Nigerian govt weighs debt relief for airlines as jet fuel crisis deepens

THE Nigerian government is exploring plans to grant domestic airlines discounts on debts owed to aviation agencies, as part of efforts to cushion the impact of surging aviation fuel prices.

A debt discount, also known as a discounted payoff (DPO), occurs when a lender or creditor agrees to accept less than the full amount owed to settle a debt, Investopedia says.

Minister of Aviation and Aerospace Development, Mr Festus Keyamo, disclosed this on Wednesday in Abuja after a high-level meeting convened to address the spike in aviation fuel costs.

READ ALSO: Jet fuel hits N3,300/litre, Nigerian govt asks airlines to avoid fare increase

He said Bola Tinubu, who was briefed on the outcome of the meeting, directed that a formal proposal be submitted for immediate consideration.

According to the minister, the president is prepared to approve a ‘generous discount’ on debts owed by airlines to agencies such as Nigerian Airspace Management Agency (NAMA), Federal Airports Authority of Nigeria (FAAN), and Nigerian Civil Aviation Authority (NCAA), with the final percentage to be determined by the presidency.

Keyamo added that the president would also set up a committee to review the multiple taxes, levies, and charges embedded in domestic airfares, with a view to easing the burden on passengers. The committee is expected to work within a defined timeline and recommend fees that could be temporarily removed.

He further disclosed that airline operators would be granted an opportunity to meet the president directly to discuss broader issues, including access to financing and industry sustainability.

Speaking at the meeting, Chairman of Air Peace, Mr Allen Onyema, attributed the crisis largely to the sharp rise in Jet A1 prices, which he said far outpaces global crude oil trends.

Onyema noted that airlines are under intense financial pressure, relying heavily on borrowing to fund fuel purchases while trying to maintain safety and operational standards. He questioned the basis for the more than 300 percent increase in fuel prices and called for marketers to be held accountable.

While acknowledging government intervention, the Air Peace chairman urged for more sweeping relief, including a full waiver of airline debts and a temporary halt in repayments until global supply conditions stabilise.

He also highlighted the challenge of high interest rates on aircraft financing in Nigeria, noting that while airlines in other countries access loans at around 3 percent, Nigerian operators face rates as high as 30 percent to 35 percent. According to him, this disparity contributes significantly to mounting industry debt.

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Onyema called on the government to strengthen funding for the Bank of Industry (BOI) to enable it to provide more affordable financing to airlines.

Earlier this month, the Airline Operators of Nigeria (AON) threatened to suspend operations over escalating fuel costs, which rose from N900 per litre in late February to about N3,300 per litre, an increase of more than 300 percent.

The group, however, later suspended the planned shutdown following appeals from the aviation minister.