Making Nigerian Airports Viable - THISDAY
MAY 08, 2022
With about 32 airports and counting, Nigeria may be one of the countries in Africa that have the highest number of airports, but most of the airports are not viable. Industry stakeholders are therefore proffering ways airports in Nigerian could be made viable and profitable, writes Chinedu Eze
One of the major challenges airports face in Nigeria is that many of them are not viable. Airport business is capital intensive and it takes whooping sum to maintain existing airports, because only few of them generate income that can be used to sustain their operations.
This is why many states that built airports in the past later handed them over to the Federal Airports Authority of Nigerian (FAAN) to manage. Many industry observers are of the view that the states that built these airports were not innovative to find ways to make the airports viable. They stated that in many parts of the world, airports are profitable because they are made host of many businesses, including hospitality facilities, enterprises, including shopping malls, and even discotheques. Recognising that the sterile areas of the airports are highly restricted, many other businesses can go on at other parts of an airport.
Recently the Chief Executive Officer (CEO), Finchglow Travels and the former President of the National Association of Nigeria Travel Agencies (NANTA), Mr. Bankole Bernard, spoke extensively on effective and profitable management of airports.
One of the reasons why aviation workers opposed the concession of four major airports in Nigeria, which include Lagos, Abuja, Kano and Port Harcourt was because these airports are the most profitable; so the question arises, if these airports are given out to the private sector as concession, how will the other airports that are unviable be sustained?
Bernard said, “We have all been distracted with the concessioning of the four major airports in Nigeria that we consider to be viable and we have neglected other airports all in the name of the fact that they are not commercially viable and my question is: Where is the document that revealed to any of us that those airports are not commercially viable? Are we looking at revenues from passengers as the only means that make an airport commercially viable?”
The former NANTA President explained that so much could be done with airport terminals and so many businesses and other investments could be hosted in airport terminals.
“As a matter of fact, let me tell you that airport terminals are no longer what they used to be. As a matter of fact, in some countries, they have turned their airports into a shopping mall – local and international where you can do and undo with a lot of things and that alone attracts passengers to ply such airport. So, if we have such a viable business outlook, why should we continue to say an airport is not commercially viable? There are quite a lot of things that we need to do and when we put those things in the right perspective, an airport becomes commercially viable.”
He argued that the federal government and the state government have not exploited the opportunities available to potentially maximiseopportunities offered by these airport facilities. For example, out of all the airports in Nigeria, only the Asaba International Airport has been given out in concession for the private sector to develop. Other states have held on tightly to their airports while they lament perennially that they are not profitable.
When Bi-Courtney opened the Murtala Muhammed Domestic Airport Terminal (MMA2) in 2007, established under the concession arrangement of Build, Operate and Transfer (BOT), it was expected that both the federal and the state government would take a cue from that successful concession and hand over many of the airports to the private sector. But it took another 14 years before Delta state government successfully concessioned the Asaba airport.
“If you say airport is not commercially viable, why don’t you allow those that have interest in those airports to turn them around? I have always said it that government is not in a business of doing business. They are regulators. They should stick to their strength, which is regulating, while we allow the business people to handle the business aspect of this.
Government can allow them to take some critical business decisions by allowing them to run the business the way it should be. I have been to some airports around the world and I will give you some instance.
“Do you know that the Baltimore/Washington International (BWI) Thurgood Marshall Airport in United States as small as it is, it is an active airport? It is active because they are building more shops and renovating the place so people can enjoy the airport.
Akure airport, for instance, had only one airline going there before, but now about three airlines go there. Are you still saying the traffic is still the way it was? Let me remind you at this point that Nigerians are constantly developing the culture of flying,” Bernard said.
According to Bernard, statistics revealed that the recovery of travel in Nigeria is the highest in the world. He said the Nigerian figures indicated that the country is higher than the world and continent’s figures.
“But this is the same place where we have no money nor do we have a national carrier. This tells you that there is a culture. We have developed the flying culture and the number keeps increasing by the day. If the number is increasing by the day, it means it is a viable market.
“They shouldn’t tell us our airports are not commercially viable. People like us that come in have even the opportunity to prove that these airports are viable. How do you make an airport viable when you only put on the generator when you have an aircraft approaching and the moment the aircraft lands, you put off the generator again? This will not be viable because you have lost communication, so even when people show up and they can’t get electricity, they will probably stop,” he said.
The stakeholders noted that there are quite a lot of things that could be done to make nation’s airports commercially viable as long as there is a genuine interest and the facilities are given it to those that are passionate about the industry and not given to relatives and friends of political leaders to manage.
Travel expert and organiser of Akwaaba African Travel Market, Ambassador Ikechi Uko told THISDAY that airports can be profitable on their own, even when the aeronautical revenue is lean. He said that airports could be turned into tourist hub, businesses could be created around the airport, as aerotropolis, but when this is not done, airport environment could become residential area.
For example, many parts of the Lagos airport have been taken over by individuals and built private houses and it is difficult to recover those areas as airport premises.
“An area where businesses enterprises could be established in an airport environment could be turned to high quality real estate if such spaces are not quickly utilised to host business hubs, hotels.
“Many years ago, I made a proposal to build 13 hotels in the so-called unviable airports. An airport owner, whether state, federal government or individual can make his money by locating other businesses at the airport,” he said.
Federal Governments Airports
The Chief Executive Officer of Finchglow Travels said both federal government and state government owned airports are still under the scrutiny and regulation of the Nigerian Civil Aviation Authority (NCAA), noting that if the authority does not give approval, no airport would operate and government is considered to be the same everywhere. So there should be no difference in practice or in expectation from the airports owned differently.
“If NCAA doesn’t give an approval, it can’t operate and government is the same anywhere in the world. It is just in this part of the world that we try to demarcate one from the other. Since government is the same, it means the users of the airports must just see it as the same. In a state owned airports, are the state governments saying the airports are not commercially viable? If they are saying same, then, let them give it out to a private sector that will run them effectively and efficiently that you will produce the kind of result that you like,” Bernard said.
He remarked that there are so many opportunities airport managers can make money from. For example, at the MMA2 at Lagos airport there are banks, eateries, gym, car parks, meters and greeters, communications companies, pharmacy and many others.
“If you give me the Murtala Muhammed Airport (MMA), Lagos to run for one year, I will turn it around to the extent that I will triple the income that comes in. There are certain things that you will not joke with. How effective are the Wi-Fi within our airports? And it has to be free usage for everybody. For everybody that logs in, I am capturing their data. With that alone, I can tell you what the traffic is at that airport.
“Then, the shops now become viable because they now have Internet to trace and monitor a lot of things. Look at the toilets, why will you get to a toilet and the whole place is in a mess? Water on the floor, yet somebody is being paid? We have to remove all manners of sentiments. Let the best man that can do the job do it. These are the Key Performance Indicators (KPIs). Those things are necessary,” he said.
Many industry observers believe that FAAN has no maximise the benefits of car parks by building more car parks like the one at the international wing of the airports. They remarked that multi-story car parks maximsesspace and add value by protecting vehicles from sun and rain while charging for the services. In addition, ancillary services like car wash, maintenance services could be established through concession and these would add to more activities that earn revenue at the airport.
According to Bernard, there must be arrangement whereby cars are parked and the government is making money from it.
“The car parks are not properly managed. You don’t have to see anybody there giving out tickets and collecting money. When you travel abroad, you don’t see anybody at the car park. From the terminal, you have paid your toll. The Closed Circuit Television (CCTV) cameras are there monitoring activities. Then can we say our airports are not viable? They are, but it is just our approach that we create around it. Then, we should stop this idea of do you know who I am? Who are you? We are all VIPs. If we all respect the law, we will make this country good for us and our generation yet to come,” he said.
According to FAAN sources, only few airports managed by the agency earn good revenue and the money earned by the Murtala MuhammedInternational Airport, Lagos is used to sustain other airports in the country. THISDAY learnt that non-aeronautical revenue sources are totally under developed in many airports in the country, especially those airports FAAN was forced to take over by the federal government. Industry stakeholders blame lack of innovation and lack of creativity as the major reason why many airports in Nigeria are unviable.
Some retired FAAN officials posit that for FAAN to develop the airports under its management, it must be made autonomous and the meddlesomeness of government through the Ministry of Aviation must be stopped, but for now, FAAN is micromanaged by the Ministry of Aviation.