation sector. By lowering operating costs, improving cash flow and ensuring minimal impact on passengers, the reforms are positioned as a critical part of the solution to the industry’s problems—not the cause.

He stressed that sustained engagement with stakeholders will be key to addressing remaining non-tax issues and ensuring the full benefits of the reforms are realised.

He added that claims not grounded in fact risk undermining progress, noting that the new tax laws are designed to support the long-term viability and growth of Nigeria’s aviation industry.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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Travel/Tourism

Airlines Fault Claims of Unpaid NCAA Regulatory Fees

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Modular Refinery for Aviation Fuel

By Adedapo Adesanya

The Airline Operators of Nigeria (AON) has denied owing cost recovery charges to the Nigeria Civil Aviation Authority (NCAA), insisting that all services rendered by the regulator to domestic airline operators are paid for fully in advance on a cash-before-service basis.

In a statement from the airlines’ body, it was emphasised that no domestic airline in Nigeria receives NCAA regulatory services without first making full payment of invoices issued to it by the agency, describing suggestions of the indebtedness for regulatory services as factually inaccurate.

It said that what the NCAA refers to as ‘outstanding charges’ relates solely to the 5 per cent Ticket Sales Charge (TSC), a tax imposed by the NCAA on passengers, which it said is not in consonance with the dictates of international aviation.

The AON then urged the federal government to urgently amend the Civil Aviation Act to empower the NCAA to collect whatever appropriate fees and charges are due it directly from passengers or whoever else, without routing such through the domestic airlines, from June 1, 2026.

It said doing this will relieve domestic airlines of the financial burden of acting as collection agents for the NCAA, since airlines currently bear banking transfer charges and other transaction costs in the process of transmitting funds to the organisation.

The airline body reiterated its position that the NCAA is a regulator, not a revenue-generating agency and that it does not fund any aspect of the airline businesses or render any direct service to passengers.

The AON said every service the agency provides to airline operators is fully paid for in advance before it is rendered.

“The AON notes that several member airlines maintain dedicated accounts, from which the NCAA draws down its monthly remittances, until the force majure caused by the Iran-Israel/USA conflict, which had put a lot of financial pressure on airlines worldwide.

“Notwithstanding this arrangement, the AON had formally appealed to the federal government through the office of the Minister of Aviation and Aerospace Development, to suspend the payment of all statutory charges temporarily, as an interim measure to assist airlines in managing their cash flows during the current period of severe financial stress caused by the increase in the cost of Jet A1.

“As an interim response, President Bola Tinubu graciously granted a 30 per cent concession while waiting for the government’s decision on the other aspects of the AON intervention request.

“While the AON acknowledges and appreciates this gesture, we had appealed for a meeting with Mr President to discuss further reliefs, a request that is yet to be granted,” the AON said.

Speaking further on reports that airlines owe billions in debt to the NCAA, the AON said the 5 per cent Ticket Service Charge in question was introduced over 45 years ago under the Government of General Gowon by the then Federal Civil Aviation Authority (FCAA) and its continued relevance has not been reviewed ever since.

It further stated that domestic airlines, in addition to the 5 per cent TSC, still pay separately ànd directly for services provided by the various industry agencies, including the NCAA itself.

AON said that the 5 per cent TSC is an ad valorem tax applied to an airline’s gross earnings, not profits and that the global aviation industry operates at a profit margin of between 1.5 per cent and 2.5 per cent at best.

“The AON remains committed to constructive engagement with the government and all stakeholders to achieve a growth-oriented sector, designed to enable the accelerated growth of key sectors of the economy and the improvement and sustenance of a healthy quality of life for the citizenry,” it said.

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Travel/Tourism

Airline Remittances: NCAA Halts Enforcement of ‘No Pay, No Service’ Policy

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NCAA

By Adedapo Adesanya

The Nigeria Civil Aviation Authority (NCAA) has announced the temporary suspension of its “no pay, no service” directive earlier issued to airlines with outstanding statutory remittances, citing ongoing consultations and prevailing operational challenges in the aviation sector.

In a statement, the authority said the decision followed a review of industry conditions, particularly the rising cost of aviation fuel, which has placed significant financial pressure on domestic carriers and threatens overall sector stability.

However, the NCAA stressed that the suspension does not amount to a waiver, cancellation, or forgiveness of the debts owed by the affected airlines, noting that such decisions fall outside its regulatory mandate.

The agency recalled that President Bola  Tinubu had earlier approved a 30 per cent discount on outstanding statutory charges owed by domestic airlines to aviation agencies, as part of broader government efforts to cushion the impact of high Jet A1 fuel costs and stabilise the industry.

According to the NCAA, airlines remain fully responsible for settling their obligations, adding that it would engage operators individually to ensure compliance through structured repayment arrangements that do not disrupt operations.

The regulator also clarified the nature of the 5 per cent Ticket and Cargo Sales Charge, describing it as a statutory levy mandated by the Civil Aviation Act and embedded in the cost of air travel and cargo services.

It explained that the charge is collected by airlines at the point of ticket and cargo sales on behalf of the aviation system and must be remitted accordingly.

The organisation emphasised that the funds do not constitute revenue or profit for the airlines and should not be treated as such.

It further noted that the revenue from these charges is distributed among key aviation institutions, including the regulator itself and other service providers, all of which play vital roles in ensuring safe, efficient, and internationally compliant aviation operations.

It added that the NCAA operates on a cost-recovery basis and does not receive direct funding from the Federal Government for its routine regulatory activities, making timely remittance of statutory charges critical to sustaining its oversight functions.

The suspension of the enforcement directive, it said, is a measured step aimed at maintaining operational stability in the sector while reinforcing the obligation of airlines to remit collected charges.

The NCAA reaffirmed its commitment to balancing regulatory enforcement with industry sustainability, warning that statutory funds already collected must be remitted for their intended purposes.

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Emirates Skywards Commences ‘Season of Rewards’ Campaign

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Emirates Skywards

By Modupe Gbadeyanka

A new campaign designed to celebrate its passengers across the globe has been launched by Emirates Skywards, a statement from the company confirmed.

The promotion is known as Season of Rewards, and will run from May 21 to August 31, 2026, with beneficiaries getting different rewards for their patronage.

The Skywards Season of Rewards offers more savings with Cash+Miles on Emirates and flydubai, with members unlocking twice the savings, including enhanced Cash+Miles rates across the Emirates and flydubai network when booking flights and extras (excess baggage, lounge access and seat selection. The offer applies across all classes of travel, fare brands and destinations on both airlines. With the limited-time offer, 2,000 Skywards Miles can unlock savings of $30 instead of $15.

In addition, passengers will receive extra tier benefits for travel up until August 31, 2026. Members earn a 20 per cent bonus Tier Miles on every Emirates or flydubai flight, helping members move through the tiers faster. With reduced Tier Miles required during this period, it’s now even easier for members to renew or upgrade their membership status.

Also, they will get 50 per cent bonus Miles with travel partners, including Emirates Skywards Hotels, Marriott Bonvoy, IHG Hotels and Resorts, Jumeirah and more. However, registration is required to participate, and bonus Miles will be credited within 60 days after the end of the offer period.

Further, Skywards members can book their next reward flight and extras with Miles, starting from 4,500 Miles instead of 9,000 Miles during the promo period across all routes, cabins and fares.

“Skywards Season of Rewards reflects our continued commitment to creating even more value for our members worldwide.

“Whether members are planning a family holiday, a Dubai stopover, a weekend escape, or simply looking to maximise rewards across their travel spend – this initiative unlocks more opportunities to earn, save and experience the world with Emirates Skywards,” the DSVP Emirates Skywards, Nejib Ben Khedher, said.

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