FAAN’s annual revenue may hit N70b

—Agency to develop non-aeronautical revenue sources

The Development of non-aeronautical sources of the Federal Airports Authority of Nigeria (FAAN) could help boost the revenue of the agency from N38 billion it generated last year.

This Managing Director of FAAN, Saleh Dunoma disclosed this Woleshadare.net on the side-line of his interactive session with the media last week.

Although Dunoma did not disclose how much revenue it could add to the agency’s revenue generation, he simply said that, “We have to develop these non-aeronautical revenues”.

Sources close to the agency said currently, FAAN earns about N2 billion from aeronautical sources and N3.5 billion from non-aeronautical sources monthly from the Murtala Muhammed International Airport, Lagos.

This amounts to N30 billion annually and N15 billion annually respectively from other airports in the country, which represents a total amount of N45 billion per annum.

Although, FAAN surpassed the N30b yearly mark to N38b last year, experts who spoke with our correspondent said that the development of non-aeronautical services in Nigeria’s aviation industry could bring FAAN’s annual revenue to over N70 billion both from aeronautical and non-aeronautical sources annually.

This can only be possible if all loopholes are closed and revenue systems automated many said.

Although, the figure the agency gave was from Passenger Service Charge (PSC), many are in the dark of what the agency generated from other sources which many said FAAN are always silent about.

Dunoma stated that he was aware that some countries generate a lot from non-aeronautical sources of revenue and rely more on it as their major source of revenue from aviation, adding that Nigeria is working towards that.

His words, “By the time we develop programme like the aerotropolis and bring about a lot of development on the landside of the airports, we would be seen as developing more non-aeronautical source of revenue and then, we will catch in on that”.

“We have issued out pieces of land for the development of hotels and other projects. By the time they are completed and commissioned, we will continue to earn more revenues. We are working on development of non-aeronautical sources of revenue, but we will want to concentrate on aeronautical sources so that we will make sure that we provide the services that we are supposed to provide to our customers who are the airlines and the passengers”.

An airline operator who spoke on strict condition of anonymity said as with any other business, airports continuously seek to increase operational profitability and efficiency.

He stated that as competition increases, and partners and stakeholders shift their business model to meet new market trends, some airports struggle to keep their business profitable, stressing that with an average of 39.8 per cent of global airports’ revenues deriving from the non-aeronautical sector, and its increasing profitability vis-à-vis the aeronautical sector, it’s no wonder that many airports are turning to this $60.4bn industry to increase overall airport profitability.

Non-aeronautical revenues continue to be a vital component of an airport’s bottom line.

This source of revenue tends to generate higher net profit margins, whilst providing airports with more diversification of income streams which then serve as an additional cushion during economic downturns where passenger numbers may drop or passenger spend may decrease in one area or other.

Globally, the retail concessions, car parking and property revenue streams lead the way. Retails are also experiencing the highest growth rates as a revenue stream.

Many industry observers are of the view that the high charges imposed on airlines by FAAN is because it has not introduced comprehensive non-aeronautical revenue sources which could increase its earnings by 30 per cent.

A former President, Aviation Round Table (ART), Capt. Dele Ore urged the agency to do more to develop the landside of the airports to such standards that would make them attractive to the public, tourists and investors and not just for passengers.

According to him, several airports globally make a huge portion of their revenue from non-aeronautical activities.

Wole Shadare