Louis Ibah
Doing business on credit in Nigeria’s aviation sector has its good side, especially for airlines and private airport operators. It allows them enjoy uninterrupted access to critical services required for their operations from the Federal Airports Authority of Nigeria (FAAN) and the Nigerian Airspace Management Agency (NAMA).
Given that airports are run as businesses requiring huge funds for their maintenances and staff remuneration, airlines and private jets utilising airports for their operations are made to pay for landing, parking, navigational, radar, en route, passenger service and terminal charges to FAAN and NAMA.
However, through the credit facilities extended by FAAN and NAMA to commercial airlines, it becomes easy for a scheduled aircraft to park, land and take-off as many times as possible in a day at any Nigerian airport without being delayed (with passengers) for a second and made to first paying for the navigational charges and other airport charges required for such operations.
Reconciliation of accounts between the service providers and the airline is delayed till month end. It is a privilege not often enjoyed by chartered, private jets, cargo and some international flights.
Credit goes sour
Airlines would indeed be too glad if all these charges were compressed into a single item as opposed to the present structure which they fault amounts to “multiple taxation” and sometimes hampers smooth credit reconciliation.
Take the five per cent Passenger Service Charge (PSC) collected by airlines on each ticket sold to a passenger as an example. It is a charge remitted and shared among aviation parastatals like the NCAA, AIB, NIMET, and also by NAMA. Even after remitting this PSC for the use of NAMA operations, the airlines are still expected to pay for navigational charges outside the ones taken care of by the PSC and that’s where the complain of multiple charges arise.
But it is not only the airlines that utilise credits from FAAN and NAMA considering that other private airports in the country also benefit from the same ‘use-and pay later-service.’ Aviation Security,
Under the Nigerian civil aviation regulations, it is mandatory for private airport owners to get aviation security, fire fighting cover and rescue operation facilities from FAAN as pre-conditions to being granted operational licences by the Nigerian Civil Aviation Authority (NCAA). In the same vein, the private airport must also get NAMA to provide air traffic control and en-route flight navigational services for the operation of the airport. All these services are available by the private airport owner – on credit.
In recent years, reconciling debts between airlines, private airports and the two service providers is becoming an herculean with both parties disputing figures presented, thus leading to a backlog of debts estimated at above N14billion. It is a case a a good business going sour. Of the figure, N7billion is owed by the airline industry, while the other N7billion is owed by private and state-owed airports.
Private/state airports debt
NAMA it was gathered is owed over N3billion by private/state-owned airports, while FAAN is owed about N4billion, including the Murtala Muhammed Airport Two (MMA2), Lagos, concessioned to Bi-Courtney Aviation Services Limited (BASL).
Investigations by Daily Sun revealed that the Warri Airport (popularly called Osubi Airstrip) controlled by Shoreline Oil Services, is owing NAMA about N700million for services and all efforts to get the management of the airport to pay the sum has proved abortive.Some of the other airports and airstrips indebted to NAMA included Akwa Ibom, Jigawa, Kebbi, Bauchi, Asaba, and Gombe airports.
“The debts profile from state owned airports and airstrips are now over N3billion,” said a NAMA source.
“ All the state owned airports in the country owe us huge sums. Osubi airstrip debt profile alone has grown to about N700million. This sum is apart from the debts of airlines. But, domestic airlines particularly still owe us billions of naira too,” the source added.
However, in recent weeks, it is the debts owed by nine of the privately run airports that has been creating ripples in the industry as FAAN is threatening to withdraw it’s services from these airports if payments were not made on or before April 31, 2019.
Some of the private airports indebted to FAAN include the Murtala Muhammed Airport II (MMA2), Lagos operated by Bi-Courtney Aviation Services Limited (BASL), Gombe Airport, Gombe, Osubi Airport in Warri, Delta State and Kebbi State.
FAAN alleges that the management of Gombe airport was indebted to it to the tune of N607,289,972; while Kebbi and Bebi airports owe N124,547,240 and N76,772,948, respectively; and Bi-Courtney which manages MMA2 is accused of owing about N1 billion, having not remitted any money to the coffers of FAAN since it commenced operations about 12 years ago.
The impact
Aviation agencies like the Federal Airports Authority of Nigeria (FAAN) and the Nigerian Airspace Management Agency (NAMA), are lamenting that the huge debt is crippling their operations.
Indeed, with no more Federal Government subvention flowing to these agencies, their survival is dependent on the revenues they are able generate. It is from this revenues that these agencies also pay staff salaries and carry out their training and re-training programmes.
With such huge debt profile, FAAN said it is finding it very difficult to replace obsolete airport equipment like airfield lighting, resurfacing of dilapidated runways and provision of other amenities to its airports.
On the part of NAMA, the agency said that it cannot source funds to install and replace old instrument landing system (ILS) at many airports, power its landing aids at various parts of the country and upgrade the skills of its technical staff.
According to the Managing Director of NAMA, Captain Fola Akinkuotu, these debts impinge heavily on the agency’s operations.
“The people that we provide services do not pay their debts. NAMA is not an entity created to make profit; it is a cost recovery agency. Now you want us to enhance the services, you want us to provide better radios, better communication, better navigation, better surveillance, knowing that equipment over time degrades, it has to be maintained; it has to be upgraded; for us to continue to do this, we need funds,” said Akinkuotu.