By Segun Koiki
WorldStage Nigeria’s Macroeconomic Outlook 2026– Demand and Trade Dynamics: The key factors that are expected to shape the Nigeria’s aviation sector in 2026 include domestic passenger traffic which is projected to grow, thanks to increasing urbanization and a growing middle class.
International travel is expected to rebound, with Nigeria’s removal from the Cape Town Convention risk list opening up access to affordable aircraft financing, while cargo services are anticipated to expand, driven by e-commerce and logistics demands.
In anticipation of this, major domestic airlines like Air Peace, United Nigeria Airlines, Ibom Air, Overland Airways and VelueJet have ordered for new aircraft directly from manufacturers with their deliveries expected to continue in 2026 and beyond.
Other factors expected to drive activities in the sector are government policies, infrastructural upgrades, the new tax reform, new routes by Nigerian airlines, regulations by the Nigeria Civil Aviation Authority (NCAA), navigational equipment provided by the Nigerian Airspace Management Agency (NAMA), passenger behaviours and the United States visa policies for Nigerians.
Already, data from the U.S. Department of Transportation showed that in 2025, the U.S. visa policy had a negative impact on travellers from Nigeria. For instance, the figures ranked flights from Lagos (Nigeria) to New York (U.S) as one of the worst networks for Delta Airlines in the past year.
Specifically, Lagos-New York was ranked the second worst international network for Delta with just 56.7 per cent of total capacity of its Airbus A330-200 aircraft, indicating 29,481 passengers for the period.
Apart from Delta, another U.S carrier, United Airlines operates direct flight services from Lagos to New York, while other mega carriers like British Airways, Virgin Atlantic, Emirates, Qatar, Turkish and Ethiopian, among others ferry Nigerians to United States routes after a first stop in their various hubs. As it stands, no Nigerian airline operates to the U.S. The plan by Air Peace to commence operations to the North American country is yet to be executed.
Investment and Funding
The Nigerian government has allocated N87.3 billion for the Ministry of Aviation and Aerospace Development in the 2026 budget, a 23 percent decline from the N113.19 billion approved in 2025.
This funding will support various projects, including Expansion of the General Aviation Terminal at Mallam Aminu Kano International Airport (N1 billion), Establishment of the African Aviation and Aerospace University in Abuja (N3 billion), Acquisition of safety and security equipment, including Category III Airfield Lighting and disabled aircraft recovery equipment (N5 billion), Rehabilitation and upgrade of airport infrastructure, including terminal buildings, runways, and fencing (N33.9 billion).
Notable exclusions from the budget are the Federal Airports Authority of Nigeria (FAAN) and the Nigeria Civil Aviation Authority (NCAA), which are considered self-sustaining revenue-generating entities.
The government has also expressed plans to improve airport infrastructure, enhance safety, and boost economic growth through these investments.
The Nigerian airlines that are committing huge funds to strengthen their operations in 2026. For Air Peace, at least two of the 13 Embraer 195-E2 aircraft it ordered in April 2019 will be delivered in 2026. However, the Boeing 737 Max 8 and 10 it ordered may not arrive in the new year because of manufacturers’ delays.
As for Ibom Air, the Akwa Ibom State-owned airline which is the second airline in Nigeria in terms of passenger traffic, is expecting further deliveries of the 10 Airbus A220-300 it ordered five years ago in 2026.
Overland Airways that placed an order for six Embraer E-175 aircraft at the 2021 Dubai Airshow is expecting further deliveries in 2026.
The deliveries of the six B737-800 to United Nigeria Airlines by Southwest Airlines are expected to take place between the first quarter of 2026 and the same period in 2027.
Other airlines that are expecting aircraft deliveries in 2026 are Green Africa, ValueJet, XEJet and Max Air.
In all, Nigerian airlines are projected to add about eight 10 aircraft to their fleets in 2026.
Government Reforms
The Nigerian Government is reviewing and updating policies to enhance the overall efficiency and competitiveness of the aviation sector.
While industry experts are calling for stronger government support, including Bilateral Air Service Agreement (BASA) in favour of the country, reciprocity of BASAs and better slot access for Nigerian airlines on international routes, the government has introduced several reforms aiming to boost efficiency, transparency, and economic growth.
The reforms include Zero Debt Strategy by the Nigerian Civil Aviation Authority (NCAA) which requires airlines to provide mandatory Advance Payment Guarantees (APG) to eliminate outstanding debts and promote financial stability; the reintroduction of VAT on aircraft, engines, and spare parts, effective January 1, 2026, despite opposition from the International Air Transport Association (IATA); the NCAA’s intensified oversight, imposing stricter penalties on airlines for passenger rights violations, such as flight delays, cancellations, and mishandled baggage; the ECOWAS abolition of air transport taxes and reduced passenger and security charges by 25%, effective January 1, 2026.
These reforms aim to position Nigeria as a leading aviation hub, enhance trade competitiveness, and drive economic growth.
The implementation of the Cape Town Convention Practice Direction by Nigeria in 2024 after its removal from the watchlist of lessors and the signing of the Irrevocable Deregulation and Export Request Authorisation (IDERA) Advisory Circular into law are expected to boost activities of the country’s airlines in 2026.
The Aviation Working Group (AWG), co-chaired by Airbus and Boeing companies has relaxed the rules for the Nigerian airlines as they now have access to dry leased aircraft directly from manufacturers or leasing companies.
Already, Air Peace has benefited from this law with the delivery of B737-700NG from AerCap. Other airlines, especially United Nigeria are expected to increase their fleets in 2026 .
While the country’s aviation sector in 2026 is expected to operate under a stronger regulatory framework, with renewed emphasis on safety, economic regulation, and airline survival, the NCAA is to implement enhanced surveillance and compliance. Emphasis is also expected to be on consumer protection and service standards. The authority in 2025 sanctioned seven airlines for various passenger rights violations and defaults under the consumer protection regulations.
Economic regulation of airlines, which aims at preventing failures rather than reacting to them, is also projected to increase in 2026 as the government seeks to maintain relatively safe airspace within the country.
The new tax law, which imposes VAT on air tickets, return of customs duties on aircraft and spare parts and other charges will affect airline operations and passenger traffic in 2026 as travelers seek cheaper means of travelling within the west coast. It is expected that the full implementation of the new law will raise costs significantly and compel airlines to pass such costs to passengers, thereby reducing the number of potential air travelers in 2026.
Also, regional tax of additional $11.5 as Advance Passenger Information System (APIS) imposed on each traveller coming or departing Nigeria by the Nigeria Customs Service (NCS), retention of $20 security levy and Ticket Sales Charge (TSC) by the NCAA and collection of $80 Passenger Service Charge (PSC) by FAAN are additional burdens on air travelers that will dictate air passenger traffic in 2026.
Airport infrastructure will play a major role in the sustainability of Nigeria’s aviation industry in 2026. The Federal Government has earmarked about N15 billion in the 2026 budget for perimeter fencing, airport upgrades, acquisition of equipment for various airports, starting with Lagos, Abuja, Benin, Kano, Calabar, Ilorin, Port Harcourt airports, among others.
The government has also allocated N712 billion for the reconstruction of Murtala Muhammed International Airport (MMIA), Lagos, with work already begun on the project. Regional airports like Ibadan, Anambra. Ogun and Akure are also positioned for religious and cargo operations in 2026.
The concession programme targeting major international airports is also expected to define the year’s narrative, particularly Lagos, Abuja, Port Harcourt and Kano airports. The government has begun the exercise with the concessioning of Akanu Ibiam International Airport (AIIA), Enugu to a private firm – Aero Alliance Consortium. This exercise will bring in more efficiency to the airports if implemented successfully by the government.
There is no doubt that the concession plans will generate controversies in the sector, particularly among industry unions who always suspect every step of the government following the experience with the defunct national carrier, Nigeria Airways whose former staff are yet to receive full severance packages 22 years after liquidation.
However, many stakeholders believe that private investment is the way to go if the country is to experience improved passenger comfort and modern facilities.
On passenger traffic, there is not going to be significant changes in 2026 despite increase in scheduled airlines to 15. Specifically, the traffic is projected to grow slightly to about 16 million in 2026 and 25.7 million by 2029. Numerous taxes, charges and levies are expected to push travelers to other modes of transportation.
Air tickets are also projected to increase slightly in 2026 by about 10 to 15 per cent due to the new tax law and other levies. However, there will be improved competition among the airlines as they scramble for the fewer passengers on local and international routes.
Like it was in the past, foreign airlines will continue to dominate international and regional passenger traffic into or out of Nigeria in 2026 with traffic figure on regional and foreign routes projected to remain at four million.
Challenges
As local airlines are battling a record-high fleet depletion that has reduced the number of serviceable aircraft in recent times, the challenges of inflation and currency depreciation may impact air travel demand in 2026.
The number of serviceable aircraft in the fleet of 15 local airlines dropped to 38 in 2025 from 44 in 2024 and 107 in 2018.
While infrastructure constraints, high operating costs, and regulatory issues are begging to be addressed, foreign airlines’ domination of international routes will continue to limit opportunities for local carriers.
Opportunities
The growing demand for air travel in West Africa is expected to present opportunities for Nigerian airlines as government initiatives, such as airport concessions and infrastructure investments are expected to boost the sector. Moreover, the Single African Air Transport Market (SAATM) could increase connectivity and trade.
For investors, the opportunities that look attractive include investment in the area of Maintenance, Repair and Overhaul (MRO) facilities; and plans to transform from import-oriented market into a West Africa cargo hub.
Investors will also be expected to explore opportunities in freight handling, cold chain logistics and export services; as most of the airlines, agencies and auxiliary services are embracing advanced technologies, investors will be looking for opportunities, especially AI propelled-technology for airlines and others. Ethical hacking investment to counter hackers will be important in the year.
On profitability, Lagos, Abuja, Port Harcourt and Kano airports have overtime dominated the Nigerian air passenger traffic with Lagos as the primary airport for airlines closely followed by Abuja. This trend is expected to continue in 2026.
The four airports have continued to generate over 95 per cent of total FAAN’s revenue, reaching the peak in 2024 with N365 billion. The trend will not change in 2026 as the airports are projected to remain dominant and yield over N400 billion.
The adoption of digital services by airlines and terminal operators is expected to increase in 2026. Bi-Courtney Aviation Services Limited (BASL), operators of the Murtala Muhammed Airport Terminal Two (MMA2), Lagos, recently unveiled plans to deploy mobile check-in counters to improve passenger processing and reduce congestion during peak travel hours. Also, FAAN has also commended migration to digital services.
Takeaway
As Nigeria’s total seat capacity fell by 3.7 per cent year-on-year 2025 to 1.16 million against 2024, making it the only top 10 African market to see contraction, the year 2026 will determine whether policy intentions, infrastructure, financial laws translate into sustainable sectoral growth.
For effective growth in 2026, the Federal Government should consider establishing an aviation development bank as canvassed by industry experts. Such an institution would provide long-term, single-digit interest financing for aircraft acquisition, infrastructure development and working capital, while addressing one of the industry’s most damaging constraints.
*Extract from WorldStage Nigeria’s Macroeconomic Outlook 2026.
