Losing N18.9bn Revenue to COVID-19, FAAN Hopes to Regain Momentum in 2024

Rabiu Yadudu
Managing Director and Chief Executive Officer of FAAN, Capt. Rabiu Yadudu

Chinedu Eze

The Federal Airports Authority of Nigeria (FAAN) said it lost N18.9 billion revenue in six months due to Coronavirus lockdown, lamenting that the impact of the virus would be felt in the aviation industry till 2024, as projected by Airport Council International (ACI).

This was disclosed by the Managing Director and Chief Executive of FAAN, Captain Rabiu Yadudu who regretted that COVID-19 had the most devastating effect in the aviation industry globally but assured that the agency has prepared the airports for domestic and international flight operations, abiding by the protocols and maintaining high safety and security status despite the loss of huge revenues during the period.

Yadudu said FAAN suffered 90 per cent revenue loss in the last six months and would suffer reduction in revenue for the next few years.

“​FAAN which depends greatly on the Internally Generated Revenue (IGR) has suffered over 90 per cent revenue loss in the last six months and will suffer this reduction in revenue for the next few years up to when the global travel returns to the pre-COVID level.

“To make matters worse, the Airport Council Internal (ACI) has forecast that recovery to pre COVID-19 (2019 level) could take up to the end of 2023 or 2024,” he said.

Yadudu explained that even during the lock down, FAAN kept the airports open and was involved in evacuation flight arrangements across the airports, which made the Authority incur cost on maintenance and utilities despite the total decline in traffic as well as revenue.

“In spite of the drastic drop in revenue, as at date, FAAN has managed to ensure that all her local airports have commenced domestic operations having met the requirements by Presidential Task Force (PTF) on COVID-19, NCAA and other regulatory bodies and have been issued clearance to reopen,” he said.

The Director of Finance and Accounts (FDA), FAAN, Mrs. Nike Aboderin, explained that for the agency to survive the immediate future, it has to boost its revenue base, exploit both aeronautical and non-aeronautical sources, close loopholes by automating its system and increase some of the charges for the service it renders to airlines, passengers and other airport users.

She disclosed that the agency had lost N17.5 billion from aeronautic revenue alone in the past 23 weeks due to Covid-19 pandemic and explained that FAAN generates revenues from the existing airports, especially the federal government-owned aerodromes, adding that in all, FAAN had lost 92 per cent of revenues from aeronautic and non-aeronautic sources between April 2020 till date.

Backing her statements with statistics, Aboderin further explained that only 8.8 per cent of its non-aeronautic revenue were recovered between April till date, when compared to the same period in 2019.

On the impending increase on the Passenger Service Charge (PSC) from $50 to $100 for international passengers, $80 from the initial $50 for flights into West African States and N2, 000 per passenger from N1, 000 for domestic flights, Aboderin emphasised that FAAN had considered all International Civil Aviation Organisation (ICAO) recommendations before announcing the increase in charges.

She also said that while airlines in over a decade had adjusted airfares for travellers, the current charges had remained unchanged in more than 10 years and appealed to all stakeholders to cooperate with its plans.

“The process for the increase started in 2017 and stakeholders were engaged. The COVID-19 crisis has made it very urgent to implement the long needed increase to support operations in the challenging time. ICAO’S recommendation in Document 9562 provides that revenue generated by airports should be transparently reinvested wholly in operating airport facilities.

“Despite this recommendation, the Federal Government of Nigeria (FGN) is increasing its direct deduction from FAAN to 40 per cent from next year, 2021. With 40 per cent deduction, FAAN will have a shortfall of over N16 billion on overhead cost. Furthermore, there will be no funds to carry our any capital expenditure,” she said.

FAAN said most of the airports it inherited were built over three decades ago and since then there has been rapid increase in passenger traffic that has stretched the facilities, so the airport facilities demand more resources for their maintenance.