AM EDITORIAL: Airline Business: Is Nigeria’s High Operating Environment Record Changing?
The perception about cost of airline business in Nigeria was amplified at the IATA Annual General Meeting held in Brazil where IATA’s Regional Vice President for Africa and the Middle East, Kamil Al-Awadhi described Nigeria as one of the most expensive countries in the world for airline operation.
He cited high operational costs that continue to challenge the viability and growth of local carriers. He opined that the high cost environment had made it difficult for Nigerian airlines to remain competitive and profitable, limiting the sector’s ability to reach its full potential and that excessive taxes, charges, and other operational expenses continued to burden airlines across the region, with Nigeria ranking among the most challenging markets from a cost perspective.
Industry stakeholders have long argued that reducing taxes and regulatory charges is essential to making air travel more affordable and encouraging greater connectivity across the region.
For Nigeria, this record seems to have arguably persisted despite the visibly concerted efforts that the Ministry of Aviation & Aerospace Development led by Minister Festus Keyamo (SAN) has made since assumption of office three years ago.
Under the leadership of President Bola Ahmed Tinubu, Keyamo has taken deliberate steps to de-risk aviation investment in Nigeria. The most consequential of these has been the strengthening of Nigeria’s implementation of the Cape Town Convention and Aircraft Protocol.
Specifically, on September 12, 2024, Nigeria issued the Federal High Court Cape Town Convention & Aircraft Protocol Practice Direction 2024, to fully implement this very important treaty on aircraft leasing, thereby enhancing investor confidence in the nation’s aviation sector. On October 16, 2024, Nigeria went a step further by officially issuing the Irrevocable De-Registration and Export Request Authorization (IDERA) Advisory Circular, intended to improve deregistration and export-remedy procedures, thus strengthening the legal framework for aircraft leasing and empowering local airlines to be able to access dry-lease aircraft. It is also aimed at reducing leasing cost and improving global safety ratings.
These measures aimed at, and did reform bankable certainty which attracts investment. Apart from legal reforms, measurable progress was made on the long-standing issue of trapped airline funds. For instance, IATA later reported that Nigeria had cleared 98% of previously blocked airline funds by mid-2024, and later cited Nigeria as a clear example of how backlog resolution can be successfully achieved through constructive engagement and phased repatriation. In fact, that action sent an important message to global airlines, financiers, and investors: Nigeria understands that liquidity, convertibility, and repatriation are not side issues. They are foundational to market confidence.”
An aircraft leasing company was last month, launched by Minister Keyamo as part of efforts to ease aircraft acquisition.
Over the years, local airlines in Nigeria were indebted to aviation agencies and the debt volume kept mounting. Following Minister Keyamo’s appeals to the federal government, the President in 2026, ordered a waiver of 30% of airlines debt to the various aviation agencies. Stakeholder efforts have also been accelerated to localize aircraft maintenance, which has over the years, constituted 40% of airline operating costs.
Despite government and stakeholder collaborative efforts to minimize operating costs for airline operations however, the cost of running an airline in Nigeria is yet to abate majorly because the air transport industry is not an island in Nigeria’s economy but a part of the entire system. The drive for increased revenue generation by government agencies alongside introduction and amplification of a new tax law by the President Bola Tinubu administration is beyond the control of Nigeria’s aviation industry.
The weakened purchasing power of Nigerians that came with geometric inflation, resulting from the removal of fuel subsidy, took the operating costs of airlines higher than usual, coming with a higher already high jet fuel cost.
Then, came the United States and Iraq war that disrupted global oil process, taking airlines operating cost to an all time high, with some giant carriers recording losses.
Nigeria’s aviation industry stakeholders have held meetings in 2026 with petroleum sector stakeholders on the high jet fuel costs, resulting in a review of fuel prices, which has impacted on airline operating costs in Nigeria.
A proper analysis of developments in the aviation sector, indicate that airlines operating costs have remained high not out of inactivity or no efforts by stakeholders to bring the costs down. Rather, external policy influencers from the petroleum industry, the Nigeria Inland Revenue Service and even the national economic policies that challenge air travel volume, as well as other factors, have played an astronomically significant role in sustaining the prevalence of high operating costs for airline business in Nigeria.
Stakeholders in Nigeria’s aviation industry need to prevail on the federal government to understand that air transport is a gateway to the nation’s economy and a peculiar sector, different from other sectors of the economy. It therefore needs to be prioritized in terms of favourable growth policies and treated specially, if the Gross Domestic Product (GDP) input is to improve. Simply put, aviation should be enabled by government policy to play the role that the sector plays in the economies of advanced climes.
We applaud the numerous efforts of the current industry leadership to strengthen local airline business and reduce operating costs but when Nigeria’s airline operating costs and environment gets better, it will be visible to the blind and audible to the deaf.AM.
