The unveiling of the Nigerian Aircraft Leasing Company (NALC) Special Purpose Vehicle (SPV) by the Federal Government is a significant step towards improving access to aircraft for local airlines, an aviation expert, Samuel Caulcrick, has said.

Speaking with The Guardian yesterday, Caulcrick, however, warned that the initiative may struggle to attract sustainable investment without reforms in the aviation operating environment in the country.

According to Caulcrick, the concept of a Nigerian-backed aircraft leasing platform was good and could help domestic and regional operators secure aircraft through a credible local institution, rather than negotiating individually with international lessors.

He expressed that information available to the public indicated that the SPV was designed as a private sector-driven initiative, funded by local and international financial institutions, banks and technical partners, while the Federal Government’s role was largely limited to providing sovereign guarantees and holding equity through the Ministry of Finance Incorporated (MOFI).

He noted that while the sovereign guarantee addresses concerns about the security of invested funds, it did not automatically guarantee the returns investors expect.

Caulcrick posited that Nigeria’s aviation market still faces several structural challenges that could affect the viability of the leasing company if left unresolved.
He mentioned sluggish passenger traffic growth, high operating costs, multiple taxes and charges imposed on airlines, absence of fuel hedging mechanisms and the impact of economic pressures on passengers’ disposable incomes.

According to Caulcrick, who was also a former Rector at the Nigerian College of Aviation Technology (NCAT), Zaria, these factors could undermine airlines’ ability to generate the cash flows needed to meet lease obligations and ensure profitability for investors backing the SPV.

He maintained that although the Federal Government was not injecting direct capital into the project, it still had critical roles to play in creating conditions that make the aviation sector attractive to investors.

He urged government authorities to review regulatory charges, particularly the percentage-based Ticket Sales Charge (TSC), recommending a shift to fixed per-passenger fees that would better align regulatory revenues with industry growth.

He also called for measures to reduce foreign exchange challenges facing airlines, including the establishment of a framework that would enable operators to access dollars for aircraft leasing and maintenance at predictable exchange rates.

Besides, he canvassed a review of landing, parking and navigation charges, among others to bring them closer to regional benchmarks and improve airline competitiveness.

Caulcrick recommended the introduction of a framework that would allow airlines to hedge against fuel price volatility or participate in bulk fuel procurement arrangements, noting that fuel remains one of the largest cost components for carriers.

He also approved the decision to structure the leasing entity as a Special Purpose Vehicle rather than a traditional corporation, saying the arrangement offered greater flexibility and enables the organisation to function as a centralised platform for aircraft acquisition and leasing.