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Nigeria to earn N30bn annually from slot allocation

By BusinessNews Staff on September 20, 2014

There is an indication that Nigeria could make about N30 billion annually from slot allocation to foreign airlines as an alternative to royalties paid on Bilateral Air Service Agreement (BASA).

The accruals will evolve from extra frequencies given to these airlines as many of them operate from different entry points in the country.

Slot is a system whereby the airport management sells landing time and space to an airline for extra slots in addition to the existing frequency agreement between the country that owns the airline and Nigeria.

For example, when Arik Air wanted to fly from Abuja to London, the airport management in London, the British Airports Authority (BAA) insisted the Nigerian airline should pay for slot amounting £250,000 (N63, 098, 225) per schedule (there are Summer, Winter, Autumn and Spring schedules) which is equivalent to quarter of a year.

UK and Nigeria have bilateral agreement that offered 14 frequencies to both countries, so while British Airways utilises seven frequencies between London and Lagos a week; Virgin Atlantic utilises the remaining seven frequencies between Lagos and London per week.

The federal government allocated only seven frequencies to Arik Air, which it is using for its Lagos to London operation. So when it wanted to operate from Abuja to London, BAA demanded the aforementioned sum of money per quarter of a year.

So in the event Nigeria introduces slot allocation, these foreign airlines will start paying fees for the extra frequencies they operate from different airports in the country. For example, Ethiopian Airlines will be paying for slot to Enugu, Abuja and Kano, while Air France will pay for slot in Port Harcourt and Abuja; the same with Lufthansa and other airlines that operate into more than one airport in the country.

The difference between slot and frequencies allocated on BASA is that the latter is periodic; it could be for a quarter, for a season etc, but BASA allocated frequencies could last for over 10 years, until both countries agree to review the BASA.

Before now Nigeria was making about $25 million from the royalties paid on BASA annually (about N4,125,000,000), but now every country will have to migrate to slot allocation, which nullifies the old system of payment of royalties.

Industry operators said the sale of slot allocation would multiply the earnings from royalties and could accrue to N30 billion annually.
The CEO of Belujane Konsult, an aviation consulting firm, Chris Aligbe said Nigeria could be generating so much money if it had adopted the slot allocation system.

“The critical issue in this country is that we should create slot allocation system. If we create it, the money we will make from slot will be almost 10 times the money we will be making from BASA and that is the truth. Nigeria can sell slots, they can sell it in a season, the next season they take it back. They can sell it for one year and the next year they take it back, and look for a higher bidder. This is a study by the Lloyds”, he said.

The CEO of Med-view Airline, Alhaji Muneer Bankole urged the federal government to establish a strong policy on how foreign airlines should be paying for slots because that is the only thing the country could benefit from them.

“If foreign airlines want to go into every airport in the country, they will be welcomed, but Nigeria should have something in return to develop Nigeria’s airports. This is because the foreign airlines are not adding any value; they come, drop and go. They are not establishing jobs for people; they are not putting anything on the ground for Nigerians,” Bankola said.

[This Day]

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