An aviation stakeholder, Allen, has said Nigerian airlines can only thrive if the Federal Government provides access to affordable financing and plays a more active role in supporting the industry.
Responding to economist Bismarck Rewane’s suggestion that airlines should consolidate as banks and insurers once did, Allen said the process in aviation must involve easier access to capital, not just mergers.
“When you say the banking industry consolidated, it was about raising their capital. The only way airlines can do that is to get funding — but in Nigeria, borrowing at 35% interest means you are dead on arrival,” Allen explained. “Aviation is capital-intensive, with low returns on investment globally. We need funding at single-digit interest rates. If we have that, no airline will fail in this country.”
Allen also backed proposals for the Federal Government to act as a sovereign guarantor for airline loans, locally or internationally, but warned operators must first carry out “self-introspection” to avoid default.
“You have to ask yourself: what kind of airline am I running — premium or budget? What is my market share? Borrowing more than you need is also a problem,” he said.
He revealed that the government, through Aviation Minister Festus Keyamo, is working on establishing a leasing company to acquire planes and lease them to Nigerian airlines at single-digit rates — a move he described as “a very big step” and praised President Bola Tinubu for supporting.
Allen added that high charges and taxes remain a burden, but the Airline Operators of Nigeria (AON) is in talks with the government to reduce or amend some of them. “The important thing is that the government is listening to us. I believe within the next year, things will change drastically for the airlines,” he said.
On the issue of stigmatization, Allen lamented that Nigeria’s image problem has increased the cost of insuring aircraft. “What is used to insure eight planes outside Nigeria is what we use to insure just one here. They say Nigeria is unsafe — it’s a lie. Every country has its own challenges. If the premiums can come down, it will help airlines’ bottom lines,” he added.
