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Nigerian Airports Viability: Exploring Non- Aeronautical Revenue

Nigerian Airports Viability: Exploring Non- Aeronautical Revenue
By Ayoola Olaitan
Globally, aviation industry is seen as a catalyst for economic growth and development of any nation and Nigeria’s over 200 million population and 15 million air travel passengers movement makes the industry a viable one in the nation.
Over the years there have been clamour to make Nigerian airports viable, with many redundant and restricted to just points of take-off and arrival.
In 2019, Nigerian aviation sector was the fastest growing sector in Nigeria in terms of Gross Domestic Product (GDP), moving up 13.2% yearly to N83.5billion from N73.8billion in 2018. The industry was tipped to increase it current contribution to the nation’s GDP but the outbreak of the coronavirus the feat would not be repeated or surpassed in 2020, in fact, the industry is expected to suffer a decline in revenue.
The economic costs of the shutdown of the nation’s airspace during the lockdown has been significant in curbing the spread of the pandemic but it has equally brought untold fiscal burden and losses for the industry players.
According to the Minister of Aviation, Hadi Sirika during a briefing to the Presidential Task Force (PTF) on coronavirus, Nigeria lost N21 billion monthly due to the pandemic.
Despite domestic flights operations returning last week, low passengers movement was recorded as anticipated by industry experts. This shows that the industry might not be able to do much due to the low turnout of passengers, it is therefore important that the industry especially the Federal Airports Authority of Nigeria (FAAN) needs to do away with its over dependence on aeronautical sources for revenue generation and start refocusing on making the airports viable to attract revenue from non aeronautic aspects of the industry.
It is pertinent to note that prior to the COVID-19 pandemic only few airports have been able to generate enough revenue and also make profit as others barely had sufficient traffic to make them worthwhile investments.
Presently, FAAN manages 26 airports nationwide. Out of the 26, only four; Murtala Muhammed International Airport (MMIA), Lagos, the Nnamdi Azikiwe International Airport, Abuja, the Port Harcourt international Airport, Omagwa and the Mallam Aminu International Airport, Kano are commercially viable as others can hardly sustain their operational costs.
However, the ideal practice should see every airport built based on the commercial viability and the guarantee of traffic. Every landing instrument or lightening system in the airport must be based on commercial viability.
In achieving viability, airports should be made friendly and charges should not be stifling so that more people, including those who are not travelling are attracted to use the airports for other commercial purposes.
Aviation expert and Chief Executive Officer of Top Brass Aviation Limited, Roland Iyayi, posits that the Federal Airports Authority of Nigeria (FAAN) should focus more on the non aeronautical aspects of the industry.
His words: “FAAN should reappraise its priorities and focus on non aeronautical revenues around the airports. Currently, aeronautical revenue is about 80 percent of their income, if they change this to be 20 percent and 80 percent non aeronautical revenues, the airport will be viable even when the airlines are not flying”
“The taxes and charges are what funds aviation now that the airlines are not flying no income for those agencies. So, all the agencies are near comatose the government had to come up with funds by which they will need to invest in the agencies to keep them afloat”.
Roland, a former Director General of the Nigerian Airspace Management Authority (NAMA) argued that airlines are already regulated and over taxed.
“If airlines are burdened with taxes the airlines will not be viable in respective of the infrastructure on ground. So there is a need review substantially some of the regulatory issues, policy issues,” he added.
Meanwhile, the Minister of Aviation, Hadi Sirika has also corroborated that airports in the country need to be viable and activities need to be created to support such airports.
Sirika observed that an airport is no longer a place to land and take off, adding that with the recent loss in revenue, new business opportunities must be looked into by all players in the industry.
The Minister recalls an insightful lecture to buttress this, he said: “In 2006, Late Musa Yar’Adua was the Governor of Katsina and he called me to deliver a lecture on the economy of Katsina. He gave me tourism, agriculture and transportation to speak on, I went there with only 3 slides and I said to him that there are 37 dams in the state. Why don’t you produce chili tomatoes and onions and use your airport to export them so that in five hours they will be in London, Paris, etc.”
“I went further to say a handful of tomatoes is 10 pounds in England and a whole basket then was N200. You make foreign exchange as airplanes are going and coming, you begin to service them from Katsina. We must deliberately create activities around the airports and that is why we are considering the concession. We won’t just handover the airport; we would analyze and look at the opportunities around the airport”. he noted.
A sustainable approach for the industry at this time is making airports viable and making the non aeronautical aspect of the industry do more in terms of revenue generating, however, this development would require thorough planning amid the uncertainty facing passenger traffic in the air travel sector.
It will be difficult to foresee passenger airlines returning to profitable operations anytime soon.  Airlines losses would be a great threat to the industry as 80 percent of revenue generated by government agencies are solely dependent on passenger airlines.
The Nigerian Civil Aviation Authority (NCAA) has already started exploring additional sources of revenue, according to the Head, Public Relations department, NCAA, Mr. Samuel Adurogboye.
Speaking with MMS Plus, he said, “It is important to explore alternative sources of funding for aviation agencies. At NCAA, we already started holding serious talks on how else can we generate income.There is need to have this approach for the sustainability of the sector and the nation’s economy.”
“If we all run to the government for revenue, where will they get the funds when the sale of crude has also been affected. Everybody is calling for help, yet the only income of the government of Nigeria is crude.”
Noting that the agency already initiated serious deliberation on exploring additional sources of income prior to the pandemic, he posited that every sector needs to start thinking as this applies to other sectors, Ministries Departments and Agencies (MDAs) as much as it was pertinent for aviation agencies.
NCAA is saddled with the collection of 5 percent sales charge on all tickets originating from Nigeria, cargo operations and charter/contract flights. This 5 percent sales charge after collection is shared with other aviation agencies such as NAMA, Nigerian Meteorological Agency (NIMET), Nigerian College of Aviation Technology (NCAT) and Accidents Investigation Bureau (AIB) as approved by the Civil Aviation Act 2006.
This 5 percent revenue is collected from airline operations that were banned for three months.

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