Access to single-digit interest rate, key to airlines’ survival-Onyema

Chairman of Air Peace, Mr. Allen Onyema, has stated that the survival of the country’s carriers is tied to access to single-digit interest loans, stressing that “no airline will fail in the country if given such funding support.

He called for a complete overhaul of aviation financing in Nigeria, warning that the current system, where airlines borrow at interest rates as high as 35% is “a death sentence” for the industry.

Speaking at the 29th annual conference of the League of Airport and Aviation Correspondents (LAAC) in Lagos, Onyema said the aviation sector, being capital-intensive with low returns on investment globally, should be treated differently from other sectors of the economy.

Onyema backed proposals for the Federal Government to act as a sovereign guarantor for airline loans, both locally and internationally, but cautioned that operators must first engage in self-introspection to ensure sustainable business models.

According to him, airlines should clearly define their operational focus, whether premium or budget service, and avoid over-borrowing.

He revealed that the government, through the Ministry of Aviation and Aerospace Development, is working on establishing a leasing company to procure aircraft and lease them to Nigerian carriers at more affordable rates.

The Air Peace boss lauded President Bola Tinubu and the Minister of Aviation and Aerospace Development, Mr. Festus Keyamo for their efforts to ease the burden on operators, including a review of multiple charges and taxes that have long strained the industry.

He noted that while some of these levies are imposed by the executive arm, others originate from the legislature, but assured that ongoing engagements are yielding positive results.

He decried the international stigmatisation of Nigeria, which he said has unfairly inflated insurance premiums for local airlines.

“What is used to insure eight planes abroad is what they use to insure just one here,” he lamented, describing the perception of Nigeria as unsafe as “a lie” and “grossly unfair.”

Onyema expressed optimism that with government support, favourable policy reforms, and improved global perception, the financial fortunes of Nigerian airlines could change drastically within the next year.

He noted that the absence of proper transit facilities at key airports has long hindered the country’s ability to function as a true regional hub, thus costing airlines a fortune, and increasing travel expense to passengers and loss of revenue to the airports.

Airlines operating in West and Central Africa, he explained, lose a competitive edge due to the hassles in connecting passengers who are subjected to immigration clearance, customs checks, and recheck of baggage merely for the sake of transit through Nigeria, a process that is a disincentive to use our airports while smaller African countries are beating us to that plum hub prospect.

Onyema noted that the lack of seamless connectivity has particularly affected the ability of domestic carriers to integrate regional routes into global connections.

He expressed confidence in the administration’s commitment, noting that with sustained focus, the country could, within two years, possess the infrastructure needed to compete with Africa’s leading aviation hubs.

He emphasised that such infrastructure upgrades act as a form of indirect financing for airlines by reducing operational inefficiencies, cutting avoidable costs, and creating conditions for sustainable expansion.

The airline chief noted that, with the right facilities in place, Nigerian carriers could match the success of leading African airlines within the next decade.

Wole Shadare