The President of the Aircraft Owners and Pilots Association of Nigeria (AOPAN), Dr Alexander Nwuba, has said that Nigerian domestic airlines are operating on dangerously thin profits, earning just about N8 per kilometre despite high air fares.
He made the disclosure during an aviation town hall webinar titled, ‘High Air Fares – Are Airlines Really the Problem?’ held in Lagos last week.
This thin margin, he noted, is responsible for the sector’s vulnerability to disruptions, rising operational costs, and the challenge of keeping fares affordable for passengers.
What they are saying
Dr Nwuba said Nigerian airlines earn just N8 profit per kilometre, with domestic flights costing N104 per kilometre to operate and revenue at only N112, leaving carriers highly vulnerable despite high air fares.
“A Boeing 737 Lagos–Abuja flight costs about 9,000 dollars to operate,” he said, citing a 162-seat configuration.
He added, “Cost per seat ranges between N77,000 and N84,000 on such flights.” He explained,
“For sustainability, fares must exceed N100,000. Anything lower reflects a low-cost model most airlines cannot currently sustain.” He said,
“Cost per kilometre is N104, revenue per kilometre is N112, leaving only N8 profit per kilometre.” He noted,
“This narrow N8 margin means any shock, such as fuel spikes or grounded aircraft, quickly turns flights into losses.”
He explained that current fares are determined entirely by cost structures rather than distance or flight time, creating a market reality where affordability remains a persistent challenge for passengers.
Aviation fuel makes up about 38% of operating costs, while aircraft leasing and maintenance account for much of the rest, raising the minimum sustainable ticket price for domestic flights.
Passenger patterns and rising fares
Dr Nwuba explained that domestic passenger numbers fell between 2022 and 2025 as air fares rose faster than real incomes, increasing financial pressure on airlines.
- On South-East routes during the yuletide period, outbound flights were nearly full at 95% occupancy, while return flights averaged only 35%.
- This resulted in a combined load factor of 65%, below the break-even level for carriers.
He added that this imbalance, combined with reduced fleet sizes due to maintenance and financing challenges, drives operational costs higher.
As a result, fares remain persistently high, reflecting underlying cost structures rather than deliberate profiteering.
Flashback
During the December yuletide rush, Nigerians reacted strongly to soaring flight fares, which more than doubled in many instances.
- At the time, AOPAN President Dr Alexander Nwuba explained that the surge in December fares was largely driven by seasonal demand, as many travellers waited until the last minute to book flights.
- He noted that airlines adjust prices to balance high demand during the festive period while offsetting lower revenues earned during off-peak months, making the increase a normal economic response rather than deliberate profiteering.
The Minister of Aviation, Festus Keyamo, added that the federal government has no authority to fix airfares, emphasizing that pricing in Nigeria’s fully deregulated aviation market is determined entirely by market forces.
What you should know
Nigerian airlines have long cited taxes, levies, and high operating costs as major factors in ticket pricing, including the $11.5 APIS security levy that raised total international ticket charges to $31.50.
- In 2024, Nigeria earned $62 million from airline ticket taxes, part of $1.97 billion collected across Africa.
- As of January 25, 2026, no update has been issued on the planned ECOWAS abolition of air ticket taxes, meaning the tax burden remains in place. Combined with high fuel, leasing, maintenance, and borrowing costs, these factors continue to push fares higher.
In December, Air Peace CEO Allen Onyema warned that domestic economy airfares could exceed N1 million following new tax reforms that took effect in January 2026.
Onyema said the tax reforms removed VAT exemptions on aircraft, spare parts, and air tickets, sharply raising operating costs, which are likely to be passed on to passengers.
