Aircraft leasing as palliative to airlines fleet depletion

Have you ever bought an Arik Air ticket and you were checked on an unnamed, unlabelled and plain aircraft for your flight?

Many passengers in recent times have wondered why they would buy an Arik Air ticket and board an aircraft which, based on all its physical appearance and registration details, cannot be identified with or linked to the airline they intended to travel with.

The issue has, in recent times, been generating controversy among air travellers who are oblivious of the global practices in the aviation world. The aircraft in contention were the two CR900 belonging to a Tunisian airline, Syphax.

It was learnt that Arik Air in 2019 entered into partnership with Nigeria Value Jet to wet-lease the aircraft from Syphax.

Nigeria Value Jet, on its website, said it “operates 2x Bombardier CRJ900 aircraft. Operated by European crews and maintained by award winning service stations in Europe our aircraft seat up to 90 passengers in Economy. Our Flight Attendants will ensure your personal safety on board and make sure you leave the aircraft feeling valued as a customer and refreshed as a traveler.”

Daily Trust learnt that Value Jet is not yet registered as a commercial airline in Nigeria with the Air Operating Certificate (AOC). It, however, partners Arik Air, a registered airline, to operate the CRJ900s wet-leased from the Tunisian airline.

Indications have revealed that the wet-lease partnership had become the easiest option for Nigerian carriers amidst the increasing difficulty to get dry lease while their fleet keeps dwindling. Also, Air Peace recently acquired a lease B737-800 aircraft to support its operation.

In aviation, there are three types of aircraft leasing, namely dry lease, wet lease and damp lease.

In wet leasing arrangement, the lessor provides the ACMI (Aircraft, Crew Maintenance and Insurance while in Dry lease, only the aircraft is provided. Damp lease is wet lease without the crew.

In the past, many airlines in Nigeria including Med-View, Arik Air, Azman, among others have signed a dry leasing contract with lessors around the world. But in recent times, there have been concerns over the lukewarm attitude of lessors to release aircraft to Nigerian operators on a dry leasing arrangement.

Therefore, wet leasing which more often than not is said not to be profitable to airline, becomes the available option. “It is often an issue of when the desirable become unavailable, the available becomes desirable,” an operator said.

The Nigeria Civil Aviation Authority (NCAA), the apex regulatory authority in the sector, has however clarified that there was nothing wrong with the leasing arrangement by Arik Air.

Spokesman of  the NCAA, Mr. Sam Adurogboye, in a chat with our correspondent said the wet-lease arrangement which comes with a foreign crew is known to the NCAA regulation.

“This is not alien to our regulation and we are carried along in the deal. Wet lease is only  approved for airlines for a short time. Probably your planes went for maintenance and you are waiting for them to return. So for you to keep your operations running, you can go for a wet-lease”, he said.

On why lessors are developing cold feet with the Nigerian operator, Adurogboye blamed the development on some operators who default in their obligations with the aircraft owner. He however said the Federal Government is working to address the issue.

“Nigeria is a signatory to the Cape Town Convention which makes NCAA the guarantor for domestic carriers to lease aircraft. But when people begin to go against that convention, other lessors are following event and they begin to lose confidence in our operators”, the NACA spokesperson clarified.

He advocated greater transparency by operators in aircraft leasing while assuring that Nigeria would always support its own.

Commenting on the development, President of Airline Owners and Pilots’ Association, Mr. Alex Nwuba, advised that the Federal Government to invest in aircraft leasing business rather than focusing on national carrier. He said this would help local operators have seamless access to aircraft leasing.

He said: “Clearly there have been cases in the past where people took leases and when it was time to return the aircraft, they didn’t. So it was a long court battle to get the aircraft back. This had happened in the past.

“But the truth is lessors have expropriation insurance and protection against this kind of activity. But it is essentially a deliberate ploy to say, ‘oh, you guys renege on your leases and so you have to pay extra for it.” So when it gets quite huge in terms of, the impact on cash flow is significant. In the past we have had these problems, occasionally we have this problems but insurance protects against it”, the industry expert added.