Nigeria's foremost Online Energy News Platform

Danger over Plans to Close 17 Airports due to Revenue Shortfalls

-By Adeniyi Onifade

A total number of 17 out of the 20 airports owned and managed by the Federal Government are now regarded as ‘unviable’, due to their inability to generate revenue.

Reports have shown that these 17 airports have been operating at a loss for the past three years.

Also, with the exception of Murtala Muhammed International Airport (MMIA), Lagos; Nnamdi Azikiwe International Airport (NAIA), Abuja; and Port Harcourt International Airport (PHIA), Rivers State, no other airport owned by the federal government has enough revenue to cover the cost of operations alone.

Flight operations have been grounded in the country for the past 2 months due to the lockdown occasioned by the coronavirus pandemic.

In Nigeria, the Federal Airports Authority of Nigeria (FAAN) manages and supervises all government airports in the country on behalf of the Federal Government, of which 20 are owned by the Federal Government, with an additional four owned by state governments.

Reports recently revealed that extra funding frequently patronized airports of Lagos and Abuja which had excess revenue of about N26.1 billion was used to cushion the operational cost deficits incurred by the unviable airports in 2017, 2018 and 2019.

A fact-sheet of revenue and expenditure of the 20 federal airports and FAAN headquarters in the last three years, revealed significant revenue gaps and deficits across these airports.

Among them include the Kaduna International Airport which was upgraded during the 2017 closure of Abuja airport.
In the last three years, it garnered a total of N1.027 billion in generated revenue, out of which N716.7 million was collected. However, the expenditure was in excess of N4.41 billion, leaving a deficit of N3.69 billion.

Infact, due to the banditry and kidnapping that has surged along the road leading to the airport, the airport has been temporarily shut due to fear of safety of travellers.

Same goes for Mallam Aminu Kano International Airport, Kano as in 2017, 2018 and 2019 pooled a total of N8.28 billion in generated revenue and collected N7.16 billion but its expenditure totalled N9.6 billion, leaving a deficit of N2.44 billion.

In the same vein, Katsina Airport made a paltry sum of N250.8 million generated revenue in three years, out of which only N42.1 million was collected. Its cost of operations was put at N1.58 billion, leaving a deficit balance of N1.54 billion.

Same case with Sokoto Airport which had a total of N725.7 million generated revenue, out of which N400.1 million was collected. The cost of operation was in excess of N2.71 billion, which resulted in a shortage of N2.31 billion.

Down south, Ibadan airport in three years made a total of N349.2 million in generated revenue and collected N244.9 million. The expenditure amounted to N1.39 billion with a deficit of N1.14 billion.

Also, Ilorin International Airport had a total accrued revenue of N437.1 million revenue in three years and collected N264.2 million. The expenditure was in excess of N2.453 billion, giving a shortfall of N2.19 billion.

Similarly, in Akure airport, Ondo state, it pooled a total of N175.8 million in generated revenue and collected N168.7 million. But the expenditure was N1.06 billion, leaving a difference of N893.7 million.

The Benin airport in Edo State is also considered ‘Unviable’. The airport generated a total of N993.2 million in three years and collected N930.1 million. The total cost of operations was put N2.02 billion, leaving a shortfall of N1.09 billion.

The Margaret Ekpo International Airport, Calabar, had a total of N540.8 million generated revenue, though collected more put at N559.6 million, the expenditure was as much as N2.50 billion, giving a deficit of N1.94 billion.

Similarly, Sam Mbakwe International Cargo Airport, Owerri, gathered a total of N1.25 billion in generated revenue and collected N1.08 billion. Expenditure was, however, N2.50 billion, with a shortage of N1.42 billion.

Analysts say the zero profit recorded in these airports were not unconnected with the long term low passenger traffic in and out of the airports.

The International Air Transport Association (IATA) sets a parameter for viability of airports across the globe saying that for an airport to be viable and self-sustaining, it must have at least five million passengers annually.

As it stands, only Lagos, Abuja, Port Harcourt airports can boast of at least five million passengers annually.

Apparently without consideration for viability, some state governments, like Abia, Nasarawa, and Ekiti, are still nursing plans on building new airports.

It is understood that the 2016 plan to concession airports is still on by the federal government, yet sustenance could be a problem as all the airports managed by FAAN usually gulp a whopping N4 billion monthly overhead cost.

Consequently, the plan by the federal government to privatise some airports in the country has been greeted with mixed feelings among concerned stakeholders.

While some industry watchers commended the bold step after years of toying with the idea, others said that the plan was ill-timed, particularly with the privatization plan focusing on four airports.

Critics though reckon that the proposal is a global practice, but are concerned that such at this time would lead to several job losses given past antecedent with the old Nigerian Airways.

An aviation stakeholder and publisher of Aviation Safety and Security magazine, Abdulhakeem Umar, has advised the government to drop the idea of privatisation.

According to him, “It is totally wrong to concession airports because only four viable ones in Abuja, Lagos, Port Harcourt and Kano have been selected. What happens to the 17 other non-viable ones that depend largely on these four airports. Anybody taking the four airports should go with the liabilities of the 17 non-viable ones.”

Umar advised government to improve on Yola, Jos, Akure and Makurdi airports by designating them as agro-airports to boost the evacuation of farm produce.

He added that the privatisation plan was “aimed at killing the Federal Airports Authority of Nigeria (FAAN) and sending workers into unemployment market as it was in the case of the liquidated Nigeria Airways.”

Umar called on Minister of State for Aviation, Hadi Sirika, as an aviator, to take far-reaching decisions aimed at developing the aviation sector in the country.

Former Managing Director of the Nigerian Airspace Management Agency (NAMA), Capt. Roland Iyayi and a former Director-General of the Nigeria Civil Aviation Authority (NCAA), Dr. Harold Demuren, however, lauded the idea.

Iyayi blamed the aviation regulatory authorities for the non-viability of most of the airports, except three. Iyayi, who is also the current Managing Director of Topbrass Aviation, said: “Today, we have 26 airports in the country owned by the Federal Government and of all, only three – Lagos, Abuja and Port Harcourt – accounting for 80.2 per cent of the total public traveling by air. And somebody in the regulatory authority cannot ask the question why this aberration.

“Is it normal that you will have airports built and well equipped, yet there is no service? Their usual answer is that Lagos is the commercial capital, Port Harcourt the oil and gas capital and Abuja is the seat of government, but they are all wrong. That is hogwash.

“Are you saying that someone in Kebbi with an airport will not want to fly to Abuja rather than drive 10 hours? Or someone in Jalingo does not want to come into Abuja by air? Are you saying that people in Benue do not want to avoid all the road traffic problems and fly into Abuja? These are the issues.” He added that the current crises in the aviation sector is “a price we are paying for not doing the right things years back.”