Airfares in Nigeria have remained high, reflecting the fragile economics of airline operations in an emerging market grappling with currency volatility, high financing costs, infrastructure gaps and rising operating expenses. These pressures are ultimately passed on to passengers through higher ticket prices.
Globally, data from the World Air Transport Statistics (WATS) shows that fuel, aircraft depreciation and flight crew salaries account for the largest share of airline costs. Fuel and oil alone represent about 28.7 per cent of total costs, followed by depreciation and amortisation at 9.1 per cent and crew salaries at 8.6 per cent. In Nigeria, however, these costs are amplified by local structural challenges.
Why Airfares Are High
Industry operators say the high cost of flying in Nigeria is driven by expensive aircraft financing, volatile jet fuel prices, the need to carry out heavy maintenance abroad, elevated insurance premiums linked to perceived country risk, and poorly capitalised airport infrastructure that depends on government support. Because these factors are interconnected, addressing one in isolation has little impact. According to aviation stakeholders, only coordinated reforms across the sector can deliver sustainable fare reductions.
This is the approach being pursued by the Minister of Aviation and Aerospace Development, Festus Keyamo.
Expanding Aircraft Availability
One key driver of fare spikes, particularly during peak travel periods such as Christmas, is limited aircraft availability. When demand rises and capacity remains fixed, ticket prices climb sharply.
To address this, the ministry is pushing reforms to make aircraft leasing easier and cheaper for Nigerian airlines. In the past, many international lessors avoided Nigeria due to concerns over contract enforcement and asset repossession, forcing local carriers to rely on costly wet leases or outright aircraft purchases.
Air Peace chief executive Allen Onyema has previously noted that the funds required to purchase a single new aircraft could instead support the dry lease of 40 to 50 aircraft, spreading costs over monthly payments rather than heavy upfront expenditure.
Leveraging his legal background, Keyamo worked with the judiciary and the government’s ease-of-doing-business agencies to strengthen Nigeria’s compliance with the Cape Town Convention on aircraft asset protection. As a result, Nigeria’s compliance score rose to 75.5 per cent, leading to its removal from the Aviation Working Group (AWG) watchlist in late 2024.
In November 2024, Nigeria received its first dry-leased commercial aircraft in more than a decade, a development industry players say signals renewed confidence by global lessors. The minister’s engagements with Boeing and Airbus have also supported airlines’ fleet renewal efforts.
Jet Fuel and Operating Costs
Jet A1 fuel accounts for an estimated 30 to 40 per cent of airline operating costs in Nigeria. To reduce this burden, the federal government has backed policies aimed at boosting domestic refining and diversifying supply sources.
The entry of the Dangote Refinery into Jet A1 production in 2024 has reduced reliance on imported fuel and exposure to global supply disruptions. However, stakeholders caution that local refining alone does not guarantee cheaper fuel at airports, citing distribution bottlenecks, pricing mechanisms and foreign exchange settlement challenges.
The ministry has therefore opened sustained engagement with fuel marketers, regulators and monetary authorities to address these constraints and ensure that increased supply translates into lower costs for airlines. It has also encouraged alternative supply solutions to promote competition in the market.
Building Local Maintenance Capacity
Another major cost driver is the absence of functional local Maintenance, Repair and Overhaul (MRO) facilities, which forces Nigerian airlines to carry out heavy maintenance abroad.
To reverse this, the ministry is pursuing partnerships with international MRO providers to establish facilities in Nigeria. Through incentives, memoranda of understanding and investor engagement, the government hopes to retain maintenance spending within the country, cut aircraft downtime and conserve foreign exchange.
Industry estimates suggest that viable local MROs could generate up to $2 billion annually while significantly reducing maintenance costs for airlines. Keyamo has said discussions are ongoing with potential investors and that the project is likely to be delivered through a Public-Private Partnership due to its scale and technical demands.
Insurance and Risk Perception
Nigeria’s aviation insurance premiums have also been high, largely because of perceived country risk and limited underwriting competition. The ministry has engaged insurers and regulators to reassess risk pricing and broaden market participation.
Officials argue that as safety oversight improves and regulatory consistency strengthens, insurance premiums should better reflect actual operational risk rather than blanket country assumptions.
Local Financing and Leasing
Beyond attracting foreign lessors, the government is also promoting domestic aircraft leasing and financing frameworks. Local financing, officials say, can reduce exposure to foreign exchange volatility, align repayment terms with local revenue cycles and create financing solutions better suited to Nigerian airlines.
Policy engagements in 2024 indicate growing efforts to mobilise domestic capital, including pension funds and financial institutions, into aviation asset financing, reducing overdependence on offshore debt.
Gradual Relief for Passengers
While the reforms are unlikely to deliver immediate fare cuts, industry observers say the cumulative effect could gradually lower airline costs and stabilise ticket prices. By targeting financing, fuel, maintenance and insurance costs, the Keyamo-led strategy aims to reset the cost structure of Nigerian aviation, with potential long-term benefits for passengers.
