Airline Operators Seek Stronger Policies, Long-Term Financing from FG
Nigerian airline operators have called on the federal government to implement policies and strengthen regulations that would make the aviation sector more attractive to financial institutions offering long-term, single-digit interest loans.
The operators also requested the creation of a special portfolio arrangement that would allow carriers to access long-term, low-interest financing from the Bank of Industry (BOI) for aircraft acquisition.
Captain Roland Iyayi, a trustee member of the Airline Operators of Nigeria (AON), told THISDAY that while Nigerian banks are showing renewed interest in aviation, they remain averse to long-term project financing or investments requiring extended amortisation.
"In my view, Nigerian banks have an appetite for retail financing rather than long-term investments," Iyayi said. "They prefer short-term funding structures over arrangements spanning five to ten years. The government is building confidence, but we are not yet at a point where we can applaud them."
The operators emphasised that airline businesses are capital-intensive and noted that in many countries, governments provide funding incentives to encourage banks to offer long-term, single-digit loans to carriers.
The administration of President Bola Tinubu has taken steps, including legislative actions, to improve aircraft leasing for Nigerian carriers, which previously relied almost exclusively on wet leases. These measures are expected to boost Nigerian banks' confidence in the aviation sector.
However, Captain Ado Sanusi, Managing Director and CEO of Aero Contractors, told THISDAY that while efforts to fast-track lessor confidence are welcome, lessors may worry about policy continuity under future administrations.
"Government should focus more on policies and regulations that strengthen the industry," Sanusi said. "If institutions are sound, lessors will be more confident that a strong system exists for the long-term recovery of their equipment in case of disputes. That way, trust grows organically rather than being rushed."
He added that a robust regulatory framework would also encourage stronger bank participation. He criticised current lending practices where banks charge interest rates of 23 to 30 per cent, calling such terms unsustainable for Nigerian carriers. He also noted that even when airlines secure international credit, servicing dollar-denominated loans with naira revenues remains a major hurdle.
"Government could introduce a policy allowing airlines to access long-term, low-interest loans from the Bank of Industry, specifically for aircraft financing," Sanusi said. "Many countries do this to support their airlines, recognising the vital role air transport plays in economic development."
On the other hand, Stanley Amuchie, Executive Director of Fidelity Bank, said banks have renewed their interest in the aviation sector. He disclosed that Fidelity Bank has entered a strategic partnership with Frankfurt-based Aircraft Finance Germany (AFG) to streamline aircraft leasing and acquisition.
"We are working to improve aviation financing and leasing," Amuchie said. "AFG specialises in aircraft financing, sourcing, and leasing. We decided to partner with them. We are already financing most of the major airlines in Nigeria. This partnership brings together finance and technical expertise, combining AFG's know-how with our financing capabilities."