Airlines see 7% survival rate in 25 years 

…Taxes, safety issues top concerns

Multiple taxation, safety concerns, and a high offshore insurance culture have been identified as the primary systemic drivers that shorten the lifespan of commercial airlines in Nigeria to below 10 years.

BusinessDay’s findings show that since the establishment of the Nigeria Civil Aviation Authority (NCAA) in 2000, approximately 150 domestic airlines have been registered. Today, only 14 remain active: Air Peace, Arik Air, Max Air, Ibom Air, Allied Air, NG Eagle, Aero Contractors, United Nigeria Airlines, Overland Airways, ValueJet, Xejet Airline, Enugu Air, Binani and Gateway Air.

This indicates a survival rate of just seven percent for the past 25 years. Numbers for 2026 are yet to be computed till full year.

Prominent brands that launched with massive capital and operational promise—including Nigeria Airways Limited, Okada Air, Oriental Airlines, Pan Africa Airlines, Chanchangi Airlines, Sosoliso, Allied Air, Bellview, Hak Air, and Skyline—all went under within a decade.

Most recently, Dana Air and Azman Air joined this expanding list of casualties, buckling under a harsh operating climate that continues to force even the surviving legacy operators to downsize their fleets and cut flight frequencies just to stay afloat.

The International Air Transport Association (IATA) recently flagged Nigeria as one of the most expensive operational environments globally for commercial aviation, citing structural cost barriers that severely undermine the viability and long-term survival of domestic carriers.

A closer look at the surviving domestic operators reveals a severely depleted capacity. A BusinessDay investigation shows that the collective active fleet of the 14 remaining scheduled airlines has plummeted from over 120 aircraft seven years ago to fewer than 60 serviceable planes today.

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This massive capacity contraction stems from the fact that local airlines generate revenue strictly in naira, yet they must settle their largest overheads—including international insurance premiums, aircraft spare parts, and heavy maintenance (C-checks)—exclusively in US dollars. Unable to source foreign exchange, operators are forced to ground their fleets.

The structural cost penalty is particularly evident in the insurance sector. While regulatory mandates require airlines to use local underwriters, the high-value, high-risk nature of aviation assets forces these domestic firms to partner with foreign entities.

Typically, Nigerian insurers lack the capacity to retain more than 30 percent of the risk, reinsuring the remaining 70 percent with A-rated offshore giants like Lloyd’s of London—a friction-heavy practice that keeps insurance premiums exceptionally high.

Consequently, while airlines operating in Ghana, South Africa, and other African nations pay between two and three percent of an asset’s value to secure coverage, Nigerian carriers are hit with an eight to 10 percent premium rate. For context, airlines in Europe and the US pay as low as 0.5 to one percent to insure the exact aircraft model.

In real terms, a local operator pays an average of $500,000 annually to insure a single Boeing 737-300, compared to roughly $200,000 to $300,000 paid by regional competitors.

Obiora Okonkwo, Chairman of United Nigeria Airlines, recently disclosed that he pays a staggering $2 million to insure a modest fleet of just six Boeing 737-800 aircraft—an amount that would comfortably cover 25 aircraft under a European regulatory framework.

“Nigeria’s aggressive deregulation of aviation in the 1990s and 2000s threw local airlines into a harsh, hyper-liberalised environment without safety nets. That decision exposed one of the most critical structural flaws in our aviation policy,” Samuel Caulcrick, the former Rector of the Nigerian College of Aviation Technology (NCAT), told BusinessDay.

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Caulcrick said if the government licensed private airlines to complement Nigeria Airways, while extending to them the same tax and charge exemptions the national carrier enjoyed, most would have survived.

“Instead, private operators were forced to compete at full cost while the national carrier was shielded. The result was predictable.”

He suggested that Nigeria return to the economic baseline where Nigeria Airways operated with exemptions from certain taxes and charges, adding that extending similar treatment to all local scheduled carriers would reduce operating costs toward global levels, the same benchmark International Air Transport Association (IATA) continues to highlight.

“No country runs a competitive airline sector when local operators carry a tax burden that their foreign competitors do not.

“Level the fiscal playing field, and Nigerian airlines can compete. Keep the current structure, and we will keep liquidating them,” Caulcrick said.

Data from the African Airlines Association (AFRAA) shows that Nigeria is the third most expensive African country in terms of air ticket taxes, paying $180 for every ticket purchase.

Even worse is the focus on increased revenue generation by government agencies in the sector, without commensurate value, and completely at variance with their establishment objective of being not-for-profit.

Meanwhile, every single flight is in turn exposed to other fees such as flight clearance, navigation, parking, or landing fees, etc. Other personnel and equipment-specific charges, such as licensing, training, aircraft certifications, insurance, etc., are also applicable.

When all these are aggregated, airlines end up with taxes at about 32.7 percent of domestic airlines’ gross revenues

In the top 10 most expensive countries in terms of ticket taxes, charges and fees, Gabon is the first with $297.7 taxes per international departure, followed by Sierra Leone with $294 taxes and Nigeria with $180 taxes. Niger, Benin, and Ghana are also part of the list.

Olumide Ohunayo, industry analyst and director of research at Zenith Travels, told BusinessDay that the industry is capital intensive and the 25 percent short term loans requested by Nigerian banks are making it more difficult for airlines to access capital.

“Also, the insurance companies in Nigeria are weak and cannot handle the risk of the aviation industry; this is why they have to go through another organisation in Europe to get the assets insured. If insurance and cost of getting capital are high, then we have shot ourselves in the foot before starting the race,” Ohunayo explained.

He said despite having the highest number of domestic airlines in Africa, Nigeria still has the lowest fleet, showing a mismatch.

Seyi Adewale, chief executive officer at Mainstream Cargo Limited, said among many factors making airline operations expensive is that the general purchasing power and disposable income of an average worker in Nigeria is low despite the country’s huge population, adding that other countries such as South Africa, Egypt, and Morocco earn significantly more than an average Nigerian worker.

Adewale also mentioned that the airlines appear to be competing on the same busy or what can be termed lucrative routes with city centres such as Lagos, Abuja, Port Harcourt, and Kano.

According to him, the implication is that the costs to manage the aviation sector with respect to various agencies are piled on the passengers operating on these routes, causing higher fees per passenger.

He said the industry doesn’t have supporting structures to firmly hold the sector because of spare parts imports,
higher insurance premiums, inadequate bird strike prevention capabilities, limited flight operating hours in most airports and poor load factor.

“It is also very difficult to have good financial or business plan projections. For example, there have been significant changes in the economy in recent years that will confound even the best financial planner or advisor. When one considers changes experienced, such as a rise in inflation and aviation fuel, devaluation of the naira, and implementation of the new tax policy. All these appear to increase the stress on the aviation industry,” Adewale explained.