Nigeria: Essential Provisions Of A Hangar Agreement In Nigeria's Aviation Sector

Last Updated: 12 February 2018
Article by Emmanuel Ekpenyong

Aircraft Hangar is traced to Wright Brothers who stored and repaired their aircraft in a wooden Hangar constructed at Kill Devil Hills in North Carolina in 1902. In modern times, aircraft Hangar is a large building with an extensive floor area for housing or maintenance of aircrafts. Hangar Agreement is a binding document between an aviation authority who has title and beneficial right over land upon which a Hangar is situate on one part and the Owner of an aircraft or fleet of aircrafts who wants to make use of the Hangar on the other part. 

In Nigeria, the growth in international trade has increased the necessity for persons and goods to move in and out of Nigeria. This development has led to a boom in the aviation sector and an increase in aircrafts in Nigeria's aerospace. The Nigerian Civil Aviation Authority ("NCCA") continually improves and ensures that aviation safety standard in accordance to international standards are complied with.

Consequently, there has been an urgent need for the Federal Airports Authority of Nigeria ("the authority") to enter into Hangar Agreement and other forms of agreement with Owners of aircrafts ("the Owner") for maintenance and repairs of aircrafts. The Hangar Agreement ("the Agreement") stipulates conventional provisions as well as technical provisions applicable in the aviation sector. The main provisions are discussed below;

  1. Lease Property

The details of the location, measurement and land upon which the Hangar is situated must be clear. The provision shall stipulate whether the Hangar has been constructed or would be constructed either by the authority or Owner. The parties shall state the period within which the Hangar will be constructed. The Owner shall carry out all Hangar activities at the Hangar. The Owner may be liable to damages for trespass if it carries out Hangar activities on a property other than the lease property. 

  1. Term

The period upon which the Owner shall carry out Hangar activities at the Hangar must be stated. The parties may include or exclude the commencement or ending date. The parties may also make provision for the option to renew the term for a further period.

  1. Use of Lease Property

The particulars of aircraft or aircrafts to be maintained at the Hangar may be specified. The parties must stipulate the purpose for which the Hangar would be used and they include;

  1. Storage of tools and equipment for maintenance or aircrafts;
  2. Deposit and release of aviation fuel and other petroleum products;
  3. Refueling of aircraft activities;
  4. Maintenance and repairs of aircraft in accordance with the relevant rules and regulations, aviation standards and environment laws.
  5. Any activities ancillary to the purposeful use of the Hangar which is not unlawful or illegal.
  1. Lease Amount

The payment for use of the Hangar must be stated. The period and due date of the payment must also be stipulated. The provision would state the interest rates or penalty for late payment of the lease amount. The provision would also contain provisions for payment of the ground rent, development lease fee, service charge, utilities costs, parking fees and other payments.

Since the Central Bank of Nigeria has banned payment of foreign currencies for contracts consummated in Nigeria, the parties must agree on an exchange rate which best represent their interest and will put the authority in the financial position stated in the Agreement.

  1. Maintenance, repairs and Inspection

The Owner would maintain the Hangar and carry out repairs in accordance to aviation standards. The authority shall be entitled to upon notice to the Owner, inspect the Hangar to ensure that the use of the Hangar is in line with the Agreement and acceptable standards.

  1. Certification, Insurance and Indemnification

Before commence Hangar activities, the Owner shall obtain the necessary aircraft certification including aircraft certificate, pass, OCD cards etc. The Owner shall also maintain an aircraft insurance policy and other policies to insulate the authority against claims, actions, judgments and liabilities by third parties. The policy shall endorse the authority as additional insured for the full amount of the policy limits.  The Owner shall indemnify the authority for third parties claims on Hangar activities carried out at the Hangar.

  1. Termination

The parties must provide the duration and process in which the Agreement may be terminated before the expiration date. This may be as a result of a breach of the terms of the Agreement or other intervening factors. Upon termination, all outstanding payments including charges for late payment shall be paid in full.

  1. Moving out

Upon expiration of the term or termination of the Agreement, the Owner shall move out its personal property and aircrafts from the Hangar and deliver possession to the authority. The Owner shall clean up and hand over key of the Hangar to the authority. The parties may treat the Owner's personal property at the Hangar after expiration of the term as being abandoned by the Owner and may dispose of the property to upset any outstanding payments.

  1. Governing Law and dispute resolution

The parties must agree on the governing law to apply in interpreting the Agreement and resolving disputes between the parties. The parties must also agree on the dispute resolution mechanism to resolve their disputes. This is usually by negotiation and arbitration where negotiation fails.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Emmanuel Ekpenyong
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