FEC Approves Nigerian Aircraft Leasing Company To Support Domestic Airlines
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 in 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 drive the initiative.
According to the minister, the proposed leasing company will be financed through a partnership involving 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 explained that Nigeria’s aviation industry is predominantly driven by private operators, unlike many African countries where airlines are state-owned or heavily subsidised. He noted that the new leasing firm would acquire aircraft and lease them to domestic carriers under naira-denominated arrangements, thereby reducing airlines’ exposure to foreign exchange volatility and high financing costs.
The minister added that the structure of the initiative was designed to strengthen investor confidence through improved regulatory frameworks governing aircraft repossession and operational safety, rather than relying on 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, with the bank earmarking a $7 billion support facility for the initiative across Africa.
According to Keyamo, discussions with international stakeholders are ongoing, while additional 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 struggled to access affordable aircraft financing.
He explained that concerns surrounding aircraft repossession and regulatory enforcement had previously discouraged international financiers from supporting Nigerian airlines, although recent reforms tied to the Cape Town Convention and aviation insurance frameworks have helped improve investor confidence.
Uriesi noted that while airlines in other markets often secure aircraft financing at significantly lower interest rates, Nigerian operators continue to face substantially higher borrowing costs, limiting competitiveness and expansion opportunities.
Industry stakeholders believe the initiative could increase aircraft availability, improve route reliability, and help moderate rising airfares over time.
Keyamo also acknowledged that rising aviation fuel prices and foreign exchange pressures have increased operational costs across the industry, but maintained that the Federal Government remains committed to 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.
