Nigeria’s aviation sector is primed for a major transformation on the back of a landmark deal between Fidelity Bank of Nigeria and Aircraft Finance, Germany (AFG) on aircraft financing and leasing.
The partnership aims to leverage AFG’s technical expertise and Fidelity’s financial capabilities to support the sector’s development.
The deal between the companies was announced by Christian Hatje, managing director, business aviation and SVP commercial, AFG at the Nigerian Aircraft Acquisition and Investment Summit held in Lagos recently.
AFG is a leading firm in commercial and business aviation whose portfolio of services covers the entire transaction process from start to finish.
Amuchie Stanley, executive director, Fidelity Bank said the deal is important and a big one as it stands to transform the sector.
Fidelity Bank is infusing the technical know-how of AFG with the bank’s ability to offer finance in all facets, he explained.
According to the finance expert, the bank has many years of experience in aviation financing in Nigeria, adding: “We are just trying to improve aviation financing and leasing. AFG is very big in financing aircraft, sourcing aircraft, and leasing aircraft. We decided to enter into a partnership. We are already doing a lot in Nigeria today. We are financing most of the airlines, the big ones in Nigeria.
“We’re just finding another platform to improve on what we are doing already. The arrangement is for us to find finance, bring finance and expertise together and just to make sure that we finance aviation. The aviation industry is one industry you have to have the technical know-how to get into. So we’re bringing the technical know-how of AFG to our ability to finance.
“So it’s technical know-how meeting financing to make sure that you de-risk your involvement in the aviation sector and make sure it’s done very well. It is as open as anything. It’s not like a deal worth any particular amount. It’s as you get deals, you do it. Whatever the deal is, you do it,” Stanley stressed.
The deal which includes both financing and leasing is a step in the right direction, he further said.
“We’ve supported Air Peace a lot, Ibom Air and most of the other airlines. In fact, when the industry was a bit sceptical about financing aviation, we were the ones that took the bull by the horn and we started supporting. This is just another step we are taking in the right direction.
“It involves both financing and leasing. It depends, if you have part of your money, you just want outright purchase, why not? Because AFG will be able to source the right kind of aircraft based on your needs, based on what you want to use it for. Therefore, if you want financing to buy, of course, we can do that. We have done that already.
“But if it’s to lease, the SPV, as explained, can buy the assets and be able to lease, so you pay lease rentals. It depends on what the operator wants. Basically, it’s for Nigerians and of course, there are a lot of opportunities here. In most African countries, we don’t even have airlines going there. You spend almost a day just to go from here to DR Congo.
“The deal is very important. Most people want to get into this business, but financing has been an issue. Now, if you don’t have the whole money, when you talk about leasing, all you need is to pay the lease rentals and be able to get into the deal. We need people who are really ready for the business. You know, if you get into the business and you understand what to do, and you are ready to stay the course, not that you get the aircraft and disappear, you won’t pay your lease rentals they can get in, you don’t have to wait to have all the money to buy aircraft. You pay lease rentals and be able to own the business. That’s what we want to achieve here,” he added.
According to him, ‘Nigeria is taking the right place when it comes to aviation. Over time, you expect that aviation in Africa, starting from West Africa, Nigeria should be the hub for aviation in Africa. So, the current government and the minister have done a lot to open up the aviation sector. And that’s what’s bringing all this.
“What you’ve seen here between yesterday and today shows the kind of drive towards that achievement. So, with what we’re doing and what other players in this market can do, we believe that in the next few years, this will be the place to be. More airlines will come in, even from Nigeria and outside.”
Meanwhile, Chris Najomo, director general, Nigeria Civil Aviation Authority (NCAA), has hailed the deal as a game changer for Nigeria’s aviation.
He expressed optimism that other banks would join Fidelity to transform aircraft leasing and financing, adding that the government has put necessary infrastructure in place.
“It’s a major thing that has just happened between Fidelity. Of course, I give it to Fidelity because Fidelity has been there. You all know that it has played the role for the biggest airline, Air Peace. Fidelity has backed up Air Peace. So, other airlines have joined. I have even been told Zenith and all the other banks are on the line. You can see that this is the way forward. The minister has put a lot in this and we’re happy it is coming into shape. In the next five, six months, you will see that more aircraft will come in, better aircraft, modern aircraft will come in. They are coming in already. We expect that more operators will leverage this deal.
“A lot is happening, and more will come. I foresee that in the next six months more airlines will come on, in fact, as I’m sitting here, another company has said they want to start the Air Operator Certificate. Six months from here, you will see an influx of aeroplanes. Initially, we did not have the capacity. Now, we are having the capacity. We are going to explore the routes that have not been explored. Nigerian airlines are now going to go to the West Coast,” he said.
Najomo disclosed that the Authority has issued eight AOCs since he assumed office adding it now takes between six to nine months for an operator to get an AOC as against two years, even without compromising safety.
With new deals being signed, the CAADG said “I can tell you one ultimate thing we are going to see at the end of the day is prices of tickets will come down, aircraft insurance will be affected positively too”.
