Aviation business, not only in Nigeria, is generally known to be a capital intensive one and strictly guided by international regulations as prescribed by the International Civil Aviation Organisation (ICAO). The ICAO recommended standards and Practices are to be referred to when dealing in aviation business, therefore, Nigeria being a signatory to ICAO should uphold international civil aviation standards and fulfill its obligations under the Convention on International Civil Aviation.
Numerous challenges, including high operating cost; fluctuating exchange rates; difficulties in aircraft repossession; perceived high-risk environment for international financiers and lessors, leading to stringent financing terms or reluctance to engage with Nigerian airlines, have really overwhelmed the sector.
Experts say international lessors often perceive Nigeria as a high-risk country due to factors like currency fluctuations and difficulties in aircraft repossession, making it harder for airlines to secure leases on favourable terms and encountering difficulties in securing financing for aircraft acquisition and maintenance.
“Despite its strategic location, burgeoning population, and role as West Africa’s gateway, Nigeria’s aviation sector struggles to attract investment and secure newer, fuel-efficient aircraft under favorable leasing terms.
According to analysts, domestic airlines continue to shrink in size ‘due to lack of adequate financing and sometimes lack of sincerity among many operators who are not disciplined enough to differentiate between operating funds from personal monies and in the mix they encroach into their capital. This is why many airlines find it difficult to offset their loans, and because of frivolous spending by many operator and other factors, the banks had it as a policy not to give credit facility to airlines’.
Fidelity Bank’s Midas Touch
Not many people were aware that while banks stayed away from the sector, Fidelity Bank placed a bet on Barrister Allen Onyema’s Air Peace brand over 10 years ago.
Air Peace began operations with seven aircraft consisting of three Dornier 328s and four Boeing 737-500. This initial fleet was notably larger than what some other airlines started with. The airline launched on October 24, 2014.
Despite their size and smallness, Fidelity Bank chose to stick with the airline. It provided fund to buy new aircraft from Boeing. In 2018, Dr. Allen Onyema signed an agreement with Boeing for 10 new aircraft, this was financed by Fidelity Bank.
Fidelity Bank provided the funds required for Air Peace’s growth and expansion. Air Peace has scaled up and is now the largest airline in West Africa by fleet and size.
