Blacklisted
International aircraft lessors have blacklisted at least 13 Nigerian airlines because they did not pay their lessor fees as per their…
International aircraft lessors have blacklisted at least 13 Nigerian airlines because they did not pay their lessor fees as per their contract terms. Additionally, some of these airlines took international lessors to court and failed to return the leased aeroplanes when requested. According to BusinessDay, the blacklisted domestic airlines are Aero, Air Peace, Arik, Azman, Dana, Green Africa, Ibom Air, Max Air, NG Eagle, Overland, Reno Air, United Nigeria Airline and Value Jet. Lessors who have blacklisted Nigerian airlines include Planesense, Jetcraft, AerCap, Air Lease Corporation, and Avolon, among others. The development has since impacted the operations of local carriers. Some of the airlines denied the report on Thursday.
As with all other industries, the airline industry cannot be insulated from country risk. Businesses operating in Nigeria and intending investors must remember the increased risk that comes with the Nigerian package. Leasing is not unusual in the airline business; Air Peace, which can be regarded as one of the most successful airlines of Nigerian origin, depends on leased aircraft for most of its foreign flight operations, including its popular Lagos-to-London route. This loss of leased aircraft will no doubt worsen an already bad situation since airlines have fewer aircraft for local and foreign flights. Aircraft lessors hold significant power in the industry as they provide emerging airlines with aeroplanes and crew, facilitating easy entry into the sector. The average price for a one-leg journey on the popular Lagos-Abuja route, which sold for between ₦55,000 and ₦65,000, now goes for as high as ₦162,000, causing significant strain for passengers and airline operators. United Nigeria Airlines says the decision to blacklist Nigerian airline operators is due to issues like country risk and the relationship with previous operators. This issue is also playing out in the financial sector, where lax anti-money laundering and counter-terrorist financing regulations have caused Nigeria to be listed as one of the Jurisdictions under Increased Monitoring (Grey List), which means limited access to the global financial network, increased scrutiny and higher compliance costs. The chairman/CEO of United Nigeria Airlines, Obiora Okonkwo, told BusinessDay that Nigerian airlines are suffering from “betrayal from lessors.” It is unclear what betrayal means from lessors who are trying to recover assets used to secure the lease agreements. The airlines are, of course, within their rights to go to court, as are the lessors to seek to repossess securities. It is now crucial to take a step back and critically assess Nigeria’s aviation sector to unravel why it continues to struggle on different fronts. Different ministries under the Bola Tinubu administration certainly have their work cut out for them as they try to treat old wounds while figuring out what legacies they want to be remembered for.