By Dickson Omobola
Federal Airports Authority of Nigeria, FAAN, and Bi-Courtney Aviation Services Limited, operators of the Murtala Muhammed Airport Terminal Two, MMA2, have recommended different approaches to growing the country’s aviation revenue, with the airport management agency advocating a comprehensive review of taxes, levies and charges.
Although FAAN said there was a need for transparency and a review of the revenue structure across the aviation industry, the terminal operator pushed for a growth-driven model that prioritises lower charges and increased passenger traffic.
The different positions emerged at the 30th Annual Conference of the League of Airport and Aviation Correspondents, LAAC, themed ‘Towards Sustainable Aviation Industry: Balancing Government Revenue Demands with Sector Growth,’ held in Lagos.
Speaking during a panel session at the conference, Managing Director of FAAN, Olubunmi Kuku, represented by the agency’s Director of Finance and Accounts, Ayodele Olatiregun, said despite improvements in aviation revenue and domestic passenger traffic since the COVID-19 pandemic, international traffic had remained the major driver of revenue in the sector.
Kuku, who said the contribution of domestic passenger traffic to the overall revenue base remained relatively low despite a slight improvement in passenger numbers over the last five years, called for a comprehensive review of all taxes, levies and charges in the air transport sector. However, she said all stakeholders must be ready to make their figures available to facilitate the process.
She said: “One thing I will also say from this other side of the divide is, in the last five years, post-COVID pandemic, there has been improvement in the revenue generation in aviation as a whole. But, unfortunately, data shows that most of this is actually driven by international traffic, rather than local traffic. So, yes, there has been slight improvements in passenger traffic at a domestic level, in terms of contribution to the cake, or to the base, it is not really representative. What I will say, in essence, is, I understand the fact that there are several charges from the perspective of who pays them. That’s the airline. But from the airport perspective, everything that we have done is in line with international regulations.
“Of course, we know that aviation is highly regulated. But when we talk about other levies and taxes, it’s very important that the cost of doing business is something that airlines will always find a way to bring the issues to the fore. And it’s not only in the aviation sector. I feel that it makes absolute sense for there to be a consolidated and comprehensive review of all the taxes, levies and charges as it affects the aviation industry. And when I say aviation industry, I mean not just the airlines, government itself and its agencies, the ground handling companies and every other entity or sector working in the industry as a whole.
“I believe it’s an ongoing conversation that needs to be had. But it is also very important that we also think through it because information is required to make such decisions. And that information is not publicly available. I believe not just government. For transparency’s sake, I feel all stakeholders, and I believe FAAN inclusive, should be ready to put out their numbers out there for proper review.”
Meanwhile, Acting Chief Operating Officer of Bi-Courtney Aviation Services Limited, operators of the Murtala Muhammed Airport Terminal Two, MMA2, Remi Jibodu, urged government to view aviation as an economic multiplier rather than primarily as a source of revenue.
Jibodu said lower charges could encourage growth in passenger traffic and other aviation-related activities, which would eventually expand government revenue.
Jibodu said: “It is better for you to have one per cent of 1 billion than 10 per cent of 100 million. The truth about it is that if you look at the figures globally, I think Airports Council International, ACI, said we are going to be growing globally by four per cent. Africa, because we have not even reached the maturity level, is going to grow by about five to six per cent. Recently, AOG came up with a report during this last summer, and they said that Africa grew by about seven per cent, which is very high.
“The driver for that is actually the domestic market in Nigeria, which drives that figure in Africa. What I’m trying to say, basically, is that the numbers, if you look at the numbers, mean there is going to be consistent growth even beyond 2050. Now, if you want it to grow and not be stunted, the way to go is to look at the mathematics and say, I will charge a little from many, or not so much from a few. Now, the second point of view, basically, is that when you now take this advice, what will happen is that, for instance, let me give you MMA2. On a daily basis, we entertain no less than 15,000 people, both passengers and customers. And what am I saying? Within these 15,000 people, you have passengers.
“They are a dynamic population, so they are not unique. So, it’s going to evolve on a daily basis. What it means, basically, is that you’re going to have expansion in cargo, ground handling, travel agencies, infrastructure, and so many aspects, in terms of employment and revenue. What it means is that the multiplier effect for the economy is going to be that the government is going to make more money at the end of the day. And the growth of the industry will be very significant, especially in Nigeria and Africa. A lot of people are looking at us to see how we can grow this figure. Government will eventually make the money. That is just the bottom line of it. But what is important is that the industry also grows while government is also making money.”
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