The Managing Director/CEO of Aero Contractors Limited, Captain Ado Sanusi, has exposed the benefits and challenges of dry leasing of aircraft, a long-term lease of aircraft whereby the airline (the lessee) takes charge of the maintenance, insurance, crew management and operation of the aircraft.
But the alternative, which is wet lease, the lessor is in charge of the aircraft maintenance, insurance and crew and the lease is usually for short-term.
Issues on dry lease has come to the front burner in the aviation industry because for a long time, over10 years, lessors have blacklisted Nigerian airlines from accessing aircraft dry lease arrangement but with the dexterous efforts of the Minister of Aviation and Aerospace Development, Festus Keyamo, Nigeria is at the cusp of resuming dry leasing of aircraft.
Throwing light on the different types of aircraft leasing, Sanusi identified key obstacles as legal and judicial bottlenecks, ambiguity in practice direction and judicial capacity gaps.
“There is renewed optimism within Nigeria’s aviation industry following the recent issuance of Practice Directions by the Chief Judge of the Federal High Court, spurred by the Honourable Minister of Aviation and Aerospace Development, Mr. Festus Keyamo. The new directives are designed to align Nigeria’s legal system with the Cape Town Convention (CTC), thereby improving trust and transparency in aircraft leasing.
“For years, Nigerian airlines have struggled to acquire aircraft under dry lease arrangements—where the airline operates and maintains the aircraft without crew or insurance provided by the lessor. While this is the most cost-effective way for carriers to expand their fleet, several enduring challenges have hindered access. With legal reforms underway, now is the time to examine what still stands in the way and how to pave the road forward,” Sanusi said.
On legal and judicial bottlenecks, Sanusi said despite the Cape Town Convention being domesticated into Nigerian law, its implementation has faced serious roadblocks, which include ambiguity in the practice direction, saying that the guidelines do not clearly define aircraft asset categories or timelines for enforcement and this opens the door to inconsistent judicial rulings and legal manoeuvring through injunctions, ex parte orders and prolonged court appeals.
There are also the judicial capacity gaps, which according to Sanusi, many judges lack the necessary training to handle complex international aviation finance cases. As a result, enforcement can be delayed or inconsistent—leading to a perception of legal risk among global lessors.
Other factors include insurance market constraints. Aero Contractors Managing Director explained that dry leases require adequate insurance coverage, which presents unique challenges in Nigeria, and this include limited underwriting capacity.
According to him, “Domestic insurers do not have the financial muscle to cover multi-million-dollar dry lease risks. International lessors often insist on offshore coverage, creating tension with local insurance regulations.”
This he said, entails high reinsurance costs and to mitigate their own risks, Nigerian insurers depend on expensive reinsurance from global markets—pushing premiums higher and discouraging lease deals.
Sanusi observed that although things have started getting better because of the current efforts of the current government but there is also the residual risks perception, noting that Nigeria’s image in the global leasing market has only recently begun to recover because of the aforementioned efforts of the Minister of Aviation.
Sanusi recalled that past defaults that led to blacklisting of Nigeria has remained a liability on the image of Nigeria in the aviation circles, noting, “Historical incidents of Nigerian airlines defaulting on lease payments—and then using the courts to block repossession—resulted in a blacklisting that the country only recently overcame. Although Nigeria has now been delisted, individual airline reputations continue to play a major role in lessor decision-making.
He also noted that there is global aircraft shortage; so, even if Nigeria resolves its domestic challenges, the international market presents another hurdle, including limited availability of single aisle (small body) aircraft.
“The global post-COVID recovery and rising demand have created a scarcity of narrow-body aircraft, such as Boeing 737s and Airbus A320s. Nigerian carriers must now compete globally for a shrinking pool of aircraft,” he said.
Sanusi also recommended how these hurdles could be overcome, saying that to take full advantage of the Cape Town Convention and Practice Directions, a holistic strategy is required, which include strong legal framework, clarity on the practice direction, including definitions, asset classes, and that procedural timelines must be spelled out clearly. He recommended a 10-day repossession window, with restricted appeal rights, which would bring Nigeria to be in line with global best practices.
“There should be aviation-specific training for judges or the establishment of dedicated aviation courts. This will significantly improve the speed and reliability of legal decisions. There should be reform on insurance regulations. Recent efforts by the Nigeria Civil Aviation Authority (NCAA) and NAICOM (National Insurance Commission) to allow up to 90% offshore coverage are promising. More reforms are needed to accommodate lessor expectations while protecting local interests. There should be encouragement of collaboration between Nigerian insurers and international firms to expand underwriting capacity and reduce long-term costs,” he said.
Sanusi also said Nigeria should improve its risk management and reputation by promoting transparent airline operations.
“Nigerian carriers must build trust by complying strictly with lease terms, avoiding legal manipulation, and ensuring timely payments. They should engage lessors actively. With improved legal protections and insurance structures, airlines should reach out to lessors, highlighting these improvements and Nigeria’s rising CTC index ranking,” he advised.
To secure aircraft despite global shortage, the former Managing Director of the Nigeria Airspace Management Agency (NAMA) also said there should be a new push for access to finance, noting that institutions such as Afreximbank have shown willingness to fund dry lease acquisitions; so, Nigerian airlines should capitalize on these opportunities.
He said there are flexible lease options; that in the short term, there could be combination of wet lease with transitional short-term dry leases, which may be a viable strategy while waiting for availability of aircraft to improve.
According to him, Nigeria is losing a lot by not dry leasing, remaking that the inability to access dry leases comes at a heavy cost, which include high operational costs, as wet leasing drives up costs and erodes airline profitability. It also affects the growth of the airline because without affordable aircraft, Nigerian carriers struggle to expand into new routes or increase frequency on existing ones.
Then there is the foreign exchange drain because wet lease payments in foreign currency contribute to Nigeria’s persistent FX challenges and this has led to high fares, which discourages tourism and trade, affecting wider economic growth and job creation.
“The recent efforts by the Nigerian government and judiciary mark a critical step toward improving access to aircraft under dry lease agreements. However, legal clarity, insurance reform, and airline discipline are still needed to unlock full benefits. The aviation sector’s growth—and indeed Nigeria’s broader economic resurgence—may well depend on how quickly these remaining barriers are dismantled. With political will, industry collaboration, and institutional reform, Nigerian airlines can once again take their rightful place in the global aviation ecosystem—this time with wings of their own making,” Sanusi further said.
