Why Nigerian airlines are yet to benefit from Cape Town Convention practice – Obiora

United Nigeria Airlines is currently eyeing the stock market and international code-sharing partnerships. However, the path to global expansion is paved with high-interest loans and a need for transit infrastructure. In this interview with IFEOMA OKEKE-KORIEOCHA, Obiora Okonkwo, the airline’s Chairman, explains why Nigerian carriers are still waiting for the full benefits of the Cape Town Convention and why the current cost of capital is the biggest threat to affordable air travel in Nigeria.

Can you speak on some of the cities you have launched flights into?

We are the first airline to touch down in Ekiti. And also the first commercial airline in Bayelsa. You see, this experience of being the first to fly to these destinations is a very powerful one. I recall our first flight to Bayelsa. I was seated next to the governor of Bayelsa State. And when we were descending into Bayelsa, seeing the landscape of that beautiful state, the man told me, ‘Chairman, you don’t know what you have done for the people of Bayelsa State. Can you imagine that this is the first time 90 percent of the people in this aircraft have seen Bayelsa from the air?’ It was very powerful. I will now relate that to our visit to Ekiti. Uniting people can open up aviation. That is why we could think of even going to Ekiti. People have said, even the admission into the State’s school this year cannot be compared. The parents are happy, the students are happy. And ladies and gentlemen, all this alone for me is worth more than financial gain.

It is a good sense of fulfilment that we are contributing to the development of this country and creating opportunities. We are living our dream uniting Nigerians. And we have many other routes that we are going to open from now till December. For some of them, we will also be the first to fly into them. We also remember that we are first to go to Ebonyi. For these people to find us worthy and put their trust in us, we are very, very happy. And we are promising them and more of those who will come that we will never let them down.

How has the lack of transit facilities at our airports affected your operations? Also, do you know if the transit facilities are also considered in the ongoing reconstruction at the Lagos airport?

It is a big concern for us operators who don’t have a transit facility at our airport.
It makes it very difficult to create a hub in Nigeria. What that simply means is that if those things are not in place, it will be very difficult for us to achieve our aim of flying to longer regions, continental and intercontinental. But the engagement we are having with the Minister of Aviation, who is very interested in this, will yield the expected results before we kick off. This is because we must be able to get people from other regions into Nigeria in a seamless way. That is, you don’t need to check out and check in. You should be able to have a transit visa if you don’t want to go in. We consider this a very critical infrastructure in our airport.

We are engaging, and it is getting positive results. Concerning the construction going on at MMIA, I don’t have the details of what is contained there, but I know that this minister is very particular about this case. As a matter of fact, we have a new product now in United Nigeria. This is because we are going to so many other cities, and more to come. We want to be able to take a student living in Ekiti, but going to Port Harcourt, Kano or Enugu. We don’t want the students’ journey to terminate in Lagos or Abuja. We want to be able to take the person beyond Lagos and Abuja. That is, get into Lagos, Abuja, move in a transit arrangement to Kano, Port Harcourt to Enugu and so on. So that discussion is going on, and we are hopeful that within the very shortest possible time, we have that in place because it will definitely help our plan.

You will recall that Nigeria signed the Cape Town Convention Practice, which allows dry-lease aircraft to be brought into Nigeria by lessors and aircraft manufacturing companies. As an airline, have you benefited from this Cape Town Convention Practice?

Yes, we are aware of the progress being made with the Cape Town Convention, the new practice direction, and the new rating, that we have now higher than most countries in Europe. Thanks to Festus Keyamo, the Minister of Aviation, United Nigeria has been an integral part of it, all the meetings locally and internationally. And yes, we are very, very well positioned to be the early beneficiaries. We have a lot of positive discussion going on in that direction. But you know, aircraft is not kept in the warehouse or a store for you to pick. By the time this agreement was made, a whole lot of these lessors had their aircraft committed with different operators. It will take a while to kick it, but we are aware. And we have gone into agreement signing with some lessors that the first set of aircraft that will come in from them in a very short time, we will be one of the beneficiaries. But we see this more or less materialising to a very fruitful position from the year 2027 when some of the aircraft that are already committed will be returned to the lessors. Because the Original Equipment Manufacturers (OEMs) are now meeting us and some of them are factoring expectations. This is because it is only when the lessee gets a new supply that you release the old contract. So we are very hopeful that it will benefit us. So we are in the forefront of it.

Tell us the number of passengers that you have airlifted in the last five years?

I think for us we are waiting to hit the one million mark. This year alone, we did over 700,000 passengers and put together so far, we have done about 2.5 million over a five-year period. We are just about to hit our annual one million number and that will happen before the end of the year. With the size of fleet we have now, we are definitely going to exceed that within this year.

What is the impact of double digit interest loan on airline operations?

As you may know, you have a bank loan at an interest of like 30 to 35 percent. That is huge. At some point, if something is not done about it, it will be very difficult to scale operations for different operators. We have requested the government to create a single-digit window for airlines. What it means is that an aircraft is high-cost equipment. For you to have a reasonable amount of a loan that will make an impact, you are talking of something in the amount of billions. Let’s say you have a 100 billion naira loan from the bank, and we are paying 30 percent interest. What it means is that without paying for the principal, every year you are already paying the bank interest of 30 billion naira. Did you get that? Interest of 30 billion translates to probably about two million dollars every month. So you took 100 billion from the bank to buy one or two aircraft, every month you pay the bank $2 million, not principal.

That is huge. And when we talk about the cost of capital as a factor that determines the cost of a ticket, people don’t look at this. You know what it takes to make $2 million? Years in the past have been so bad. For the last two years, we are now at the cruising point. We are in order because we are talking about going into the stock market. We are inviting external people. And they must be happy to partner with you. It is a lot of work. It is a lot of processes. And we are complying with all that is required: the corporate governance, the books and the rules. I can assure that those who have coming contact with us have fallen in love. So right now, we are just in friendship, you know, it is I love you, I love you kind of a thing. We hope that it will end in marriage. So we are open.

We are also hoping that with the size and the type of equipment we have today, we are also a very eligible bride for interline and code-sharing. On this, we have some advanced discussions ongoing. This is because for any airline to codeshare with you, you have to have the same service standard. And then you also have some equivalent equipment that their own customers will be happy with. Recall that before now, we were operating mainly a small-body aircraft, the ERJ 145. If you want to make codeshare with an international operator, like a legacy carrier, they are going to need it. So somebody going to America or London or Dubai from Enugu or Port Harcourt, normally we have a big box. They shop five, three boxes. Our ERJ is not suitable for that. But today, we are very prepared. Our doors are open. We are having some positive discussions in that direction. So we are positioned to take a good advantage of that.

The reforms introduced by the current administration, according to you, has taken aviation out of the woods. Could you throw more light on some of those strides for which United Airlines is in major beneficiary?

In terms of policy, that has favoured us, we have said that before now, you wake up in the morning, you don’t know how much naira to dollar will be by noon. You also don’t know how much it will be by 3pm. Somebody is telling you this is my rate now, in one hour, if you want to pay money to my account, call me to tell you the current rate. You all saw that, right? Now, it is a thing of the past. So the reason why we are talking with some international financiers and partner is that they are sure you can change your naira into dollar to be able to pay our obligations to them. That is a positive policy from this government. We are already benefiting from it. We have seen the naira very stable. So these are positives and we actually commend the government for that. We also hope this stability and predictable exchange rate will continue.

In recent years, we have had incidents of unruly passenger behavior and several happened last year. What has been your experience in recent times? Is it increasing or reducing?

I don’t know how many of you recall that in January 2025, in one of my TV outings, I had said that the worst thing that was happening to our industry then was unruly passengers. We had overcome the problem of policy instability and some other things. For unruly passengers, I do not see it in decrease. It is a thing of concern. If there is anything that is not pleasant for me in this sector, it is the unruly passenger situation. If there is a situation that happens, not only in United Nigeria but also in others, too, your heart starts beating because you don’t know the fate of your staff who are in different stations. Let me tell you about my last journey. I travelled in January to Dublin. I flew on our great airline, Air Peace, to London. Everything was great. On arrival, I had to take another airline to Dublin. On arrival in Dublin, I was in business class and had only one piece of luggage. I did not see my luggage. This happened last month, and right there, the worst was that I did not even see anyone to complain to.

The nearest person I could talk to referred me to a system that was standing there. They said, go and fill in the complaint in the system. In my desire to talk to somebody, I even claimed that I am not computer literate, so that I could get help, but the person walked away from me. I went back to my hotel, and I did not get my luggage. I managed to fill out the form. Around 6 am, when I woke up the next day, by 8 am, I saw a message that I could come to the airport to pick up my bag. Not minding that I have filled out the form, I wanted my bag to be delivered to the hotel. I hurriedly went to the airport, got there, and there was nobody to talk to.
This time I was given a phone to call with. At the end of the day, I got another message that while I was there, my bag would be delivered to the hotel.
I missed my appointment. I did not get the bag till in the evening. That’s the next day. That is not the end of my story.

Each message I got, I forwarded it to the minister and the DG of the Nigeria Civil Aviation Authority (NCAA) because we were on the same trip in the same hotel. And as a matter of fact, DG NCAA, in that conference the year before, did not get his luggage too. He had to go to the airport the next day and then got his luggage 24 hours later.

On the day of my departure, my flight was supposed to be 120 pm. We scheduled a lot of appointments for me to meet my 1.20 pm flight. Only for me to wake up around eight o’clock and get a message that my flight had been cancelled and rescheduled for 8.40 pm that evening. Meanwhile, my connecting flight from Gatwick was at 9 pm; they scheduled my flight at 8.40 pm. Yet nobody to talk to, nobody to call. And then I was asking myself, how people would react if this happened in Nigeria. Some would have beaten up the staff of the airline. This thing happens all over the world. What did I do? I had to buy another ticket to be able to meet my connecting flight from Gatwick back to Abuja. As of today, I have not received any compensation. Nobody is even talking to me about my refund.
Our passengers are not fair to us.