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Industry Calls for Supportive Environment to Improve Aircraft Leasing Efficiency

Industry Calls for Supportive Environment to Improve Aircraft Leasing Efficiency
Launch of Nigerian Aircraft Leasing Company SPV
The Federal Government’s establishment of the Nigerian Aircraft Leasing Company (NALC) Special Purpose Vehicle (SPV) represents a pivotal effort to enhance access to aircraft for local airlines. Aviation expert Samuel Caulcrick regards the initiative as a promising, private sector-driven platform that could enable domestic and regional operators to secure aircraft through a credible local institution, thereby reducing reliance on direct negotiations with international lessors. The SPV is structured to receive funding from both local and international financial institutions, banks, and technical partners, with the Federal Government providing sovereign guarantees and holding equity through the Ministry of Finance Incorporated (MOFI).
While the sovereign guarantee addresses investor concerns regarding the security of funds, Caulcrick cautions that it does not guarantee the returns investors expect. He highlights persistent structural challenges within Nigeria’s aviation sector that could undermine the profitability of the SPV and the ability of airlines to meet lease obligations. These challenges include sluggish passenger traffic growth, high operating costs, multiple taxes and charges, absence of fuel hedging mechanisms, and economic pressures on passengers’ disposable incomes.
Structural and Regulatory Challenges
The concerns raised by Caulcrick reflect broader industry difficulties. Regulatory obstacles such as discriminatory airport access and evolving decarbonization requirements have been identified by organizations like the European Business Aviation Association (EBAA) as factors that disadvantage operators and increase compliance costs. In response, market participants may intensify scrutiny of regulatory frameworks, while competitors might establish new leasing entities similar to the NALC to reduce costs and dependence on foreign suppliers. Additionally, bureaucratic delays in setting standards for emerging technologies, including electric propulsion, risk impeding innovation and further complicating the operating environment.
Caulcrick, a former Rector at the Nigerian College of Aviation Technology (NCAT), Zaria, underscores that although the government is not injecting direct capital into the NALC, it plays a critical role in fostering an investor-friendly climate. He advocates for a review of regulatory charges, particularly the percentage-based Ticket Sales Charge (TSC), suggesting a shift to fixed per-passenger fees to better align regulatory revenues with industry growth. He also calls for measures to alleviate foreign exchange constraints, such as frameworks enabling airlines to access dollars for leasing and maintenance at predictable rates.
Further recommendations include revising landing, parking, and navigation charges to align with regional benchmarks and introducing mechanisms for airlines to hedge against fuel price volatility or participate in bulk fuel procurement, given that fuel remains a major cost driver.
Potential and Path Forward
Caulcrick supports the decision to structure the leasing company as a Special Purpose Vehicle, noting that this model offers greater flexibility and positions the NALC as a centralized platform for aircraft acquisition and leasing. However, he emphasizes that the initiative’s full potential can only be realized through targeted reforms and a supportive regulatory environment capable of attracting the investment necessary to transform Nigeria’s aviation sector.

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