If Virgin Nigeria Airways Limited obeys the instructions from the Federal Airports Authority of Nigeria (FAAN�s) Managing Director, Richard Aisuebeogun, to relocated its domestic operations from the Murtala Mohammed International Airport (MMIA) in Lagos to the MM2 domestic terminal this week, then FAAN�s annual revenue would reduce by some N150 million.
This figure represents the N350 Passenger Service Charge on some 500,000 passengers which the airline pays to the FAAN. Now, the funds may be channelled into the bank accounts of Bi-Courtney Consortium Limited (BCC) to which the domestic wing of the Lagos Airport has been given on a controversial concession for 36 years. This is not good news for an agency which gets 75 per cent of its total internally generated revenue from the airport in Lagos. The airlines regulator�s boss has complained of being owed N3 billion by over a dozen airlines operating in the country.
Apart from the financial implications of this directive, it may further compound the problem of the lack of direction facing the aviation sector. Sunday Trust gathered that the initial plan of the federal government was to make the international wing of the MMIA in Lagos the hub airport for the West African sub-region � what Amsterdam and Frankfurt airports are to Europe.
In South-East Asia, the airport in Singapore serves as the hub for connecting the region. It was based on this vision that both Arik Air and Virgin Nigeria Airways were granted the permission to use the international airport for domestic flights. Those who took the decision wanted to regain part of the master plan for the MMIA airport, which was lost as a result of distortions. For instance, the international airport�s master plan, which was developed 30 years ago, has provision for eight aircraft parking fingers with the capacity for 60 aircraft at a time.
There is supposed to be a network between the international wing and the sub-regional and domestic wing, which was to be solely for use by the airport to facilitate unhindered movement between the two terminals. Today, there are only two parking fingers being utilised at the international airport, while the movement from the international terminal to the domestic terminal is hindered by the hectic traffic congestion around the airport because the connecting road is being used for movement from one part of Lagos to another. To further frustrate the master plan, the land that originally belongs to the airport is being used for other purposes.
Attempts to compel the Arik and Virgin to relocate to the MM2, which is being operated Bi-Courtney, a company given the monopoly to run the terminal, has led to a legal battle, which has been running for almost one year now. Both Arik and Virgin Nigeria had contended that their original agreement with the federal government stipulated that they should provide their domestic service from the international airport terminal, as a prelude for developing it as a hub airport for the West African sub-region.
But Bi-Courtney opposed this, saying it had an earlier agreement to develop and run a terminal for domestic flights.
Why did the government enter into deals with Virgin Nigeria and Arik Air, to make the international airport the hub airport for domestic and international flights, when it had signed an agreement with Bi-Courtney to concede the domestic terminal from Lagos to Bi-Courtney ? When our reporter asked a top official of the aviation ministry this question, the response was, �This is the kind of confusion we have inherited from the previous administration. The Bi-Courtney agreement was signed by Mrs Kema Chikwe, while the one with Virgin Nigeria was signed by Alhaji Isa Yuguda. In the last few months, it has been very difficult for us. We need the cooperation of all the stakeholders to be able to tackle it.�
The confusion seems to go beyond the idea of building a hub airport. It extends to the terms of the deal with Bi-Courtney and the concept of a monopoly in the agreement. Sunday Trust learnt that a former managing director of FAAN, Mallam Mohammed Yusuf, actually opposed the deal and refused to sign the controversial agreement on the concession. The 36-year concession of the domestic terminal to Bi-Courtney was a contentious issue, to the point that former President Olusegun Obasanjo could not sign it until his last few days in power.
A letter on this controversy dated October 4, 2006 the ministry said �on the 24th May, 2007, the president unambiguously rejected the 36 years tenure for the BOT arrangement.� Obasanjo was said to have pegged the tenure to 12 years. In the first few weeks of the Yar�adua administration, the tenure arrangement raged like a storm, as The Presidency was divided. Initially, it was argued that if domestic flights operated from the MMIA, drug traffickers could take advantage of it, and this would lead to security problems.
But Yar�Adua was said to have opposed this position, saying drug trafficking was not a domestic flights problem. He, therefore, asked top officials in The Presidency to look into the grey areas of the agreements and find a middle ground, such that would not give the international community the impression that Nigeria did not respect agreements. Since February 28th when the meeting was held, not much was heard about the issue until recently when the Minister of State for Aviation, Felix Hyet was quoted as saying government had conceded the terminal to Bi-Courtney for 36 years. The reasons were not very clear.
To register their disagreement with the government�s grant of the monopoly to Bi-Courtney, Arik Air had threatened to divest its investment from Nigeria if it was compelled to move its domestic operations to MM2. At the height of the face-off, the aviation authorities had to �bend the rule� and, as a face-saving measure, grant Arik the permission to utilise the General Aviation Terminal (GAT) for its operations. Indeed, the monopoly is a source of disagreement, not just between the airlines and government, but even among top officials of the ministry of aviation, Sunday Trust learnt. �It does not make economic sense to remove monopoly from government and put it in the hand of an individual. Government should liberalise terminal utilisation,� Dr Imomi Kubo, a director in the Air Transport Management Department of the Ministry of Transportation said recently. The director argued that such monopoly would hamper the utilisation of the airport, reduce route expansion for airlines and affect manpower utilisation. Sunday Trust learnt that under the agreement with Bi-Courtney, no airport should be built in Lagos for another 36 years! The Lagos State government is said to be contesting this clause.
Earlier in the year, aviation workers union rose against the deal with Bi-Courtney as it would be the death knell for FAAN, especially. Since last year when the company took over the operations at the MM2 terminal, it has been collecting all the charges paid by airlines using the terminal. But as at the time of filing in this report, the company has not paid the mandatory 5% of its total revenue to FAAN. Asked why this is so, a top official of the aviation ministry said, �We would have to cross-check with FAAN to know why.� When our reporter called the General Manager, Public Affairs of FAAN, Mr. Akin Olukunle to obtain more information on the payment, he said he would have to cross-check with a department.
It was learnt last night that Virgin Nigeria has written a petition to the Attorney-General and Minister of Justice, Chief Michael Aondoakaa, on FAAN�s relocation order, saying that the instruction contravened the rule of law as the case was still before the Court of Appeal. The case is due for hearing on October 7, 2008. Virgin Nigeria claimed that it spent N260 million on the D Finger of MMIA where it carries out domestic flights, and might ask for compensation if forced to leave the MMIA. But a top official of the aviation ministry said the Court of Appeal did not ask government to stay execution on the judgement of the lower court which says all airlines must move their domestic operations to MM2 in line with the agreement with the concessionaires, Bi-Courtney.
As the controversy rages on, the pertinent questions include, what happens to the master plan of the Lagos airport? Is the monopoly granted to Bi-Courtney of any economic benefit to Nigeria? When will the aviation sector come out of the wood to play its pivotal role of stimulating the Nigerian economy?