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We need $12 billion for airports
development
By UCHE USIM
Monday, December 1, 2008
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•Aisuebeogun
Photo: Sun News Publishing |
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When Richard Aisuebeogun was appointed the Managing Director/Chief
Executive Officer of the Federal Airports Authority of Nigeria (FAAN)
in November last year, little did he know about the extent of rot
in the parastatal.
He came in when most of the airports’ facilities have outlived
their lifespan such that replacement, not refurbishment was the
way out. Specifically, he was greeted, on arrival, by dilapidated
terminal buildings, undulating runways, dead fire tenders, slow
and squeaky elevators, bad conveyor belts, uncoordinated revenue
collection, huge debt and a host of abandoned projects.
While he received bashings from the public over the problems in
various airports, he made a resolve to tackle them as quickly as
possible, at least, to prove his mettle as a vibrant manager and
entrepreneur.
Obviously, the task that lay before him is enormous but as a man
from the private sector, he has braced up for the challenges and
marshaled out strategies to overcome them. The first thing he did
was to carry out an infrastructural audit to give him a roadmap
on how to solve the equipment decay and untie other knotty issues
strangulating the authority. The second thing was to categorize
the solutions under immediate, short, medium and long term programmes.
However, unlike most of his predecessors, who would have hurriedly
reeled out unrealizable programmes just to hold brief for the decay
in the authority, Aisuebeogun rather began by changing staff orientation
and boosting their morale by paying the 15 per cent salary increase
put in place by his predecessor. This was necessary as his success
depends on the support from his staff. He made FAAN workers see
themselves as service providers and not untouchable authorities.
More so, since funds is the fulcrum on which the greater percentage
of the decay will be addressed, he hastened the completion of the
Airport Management System (AMS) installed at the Murtala Muhammed
International Airport by the Maevis/Unisys Company. That helped
sealed up the revenue leakage in the parastatal by ensuring proper
capturing and billing for services rendered by FAAN to airlines
and other consumers.
Even with improved revenue, the FAAN boss said what is needed to
replace the important but aged infrastructure in airports stands
at $12 billion, on a conservative estimate.
He argued that the money was not too much as the newly-completed
Terminal 5 in Heathrow Airport alone cost the UK government about
$10 billion.
While the figure might be staggering, Aisuebeogun called on the
private sector to partner with the parastatal, stressing that the
government, as it appears, could not shoulder it alone.
Amid the rot, he sees a bright future for the nation’s aviation
sector, urging airport users to exercise patience, as decades of
decay cannot be cleaned up overnight.
In this interview, he speaks about his job, the rot he met at FAAN,
ways out and vision.
Excerpts
The rot I met on ground
I must say that about a year ago, I took over the saddle of managing
FAAN. I must tell you that initially I probably underrated the enormousness
of the task ahead of me. Nevertheless, I strongly believe that it
was the responsibility entrusted on me by the Federal Government
of Nigeria through the office of the Honorable Minister of Transportation.
Indeed, I saw the responsibility to contribute to the success of
the executive arm of government through synergies, so as to handle
the enormity of the problems that lies ahead of me. But as soon
as I got into the saddle and settled down in the office, I needed
to quickly carry out audit of the airport infrastructure, particularly
the air side infrastructure such as fire tender machines and air
field lighting apparatus on our runways.
We also carried out audit on facilities in the terminal buildings
lsuch as conveyor belts, air-conditioning systems, elevators etc.
I’ll tell you that the result of that audit was alarming.
It was clear that we are, indeed, experiencing infrastructure decay
in the transportation sector, especially as it concerns FAAN. There
was a lot of rot in the system. With that audit report of the status
of the fire tenders, the airfield lightings and other facilities,
we went immediately into action recommending appropriate things
to the government that must be addressed. We highlighted the need
for us to quickly address the issue on short, medium and long term
basis. Now, we’ve identified areas that require short term,
medium and long term approach. One thing I want everyone to appreciate
is this: As much as we believe infrastructure is decaying and that
some of them are even obsolete, we believe that the soft end of
the business must be addressed first and more so, on a short end
period. The first of this soft end is the customer service orientation.
Change in orientation
What I realized on assumption of office is that neither the workforce,
nor the entire organization believed that we’re service providers.
So, I had to go about setting the perception right for them to know
that we’re service providers and not airport authority. Hitherto,
they never saw themselves as service providers, rather, they saw
themselves as people who must lord things over others because they
are authorities. But you and I know that the only authority we have
within the aviation parastatals is the Nigerian Civil Aviation Authority
(NCAA). They’re the regulators of the business. Others are
purely service providers.
They had to know that they must show courtesy to people and when
there are issues; they have to respond to them quickly and not waiting
till the next day or giving people excuses. I made them appreciate
that the success of FAAN means their success and that of the nation
in general. In our business, excuses are not acceptable and that
is one of the ethics of customer service. Two, I had to change the
culture of work. I made it very clear that people must resume work
by 8 a.m to 8:30 a.m latest. And I had to set the example by resuming
work at that time, and I come to work everyday of the week if I’m
in Lagos, and when I’m in Abuja, I resume at the ministry
as early as possible. That work attitude had to be changed.
Third, we had to let people know that it is forbidden to eat in
the office. It is also forbidden for people to watch home videos
in their offices. As a matter of fact, we had to reduce the number
of people who watch television in the office to just the senior
management staff and define the channels they could watch; CNN,
SkyNews or BBC period.
The next level was the need to attend to the infrastructure on ground.
We asked ourselves, what are the quick fix things we could do, so
that people will begin to feel the impact? We said first of all,
we need to quickly attend to the General Aviation Terminal (GAT),
which handles two thirds of domestic operations and that is why
you saw the facelift of the terminal. We are still expanding GAT
in terms of refurbishing the oldest terminal that is located within
that place in view of the anticipated passenger traffic by the end
of the year in December. If you go there now, you will see the enormous
work that is going on to quickly get things done within that terminal.
Let me quickly say this; when I came in, the air conditioning system
at the Nnamdi Azikwe International Airport, Abuja and Murtala Muhammed
International Airport, Lagos were in a very serious state of collapse.
They were near collapse, so to say, but I met with the contractors,
Beniod Nig. Ltd and Julius Berger in Abuja and got their contract
management agreement signed. Prior to my coming in, Julius Berger
maintenance contract management for Abuja Airport was due 18 months
for renewal. It was never signed, but I made a case to the then
minister of state in charge of Air Transport who finally gave an
approval for the contract to be signed. Today, Julius Berger has
turned around and is managing the airport for us. For major works,
for instance, the Port Harcourt runway was a challenge because the
airport as at the time we came in was shut and it had been shut
down for a year.
Now, we looked at the collateral damage that the closure of that
airport caused the people of Niger Delta and Nigerians in general
and we saw it was colossal. Driving between Owerri and Port Harcourt
had caused the death of so many people and some people had been
attacked by hoodlums on that road. So, the transportation minister
in her wisdom called the team headed by me together and gave us
an ultimatum to do everything possible to make sure that the Port
Harcourt Airport was reopened. In three weeks, we worked day and
night to complete the expanded car park of Port Harcourt Airport;
we also did a quick fix refurbishment of the terminal building and
ensured that the runway was completed by Julius Berger along with
other things.
Within three weeks, the airport was reopened for domestic flight
operations. Let me also say that the airport was not just opened
on a blanket request for it to be opened, the NCAA conducted an
audit of the airport and found it satisfactorily ready for what
we call day light operations. Two months later, we put the portable
airfield lighting there to support night operations and I’ll
say that is has been aiding flights operations into the runway,
while we work hard to ensure that the proper airfield lighting is
installed on the runway.
We did not stop there. Over the months, we’ve pressed on to
ensure that the airfield lighting of the airport runway issues are
resolved and installations are made. The contractors have taken
delivery of the entire airfield lighting materials of Port Harcourt
airport. They are on site, and they even got a number of young men
hired to join them in the installation work of the airfield lighting.
Right now, the installation work is going on, and we’re hoping
that by December 20th, this work would be completed.
Apart from that, we also realize that Mallam Aminu Kano International
Airport is a major airport that is dear to our heart. Again, we
took a look at that airport and found out that the domestic building
terminal building that had been under construction for the last
ten years was abandoned for two and half years. We took it up early
in the year, met with other contractors and reorganized the payment
process. Now, having examined and verified the authenticity of the
various claims, we invited the contractors back to site. By the
grace of God, work has reached 85 per cent completion stage. It
is my belief that by the end of this year, that terminal building
would be completed and it would be our gift for the people of Kano
and Nigerians who would use the airport next year.
We’ve also looked at the support we got from other state governments
in terms of our needs, and we’re putting everything into good
use. I must say that we have received so much support from the Niger
State Governor who provided us with fire tenders and generators
for the Minna Airport. We also received support from the Lagos State
government and the FCT, all geared towards boosting our infrastructure
at the airports. And this obviously has helped us to come out of
the near total collapse state it were when I came in as the MD of
FAAN. I strongly believe that there is still much work to be done.
Beyond that, there are major issues that we believe are crucial.
For instance, we have to ensure that the budget for 2009 has the
fire tenders properly captured in it.
Also, security screening equipment are key to the safety and security
of our passengers and other airport users and they’ve been
put in place. Let me also tell you that within the period we’re
talking about, a security audit of the airports was conducted by
ICAO and we passed that exercise because we did everything possible
to ensure that security infrastructure were in place for the benefit
of the users.
Safety, as you know, is not only in the air but also on land. And
that is why giving priority to apron activities in recent times
unlike in the past when it was neglected. For instance, in recent
months, we’ve degreased the entire apron of Lagos and Abuja
airports. Of course, the runways are being swept on regular basis
of debris and foreign objects. This is crucial to the safety of
the equipment used on the apron and that comprises those used by
the ground handlers and also the airlines.
Apart from that, we had to do some major repair works on our avio-bridges
just like we did on the air conditioning. We also had to work on
the screening machines that were shut down as the workers claimed
that they were unserviceable. Now, as we speak, there is no airport
that does not have a screening machine for passenger and baggage
screening. On that, we’re sure that everyone boarding the
airplane is properly screened of any harmful or dangerous object.
Staff trainin
Other thing I did was to boost the morale of staff because when
I came in, I discovered that the staff were not happy and as such
were not doing their best. I had to find out what was responsible
and I discovered that staff had not gone on training for a very
long time. So, we took training as one sub-head that was important
to us. Today, I’m very pleased to say that we’ve sent
40 per cent of the workforce to various training programmes, both
professional and general and it has been either local or foreign.
This is something that happened last about 15 years ago. You can
feel the pulse of the staff and you’ll realize what I’m
saying. The affected staff came back with a resolve to put what
they had learned into the system.
We also realized the need to implement the 15 per cent salary increase
approved by the previous administration. Today, the staff are enjoying
a 15 percent salary increase implemented within the confines of
the limited resources we have. They’re now willing to deliver
and I’m particularly happy about it because I’m guaranteed
of performance at the end of the day.
Public-Private-Partnership
Let me say that PPP has been in existence in FAAN for a long time
though on a small scale. The truth is that we have concession programmes
with the private sector at the airports. There’re people (private
investors) that we’ve leased land to who have come to develop
some of projects around the airport. For instance, the Joint Hydrants
Users Installation (JUHI) operated by major oil companies at the
Murtala Muhammed Airport, Lagos (MMA) is a PPP arrangement with
FAAN. Another one is the in-flight catering done by Airline Services
and Logistics Limited (ASL).
Now, the big scale of PPP is the establishment of MMA Terminal 1,
the one popularly called MMA 2. Let me say that we do not have two
MMAs, it’s only one but has three terminals. We’ve the
international terminal, we have the terminal 1 (MMA 2), we have
the terminal 2 at the General Aviation terminal where we have Aerocontractors,
Bristow Helicopters and the rest. If we get more investors who want
to build other terminals, then we’ll get more terminals. The
Heathrow airport in the United Kingdom has up to five terminals.
More so, the concessionaires at the cargo and international terminal
are also carrying out PPP business models with FAAN.
PPP has worked for us and we’ll keep encouraging it. People
are leasing lands to build hotels around the airport and we’re
encouraging that; people are leasing land to build multi-storey
car park and we’re also encouraging that; very recently, some
investors have come up with a proposal to build a water treatment
plant within the airport to supply water to airlines, we’re
also supporting that and it’s even more like a specialized
business. Very soon, the foundation for that project will be laid.
It’s also something I’m happy about. More so, we’re
encouraging existing ground handling companies to expand their operations.
People who want land for fuel stations, warehouses at the cargo
and hajj terminals are welcome. These are crucial to our development.
The more activities we’ve at the airports, the better it is
for us in FAAN as service provider and the entire country as a whole
nation.
To me the biggest PPP package is the establishment of the Airport
Management System (AMS) by the Maevis/Unisys Company. I think that
project has moved the authority to the 22nd century. As it is today,
we have said goodbye to the collection of revenue due to FAAN by
cash. Henceforth, payment for services rendered by the authority
to beneficiaries will no longer be by cash but through electronic
platform. And the AMS does not only capture accurately, the details
of payment, but also the details resulting in the payment. For instance,
it captures the landing, the parking of aircraft and all of that.
So, there’s no room for mistakes. It also captures the number
of passengers because you now check in through what we call the
Common User Terminal Equipment (CUTE).
Apart from that, there is a Flight Information Display System (FIDS)
that is functioning and thus making life more comfortable to our
passengers. We’re saying that all airlines should go on that
platform, so that we don’t start debating or arguing about
financial liabilities about services rendered. The AMS captures
accurately all forms of revenue due to the authority. Good enough,
that is the practice all over the world. We’re even using
an advanced automation system in this part of the world, the 3-D
backbone system. It has worked in the developed part of the world
and it’ll certainly work in this part of the world. We’re
appealing to the domestic airlines to embrace and use it. We believe
in the synergy with the airlines because we know we cannot do it
alone. Very soon, the non aeronautical activities will also be captured
in the AMS.
With that, in the next six months my desire is to see a cashless
transaction in FAAN, where staff will no longer be exposed to cash
transactions. The idea is that anyone who wants to pay for our services
should do so electronically. That way, we’ll prevent leakages
and fraud; we’ll also prevent arguments and allegations of
under-billing and over-billing, etc.
Challenges
My challenges are enormous, but my biggest one is to ensure that
we get enough funds to manage our airports. And the best way to
appreciate what I mean by that is this way; the average age of any
airport in Nigeria is 25 years. And that means that the average
age of each runway is between 22 to 25 years. The lifespan of any
runway should not be more than 20 years. So, the runways we have
in Nigeria, simply put, have outlived their lifespan. The next thing
now is to rebuild. If I decide to build one runway on an annual
basis, in 22 years, I’ll be building the 22nd and last one
and by the time I finish that, I’ll come back to the first
one to rebuild again because it would have passed its lifespan.
So, what we’re saying is that we’re encouraging PPP
so that investors can come in and help fund the industry. That is
the way forward. We’re not going to replace government monopoly
with private monopoly. But we must create a competitive free market
enterprise where investors will be free and be allowed to come in
and invest. That’s what we’re doing and it’s a
challenge to us. And until we begin to appreciate that we need to
allow people to come in, so that the cash flow can improve, then
we’ll continue to remain in the quagmire we are. I strongly
believe that injection of capital into the aviation sector and FAAN
in particular is inevitable because we’ve allowed the facilities
and infrastructure to deteriorate.
Now, we cannot replace the equipment overnight, not even with the
meager resources that we have currently. What we’re making
as revenue as at now is barely sufficient for sustaining the welfare
of the workforce in terms of salaries, allowances and maintenance
of the airports. But in terms of capital equipment replacement,
we need massive injection of funds from private entrepreneurs. Government
has regulated safety effectively and successfully, but we need to
deregulate the economy and allow people to come in and contribute.
The DG NCAA was modest when he said that we need about $12 billion,
which is reasonable. But we know what the rest of the world has
done in terms of investment in the aviation sector. Turkey spent
close to $10 billion recently, Bahrain too and we also know what
is going on in Dubai as well. We know the cost of Heathrow Airport
Terminal 5; about 5billion pounds for one terminal alone.
For us to develop the four major international airports in Nigeria,
we’ll need nothing less than the least spending of the countries
I mentioned. We need at least $10 billion dollar for that. That’s
just about N118 billion. That is really needed because the infrastructure
that need replacement are many. We need to replace our fire tenders
equipment and ensure that the airports meet the various categories
for which they’ve been designated, we need to ensure that
our perimeter fences are in place, we also need to ensure each runway
has its category airfield lighting as indicated and where we need
to upgrade because of increasing flight operations, then we’ll
do that and we need to improve on our water supply in the airports.
Another major challenge is that we need to improve our power supply.
Indeed, I can say that it is the biggest challenge I faced in the
last one year. Indeed, we’ve had to run our airports on diesel
on a continuous basis. This is aside the fact that we pay the PHCN
enormous money on a monthly basis. The amount I pay PHCN monthly
for the irregular power supply is an average of N50 million for
Lagos Airport alone. That’s sad. That’s about $5 million
. So if someone sets up an independent power plant, it’s,
indeed, a viable business. If you can make about N30 million ($3
million ) from FAAN alone monthly and you can also make an additional
N30 million from the community around the airport, then the coy
is in business.
We’re encouraging PPP on that, but while we’re waiting
for that option, we have to continue to run the airports and it
has not been easy because of the acute shortage of diesel at our
airports. It’s really been a major problem getting power supply.
Generators are aged crying for replacement, diesel is expensive
and scarce, and what of have you. Indeed, every night, I sleep with
one eye open because we cannot afford a situation where we do not
have power supply at our various airports. The airports have to
be lighted for safety and security purposes and that means we’ve
to burn diesel. I’m proud to say that one of the achievements
in last one year, among other things, is the completion of the 33kva
dedicated power line to the Nnamdi Azikiwe International Airport,
Abuja.
I met that project abandoned but had to continue it. We threw every
weapon in our arsenal, muscled all the support we could from PHCN,
the contractor and government to realize it. I must say that my
greatest appreciation on that goes to the Chairman Senate Committee
on Aviation, Anyim Ude, who gave me all the support and push to
bring the project to fruition. We pulled the contractor left right
and center, appealed to PHCN, followed up continuously and by the
end of May this year, it was completed. That ended the running of
Abuja airport in the last 20 years on generator. It was really an
expensive and dangerous thing. With that, diesel consumption in
Abuja airport has dropped. We have replaced the 33kva cable that
was laid about 30 years ago in Lagos airport connecting the transmitting
station to the airport. The NEPA cables were as old as the airport
but the contractor that replaced it just had his job tested and
commissioned. That is part our achievement as we speak.
Investment opportunities in FAAN
Investment opportunities in our airports for both local and foreign
investors are nearly inexhaustible. Apart from water and power plant
that I mentioned earlier, investors can build and manage terminal
buildings, construct and manage helipads, hangars, avio-bridges,
duty free shops, holiday inns and resort centers etc. Others are
petrol stations, cold storage facilities, tourist attractions, shopping
malls and many more. They can be done under the PPP. Tourism is
growing in direct proportion to our economy backed up by a strong
regulatory regime. Investors will realize prompt and significant
returns on investments and this makes us open for business at all
times.
Management style
In terms of staff administration and management, we’ve moved
on well, I must say. I believe in team work. In fact, one of the
things I did when I came in is to encourage the directors to hold
weekly meetings with the departments under their directorate. More
so, every department must do standup meetings within the department
both at the headquarters of FAAN and the head office of the various
airports. Regional and airport managers are involved deeply in this.
In such meetings, members of the department and directorate will
share information and ideas together. It’s held for a short
period and it helps know what each member of staff is doing and
can easily be appreciated.
So, if, for instance, the next day, a member does not show up at
work for one reason or the other, another person can easily take
up the job since he/she already knows what his/her colleague does
and the extent it has gone. With that, no vacuum is created and
the agency forges ahead. Rather, it creates a synergy of ideas for
people to work and contribute their quotas. We’ve also improved
in our management meetings a great deal. We discuss a whole of issues
and it’s helping us. We discuss business issues that help
us evaluate our performances and determine whether we’re achieving
results or not. We’ve also done some reshuffling here and
there just to ensure that people’s competency is not misplaced
but rather are broadened further.
Expansion plans
As it is today, the MMIA has not been over-utilized. There’s
a period of the day that the tarmac, apron, avio-bridges are practically
empty. So, what we’re saying is that there is still room until
all hours of the day, the airport is continuously in use and appears
congested, then, we can move for expansion.
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