Capital city VIP breathing in ozone on island (7)
I believe the answer is:
nairobi
'capital city' is the definition.
(capital of Kenya)
'vip breathing in ozone on island' is the wordplay.
'vip' becomes 'nob' (I've seen this in other clues).
'breathing in' indicates putting letters inside.
'ozone' becomes 'air' (ozone can mean air).
'on' says to put letters next to each other.
'island' becomes 'i' (geographical abbreviation).
'nob' placed around 'air' is 'nairob'.
'nairob'+'i'='NAIROBI'
(Other definitions for nairobi that I've seen before include "East African capital" , "The capital of Kenya (7)" , "Robinia strangely found in Kenya" , "Badly-behaved child" , "I, a robin (anag) - city" .)