17 out of the 20 airports owned and managed by the Nigeria government may shut down over losses, as Facilities incurred of $67 Million (26.1 billion Naira) Deficits. according to report.
A report published by the guardian Newspaper Nigeria indicate that
Apart from Murtala Muhammed International Airport (MMIA), Lagos; Nnamdi Azikiwe International Airport (NAIA), Abuja; and Port Harcourt International Airport (PHIA), Rivers State, other airport have turned out to be unviable and have operated at a loss for three years.
Further Investigations by The Guardian showed that additional funding from high-traffic Lagos and Abuja airports’ excess revenue to the tune of N26.1 billion cushioned the operational cost deficits incurred by the unviable airports in 2017, 2018 and 2019.
With zero revenue being recorded following the lockdown occasioned by the coronavirus pandemic and recent flight restrictions for another four weeks, the Nigeria Government is in a dilemma on what to do with the airports; either to keep running them at a loss regardless of liability or temporarily closing them till the economy and passenger traffic start looking up.
Apparently due to the political uproar that forbids shutdown, some stakeholders have urged the government to expedite the concession programme for the airports, and attendant restructuring of the Federal Airports Authority of Nigeria (FAAN) for sustainability.
The Federal Airport Authority of Nigeria, FAAN owns and manages all the public airports in the country on behalf of the Nigeria Government. Among them are 20 that are directly owned by the Federal Government and four state-owned airports.
A fact-sheet of revenue and expenditure of the 20 federal airports and FAAN headquarters in the last three years, obtained by The Guardian, showed huge revenue shortfall and deficits across the board.
For instance, the Kaduna International Airport that was upgraded during the 2017 closure of Abuja airport has in the last three years pooled a total of 1.027 billion Naira in generated revenue. Of the sum, 716.7 million Naira was collected. However, the expenditure was in excess of 4.41 billion Naira, leaving a deficit of 3.69 billion Naira.
The Mallam Aminu Kano International Airport, Kano, did not fare better. The airport in 2017, 2018 and 2019 pooled a total of 8.28 billion Naira in generated revenue and collected 7.16 billion Naira but its expenditure totalled 9.6 billion Naira, leaving a shortfall of 2.44 billion Naira.
The Kastina Airport managed to make a total of 250.8 million Naira in generated revenue in three years, out of which only 42.1 million Naira was collected. Its cost of operations was put at 1.58 billion Naira, leaving a deficit balance of 1.54 billion Naira.
In the same situation, Sokoto Airport had a total of 725.7 million Naira generated revenue, out of which 400.1 million Naira was collected. The cost of operation was in excess of 2.71 billion Naira, which gave a shortage of 2.31 billion Naira.
In the South, Ibadan airport in three years made a total of 349.2 million Naira in generated revenue and collected 244.9 million Naira. The expenditure amounted to 1.39 billion Naira with a deficit of 1.14 billion Naira. Ilorin International Airport generated a total of 437.1 million Naira revenue in three years and collected 264.2 million Naira. The expenditure was in excess of 2.453 billion Naira, giving a shortfall of 2.19 billion Naira.
Ditto for Akure airport. The facility pooled a total of 175.8 million Naira in generated revenue and collected 168.7 million Naira. But the expenditure was 1.06 billion Naira, leaving a difference of 893.7 million Naira.
The Benin airport in Edo State also ran at a loss. The airport generated a total of 993.2 million Naira in three years and collected 930.1 million Naira
The total cost of operations was put 2.02 billion Naira, leaving a shortfall of 1.09 billion Naira.
The Margaret Ekpo International Airport, Calabar, had a total of N540.8 million generated revenue, though collected more put at 559.6 million Naira the expenditure was as much as 2.50 billion Naira, giving a deficit of 1.94 billion Naira.
Similarly, Sam Mbakwe International Cargo Airport, Owerri, amassed a total of 1.25 billion Naira in generated revenue and collected 1.08 billion Naira. Expenditure was, however, 2.50 billion Naira, with a shortage of 1.42 billion Naira.
The Guardian learnt that the poor revenue and zero profit sprees were not unconnected with the perennially low traffic inflow in and out of the airports.
The International Air Transport Association (IATA) lately stated that for an airport to be viable and self-sustaining, it must have at least five million passengers a year. Today, only Lagos and Abuja airports could boast of at least five million passengers annually.
Apparently without consideration for viability, some state governments, like Abia and Ekiti, are bent on building new airports.
Meanwhile, the Federal Government is at a crossroads on what to do with the airports that are still operating at a loss. The 2016 plan to concession the airport is still on, yet sustaining all the airports at FAAN’s N4 billion monthly overhead is a tough call during lean times.
A temporary closure of some of the airports was considered but not feasible given the political hullabaloo that awaits such a move, The Guardian has learnt.
Aviation consultant and Chief Executive Officer of Beljune Konzult Limited, Chris Aligbe, said it was expedient for the Federal Government to keep supporting FAAN and other regulatory and service providers with grant, pending the time the airlines will return to pre-coronavirus capacity.
Aligbe said aviation infrastructure abhored temporary shutdown. More so, they are readymade tools in the hand of politicians. He observed that some of the unviable government-owned airports were built by state governments for political aggrandizement.
“It was after building them that they found that they did not have resources to run them and quietly pushed them to the Federal Government through the back door. That was how they got into the care of FAAN.
“But we cannot shut them down, especially for political reasons. It is never going to be easy. If you try to do that, the impact will be more on the northern airports than on the south. The airport in the south that has become the ghost of its old self is that in Calabar. It records only one flight a day since Donald Duke left as governor of Cross River State. The Uyo Airport has taken over. Owerri is bubbling. Enugu will pick up because, at a time, it was behind Lagos and Abuja, even ahead of Port Harcourt International Airport.
“But in the north, you will have to shut down Sokoto, Bauchi, Gombe, Minna, and Ilorin maybe, among others. In the west, maybe Akure. Hence, it becomes highly political and more dangerous. So, for the length of time that it will take the airlines to bounce back, the agencies and the airports will have to keep running with the government’s support,” Aligbe said.
The Secretary General of the Aviation of Safety Round Table Initiative (ASRTI), Group Capt. John Ojikutu (rtd), urged the government to concession all the airports, and not the big four alone, to run efficiently and profitably.
Ojikutu advised that the Lagos and Abuja airports should be concessioned in blocs with four or six others.
“Lagos could go with Kano and some others in the south but not Enugu or PHIA. Abuja could go with Enugu but not with PHIA. PHIA could go with Kaduna and others but not with any other mentioned.
“My idea of concession is only for the non-aeronautical. These include the passenger terminal buildings, cargo terminals, aircraft parking areas, car parks and tollgates. FAAN could become a holding company overseeing the concession airports on behalf of the government,” Ojikutu said.
The Chairman, House of Representatives Committee on Aviation, Nnolim Nnaji, earlier called for the unbundling of FAAN ahead of the move to concession major airports. Nnaji said it was a glaring fact that Nigeria’s airports were not just underdeveloped, but grossly underutilised.
Indeed, FAAN headquarters in the last three years generated N16.10 billion in revenue and collected N15.02 billion. Its expenditure was put at N59.41 billion, leaving a deficit of N29.1 billion.
The Chairman, NIGAV Centre, Fortune Idu, said FAAN was overburdened with managing 22 airports and paying salaries of over 12,000 workers from the revenue generated by Lagos and Abuja airports.
Idu said it was only FAAN, among airport authorities in the world, that had such a peculiar business model of airport subsidisation.
According to him, the body remains critical to the “fragile aviation industry” and should be carefully considered and properly repositioned to save the industry.
Source: The Guardian Newspaper