Nigerian airports, airlines grapple with financial crisis

Tosin AinaApril 7, 20252 Mins read5 Views

Nigeria’s airport sector continues to grapple with financial struggles, as 80 percent of the country’s airports operate at a loss.

The Federal Airports Authority of Nigeria (FAAN) manages 22 Federal Government-owned airports, with some generating between $1,000 to $7,000 annually.

The Federal Airports Authority of Nigeria (FAAN) has approximately 1,922 staff members.

While this number is cited on FAAN’s LinkedIn page, it is worth noting that some sources indicate a larger company size of between 5,001-10,000 employees.

This discrepancy could be due to the inclusion of personnel who may be contracted or otherwise not directly employed by FAAN but working on FAAN-managed airports.

The financial woes of Nigerian airports, therefore, can be attributed to various factors, including high operating costs, scarcity of foreign exchange, poor funding and inefficient statutory management.

The situation is further compounded by the insolvency of some airlines, many of which are owing FAAN a huge sum of amount on services provided.

Recall that in 2022, Dana Air was suspended by the Nigeria Civil Aviation Authority (NCAA) due to its inability to meet financial obligations and conduct safe flight operations.

Other airlines like Arik Air have suffered similar fate in the past, leading to outright suspension of flight services while others remain in operation, performing skeletal service.

This situation, according to industry pundits, is due to high debt burden of the airlines, most of which are owing heavily on services, ranging from landing, parking, overflyer, fuel and sundry other dues.

FAAN Managing Director, Olubunmi Kuku, once said that 19 of the nation’s airports under her agency are being subsidised as they do not get passenger traffic commensurate to their operational cost.

She further said that majority of the 22 airports managed by FAAN require maintenance and upgrades in critical infrastructure like the terminal areas, the landside as well as the airside.

This revelation by the FAAN MD tallies with further research which reveals that only four out of over 30 airports in the country are economically viable, contributing N5.57tn to foreign trade in 51 months.

The four airports are: Nnamdi Azikiwe International Airport, Abuja, Muritala Mohammed Airport, Lagos, Kano airport and the Port Harcourt airport.

It was gathered that the four airports contributed a sum of N529.68bn in total exports and N5.05tn in imports between January 2020 and March 2024.

This indicates that most airports are not economically viable to support foreign trade.

To address these challenges, experts recommend a comprehensive review of the existing security protocols and the establishment of a clear chain of command.

They also advocated an enhanced inter-agency collaboration and communication as essentials in improving security operations and passenger experience.

The Nigerian government has been working to revamp the aviation sector, with initiatives such as the recapitalization programme, which has seen banks raise N2.4 trillion, however, industry expert said that the administration needs to address the underlying issues plaguing the sector.

As the government continues to explore solutions, stakeholders are calling for a more equitable development strategy that promotes regional growth and enhances air connectivity.

The Chief Executive Officer of Mish Aviation, Capt Ibrahim Kadafir Mshelia is of the opinion that a lot can be done to reoxygenate the sector.

According to him, by addressing the financial and operational challenges facing Nigerian airports, the government can create a more sustainable and efficient aviation sector.