In Nigeria, the outbreak of the COVID 19 pandemic, has taken a serious toll on the fortunes of the Federal Airports Authority of Nigeria (FAAN) which is by and large, the strongest player within the nation’s aviation industry hence the recent outcry by its management that if the lockdown occasioned by the Pandemic continues, it might find it difficult in meeting its salary obligations for the month of May amidst fear of downsizing.
This revelation did not only send shock waves to the over 12,000 income earners on the payroll of the Authority comprising of both active staff and the retirees, the ripple effect were also felt by other Agencies and business that derive their revenue from FAAN’s good financial performance.
The dilemma of FAAN is that it whereas has 22 airports in its kitty, the burden of paying both salaries and running costs of the entire airports sadly rests on the revenue generation of just two of the airports.
It is rather unfortunate to note that in the aviation industry, FAAN is the only airport authority with such a peculiar business model of airport subsidization.
It therefore must be emphasized here that the critical position of FAAN as the pillar of the fragile and slowly developing Nigeria aviation sector requires that careful consideration be made by Government in taking decision concerning the organisation and as such, retrenchment of Staff cannot be considered in this circumstance but serious effort should be made to reposition FAAN to save the industry.
Our position on the issue is therefore hinged on three aspects namely – State Intervention, FAAN Recovery Essentials and Closing Wastage Gaps.
Federal Government as a matter of urgency should design and implement a financial Intervention process to support Airport Infrastructure Projects.
FAAN should be allowed to reinvest its IGR directly into airport development.
Introduction of Annual Airport Development Levy to be paid by States or private airports to FAAN as the Airports development authority. The said levy should be used to set guidelines and monitor airport development operations nationwide as required by its statutory obligation.
Establishment of financial support services for investments in the aviation industry which will include the setting up of a special low interest Aviation Development Bank to support the peculiarity of investments within the aviation corridors of both aeronautic and non-aeronautic.
Federal government should assist FAAN in the recovery of outstanding debts currently owed it by airlines, agencies and States.
FAAN should design and begin the implementation of a private sector-like business model so as to make at least 10 out of its 22 airports self-sustaining or viable bearing in mind that in practical terms, not all airports can be viable as some will merely play social and economic support roles which are catalysts to development of other related businesses, but will not enhance their own bottom-line.
FAAN Recovery Essentials
FAAN should pursue with vigor, the improvement of non-aeronautic revenue and bring it up to 50% in its total airport revenue.
The Authority urgently needs to lead a national drive for full scale aero logistics development with special investment focus on agro logistics as a way to improve cargo services and revenue. It should aspire to earn 35% of its revenue from cargo services.
Efforts should be made to optimize the land rental services through a collaborative effort by stakeholders which will see land allocation within airports serve as quick revenue generation to allow for 5% returns on turnover.
FAAN should consider direct involvement in retail concessions through part ownership of retail outlets under PPP agreement to create bigger retail shops.
Implementation of full automation of the revenue collection system in all revenue points especially the parking lots and the Toll gates, etc
Set up a Committee to identify opportunities that may require direct FAAN investment, PPP or outsourcing for intensified and improved improving revenue generation.
It will also be necessary to involve the services of specialist consultants, plant location specialists or global investment marketers to identify opportunities and attract international investors into Nigerian Airports.
FAAN should reduce retail clustering within the terminal building and source for big investors in retails market for the terminals.
Implementation of an electronic one-stop-shop Enquiry Management Call Centre Service to enable global access to FAANs information where all enquiries including business and investment opportunities can be made 24:7 taking into account time differences. Enquiries will be processed, recorded and monitored for compliance with PEBEC on ease of doing business.
There should be the setting up of an airport tourism unit with the capacity to interface with the tourism industry to create more airport revenue opportunities while supporting the local tourism market.
Implementation of strategic policies aimed at reducing the obvious bottle necks and delays associated with the processing of applications and other documents needed for doing business or investments with FAAN.
FAAN should display seriousness in penalizing its officers who frustrate stakeholders and investors from full deployment of business operations after all clearance, due approvals and payments have been made to it.
Development of an extensive vehicle parking programme that covers the entire airport and comprising of low cost, medium and high end parking services.
Review the existing Airport taxi services to recognise the services of other transport sector players such as Uber, Taxfy, Bolt, etc with a view to further improve on its revenue generation from drop off and pick-up bearing in mind that the era of stationary and over-priced airport taxis is fast outdated, obsolete and irrelevant in the post COVID 19 recovery era.
FAAN should as a matter of urgency implement automated Self-Check-in Kiosks services in the major international airports. As well as equip all airports with broadband WIFI facilities.
A proper Facility Management System should be put in place to handle repairs of all essential components at the Airport such as the Conveyor system, Air conditioning system, Elevators, Escalators, operational vehicles, fire tenders etc under a standard maintenance contract agreement that can allow for monitoring and delivery of quality services.
There should be the development of a professional and standard business model master plan that projects the future of airport growth and identifies and guides investment opportunities in each of the airports.
The good news is that FAAN has just recently opened up a channel relationship with Munich Airport which has good and extensive experience in the above area with successful track records and kin interest to assist FAAN to prosper. This is one opportunity that should not be wasted but rather optimized for technical partnership, knowledge transfer and investment prospecting.
Closing Wastage Gaps
FAAN is being urged to drastically reduce all operational and overhead cost emanating from non-critical mission services.
Close all areas of procurement wastage so as to recoup up to 20% of its revenue from streamlined operational procurement in fire and other department.
Close all areas of wastage emanating from recurring maintenance costs that does deliver value for money as the constant breaking down of the air conditioning system, conveyor belts, lifts etc has become a major concern to flying public and the stakeholders and as such, affecting FAAN’s reputation.
Reduce delays in connecting land lessee to auxiliary services such as electricity, security and access which in some cases have always bred corruption and undermining of regular payments to FAAN as staff are compromised at the airport level.
Reduction of overhead costs and travel costs
Training costs can be reduced with online training, webinar services and video conferencing.
FAAN should implement reasonable charges for accommodation for FAAN quarters which are another area of revenue leakage.
Fortune Idu, Chairman FCI International (NIGAV Centre) wrote in from Lagos