• Tuesday, March 19, 2024
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FG cautioned against takeover of non-viable airports as FAAN faces financial strain

Federal Executive Council okays April 2022 for Air Nigeria take off

The Federal Government has been cautioned against takeover and management of unviable airports across the country amid financial strain faced by the Federal Airports Authority of Nigeria (FAAN).

This advice by experts in the aviation sector is coming after Hadi Sirika, minister of aviation, at the meeting with the Senate Committee on Aviation for the 2021 budget defence on Tuesday disclosed that the Federal Government would take over 10 airports across Nigeria.

The minister said the decision was to further boost the aviation industry, having realised that it was the fastest growing sector of the nation’s economy.

Sirika listed the airports to be taken over to include those of Anambra, Benue, Ekiti, Nasarawa, Ebonyi, Gombe, Kebbi, Delta and Jigawa.

Read also: ICPC inaugurates FAAN anti-corruption and transparency unit members

However, experts have raised concerns over the decision, explaining that the Federal Government does not have the financial ability to manage airports that are not viable, especially at a time when the sector is still reeling from the impact of COVID-19.

“Why must FAAN run all airports? Is it necessary? The Federal Government should only be interested in having FAAN run the airports of entry, and profitably too,” said Edward Boyo, founder and managing director, Landover Company.

“What is too much in an airport for a management company to run? What is too much in an airport for even a state to run? Every state should be encouraged to establish an airport of not more than 2000m runway length excluding clearway length. Where are all the retired FAAN staff? Are they unable to utilize their experience at state airport companies?” he asked.

Boyo stated that FAAN is suffering the yoke of the weight of its greed, adding that the rules and standards to run airports are clearly spelt out by International Civil Aviation Organization (ICAO) annexes.

He further stated that airports are licensed and subject to NCAA and state security regulations and are meant to be state infrastructure like schools and hospitals; they do not need to make profit but are to complement social growth.

Seyi Adewale, chief executive officer, Mainstream Cargo Limited, told BusinessDay that in reality, the Federal Government cannot take over the state-built airports except they have major financial stake in any of the state-built airports or the states may not have the technical know-how or competence to handle or manage the aviation security aspect due to lack of duly trained and certified manpower, according to the Civil Aviation Authorities (CAA) requirements or standards.

Adewale explained that technically, the Federal Government can take over this important aspect through FAAN to manage the very important aspects of security at the airports but when the states have trained, qualified and certified manpower to manage the aviation security arm, the states can manage even this aspect, according to the CAA rules.

He noted that another reason the Federal Government may take over states’ airports could be because the states may be insolvent and could go into a deal with the Federal Government to manage, run, complete and develop on their behalf.

“Building is one aspect, having capacity to run the airports including capital is another aspect, and lastly to make it commercially viable,” he stated.

Adewale suggested that airports could be made viable if they are concessioned to a highly skilled group of professional investors: they would create value, bring additional capital, manage professionally, and create wealth for the investors.

John Ojikutu, a member of aviation industry think-tank group, Aviation Round Table (ART), and chief executive of Centurion Securities, told BusinessDay that it does not make any economic sense to build any more airports when the government is planning to concession the ones it owns.

This perspective follows suggestions by some aviation stakeholders that the Federal Government could build more airports of its own instead of taking over the management of unviable state-owned airports.

“These are airports where their earnings cannot sustain their operations and maintenance. Owning the old and new states’ airports as national assets for national security makes sense to me but building from fringe financial resources makes no sense,” Ojikutu said.

“Only Lagos and Abuja are viable; both contribute more than 70 percent of the national passengers and air traffic and contribute over 70 percent in commercial aviation earnings, yet they are slated for concession because their earnings cannot sustain them and the remaining airports,” he said.

He explained that an asset of national security would need some subventions, and that would be a decision of the National Security Council and not the Ministry of Aviation.

“The minister of aviation should not have the exclusive right to concession any airport of joint user with the military without the consent of the minister of defence, National Security Council and the commander-in-chief in council. Most of the essential facilities at joint user airports are critical to military operations,” he added.