Nigerian carriers violate Cape Town pact

•       Aircraft lease rental may triple
•       Lessor may blacklist country’s airlines

There are indications that two Nigerian carriers (names withheld) have refused aircraft lessors to re-possess their aircraft after defaulting in lease payment for the equipment, thereby violating the Cape Town Convention agreement, which Nigeria is a signatory.

The two carriers have inexplicably gone to court to seek injunction stopping the aircraft owners from taking their airplanes.

This, however, stakeholders said, would have a damaging trust effect on the country’s aviation industry, which could lead aircraft lessors to go back to pre-2006 when Nigerian airline operators could not be trusted.

Woleshadarenews gathered that some Nigerian airlines run 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.

Aviation consultant and former spokesman for liquidated Nigeria Airways, Mr. Chris Aligbe, disclosed that two airlines are already in court to frustrate moves by owners of the aircraft to retrieve their airplanes; a situation he said is damaging to the reputation of the sector, which former Director-General of the Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren, worked hard to rectify through the Cape Town Convention, which Nigeria is a signatory.

Aligbe also noted that airlines are going through tough times because of owner-management syndrome, which he noted has done incalculable damage to the airline business in the country.

A source in the NCAA, however, said it is an exercise in futility for any defaulting airline who wish 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.

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Wole Shadare