Nigerian airlines are facing a severe financial crisis due to their dollar-denominated costs and naira-denominated revenue. Industry estimates indicate that almost 90 percent of airline operational costs are dollar-denominated, leaving local carriers exposed to naira depreciation and foreign exchange volatility. This financial structure poses a significant challenge to the survival of domestic airlines.
The financial struggles of Nigerian airlines are attributed to various factors, including aircraft leases, spare parts, maintenance checks, engine overhauls, aviation insurance, and crew training, which are paid in foreign currency. Aviation finance expert Sam Onitilo described the situation as a structural problem embedded in the balance sheets of Nigerian airlines. The pressure goes beyond the widely discussed challenges of fuel prices, ticket fares, and access to foreign exchange.
According to Onitilo, an airline operating four narrow-body aircraft under operating leases could incur between $400,000 and $700,000 in monthly lease obligations. For a medium-sized carrier operating six or seven aircraft, monthly lease commitments could exceed $1 million before fuel, salaries, airport charges, maintenance, and spare parts are factored in. Lease agreements can run for several years and are frequently governed by foreign jurisdictions, which can trigger penalties, repossession, or grounding of aircraft in case of default.
The dollar exposure continues after an airline secures an aircraft, as Nigeria has limited capacity for major aircraft maintenance, repair, and overhaul. Airlines routinely send aircraft, engines, and components abroad for specialized work, with industry estimates putting Nigerian airlines' annual spending on offshore maintenance and technical support at between $300 million and $400 million. This represents a substantial foreign exchange drain from an industry already struggling to obtain dollars for its essential operations.
The vulnerability of Nigerian airlines becomes particularly acute whenever the naira depreciates sharply or access to foreign exchange tightens. During previous periods of severe forex shortages, some Nigerian airlines reportedly waited between six and 10 weeks to access dollars through official channels. Others had to obtain foreign currency through more expensive alternative markets, while aircraft remained grounded due to a lack of parts or technical services required to return them to operation.
The foreign exchange challenge has now been compounded by another major cost shock — aviation fuel. The Airline Operators of Nigeria (AON) has warned that the price of Jet A1 rose from about N900 per litre in late February 2026 to approximately N3,300 per litre within weeks. The association described the increase as excessive, arguing that it was far above the roughly 30 percent increase in international crude prices during the same period.
To mitigate the challenges faced by Nigerian airlines, the Federal Government is exploring ways to reduce the industry's exposure to foreign currency. Minister of Aviation and Aerospace Development, Festus Keyamo, is leading efforts to find solutions to the problems. The government aims to support the sustainability of the aviation sector, which is crucial to the country's economy and transportation network.
Key points
- Nigerian airlines face financial crisis due to dollar-denominated costs and naira depreciation.
- The industry's exposure to foreign currency is a structural problem embedded in the balance sheets of Nigerian airlines.
- The government is exploring ways to reduce the industry's exposure to foreign currency to support the sustainability of the aviation sector.
