NAMA’s survival hangs in the balance
The 50 per cent revenue reduction of the various aviation agencies has continued to dominate the discourse. The hardest hit is the Nigerian Airspace Management Agency (NAMA). The agency is in serious financial dire strait and looking for ways to survive, writes, WOLE SHADARE
Survival
The survival of the Nigerian Airspace Management Agency (NAMA) is more than ever going to be tested in the next few months as the agency requires enormous funds to keep up with the development of the Nigerian airspace infrastructure to meet the requirements of the ICAO Standards and Recommended Practices (SARPs).
The organisation is responsible for the provision of air navigation services throughout the Nigerian Flight Information Region.
NAMA is entrusted with the critical responsibility of ensuring the safe conduct of flights within Nigeria’s airspace, including the Gulf of Guinea.
To fulfil this mandate, NAMA maintains advanced safety-critical equipment and recruits and trains personnel to meet national and international safety standards as outlined by NCARS and ICAO SARPS.
Consequently, the agency is currently facing significant financial constraints due to the implementation of a 50% revenue deduction.
This reduction according to people familiar with the agency, has severely impacted its revenue, cutting it by more than half at a time when the need for infrastructural and personnel development is growing.
Airspace safety challenged
Not a few believe the safety of the country’s airspace is paramount even though the current financial model is unsustainable.
The 50% revenue deduction hinders the agency’s ability to maintain and upgrade critical infrastructure, such as our obsolete surveillance systems, which are over a decade old and urgently need replacement.
Without adequate funding, NAMA cannot meet the high costs of procuring and maintaining essential equipment or ensuring the continuous training of its technical staff, which is vital for maintaining safety standards.
It is crucial to understand that NAMA operates on the principle of cost recovery, as the International Civil Aviation Organisation (ICAO) recommends. This means all charges are solely meant for the recovery of equipment and other costs incurred in service provision.
Skewed revenue sharing formula
The current revenue-sharing formula allocates only 22% of the 5% airfare, contract, charter, and cargo sales charges to NAMA, despite its significant capital investment needs.
The Nigeria Civil Aviation Authority (NCAA) with fewer responsibilities as it stands currently is allocated 56% while NAMA with all its responsibilities, gets 22%. This formula is skewed against NAMA despite the huge capital requirement of its investment, jeopardizing its ability to meet national and international obligations.
Brick-wall
Efforts by NAMA to adjust navigational charges to cushion its financial constraints have not come to fruition while airlines that have rejected the adjustment have themselves increased fares by over 600 per cent in the last 18 months making fares to be out of the reach of travellers.
The agency raised en-route navigational charges from N6,000 to N18,000 and equally increased the extension of hours of service to airlines.
NAMA and the NCAA in January held a strategic meeting with some airline operators under the aegis of Airline Operators of Nigeria (AON) to review what has been described as the outdated N6,000 Terminal Enroute Navigational Charges (TNS).
The meeting held in Abuja was called at the instance of the NCAA and NAMA to get the understanding of the airlines on the review of the rate which the airlines admitted needed to be reviewed.
Suspension
Shortly after NAMA announced the marginal rise in navigational charges, the Minister of Aviation and Aerospace Development, Mr Festus Keyamo asked the agency to suspend the implementation.
The Minister emphasized the need for further consultation before implementing any changes, highlighting the importance of being sensitive to the plight of Nigerians amidst these economic challenges.
The largest percentage of NAMA’s revenue comes from en-route navigation charges (domestic and international flights) and terminal navigation charges (domestic and international flights). While international flights pay in US dollars, domestic flights pay in the Nigerian currency.
The Managing Director of NAMA, Engr. Umar Ahmed Farouk while announcing the adjustment in July this year highlighted the significant economic pressures the aviation industry faces, exacerbated by global economic volatility, fuel price hikes, and currency instability.
Survival strategy
He outlined strategies for survival and growth, including operational efficiency, embracing innovation and technology, strengthening infrastructure, and fostering collaboration and partnerships.
Explaining why his agency took the action before the Minister called for suspension of the implementation of an increase in navigational charges, Farouk discussed the financial challenges NAMA faces, noting that the agency relies on statutory fees for managing the airspace.
NAMA had proposed an increase in its fees to sustain its operations and ensure the safety and efficiency of Nigeria’s airspace. The new unit rate/minimum charge for en-route was set to increase to 18,000 Naira from N2,000 Naira per flight while the unit rate/minimum charge for terminal navigation charge(TCN domestic) was to rise to 54,000 Naira from 6,000 Naira per flight with effect from the 1st of September 1, 2024.
Experts’ views
Director, of Public Affairs and Consumer Protection of NAMA, Abdullahi Musa said NAMA would continue to engage the airlines, who have been responding to the prevailing economic situation since 2008 without taking NAMA into consideration, which is supposed to be a cost recovery agency in line with global practices.
The Secretary-General of the National Association of Aircraft Pilots and Engineers (NAAPE), Olayinka Abioye who spoke to Aviation Metric at the weekend said the union leaders in the aviation industry would again meet with Keyamo when he comes back from his overseas trip on how to prevail on him to save the agency from financial dire straits that may hamper the effective implementation of its core responsibility.
He said, “First and foremost, NAMA is my first constituency, because I retired there and my monthly pension comes from there. I am very much concerned about the growth of NAMA, financially and otherwise. When this information broke that all agencies, MDAs and so on, would be losing part of their financial shares, we raised an alarm. That alarm got us to the Minister’s office up till two weeks ago we still discussed this”.
“We have assurances that these things will be reviewed. Confidentially, when the Minister returns from his overseas trip, the union leadership will be meeting with him. We are also planning to go and meet with the Minister of Finance to discuss it. Concessions have been made. The fact is that those concessions and figures are not supposed to be made public, so I won’t discuss further than that. They were working on it.”
He carpeted airline operators for what he termed selfishness by increasing their fares over time but would not allow other agencies to do so, urging airlines to partner with the government.
“For as long as airlines continue to increase their prices, they cannot stop any of these agencies from increasing their tariffs. Because one thing gives the other one. If our services are not good, you cannot even fly.”
“If we have 20-year-old equipment that needs to be replaced, it will cost a lot of money to replace it. It is like them changing parts of their equipment and things like that. There must be a balance, there must be understanding. One of the things I would like to encourage is that there should be regular consultations, midwifed by the NCAA between airline operators and the agencies, particularly FAAN and NAMA. They must be talking among themselves.
“This is what we intend to do including the airlines who just willy-nilly increase their fares as they wish. Ordinarily, there is a rule that you must get approval from the NCAA before you do that. But these days, they just do it and they don’t care what happens thereafter.”
Last line
Restoring the full revenue allocation to NAMA is quite essential. Doing so will enable the agency to address the critical needs of infrastructure, enhance operational efficiency, and ensure the continuous training of safety-critical personnel. With adequate funding, it can fulfil its mandate to provide safe and reliable air navigation services across Nigeria’s airspace.
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