How to make airports effective, by experts

Should the Federal Airports Authority of Nigeria (FAAN) be unbundled? Yes, say experts, who gathered at the Airport Business Summit and Expo Africa to examine the issue during a summit. Other options on the table are privatisation, commercialisation and concession, KELVIN OSA-OKUNBOR reports.

How to make airports effective and safe in Africa is becoming an interesting subject whenever experts and players gather to examine global trends in airport management.

International aviation bodies including: International Civil Aviation Organisation (ICAO), Airports Council International (ACI) and International Air Transport Organisation (IATA) say global attention has been on Africa and Nigeria in particular, because it is becoming an investments’ frontier.

With airports playing critical role in air transport infrastructure, especially by  attracting economic prosperity to their domains, a global campaign is ongoing by African governments to invest more in their airports.

To attract carriers, airports must be run effectively. They should charge minimum aeronautical charges in line with the global template.

Africa has 731 airports and 419 airlines in a global industry where aviation supports about seven million jobs, generating over $80billion economic activities.

It is for these reasons that experts continue to canvass models of running airport economies in Africa, insisting that players think out of the box to consider ways and means of steering the industry onto the path of growth.

To them, air transport services consolidation must be built on a strong base, utilising the best options to optimise both aeronautical and non-aeronautical revenue sources to propel growth.

Though consensus is building on the desirability of airports in every corner across Africa as economic enablers, the model to be adopted to run such social infrastructure has pitched experts against one another.

Are airports built for profits or mere catalysts to drive socio – economic activities?  Are they stand-alone social infrastructure or projects meant to grow the gross domestic product of the economies in their domain? Are airports run as private or public investments?

These are some of the issues on the table last week, when experts met at the Airport Business Summit and Expo Africa (ABSE) in Lagos to examine models for airports in the continent.

To them, the increase in Africa air traffic has been consistent with increase of passenger traffic growth rates of 6. 3 per cent between 2016 and 2017 and 9. 9 per cent between 2017 and 2018. According to Summit statistics, projected growth for passenger traffic in Africa is expected to continue through 2035 on the average of 4.3 per cent annually. The statistics said more people will travel in and out of Africa with inter-regional traffic expected to improve significantly.

Setting the tone for discussions, the organiser of the summit, Mr Fortune Idu, said ABSE as a multi-sector event drew participants from industries with direct and indirect dealings with airports in the value chain, not limited to airlines; retail; security; safety; technology, hotels and others.

He said the summit was critical as an important connector that will help airports’ operators make their cities and terminals attractive for airlines and investors by showcasing a one-stop information portal for passenger projections and facilities.

Idu said the summit created a platform to assist operators, investors and the airport business community to find a common ground for prosperity.

He said: “ The gap between operational cost of most regional airports and the revenue is very small, making the burden of concession and incentives huge. However, all other sub sectors within this chain look up to the airport to be the driving force for cost reduction, which will translate to a more affordable fare and increase in patronage. This expectation is real and the airport must address it by increasing its capacity to earn more and save more by providing efficient services management and operations.”

Models for running Airports in Nigeria

According to Idu, the current Federal Airports Authority of Nigeria (FAAN) structure  is too large to achieve efficient running of airports.

With over 26 airports under its management, FAAN, he said cannot deliver because it was handling more than what it has the capacity to undertake.

He canvassed FAAN’s unbundling into three entities, which he listed to include: Airport Development Authority; Airport Management Company and Federal Airports Property Company Limited.

Idu said such model was already in place in other countries, including South Africa, Ghana, Egypt and others in Africa.

The Airport Development Authority, Idu said, should have jurisdiction over security and airports’ regulation whereas the Airport Management Company should be strictly involved in the business of managing airports.

Such entity, which should strictly busy itself with management of airport terminals, could be ambitious enough to consider managing airports in other African countries.

The Federal Airports Property Company Limited, Idu said, should be saddled with managing all FAAN property.

Such body, he said, will have business with management all airport land and the criteria for lease by concessionaires and other investors around the airport. If achieved, this model he said, will bring about right-sizing of existing personnel for capacity.

A case for concession

Speaking at the event, aviation consultant , Mr Chris Aligbe said the way forward to effective management of airports remains their concession.

Aligbe said:”Government should consider airports concession option. Without exploring the option of concession, it could be difficult to expand the airports because of issues of resistance to change by aviation workers. In doing this, the government must consider how to address issues of labour .

Govt’s position

Minister of State, Aviation, Mr. Hadi Sirika, had consistently reminded aviation stakeholders that there was no going back on government‘s plan to concession major international airports in Lagos, Abuja, Port Harcourt  and  Kano.

He said the process for their concession had been concluded, but he failed to mention the international firms that won the bid to concession the terminals.

This development has continued to raise doubts among industry players and watchers.

Contradictions

The government, however, seemed to have contradicted itself when in one breath it said some airports have been concessioned, and it is still investing in their upgrade and expansion.

El- Mansur Atelier Group Chief Executive Officer, Tunde Oyekola, said despite the misgivings on how airports are managed, some state governments are not looking back in their bid to have airports in their domain as economic enablers.

He said increasing investments in airport terminals have made it difficult for the government to hand them over to private investors.

Case for route/airport development

A representative of Intels Group, Nuhu Adams, canvassed the setting up of route development department in FAAN.

According to him, there was need for airlines, banks and government agencies to collaborate to deepen air transportation.

He examined the role FAAN could play in deepening the process of  route development, adding that financial institutions could assist by developing funding models for airport infrastructure and other projects critical to aviation development.

He queried banks for not pushing for aviation project financing, observing that banks are running away from financing airlines because of low returns , poor corporate governance ethics and other infractions by owners and investors in that sub sector.

Idu said airports’ concession is the way to go if aviation workers could trust that it would not lead to job losses, adding that if the process was transparently carried out, it could lead to a win win situation for all players.

Besides unbundling the current airport authority, Idu said the way the government was investing more funds in aviation infrastructure, could be difficult, if the same government could give up the airports for concession.

Some experts argued that if airports are built as economic enablers, the whole idea of trying to make money out of them sounds may not be counter productive.

They cited how the Nnamdi Azikiwe International Airport has helped to open up the Federal Capital Territory in Abuja.

They made the case for states governments investment in airports to open their corridors to economic activity.

Cargo development option

An aviation consultant, Mr. Tayo Ojuri advocated the development of a comprehensive agro-air logistics policy to encourage investors in the air logistics business.

He said the opportunities that abounded in agro air logistics were not harnessed by stakeholders.

He observed that cargo airports must be properly developed with the requisite infrastructure to attract investors and most especially, the farmers in the agro commodities to grow the industry.

According to him, awareness creation was important for prospective investors, especially the farmers to know the benefits derivable from the business.

A case for ground handling

Skyways Aviation Handling Company ( SAHCO) Plc Managing Director, Mr Basil Agboarumi said effective airports remained the key for players in the ground handling value chain.

He said effectively run airports will serve as incentives for ground handling business, where operators do not need to bother about inadequate operating facilities.

The SAHCO boss said it was time Nigerian airports ran effectively without the authorities subjecting ground handling companies to multiple audits.

Besides the International Safety Ground Operations Audit ( ISAGO) carried out by IATA, operators Agboarumi said, are still subjected to other local audits by either FAAN or the Nigerian Civil Aviation Authority (NCAA).

He said whatever option in airport management adopted in Nigeria, issues related to high aeronautical charges, multiple airport taxes and inadequate facilities should be addressed. “We have to pay through our noses, most of the time we pay a lot to be in business. Everybody is collecting money from ground handling companies. I don’t want to go into controversy, but it has become so bad that before you can even sneeze around the airport, you must pay, everybody is squeezing, squeezing, that’s is a problem, that’s is a challenge,” he said.

He emphasised co-operation between ground handling and the airport authority, adding that updating of airports with the latest technology remains key.

“I believe that aviation today is about co-operation. Across the world, co-operation is the word and if we must have an industry with global standards, there must be co-operation. Cooperation  between ground handlers and other airport stakeholders,” Agboarumi said.

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