Nigeria’s Aviation Sector and the Role of Fidelity Bank
The International Civil Aviation Organization (ICAO) has established recommended standards and practices that are crucial for the aviation industry. As a signatory to the Convention on International Civil Aviation, Nigeria is expected to uphold these international civil aviation standards and fulfill its obligations. However, the Nigerian aviation sector faces numerous challenges that have hindered its growth and development.
Challenges in the Nigerian Aviation Sector
High operating costs, fluctuating exchange rates, difficulties in aircraft repossession, and a perceived high-risk environment for international financiers and lessors have significantly impacted the sector. These factors have led to stringent financing terms or reluctance from international entities to engage with Nigerian airlines. Experts suggest that international lessors often view Nigeria as a high-risk country due to currency fluctuations and challenges in aircraft repossession, making it difficult for airlines to secure favorable leasing terms and financing for aircraft acquisition and maintenance.
Despite its strategic location, growing 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. Analysts note that domestic airlines continue to shrink in size due to a lack of adequate financing and sometimes a lack of sincerity among operators who fail to distinguish between operating funds and personal monies. This mismanagement leads to difficulties in offsetting loans, with banks reluctant to provide credit facilities to airlines.
Fidelity Bank’s Support for Air Peace
Fidelity Bank has played a pivotal role in supporting the growth of Air Peace, an airline founded by Barrister Allen Onyema. While many banks avoided the aviation sector, Fidelity Bank placed a bet on Air Peace over 10 years ago. The airline began operations with seven aircraft, including three Dornier 328s and four Boeing 737-500s, which was notably larger than what some other airlines started with. In 2018, Dr. Allen Onyema signed an agreement with Boeing for 10 new aircraft, financed by Fidelity Bank.
Fidelity Bank provided the necessary funds for Air Peace’s growth and expansion, enabling it to become the largest airline in West Africa by fleet and size. The airline has maintained its loyalty to Fidelity Bank, choosing to bank with it despite having multiple choices. Air Peace currently has 49 aircraft, with 36 on outright purchase and four on wet lease, and has secured a coveted slot in Heathrow.
Financial Integrity and Maintenance
Onyema emphasized the financial integrity of Air Peace, highlighting that the airline’s fleet maintenance is top-notch. Partnerships with Israeli Aerospace Service and Original Equipment Manufacturers (OEMs) have earned the airline international accolades. He noted that Air Peace’s financial integrity has grown the confidence of other financial institutions in investing in aviation.
At a press conference announcing the commencement of Abuja-London Heathrow flights, Onyema spoke about the financial discipline of the airline, stating that banks now want to partner with them because they treat borrowed money as depositors’ money, using it prudently.
Celebrating Milestones and Achievements
On Sunday, April 21, 2024, Fidelity Bank hosted an evening in honor of Air Peace for achieving a historic milestone: being the first Nigerian airline in recent times to commence direct flights from Nigeria to London. The event coincided with the 10th anniversary of the airline and celebrated the achievements of Dr. Allen Onyema, who broke the jinx of Nigerian airlines in the international aviation space.
Air Peace’s debut flight to London on March 30, 2024, with a ticket price of N1.2 million, prompted foreign airlines to reduce their prices to remain competitive. The airline’s strategic pricing has been a big win for Nigeria’s flying public, providing more liquidity for Nigerians to enjoy other pleasures.
Supporting Other Airlines
Fidelity Bank has also supported other Nigerian airlines, such as Ibom Air and Enugu Air. For Ibom Air, Fidelity Bank was the lead financier for the acquisition of its Airbus A220-300 Series. Captain Mfon Udom, the former Managing Director of Ibom Air, acknowledged the bank’s support, noting that the airline plans to operate 18 aircraft by 2026 and add two new destinations later this year.
Enugu Air, recently launched, was also made possible with strong financial support from Fidelity Bank. Dr. Nneka Onyeali-Ikpe, Managing Director and CEO of Fidelity Bank, described the launch of Enugu Air as a powerful affirmation of the nation’s aviation sector as a driver of economic growth.
Signing of the Cape Town Convention
Nigeria recently signed the Cape Town Convention (CTC) Practice Direction in the aviation sector, led by Vice President Kashim Shettima and Aviation and Aerospace Development Minister Festus Keyamo. This move aims to reduce the cost of airline operations, facilitate aircraft leasing and financing, and potentially lower flight costs for passengers. The CTC treaty is designed to expand financing opportunities and reduce costs, providing substantial economic benefits. This government initiative is expected to encourage Fidelity Bank to support more domestic airlines that have struggled to access funds for fleet and route expansion.
