Airport concession, national carrier: What options for Keyamo?

  On his first day in office, the new Minister of Aviation, Mr Festus Keyamo SAN, touched on one of the most controversial issues in the aviation industry —the roadmap of the immediate past administration, saying he would not totally discard the roadmap. What options for him? The Aviation Development Roadmap unveiled by the immediate […]

 

On his first day in office, the new Minister of Aviation, Mr Festus Keyamo SAN, touched on one of the most controversial issues in the aviation industry —the roadmap of the immediate past administration, saying he would not totally discard the roadmap. What options for him?

The Aviation Development Roadmap unveiled by the immediate past administration of President Muhammadu Buhari was implemented by the former Minister of Aviation, Senator Hadi Sirika, who, on account of the implementation of the roadmap, turned foes to many aviation stakeholders and experts who queried the steps taken along the line of the roadmap.

Barely a week to the end of the last administration, the Federal Government announced that it has successfully concessioned the Murtala Muhammad International Airport (MMIA) Lagos and the Nnamdi Azikiwe International Airport Abuja.

The then Special Assistant on Public Affairs to the Minister of Aviation, James Odaudu, stated that the concessioning was approved by the Federal Executive Council (FEC).

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He disclosed that the Corporacion American Airport Consortium emerged as the preferred bidder, which comprises the Corporation American Airports, Mota Engil Africa, and Mota Engil Nigeria.

Furthermore, the Corporacion American Airport Consortium will make upfront payments of $7 million for NAIA and $1.5 million for MAKIA.

Expectedly, during the concession period, total projected nominal revenues accruable from the combined concession of NAIA and MAKIA exceed $4 billion, which, according to the statement, over 70 per cent of these projected revenues will be payable to the Federal Airports Authority of Nigeria (FAAN).

He said: “Following a thorough and comprehensive evaluation process that commenced with the Request for Qualification (RFQ) advertised in local and international media on 16th August 2021, and subsequent rigorous evaluation of technical and financial bids, coupled with due diligence visits conducted from 27th – 29th December 2022 and 9th – 10th January 2023, the Corporacion American Airport Consortium has emerged as the preferred bidder.

“The consortium, composed of The Corporation American Airports, Mota Engil Africa, and Mota Engil Nigeria, is globally recognized for its superior technical expertise in the design, construction, management, and operation of infrastructure. The Corporation American Airports, a New York Stock Exchange (NYSE) listed airport operator, has presence across three continents, managing 53 airports in six countries and serving approximately 82.4 million passengers in 2019.

“The concession of NAIA and MAKIA will considerably enhance the operational efficiency and profitability of these airports, repositioning them to operate optimally and competitively. During the concession period, total projected nominal revenues accruable from the combined Concession of NAIA and MAKIA exceed $4 billion United States Dollars. Over 70 percent of these projected revenues will be payable to the Federal Airports Authority of Nigeria (FAAN), thereby generating additional revenue sources for the Federal Government.”

But the concession has been mired in controversy from day one when it was proposed as the workers represented by their unions opposed the move, leading to constant confrontation with the minister.

The Nigeria Labour Congress (NLC) also backed the aviation unions in rejecting the concession which they said would trigger job losses and amount to surrendering the country’s commonwealth to private entities.

This was why the announcement of the concession was greeted by mixed feelings with the unions describing the purported concession as a ruse. The unions comprising the Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), the National Union of Air Transport Employees (NUATE), the Association of Nigeria Aviation Professionals (ANAP) and the Nigeria Union of Pensioners (NUB- FAAN BRANCH) had sued the former minister and FAAN over the proposed concession.

This was why the announcement that the concession had been concluded was taken with a pinch of salt by the unions and other aviation stakeholders.

Months after it was announced, checks by Daily Trust on Sunday indicated that the concessionaires are yet to make the agreed payment while the status of the airports is yet to change as of press time with stakeholders in the industry calling for a review of the said airport concession.

Apart from airport concession, the national carrier was another major project in the roadmap which was equally mired in controversy following what was said to be a shadow launch on May 26, just 72 hours to the end of the administration. The launch came as a shock to many observers and players in the sector as the airline christened Nigeria Air was yet to receive the Air Operator’s Certificate (AOC) to commence commercial operation.

At the time of the controversial launch, the order of the Federal High Court in Lagos stopping the take-off of the national carrier following a suit filed by the Airline Operators of Nigeria (AON) was and is still subsisting.

The acting Managing Director of Nigeria Air, Capt. Dapo Olumide, later told a House of Representatives investigative hearing that the aircraft used for the launch and welcomed with a ceremonial water salute by FAAN’s Aerodrome Rescue and Firefighting Services (ARFFS) department, belonged to Ethiopian Airline as it was used for a demo flight.

As at the time of filing this report, the national carrier project appears to be in limbo as the case instituted against it is yet to be determined.

Since the demise of Nigeria Airways, Nigeria’s once blossoming national carrier, attempts at floating another carrier – from Virgin Nigeria, Air Nigeria, Nigerian Eagle Airlines and Nigeria Air – have been hitting a brick wall.

While the airlines before Nigeria Air flew for sometimes before they went under, Nigeria Air is still grounded even before take-off. Stakeholders are however divided over the national carrier. While some said the national carrier was desirable, others advocated instead for strong flag carriers. But from the perspective of the unions that backed the national carrier project, any airline at all, whether national carrier or flag carrier, is desirable in providing more job opportunities for aviation professionals in addition to improving flight connectivity in Nigerian cities.

What options for Keyamo?

The new minister on assumption of office had promised to tinker with the roadmap but not discard it totally. He said, “I have read the roadmap, the one developed in 2016. I read it thoroughly, our intention is not to disrupt things that have been done so well, if there are things that have not been done so well, we will look at it thoroughly.

“We may have to add to the roadmap but not pull it down totally because I know it was a product of a roundtable held in 2016, so if it was well thought out, I like the structure that I saw.”

Also included in the roadmap are aircraft leasing company (ALC), Development of Agro filled / Cargo Terminals; Establishment of Maintenance, Repairs and overhaul (MRO) centre; Development of Aerotropolis (Airport cities) and Establishment of an Aerospace University.

Stakeholders however said the minister must revisit the projects in the concession to ascertain whether the process was transparent.

President of Aircraft Owners and Pilots’ Association, Capt. Alex Nwuba, in a chat with our correspondent said, “The issue of concession like everything done prior should be revisited and reviewed to ascertain that they were done transparently and in the interest of the nation. This will also answer the question of assessing the concession program of the prior APC administration.

“The minister is new; his administration has time and the nation deserves the very best. Thereafter, we must ask ourselves the basic questions. One, is concessioning the solution to the development of our airports, or do we need to restructure the business model of the Federal Airports Authority of Nigeria and commercialize it?

“Two, if we choose to concession, what are we trading the potentials of the business for? What is the concessionaire bringing to the table and, what is a reasonable return on investment and gain to the Nigerian people? If we choose to restructure, what should be FAAN’s operating model?

“We are surrounded by other African nations with better run airports, what are they doing right?

On other projects in the roadmap, he said, “As I indicated earlier, we have a new lettered man on the job, he should as a matter of priority discard the map that has led many to the wrong destination, gather a team and build a new map that builds a house from design, not even foundation to the comfort, safety and well-being of the occupants.”

Former General Secretary of NUATE, Comrade Olayinka Abioye, recalled that attempts at airport concession were not new, saying, “If the new minister makes concession his top priority, he too will fail woefully. The hurriedly concluded concessions made for Kano and Abuja are already being litigated against so we can say authoritatively that no airport has been concessioned yet….and we must be careful how we handle this matter. Airport Terminal Concession or Airport Concession, which is which? Did the former minister conclude all relevant and germane staff welfare issues? No! Did he disclose the value of each of the terminals for concession and the expected gains there from? No! Did he disclose to the Nigerian public staff liabilities who and what category of personnel are expected to be affected by that exercise? No!

“There are about four of the roadmap projects that are worth reviewing for the greater good of the sector such as Aircraft Leasing and MRO. These two will deepen the growth of the sector immediately and impact positively on our GDP (gross domestic product) and FDI (foreign direct investment). It will also help in securing services of suitably qualified professionals who are unemployed.”

But Group Capt. John Ojikutu, rtd, foremost aviation analyst and former commandant of the Murtala Muhammed Airport, said the Airport concession should go on urgently “so as to get the government off the yearly budgeting for financing their periodic maintenance and developmental projects.”

“However, each international airport should go for concessions with at least four domestic airports. Secondly, only the non-Aeronautical services for concessions and the Aeronautical services like the runways and Taxiways could be excised to NAMA and FAAN should be made a Holding Company. Thirdly, the Airport Security and its Defence Layers should remain our obligations to ICAO and the responsibility of the government.

“Government must set up a National Air Traffic Services to include the NAF in the management of the airspace to be routinely monitoring the airspace violence and to avoid the type of disconnection between the two in the multiple attacks in the US during September 9, 2001. There should no longer be any consideration for National Carrier but Flag Carriers, at least two for a start, to operate on the neglected BASA Routes.”

Another analyst, Babatunde Adeniji, said from all indications, the airport concession carried out by the last administration was not concluded.

If he (Sirika) succeeded with concessions, why don’t we have concessionaires at the airports?

“I am more worried that the issues identified as the basis for the Road map since 2016 are mostly still with us. These include currency depreciation; lack of local capacity of key aspects of the value chain like MRO, leasing company.”