Aviation treaty default hampers quest for newer aircraft
The difficulties encountered by Nigerian carriers from acquiring newer air planes from lessors have been attributed to inability of carriers to abide by law governing the Cape Town Convention, according to the Managing Director of Spring Fountain, Mr. Tunde Fagbemi.
Fagbemi was also the Chairman of Maevis Aviation Limited, a travel solution firm that helped in seamless passenger facilitation at most of the nation’s airports.
He stated that until that it is done, any one attempting to bring in aircraft into the country would be wasting his time, adding that until there is a strict observance to the law, they themselves would be in serious limbo in bringing in air planes.
Lack of newer air planes in recent times with the exception of Air Peace, which ordered 10 brand new B737MAX, many of the airlines acquire outright B737 classic or relatively older aircraft.
His words: “Non-observant of Cape Town Treaty has prevented us from bringing in new aircraft into this country. The quality of share capital and lack of corporate governance is also the problem of the airlines.
“Until we obey the law guiding this protocol, lessors will find it difficult leasing aircraft to Nigerian operators. The Nigerian Civil Aviation Authority (NCAA) has realised the need to ensure that the law guiding the protocol is followed by airlines,” he added.
The Cape Town Convention on International Interests in Mobile Equipment, or Cape Town Treaty is an international treaty intended to standardise transactions involving movable property.
The treaty creates international standards for registration of contracts of sale (including dedicated registration agencies), security interests, leases and conditional sales contracts, and various legal remedies for default in financing agreements, including repossession and the effect of particular states’ bankruptcy laws.
Woleshadare.net gathered that some Nigerian airlines ran to local court to get injunctions to stop lessors from taking back their aircraft and, according to industry sources, the Nigerian Civil Aviation Authority (NCAA) allegedly do not assist the lessor in accordance to the Cape Town Convention.
This could also make insurance firms and aircraft lessors to increase premium and lease rental for Nigerian operators to be more than three times the normal rate, because of the fear of retrieving their equipment quickly in the event of a default.
Also, the dwindling of the sector, particularly the fortunes of the carriers, has equally made lease rentals to be on the high side because foreign firms do not trust Nigerian operators enough with their equipment.
A source in the NCAA, however, said it was an exercise in futility for any defaulting airline that wishes to go to court, noting that since Nigeria is a signatory to the international protocol, doing so would amount to ‘time wasting.’
Added to this is the belief in the international aviation sector that Nigerian operators lack skills in negotiating for aircraft lease, which has led to most airlines to be on the receiving end. Most local airlines are said to lack the ability to understand minimum flight hour and engine cycles for aircraft under lease.
In 2012, due to frequent air mishap, which claimed the lives of passengers and crew members including lack of faith in the country’s aviation sector, major aircraft leasing firms such as GE Capital Aviation Services (GECAS), International Lease Finance Corporation (ILFC), Cab Tree and Aercap raised lease on aircraft to Nigerian airlines by over 40 per cent and above.
The lease had remained stable and later slightly reduced from 2006 to a few years ago following near impeccable safety recorded in the aviation industry and the implementation of Cape Town Convention.
The Cape Town Convention on International Interests in Mobile Equipment, or Cape Town Treaty is an international treaty intended to standardise transactions involving movable property.
Three protocols to the convention are specific to three types of movable equipment: Aircraft Equipment (aircraft and aircraft engines; signed in 2001), railway rolling stock (signed in 2007) and space assets (signed in 2012). The treaty resulted from a diplomatic conference held in Cape Town, South Africa in 2001.
The conference was attended by 68 countries and 14 international organisations. Fifty-three countries signed the resolution proposing the treaty. The treaty came into force on April 1, 2004 and has been ratified by 57 parties.
The Aircraft Protocol (which applies specifically to aircraft and aircraft engines) took effect on 1 March 2006 when it was ratified by eight countries: Ethiopia, Nigeria, Ireland, Malaysia, Oman, Panama, Pakistan and the United States.
