High-Risk Environment Deepens Nigerian Airlines’ Competitive Disadvantage
Nigeria’s high-risk classification is making it more expensive for domestic airlines to operate, with insurance and financing costs far above what foreign competitors pay, Ibom Air Chief Executive Officer, George Uriesi, has said.
This was the position of Ibom Air Chief Executive Officer, George Uriesi, who argued that although recent government reforms have improved access to aircraft, the high-risk operating environment and other fundamental structural challenges continue to undermine airline profitability despite strong operational performance.
Speaking on the industry’s biggest challenges, Uriesi said the administration of Aviation and Aerospace Development Minister, Festus Keyamo, deserves recognition for addressing long-standing obstacles that prevented airlines from accessing international aircraft financing.
“A lot of them have been done, I must say. I must give credit to Barrister Keyamo,” Uriesi said.
“He’s the one minister recently who has listened to the industry’s issues and tackled them with vigour. He has removed the impediments. We are now able to secure aircraft.”
He explained that aircraft remain the largest capital investment for any airline. Therefore, obtaining them through international financiers and lessors at lower interest rates significantly changes the economics of airline operations.
“The most expensive thing in an airline is the aircraft. We are now able to secure aircraft through international financiers and lessors at lower interest rates, which is what was killing us.”
According to him, Ibom Air’s underlying business remains exceptionally healthy despite prevailing economic pressures.
“If Ibom Air was not paying heavily for interest payments, we would be a highly profitable airline. The business is solid. Our Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) is 35% in 2025. It beats most international airlines.”
He said the airline’s investments in the Airbus A220 fleet have generated substantial operational efficiencies.
“It’s a very, very efficient airline. All our investment in the A220 has delivered massive returns. All that efficiency, however, goes to the banks because of interest payments.”
Uriesi argued that reducing financing costs from Nigeria’s prevailing double-digit lending rates to single-digit levels would immediately transform airline profitability in the country’s high-risk operating environment.
“If we can reduce that interest rate from high double-digit interest rates to low or middle single-digit interest rates, all that money will come to us because we make the money.”
Meanwhile, aviation fuel continues to distort airline economics, further compounding the challenges of operating in a high-risk aviation market.
According to him, the unprecedented rise in fuel prices forced operators to redesign their business models while borrowing heavily simply to sustain operations.
“We had to recalibrate the business model and borrow a lot of money to keep going.”
He illustrated the scale of the challenge by comparing fuel costs on a typical domestic service.
“From less than ₦2 million for a flight to Abuja, you start paying almost ₦8 million for a flight to Abuja.”
Uriesi noted that airlines could not transfer these increases entirely to passengers because of affordability concerns.
“It takes all the money from the ticket. You cannot increase fares by 300%. You can barely increase them by 20 or 25% before everyone starts complaining.”
However, he maintained that access to cheaper aircraft financing remains the industry’s most urgent requirement.
“We need to get cheaper aircraft and pay less than what we are paying now to make money better for us.”
High-Risk Classification Pushes Insurance Premiums Higher
Beyond financing and fuel, Uriesi identified Nigeria’s high-risk classification by international insurers as another major structural disadvantage facing domestic airlines.
He questioned why Nigerian operators continue to pay substantially higher insurance premiums despite complying with global aviation safety and regulatory standards.
“After some time, we need to tackle the insurance issue. Why are they calling us high-risk? Why? They should tell us. We don’t understand.”
He added: “Why am I paying three to four times what my counterpart in Europe is paying for his aeroplane? The same aeroplane.”
According to Uriesi, Nigerian airlines satisfy the same regulatory and operational requirements as European carriers.
“We adhere to all the safety standards, all the regulatory standards. We adhere to everything. Yet, I want to insure my aeroplane and I’m paying three to four times what my counterpart is paying in Europe.”
The cumulative effect, he explained, is a severe competitive imbalance.
“I have five aeroplanes, he has five aeroplanes. Just imagine the difference.”
He contrasted financing conditions between Nigerian airlines and European operators.
“Then he can undercut me on ticket price because he has three per cent interest rate. I have 32 per cent interest rate.”
According to Uriesi, the combination of high-risk insurance premiums, expensive borrowing and higher operating costs makes direct competition with established international airlines commercially unsustainable.
“So, I can’t compete with him.”
That reality, he revealed, explains Ibom Air’s measured international expansion strategy.
“That’s one of the reasons why Ibom Air said we are not going to look outside Africa. We are going to compete inside Africa until we have a very comfortable airline.”
He stressed that the airline would only consider long-haul markets after achieving greater financial stability.
“Before we think of going outside Africa, it will not be me. It will be two managements later when the airline is fully solid. That is the strategy.”
Uriesi warned that entering mature markets such as the United Kingdom would expose Nigerian carriers to airlines with overwhelming financial advantages.
“You now want to go and venture to the UK where British Airways and others will simply drop their prices.”
“Their cost of operation is much less. They have economies of scale.”
He concluded that unless Nigerian airlines overcome the burden of high-risk financing, insurance premiums and limited scale, competing globally will remain extremely difficult despite improvements in operational efficiency and regulatory reforms.
