5 Reasons Leasing Is the Best Financing for New Airlines

BY ANTHONY OMOH

InterGroup Chief Financial Officer, Mary Olowo-Sokeye, says leasing remains the most practical entry strategy for Nigeria’s startup carriers.

She stressed that the best financing for new airlines avoids crippling debt, allows operational flexibility, and preserves capital for growth.

Olowo-Sokeye explained that startup carriers often miscalculate the risk of committing to expensive repayment schedules before achieving operational stability.

“For new airlines or people trying to get into the airline space, definitely consider the leasing option,” she said.

“You never want to own it outright at the beginning. You just use it to make money, paying a leasing fee which is usually lower than the cost of ownership, while the servicing remains with the owner.”

She compared aircraft ownership to buying a luxury car, where a $50 million purchase could tie an airline into years of high-interest repayments.

Leasing as the best financing for new airlines allows operators to focus on building revenue streams without crippling capital commitments.

1. Lower Upfront Costs Make Leasing the Best Financing for New Airlines

Olowo-Sokeye said new carriers must protect their liquidity by avoiding heavy initial capital outlays.

“If you don’t have a lot of cash, the lease-back option is better. You can use those funds for operations, staffing, and marketing instead of ownership costs,” she explained.

This makes leasing the best financing for new airlines because it frees cash for other business priorities.

2. Best Financing for New Airlines Preserves Cash Flow Stability

She noted that leasing keeps more working capital available to handle fluctuations in passenger demand and seasonal changes.

“If your cash flow is negative, no CEO or investor will approve new investments,” she warned.

By choosing leasing as the best financing for new airlines, CFOs can focus on maintaining positive cash flow and meeting operational obligations without overextending.

3. Reduced Maintenance Liability Strengthens the Case for Leasing

Under most leasing agreements, the lessor retains responsibility for major servicing.

“The servicing and all of that stays with the owner,” Olowo-Sokeye said. “So, you only have to pay a fee to use it and gain what you need.”

This reduced liability reinforces leasing as the best financing for new airlines, especially in early operational years.

4. Protects Against Asset Depreciation Risks

Purchasing aircraft exposes carriers to depreciation, locking them into aging assets. Leasing offers fleet flexibility, enabling upgrades without major losses.

Olowo-Sokeye urged new carriers to learn from past operators adopt what worked, avoid mistakes, and keep fleet assets flexible through leasing.

5. Best Financing for New Airlines Helps Manage Market Volatility

Nigeria’s aviation sector faces heavy exposure to foreign exchange risks. Olowo-Sokeye said a large percentage of airline expenses are FX-linked. 

Furthermore, she stats that devaluation increases the naira required for dollar-denominated leases.

“When I took this role as CFO three years ago, it was ₦460 to the dollar. Today it’s ₦1,550,” she said.

Leasing as the best financing for new airlines allows operators to renegotiate terms or adapt fleet sizes faster than ownership models.

Government Support Could Transform Established Airlines

While leasing is the best financing for new airlines, Olowo-Sokeye said targeted government funding could reshape the competitive landscape for established carriers like Air Peace.

“Just imagine if Air Peace was granted $300 million,” she said. “That would make a huge difference in the size of their fleet, the number of routes they can cover, the innovation they can introduce, and the systems they can put in place.”

She called for grants, export credit schemes, and low-interest loans to strengthen industry capacity.

Diversification and Oversight Still Essential

Olowo-Sokeye advised that even with the best financing for new airlines, executives must diversify investments and maintain rigorous oversight.

“There’s not one way to skin a cow or cook a fish. You have to diversify,” she said.

She encouraged reinvesting profits into ventures outside core airline operations to create additional income streams and buffer against downturns.