Flight restrictions cost Lagos airport over N15b in revenue
Protracted flight restrictions of both local and international flight operations in the last two months may cost Murtala Muhammed International Airport (MMIA) as much as N15b loss in revenue.
The sum covers unmet targets in passenger service charge, sundry charges on other airport-users, land transport services and toll charges at the access gate, among other income-generating sources for the managing Federal Airport Authority of Nigeria (FAAN).
The government had in March placed a restriction on local and international flights, as part of efforts to contain spread of the Coronavirus pandemic. The restriction excludes cargo, emergency and essential flights, as approved by the Minister of Aviation, Hadi Sirika. The restriction was further extended on May 6 for another four weeks.
While it is not yet clear if flights will resume at the end of the current restriction, the losses to the Lagos facility, which is both the biggest in passenger traffic and revenue, are not in doubt.
A visit to the airport recently showed a complete opposite of the erstwhile chaotic arena. Not only was there to travelling public, support services, retail shops and kiosks were also under lock and key. Only very few staffers were noticed in the international wing. Both Murtala Muhammed Terminal II (MM2) and General Aviation Terminal (GAT) were completely barred to the public.
Sources at FAAN’s Corporate Affairs department told The Guardian that the losses would be in billions, though “no one can say exactly how much for now, because we are still counting.”
“Don’t forget that the disruption started at the beginning of the year. It was after the harmattan haze that led to flight diversions to neighbouring countries. Operations didn’t fully recover, as foreign airlines were already feeling the pinch of Coronavirus.
Again, a lot of franchisees and concessionaires were still making payment plans and arrangements for the year, when this whole problem started. I have no doubt that almost half of the entire annual revenue could be affected, that is if flight resumes by June,” a senior official said.
The Guardian learnt that at least 33 per cent of the airport’s N45.865b total revenue earning in 2019 is already affected. At the access toll plaza, for instance, the total earning for the month of April was less than N10m, compared to N100m projected by aviation unions at the takeover of the facility from I-CUBE in February.
The airport’s General Manager, Victoria Shin-aba, recently disclosed that the international airport had been reduced to skeletal operations and flight movements, with attendant impact on revenue.
Compared to between 23 and 28 flights daily, she said the facility had been reduced to between one and three flights per day, which are either cargo flight or evacuation exercises.
Company Secretary and Legal Adviser of FAAN, Dr. Clifford Omozeghian, said the management would have to liaise with the Federal Government to address the issues of revenue shortfall to be able to meet airport infrastructure challenges and pay workers’ salary.
Omozeghian noted that the global economy is in recession and FAAN is not excluded. It would be recalled that a total of 120 aircraft have since been grounded nationwide, since the lockdown began. The Chairman of Airline Operators of Nigeria (AON), Capt. Nogie Meggison, said it should be noted that about four weeks before domestic airlines suspended operations, passenger traffic had declined to about nine per cent, leaving airlines in financial distress.
The International Air Transport Association (IATA) earlier estimated that the temporary flight restriction could potentially affect at least 3.5 million passengers, resulting in a $0.76b revenue loss for Nigeria.
Meggison said operators aligned with global concerns and reports, which puts aviation sub-sector as the worst hit, as a result of the various global containment efforts and strategies.
“These troubling statistics are likely to threaten the existence of many domestic airlines in Nigeria, who are still grappling with over 32 multiple charges. AON is, therefore, seeking government’s stimulus packages and incentives to mitigate the negative impact of this pandemic on the aviation industry in Nigeria and by extension, the domestic airlines. These should include deliberate sourcing, loans, grants, tax waivers, special forex windows and rates, reduction of airport taxes or surcharges, and waivers,” he said.
Aviation expert, Chris Aligbe, said all aviation agencies and parastatals depended on passengers’ revenue, majority of which was from foreign airlines.
Fares on foreign airlines are more. A five per cent passenger service charge on N300, 000 is by far higher than five per cent on N25, 000 or N50, 000 local flights.
“Airport charges are like that too. So, if the airlines don’t pick up to the level of pre-COVID-19, then the revenue won’t come to the agencies too. These are all government’s parastatals. By the virtue of their Acts, unfortunately, none of them can go borrowing. It is only government that can borrow for them. They all still need their revenue monthly for sustenance and keeping the safety records intact.
“Then, the government has no choice than to place them on grant level. They should receive grants to cover their expenditure, while the support is gradually reduced, as the revenues start coming from airlines’ operations.
“I worry very much about FAAN. If you leave the carrousel unused for one month, for instance, it will get cranky. So, you need to keep maintaining the airport infrastructure that they may work properly the day operations resume. Unfortunately, aside Lagos and Abuja airports, all others are running at a deficit,” Aligbe said.