The Chief Operating Officer (COO) of Bi-Courtney Aviation Services Limited, Mr. Remi Jibodu, has raised concerns over the challenges facing Nigerian airlines, warning that high interest rates and inflation could undermine their profitability despite the implementation of the Cape Town Convention (CTC) Practice Direction. Jibodu made the remarks during a courtesy visit by members of the League of Airport and Aviation Correspondents (LAAC) to the company’s office.
The Cape Town Convention, which Nigeria recently adopted, is designed to facilitate aircraft leasing by reducing risks for lessors and making it easier for airlines to access aircraft. However, Jibodu highlighted that the high cost of borrowing and inflationary pressures in Nigeria could negate the benefits of the convention.
Financial Challenges for Airlines
Jibodu explained that the current economic environment poses significant hurdles for Nigerian airlines. “In Nigeria, unless you have private funds, if you look at the financial institutions, vis-a-vis what is happening in the industry now, you have interest rates of about 30 per cent plus and inflation is about 24.7 per cent or thereabouts,” he said.
He emphasized that the high cost of borrowing makes it difficult for airlines to break even, particularly when lease agreements are factored in. “It means that if you are borrowing money from the bank, it is going to be very difficult for you to break even, especially when they are putting the cost in terms of lease agreement on you,” Jibodu added.
Impact on Aircraft Leasing
Jibodu noted that while the Cape Town Convention encourages airlines to dry lease aircraft, the financial burden of lease agreements remains a major challenge. He revealed that some airlines have had to return aircraft due to their inability to cope with the high costs. “When you look at most of the aircraft that we brought in, maybe in November, December last year, you would realize that because it was summer, a lot of them were cheaper to get, at least at that time. Even at that, it was at serious costs. There are airlines that have to return their aircraft because they cannot cope with the lease agreements,” he said.
Call for Government Intervention
The Bi-Courtney COO called on the government to address the economic challenges facing the aviation industry, particularly the high interest rates and inflation. He stressed that without intervention, the sector’s growth and sustainability would be at risk. “The government needs to take a closer look at the financial environment and provide support to ensure that airlines can operate profitably and contribute to the economy,” Jibodu said.
The Role of the Cape Town Convention
The Cape Town Convention is an international treaty aimed at standardizing transactions involving movable property, including aircraft. By adopting the convention, Nigeria aims to attract more aircraft lessors and make it easier for airlines to access aircraft on favorable terms. However, Jibodu’s comments highlight the need for complementary measures to address the underlying economic challenges that could limit the convention’s effectiveness.
The Nigerian aviation industry is at a critical juncture, with high interest rates and inflation threatening the profitability of airlines despite the implementation of the Cape Town Convention. Mr. Remi Jibodu’s remarks underscore the urgent need for government intervention to create a more favorable economic environment for airlines to thrive.
As stakeholders continue to advocate for policies that support the growth of the aviation sector, the success of initiatives like the Cape Town Convention will depend on addressing the broader economic challenges that impact the industry. Without decisive action, the dream of a robust and sustainable aviation sector in Nigeria may remain out of reach.
