…Says revenue inflow down by 95 per cent

…Passengers to pay new service charges from September 1

FAAN laments N16bn overhead shortfall

By Dirisu Yakubu

The Federal Airports Authority of Nigeria, FAAN, Thursday, rolled out new service charges per passenger to cushion the effect of the more than N16 billion shortfall occasioned by the coronavirus pandemic.

The shortfall culminated in the loss of 95 per cent revenue owing to the stoppage of local and international flights for months as a means of curtailing the spread of the virus.

Managing Director of FAAN, Capt. Rabiu Yadudu who stated this in Abuja said from 1st of September 2020, passengers will pay N2, 000 as service charge up from N1, 000 for domestic flights, adding that for the Economic Community of West Africa States, ECOWAS, member countries, passengers will pay $80 each. For intercontinental flights, passengers are now required to pay $100 as service charge, Yadudu added.

According to Ya dud u, “airport management is capital intensive. FAAN has not increased Passenger Service Charge, PSC, since 2011. The current PSC charge of N1, 000 is no longer realistic as it does not correlate with the realities of cost related inflation rate which the Central Bank of Nigeria, CBN has put at 12.82 per cent.

“Besides, FAAN, until late 2019 was collecting the naira equivalent of PSC at an official rate of N305.50 -N344.38 to a dollar when airlines were collecting at subsisting market rate of about N362 to a dollar”.

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He also noted that with effect from 2021, the federal government would increase its direct deduction from FAAN up to 40 per cent, saying, “With such deduction, the Authority will have a shortfall of over N16 billion on overhead cost. The authority is however engaging the federal government to exempt her from this deduction.

He continued: “It has, therefore become imperative to review the Passenger Service Charge, PSC, from N1000 –N2, 000 per passenger. This review which will take effect from 1st September, 2020, has already been communicated to the airlines.

“We therefore implore stakeholders, airport users and the general public to bear with us as FAAN is laden with overhead cost of operation”.

Justifying the increment, Yadudu said “if it weren’t necessary for us to increase, you will never see this increase. Our revenue is down by over 95 per cent, FAAN is a service delivery agency and if you are in regular service and your revenue is down by 95 per cent, what will you do? You will do whatever you can legitimately to continue delivering those services.

“This increase does not assure or guarantee that we will be back to normal, but this is just the beginning. We are doing other things that will increase our revenue and boost our efficiency.

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“You have to understand that every aspect of our operation for business in this modern age is relative. If you look at it from the area of passenger alone, and maybe the airline, it is clearly not the most appropriate moment for an increase in PSC.

“But if you look at it from the point of view of the service provider that is about to be consumed by the economic effects of the pandemic, and you are trying to survive, then there is no better time than this time. This is an increase of over 3 per cent on ticket for the international, from $50 -$80 on ECOWAS ticket and $100 for Intercontinental tickets” he explained.

Vanguard News Nigeria

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