The Federal Executive Council has approved the establishment of a Nigerian aircraft leasing company aimed at reducing the cost of aircraft acquisition for domestic airline operators.

The Minister of Aviation and Aerospace Development, Festus Keyamo, disclosed this on Tuesday in Abuja during a meeting with representatives of the Airline Operators of Nigeria.

According to Keyamo, the initiative is designed to strengthen the operations of local airlines, reduce flight disruptions, and help lower airfares across the country.

He explained that President Bola Ahmed Tinubu approved the plan as part of efforts to support domestic carriers in acquiring aircraft for their operations.

“Since we don’t own a national airline and we don’t subsidise one, our duty as a government is to ensure that we support domestic airline operators to make them stable and make their businesses thrive,” Keyamo said.

He noted that difficulty in acquiring aircraft and helicopters has remained one of the major challenges facing local operators, adding that increasing the number of aircraft available to airlines would help reduce frequent flight cancellations and force down ticket prices.

Keyamo revealed that the proposed leasing company would operate mainly as a private-sector-driven venture, with the Federal Government holding only a minimal equity stake.

“The company will have strategic backing by the government but it will be substantially private. We are bringing in investments of nearly 95 or 99 per cent from outside,” he said.

According to him, the government will not inject funds directly into the company but will instead provide sovereign guarantees to ensure the safety and repossession of leased aircraft when necessary.

The minister also disclosed that the African Development Bank has committed a $7 billion support package for its integrated African aviation programme, with Nigeria selected as one of the pilot countries.

He added that the AfDB had appointed him as an ambassador for the programme in Africa.

Speaking on behalf of the Airline Operators of Nigeria, the Managing Director of Ibom Air, George Uriesi, described the initiative as a major relief for airline operators.

He explained that Nigerian airlines currently face significantly higher financing costs compared to foreign competitors when purchasing aircraft.

“So this move has untied our hands by providing us a Nigerian leasing company that not only will provide us access to aircraft at reduced interest rates, but we will be paying in Naira,” Uriesi said.

He added that paying in local currency would protect operators from exchange rate volatility and make airline business models more sustainable.