As FG Begins Concession with Two Busiest Airports…


The federal government has approved a plan to grant an operating concession for the Lagos and Abuja airports to the private sector, in obvious attempt to increase efficiency, but experts and stakeholders view the move differently. Chinedu Eze reports

On Monday, the vice president, Professor Yemi Osinbajo, announced on his twitter account that the federal government had approved the granting of an operating concession for the Nnamdi Azikiwe International Airport, Abuja, and Murtala Muhammed International Airport, Lagos, to private operators. The announcement was a confirmation of the policy of the federal government to give the running of the four major airports in Lagos, Abuja, Port Harcourt, and Kano, to private entities. The idea was mooted in 2015 by the Minister of State for Aviation, Senator Hadi Sirika.

Sirika had said that airport concession, establishment of national carrier, establishment of aircraft leasing company, and the establishment of maintenance, repair and overhaul (MRO) facility would be the major planks of development by the Buhari administration in the aviation sector. In April this year, Sirika reiterated the need to grant operating concessions for the airports, describing the plan as the only viable option to modernise and make the airports serve travellers better. He noted that there was not much government could do in terms of investing more funds to develop the airports, stressing that government does not have such funds and there is a better alternative, which is to improve the infrastructure through airport concessions.

“I think the ultimate solution to all of these is to concession these airports. I have maintained this because I don’t know any other way we can go about it. That is the only way to go because government does not have the resources to continue to invest in these airports,” Sirika had said.

Sirika said the decision to run the airports through private operators was born out of government’s desire to have effective and efficient management of the airports and adequate utilisation of the abundant skilled manpower in the aviation sector. He said, “There are entrepreneurs, high net worth and knowledgeable people whose business is to be in the promotion, construction, selling and providing of airport facilities around the world. It is the business they know how to do and they also make money out of it.”

In a statement on September 8 by the Ministry of Transportation on the aviation roadmap, the Minister of State, Aviation, stressed the need to realise the set goals in the industry as enunciated by the current administration. The release signed by the deputy director, press and public affairs, James Odaudu, said the ministry was poised to implement the policy on Public, Private Partnership with regard to the aforementioned four airports in the country. The government noted that this was the only way the industry could be developed and remain competitive in the West Africa sub-region.

In the sub-region, smaller countries have almost taken over the air travel market by operating as a hub; but Nigeria, which has the highest number of travellers in the West Coast, is left behind in airport infrastructure development.

Industry consultant and Chief Executive Officer of BelujaneKonsult, Chris Aligbe, believes the best solution to airport infrastructural deficiencies is concession. Aligbe says transparent concession of the airports would permanently solve the problem of obsolete and porous airports.
He stated, “The solution to poor airport facilities is concession, but there should be efforts to ensure that every staff of the Federal Airports Authority of Nigeria is carried along. The unions are major stakeholders. The concession programme should be put in the open so that the country will get the best of it. It is the responsibility of government in the concession that every staff gets all his full entitlements just at the point of concession and those that will be retained will be retained on different service conditions.”
Aligbe noted that concession should be made transparent, saying when it is transparently done it would create opportunity for employment to be given to more people.

But the major opposition to the concession initiative is the workers. There is also the general apprehension by many Nigerians that the programme may not be transparently done, going by past experiences. The aviation labour unions representing the workers believe that their interest would not be protected. A few months ago, the workers marched in protest against the government’s plan to grant private operators concession to run the airports.

On Tuesday, the leaders of the two major unions in the industry – National Union of Air Transport Employees and Air Transport Service Senior Staff Association – told THISDAY that they would galvanise all relevant unions in the country to shut down the airports this week if labour became convinced that the workers’ interest was not protected in the concession programme.
National Secretary of NUATE, Olayinka Abioye, told THISDAY that the decision of NUATE, other unions in the industry, and their national affiliates was to shut down all air operations if government chose to carry out the concession programme the way it had started without recourse to the expected procedure of carrying the workers along.

Abioye said, “We are going to confront the government because what they are doing is fraudulent. We know that when concession is done transparently it is beautiful to behold and if concession is the key for infrastructural renewal, this is not the way to go about it. Sirika does not want to be a servant but a slave driver.”

The NUATE national secretary said the unions and the workers did not support the planned airport concession under the present arrangement, unless there was transparent effort that also effectively took into account the interest of the workers.
“We have said no to concession,” he stated. “We are not unmindful of the benefits of concession when properly done, but this government wants to concession the four major airports in the country. But one of the fundamental questions is, what do they want to concession? Do they want to concession the terminals, the runways or the services? And they said that there won’t be job losses, but we know that all over the world there will be job losses when concession takes place.”

Many believe there are great benefits in concession when it is properly done. For one, it removes the funding of public infrastructure from government to the private sector and creates competition, more jobs and profitability, as concessionaires strive to modernise and expand such public utility.
But in Nigeria, the efforts to grant operating concession have not been very fruitful. At the ports, where concession had taken place, there are still doubts as to the gains of the exercise. Port users and workers have continued to complain about highhandedness and exploitation by the concessionaires.
Despite the controversy, the concession of the domestic terminal of the Murtala Muhammed International Airport, Lagos, has been a success in terms of facility upgrade and modernisation, according to industry observers. Though, the concession deal is still dogged by controversy and legal tussle.

Mixed Bag
Last year THISDAY interviewed the Director-General of the International Air Transport Association (IATA), Alexander de Juniac, and asked him questions on concession. According to him, concession is a mixed bag, which must be managed with care.
Juniac stated, “What we say is that we want governments to be cautious about privatisation of airports. We say to them, be careful because privatisation of airports has not led to cost efficient, technology efficient infrastructure. The experience we had from Australia, from Chile, from Europe is not convincing. So we say, beware. Of course, we understand that to run the airport as operations, privatising or even concession is much better than having civil servants doing the job, that’s for sure. Then we come to the process of choosing the concessionaire, which in many countries is based on the man who is buying at the highest price. So it means that the cost increases, at the end of the day the bill is sent to the airlines. And we say in the choice of the concessionaire, they always should look at other criteria.

“We favour privatising the operation through the concessionaire with a process that is not only based on choosing the man who is paying the highest price, we say to government, be cautious about privatising the ownership of the infrastructure, be careful because you may privatise a local monopoly that may go out of control. If you do that, be able to implement a strong regulatory body. And, frankly, there is nowhere in the world, perhaps, except in the UK, that the regulation has been successful. In France, it is a nightmare, the state owns 54 per cent of privatised airport, the privatised monopoly of the airport makes very big money, 42 per cent or 30 per cent profit.”

The federal government has always assured that it would carry out transparent concession, but a senior official of ATSSSAN, FAAN branch, said dealing with the existing concessionaires would be a difficult task due to the many years of relationship with government at the airports designated for concession. The official, who preferred anonymity, said these airports earmarked for concession were the ones that generated about 80 per cent of FAAN’s revenue, which the agency uses to fund and manage the other airports. “So the challenge is, when you concession these airports, where will FAAN get money to manage the other airports not given out in concession?” he says.