Airline operators in Nigeria are increasingly partnering with willing state governments to gain easier access to financing and credit guarantees as they navigate industry challenges.
Financial institutions are typically more open to lending to state governments due to the legal and contractual structures backing such borrowing. Airlines are leveraging this by collaborating with states to address issues such as inadequate maintenance facilities, global aircraft shortages, and insurance hurdles, all of which complicate their ability to secure dry lease aircraft.
A dry lease agreement involves the lessor providing only the aircraft, while the airline (lessee) takes full responsibility for crew, maintenance, and insurance.
Through these partnerships, some state governments have launched new carriers under existing airlines, allowing immediate operations while certification processes for the states’ airlines are completed. Stakeholders see this as a win-win model, enabling airlines to utilise more aircraft while states stimulate local economies, create high-paying jobs, and boost investment, tourism, and commerce.
“States are better capitalised than the private sector and have access to cheaper funding, credit, and foreign exchange,” said Alex Nwuba, vice president of the Aviation Safety Round Table Initiative (ASRTI). “This model benefits airlines with additional aircraft to pay staff and overheads, while states can quickly drive economic activities.”
Current partnerships reflect this model. Aero Contractors, for instance, is working with the Cross River State government to operate Cally Air, using two Boeing 737 aircraft owned by the state while discussions continue to expand the fleet.
Enugu Air has also partnered with Xejet as its operational partner pending the completion of its Air Operator Certificate (AOC). Xejet has integrated the EMB 170 aircraft into its operations in line with the Nigeria Civil Aviation Authority’s five-phase certification process.
Ibom Air, owned by Akwa Ibom State, has partnered with Airbus, ordering 10 Airbus A220-300 aircraft, with two already in its fleet. It is also setting up a maintenance, repair, and overhaul (MRO) facility targeting the African market and working with Airbus Consulting to develop a six-to-eight-year maintenance strategy.
According to Ado Sanusi, CEO of Aero Contractors, state governments are tapping into aviation partly for political reasons, as operating state airlines provides leverage while supporting local development. “We have a fantastic relationship with the Cross River State government. They purchased aircraft and dry leased them to Aero, allowing us to operate routes commercially and pay our lease rentals consistently,” he explained, noting that Aero has never defaulted on its monthly payments, building trust in the partnership.
Sanusi emphasised that aviation requires discipline and professionalism to run successfully, despite its political appeal.
Similarly, Samuel Caulcrick, former rector of the Nigerian College of Aviation Technology (NCAT), described the partnerships as a practical solution that allows sub-national governments to absorb capital costs, a major burden in airline operations. He noted that while securing an AOC can take time, these partnerships allow states to begin operations immediately while completing regulatory processes.
As funding challenges persist in the aviation sector, collaborations between airlines and state governments are emerging as a pragmatic model to drive growth, improve connectivity, and strengthen the industry’s resilience.
