At the recently concluded 5th CHINET Aviacargo Conference in Lagos, a troubling revelation emerged: for years, Nigerian airports have reportedly lacked adequate insurance coverage, a situation that not only deviates from global standards but also imposes significant financial burdens on airlines and other airport users.
A High-Risk Environment
Nigeria has long been designated a high-risk country by lessors and international insurance providers, with the absence of comprehensive airport insurance cited as a major factor. This has translated into higher premiums for Nigerian airlines, which pay nearly three times the insurance costs borne by their counterparts in Europe and North America.
Frequent security lapses reinforce this perception of risk. Notable incidents include a mentally challenged man clinging to an aircraft wing in Lagos, villagers encroaching on Kaduna airport’s runway, and local farmers spreading produce on the airstrip in Port Harcourt. Such breaches highlight the porous nature of airports managed by the Federal Airports Authority of Nigeria (FAAN), where even restricted areas like the airside are easily accessible.
Airlines Bearing the Costs
Without comprehensive airport insurance, Nigerian airlines directly shoulder the financial impact of accidents, vandalism, and infrastructure failures. Cases abound:
- In 2010, an Arik Air Boeing 737 sustained severe damage after being struck by a taxi that illegally accessed the tarmac in Calabar. FAAN refused liability, leaving the airline to bear the repair costs.
- In 2022, thieves breached the tarmac at Lagos’ MMA2 terminal and stole critical components from an Arik Air aircraft. Again, the airline covered the full expense of repairs.
- Repeated bird strikes, linked to inadequate wildlife control, also continue to cause costly engine damage, with airlines receiving no compensation.
Calls for Reform
Industry leaders argue that airport insurance is essential. Captain Edward Boyo, Managing Director of Overland Airways, stressed that Nigerian airports must be insured to protect against losses caused by infrastructural inefficiencies and operational hazards. He likened the current situation to “driving on the road where only some cars are insured,” and called on the National Insurance Commission (NAICOM) to enforce compulsory airport insurance.
Boyo noted that provisions for airport insurance were removed from the Nigerian Civil Aviation Regulations (Nig-CARs), creating regulatory gaps that expose operators to unnecessary risks.
FAAN’s Position
FAAN’s Managing Director/CEO, Mrs. Olubunmi Kuku, countered the claims, insisting that all federal airports under FAAN’s management are insured. According to her, records confirm that “all FGN airports managed by FAAN are insured with coverage up to date.”
She acknowledged, however, challenges around community encroachment and wildlife-related incidents, which continue to impact operations. She added that FAAN is working to address runway infrastructure issues, including ageing facilities and overdue maintenance.
Yet, industry insiders remain skeptical, questioning the type and scope of insurance policies FAAN has undertaken. They point out that airlines still bear the full financial burden of aircraft damages at airports, raising doubts about the practical effectiveness of FAAN’s coverage.
Global Best Practices
While the Airports Council International (ACI) does not mandate insurance as a condition of membership, experts stress that adequate coverage is a standard international practice. According to Dr. Richard Aisuebeogun, former FAAN Managing Director and now Managing Partner at Avialog Company Limited, insurance is both a risk management tool and a demonstration of financial responsibility.
He emphasized that airports worldwide face significant risks—ranging from accidents and infrastructure damage to terrorism, natural disasters, and cyber threats—making insurance a critical safeguard for business continuity and stakeholder confidence.
Similarly, George Uriesi, Executive Director/COO of Ibom Air and former MD of FAAN, noted that in other jurisdictions, airport insurance not only protects operators but also lowers premium rates for airlines by improving risk assessments.
Conclusion
The absence—or perceived inadequacy—of airport insurance in Nigeria underscores broader concerns about the country’s aviation safety environment. By leaving airlines to absorb losses caused by security breaches, bird strikes, and poor infrastructure, the system amplifies Nigeria’s reputation as a harsh operating environment.
As experts and regulators debate FAAN’s insurance practices, one fact remains clear: comprehensive airport insurance is not merely optional but a fundamental requirement for credibility, financial resilience, and alignment with international best practices.
