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Nigeria's leading finance and market intelligence news report.

Experts show pathway for workable airport concession

The Federal Government has gone far in its resolve to toe the path of airport concession in the country.

What is however constituting news, which every concerned stakeholder is anxiously waiting to receive is, what becomes of the whole exercise.

True to fact, airport concession as a business interventionist model, is a widely accepted Public Private Partnership (PPP) option in the global aviation industry. It is not in any way peculiar to Nigeria alone, other nations of the world have taken advantage of the model and utilised it to the fullest.

This is not unconnected to the many positives that are derivable from the system.

For instance, while speaking recently on the benefits of concession, Rabiu Yadudu, the managing director of the Federal Airport Authority of Nigeria (FAAN), said airports concession would reduce the bureaucracy involved in public procurement.

It has also been argued that private sector operators are well positioned to prioritise effective management, ensure human capital and capacity development, and entrench sound work culture.

These indices, where and when properly harnessed, are capable of crystallizing into the foundational ingredients required to run modern infrastructure and deliver compelling experiences for travellers and other airport users.

Also, in the light of varying degrees of underdevelopment with decayed infrastructure, unkempt toilet facilities, touting, lack of connecting and or transit facility for linking passengers at both international and local airports – all adding to the parlous state of airport facility in Nigeria, it’s been argued that there is need for serious private intervention.

Read also: Lagos airport users lament unfair car towing

Not even the addition of new terminals to the Lagos, Abuja, Port Harcourt and Kano airports have succeeded in making any difference; they still do not collectively improve the airports environment and general aesthetics in terms of technology and new innovations to really drive seamless passenger facilitation.

Interestingly, aviation experts are of the view that the government could no longer cope with the task of delivering the much needed modern experiences at the airports which stakeholders deserve and are willing to pay for.

To this end, Nigeria’s first experience in airport concession, that is the domestic wing of the Lagos Murtala Muhammed Airport, (MMA2), may have had its fair share of Nigeria’s style of Doing-Business, it still remains the nation’s point of reference.

This is according to the positions of industry watchers.

Stakeholders are of the view that with gross ineptitude and mismanagement in government establishment, sensitive facilities and other infrastructure are better taken care of when managed through private initiative.

With four out of 22 airports in the country said to be generating about 80 percent of total revenue and a staggering record of about 10 million air travellers from over 200 million population at the moment, Nigeria remains a top destination within the sub-region; and a good infrastructure investment destination if existing opportunities are properly harnessed.

With privatisation comes the opportunity to access capital investment in real aviation infrastructure. This is made possible due largely to immense possibilities among which is increased efficiency and quality service delivery, as epitomised by MMA2.

Seyi Adewale, chief executive officer – Mainstream Cargo Limited, Nigeria said he supports the Build, Operate and Transfer type of Concession Bi-Courtney Aviation Services Limited (BASL), operators of Murtala Muhammed Airport 2, signed with the federal government through the appropriate agency, FAAN.

According to Adewale, the BASL model is long term and gives the concessionaire the opportunity to recoup its investment, allows the FAAN or federal government to concentrate on its core area of efficiency area such as Aviation Security, eliminates waste and inefficiency that is often associated with government agencies and allows customer-centricity because the concessionaire depends on airport users and customers to recoup investment, pay back debt, and make profit at the end.

He explained that the model allows for assets to revert back to the federal government after the contractual term and the federal government still earns fees or income in the process both directly and indirectly.

He said BASL’s agreement has so far been result orientated and there are clear service standards that can be reviewed.

John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay that airport concessions are global practices and are working in many places all over the world.

According to Ojikutu, Adebayo Ogunlesi, a Nigerian once bought Gatwick airport and have added Stansted Airport and one other to it, all in the UK, Ojikutu said, stressing that if he did not do well with them, the UK government would have taken them from him and given to another.

Heathrow has six terminals which are given as concessions to about two or two companies.

“Nobody would say that Bi-Courtney is doing badly in the services it gives to passengers and airlines compared with other terminals at our airports. Unless we begin to plan national interests in our national department, we cannot progress with our contemporaries regionally, continentally or intercontinentally in commercial aviation,” he said.

Ojikutu hinted that Nigeria needs upgrades for most of its airports infrastructure both aeronautical and non-aeronautical but has no money today for any serious upgrades on any of the two.

He suggested that rather than use available money for the non-aeronautical that should be planned for concessions, the available money should be spent on the deficiencies in the aeronautical infrastructure and services.

“Whatever deficiencies or upgrades that the non-aeronautical infrastructure required should be included in the concessions as development plans for the winners within the concession periods.

“Whatever we are doing in the concessions plans and development must put in mind the actual earnings from the non-aeronautical services based on the recorded annual statistics of FAAN on each airport,” he explained.

Ojikutu hinted that with Bi-Courtney’s airport concession, it has not shown signs of failure or losses even with monies spent on the abandoned projects allied to the MM2 terminal.

Experts therefore stress that the onus is on the government to provide the enabling environment, with necessary regulatory and legal framework for the nation’s aviation industry to be properly developed.

They noted that this is the more reason why this ongoing airport concession plan should not be handled with levity as all hands must be on the deck to see to its success.

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