The Managing Director of Federal Airports Authority of Nigeria (FAAN), Mrs Olubunmi Kuku, has identified the signing of the Cape Town Convention Protocols and implementation of New Practice Directives designed to facilitate cross – border financing and leasing of large commercial aircraft and engines as part of interventions put in place by the Federal Government to bolster the growth and development of the air transport sector.
The treaty, which has created a robust window to bring about a stable international regime to protect creditors, conditional sellers and lessors aim to reduce risks for creditors, lower borrowing costs for debtors as well as provide discounts on export credit premiums for airlines of the adopting states.
Speaking in an interview at the sidelines of the Aviation Safety RoundTable Initiative in Lagos, Mrs Kuku, said Nigeria’s audacious adoption of the Convention and Protocol has brought about a threshold of change with readiness to unlock new opportunities and redefine the future of aviation business.
Affirming that the Cape Town Convention is more than a legal framework, the FAAN boss said it is now a beacon of hope for Nigerian carriers, investors and the economy at large.
She said for many years, Nigeria struggled with non – compliance of the treaty, which hindered the growth and its potential in the global aviation market.
Describing them as bold steps critical in addressing the challenges of the past, she said the initiative will unlock the potential of Nigeria’s airlines and the economy in general.
Kuku said the adoption of the Cape Town Convention , will not only buttress Nigeria’s commitment to global best practices , but will enhance its attractiveness to foreign investors in aviation and other related sectors.
The impact of such a move, Kuku said will trigger economic development for the country by increasing Foreign Direct Investment (FDI), the financing of airports and its upgrade, aviation training institute and other ancillary services.
The FAAN boss while describing the signing of the CTC as a pivotal moment for the Nigeria air transport industry, she said it will transform its aviation landscape as with far reaching economic implications.
She said : “The treaty’s purpose is to create a stable international regime to protect creditors, condition sellers and lessor.
“ As we delve into the implications of this convention, let us explore how these new practice directions will shape the fortunes of Nigerian airlines and propel our economy forward. Together, we will navigate this journey, understanding the past, embracing the present, and envisioning a brighter future for Nigeria’s aviation industry.
“In the past, Nigeria’s non-compliance with the Cape Town Convention has been a significant roadblock for our aviation sector.
“The high cost of insurance for airlines, coupled with the loss of investor confidence, painted a bleak picture for our domestic operators. “ “Imagine a scenario where Nigerian airlines struggled to access dry lease aircraft, a vital component for expanding their fleets and enhancing operational capacity.
“This was not just a financial burden but a missed opportunity for growth and development. The legal impediments within our judicial process further exacerbated the situation, creating an environment where creditors’ speedy reliefs were not granted, and disputes over aviation assets lingered unresolved. “These challenges not only stifled the growth of our airlines but also cast a shadow over Nigeria’s reputation in the global aviation market.
“However, with the recent signing of the Cape Town Convention and the issuance of new practice directions, we are poised to turn the tide. By addressing these historical challenges, we are paving the way for a more robust and competitive aviation industry, ready to take its rightful place on the world stage.
The introduction of new practice directions marks a significant shift in our approach to aviation regulation. These directions, issued by the Chief Judge of the Federal High Court, are designed to eliminate the judicial impediments that have long hindered our compliance with the Cape Town Convention.”
Explaining further, the FAAN boss said by streamlining the legal processes and ensuring that creditors’ reliefs are granted promptly, the government has created a more conducive environment for business.
This move , she further said is expected to boost investor confidence, as it signals Nigeria’s commitment to upholding international standards to foster a transparent and efficient aviation sector.
She said : “ With these new directions in place, aircraft lessors will feel more secure in leasing their assets to Nigerian airlines, knowing that their rights are protected and disputes will be resolved swiftly.
“This is not just a legal reform; it’s a catalyst for change that will unlock new opportunities for our airlines and set the stage for a more dynamic and competitive industry. As we implement compete on a global scale these practice directions, we are laying the foundation for a brighter future, where Nigerian airlines can thrive.
“The economic benefits of embracing the Cape Town Convention are profound and far-reaching. By aligning with international standards, we are opening the doors to increased investment and growth in our aviation sector.
“One of the most immediate impacts will be the reduction in insurance costs for airlines. With lower premiums, airlines will have more funds available to invest in their operations, leading to better pay for staff and pilots, and ultimately, improved service quality for passengers Moreover, the newfound confidence among aircraft lessors will lead to an influx of leased aircraft into Nigeria, enhancing the operational capacity of our airlines.
“This, in turn, will create more jobs and stimulate economic development, as the aviation industry is a key driver of growth and connectivity. By fostering a more competitive and efficient aviation sector, we are not only boosting investor confidence but also positioning Nigeria as a hub for aviation in Africa.
“The ripple effects of these changes will be felt across the economy, as increased connectivity and improved airline services drive tourism, trade, and investment.”
Citing experiences from Qatar, which has benefited from the Cape Town Convention, Mrs Kuku said the country has positioned itself as a destination for aviation-related transactions.
“ Qatar’s tax regime, combined with the Cape Town Convention, has made it an attractive destination for these transactions.
With the convention , we are building a stronger, more resilient economy, ready to seize the opportunities of the future.
“The Cape Town Convention empowers creditors to repossess aircraft swiftly in case of default.”
To optimise the benefits accruing from the new arrangement, Mrs Kuku said the government must put in place frameworks that will deepen regulation for the sector’s sustainability.
She said :” Airlines must strengthen financial management and operational strategies to avoid defaults, especially in an industry susceptible to external shocks.
“Seamless access to finance creates an avenue for airlines to expand their routes, thus influencing an increase in market share both domestically and internationally while fostering business growth, and encouraging tourism, trade and investment in the country.
“ Looking ahead, the future of Nigeria’s aviation sector is bright and full of promise. With the Cape Town Convention as our guiding framework, we are poised to transform the landscape of our aviation industry. The smoother ease of doing business, coupled with increased access to leased aircraft, will empower our airlines to expand their fleets and enhance their services. This will not only boost their competitiveness but also position Nigeria as a key player in the global aviation market. As we continue to implement the new practice directions, we can expect to see a surge in investor interest and confidence, driving further growth and development. The positive implications of these changes extend beyond the aviation sector, as they will contribute to the overall economic prosperity of our nation.
“By fostering a more dynamic and competitive aviation industry, we are creating a ripple effect that will benefit all sectors of the economy. Together, we are building a future where Nigerian airlines can thrive, compete, and lead on the global stage, ushering in a new era of growth and opportunity for our country.
“A more financially stable and viable aviation sector enhances Nigerian Gross Domestic Product (GDP) contributions through employment generation, infrastructure development, and related industries.
“ A vibrant civil aviation sector stimulates broader economic activity and improves Nigeria’s national and international economic integration.
“The adoption of the Cape Town Convention is an indication of Nigeria’s commitment to global best practices thereby enhancing its attractiveness to foreign investors in aviation and other related sectors.
“The potential for airlines to default and have their aircraft repossessed could lead to disruptions in air travel, affecting business operations and investor confidence.
“The government must establish support mechanisms, such as tax incentives or bailout options, to cushion struggling airlines and protect economic stability.
Implementing the Cape Town Convention requires alignment with domestic legal systems, fostering
a more robust legal environment for commercial transactions.
“This strengthens Nigeria’s rule of law and could positively have an impact on other sectors of the economy.
“In conclusion, the signing of the Cape Town Convention and the implementation of new practice directions represent a turning point for Nigeria’s aviation sector. We have taken a bold step towards addressing the challenges of the past and unlocking the potential of our airlines and economy.
“By fostering a more transparent and efficient regulatory environment, we are boosting investor confidence and creating new opportunities for growth and development.
“The economic benefits of these changes are profound, as they will drive job creation, enhance connectivity, and position Nigeria as a hub for aviation in Africa. As we move forward, let us embrace this opportunity with optimism and determination, knowing that we are building a brighter future for our aviation industry and our nation.
“Together, we will navigate the challenges and seize the opportunities of the future, ensuring that Nigeria’s aviation sector thrives and prospers on the global stage.”
Speaking further , Mrs Kuku said the Cape Town Convention provides an important policy direction and initiative for key stakeholders and industry players.
She said the new arrangement will enable Nigerian operators to have more aircraft , create more jobs and bring about overall economic development.
Kuku said:” So we need to create the capacity. But at the same time, as an airport operator, we also have a responsibility to you. And that is to make sure that as you continue to operate and bring in more aircraft. So for us, in terms of how we’re supporting the implementation and the growth there is to come, there’s significant activity that has happened to improve the state of the runways across the nation, both in Lagos, Abuja, Calabar, Owerri, Ilorin . We’re also working to improve the airfield lighting. I’m sure in the next couple of weeks, you will see some of the progress, especially for the night operations. There’s been a back and forth as well at Sunrise Sunset Airport.
“So we need to look at our high-priority airports – Lagos, Abuja, Kano and Port Harcourt on the domestic side.
“On the international side, Lagos, Abuja and Kano are a priority. After that, we focused and looked at our secondary airports. Let us make sure they are safe and habitable. What is required to turn them around is probably a lot more minimal than the rest. We then take our larger airports and we focus on making them a hub.”
“Over the last few months, we have been working aggressively on improving the state of the runways. We had opened that earlier. We have some issues with Taxiway A and Taxiway B. We have started to work on those. In Abuja, there were some challenges around some of the runways as well as the pavements which we have started to work on.”
She assured that before December, all of the runway markings across all of the airports should have been completed.”
