Nigeria signed the Cape Town Convention last week, making it one of the few countries in the world to pioneer the issuance of practice directions by the Federal High Court, which is vested with the constitutional jurisdiction on aviation matters.
Before now, Nigeria had majorly failed to comply with the Cape Town Convention (CTC) – a convention that regulates the dry-leasing of aircrafts by major manufacturers such as Boeing and Airbus and major lessors across the world, who had perceived Nigeria as a non-compliant country.
According to Festus Keyamo, minister of aviation and aerospace development, the CTC compliance index shows Nigeria’s substantial non-compliance, which is largely as a result of legal impediments in the country’ judicial process. These impediments have adverse impact on the implementation of and compliance with terms of the convention.
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Keyamo stated that speedy reliefs sought by the creditors are not granted within the 10-day declaration made by Nigeria under the convention.
The minister, with the support of President Bola Tinubu, Vice President Kashim Shettima, and Lateef Fagbemi, attorney-general of the federation, then reached out to key institutions and offices in the judicial sector, resulting in the signing of the practice directions last week.
The new practice directions issued by the Chief Judge of the Federal High Court is expected to eliminate judicial impediments in the implementation and compliance with the Cape Town Convention.
This move, according to Keyamo, is also expected to boost investor confidence and open the floodgates to Nigeria’s air operators to have easy access to aircraft acquisition at much lower rates.
Stakeholders say the Cape Town Convention is expected to significantly enhance the growth of the aviation industry by creating more jobs and promoting the rapid economic development of the aviation industry. By doing so, the Nigeria aviation industry, which has a huge global market, can favourably compete.
Amid these benefits, however, stakeholders have fingered grey areas that may erode the benefits of the convention if they are not addressed.
Ibrahim Mshelia, CEO, West Link Airlines, told BusinessDay that the purpose of the Cape Town Convention protocol is to address issues of opposable rights over aviation movable assets such as engines, aircraft spares and aircraft leases.
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“After we have domesticated and fully signed the agreement and there are disputes over the assets, the owners should be able to take their properties away without issues. It is then expected that people would freely lease airplanes to Nigeria without fear of their equipment being held over litigations.
“The signed convention is expected to boost confidence of people in other territories to do business with Nigeria in terms of aviation assets,” he explained.
Mshelia however hinted that the convention would not do anything for airline operations in Nigeria because of the current volatile operating environment, insincerity of operators and the current naira to dollar exchange rates.
“Leases and issues in Nigeria have nothing to do with the law. They just have to do with our nature as a people and our aviation system. We were under the high-risk nation category because some airlines went to court in the past and seized people’s airplanes.
“Also, getting dollars to pay for these assets makes things difficult. If we don’t fix our exchange rate problems, we can sign 10 of these conventions but they won’t change anything,” the CEO of West Link Airlines said.
Jonathan Ibrahim, a retired airline captain, said that the behaviour exhibited by some airlines in the past, where they failed to pay for leased aircraft and took lessors who tried to retrieve their equipment to court, may still pose problems for the current airlines.
“Insurance premiums are very high in Nigeria because of the environment. After signing the Cape Town convention, the Western world may not immediately get involved.
“If the major issues are not addressed, the Cape Town Convention would just be like an ordinary signed paper and nothing will happen,” he further said.
The Cape Town Convention is currently in force with 87 contracting parties, while the Aircraft Protocol for equipment has 84 contracting parties.
These countries have long enjoyed access to modern aircraft on a dry lease basis.
The signed convention has also made domestic airlines in these countries more competitive.
“Difficult operating environment, ease of doing business, corruption, security challenges, naira exchange rate, high interest rate and lessor confidence are major issues,” an aviation stakeholder, who didn’t want his name mentioned, said.
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John Ojikutu, industry expert and the CEO of Centurion Aviation Security and Safety Consult, said the CTC would make sense if Nigeria has a national carrier or flag carriers.
“I am afraid that what has been signed would not be the same as the Ogun State government and Chinese treaty that became a burden on the federal government, with the presidential fleet paying the price. Internally, the federal government has once supported the private airlines, but that has resulted in the Asset Management Corporation of Nigeria (AMCON) receivership.
“If the federal government is standing out for the private airlines, they would need to go public selling not less than 50 percent of their shares to the public and the government. The federal government should thereafter designate them as national flag carriers,” Ojikutu said.
He hinted that the Nigeria Civil Aviation Authority (NCAA) must subject its business plans to scrutiny and the route to market should be made favourably for them to effectively compete with the foreign airlines, especially in the home market.
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