Industry experts say the sector needs a fundamental overhaul, pointing to opaque management practices, rampant corruption and risks for passengers from security and dilapidated infrastructure.
Arik Air, which has a 60 percent share of domestic flights and is the country's biggest private carrier, has found itself increasingly in the firing line of disgruntled passengers.
Earlier this month, irate passengers beat up one of its executives at Lagos international airport after the third consecutive cancellation of their flight to Johannesburg.
There was no response from Arik when asked to comment on the situation by AFP.
Also Read
Other domestic operators are struggling. Aero Contractors, the second biggest carrier, stopped services for four months at the end of last year because of "serious financial difficulties".
For John Ojikutu, an aviation security consultant, most Nigerian airlines run their businesses like a grocery store.
"They just want to make profit," he told AFP.
The result is airlines in Nigeria generally have a short life span: in 35 years more than 40 operators have gone bust, including Nigeria Airways, which collapsed in 2003.
"People are... Operating without paying the fuel marketers, without paying their staff, without paying for the services they're given (insurance, maintenance)," he said.
"If they are not making profit, the question is what do they really do with all this money?... They are selling tickets every day.
"As long as we don't have a strong, credible, independent regulatory agency we cannot have a viable aviation industry in this country."
In their defence, the airlines blame a lack of foreign currency that has left them unable to pay fuel suppliers or, in some cases, landing charges at airports outside Nigeria.
The fall in the price of crude on international markets has seen the naira currency lose value against the dollar and Nigerian banks no longer have enough liquidity.
Foreign airlines such as United and Iberia have stopped flights to Nigeria because of difficulties in repatriating profits in dollars.
Disclaimer: No Business Standard Journalist was involved in creation of this content