Leasing Aircraft Into Nigeria: A Guide To Asset Protection, Enforcement And Counterparty Risk

Introduction

Nigeria operates the largest domestic aviation market in West Africa, and that market depends overwhelmingly on leased aircraft. Rather than purchasing aircraft outright, which is highly capital intensive, most Nigerian airlines rely on operating, finance, dry and wet lease arrangements to build and maintain their fleets. For international lessors and financiers, this presents a significant commercial opportunity.

Nigeria’s large and growing population, increasing demand for air travel and strategic position as a regional aviation hub continue to make it an attractive destination for aircraft leasing and aviation finance.¹ Opportunity, however, comes with risk. Aircrafts are high-value, mobile assets that routinely cross jurisdictions and are exposed to a range of commercial, regulatory and operational risks. In Nigeria, those risks may be heightened by foreign exchange volatility, regulatory requirements, insolvency concerns and the practical realities of enforcement.²

Consequently, every aircraft lease should be structured on the assumption that it may one day become an asset recovery exercise. The real test of a leasing transaction is therefore not whether the lease performs as expected, but whether the lessor can promptly protect and recover its asset when the transaction becomes distressed. Against this backdrop, a recurring question for aircraft owners, financiers and their advisers is whether Nigerian law provides an effective framework for protecting leased aircraft and enforcing proprietary rights upon default. While Nigeria has made significant progress through its adoption of the Cape Town Convention and the implementation of recent legislative and regulatory reforms, the effectiveness of those protections ultimately depends on how the transaction is structured, how interests are perfected and registered, and how enforcement mechanisms are deployed when disputes arise.

This article examines the legal and practical considerations that should inform aircraft leasing transactions in Nigeria. It considers the measures available to protect a lessor’s proprietary interests before and during the life of a lease, the domestic and international legal framework governing aircraft leasing, the enforcement and repossession options available upon default, and the principal counterparty risks that should be assessed before an aircraft is delivered.

Understanding the Nigerian Aircraft Leasing Landscape

Aircraft are capital intensive assets, and the aviation industry is one of the most capital intensive sectors in the global economy, from the cost of acquisition to the cost of operation, and exposure to foreign exchange volatility .³ Outright purchase requires either substantial capital or access to long - tenor secured debt, neither of which is readily available to most Nigerian carriers.

Leasing, therefore, becomes the only viable alternative. It allows airlines to use, buy or upgrade their fleets through scheduled rental payments.

As much as leasing is advantageous in Nigeria, it also bears its challenges. The major challenge is the mismatch between naira denominated revenue and dollar - denominated lease obligations.

Aircraft, spare parts, insurance, and most lease rentals are priced in foreign currency as opposed to the naira income they are satisfied or paid from; as such, Nigerian lessees are exposed to exchange rate volatility.

Several leasing structures coexist in the Nigerian market, each allocating risk and reward differently between the parties:

Operating leases

Operating leases are the most common form of aircraft leasing in Nigeria. Under this arrangement, the Lessor retains ownership of the aircraft and bears the residual value risk, while the Lessee operates the aircraft for an agreed term in exchange for periodic rental payments. At the end of the lease, the aircraft is returned to the Lessor for re - leasing, sale or other commercial use.

Finance leases

Finance leases are structured to enable the Lessor to recover substantially all of the aircraft's value through lease rentals during the lease term. Unlike an operating lease, the Lessee assumes many of the economic risks and rewards associated with ownership and may have the option, or in some cases the obligation, to acquire the aircraft at the expiry of the lease

Wet leases

Wet leases, involve the provision of the aircraft together with crew, maintenance and insurance (commonly referred to as an ACMI arrangement). They are typically used to address short - term capacity shortages, seasonal demand or operational disruptions. While wet leases provide flexibility and allow airlines to deploy aircraft quickly, the NCAA has increasingly encouraged operators to transition towards dry leasing in order to promote local operational capability, skills transfer and the long - term sustainability of Nigeria's aviation industry.

Dry leases

Dry leases, involve the provision of the aircraft alone, without crew, maintenance or insurance. The Lessee is responsible for operating and maintaining the aircraft under its own Air Operator Certificate (AOC), while complying with all applicable regulatory requirements.

This structure is generally preferred by established airlines with the operational capacity to manage their own fleet and has become increasingly encouraged by Nigerian regulators as part of broader efforts to strengthen indigenous aviation capacity. The recent dry lease of a Boeing 737 - 700NG by Air Peace from AerCap illustrates the growing adoption of this model in Nigeria .⁴

Aircraft leasing transactions typically involve a range of stakeholders beyond the Lessor and the airline which is usually the Lessee. Each plays a distinct role in the transaction and may significantly influence the protection, enforcement and recovery of the aircraft if the lease becomes distressed. These key participants include:

Lessors

The aircraft owner or head - lessor, whose commercial interest is protection of title, priority and the ability to recover possession without unreasonable delay.

Insurers

Providers of hull, liability and other aviation insurance whose coverage can materially affect risk allocation and recovery.

Lessees (airlines)

The operator of the aircraft, whose interest lies in maintaining operations, preserving its Air Operator Certificate (AOC) and, where financially distressed, restructuring rather than losing the aircraft.

Lessees (airlines)

Maintenance, Repair and Overhaul (MRO) providers: entities responsible for maintaining the aircraft and which may assert liens for unpaid maintenance charges.

Financiers and lenders

Banks and other financial institutions that fund the acquisition of the aircraft and whose financing requirements often shape the lease structure and security package.

Regulators

Principally the NCAA, FAAN, the Central Bank of Nigeria, the Corporate Affairs Commission and the Federal Inland Revenue Service, each of which may, directly or indirectly affect the registration, operation, enforcement or repossession of the aircraft.

Footnotes

1 Isaac Agber , ‘FG Approves Nigerian Aircraft Leasing Company to Transform Aviation Sector’ Independent (1 May 2026) https://independent.ng/fg-approves-nigerian-aircraft-leasing-company-to-transform-aviation-sector/ accessed 20 July 2026.

2 Tamuno Atekebo , Chinasa Unaegbunam , Naomi Kabowei and Favour Osayuwamen, 'Aviation: Financing and Leasing 2025' Mondaq (12 August 2025) https://www.mondaq.com/nigeria/aviation/1664744/aviation-financing-and-leasing-2025 accessed 20 July 2026

3 Atekebo and others, 'Aviation: Financing and Leasing 2025' (n 1)

4 Air Peace, 'Air Peace Marks Arrival of Dry - Lease Boeing 737 - 700 NG, a Milestone for Nigerian Aviation' (7 November 2025) https://flyairpeace.com/blog/air-peace-marks-arrival-of-dry-lease-boeing-737-700-ng-a-milestone-for-nigerian-aviation/ accessed 20 July 2026

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