The Federal Executive Council (FEC), has approved the establishment of a Nigerian aircraft leasing company to ease the cost of acquiring aircraft for local operators.
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The Minister of Aviation and Aerospace Development, Festus Keyamo announced the plan in Abuja on Tuesday during a meeting with representatives of Airline Operators of Nigeria (AON).
He noted that the move was designed to ensure the survival and stability of airline operators by reducing flight disruptions and airfares.
He also revealed that the African Development Bank (AfDB) has committed a $7 billion package to support its integrated African aviation programme.
On the importance of establishing an aircraft leasing firm, Keyamo said: “Since we don’t own a national airline and we don’t subsidise one, our duty as a government is to ensure that we support domestic airline operators to make them stable and make their businesses thrive.
“President Tinubu approved this plan to ensure that they (airline operators) get the fullest support from the government to acquire their aircraft because the major problem of the local operators has been how to acquire their helicopters, their aircraft, for their different operations.
“It’s not only their businesses that will benefit from this move. Once they acquire more aircraft, it will help to cut down on the constant cancellation of flights we are currently familiar with and force down the price of airfares”.
On how the firm would operate, Keyamo said the firm will be substantially private with the government holding only a minimal equity stake.
He said: “The company will have strategic backing by the government but it will be substantially private. We are bringing in investments of nearly 95 or 99 per cent from outside. Development banks across Africa, private individuals from outside the country and inside the country are bringing in money to ensure that this company has enough funding to bring in aircraft into the country on dry lease.
“Government is not putting one kobo in it. The government is only providing a sovereign guarantee for the safety of those aircraft and for repossession. And for that, the government will hold a minimum equity in the company”.
On the commitment of AfDB, Keyamo said: “The African Development Bank has keyed into this because they have an integrated programme for this kind of thing in Africa and Nigeria is one of their pilot countries. They have announced a $7 billion support package for this programme to pump into aviation and I have been officially appointed as ambassador for this programme in Africa by the African Development Bank.”
Speaking on behalf of AON, the Managing Director of Ibom Air, George Uriesi said the firm would ease the financial burden on airline operators.
He said: “Aircraft is the most expensive thing any airline can buy and for people like us who have ordered for brand new airplanes, these are multi-million dollar equipment. So if we take our A220 from the factory at 30 per cent interest rate, and our competitors elsewhere take it from the factory at 3 per cent while they are paying $100 a month for the airplane, I’m paying $600, $700 for the same airplane for the same business.
“Already our hands are tied behind our back in the wrestling ring. So this move has untied our hands by providing us a Nigerian leasing company that not only will it provide us access to aircraft at way reduced interest rates, but we will be paying it in Naira.
“With this, we are not worried about whether the dollar is going to go up or come down because the business model will be very clear and we will be paying in Naira”.
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