Gale of Airport Concessions

Chinedu Eze

The federal government under President Bola Ahmed Tinubu’s administration has started the implementation of airport concession, a development that previous administrations could not pull through.

After executing the concession process of Akanu Ibiam International Airport, Enugu, the federal government also gave approval for the concession of the Port Harcourt International Airport, but the final hand over is still in progress. The Federal Executive Council (FEC) recently approved the business case for the concession, and officials are already finalising the final legal and contractual agreements.

This is a firm action compared to the past. Before this time, there have been long-running legal fights, regulatory uncertainties, frequent protests from aviation unions and governance and policy confusion, over airport concession.

Government has said severally that it cannot effectively continue to fund the nation’s airports because of the high capital outlay, given the fact that airports need state-of-the-art facilities that can best be provided by the private sector.

So, willy-nilly, government must have to concession the airports for them to become competitive with similar airports in Africa and around the world. Private sector funding is attracted by government through public, private participation (PPP) arrangements and other such collaboration so that while government has regulatory and security control, the private sector invests to develop the facilities.

This was the core theme in the paper presented at the recent Airport Business Summit in Lagos by the former Managing Director of FAAN Dr. Richard Aisuebeogun, themed: ‘Airport Concession, The Inevitable’.

Aisuebeogun said Europe has fully embraced airport concession and that it remained the most viable alternative for Nigeria if government really wishes to reduce its funding of airport infrastructure.

According to him, in Europe, about 60 per cent of the airports are privately owned, while over 100 airports are under mixed ownership (PPP) and under 2000 are still owned by the pubic or government. Countries like Cyprus, Hungary, Portugal, Slovenia and United Kingdom “have almost entirely privatised airport systems.”

Aisuebeogun said airport divestment was gaining global momentum as more than 200 European airports embraced private investment and concessions, noting that airport commercialisation is no longer a policy option but an operational necessity. He therefore urged industry stakeholders to view concessions as a strategic tool for improving efficiency and competitiveness rather than simply transferring ownership. 

“About 205 European airports now have private shareholders, representing 41 per cent of the continent’s airports, up from 22 per cent in 2010,” Aisuebeogun said.  

According to the aviation expert, the figures demonstrate how governments are increasingly turning to airport divestment and concession models to modernise infrastructure, improve competitiveness and attract long-term investment.

He remarked that Europe now has about 60 fully privately-owned airports, while others continue to expand concession programmes.

Aisuebeogun who is currently the Managing Partner, Avialog Company Limited, also said the experience across Europe showed that airports could successfully transition from government-run facilities into commercially focused enterprises without compromising their strategic importance.

He explained that airports continue to attract investors because of sustained passenger growth, strong long-term revenue potential and limited competition, stating that significant capital is required to build new airports, and combined with planning restrictions, it creates high barriers to market entry, making existing airports attractive investment assets.

In other words, because of the high capital needed to build new airports and legal and security impediments, it is always better to modernise existing airport; except in situations like in Nigeria where a state government may want to build a new facility.

He cited the Airports Council International (ACI) report, which showed that private investment in European airports rose dramatically between 2010 and 2016. During that period, the proportion of airports with private shareholders increased from 22 per cent to 41 per cent, reflecting growing confidence in concession and commercialisation models across the continent.

Describing airport concession as the equivalent of a long-term lease rather than an outright sale, Aisuebeogun said governments should retain ownership while granting private operators the responsibility for financing, operating and developing airport infrastructure. According to him, the model allows airports to function as commercial businesses while ensuring governments continue to exercise strategic oversight.

“Increased private participation has transformed airport operations across Europe by encouraging stronger competition for airline routes, improving service quality, enhancing operational performance and creating more sustainable approaches to financing infrastructure expansion,” Aisuebeogun said. He added that airports have become leaner, more customer-focused and better positioned to respond to changing market demands.

Aisuebeogun identified international examples of successful airport divestment and concession arrangements. These include Bolivia’s 30-year concession covering three major airports, Argentina’s 30-year concession for 33 airports, Mexico’s concession programme involving 58 airports, Greece’s 40-year concession for 14 regional airports, and Brazil’s airport concessions, which attracted multi-million-dollar investments from international operators.

Airport concession generally is long term because of the high-end investment, the long time needed to recoup investment, as government regulates the charges in order not to over tax the airlines and other airport users.

The industry expert also identified increasing fiscal pressure on governments as one of the major reasons for pursuing airport concessions. According to him, many governments can no longer finance airport expansion alone and are turning to private capital to fund infrastructure upgrades while introducing more commercially driven management structures.

Aisuebeogun said airport divestment would enable operators to respond faster to changing aviation markets through streamlined decision-making, improved business practices and stronger investment planning. He stressed that modern airports required proactive management capable of adapting to evolving passenger expectations and airline requirements.

He however acknowledged concerns surrounding concession arrangements, such as fears of short-term profit-driven management, reduced investment, higher airport charges, organisational disruption during transition and the need to maintain public accountability. He added that concerns over cross-subsidisation within multi-airport systems had also been raised.

These are part of the fears raised by ACI, especially when airport concession takes place in Africa.

Despite these reservations, Aisuebeogun described many of the concerns as theoretical rather than inevitable. He argued that carefully structured concession agreements would provide governments with sufficient regulatory oversight while allowing private operators to introduce greater commercial discipline and operational innovation.

Concluding his presentation, Aisuebeogun said governments rarely relinquish complete control because airports remained strategic national assets and critical infrastructure. He said instead, concession agreements were designed to preserve government influence while unlocking private investment and management expertise.

“The commercialisation process will also lead to an improvement of the operational performance because it results in an airport becoming more customer and market focused,” he further said.

The Managing Partner of Aviation Company added that concession arrangements would encourage airports to develop new business strategies, maximise revenue opportunities, reduce operational risks and strengthen long-term sustainability.

He noted that for governments seeking to modernise aviation infrastructure, airport divestment was no longer simply a financing option but an increasingly proven strategy for building more competitive airports, as the private sector always come with competitive edge and verve.