Festus Keyamo, Minister of Aviation and Aerospace Development, has stated that international aircraft lessors and manufacturers require insurance to be sourced from the international market, not locally, before they can bring aircraft into Nigeria on dry-lease terms.
Keyamo shared this insight during an exclusive interview on the “News Night” program on Channels TV on Sunday, where he discussed the state of the nation’s aviation sector.
He highlighted that the international lessors and manufacturers have reservations about the capacity of Nigeria’s local insurance market to handle the risks involved in dry leases, insisting that this issue must be addressed before they will deliver aircraft to Nigeria.
- “The international lessors and manufacturers are insisting that they will not bring aircraft into Nigeria if the risk is placed in the local market.
- “They insist that the risk must be placed in the international market,” Keyamo said.
The Aviation Minister pointed out a challenge to meeting this requirement, explaining that the National Insurance Commission (NAICOM), the agency responsible for regulating and controlling insurance business in Nigeria, mandates that all risks within the country be insured locally.
More insight
Keyamo acknowledged the importance of local content but noted a significant challenge: for the local insurance market to handle the risks associated with dry lease aircraft arrangements, most local firms would need to seek reinsurance in the international market, which would increase costs for local airline operators.
- “The risk in aviation is so big that most of these local insurance would have to go for reinforcement in the international market once the risk is placed in the local market and this is an extra cost on our local operators,” the Aviation Minister stated.
To address this deadlock, Keyamo revealed plans to initiate discussions with NAICOM to potentially allow an exception for dry lease insurance in the aviation sector, while keeping other aviation-related insurance local.
The Aviation Minister further explained that resolving the insurance issue, along with revising legal guidelines to prevent courts from issuing injunctions that block lessors from reclaiming aircraft from airlines that default on their dry-lease agreements, would encourage international aircraft lessors and manufacturers to bring their aircraft into Nigeria on dry leases.
What you should know
- About a week ago, Festus Keyamo, the Minister of Aviation and Aerospace Development, disclosed that the Aviation Working Group—co-chaired by Airbus and Boeing—has asked Nigeria to revise its legal guidelines to prevent courts from blocking the recovery of aircraft by lessors.
- This change is necessary for Nigeria to be removed from a blacklist that currently hampers local airlines’ access to dry-lease aircraft.
- The Working Group pointed out that the use of court injunctions by airlines to prevent lessors from reclaiming aircraft from defaulting airlines contradicts the regulations of the Cape Town Convention, a globally recognized standard for aircraft leasing, which Nigeria has both signed and ratified.
- Last Monday, during an interview on Arise Television’s “The Morning Show,” Festus Keyamo, the Minister of Aviation and Aerospace Development, announced that the Nigerian government is actively revising legal guidelines.
- This update is intended to prevent courts from issuing injunctions that block lessors from reclaiming aircraft from airlines that fail to adhere to their dry-lease arrangements.
- “We are in the process of drafting a practice direction to satisfy the Aviation World Group that mandates judges not to grant injunctions for detained aircrafts that are on dry lease in Nigeria as it gives Nigeria a bad name and also goes against the Cape Town Convention,” Keyamo had said.
