Nigeria identifies wet lease, others as obstacles to carriers’ growth

• NANTA seeks Minister’s intervention in travel trade market
• Trans-boarder ticket sales shrink domestic market by 40% 

For many years, Nigerian airlines have been faced with the challenge of getting aircraft on a dry-lease agreement which has put enormous strain on their operations as airplanes are only available to the operators on a wet-lease basis with huge attendant costs.

Faced with the situation that has led to the shrinking of the country’s domestic aviation market leading to little more than 30 aircraft in the fleet of about 11 carriers, the Minister of Aviation and Aerospace Development, Mr. Festus Keyamo voiced his concern about the situation which he said has hampered the operators from competing favourably and meet surging air travel demand.

Virtually all Nigerian carriers are said to have a clean bill of health with their creditors. Still, the actions in the past by some airlines that have gone into extinction have rubbed off negatively on many of the existing carriers in the areas of securing airplanes on a dry-lease basis which comes with stringent conditions and high costs attached to the agreement. In contrast, dry-lease is almost nonexistent despite the relative health of the carriers.

A dry lease is an agreement for leasing an aircraft without any accompanying crew, maintenance, or insurance.

Essentially, the lessee (the operator) acquires the “bare” aircraft and is responsible for all operational aspects.

This type of lease offers greater flexibility and control to the lessee while under a wet lease, compensation paid for the lease is the payment for an air transportation service, similar to riding in a taxicab. Conversely, a “dry lease” is therefore the lease of an aircraft without any crewmembers.

The Minister, during a meeting with the President and executive members of the National Association of Nigeria Travel Agencies (NANTA) in Abuja, stressed the necessity of opening the market for dry leasing of aircraft to Nigerian operators, identifying wet leasing as a major obstacle to sustainable growth.

The Minister had recently lamented that Nigerian airline operators are disadvantaged and would find it extremely difficult to compete with their foreign counterparts because lack of access to finance and the high interest rate charged by banks on loans.

Speaking a few months ago for the first time on the blacklist of Nigeria by aircraft lessors because of default by airline operators in the past and the difficulty of the aircraft owner retrieving their equipment, Keyamo expressed sadness over the action of the offenders, explaining that the action is in contravention of the Cape Town Convention which Nigeria is a signatory to.

Keyamo disclosed that the Federal government was working with the Aviation Working Group on a practice direction to enable domestic airline operators to dry lease aircraft.

He pledged to address the travel trade industry’s concerns and emphasised the need to empower Nigerians to revitalize the sector.

He reiterated his commitment to restoring the aviation industry’s former glory, highlighting his recent visits to aircraft manufacturing companies to assist local investors in acquiring aircraft.

Keyamo called on NANTA to continue supporting the government’s efforts to create jobs and empower Nigerians.

NANTA President, Mr. Yinka Folami, lauded Keyamo for his determination to reform the sector and assured him of NANTA’s ongoing support and collaboration.

The NANTA President also requested the minister’s intervention to ensure equity and fairness in the travel trade market, noting a significant 40% shrinkage due to unregulated cross-border trading by foreign merchants and their local partners.

The NANTA president urged the government to implement policies to curb these unethical practices and impose necessary sanctions to prevent economic sabotage.

He emphasised that while NANTA had no issues with global players in the market, they must engage fairly and stop encroaching on global fares, which negatively impacts the Nigerian economy and travellers.

Wole Shadare