Air Peace Chairman, Allen Onyema, says Nigerian airlines must prove to aircraft manufacturers that local financing costs can reach 30%, unlike the 3-4% rates available elsewhere.
Onyema said original equipment manufacturers (OEMs) often question the financing figures presented by Nigerian carriers seeking aircraft. According to him, airlines have had to provide documentary evidence before manufacturers accept that borrowing costs in Nigeria can be several times higher than international benchmarks.
“When we say to the OEMs, those who supply us with aircraft, ‘We want to buy planes, and we want you to share the cost,’ because when we borrow money, we pay as much as 30%, they say, ‘No, that’s a lie. Maybe 5%,’” Onyema said.
“I say, ‘No.’ We provide documents to prove to them that we are paying interest rates as high as 30%.”
The revelation highlights one of the biggest financial pressures confronting Nigerian airlines as they seek to acquire aircraft and expand their fleets. According to Onyema, domestic carriers are forced to compete against international airlines operating with access to substantially cheaper capital.
Financing Gap Puts Nigerian Airlines Under Pressure
Onyema said Nigerian airlines borrow from local banks at rates ranging from 29% to 33%. However, he said airlines in other markets can obtain financing at rates of about 3% or 4%, creating a major cost disparity.
“We are talking about other countries where everything works, where companies acquire financing at just 3% or 4%,” he said. “The airlines of Nigeria borrow money from Nigerian banks at 33% and 30%. They’ve come down now to about 29%.”
The difference means Nigerian airlines can face significantly higher financing costs before an aircraft begins generating revenue. It also creates additional pressure when carriers attempt to renew fleets, introduce newer aircraft or increase capacity on existing routes.
For Onyema, the problem is therefore not simply the price of an aircraft. The cost of financing that aircraft can determine whether an airline can sustainably operate and compete after taking delivery.
“The next question is: ‘How do you survive?’” he said OEMs would ask. “At the same time, we are expected to compete at the same level with people who are getting their financing at 3% and 4%.”
The Air Peace chairman said the financial burden is particularly difficult because airline profitability remains relatively narrow. He argued that Nigerian carriers cannot absorb high borrowing costs indefinitely while also meeting the other expenses associated with aviation operations.
“You do not make 5% profit in this airline business. We don’t. Hardly,” Onyema said.
His comments place financing at the centre of the debate over Nigerian airline competitiveness. Lower-cost capital gives international carriers greater flexibility when acquiring aircraft, while Nigerian operators must factor significantly higher interest expenses into fleet and network decisions.
Onyema questioned how Nigerian airlines can be expected to meet the same competitive standards under such unequal financial conditions.
“What kind of country are we in?” he asked. “You have high expectations, but you don’t have the will to move those high expectations to the next level. You’re dead-on arrival.”
He also argued that the financing problem should be considered alongside the wider cost of maintaining an airline in Nigeria. Government charges, infrastructure challenges and unexpected operational expenses can add further pressure to carriers already dealing with expensive capital.
The financing pressure becomes more apparent when unexpected operational costs arise. Onyema cited bird strikes as an example, arguing that inadequate infrastructure and bird-control measures can expose airlines to substantial repair bills.
He said one airline recorded 56 bird strikes in the previous year. Onyema also disclosed that a recent bird strike involving a brand-new E2 aircraft in Abuja resulted in a repair invoice of almost $2 million.
“We had one in Abuja last week involving a brand-new E2 aircraft,” he said. “The inlet cowling and other components were damaged. The OEM came to us with an invoice of $1.852 million, almost $2 million.”
For Onyema, the solution requires policymakers to understand the realities behind airline finances rather than judging carriers only by passenger numbers or ticket revenues. He maintained that airlines operate within a complex financial environment involving aircraft costs, financing, infrastructure and other operational obligations.
The financing challenge also affects discussions between Nigerian airlines and OEMs. When manufacturers initially assume that aircraft buyers can access financing at around 5%, Onyema said they struggle to understand how Nigerian carriers can sustain borrowing costs approaching 30%.
The airlines must therefore demonstrate the reality of the Nigerian financial market before negotiations can fully account for the cost of capital.
This, Onyema argued, leaves domestic airlines facing a structural disadvantage that cannot be solved simply by increasing passenger numbers. A carrier may generate substantial revenue but still face heavy financial pressure when the cost of borrowing consumes a significant portion of its earnings.
He called for greater understanding of the economic conditions facing Nigerian aviation and warned that high financing costs could undermine the industry’s ability to renew fleets and expand connectivity.
“If any airline succeeds in this country, it is the success of the entire nation,” he said.
Onyema’s comments put the cost of financing at the heart of Nigeria’s airline competitiveness debate.
