17 Nigerian FG Airports May Shut Down After Incurring N26.1b Deficit

 At least 17 out of the 20 airports owned and managed by the Federal Government of Nigeria have turned out to be unviable and have operated at a loss for three years, media sources have revealed.

Sources disclosed that only the trio of the Murtala Muhammed International Airport (MMIA), Lagos; Nnamdi Azikiwe International Airport (NAIA), Abuja; and Port Harcourt International Airport (PHIA), Rivers State, has sufficient revenue to cover the cost of operations alone.

According to Nigerian newspaper, Guardian, additional funding from high-traffic Lagos and Abuja airports’ excess revenue to the tune of N26.1 billion cushioned the operational cost deficits incurred by the unviable airports in 2017, 2018 and 2019.

With zero revenue being recorded following the lockdown occasioned by the coronavirus pandemic and recent flight restrictions for another four weeks, the Federal Government is in a dilemma on what to do with the airports; either to keep running them at a loss regardless of liability or temporarily closing them till the economy and passenger traffic start looking up.

Apparently due to the political uproar that forbids shutdown, some stakeholders have urged the government to expedite the concession programme for the airports, and attendant restructuring of the Federal Airports Authority of Nigeria (FAAN) for sustainability.

FAAN owns and manages all the public airports in the country on behalf of the Federal Government. Among them are 20 that are directly owned by the Federal Government and four state-owned airports.

A fact-sheet of revenue and expenditure of the 20 federal airports and FAAN headquarters in the last three years, obtained by The Guardian, showed huge revenue shortfall and deficits across the board.

For instance, the Kaduna International Airport that was upgraded during the 2017 closure of Abuja airport has in the last three years pooled a total of N1.027 billion in generated revenue. Of the sum, N716.7 million was collected. However, the expenditure was in excess of N4.41 billion, leaving a deficit of N3.69 billion.

The Mallam Aminu Kano International Airport, Kano, did not fare better. The airport in 2017, 2018 and 2019 pooled a total of N8.28 billion in generated revenue and collected N7.16 billion but its expenditure totalled N9.6 billion, leaving a shortfall of N2.44 billion.

The Kastina Airport managed to make a total of N250.8 million in generated revenue in three years, out of which only N42.1 million was collected. Its cost of operations was put at N1.58 billion, leaving a deficit balance of N1.54 billion.

In the same situation, Sokoto Airport had a total of N725.7 million generated revenue, out of which N400.1 million was collected. The cost of operation was in excess of N2.71 billion, which gave a shortage of N2.31 billion.

In the South, Ibadan airport in three years made a total of N349.2 million in generated revenue and collected N244.9 million. The expenditure amounted to N1.39 billion with a deficit of N1.14 billion. Ilorin International Airport generated a total of N437.1 million revenue in three years and collected N264.2 million. The expenditure was in excess of N2.453 billion, giving a shortfall of N2.19 billion.

Ditto for Akure airport. The facility pooled a total of N175.8 million in generated revenue and collected N168.7 million. But the expenditure was N1.06 billion, leaving a difference of N893.7 million.

The Benin airport in Edo State also ran at a loss. The airport generated a total of N993.2 million in three years and collected N930.1 million. The total cost of operations was put N2.02 billion, leaving a shortfall of N1.09 billion.

The Margaret Ekpo International Airport, Calabar, had a total of N540.8 million generated revenue, though collected more put at N559.6 million, the expenditure was as much as N2.50 billion, giving a deficit of N1.94 billion.

Similarly, Sam Mbakwe International Cargo Airport, Owerri, amassed a total of N1.25 billion in generated revenue and collected N1.08 billion. Expenditure was, however, N2.50 billion, with a shortage of N1.42 billion.

According to the media source, the poor revenue and zero profit sprees were not unconnected with the perennially low traffic inflow in and out of the airports.

The International Air Transport Association (IATA) lately stated that for an airport to be viable and self-sustaining, it must have at least five million passengers a year. Today, only Lagos and Abuja airports could boast of at least five million passengers annually.

Apparently without consideration for viability, some state governments, like Abia and Ekiti, are bent on building new airports.

Meanwhile, the Federal Government is at a crossroads on what to do with the airports that are still operating at a loss. The 2016 plan to concession the airport is still on, yet sustaining all the airports at FAAN’s N4 billion monthly overhead is a tough call during lean times.

A temporary closure of some of the airports was considered but not feasible given the political hullabaloo that awaits such a move,

The Chairman, House of Representatives Committee on Aviation, Nnolim Nnaji, earlier called for the unbundling of FAAN ahead of the move to concession major airports. Nnaji said it was a glaring fact that Nigeria’s airports were not just underdeveloped, but grossly underutilised.

Indeed, FAAN headquarters in the last three years generated N16.10 billion in revenue and collected N15.02 billion. Its expenditure was put at N59.41 billion, leaving a deficit of N29.1 billion.