Markets under pressure as Nigeria and global airlines battle rising costs
Nigeria has been ranked among the most expensive markets in the world for airline operations, with the International Air Transport Association (IATA) warning that high taxes, charges and operational costs continue to weaken the competitiveness of carriers operating in the country.
Speaking at the IATA Annual General Meeting in Rio de Janeiro, Brazil, IATA Regional Vice President for Africa and the Middle East, Kamil Al-Awadhi, said Nigeria remains one of the costliest markets despite ongoing reforms by the Federal Government.
Al-Awadhi acknowledged efforts by the Minister of Aviation and Aerospace Development, Festus Keyamo, to improve the sector but stressed that operators continue to face significant financial burdens in these markets.
According to him, the high-cost operating environment in these markets makes it difficult for Nigerian airlines to remain profitable, expand their networks and contribute fully to economic growth and regional connectivity.
To address the challenge, IATA called on member states of the Economic Community of West African States (ECOWAS) to implement a proposed 25 per cent reduction in aviation taxes and charges across regional markets.
The association believes the measure would lower the cost of air travel across markets in West Africa, stimulate passenger demand and improve the competitiveness of airlines.
Industry stakeholders have repeatedly argued that multiple taxes, regulatory fees and airport charges across Nigerian markets are among the biggest obstacles to the growth of aviation in Nigeria.
The concerns over Nigeria’s operating environment come amid a wider global crisis facing airline markets.
In its latest financial outlook, IATA projected that airline industry profitability will fall sharply in 2026 due to disruptions across global markets caused by the conflict in the Middle East and a dramatic increase in fuel prices.
The association projected that airline markets will see net profits decline to $23 billion in 2026, nearly half the $45 billion recorded in 2025 and far below an earlier projection of $41 billion.
Net profit margins in global airline markets are also expected to fall from 4.2 per cent in 2025 to 2.0 per cent this year.
Commenting on the outlook, IATA Director General Willie Walsh said the combination of geopolitical instability and soaring fuel costs had significantly worsened conditions across airline markets.
“Globally, airlines are expected to see profitability halve compared to 2025. Profits will shrink from $45 billion in 2025 to $23 billion this year. And margins will shrink from 4.2% to 2.0%,” Walsh said.
He added that all airlines were feeling the impact of fuel costs.
“All airline bottom lines are suffering from the rapid 70% rise in jet fuel prices. Some of the additional cost is being recuperated by adjusting prices and improving efficiency, but it will not be sufficient to maintain profitability at the previous year’s level.”
According to IATA, jet fuel prices are expected to average $152 per barrel in 2026, up from $90 per barrel in 2025. As a result, global airline fuel expenditure is projected to surge from $252 billion** to $350 billion, accounting for more than 31 per cent of total operating costs.
The Middle East is expected to be the hardest-hit region. Airlines there are projected to collectively record losses as operational disruptions and weaker demand weigh heavily on performance.
Walsh noted that Gulf carriers were particularly affected following airspace restrictions linked to the conflict.
“The Gulf carriers face operational uncertainty following a near complete shutdown of airspace at the outbreak of the war. These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable.”
Despite the challenges, IATA expects global airline revenues to rise by 9.4 per cent to $1.165 trillion in 2026. Passenger numbers are forecast to reach 5.1 billion, while airlines are expected to achieve a record average load factor of 84 per cent.
However, the association warned that persistent supply chain constraints, aircraft shortages, infrastructure limitations and economic uncertainty could further weaken industry performance.
For Nigerian airlines already struggling with one of the world’s most expensive operating environments, the global fuel shock and geopolitical disruptions add further pressure, strengthening calls for a reduction in taxes and charges to improve the sector’s long-term sustainability.
