Chinelo Obogo, [email protected]
Nationwide debate over the likely benefits of Federal Government’s concessioning and privatisation of airports in Nigeria, which began about the year 1980 has never ceased to generate the associated controversies several decades after.
While the umbrella body for global airlines, International Air Transport Association (IATA) is kicking against it, the Airport Council International (ACI) appears to be strongly in support of privatisation. At the IATA last General Assembly, its president, Alexandre de Juniac, said there has not yet been an example of privatisation that brought about better efficiency for the airlines and better experience for customers.
But Nigeria’s Minister of Aviation, Captain Hadi Sirika, remains defiant and maintained the Federal Government stand to proceed with plans to privatise the nation’s most lucrative airports in Abuja, Lagos, Port Harcourt and Enugu amidst mixed reactions from aviation sector stakeholders.
The Air Transport Senior Staff Association of Nigeria (ATSSAN) and some stakeholders have raised some pertinent questions on the issue including wanting to know how many jobs will be lost in the process of privatisation, due to inevitable downsizing by private companies taking over the government enterprise.
They have also sought to know whether the privatisation process would be open and transparent? Will there be political interferences as has always been the case with Nigeria’s past privatization programmes ? These were some of the issues discussed recently at the colloquium organised by Nigerian Travel Mart which held in Lagos with the theme, ‘Airport Concession and Options for Airports Development in Nigeria.’
The event organiser, Simon Tumba, in his opening remarks said the country’s aviation industry has the potential to be a global hub but to achieve that, government needs to think out of the box. He also advocated for the government to explore public private partnerships and concession the airports but also carry along the work force at the Federal Airports Authority of Nigeria (FAAN), to avoid job losses.
The chairman, House of Representatives Committee on Aviation, Nnaji Nnolim, who was guest speaker, said it is not in doubt that the nation’s airport are in need of speedy development , but warned against the downsides of downsizing. “It is a glaring fact that our airports are not just underdeveloped but also grossly underutilised. In aviation today, the modern trend is that airports have become huge sources of revenue generation. Revenue accrues from both aeronautical and non-aeronautical sources, with non-aeronautical revenues now becoming a dominant source of airport development, stability and aviation sustainability. Airports are now big business hubs with hotels and other ancillary entities springing up in major international airports across the globe.
“There are benefits of privatisation including its ability to provide access to larger commercial sectors that allows airports to diversify services without the fear of government control and interference. In theory, this may lead to increased operational efficiency as well as create new paid incentives for management and employees. Most large Australian airports are now owned by consortiums of private companies. But in Nigeria, the story has been one experiment, too many challenges.
“In Nigeria, we have not exploited even up to 10 percent of the possible non-aeronautical revenues because our airports are not yet developed to the level of harnessing the revenue potentials available on the land side. To channel a new development pathway for our airports to be more economical and sustainable, many have suggested privitisation and taking the airports away from the domain of the govermnent’s management. This discourse has been trending long before I became chairman, House Committee on Aviation.
“Examining the first experiment we had in this sector which was the build, operate and transfer arrangement the Federal Airports Authority of Nigeria (FAAN) entered with Bi-Courtney Aviation Services at Murtala Muhammed International Airport terminal, popularly known as MM2. It has been riddled with controversies leading to many court cases.
“For Nigeria, the biggest challenge of privitisation may be immediate job loss resulting from downsizing. Secondly, the peculiarity of Nigerian airports, development model and the critical role the airport plays where it is seen as catalysts for business activities, does not necessarily make profit as long as it meets the social economic needs.
“Thirdly, there are national security issues where the nation’s gateway may be open to abuse. Fourthly, Nigeria’s air transportation usability is far below her population ratio, making some airport locations redundant while some are overly active. This is as a result of low middle class capacity. But whichever direction that the country takes that makes our airport more competitive and attractive to both passengers and airline, I will give my legislative support.” Nnaji said Also speaking, Captain Dapo Olumide, a pilot and former Managing Director of Aero Contractors, said that since the country has not made much progress in the sector for many years, it would not be out of place to try something new. “Since the Murtala Muhammed International Airport was commissioned in 1979, which is 40 years ago, very little has changed. The law maker also talked about the experiment of privatisation and the challenges and controversies. Yes, there are many challenges and controversies because there wasn’t transparency. Agreements were signed, reneged upon, re-entered and re-engaged.
“My concern with Nigeria and this concession plan is that when it is done, there would be downsizing and many jobs will be lost. However, downsizing is one thing because most often, government doesn’t employ according to their needs. If you go to the toilets in many of our airports, you will find a male or female attendant who will give you toilet paper but in the private sector, it doesn’t work that way. The toilet papers are kept in the toilet and you only have cleaners who will come and clean the toilets at certain times of the day. On the other hand, there will be downsizing but jobs may not be lost because if they want to bring in people from Europe for instance, the people who are there now will still be the people running it but the difference is that they are going to be trained.
“Some people use the word concession and some people use the word privatisation. When you are talking about concessioning or privatisation, you are not asking for the airport to be privatised. You can, but that is a huge investment for anybody who wants to get involved. You can keep the airside to the government so that it can continue to maintain the runways, operational systems, markings, and the lightings . The way airport terminals are run here, the government taxes you for everything but what do they do with that money? We are just going round in circles. We have got to get past the point of saying that we have an airport.
“For 15 years, we have been experimenting and going around in circles, maybe we can try and see if private investors will make a difference. The lawmaker said government controlled airports in other countries are thriving, they are thriving because they are hubs for their airlines and if you are hub as opposed to just being a terminal, you will generate more money. A hub is a magnet that draws other foreign airlines who know that when they come through your hub they will get concessions. The more airlines that come through your hub, the more money you make and the more people you can employ for the betterment of the country. “
For his partAli Mogashi, an aeronautical and telecommunications engineer, warned against rushing into privatisation, saying it is the responsibility of the government to first develop the infrastructure of an infant industry such as aviation until they get to a level where they can be concessioned or privatised.
“One of the major problems of our country is wanting to import things wholesale without context. We should always understand that aviation is an infant industry in Nigeria, especially the development of airports. IATA has said that if you don’t have five million passengers going through your airports annually, you don’t need one and this assertion is backed by economics. The only airports that likely has this number are Abuja, Lagos, Port Harcourt and maybe Kano. If you talk about privatising airports, you should ensure that they are sustainable in the first place.
“In line with the context of our situation, it is the responsibility of the government to develop the infrastructure of an infant industry such as aviation until they get to a level where they can be concessioned or privatised. If you say you want to concession Lagos or Abuja it will make sense because of the traffic and the potential for growth. But to say you will concession all the airports in Nigeria, I do not see the wisdom in it because the private sector that is coming to do it wants to make money above all. “The same way that the government is responsible for light, road, railway infrastructure, it should also be responsible for aviation infrastructure. It is only after such things are developed that it can change hands,” Mogashi said.