Age limit to increase aircraft leasing cost by 83% (So be it)

Posted by admin Aviation, Headlines Wednesday, July 25th, 2012

The Federal Government’s plan to reduce the minimum age of aircraft operating in Nigeria from 18 to 15 years will force airlines to pay 83 per cent more on leased planes, the Chief Executive Officer, Aerocontractors Airlines, Captain Akin George, has said.

George told journalists at a news conference on Wednesday that the new age policy proposed by the Minister of Aviation, Mrs. Stella Oduah, would compel airlines to pay a minimum of $220,000 monthly as lease rentals on 15-year-old planes, compared to $120,000 currently being paid on 18-year-old planes.

He explained that the huge difference in the monthly lease rentals was because younger planes of 15 years were currently scarce globally.

He said, “Lease rentals are definitely strong at this time and not just because of being in Nigeria. When you want to go into younger aircraft of 150-seats capacity, they are quite difficult to find at this point in time. So if we are even looking at what they call medium age of Boeing 737 planes that is 15 years old, we are still looking at the lease rentals of definitely not less than $220,000 or $230, 000 in a month.

“But for the new generation (aircraft that are far younger than 15 years), they are in higher demand. And that is what the minister says she wants to push us into.”

The minister had at a safety conference of African Aviation ministers in Abuja last week said government was considering lowering the age limit of aircraft that could operate in the country to 15 years.

She admitted that the policy could have a short term negative impact on the desire to encourage the growth of domestic airlines but added that the issue should be how to strengthen airlines’ viability as business concerns.

She said, “We will continue to encourage domestic airlines not only to grow in their individual capacities but to also consolidate wherever possible, so as to pool resources together for the emergence of more stable, viable and profitable industry.”

Meanwhile, the Aerocontractors CEO has said that 90 per cent of private jets flying in the country are registered in foreign countries by their owners.

The development, he said, was caused by pressure from banks, which gave loans to Nigerian businessmen to acquire the jets.

George said the trend could be reversed if government allowed the Nigerian Civil Aviation Authority, the industry regulator, to enjoy its autonomy by not interfering with its regulatory processes.

He said, “Financially, it makes more sense for them to have it registered in foreign countries. And because of the way we handle our aviation matters in Nigeria, most of the banks that will loan this money to these businessmen or people will tell them to have them on a foreign registration, so that if they default, they will be able to collect the aircraft back without any issues.”

He attributed this to lack of trust in the aviation system in Nigeria.

via Punchwp_posts