Again, airport privatization comes under severe criticism

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Since the federal government gave a hint that four international airports will be privatised, protests against the plan have not ceased
 
If there is any group that vehemently kicks against the planned concession of the international wing of the Murtala Muhammed Airport, Lagos, Port Harcourt International Airport, Omagwa, Nnnamdi Azikiwe International Airport, Abuja and Mallam Aminu Kano International Airport, Kano, it is the Nigeria Union of Pensioners (NUP), Federal Airports Authority of Nigeria (FAAN) chapter.
To NUP, the privatization, commercialization or concession of the “viable airports” as hinted by the minister of state for aviation, Senator Hadi Sirika is borne out of the “quest for materialism, selfish interest and to support capitalism in the country to the detriment of Nigerians.”
At a peaceful protest rally held in Lagos recently, the national chairman of the body, Alhaji Rasaki Ope said “airports should not be seen as a buying and selling venture where profit should be the yardstick.”
He argued that airports represent lots of interests including economic, social activities and international connections from country to country and from state to state.
Since Sirika is bent on making the airports viable and profitable, Ope advised that he should concentrate on the unviable ones and turn them around.
Globally, he said airports represent any country’s sovereignty, hence handing them to individuals or group of people portend danger.
“How can we give out our national heritage to individuals to operate, thereby undermining Nigeria’s sovereignty, losing sight of security implications, which is supposed to be paramount in every sphere of any nation?” he asked.
The union noted that FAAN had tried such a concession in the past with Maevis on revenue collection but it went awry because “Maevis refused to remit what it agreed to pay into FAAN’s coffers while FAAN was unable to pay salaries and pensions and meet other statutory obligations.”
NUP also recalled that Bi-Courtney Aviation Services Ltd (BASL) which manages the Murtala Muhammed Airport terminal 2 in Lagos won a concession to build, operate and transfer the facility after a stipulated period. However, NUP said the terminal manager had since refused to remit what is due to FAAN “because the company (BASL) claimed that the general aviation terminal vicinity belongs to it (BASL).”
“We are asking this question: Is a terminal building an airport or minute part of an airport? What BASL has is a terminal building…where it collects rents and charges from airlines….FAAN is still maintaining the runways, security, airfield lightings and general operations of the airport which are the important aspects an airport,” said Ope.
Should the four international airports be privatized in whatever form, Ope posed some questions: “What happens to other unviable airports built for political interest to bring federal presence to the people of the state? Who will be responsible for the assets and liabilities of FAAN? What happens to the act establishing FAAN? Has the act establishing FAAN been abrogated or amended by the national assembly before such transformation?”
Prior to the NUP protest, the former director of engineering services at FAAN, Mr. Mohammed Sadiq, has advised the government against privatizing the viable airports  saying apart from reducing the revenue accruing to government it would also impact negatively on safety and security. He argued that with improved transparency the nation’s airports are capable of operating without subvention from the government. He said FAAN generates N33 billion annually and can contribute 25 per cent of this revenue to the government’s account, especially with the introduction of the Treasury Single Account (TSA).
He added that the ongoing construction of new terminal buildings at the international airports could easily be paid for by FAAN, since it is at a very low interest rate of 2 per cent and payable over 22 years. Comparing with data from the U.S., he noted that the busiest airport in the world, Hartfield-Jackson International Airport in Atlanta, Georgia had an annual turnover of $24 billion (about N7.2 trillion) which is more than Nigeria’s N6.06 trillion budget for 2016.
“It is this economic viability of our airport system that the economic terrorists are targeting by advocating privatisation of the only viable international airports to the detriment of the overall development of the other airports.
“If the few viable airports are selected and given to concessionaires, the other unviable airports are being deliberately killed by the greed of the concession advocates,” he said.
Similarly, the spokesman for FAAN, Mr. Yakubu Dati had argued that airport management goes beyond profit and loss making adding that airport privatisation in the country had been opened to so much debate by different stakeholders and professionals in the aviation sector.
He cited the case of Dubai, Qatar, Doha as some airports that are profitable and owned and controlled by their various governments.
He argued that if the ownership of an airport falls into the hands of unscrupulous people, it may work against the interest of the nation.
“If I own an airport, I can decide how I want to run it. This personally, I would say, creates a separate set of problem for the country.
“Privatisation means airports will now be transferred to the private sector. If you look at the history of airports that are profitable across the world, they are airports that are owned by the governments.
“Look at Dubai, Qatar, Doha and others, all these are airports that are owned and operated by the government and they are operating profitably. This is so because there is connection between the airport, economy in the city, industry in the city and tourism,” he said.
He said the profit of an airport may not be in the tickets sold, but in the business brought to such a state by even a single investor with huge resources for investments.
“If you privatise an airport today and the investor is not making profit, he can decide to close down such an airport. Then, what happens to airports like Benin, Katsina, Enugu, Jos, Sokoto, Ibadan, Akure, Owerri and few others? Only Lagos would operate.
“I believe aviation is too serious a business to be left in the hands of people who look at it from the prism of profit and loss. It is way beyond that. It is an economy enabler; a security issue and also an emolument that represents people,” he said.
However, the head of research at Zenith Travels, Mr. Olumide Ohunayo said advised that should the government insist on privatization, it should consider the clustering option whereby a major airport will be taken along with other unviable airports within the zone.
The option, he said, would reduce FAAN’s liability while it concentrates on regulating, monitoring and securing the airports.
“Clustering takes the airport in totality rather than the cherry picking option. The Argentines took the 30 airports in totality using funds from the viable to support the unviable ones; the Indians divided the airports into green field and brown field before privatising. To protect the public, airlines and other airport users, the Indian government established an independent regulatory body to monitor and regulate the public and private airports.
“This ensures compliance to benchmark service level and generally resists any form of monopolistic tendency. They also set up a scheme called “Viability Gap funding”, to protect, attract and support investors for non-viable airports. The government provides funds, which can only be accessed by interested investors through a bidding process.
“Also, the government ensured states where these airports are located are not left out by providing an additional state support agreement to boost the confidence of investors, while also wielding a stick called “Liquidated Damages,” which are charged for defaults.
These countries took the airport in totality, the common factor in these agreements are capital injection, improvement of airport facilities, financial returns to government annually, protection of public interest and other operators,” he said.
In less developed countries like Nigeria, Ohunayo said governments should be building and enhancing the transport system rather than just offloading the assets.
“This is to avoid a situation whereby we move from ugly state-owned airports to even uglier privately owned airports. It is noteworthy that most reputable private sector investors would not consider buying an airport with fewer than one million passengers. This is why airports have often been sold as a package – good and bad, small and large, domestic and international,” he said.

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