NIGERIAN airlines face significant challenges in sustainability when relying solely on leasing aircraft, as this model does not adequately support long-term operational viability. But, what is to be done?
Airlines are urged to shift from leasing aircraft to outright ownership to ensure long-term financial sustainability.
Gbenga Onitilo, Managing Partner of Aeronexus, highlighted that reliance on leased aircraft, amidst challenges like high fuel costs and foreign exchange volatility, is detrimental.
Airlines earn revenue in naira but settle lease payments in dollars, creating severe foreign exchange risks. This dependency not only turns lease payments into expenses rather than investments but also leads to financial crises within airlines.
Onitilo estimated that an airline with four narrow-body aircraft could incur monthly lease costs of $400,000 to $700,000 in foreign currency.
He cautioned that these excessive liabilities compromise airlines’ financial stability and reduce their ability to attract investments and secure financing.