FAAN Hikes Passenger Service Charge, as Revenue Drops 95%

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By Ndubuisi Francis

Buffeted by massive revenue drop occasioned by the impact of Covid-19, and other cost-related inflation, the Federal Airports Authority of Nigeria (FAAN) has increased Passenger Service Charge (PSC) for domestic and international flights, as part of overall measures to bolster revenue generation.

The PSC increase, which will become effective September 1, 2020, will culminate in a 100 per cent increase for domestic flights (from N1,000 to N2,000).

Flights within the West African sub-region will attract $50 as against the current $20, while international flights will move from $50 to $100.

FAAN said its revenue dipped by as much as 95 per cent necessitating a number of measures, including an increase in PSC to continue to render the desired standard quality service for flight operations.

Briefing journalists in Abuja, Thursday, the Managing Director of FAAN, Capt. Rabiu Yadudu, disclosed that airport management is capital intensive, adding that the Authority has not increased the PSC since 2011 despite all the huge capital investments at the airports.

Yadudu noted that the current N1,000 PSC is no longer sustainable as it does not correlate with realities of cost-related inflation which the Central Bank of Nigeria (CBN ) put at 12.82 per cent.

He stated: “FAAN, until late 2019 was collecting the naira equivalent of PSC at an official rate of N305.50–N344.38 to a dollar when airlines were collecting a subsisting market rate of N360 to a dollar.”

According to him, the International Civil Aviation Organisation (ICAO) recommendation in Doc. 9562 stipulates that revenue generated by airports be transparently re-invested wholly in operating and developing airport facilities.

Yadudu observed that the federal government was increasing its direct deduction from FAAN to 40 per cent from 2021, adding that with such a deduction, the Authority will have a shortfall of more than N16 billion on overhead cost.

“The Authority is however engaging the federal government to exempt her from this deduction. It has therefore become imperative to review the Passenger Service Charge (PSC) from N1,000–N2,000 per passenger.

“This review which takes effect from 1st September, 2020, has already been communicated to the airlines. We therefore implore stakeholders, airport users and the general public to bear with us as FAAN is laden with so much overhead cost of operation,” he stated.

As preparations for the resumption of scheduled international flight operations into the country continue, he observed that it has become necessary to roll out new advisories for airlines and air travellers.

According to him, as soon as these are ready, FAAN would communicate same to the public.

On the number of international airlines embarking on flights into Nigeria from September 29, the FAAN chief executive said the Nigerian Civil Aviation Authority (NCAA) and the Ministry of Foreign Affairs are working out the details which would be communicated to FAAN for effective preparations.

Reiterating that the federal government has continued to make massive investment in the aviation sector, Yadudu pointed out that government’s effort to renew the nation’s dilapidated airport infrastructure and ensure safety in the industry has come at a very huge cost.

He recalled that some of the five new terminals at the international airports have been completed, while others are at advanced stages of completion, stressing that apart from other efforts to reposition the sector, the government has been reconstructing some airport runways to ensure safety.

On the protocols introduced at the airports in the wake of the Covid-19 pandemic, Yadudu who admitted that a few highly-placed Nigerians had violated the new order, however expressed gratitude that the new protocols have been working almost seamlessly.

He explained that NCAA was handling the cases of the few violations and is expected to come up with a position soon.

The cooperation of air travellers, he noted, has been particularly impressive, adding: “We shall continue to urge all airport users to comply with the new policies and help keep the travelling public, and our nation safe and healthy.”

He assured Nigerians that FAAN shall continue to review and update the Covid-19 protocols in line with the updates from the World Health Organisation (WHO).