…As NCAA suspends enforcement of debt sanctions on Airlines
By Charles Ebi
Nigeria’s aviation industry suffered its first contraction in nearly two years in the first quarter of 2026, with the air transport subsector posting a sharp reversal that erased much of the momentum built during its 2025 recovery.
Data from the National Bureau of Statistics’ latest Gross Domestic Product ,GDP, report showed that air transport contracted by 47.3% year-on-year in nominal terms in Q1 2026, compared with a 57.21% expansion recorded in the corresponding period of 2025.
The performance marked the subsector’s first nominal contraction since the 8.92% decline recorded in Q1 2024, ending seven consecutive quarters of growth.
The downturn came despite Nigeria’s economy growing by 3.89% in real terms during the quarter and the broader transportation and storage sector remaining in positive territory.
The latest figures show the aviation sector’s nominal output almost halved within one year.
Air transport generated N55.74 billion in economic output during the first quarter of 2026, down from N105.77 billion in the corresponding period of 2025. The decline of approximately N50.03 billion represents one of the sharpest reversals among transportation subsectors and shows the loss of momentum in the industry after a strong 2025 performance.
The contraction follows a steady deceleration in growth throughout last year. After expanding by 57.21% in Q1 2025, the subsector slowed to 30.60% in Q2, 2.88% in Q3, and 18.02% in Q4, before plunging into negative territory at the start of 2026.
The sector’s footprint within the economy also weakened. Air transport accounted for 0.05% of nominal GDP in Q1 2026, down from 0.11% a year earlier, reflecting both lower activity levels and a reduced contribution to national output.
The weakness was equally evident after adjusting for inflation. Real output declined by 7.62% year-on-year, worsening from the 0.81% contraction recorded in Q1 2025. At constant 2019 prices, aviation output fell to N33.66 billion from N36.44 billion a year earlier, indicating a genuine decline in activity rather than a price-driven adjustment.
Despite the aviation slump, transportation and storage continued to contribute to economic growth in nominal and real terms.
The overall transportation and storage sector maintained positive growth of 6.51% in nominal terms during Q1 2026. However, this was significantly lower than the 53.56% growth recorded in Q1 2025 and the 39.62% expansion posted in Q4 2025, highlighting the extent to which aviation dragged on sector performance.
The sector contributed 1.36% to nominal GDP, down from 1.51% in the corresponding quarter of 2025 and 1.55% in the preceding quarter.
It recorded 7.41% real growth in Q1 2026, although this represented a moderation from 14.08% in the same period of 2025 and 21.25% in the previous quarter.
According to the NBS, transportation and storage accounted for 1.02% of real GDP in Q1 2026, slightly above the 0.99% share recorded a year earlier and unchanged from the previous quarter.
The figures suggest that while Nigeria’s transportation sector remains supported by road logistics, courier services and water transport, the aviation industry has emerged as a major pressure point, reversing nearly two years of expansion and significantly weakening the sector’s overall growth trajectory.
Nigeria’s aviation sector is facing mounting pressure as taxes, fees and regulatory levies consume as much as 35% of airline revenues, according to the Centre for the Promotion of Private Enterprise ,CPPE, which warned that the burden is undermining the sustainability of domestic carriers.
The CPPE noted that the cumulative impact of ticket sales charges, cargo fees, passenger service charges, landing and parking charges, inspection fees, as well as duties on aircraft and spare parts, has significantly eroded airline profitability and weakened the sector’s resilience.
Meanwhile, Nigeria Civil Aviation Authority ,NCAA, has temporarily suspended its stringent “No-Pay-No-Service” directive against 11 domestic airlines over an estimated ₦12 billion unpaid statutory remittances,citing the rising cost of aviation fuel and the need to preserve stability in the country’s aviation sector.
An internal memo issued by the NCAA’s Directorate of Finance and Accounts initially ordered all regulatory departments to withhold critical administrative and operational services from the indebted carriers.
The dispute centers on non-remitted funds from the 5% Ticket Sales Charge ,TSC, and Cargo Sales Charge ,CSC, which airlines collect from passengers on behalf of the regulator to fund safety oversight and training.
In an official statement by NCAA Director-General Chris Najomo, the regulator paused the strict enforcement to prevent a collapse of the domestic flight network amid severe macroeconomic headwinds, particularly the skyrocketing cost of aviation fuel ,Jet A1.
Besides, NCAA said it operates largely on a cost-recovery basis and does not receive direct Federal Government funding for its routine regulatory activities, making statutory remittances important to sustaining oversight and safety functions.
He said: “These funds, after remitted, are not retained by a single institution; they are shared among the regulator ,NCAA, and key aviation service providers, which perform specific responsibilities that collectively sustain safe, efficient, and internationally compliant aviation operations.
“Within this structure, the Nigeria Civil Aviation Authority operates on a cost recovery basis and does not receive direct funding from the Federal Government for its day-to-day regulatory activities. The funds derived from statutory charges are therefore not only essential, but critical, to sustain oversight functions.
“The temporary suspension of the “no pay, no service” measure is a calibrated step aimed at maintaining operational stability within the sector while continued engagement is pursued toward full settlement of outstanding obligations”.
The NCAA had over the weekend, barred 11 Nigerian airlines, including Air Peace, Ibom Air and ValueJet, from accessing regulatory services.
Also affected by the sanction are Arik Air, United Nigeria Airlines, Umza Air, NG Eagle, Max Air, Caverton Helicopters, Overland Airways and Rano Air.
The internal memo, dated May 22, 2026, issued by its Director, Finance and Accounts, Olufemi Odukoya was copied different directorates Directorate of Operations, Licensing and Training Standards ,DOLTS, Directorate of Airworthiness Standards ,DAWS, Directorate of Aerodrome and Airspace Standards ,DAAS, Directorate of Air Transport Regulation ,DATR, Directorate of Legal Services/Company Secretariat ,DLS/CS, Regional Managers and Regional Accountants and obtained by The Guardian, said the above-mentioned airlines should not be rendered services without financial clearance from the Director of Finance & Accounts
The enforcement action, had targeted airlines owing the regulator outstanding remittances, is expected to affect access to critical regulatory and administrative services until the affected carriers clear their debts or agree on payment plans with the authority.
This was contained in an internal memo obtained by our correspondent on Sunday. At the centre of the dispute are the five per cent Ticket Sales Charge and Cargo Sales Charge, funds collected by airlines on behalf of the NCAA to support safety oversight, personnel training, and economic regulation within the aviation sector.
The memo, dated May 22, 2026, obtained by our correspondent, directed all NCAA directorates to withhold services from the affected operators pending financial clearance from the Directorate of Finance and Accounts.
The memo, signed by the Director of Finance and Accounts, Olufemi Odukoya, was circulated across the authority’s regional offices and copied to the Director-General of Civil Aviation and other senior officials.
Under the directive, affected airlines risk immediate interruptions in regulatory support, a development that has raised concerns among operators and passengers over possible operational delays and wider industry implications.
Director-General of the NCAA, Chris Najomo, said that although the regulator understands the harsh economic realities confronting operators, the agency cannot afford to compromise its financial stability.
According to him, delayed or non-remittance of the statutory charges could weaken the authority’s ability to sustain effective safety oversight, risk-based surveillance, and compliance with international aviation standards.
In a WhatsApp chat with our correspondent, the Chief Executive Officer of Ibom Air, George Uriesi, said the current realities facing airlines go beyond poor financial management, insisting that operators are struggling to survive under an unsustainable business environment.
According to him, the sharp rise in aviation fuel prices over a short period disrupted the financial structures of many airlines and forced operators to make difficult decisions about how to manage limited working capital.
The former Rector of the Nigeria College of Aviation Technology, Samuel Caulcrick, questioned the long-term viability of Nigeria’s domestic aviation sector, saying the crisis extends beyond the controversy surrounding the 5% Ticket Sales Charge.
According to him, even if the charge is removed completely, airlines would still face severe challenges linked to inflation, foreign exchange instability, weak passenger numbers, and multiple regulatory charges.
He noted that only a small percentage of Nigerians travel regularly by air, while inflation and declining purchasing power have further reduced passenger traffic, forcing over 10 airlines to compete for a shrinking market.
Caulcrick also argued that domestic airlines remain vulnerable because they rely heavily on dollar-denominated expenses such as aircraft leasing, maintenance, and spare parts, without stable access to foreign exchange or hedging mechanisms.
The industry expert stressed, “The question is no longer whether airlines can survive the TSC. It’s whether the environment itself allows any airline to survive.
“Aviation fuel, landing, and parking fees consume the bulk of revenue. On some routes, airlines are left with net profits as low as N8 per passenger per kilometre. At that level, a single delay or cancellation can erase the margin for an entire flight”.
