The Federal Executive Council (FEC) has approved the establishment of a Nigerian aircraft leasing company aimed at addressing the persistent shortage of aircraft affecting domestic airlines and reducing operational costs within the aviation sector.
Minister of Aviation and Aerospace Development, Festus Keyamo, disclosed this on Tuesday in Abuja during a meeting with airline operators and industry stakeholders following the Council’s approval of a Special Purpose Vehicle (SPV) to implement the initiative.
According to the minister, the proposed leasing company will be backed by international investors, development finance institutions, and private sector financiers.
The initiative is expected to improve access to aircraft for Nigerian airlines through more affordable leasing arrangements.
Keyamo noted that Nigeria’s aviation industry is largely driven by private operators, unlike many African countries where airlines are state-owned or heavily subsidised.
He explained that the leasing firm would acquire aircraft and lease them to domestic carriers in naira-denominated arrangements, thereby reducing airlines’ exposure to foreign exchange volatility and high financing costs.
The minister stated that the structure of the initiative is designed to reassure international financiers through stronger regulatory frameworks governing aircraft repossession and operational safety, rather than direct sovereign guarantees.
He further revealed that the African Development Bank has identified Nigeria as one of the pilot countries under its continental aviation financing programme.
According to him, the AfDB has earmarked a $7 billion support facility for the initiative across Africa.
Keyamo added that discussions with international stakeholders were ongoing and that further agreements are expected to be signed during upcoming aviation meetings in Brazil.
The minister linked the initiative to recurring flight delays and cancellations in Nigeria, stressing that many domestic airlines currently operate with insufficient aircraft capacity.
“Our objective is to support airlines with policies that enhance operational efficiency and service delivery. Airlines lose significant revenue whenever flights are cancelled,” he said.
Chief Executive Officer of Ibom Air, George Uriesi, described the development as a major boost for the aviation industry, noting that Nigerian carriers have historically faced challenges accessing affordable aircraft financing.
He explained that concerns over aircraft repossession and regulatory enforcement previously discouraged international financiers from supporting Nigerian airlines, although recent reforms tied to the Cape Town Convention and aviation insurance frameworks have improved investor confidence.
Uriesi stated that airlines in other markets often secure aircraft financing at significantly lower interest rates, while Nigerian operators contend with substantially higher borrowing costs, limiting competitiveness and expansion.
Industry stakeholders believe the initiative could increase aircraft availability, improve route reliability, and help moderate rising airfares over time.
Keyamo acknowledged that rising aviation fuel prices and foreign exchange pressures have increased operational costs across the industry, but maintained that the Federal Government remains focused on long-term structural reforms to strengthen the sector.
He added that incorporation of the leasing company is expected within the coming weeks, while financial and operational arrangements with investors and development partners are being finalised.