Why aircraft lessors blacklist Nigerian airlines

Onwubuke Melvin
Onwubuke Melvin

Aircraft leasing companies across the world have put Nigerian carriers on the blacklist as a result of breaches in contracts that occurred in the past.

This has since affected the operations of indigenous carriers and made it hard for them to compete favourably with foreign airlines on international routes.

This disclosure was made by the Minister of Aviation and Aerospace Development, Festus Keyamo during the Air Peace Lagos-London inaugural flight ceremony at the Murtala Muhammed International, Airport, Lagos on Friday.

Findings reveal that Nigerian airlines are only able to secure wet leased aircraft and not dry lease aircraft contracts which are more profitable for the airlines, according to Businessday.

The owner shall provide the aircraft to the lessee with no crew on a dry lease basis; if the aircraft does not transport people or property for compensation or rental purposes, neither party shall be obliged to hold an air carrier certificate. Under this type of lease, the lessee usually carries out operational control, including legal responsibility for the aircraft.

However, the owner shall provide aircraft and crew members as part of an arrangement with a wet lease. The owner assumes operational responsibility, which includes performing maintenance, procuring insurance, and other legal responsibilities of operations. It is therefore likely that lessors, not airlines, will receive the lion’s share of aircraft operating profits.

According to Keyamo, local operators are handicapped because they don’t have access to aircraft that international airlines have on the same terms.

“There is no airline in the world that buys their fleet 100 per cent. It is not possible. Statistics say that out of 100 aircraft flying around the world, about 70 percent of those aircraft are on dry lease from leasing companies and  aircraft manufacturers. So, why can’t we take advantage of these lease arrangements to empower our local operators?

“This is the key to also servicing these international routes because you cannot compete with someone who has access to aircraft on better terms than you do who will go for wet lease aircraft.

He explained, “Nigeria is on the blacklist to get dry lease aircraft around the world. These is the diplomatic visits I have been undertaking since I came. I have been trying to assure aircraft manufacturers such as Airbus and aircraft leasing companies that we can protect their assets if they bring them into Nigeria because what they want is the assurance from the government that when these assets are brought into Nigeria, we can allow them take their assets away if there are breaches to these agreements.”

He noted that lessors faced problems in the past that when they bring in their assets into the country and there is a breach of contract, court orders, and politics, make it difficult for them to take their aircraft back, which amounts to a big loss for the lessors.

“So, what they want is that if they bring their aircraft into the country on the dry lease, they can take them out when there is a breach. It is the government that will assure these leasing companies and creditors to bring in their aircraft.

“I have been engaged with the diplomatic shuttle. Beyond that, we also need to comply with the Cape Town convention to also enable local carriers to have access to dry lease aircraft,” he pointed out.

Meanwhile, the chief executive officer of United Nigeria Airlines, Obiora Okonkwo, said the airlines are pleased that the Minister has agreed that there is a problem with aircraft leasing and access to equipment.

Okonkwo said that the policy needs to be addressed, adding that it is for airlines to go and source aircraft, but there are certain areas in which policies need to be dealt with.

“I do not see the reason why modern-day operators should suffer the sins of the old-time operator because any lessor will tell you that there have been some violations in the past. Today we are not violating any lease arrangements but we are rather victims.

“Also, there must be a window for foreign exchange because when you lease an aircraft, there are specific days of the month you must be able to pay what has been accrued. But if you are left alone as an airline to be looking for foreign exchange in the open market like any other importer, you probably will miss the deadline. So, if we sign our lease agreements, let us submit it to CBN and the banks and let them guarantee us,” he expounded.


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