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Dry-Lease Option Offers Relief for Carriers

Dry-Lease Option Offers Relief for Carriers
Renewed Opportunities in Nigeria’s Aviation Sector
The aviation industry in Africa continues to face significant challenges, particularly for airlines operating with limited working capital. In Nigeria, however, a promising development has emerged as the Federal Government reopens access to dry-lease arrangements. This policy shift is expected to empower local carriers by enhancing operational efficiency and reducing reliance on costly alternatives.
For more than ten years, Nigerian airlines have struggled to secure affordable dry leases. Many lessors withdrew from the market due to repeated breaches of lease agreements and the perception of high risk associated with Nigerian operators. Consequently, carriers have depended heavily on wet leasing—contracts that provide aircraft along with crew, maintenance, and insurance (ACMI). While wet leasing ensures operational continuity, it has resulted in substantial capital flight and constrained profitability for domestic airlines.
Capt. Ado Sanusi, Managing Director of Aero Contractors, underscored the economic disadvantages of wet leasing, noting the prevalence of foreign aircraft and crews operating within Nigeria. He argued that this trend is detrimental to the national economy and called for a deliberate government strategy to domesticate leasing companies. Sanusi proposed collaboration with international banks and financiers under the oversight of the Ministry of Finance to facilitate the sustainable introduction of aircraft into the country.
Government Role and Industry Reforms
Government intervention is widely regarded as essential to advancing the sector. Sanusi emphasized that supporting and investing in a domestic leasing company would help curb capital flight and alleviate the chronic shortage of operational equipment faced by Nigerian airlines.
Recent reforms have signaled a new chapter for the industry. Nigeria’s alignment with international compliance standards has encouraged lessors to reconsider dry-lease agreements with local carriers. The Minister of Aviation and Aerospace Development, Festus Keyamo, has been instrumental in this transformation. His efforts to dismantle barriers—such as stringent international insurance requirements and legal ambiguities—have been pivotal. Notably, the signing of the Irrevocable Deregistration and Export Request Authorisation (IDERA) has provided lessors with greater confidence by ensuring their ability to repossess aircraft from defaulting airlines.
Challenges and Market Dynamics
Despite these positive strides, the sector faces ongoing challenges. Volatile fuel prices, geopolitical tensions—including disruptions to shipping routes and incidents like satellite signal jamming near Iran—and evolving regulatory frameworks continue to pose risks. These factors highlight the necessity for flexible leasing arrangements that enable carriers to respond swiftly to shifting market conditions.
Market responses indicate a growing demand for such adaptability, as airlines seek to mitigate operational risks and maintain service reliability. In turn, competitors are likely to enhance their leasing programs or offer more competitive terms to capture market share. The renewed emphasis on dry leasing offers Nigerian airlines a cost-effective avenue for fleet expansion and better positioning to navigate the uncertainties of the global aviation environment.
As Nigeria’s aviation sector embraces these reforms, the dry-lease option emerges as a strategic instrument to strengthen local carriers, reduce capital outflows, and build a more resilient industry amid persistent global challenges.

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