New Telegraph

Depleting Revenue: Aviation agencies scamper to recover costs

  • FAAN operating at a loss


The depleting revenue of many of the aviation agencies may have made them, particularly the Federal Airports Authority of Nigeria (FAAN), go after airlines that owe them over N30 billion in taxes, charges and other remittances.

The reduction in revenue generation has put FAAN in a dire financial strait and makes it extremely difficult to attend to the need of over 27 aerodromes the agency controls throughout the country.

Aside from that, the agency is finding it difficult to meet up with some of its statutory responsibilities and enormous demands from the agency. To shore up its revenue base, FAAN is not only looking at ways to block loopholes in its revenue generation, but has gone on the offensive against indigenous airlines that are indebted to it.

Out of the 27 airports operated by FAAN, only the Murtala Muhammed Airport, Lagos, Nnamdi Azikiwe International Airport, Abuja, the Port-Harcourt International Airport, Port-Harcourt and the Mallam Aminu Kano International Airport (MAKIA) are said to be viable, while other aerodromes are fed from the revenue from these other facilities.

Specifically, the Lagos airport generates over 55 per cent of the total earnings from aviation in Nigeria, a situation that has made FAAN, a revenuegenerating agency of government, to be stretched beyond its capacity.

A source close to the Agency told New Telegraph that FAAN is on the onslaught to recover what is owed it by ‘recalcitrant’ airlines that failed to pay for services rendered to them.

The source, who pleaded anonymity, disclosed that since normal operations started after the COVID-19 lockdown last year, there have been excuses that revenue targets are not being met because of the effects of the pandemic.

The Managing Director of FAAN, Captain Rabiu Yadudu, early this year, hinted that the organisation was proposing a revenue budget of N188 billion for year 2022 as against N125.4 billion approved for the year 2021, which represented an increase of 50.4 per cent.

He announced that despite the effect of the pandemic, FAAN did not have an operating surplus, but was able to remit N16.7 billion to the Federation Account as contribution to the Consolidated Revenue Fund by the end of December 2021, which he said had impacted on its ability to adequately meet up with the organisation’s obligations.

The Director-General of the Nigerian Civil Aviation Authority (NCAA), Capt Musa Nuhu, after a closed-door meeting with debtor airlines, told New Telegraph that they have discussed and they all agreed that everybody is having chal-economlenges, difficulties and not restricted to the industry stakeholders alone, the airlines, ground handlers and other service providers. He further disclosed that the agencies too were equally having their own financial challenges. His words:

“At a point in time during the COVID-19 pandemic when the airlines ran into troubles, a lot of the agencies too had the same challenge of paying the salaries of their workers. So, we are all in the same boat. You can imagine FAAN running about 27 airports and the funds are not there, NAMA has facilities all over the country that it must maintain, equipment is imported and it must be maintained. I had to train my inspectors overseas.

“We are all in the same boat and we all need to work together, collaborate and get out of the problem. We need to stabilise the system and ensure there is an improvement. Also, there are issues of outstanding debts that need to be paid. “So, we are working on the airlines, we know that if we tell them to give us all these monies at the same time, it is very difficult and not possible, so, what we have put in place in NCAA and to prevent the debts from growing, we have put in place a tripartite agreement; the NCAA, airlines and the airlines’ banks.

“So, once those funds go to the bank, the five per cent TSA/ CSC is automatically deducted and goes into the NCAA bank and NCAA will share it with the other sister agencies on a pre-determined ratio as entrenched in the 2006 Civil Aviation Act.” Nigerian airlines’ debts have risen to N19 billion and $.7.8 million.

These are debts owed to the aviation regulatory body. Aside from debts owed to NCAA, the carriers are also said to owe the Federal Airports Authority of Nigeria (FAAN) and the Nigerian Airspace Management Agency (NAMA) to the tune of N18 billion and N5 billion, respectively.

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