By Tristan Brouard
Africa’s aviation industry stands at a critical juncture. With a rapidly growing population, the continued liberalization of skies under initiatives like the Single African Air Transport Market (SAATM), and demand for improved regional connectivity, the continent holds immense promise. Yet, for most African airlines, the most fundamental question remains: how do we sustainably finance fleet growth?
Traditional routes such as dry leases, ACMI agreements, or outright purchases, remain important. However, as capital constraints persist, airlines are increasingly exploring new and more strategic approaches to aircraft acquisition, including equity investment and merger and acquisition (M&A) activity. Notably, Qatar Airways’ recent investments in Airlink (South Africa) and RwandAir (Rwanda) highlight the growing appeal of partnerships that combine capital injection with strategic alignment.
This article explores how African airlines are reshaping their approach to financing, the key enablers and barriers they face, and why the future will likely be defined by hybrid financing strategies and long-term collaboration.
Aircraft Acquisition Models: Old Tools, New Context
Historically, African airlines have had to adopt flexible – and often pragmatic – approaches to fleet acquisition. Here’s how the landscape is evolving today:
ACMI (Wet Leasing)
ACMI continues to serve as a practical solution for smaller or seasonal operators. It enables quick market entry or rapid capacity injection during peak periods without the fixed costs of aircraft ownership or maintenance.
However, ACMI is transitioning from a temporary fix to a long-term fleet strategy. Increasingly, African-based ACMI operators are emerging, offering regionally attuned services that are more cost-efficient and responsive to local market dynamics. This shift supports local employment, builds technical capacity, and reduces reliance on foreign operators.
Dry Leasing (Operating and Finance Leases)
Dry leasing remains the most commonly used structure for mid-sized African airlines, particularly operating leases, which provide access to modern aircraft with relatively low capital outlay. These allow for scalability, but come with stringent return conditions, maintenance reserves, and limited control over aircraft customisation.
Finance leases, in contrast, offer a pathway to ownership but typically involve higher financial commitments and show up on the airline’s balance sheet as liabilities.
Outright Ownership
Rare, but not obsolete. Outright purchase, especially through government support or development finance, still appeals to well-capitalised national carriers seeking long-term cost savings and asset control. However, high capital requirements, foreign exchange exposure, and depreciation risks often make this approach unviable for most private carriers.
Strategic Partnerships and M&A: A New Financing Frontier
In recent years, strategic equity partnerships have emerged as a compelling alternative to traditional financing. Qatar Airways’ investments in RwandAir and Airlink represent a major shift in how capital and capacity can be deployed on the continent.
These investments are not merely financial, they are strategic. They provide:
- Access to working capital, helping African partners stabilise operations and expand networks.
- Integration into global alliance networks, increasing reach and international credibility.
- Operational synergies, such as code sharing, fleet planning support, and staff training.
- Increased aircraft access, often through shared leasing pools or collective bargaining power with OEMs and lessors.
In return, Qatar secures access to key regional feeder markets, advancing its competitive position in Africa. This model, combining finance, operations, and network strategy, represents a new template for African carriers seeking sustainable growth without traditional debt burdens.
Financing Sources: Diversified but Uneven
While Africa’s aviation financing ecosystem is gradually expanding, airlines across the continent continue to face significant challenges. Below is a summary of the main current financing sources, including their benefits and limitations:
Three Trends Reshaping the Future
The Rise of Local Leasing and ACMI Platforms
African-based lessors and ACMI providers are on the rise. These organisations have a deeper understanding of local market volatility, seasonality, and demand nuances, allowing them to offer more tailored leasing terms and operational support.
Blended Financing Structures
The financing landscape is increasingly driven by hybrid models — for example, combining a DFI-backed loan with an operating lease, or pairing private equity with OEM financing. Flexibility and creativity are becoming more important than rigid structures.
Green Financing and ESG Considerations
Investors are placing growing emphasis on environmental, social, and governance (ESG) performance. Carriers that invest in fuel-efficient aircraft, carbon-offset programmes, or sustainable operations may gain access to lower-cost, ESG-aligned capital. This creates both financial and reputational advantages for well-governed, forward-thinking carriers.
What Airlines Can Do to Attract Capital
For many African carriers, the biggest challenge is not just accessing funding, it’s convincing investors and lessors that they’re a credible, long-term partner. Here’s how they can do it:
- Present audited financials and clean corporate structures. This builds trust.
- Align fleet strategy with commercial demand. Every aircraft acquisition must have a clear, profitable purpose.
- Maintain regulatory compliance. Adhering to international standards such as the Cape Town Convention and IOSA enhances credibility and reduces perceived risk.
- Demonstrate operational excellence. On-time performance, good maintenance records, and positive technical audits outcomes are key signals for asset owners.
- Communicate proactively with financiers. Transparency, early engagement, and clear business cases help avoid surprises and accelerate deal timelines.
Conclusion: Financing the Future Through Collaboration
Africa’s aviation future will not be built on a single model alone. Whether through wet leases, structured debt, or strategic partnerships, the real opportunity lies in aligning the right type of capital with the right airline at the right time.
The example set by Qatar Airways and its African partners signals a new era, one where aircraft access can be enabled through collaboration, not just credit.
For airlines, success will depend on positioning themselves as credible, investment-ready businesses. For investors and partners, it will require understanding Africa’s unique context and potential. Together, these actors can unlock the next chapter of aviation growth on the continent, one built not just on ambition, but on well-structured, mutually beneficial finance.
