FAAN Boosts Revenue through Concessions

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Despite the recent decision of the federal government to concession airport facilities, the Federal Airports Authority of Nigeria (FAAN) has since adopted the system of partnering the private sector, a strategy that has gained traction about four years ago when the number of international airlines that operate into the country doubled.

With the Nnamdi Azikiwe International Airport, Abuja and the Aminu Kano International Airport, Kano hosting more foreign carriers since 2012, FAAN had to boost its commercial offering to cater for the needs of increasing passenger traffic as it built more shops and other commercial facilities to attract investment from the private sector.

This has boosted the nonaeronautical revenues of the agency, which is expected to rise in the coming years as the country gears to increase its perishable goods export and as it is expected that passenger growth despite current economic recession would rise by 15 percent 2019.

The Managing Director of FAAN, Saleh Dunoma told THISDAY that recently, more international airlines have added the Murtala Muhammed International Airport (MMIA), Lagos to their long haul schedules, including now one from the USA, two from the Middle East, one from Far East and several regional airlines.

“Local airlines are also expanding their fleet and route networks while private-public partnership is growing, with a fresh set of projects underway at various airports and the first of Build-Operate-Transfer (BOT) projects recently commissioned at four major airports in Lagos, Port Harcourt, Abuja and Kano,” Dunoma said.

The FAAN boss believes that the new terminals would boost passenger traffic and enhance passenger facilitation, as the new terminals would come with state-of-the-art facilities.

“It is easy to see why several factors work in our favour. FAAN offers an array of irresistible incentives and doing business with us has become a lot easier. We are investing heavily in the renewal and expansion of infrastructure at our airports with five international buildings nearing completion at Lagos, Abuja, Port Harcourt, Kano and Enugu airports.

“Our aim is to create capacity and promote excellent investment environment. With tourism growing in direct proportion to the Nigerian economy, international best practice regulatory policies in place and world class service delivery at our airports, we are poised for a significant growth in passenger traffic and therefore confident that investors, both local and foreign, would realise prompt and significant returns on their investments,” Dunoma said.

He said the aviation industry contributes over $1billion to the Nigerian economy annually and supports more than 150, 000 jobs in Nigeria and thus creating immense business opportunities for both local and foreign investors.

FAAN is calling for investment in airport infrastructural facilities like the construction and management of hangar facilities and well as fixed base operations (FBOs), construction and management of hospitality facilities, including but not limited to hotels; construction and management of automated car parks, development of terminal buildings, construction of runways, taxiways and aprons; construction and management of helipads and construction and management of independent power plants (IPPs) and aviation fuel deposit facility. Also for perishable agri-produce, FAAN is inviting for the construction and management of cargo air services for perishable agricultural produce.

Dunoma explained that for third party businesses, FAAN provides land spaces or developed aviation and nonaeronautical facilities, under appropriate business and financial arrangements, in line with the agency’s commercial and investment policy guidelines for leases and rentals.
“In the interest of transparency, FAAN advertises all commercial concessions and infrastructural facilities and calls for bids for such concession/facilities from local and international investors,” Dunoma said.

He said there is direct linkage between economic prosperity, population growth and airport, airline and tourism activities.

“A number of indices can make FAAN and by extension tourism in Nigeria attractive and flourishing. Investors will find both the new and improved airports as well as Nigeria generally a haven for investment. We have stable democratic government, potentially popular tourist destination in a country of scenic beauty with airport connection in Cross River, Bauchi, Kwara, Osun, Plateau, Taraba and Adamawa states,” the FAAN boss said.

But indigenous airlines have advised FAAN to offer land freely for the establishment of Maintenance Repair and Overhaul (MRO). They argued that the agency’s revenue would be boosted further if it offers land for the establishment of MRO facility, which when completed would be attracting patronage from airlines operating in West, Central and other parts of Africa.

“And if such facility is managed by renowned companies like Lufthansa Technik and other well-known maintenance organisations, it would be directing aircraft from other parts of the world to come and do their maintenance in the Nigerian facility. FAAN will collect revenue from landing and parking and other services it will offer. But it has to map out land and give it freely to any airline or partners that want to build MRO facility because a major airport cannot be complete without MRO facility. That is what will contribute in making Lagos a hub,” an airline operator told THISDAY.

Over the years, FAAN has realised that that the private sector must be engaged to develop and boost business at the airports. That is the way it is in other parts of the world. With this new strategy, it is hoped that in the coming years FAAN would earn more from nonaeronautical revenue sources than from aeronautical sources. This will prompt the agency to review downwards the aeronautical charges, which would invariably attract more airlines into the country.