.. Says unbundling of FAAN may lead to efficient, progressive airport development

Photo Caption:
Patrick Tamba Musa, Senior Transport Engineer, African Development Bank (AFDB); Hon.Nnolim Nnaji, Chairman, House of Representatives Committee on Aviation; Simon Tumba, CEO/Publisher, NTM; Captain  Dapo Olumide, CEO Ropeways Transport Limited; Ali Magashi, CEO, Kitari Consult Limited at the 2019 NigerianTravelsmart(NTM) Colloquium recently in Lagos.

The chairman House Committee on Aviation, Hon. Nnolim Nnaji has called for the review of the Federal Airports Authority of Nigeria, FAAN Act giving it the power to dominate in an area that can be open for private sector entry.

Speaking at the 2019 NigerianTravelMarket Colloquium at the Eko Hotel and Suites in Lagos on Thursday, with the theme: airport concession and option for airport development in Nigeria, Nnaji noted that the unbundling of FAAN may lead to a more efficient and progressive airport development and an enabling environment that will attract private sector investments and tourism development in Nigeria.

He listed the proposed organisations to
emerge from the process to include Nigeria Airport Development Agency which shall have the authority and capacity to process, supervise, monitor and forecast the development of airports in Nigeria and also advise, check the capability, practicability of interests and applications in line with developmental needs, security approvals and compliance to the Nigerian Civil Aviation Authority, NCAA regulations.

The other is the Airport Management Company PLC; which shall be a limited liability company or public quoted company with less than 20 percent shares held by the federal government of Nigeria while the remaining shares shall be sold.

Nnaji said this shall be a first class global company with the sole function of engaging in airport operations and management worldwide, adding that the company shall compete and bid for the management, operation of FAAN airports and other airports worldwide.

While the third one is the Federal Airports Property Company Ltd which shall be the owner and custodian of all Federal Airports Lands and Properties.

He stated further that the government can invest in airport development but not in its operations as It can acquire lands for airport development just like the state government, but must outsource the management to a competent company through a due process.

Nnaji explained that he has suggested that the remittances from Internally Generated Revenues (IGRs) of the aviation sector should be retained for the next ten years for the development of aviation infrastructures.

In his words: “This is why in my contribution during the preliminary debate on the 2020 Budget on the floor of the House of Representatives, a couple of days ago, I suggested that the remittances from Internally Generated Revenues (IGRs) of the aviation sector should be retained for the next ten years for the development of aviation infrastructures”.

Nnaji stated that since 1980 when the push for airports’ privatization began, it has continued to steer great arguments in favour or against, while the International Air Transport Association (IATA), the umbrella body for global airlines, is strongly kicking against privatization of airports, Airport Council International (ACI) believes it is the best way to go.

Nnaji listed the benefits of airport privatisation to include reducing the need for public sector investment, provides access to larger commercial sectors, and allows airports to diversify services without the fear of government control and interference.

According to him: “In theory, this may lead to increased operational efficiency, as well as create new paid incentives for management and employees.

“Available statistics indicate that more than 50 percent of European airports have some form of private ownership, with this percentage increasing significantly since 2011.

Most large Australian airports are now owned by consortiums of private companies. Gold Coast Airport for instance, is arguably an example of a successful privatization model, having seen almost USD233m of investment since it was taken over by Queensland Airport Limited in 1998”.

“Many countries are seeking to replicate this model/success. In May, Japan invited the private sector to submit proposals for the operation and management of seven airports under a 30 to 35 year concession. The country’s transport ministry is attempting to leverage on the private sector to promote tourism in the Hokkaido region.

Elsewhere, Brazil is planning to shut down its National Airports Authority and sell its 54 airports to private companies. It kicked off the ambitious programme last year, raising USD889.08m through an auction of concessions for four airports”.

Nnaji observed that in Nigeria, the story has been one experiment, too many challenges.

He explained that: “Examining the first experiment we had in this sector, which was the build, operate and transfer (BOT) arrangement the Federal Airports Authority of Nigeria (FAAN) entered with Bi-Courtney Aviation Services at Murtala Mohammed Airport local terminal, popularly known as the MM2. It has been riddled with controversies leading to many court cases”.

Nnaji noted that our airports are underdeveloped and underutilized while the pace of development in general is very slow.

According to him catching up with the rest of the developing world needs a reliable and viable aviation sector as the airport is the bedrock.

In his welcome address, the chief executive officer of NigeriaTravelMart, Mr Simon Tumba stated that for decades, the industry has seen the state of the nation’s airports, especially the major gateways in Lagos, Abuja, Enugu, Port Harcourt, Kaduna and Kano.

Tumba noted that over the last few years the federal government has made investments to enhance  the customer experience in these airports, but the country is lagging behind, despite the efforts of the Federal Airports of Authority FAAN

In his words: “Taking cognisance to the dwindling revenue of the government, very demanding social needs and the increase of our debt profile as a nation, one may say the government is doing its best. However $40 million is not enough for an emerging market like Nigeria, a country with every potential to be a global hub. The government needs to think out of the box.”

He suggested that the government should explore a Public Private Partnership (PPP) and Concession of the nation’s airports carrying along the workforce at FAAN.

Tumba added that “With Nigeria’s God given natural and Human Resources, and a solid leapfrogging plan and strategy, we should be aiming for a futuristic airport of $2-5billion. We have the population, the market and geographic position to make and realize such aspirations”.

NigeriaTravelMart boss said aviation unions who are averse to concession of the country’s airports are merely shooting themselves in the foot, and in the long run, may end in regret and  bitter cries.

The Colloquium attracted aviation experts and key stakeholders who added their voices to the airport concession debate.