As airport concession progresses, FG urged to learn from MMA2 scenario

As the federal government insists on the concession of four international airports in the country despite misgivings from some quarters, there are questions about what becomes of the only terminal concessionaire in the aviation sector, Daily Trust on Sunday can report.

Although the concession of the Murtala Muhammed Airport Terminal Two, popularly known as MMA2, to Bi-Courtney Aviation Services Limited (BASL) has been a thorny battle between the concessionaire and the Federal Airports Authority of Nigeria (FAAN), stakeholders say the terminal operator has endured the controversy to build the most efficient terminal in Nigeria.

The controversy stemmed from the disagreement over the tenure of the concession and the scope. While the BASL argues that by the concession agreement, all domestic flights emanating from Lagos airport, including the General Aviation Terminal (GAT), would be handled by the company, the authorities have resisted the move.

So for years, the BASL and FAAN have engaged in a running battle over the concession. Several court cases, up to 30, were filed and the crisis dragged on.

Bi-Courtney also went ahead to invest in regional operations, but up till now, the terminal is not allowed to operate regional flights, even though some of the airlines operating from the terminal fly to Ghana and other West African countries.

From few airlines at inception, more airlines now make use of the terminal. The airlines include Dana Air, Azman, Aero Contractors, Max Air, United Nigeria, Ibom Air and Air Peace.

While the concession fallout is yet to be fully resolved amidst agitation by Bi-Courtney to take over the management of the GAT, which it insists is part of the concession, the federal government has concluded plans to concession four major airports in Nigeria.

The airports slated for concession are the Murtala Muhammed Airport (MMA), Lagos; Nnamdi Azikiwe International Airport (NAIA), Abuja; Port Harcourt International Airport (PHIA), Omagwa, Rivers State and Mallam Aminu Kano International Airport (MAKIA), Kano.

The decision of the Ministry of Aviation to invite bidders through a recent advertisement despite the opposition by some stakeholders, largely the labour movement, showed the readiness of the federal government to go ahead with the concession.

The concession of airports is part of the aviation roadmap unveiled by the Minister of Aviation, Senator Hadi Sirika. It has dragged on for over six years since the birth of the administration because the move met stiff resistance from some stakeholders in the industry, especially the labour unions.

Also, retirees of the FAAN, including a body of former managing directors and directors of the authority, stoutly opposed the move.

Apart from airport concession, other projects highlighted in the move include the establishment of a national carrier, Maintenance, Repair and Overhaul (MRO) and Aviation Leasing Company (ALC).

But the airport concession has been the most controversial among the projects highlighted in the roadmap, creating tension and uneasy calm in the industry, with stakeholders sharply divided over the issue.

The four major airports listed for concession are those generating the largest chunk of aviation revenue for the federal government, including the MMA2, which is the second terminal of the Lagos airport.

Recent statistics revealed that out of 22 airports under FAAN’s management, the four major ones generated 87 per cent, while the remaining 18 recorded 13 per cent aviation revenue.

The MMIA led with 58 per cent, followed by NAIA, 21 per cent, while Port Harcourt and Kano generated four per cent each between January and December 2020.

This indicates that the four airports are the juiciest and most viable of the airports managed by the federal government. It was on this premise that some stakeholders kicked against the concession of the four airports.

Others also argued that the government must address pending issues over past concessions before talking about giving new airports to private concerns, more so when the airports under contention have undergone infrastructural upgrade with government funding. For instance, the airport terminals have undergone remodeling, which was done with a $500m loan secured in 2013 from the China Exim Bank by the administration of former President Goodluck Jonathan.

According to details of the agreement signed with China, the four airport terminals being undertaken by the China Civil Engineering and Construction Corporation (CCECC) were to be completed by March, 2015, but as at today, only two – Abuja and Port Harcourt – have been commissioned, while those of Lagos and Abuja are awaiting commissioning.

In February this year, the BASL, which is the operator of the MMA2, said it was upgrading the terminal by importing $500,000 X-ray machines and other equipment.

The chairman of BASL, Dr Wale Babalakin, said massive upgrade of the x-ray machine and air conditioning systems was to enhance passengers’ safety, security and comfort.

The new machines would fast-track the screening of passengers and cargoes, according to a statement by the group corporate affairs manager of the BASL, Mikail Mumuni.

He said, “Massive resources are also being deployed to upgrade our air conditioning system for the comfort of passengers as we always treat our customers as kings and queens.”

The BASL spokesman said the ongoing upgrade of the facilities was part of the company’s determination to continue to give Nigeria the best airport terminal comparable to those available in developed economies. He disclosed that the company had to source for 50 per cent of foreign exchange from the parallel market to accelerate the importation of forex.

“To satisfy our customers, we had to buy 50 per cent of the money required for the importation of x-ray machines from the parallel market as the Central Bank of Nigeria (CBN) was only able to allocate 50 per cent to us,” he added.

But as the concession process progresses, and with the experience of the MMA2 still fresh in the minds of pundits and observers of events in the sector, stakeholders stress the need to avoid the pitfalls that bedevil the previous concessions.

What is imperative, as stakeholders argue, is the need to bring about greater efficiency in the management of the terminals slated for concession.

For many, the MMA2 management has tried persistently to define a minimum standard of operation, which has made the terminal attain a category of efficiency the passengers love to experience when travelling to any part of the country.

An aviation analyst said, “The MMA2 terminal signposts what a concession can do. It has defined a standard of operation without interference, deploying technology in passenger facilitation and ensuring uninterrupted electricity supply and putting in place, water-tight security arrangements that have led to several lost items being found.”

Group Captain John Ojikutu, a retired commandant of the MMIA, said there was nothing wrong if the BASL also bids for any of the airport terminals being put up for concession. He noted that the operator could even activate the clause of “right of first refusal” in bidding for concession of Lagos airport.

He said, “Bi-Courtney is free to express interest in the airport concession, likewise any state of the federation. It is wrong to deprive anyone of the right to participate in the exercise. All the government needs to do is the modalities for the concession and these must be technical.

“Once such a state or organisation meets the requirements, it should be allowed to participate. You cannot deny anyone the right to participate in an exercise once that person or organisation is qualified to do so.”

Another aviation expert who spoke on the condition of anonymity said, “When you look at the Outline Business Case (OBC) for the proposed concession of Lagos Airport, there was no mention of the GAT. One can only assume that the whole intention is to hand over the GAT to BASL, or we don’t know what the federal government is planning with Dr Wale Babalakin, a Senior Advocate of Nigeria (SAN), the founder of BASL.”

But a former secretary of the National Union of Air Transport Employees (NUATE), Comrade Olayinka Abioye, in a chat with our correspondent, said government could experiment with concessions with one of the unviable airports in Nigeria.

Depending on the model adopted by the government, analysts emphasise the need to consider experience, expertise, and above all, ensure that the process leading to the concession is as transparent as possible to produce the best concessionaires.