Nigeria’s aviation sector made a significant shift with the issuance of new Federal High Court Practice Directions, ensuring compliance with the Cape Town Convention and opening up access to dry-leasing for domestic airlines.
The move, announced at a Presidential Enabling Business Environment Council (PEBEC) meeting presided over by Vice-President Kashim Shettima, aims to address years of legal barriers that had made aircraft leasing more difficult for local carriers.
The statement further noted that this development comes after years of local airlines being unable to secure aircraft on more affordable dry-lease agreements due to Nigeria’s blacklisting by the Aviation Working Group.
The blacklisting, a result of non-compliance with the Convention, restricted financing options for airlines.
The new directives now aim to remove these judicial impediments, restoring access to cheaper leasing options and facilitating smoother aircraft acquisitions. This is expected to provide much-needed relief to the aviation sector, which in turn will contribute to job creation and the broader growth of Nigeria’s economy.
“Monumental history was made earlier today as Nigeria became one of the few countries in the world to pioneer the issuance of Practice Directions by the Federal High Court which is vested with the constitutional jurisdiction on Aviation matters. The signing of the Practice Direction was presided over by the Vice-President of Nigeria, Senator Kashim Shettima at the meeting of the Presidential Council of Presidential Enabling Business Environment Council (PEBEC) at the Presidential Villa, Abuja,” the statement read in part.
It added, “The new Practice Directions issued by the Chief Judge of the Federal High Court will eliminate judicial impediments in the implementation and compliance with the Cape Town Convention. This singular move has revolutionised airline business in Nigeria as it will boost investors’ confidence and open the floodgate to Nigeria air operators to have easy access to aircraft acquisition at much lower cost.”
The statement explained that, with the support of the President, Vice-President, and Attorney-General, key judicial institutions were engaged, leading to the signing of new Practice Directions. This ensures creditors can seek relief within 10 days if an airline defaults on its dry-lease payments.
This move follows the Aviation Minister’s recent commitment to Boeing during a U.S. visit, where he promised to reduce Nigeria’s deregistration process for defaulted leased aircraft from five days to four under the Cape Town Convention.
What you should know
A dry-lease is an aircraft leasing arrangement where the lessor provides the aircraft, but the lessee (the airline) is responsible for all operational aspects, including crew, maintenance, fuel, and insurance. This arrangement allows airlines to expand their fleets without the upfront costs of purchasing planes and is typically used for medium- to long-term leasing.
In recent months, Aviation Minister Festus Keyamo has worked to secure more favorable dry-lease terms for Nigerian airlines, aligning with global practices.
His efforts focus on addressing two key challenges: the need for international insurance before aircraft can be brought into Nigeria under dry-lease terms and amending the legal framework to allow lessors to repossess aircraft from defaulting airlines without court interference.
The Aviation Working Group, co-chaired by Airbus and Boeing, had previously flagged these issues as violations of the Cape Town Convention.
With the new Federal High Court Practice Directions ensuring compliance with the Cape Town Convention, the first challenge has been resolved.
Keyamo has also noted that efforts are ongoing to address the insurance requirement.
Recently, he led a delegation of major Nigerian airlines to sign an MoU with Boeing in the U.S., aimed at enhancing aircraft acquisition and safety practices in the aviation industry.
