Nigeria’s aviation sector has taken a major step forward with the issuance of new Federal High Court Practice Directions to ensure compliance with the Cape Town Convention, thereby facilitating access to dry-leasing for domestic airlines. This development was announced during a Presidential Enabling Business Environment Council (PEBEC) meeting, chaired by Vice-President Kashim Shettima. It aims to resolve long-standing legal challenges that have hindered aircraft leasing for Nigerian carriers.
The new court directives address years of difficulties faced by local airlines in securing affordable dry-lease agreements, following Nigeria’s blacklisting by the Aviation Working Group due to non-compliance with the Cape Town Convention. This blacklisting severely restricted financing options for airlines, making it more expensive to lease aircraft.
The statement emphasized that these new directives are designed to remove judicial barriers, restoring access to cheaper leasing arrangements and streamlining the process of aircraft acquisitions. This shift is expected to relieve the aviation sector, support job creation, and contribute to Nigeria’s economic growth.
“Monumental history was made earlier today as Nigeria became one of the few countries in the world to pioneer the issuance of Practice Directions by the Federal High Court, which holds constitutional jurisdiction over aviation matters,” the statement noted. It further highlighted that the signing of the Practice Directions took place under the leadership of Vice-President Kashim Shettima at the PEBEC meeting in the Presidential Villa, Abuja.
The statement added, “The new Practice Directions issued by the Chief Judge of the Federal High Court will eliminate judicial impediments in implementing and complying with the Cape Town Convention. This significant move will boost investor confidence and provide Nigerian air operators with easier access to aircraft acquisitions at much lower costs.”
With the backing of the President, Vice-President, and the Attorney-General, key judicial institutions were engaged to finalize these new Practice Directions. The new rules allow creditors to seek relief within 10 days if an airline defaults on its dry-lease payments, offering greater security to lessors.
This move follows the commitment of the Minister of Aviation, Festus Keyamo, to reduce the deregistration process for leased aircraft from five days to four, in line with the Cape Town Convention, as he promised during a recent visit to Boeing in the U.S.
What You Should Know:
A dry-lease is an aircraft leasing arrangement in which the lessor provides the aircraft, while the lessee (the airline) handles all operational responsibilities, including crew, maintenance, fuel, and insurance. This arrangement allows airlines to expand their fleets without bearing the full cost of purchasing planes, typically used for medium- to long-term leasing.
In recent months, Minister Festus Keyamo has focused on securing better dry-lease terms for Nigerian airlines, addressing two main challenges: ensuring international insurance coverage for aircraft entering Nigeria and amending legal frameworks to allow lessors to repossess aircraft from defaulting airlines without court interference. The Aviation Working Group, co-chaired by Airbus and Boeing, had flagged these issues as violations of the Cape Town Convention.
With the recent issuance of the Federal High Court Practice Directions ensuring compliance with the Convention, the first challenge has been addressed. Efforts to resolve the insurance issue are still ongoing, as the minister works towards enhancing aircraft acquisition and safety practices within Nigeria’s aviation sector.
