The President of the Aircraft Owners and Pilots Association of Nigeria (AOPAN), Alex Nwuba, has dismissed calls for the establishment of a specialised aviation bank to provide airlines with single-digit interest loans.

Nwuba, in an interview with The Guardian in Lagos yesterday, said that such a model would be economically unsustainable.

Nwuba, who is also the 2nd Vice President of Aviation Round Table (ART), said that the persistent demand by operators for government-backed low-interest financing indicated a misunderstanding of basic macroeconomic realities and risks creating further distortions within the aviation sector.

According to him, the idea of creating a dedicated aviation bank to provide subsidised loans to airlines was “dead on arrival” insisting that it negated fundamental principles of risk management and banking operations.

Nwuba explained that aviation is one of the most capital-intensive and volatile industries globally, making it dangerous for any financial institution to concentrate its entire loan portfolio within the sector.

He said: “As a structural concept, this proposal is entirely dead on arrival, serving as a textbook example of trying to invent a financial instrument to solve an operational governance crisis.

“A bank whose entire asset portfolio is concentrated in a single, notoriously volatile, capital-intensive and low-margin industry violates every basic tenet of risk management.

“If a global fuel spike or domestic currency devaluation hits the sector, the entire loan book goes toxic simultaneously, turning the institution into a guaranteed vehicle for non-performing loans.”

He argued that most aviation assets, including aircraft and spare parts, are priced in foreign currencies, saying that a locally funded aviation bank would struggle to provide sustainable long-term financing at single-digit interest rates.

According to him, any attempt to lend foreign currency-denominated funds at subsidised rates would ultimately weaken the bank’s balance sheet and encourage poor financial practices among operators.

The aviation expert stressed that domestic commercial banks could not offer single-digit interest rates when the country’s monetary environment remained characterised by high lending costs.

He declared that local banks operate within economic realities that made low-interest lending virtually impossible.

According to him, the challenge facing Nigerian airlines was not the absence of specialised banks, but the inability of many operators to position themselves for access to international capital markets.

Rather than seeking government intervention, Nwuba urged aviation businesses to strengthen their corporate structures, improve governance standards and embrace global best practices that would make them attractive to foreign investors and development finance institutions.

Nwuba canvassed the use of offshore financing structures, partnerships with global lessors, development finance institutions and access to international debt markets where funding rates were significantly lower than those obtainable within Nigeria.

He posited that international lenders were willing to provide financing at rates as low as three to four per cent, but only to companies that demonstrated strong corporate governance, financial transparency and effective risk management systems.

The AOPAN President also condemned the tendency of some corporate leaders to seek government protection rather than building resilient and competitive business models.

He warned that public demands for subsidised funding sent negative signals to international investors, raising concerns about the financial sustainability of businesses seeking such interventions.

According to him, enterprises that depended heavily on government support rather than operational efficiency risked undermining investor confidence and limiting their ability to attract foreign capital.

He further faulted regulators for failing to challenge unrealistic demands from industry players, arguing that regulatory agencies should focus on promoting institutional discipline and long-term sustainability rather than endorsing economically unviable proposals.