FAAN’s operating cost dips by N16bn as FG increases direct deduction to 40%


As the federal government increases its direct deduction from the Federal Airports Authority of Nigeria (FAAN) to 40 per cent starting 2021, the agency said the increment would lead to over N16 billion revenue shortfall.

The managing director of FAAN, Capt. Rabiu Yadudu who stated this at a press conference in Abuja today said airport managers were engaging the relevant authorities to get an exemption from the deduction while also doing the utmost to close the revenue gap.

Yadudu said the increase in direct deduction informed the upward review of the passenger service charge from N1000 to N2, 000 per passenger from September 1, 2020.

 He said the agency had not increased the PSC since 2011, despite the huge capital investments at the airports.

“The federal government has continued to make massive investment in the aviation sector. Government’s effort to renew the nation’s dilapidated airport infrastructure and ensure safety in the industry has come at a very huge cost.

“Airport management is capital intensive.  FAAN has not increased PSC since 2011, despite all the huge capital investments at our airports. The current PSC charge of N1, 000 is no longer realistic as it does not correlate with realities of cost related inflation rate which the CBN has put at 12.82%.

“Besides, until late 2019 FAAN was collecting the naira equivalent of PSC at an official rate of N305.50 – N344.38 to a dollar when airlines were collecting at subsisting market rate of about N362 to a dollar.

“It should  be  noted  that ICAO ‘s recommendation  in Doc. 9562  stipulates that  revenue  generated  by airports  be transparently  re-invested wholly in operating and developing  airport  facilities.

“It is also worthy of note that the federal government is increasing its direct deduction from FAAN to 40 per cent from 2021. With such deduction, the Authority will have a shortfall of over N16b on overhead cost. The Authority is however engaging the federal government to exempt her from this deduction.

“It has, therefore become imperative to review the Passenger Service Charge (PSC), from N1000 – N2, 000 per passenger. This review which takes effect from 1st September, 2020, has already been communicated to the airlines.

“We therefore implore stakeholder, airport users and the general public to bear with us as the FAAN is laden with so much overhead cost of operation,” he said.

On the existing advisory for domestic travel Yadudu said: “We are glad to note that the new protocols have been working almost seamlessly. The cooperation of the air travellers has been particularly impressive.

“We shall continue to urge all airport users to comply with the new policies and help keep the traveling public, and our nation, safe and healthy. We shall continue to review and update our COVID-19 protocols in line with the updates   from the World Health Organization (WHO). Together, the world would join forces   and overcome this pandemic.


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