By Chinelo Obogo
In Iine with the International Civil Aviation Organisation (ICAO) has consistently recommendation that revenue generated from the aviation sector be ploughed back into the system, the Managing Director of the Federal Airport Authority (FAAN), Capt. Rabiu Yadudu, has taken the lead in urging the National Assembly to review the laws that mandate the Authority to remit 25 percent of its annual Internally Generated Revenue into the federation account. In this interview the FAAN boss gave reason for his advice among other issues.
Revenue generation
It is the International Civil Aviation Organisation (ICAO) mantra that revenue generated from the aviation sector should be ploughed back into the system and it is a very important one because our margins are very minimal. But, we are a government agency and most governments don’t understand that the margins are very skeletal in this industry, especially as FAAN has not built any airport. It is the Federal Government that builds airport and asked FAAN to manage them. So, it is not that it is our airport. It is our airport by virtue of being the manager, developer and overseer for the government. So, we are working actively now to make sure that while we remain managers and developers, we enlighten government on the importance of abiding by the rules of aviation.
Even though there are margins, it is used to keep on developing the industry. It is capital intensive. If I have N1 million expenditure today in aviation, it can go up to N1.1 million by one month. In aviation, you must modernise; you must protect yourself and you must buy the technology or the equipment. That is why every five years, the cost of operations in FAAN increases very significantly. This includes new security equipment, new procedures, new processes, new training and you must train everybody.
The 25 percent we remit to the Federal Government is a lot. We are just trying to come out of Covid-19 and our traffic level is maybe about 60 percent and then 25 percent is taken out. Also consider that our revenue generated, the collection is not up to 100%. If you are generating only 70 or 80 because of the current situation…if you insist some stakeholders will collapse. So, we balance our responsibility to collect with our responsibility to enhance the economy.
That is why you see our collection is not very high. People always say why don’t you do it aggressively and they fail to understand the balancing side. So, FAAN has to be very wise in terms of managing all stakeholders. And that is why our collection is not that high. And even though it is not that high, we still get that 25% taken off. We are working very closely with our ministry and both the Senate and the House of Representatives have shown a lot of understanding.
Airport concession
Concession is about improving our facilities. We are not selling it, but just to improve it, make it bigger, better and more comfortable. Generate more revenue and then after you recoup your money and profits, you give it back to us. Many companies have been sold in Nigeria; I didn’t see this kind of attention. Because suddenly, the government will wake up and say they have already sold this, people will talk for a week and it is finished. But, this government came and said they want to concession and they tried to engage everybody.
It should be a big plus, a commendable act by the government. And now the government says show us your track record; you can bid and among the best ones that bid, you will get it. Which other transparency do you prefer? So, there is commitment. This is something that you can see and it is aimed at improving Nigerians and foreigners’ experience at our airports. This is because the airport will be fully managed probably by Dubai Airport. All the things I spend one month to buy, they can buy it in one minute. No procurement process. All the things I need to go and start sourcing for contacts, they will just make a phone call and they will get it.
But, for some reasons, maybe lack of understanding, and those that understand deliberately paint it black for political reasons. If the airports are looking like that of Dubai and London, do you think any government will come and say they want to concession it? And the whole process is driven by the ministry with full support and collaboration of the Infrastructure Concession Regulatory Commission (ICRC). I saw statistics that showed that 40 percent of airports that are big are the ones concessioned. But those 40 per cent control almost 60 or 80 percent of the whole business, which means it is the biggest ones that are doing it. In terms of number it’s only 40 percent but they have 80 percent of the whole world. So, when you want to think big, think about it because somebody will come and put his money and knowledge to invest.
You could give Gombe, Jos and Dutse, even Akure, but mind you, some of these airports have 100 passengers in a year. Who will then come and spend $10 million and the whole profit is maybe N20, 000 in a whole year? This is because whether the airport is small or big, you must have the compliments of all the personnel – screening machines, equipment, power, airfield maintenance.
That is why the State governments are handing over their airports to Federal Government and FAAN. You spend N200 or N300 million per month, and you don’t generate N1 million. The only airports that are highly marketable are Abuja and Lagos. For Port Harcourt and Kano, to us we are trying to award them. We have airports doing 80 million passengers per annum. It is only Lagos that is doing only about 8 million passengers per annum. Even Lagos doesn’t comply with the rest of the world but to us, it is huge. So, they want to come and do Lagos.