CTC: Airline operators project lower cost of operations

Shettima vows increased support for local carriers

Airline Operators of Nigeria (AON) has asserted that recent move by the Federal Government to implement the Cape Town Convention (CTC) will drastically reduce cost of operations for airlines operating on Nigeria.

Meanwhile, Vice President Kashim Shettima has reiterated commitment to support AON members with the implementation of the Convention to unlock investment opportunities in the aviation industry.

The Chairman of Air Peace, Allen Onyema, while speaking on the sidelines of the 2024 Aviation Ministry Conference on the Convention on International Interests in Mobile Equipment and the Protocol on Matters Specific to Aircraft Equipment, yesterday, in Abuja, organised by the Nigeria Civil Aviation Authority, (NCAA), said the CTC would enable them access  dry leases aircraft.

Onyema said: “Before now, it was difficult for Nigerian airlines to increase their capacity without difficulty. Most airlines in the world depend on dry lease, because all they do is go to equipment manufacturers like Boeing, Airbus among others and specify the aircraft they want. The lessors buy the aircraft and lease them to the airlines, which is why a foreign airline can have a fleet of up to 800 to 1,000 airplanes.

“But in Nigeria, we have to amass our money in cash before we buy an aircraft because we were unofficially blacklisted due to incidences in the past where people default in payment and Nigerians run to court to prevent the aircraft from being taken by the lessors.”

He stated that private operators in Nigeria were trying because the money used in buying an airplane can could up to 50 planes on dry lease.

Onyema pointed out that the signing of Practice of Direction by President Tinubu empowered them and ensured that whenever an airline defaulted in payment, the owners could apply to the NCAA and  withdraw their aircraft within five days

He said: “The least aircraft cost about $120 million to $160 million. With dry lease, that money can fetch me about 40 planes because every month we will be paying $200,000. But if it is wet lease, we pay $2 million every month, which goes into the cost of operations and trickles down to passengers.”

The Chairman of United Air Nigeria, Prof. Obiora Okonkwo, stated that AON was happy, as the minister embarked on the transformation of the sector, adding that the CTC would take Nigeria back to the global aviation stage, increase access to aircraft leasing, and remove all the road blocks before now.

According to Okonkwo, by the time there are more aircrafts, we cover more routes, have more efficient services, passengers will have lower air tickets.
SHETTIMA maintained that the Tinubu administration made it a focal point to support the growth of local airline operators.

Represented at the event by the Minister of Aviation and Aerospace Development, Festus Keyamo, the Vice President noted that there had been high mortality of airlines, as more than 100 airlines had gone under in the last 40 years due to lack of government support.

He maintained that the Tinubu government was taking a new direction with the recently issued Federal High Court Practice Directions and Advisory Circular on the CTC, which aligns with international best practices.

Stating that the convention has not only enhanced Nigeria’s aviation global standing,
Shettima said it also opened doors to increased investment and growth in aviation financing.

Implementation of the CTC alongside the Practice of Direction further increased confidence of lessors and financiers in Nigeria and then enable airlines to get get aircraft on dry lease, he added.

“Wet lease is a nightmare for many Nigerian airlines, as it is three times more expensive than dry lease, and the ripple effect is the reduction in flight cost, reduced cancellations and delays of flight,” he stated.

Acting Director-General, NCAA, Capt Chris Najomo, said the theme of the conference underscored the importance of the CTC and its Aircraft Protocol as essential instruments for promoting growth, stability and resilience in the aviation industry.