Aviation business, not only in Nigeria, is generally known to be a capital-intensive one and is strictly governed by international regulations prescribed by the International Civil Aviation Organisation (ICAO). The ICAO recommended standards and Practices are to be referred to when dealing in the aviation business; therefore, Nigeria, being a signatory to ICAO, should uphold international civil aviation standards and fulfil its obligations under the Convention on International Civil Aviation.
Numerous challenges, including high operating costs, fluctuating exchange rates, difficulties in aircraft repossession, and a perceived high-risk environment for international financiers and lessors, have really overwhelmed the sector, leading to stringent financing terms or reluctance to engage with Nigerian airlines.
Experts say international lessors often perceive Nigeria as a high-risk country due to factors such as currency fluctuations and difficulties in aircraft repossession, making it harder for airlines to secure leases on favourable terms and to secure financing for aircraft acquisition and maintenance.
“Despite its strategic location, burgeoning population, and role as West Africa’s gateway, Nigeria’s aviation sector struggles to attract investment and secure newer, fuel-efficient aircraft under favourable leasing terms.
According to analysts, domestic airlines continue to shrink in size ‘due to lack of adequate financing and sometimes lack of sincerity among many operators who are not disciplined enough to differentiate between operating funds from personal monies and in the mix they encroach into their capital. This is why many airlines find it difficult to offset their loans. Because of frivolous spending by many operators and other factors, banks have adopted a policy of not granting credit facilities to airlines.
Fidelity Bank’s Midas Touch
Not many people knew that, while banks stayed away from the sector, Fidelity Bank placed a bet on Barrister Allen Onyema’s Air Peace brand over 10 years ago.
Air Peace began operations with seven aircraft consisting of three Dornier 328s and four Boeing 737-500. This initial fleet was notably larger than that of some other airlines. The airline launched on October 24, 2014.
Despite their size and smallness, Fidelity Bank chose to stick with the airline. It provided funds to buy new aircraft from Boeing. In 2018, Dr Allen Onyema signed an agreement with Boeing for 10 new aircraft, which was financed by Fidelity Bank.
Fidelity Bank provided the funds required for Air Peace’s growth and expansion. Air Peace has grown and is now the largest airline in West Africa by fleet size.
The airline has also kept faith with Fidelity Bank, choosing it even amid multiple options, currently.
No airline in Nigeria today comes close to Air Peace in terms of daily turnover and liquidity.
Onyema, who disclosed recently at a press conference to announce the commencement of Abuja-London Heathrow flights, that the airline currently has 49 aircraft, 36 on outright purchase and four on wet lease, spoke of the financial integrity of the airline, adding that it has contributed to the feat of securing the coveted slot in Heathrow.
Speaking on the airline’s maintenance and financial integrity, Onyema described its fleet maintenance as top-notch, noting that its partnership with Israeli Aerospace Service and OEM has also earned it international accolades. He added that Air Peace’s financial integrity has grown the confidence of other financial institutions in investing in aviation.
“The banking industry confidence has grown due to our financial integrity. Fidelity Bank celebrated us recently; our financial integrity is the reason for our expansion. Every Nigerian bank now wants to partner with us because we see borrowed money as other people’s money, they are depositors’ money, so we are prudent with it, banks don’t look over their shoulders when they are dealing with us”, he added.
On Sunday, April 21, 2024, Fidelity Bank hosted an evening in honour of Air Peace for achieving a historic milestone of being the first Nigerian airline in recent times to commence direct flights from Nigeria to London.
The dinner, which also coincided with the 10th anniversary of the airline, was to be an opportunity to get together to celebrate the Nigerian aviation giant and Chairman of the Air Peace Group, Dr Allen Onyema, who had broken the jinx of Nigerian airlines in the international aviation space with the commencement of flights to London.
Making its debut flight to London on March 30, 2024, with a ticket price of N1.2 million, while players in the space prior to March 30 had charged as much as N3 million, foreign airlines plying the route have since continued to drop their prices in order to remain competitive in the market.
Air Peace’s involvement in international flights has received widespread acclaim from Nigerians at home and abroad, and its strategic pricing is also a big win for Nigeria’s flying public, as reduced flight costs give Nigerians more liquidity to enjoy other pleasures they may wish.
Following on this, Fidelity Bank’s evening in honour of Air Peace is a loud cheer in support of the airline.
According to Onyema, when the airline started operating in 2014, only Fidelity Bank among the country’s financial institutions was willing to support it through its teething period.
Onyema noted that the support he has received from the bank has been consistent over the years, enabling him to fulfil his lifelong dream of creating jobs and empowering the average Nigerian.
“This bank (Fidelity) is the only bank that responded to us in the early days. They believed in us. People who earn a hundred thousand a month, they give them loans. I call it our journey with Fidelity Bank”.
“Dr Nneka Onyeali-Ikpe has just spoken about us, how we were there for them. But I also remember how she was there for us while she was an Executive Director with Fidelity. The team was always there when the road was very rough. Words have failed me because I didn’t know this day would come when an indigenous institution would be celebrating another indigenous institution. It is very encouraging.”
In her remarks at the event, the Managing Director and Chief Executive Officer of Fidelity Bank, Dr Onyeka Onyeali-Ikpe, stated that the celebration is well deserved, as Air Peace has, through financial discipline, expanded its operational fleet and is going the extra mile to put Nigeria on the world stage.
“Today, we are celebrating one of ours. They started operations with a few aircraft and now have 24. My experience with them underscores what you call financial discipline. When you review their accounts, you will not see any personal spending.
“That is a lesson for everybody. We are here to celebrate them. This is a major milestone. We have supported them, no doubt, but they have also been very loyal to us. Because they have been a big fan for a very long time, and all the big boys wanted them, but Allen and his team said no.
Ibom Air
Fidelity Bank is also a part of the success story of Ibom Air as it was recently revealed by the erstwhile managing Director of the airline, Captain Mfon Udom that it was the lead financier for the acquisition of its Airbus A220-300 Series.
Speaking at the ceremony to officially receive the aircraft at the Victor Attah International Airport, Uyo, Udom stated that “there are several Banks that are supporting Ibom Air, but this Aircraft in particular has been made possible by Fidelity Bank and Union Bank.’
“The significance of this ceremony today cannot be overemphasised. I must thank Fidelity Bank for coming in full force to support us. By 2026 we are going to be operating 18 aircraft and adding two new destinations to the routes of Ibom Air later this year, the aircraft will boost services on existing routes.
“My speech would be incomplete without acknowledging the role played by Fidelity Bank as the lead financier of the acquisition of Ibom’s Air’s Airbus A220-300 aircraft”, he stated.
Also speaking at the event, the Managing Director and Chief Executive Officer of Fidelity Bank Plc, Dr. Nneka Onyeali-Ikpe, represented by Mr. Charles Nwoke, Executive Director, Risk Management, Fidelity Bank, noted that “As the market leader in airline financing in Nigeria, Fidelity Bank is proud to support Ibom Air in this venture.
His words, “The partnership reflects our commitment to being the bank of choice for the people of Akwa Ibom State. And we pledge to do more for our valued customers as we continue to pursue our corporate mandate of helping individuals to grow, businesses to thrive and economies to prosper.’’
Enugu Air
And the recently launched Enugu Air was also made possible with the strong financial support of Fidelity Bank.
Its Managing Director, Dr Nneka Onyeali-Ikpe, described the launch of Enugu Air as a powerful affirmation that the nation’s aviation sector is a major driver of Nigeria’s economic growth.
Speaking at the official launch of the Enugu Air held at the Akanu Ibiam International Airport, Enugu, she stated that ‘Fidelity Bank is proud to finance tomorrow’s opportunities today, noting that the bank’s support for Enugu Air aligns with its belief in aviation as a catalyst for growth’.
“It is an honour to join you today as we celebrate the official launch of Enugu Air. As the lead financier of this visionary project, we support Enugu Air because we believe in aviation as a driver of economic growth, regional connectivity, and national transformation.
“At Fidelity Bank, we stand firmly behind its potential to unlock new corridors of opportunity by boosting tourism, accelerating commerce, and creating thousands of jobs across the Southeast. We are proud to finance tomorrow’s opportunities today, a powerful affirmation that ‘Tomorrow Is Here’ in Enugu State and across Nigeria’s aviation sector,” she stated.
CTC signing by Nigeria
Led by the Vice President, Kashim Shettima and Aviation and Aerospace Development Minister, Festus Keyamo, Nigeria recently signed the Cape Town Convention (CTC) Practice Direction in the aviation sector, aimed at reducing the cost of airline operations. This move is expected to facilitate aircraft leasing and financing, potentially lowering passenger flight costs.
CTC is a treaty designed to facilitate asset-based financing and leasing of aviation equipment, expand financing opportunities, and reduce costs – thereby providing substantial economic benefits. It is believed that this move by the government will continue to encourage Fidelity Bank to support more domestic airlines that have hitherto found it difficult to access funds for fleet and route expansion.
