Hope rises as foreign aircraft lessors return to Nigerian market
Nigerian air passengers have been suffering untold hardships due to skyrocketing airfares, flight cancellations and delays, among others, over cards of trust stacked against the aviation industry, OLASUNKANMI AKINLOTAN writes
For over 10 years, aviation financiers and multi-billionaire aircraft lessors worldwide have refused to transact business with Nigerian airlines over fear of defaulting on an agreement. This decision to block aviation opportunities against Nigerians has resulted in different layers of business hardship for operators of the aviation sector.
The challenging business factors were all hinged on limited available aircraft, which trickled down to almost every other part of the aviation industry.
This led to huge debts on many of the domestic airlines in the country, putting safety concerns on them. While some of these airlines are currently on “life support”, some have gone under either by regulators’ big sticks or through takeovers by creditors.
These challenges have been having a great multiplier effect on passengers’ experiences, airfares and the reputation of the country’s aviation industry. These many troubles, which have trickled down to passengers, especially on the domestic routes, have made many abandon air transportation.
Meanwhile, in August 2023, after President Bola Tinubu swore in the Minister of Aviation and Aerospace Development, Festus Keyamo, he promised to tackle the issues of trust between the Nigerian aviation sector and the rest of the world.
Keyamo took the baton from Hadi Sirika, who, alongside his brother Ahmad Sirika, daughter Fatima, and her husband, is currently being prosecuted for misappropriation of public funds while he was in office.
The aviation minister came in at a time of many unresolved issues in the sector, such as the controversial Nigeria Air project, plans to hand over airports to concessionaires, dollar scarcity/repatriation concerns, the high cost of aviation fuel and multiple taxes.
Other contentious issues include rising airfares, law enforcement and safety concerns, flight delays and cancellations, encroachment on airport lands, insufficient transportation services, touting and hawking at airports, as well as the distrust between the lessors and Nigerian airlines.
Meanwhile, in Tinubu’s Renewed Hope Promise document, the President promised Nigerians, among other things, that his government would focus on improving airport runways and other critical aviation infrastructure. Keyamo at different fora added to Tinubu’s promise, his resolution to address issues of aircraft shortages, which emanated from the distrust between the aircraft lessors and the Nigerian airline operators.
In August, the minister led the airline operators of Nigeria to lessors and aircraft manufacturers around the world to mend fences and assure them of staying true to any agreement made with any airline in the country.
Notable among the places visited was the State of Washington in the USA to meet with the popular plane maker, Boeing. On his X handle, Keyamo said Nigeria had signed a Memorandum of Understanding with the American aerospace company to enhance sustainable development in the country’s aviation sector.
His post reads, “Yesterday, in Seattle, State of Washington in the USA, I led a delegation of the executives of major airlines in Nigeria under the auspices of Airline Operators of Nigeria and other important stakeholders in the civil aviation ecosystem in Nigeria to sign an important Memorandum of Understanding with The Boeing Company, one of the major aircraft manufacturers in the world.”
The PUNCH also learnt that a discussion was held between the minister and AerCap all to cause relief for Nigerian airlines and passengers.
During those visits, the aircraft lessors gave the minister and his entourage conditions to return to business with any Nigerian airline. Topping the request was for the Nigerian government to sign the Cape Town Convention on aircraft leasing.
The primary motive of the Cape Town Convention was to resolve the problem of obtaining certain and opposable rights to high-value aviation assets, namely airframes, aircraft engines and helicopters, which, by their nature, are not fixated.
The action was to ensure lessors’ rights under the law; this included a “practice direction” to Nigerian judges not to obstruct the return of dry-leased aircraft, enabling aircraft owners to obtain speedy assistance from the Nigerian Civil Aviation Authority, and requiring courts to grant relief to creditors seeking to reclaim aircraft within ten days.
Keyamo promised that those measures would facilitate aircraft leasing and improve Nigeria’s compliance with international standards.
He hoped the development would improve the fleet sizes of Nigerian airlines to meet growing passenger demand and potentially lower domestic airfares.
On September 12, the Federal Government signed the Cape Town Convention Practice Directions, causing widespread jubilation among industry stakeholders and operators.
The CTC Practice Direction was signed by the Chief Judge of the Federal High Court, Justice John Tsoho, during a stakeholders’ meeting of the Presidential Enabling Business Environment Council chaired by Vice President Kashim Shettima at the Presidential Villa, Abuja.
Speaking after the signing of the CTC Practice Direction, Shettima said the current administration was a pro-business government ready “to take all the necessary measures, as painful as some might be, to protect, promote, protect and preserve the interest of the Nigerian nation “and preserve and promote the nation’s airline industry”.
He added, “It is a great day for the Nigerian nation. We had fruitful engagements and we were able to cross-pollinate ideas across all sectors and have come up with robust solutions to the challenges facing the aviation industry.
“I want to seize this opportunity to commend my Lord, Justice John Tsoho, and the Chief Judge of the Federal High Court. Judges are, by nature, very conservative people. For him to frontally address the issue and sign the Cape Town Convention Practice Directions, I think, is worthy of commendation.”
To show the commitment of the NCAA to the minister’s struggle, the authority also signed the updated Procedure for Recordation of Irrevocable Deregistration and Export Request Authorisation document, codenamed IDERA, that empowers aircraft lessors to pull out their aircraft from borrowers in Nigeria whenever an airline defaults in agreement.
IDERA empowers the NCAA, based on default to an agreement with any lessor, to immediately ground the leased airline awaiting the lessor’s takeover of such an aeroplane.
Following those new turns of events, the Aviation Working Group hailed Nigeria’s aviation industry, increasing the country’s rating from 70.5 to 75.5 per cent, placing the country in the ‘high category’. This current status exited Nigeria from the watchlist of the AWG.
A correspondence tagged ‘CTC Compliance Index Score adjustment notice’ sent to the minister by the AWG communicating the country’s new ratings stated, “The Nigerian Civil Aviation Authority issued Advisory Circular NCAA-AC- AWS001A (Procedures for Recordation of IDERA and De-registration of Aircraft under an IDERA) in connection with IDERA recordation and enforcement. NCAA-AC-AWS001A, inter alia, (i) prescribes timelines for (a) IDERA recordation and (b) deregistration of an aircraft upon exercise of an IDERA by the authorised party, each consistent with timelines required under CTC.
“(ii) clarifies that documents and actions within the exclusive control of the aircraft operator are not required prior to processing deregistration or export pursuant to an IDERA exercise, and (iii) clarifies that exercise of export remedies pursuant to an IDERA is subject to applicable laws and regulations permitting operation of an aircraft under a ferry or other special flight permit and excludes any requirement for an export certificate of airworthiness. As a result, Nigeria’s variable A score has been increased from 4 to 5,” showing the scoring action to have increased from 70.5 to 75.5.
Commenting on the feat achieved by the minister, industry expert John Ojikutu appealed to the Federal Government to establish two airlines as national carriers and restrict foreign airlines to either Lagos or Abuja. He noted that this would encourage interlining with domestic airlines.
He said, “You don’t have a national carrier nor flag carrier, but private carriers not listed in the stock market. The profits on domestic and BASA routes don’t come to the government but to them and they still return to the government for intervention funds or subsidies. These are the problems in the national economy.
“Designate two airlines as national flag carriers. One for regional and continental and the other for intercontinental. Restrict the foreign airlines to either Lagos or Abuja and not anymore to Lagos and Abuja, but each can have additional airports from alternative geographical locations to the airport of their choice and can interline with domestic airlines for transiting international passengers on their flights. Grade the federal airports into five categories: A, B, C, D and E. For A, charge 100 per cent, B 75 per cent, C 50 per cent, D 25 per cent and E 10 per cent.”
Meanwhile, on October 20, the International Transport Workers’ Federation hailed the Nigerian government on the Global Compliance Milestone of 75.5 per cent ratings by the Aviation Working Group under the International Civil Aviation Organisation, Cape Town Convention.
The ITF General Secretary, Stephen Cotton, made this known in an official email to the Minister of Aviation and Aerospace Development at the closing session of the 46th ITF Congress, held in Marrakech, Morocco.
The ITF Congress is a prominent global gathering of transportation workers and stakeholders, addressing critical issues facing the transport industry worldwide.
“We congratulate Nigeria for attaining a 75.5 per cent compliance score under the International Civil Aviation Organisation-ICAO Convention. This achievement offers Nigeria the platform to further develop a robust regional aviation industry based on the principles of decent work, economic development, and environmental sustainability,” the mail reads.
The forum also acknowledged the leadership and hard work of the Nigerian government, particularly the Minister of Aviation and Aerospace Development, Festus Keyamo.
He said, “We thank the Nigerian government and Honourable Minister Festus Keyamo for his unwavering commitment to driving this progress. We were honoured by his presence at the 46th ITF Congress and look forward to continued collaboration in advancing aviation standards globally.”
