Friday, April 11, 2014

Nigeria: It’s Time To Privatize Our Airports -Capt. Daniel Omale

Capt. Daniel Omale

— April 12, 2014

It is needless to reemphasize the economic role of airports in a country. The huge issue about airport development, improvement and management is: who should bear the burden of continued operation of the airport?

While the Federal Airports Authority of Nigeria (FAAN) has been saddled with operating and managing the 22 airports in the country, the most efficiently operated and managed airport in Nigeria still remains the MM2, which is part of the concession agreement with Bi-Courtney Aviation Services (BASL).

BASL has constantly kept the airport clean and serviceable with less government-type bureaucracy and inefficiency.

FAAN’s main revenues come from Lagos, Abuja and Port Harcourt. The ever-relegated Aminu Kano Airport, which has huge growth potential, is virtually underutilized. Therefore, at this point, it is more important to relieve FAAN of its burden by leasing out most of the airports in the country.

The core problem of airport improvement program in Nigeria is government’s interference with what FAAN generates internally, and as long as the airports authority is tied directly to government’s overbearing directive, there is no way Nigeria’s airports will function to international standards.

The Federal Airports Authority, if necessary, should select a few airports to manage and operate, with little or no government subvention. Private investors must be encouraged to take control of the other airports in other parts of the country with a view to increasing air traffic into the fields for more revenue generation to sustain the investment.

Some states like Jigawa, Gombe and Delta have created the structure for air link into their state capitals, but failed to manage the airports on their own. Handing such investments to FAAN will surely limit air traffic growth into the field.

Private investors will scan for business from foreign and domestic airlines. FAAN won’t.

Transportation is basic to the economy of any region, but little credit is given to the vital role it plays in linking suppliers, manufacturers, and consumers into a productive and efficient pattern of distribution. This is especially true from the aviation standpoint.

Everyone is aware of the contribution of highways to the road transportation system because almost everyone drives a car.

Aviation is a key element in the transportation network but this fact is not publicized as well. The airlines do a fairly good job of letting the public know the importance of scheduled service at primary airports, but the public is usually unaware of the benefits derived from the general aviation industry.

The local airport is the principal gateway to the nation’s transportation system. A community’s lack of an airport can be as detrimental to its development as being bypassed by a major road network. Gombe, the capital of Gombe State, has witnessed this development since the government of Danjuma Goje established an active airport there.

Communities that are not readily accessible to the airways may suffer economic penalties that can affect every local citizen whether they fly in a general aviation aircraft, use the airline, or never have occasion to travel at all.

The airlines provide excellent service to many major metropolitan areas of the country Abuja-Lagos, Portharcourt, and Kano but thousands of smaller cities, towns, and villages also need air transportation service. There are close to 1000 incorporated communities in the 36 states of Nigeria and an additional 500 unincorporated communities. Since scheduled airlines serve fewer than 5 per cent of the nation’s 22 airports with approximately 40 aircraft, there are a large number of communities and their citizens without immediate access to the fine airline system.

By having air access to all the nation’s airports, general aviation aircraft can bring the benefits and value of air transportation to the entire country.

Cities and towns that years ago decided not to build an airport have learned that lack of an airport jeopardizes community progress. Time and again, the lack of an airport has proved to be the chief reason why a community has been bypassed as a location for a new plant or a new industry.

The airport has become vital to the growth of business and industry in a community by providing air access for companies that must meet the demands of supply, competition, and expanding marketing areas. There is little doubt that communities without airports place limitations on their capacity for economic growth.

Obviously, FAAN should not be the sole operator of our airports, although, it is acceptable for FAAN to play active role in airports’ security in the nation.

Airports and related aviation and non-aviation businesses located on the airport represent a major source of employment for many communities around the country. The wages and salaries paid by airport-related businesses can have a significant effect on the local economy by providing the means to purchase goods and services while generating tax revenues as well. But local payrolls are not the only measure of an airport’s economic benefit to the community. Indirectly, the employee expenditures generate successive waves of additional employment and purchases which are more difficult to measure but nevertheless substantial.

In recent years, a number of issues have arisen concerning airport system development where the interests of several parties have come into sharp conflict. One such group of issues relates to the strategic policy of the federal government in development of the airport system. Some have suggested that past federal policy has placed too much emphasis on capital investment in new facilities and not enough on methods to make more effective use of existing facilities.

A second set of issues involves funding. Some observers have suggested that the federal role has become too large and pervasive and that responsibility for airport development should devolve either on the airports and their local sponsors or the federal government.

Other issues arise from the legal and contractual arrangements traditionally concluded between airports, airlines and other concessionaires.

Finally, there are issues surrounding the planning of future airport development, particularly the timing and location of demand growth and the role that the federal government will play in defining and meeting airport needs.

But since Nigeria is gearing towards privatization of most economic sectors, it’s best for government to allow private hands in airports’ operation in the country. Of course, security at the airport must remain with FAAN and  other law enforcement agencies.