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Why FG should privatise 22 airports – Ex-FAAN MD

By on April 2, 2016

The former Managing Director of the Federal Airport Authority of Nigeria (FAAN), Mr. Richard Aisuebeogun, has urged the federal government to privatise the 22 federal airports under the management of the agency (FAAN).

According to Aisuebeogun, aside that it is the trend globally, the privatisation of the airports will enhance their (airports’) income generation capacity and make their very efficient services.

He cited South African and Ghanaian airports that have been transformed from airport authorities to airport companies, with the private sector shareholders getting involved in their operations and business development.

This transformation, he said has made these airports to be efficiently managed for operational freedom.

The former FAAN boss spoke in Abuja at the 2nd Airport Business Summit and Expo, which ended on Thursday. He said getting the private sector involvement will give the airports operational freedom and a greater measure of financial performance.

He stated the need to encourage private investors into the country’s airport operation, adding that the so called unviable airports will become Strategic Business Units (SBUs), once they are commercialised and the airports will now be challenged to raise benchmarks and operational standard for efficiency.

Aisuegbedion said: “We need to now begin to make the rest of the nation’s airports viable by investing in non-aeronautical activities. Out of the over 1600 airports across the globe, 1000 handles less than one million passengers annually. The challenge is therefore obvious.

“The tendency is that if they are companies under privatised commercialised model, then they would have to depend largely on non-aeronautical revenues. They will need to now depend on other activities within the airport to enhance their revenue platforms, therefore making them more business minded, rather just being operations as it is.

“This does not require ours or your personal funds. We need to encourage private investments to cone into the airports and develop it in terms of non-aeronautical activities, so that the unviable airports will become Strategic Business Units (SBUs).”

According to him, it is not until Nigerians began to look at the airports as a business unit that is accountable financially, economically and commercially, including operations and safety activities that the country will now be able to develop an airport that will add to the Gross Domestic Product (GDP), of the country.

Two per cent airports’ contribution to GDP comes mainly from the flagship airports, adding that the time has come for stakeholders to start working on the viability of the other airports scattered across the country.

“That we always say that the entire airports contribute perhaps about two percent to the GDP. If you break that down, on a proportionate scale, how many airports added value to the entire GDP. Perhaps, it is just the flagships and we need to go beyond the flagships today.

“We have to start talking about Enugu, Calabar, Yola and Sokoto airports, these airports exist because there is a reason for their existence as there is so much potential in them.”

It is believed that potentially huge revenues that should be accruing from airport facilities are lost because the airport facilities are not well-developed and non-aeronautical sources that in other countries generate more revenues that the aeronautical revenue sources are not developed in Nigeria.

Since the last few years, there have been clamour for the privatisation of airport terminals and other facilities because government cannot fund these projects because of its lean resources and the demand of people-oriented projects in the areas of education, health, road and rail infrastructure and others.

 

[ThisDay]