Challenges owing to the advent of onthe Corona Virus pandemic has left the Federal Airports Authority of Nigeria FAAN, broke on all fronts.
But despite the current financial situation, the agency has kept its airports operational for safe flight operations.
At a virtual meeting with critical industry stakeholders, the Managing Director, FAAN, Captain Hamisu Yadudu said since the pandemic outbreak, the agency had suffered over 90% revenue loss in the last Six (6) months, adding that it would continue to suffer this reduction in revenue for the next few years up to when the global travel returns to the pre-COVID level.
“To make matters worse, the Airport Council Internal (ACI) had forecasts that recovery to pre COVID-19 (2019 level) could take up to the end of 2023 or 2024.”
He emphasized that, in spite of the drastic drop in revenue, as at date, FAAN had managed to ensure that all her local airports have commenced domestic operations having met the requirements by Presidential Task Force (PTF) on COVID-19, NCAA and other regulatory bodies and have been issued clearance to reopen.
According to him, this had been at a huge costs on the Authority on maintenance and utilities despite the total decline in traffic as well as revenue.
“The above automatically translates to fewer passengers and limited income even with the resumption of International Operations. All these are issues of great concern to the Authority and partly what has necessitated the need for all our stakeholders to rub minds on strategies to adopt to ensure that the industry remains in operation to provide the very much needed service.”
Corroborating the FAAN MD on loss of revenue, the Director Finance and Accounts, Mrs. Adenike Aboderin in her presentation titled, “Airport Economics in the Ongoing COVID-19 Crisis, Implications on FAAN”, said FAAN had lost over N17.5 billion of aeronautical charges in 23 weeks compared to 2019.
“87% of 2020 budgeted overhead cost was completely wiped out in six months.”
She noted that up to 95% decline in weekly revenues and from week 14 till date revenue loss had averaged 92%.
Explaining further, Mrs. Aboderin said in non-aeronautical revenue, FAAN lost from April to June 2020 compared to the same period in 2019 lost N1.4 billion, adding that its customers were also compounding their financial problems with frequent requests.
“Customers are increasingly defaulting on payment, increase in request for payment suspension, deferrals and waivers due to the crisis.”
According to her, only 8.7% of non aeronautical revenue charges was collected from April to June compared to the same period in 2019.
From her statistics, revenue contribution by charges 72% was passenger related and 28% was from airline, aircraft related operations.
Mrs. Aboderin stressed that FAAN had considered the International Civil Aviation Organization, ICAO’s recommendations of cost relatedness which recommended that as a general principle users shall ultimately bear their full and fair share of the cost of providing the airport.
” With our volume of traffic, the Passenger Service Charge, PSC increase is long overdue, even though the increase is less than what would have been if FAAN had strictly based it on the above building block.”
“It suffice to state that the increase is fair considering the recommended “user pay principle.”
“We have therefore come to a point in time where the responsibility now lies on the Authority to strategically position itself to ensure its survival or otherwise.”
