‘Airport viability depends on good rail, road networks, others’

Managing Director of the Federal Airports Authority of Nigeria (FAAN), Olubunmi Kuku, in this interview, addresses sundry issues in the air transport sector, including the controversial creation of more state-owned airports, stalled concession plan, and perennial extortion at the facilities.

There are a lot of challenges across the airports nationwide. What strategies have you adopted to tackle them?
I think we’ve spent too much time talking about the decay, and it’s time to start fixing and that’s exactly what we’re doing. So, let me talk about the work that we’re doing, as opposed to what has happened. The first effort is to block some immediate gaps, and we did that with minor rehabilitation works at a lot of our airports. I’m sure if you’ve been a travelling public over the last 90 days, you would see that the airports are cleaner. They’re friendlier. In terms of the atmosphere, we’ve lit up some of those airports a lot more and it’s more spacious in certain areas. That is just the minimum that we can do in terms of interventions.

How viable are these airports today? Many have been racking up debts, yet states seem to be building more. Would you subscribe to shutting them down?
In finance, there is something we refer to as cost. So, you’ve already made the investment in infrastructure, what you need to do is really to plug that investment so that you can improve your rate of returns. I do not recommend shutting down those airports at all. And if you’ve had conversations with me over the last few months, what I will say to you is that there are two things. One is the economics of the airports, which is viability. The second is the social impact that the airport brings into driving the economy, or at least helping us to turn around the economy.

Our commercial and business development team, as well as myself, obviously, with the guidance of the Honourable Minister, have worked very closely with some of the state governments in terms of what they can do. One is largely around cargo. I think cargo is a sweet spot for us. States like Kano, Plateau, and Ogun are aiming to drive cargo effectively as well. But it’s not just about building the infrastructure or investing more in the infrastructure on ground. It’s really making sure that there’s a feeder system that starts all the way from the bottom of the value chain to drive cargo, the various segments of cargo, I think agro and farmer are two critical areas that we have been looking at.

I think if we want to drive economic activity at this airport, it is really to make sure that we’re able to drive the GDP growth. The second is really about improving the infrastructure linkage to the airport facilities, making sure that collaboration between ourselves and the state governments and, of course, at the federal level as well, making sure that the road network that leads to the airport and the transit facilities are available.

The previous administration had a plan to concession the airports beginning with the first four. The Lagos, Abuja, Port Harcourt and Kano airports were allotted to bidders, but that has changed. Where are we on the concession of major airports?
I’m glad we’re all on the same page that private sector participation is required. The Honorable Minister has been working very closely with us at FAAN to make sure that the concession process is thorough. There has been a review. Of course, there has been a review of the last concession process as well. There were some notices that we put in the paper a couple of months ago, largely around interest or intent in those airports that we want to concession. There’s some advisory work that is also ongoing in terms of project development and the economics.

When it comes to concessions, it’s one thing to potentially find a private sector partner to work with you on those concessions, but what is more important is to make sure that you have the same goals. The Honourable Minister has said there will be no jobs lost. Of course, that also requires conversation in terms of the economics and the financials of what happened. So currently, we’re in the project development stage.

Aviation is capital intensive, to warrant the Aviation Safety Round Table Initiative’s call for measures like the establishment of an aviation finance bank, which will be a single digit lending rate, and the exemption of local refineries of Jet A1 from taxation? Do you agree with them?
While I respect the Aviation Round Table in terms of their thoughts and their enormous contributions to the sector, I’m actually not of the opinion that we should set up another institution for financing aviation. I think we have a lot of financial institutions that exist today. For example, you have some of the commercial banks even though they lend at double digits. What I think we need is more specialised banking, or specialised financing that we can leverage. We also need to consider things that would help us improve the financing environment; some sort of financial instruments, and credit guarantees for the industry.

Provide some clarifications on the N580 billion budget for the new Abuja runway and rehabilitation of others.
I’d like to clarify two things. We have a number of runways in Nigeria today. We have mentioned to you that there are 22 airports that are owned by the federal government. We also support some airports that are owned by the state. I did make specific reference to airports that have runways that had exceeded their lifespan. The average lifespan of a runway is about 20 to 25 years. A lot of our runways in Nigeria have actually exceeded that time, meaning that we’ve had them for 30 to 35 years. And what it means is that we need to actually reconstruct those runways.

The N580 billion initially mentioned is actually for over 17 runways. And it’s not just the runways. It includes some perimeter roads. It includes fencing. I’ve seen some commentaries where people are saying, ‘what do they need all of this money for?’ I encourage you, please just look at Google if you’re in the construction business or in the aviation business to try and understand what it means to build runways, taxiway links, and apron expansion work that we need to do, and of course, to make sure that we put a safe environment together for everything that happens on the air side.

Now, the reference that the Honourable Minister made while we’re at the National Assembly (recently) was specific to the second runway project in Abuja. That project was initially awarded to some consultants and contractors by previous administrations. I believe that from conversations with the ministry, the scope of that project has changed. There has also been price variations, of course, which is affected by the scope and, of course, FX fluctuations.

There’s some additional information that has come on, which the minister has, and which, of course, provides him with a lot of discomfort around the numbers that have been provided to him. And to that effect, he has largely come out to say, instead of accepting a figure that has been provided to him, he needs to provide more oversight and more scrutiny.

Cases of touting, street begging and extortion are still rampant at the airports. You once spoke about this in a viral video. How is FAAN dealing with this differently?
I’m sure you know that in Nigeria, in this economy, there’s no hard decision or policy that is put out that does not face any resistance. We have faced some resistance with the implementation of that policy, but I assure you that the Honorable Minister and I are extremely relentless. We have come out. We have engaged with our community, and of course, with the Security Council that we meet with. The Nigerian Civil Aviation Authority has also had multiple sessions, and we have made sure that all of the agencies that are working very closely with us understand the implications of our actions. We did find one or two people culpable. I mentioned that we have magistrate courts that have been set up in some of our locations. We make sure that they’re prosecuted and made examples of.

I also want to use this medium to let every Nigerian know that if you are stopped at the airport and someone is asking you to support them in any illicit activities, you will find yourself culpable, along with those officials. So I’m saying very boldly again, and I’m supporting my Honourable Minister to say that our airports are tout-free zones, and we ask that you stop. We are putting in all necessary measures from our end to make sure that that stops as well, of course, with the continued support of the National Security Adviser and the Security Council. So it’s also our responsibility as Nigerians. You’ve heard me say it. You’ve heard the minister said, if any agency, including mine, comes to you within the airport premises and wants to engage in such activities, it is your responsibility to tell them no. If they ask you for funding, tell them no.