FG aircraft leasing company to offer tax holidays — Keyamo

…as Tinubu writes off 30% taxes, agency fees owed by domestic airlines 

Minister of Aviation and Aerospace Development, Festus Keyamo has revealed that the federal government is considering tax holidays and government guarantees for the privately-funded national aircraft leasing company.

Speaking during an interview with Channels Television,Keyamo highlighted that a primary bottleneck for African aviation is the prohibitive cost of financing fleet renewals. 

While international airlines secure aircraft financing at rates between 3% and 6%, Nigerian operators face interest rates as high as 30% from local commercial banks. Consequently, African skies are frequently populated by older, leased aircraft that have already spent their most efficient years in more lucrative global markets.

To counter this, the new Nigerian aircraft leasing company will operate on a free-market model, allowing local airlines to secure dry leases and execute transactions entirely in Naira. Under this arrangement, the leasing company will absorb the burden of sourcing foreign exchange for its international obligations, relieving local operators of severe dollar liquidity constraints. 

Keyamo noted that while participation will not be mandatory for domestic airlines, the competitive advantages of the platform are expected to naturally attract operators. Over time, the government plans to scale the platform to serve the broader West and Central African regions.

The leasing company will feature a small equity stake from the Federal Government, a structure required to back sovereign guarantees for its transactions. 

Keyamo emphasized that Nigeria has heavily de-risked the environment for international lessors and creditors by fully complying with the Cape Town Convention and refining the Irrevocable De-registration and Export Request Authorization (IDERA). 

Beyond financing, Keyamo confirmed that President Bola Tinubu has established an inter-ministerial committee comprising representatives from the ministries of aviation, finance, and federal tax authorities to review the high burden of taxes and levies squeezing local airlines. This follows a report by the International Air Transport Association (IATA) identifying Nigeria as having some of the highest aviation fees and taxes on the continent. 

In an immediate interim intervention to provide relief, he disclosed that President Tinubu directed that 30% of the taxes and agency fees owed by domestic airlines be written off.

The Minister concluded by urging African nations to discard protectionist borders and aggressively pursue diplomatic efforts to eliminate strict visa regimes and heavy aviation taxes. 

He warned that the structural goals of the African Continental Free Trade Area (AfFTA) cannot be realized without first establishing seamless regional flight networks, noting that it remains paradoxically easier and quicker for many Africans to secure travel visas to Europe than to neighboring African states.