Home BUSINESS AND ECONOMY Autonomy, unbundling of FAAN Act divide stakeholders
Autonomy, unbundling of FAAN Act divide stakeholders

Autonomy, unbundling of FAAN Act divide stakeholders

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As the debate over the Federal Government’s decision to concession all the airports in the country continue, stakeholders in the aviation industry have started offering solutions on what they believe could better  serve the government interest better than merely concessioning its facilities.

Though the solutions differ in several ways, one issue which most  industry experts agree on is that the Federal Airports Authority of Nigeria (FAAN), the agency responsible for the management of the airports, needs to be completely autonomous and devoid of any form of political meddling and interferences. But so far there has been no consensus on what form the autonomy would take.  The composition of the 2004 FAAN Act does not give complete autonomy to the agencies in the industry as they are still mandated by law to get approval from the Minister of Aviation before major decisions are made.

At a recent colloquium organised by Nigeria Travel Mart.Com, the Chairman, Committee on Aviation in the House of Representatives, Nnaji  Nnolim, proposed the unbundling of FAAN. Citing the report from Nigeria’s annual airport business summit, he said the unbundling of FAAN may lead to a more efficient and progressive airport development and an enabling environment that will attract private sector investments and tourism development in Nigeria.

The lawmaker said FAAN should be split into three separate organisations for efficiency.

Unbundling is the splitting of a company or conglomerate into constituent businesses especially prior to selling them off. Nnolim proposed that the agency be split into three different agencies that will run independently of each other and will function as a private company without interference from the government.

He said: “The Act that set up FAAN, and gave it the power to dominate in an area that can be open for private sector entry has to be reviewed. I have had the opportunity of reading through the report of Nigeria’s annual  airport business summit for 2017, 2018 and 2019, organised by FCI International Limited and each of these reports show consistently that the biggest challenge to airport concession is the fear of job loss. The summit suggested the unbundling of the Federal Airport Authority of Nigeria (FAAN), which will help to address the basic problem of job loss and unemployment. However, the unbundling of FAAN may lead to a more efficient and progressive airport development and an enabling environment that will attract private sector investments and tourism development in Nigeria.

“The following three organisations are proposed to emerge from the process; Nigeria Airport Development Agency. This agency shall have the authority and capacity to process, supervise, monitor and forecast the development of airports in Nigeria. It will advise, check the capability, practicability of interests and applications in line with developmental needs, security approvals and compliance to NCAA regulations. This will help address both aeronautical and non-aeronautical business matters for both private and public airport development interest.

“Another organisation that can be formed is the Airport Management Company. This shall be a limited liability or public quoted company with less than 20 percent shares held by the Federal Government of Nigeria, while the remaining shares shall be sold. This shall be a first class global company with the sole function of engaging in airport operations and management worldwide. The company shall compete and bid for the management, operation of FAAN airports and other airports worldwide without government’s interference.

“Federal Airports Property Company is another organisation that can be formed from the unbundling. This company shall be the owner and custodian of all Federal Airports’ Lands and Properties. Government can invest in airport development but not in its operations. It can acquire lands for airport development just like the state government but must outsource the management to a competent company through due process.”

For his part, former General Secretary of the National Union of Air Transport Employees (NUATE) in Lagos, Olayinka Abioye, believes that FAAN as presently constituted is too large to be controlled by a central body and therefore supports its unbundling. In an interview with Daily Sun, he said if FAAN is unbundled, it will create job opportunities and it will run as a private entity with a smaller body to oversee it.

He said FAAN as presently constituted is too big to be managed by a Managing Director because there is no proper coordination, and burdened with much political interests and interferences.

“We have told the government that FAAN as the manager of all the Nigerian airports should be made an autonomous commercial entity. FAAN can be unbundled. The engineering department of FAAN is manned by very experienced and well trained individuals who when you sent up FAAN engineering company for instance, can handle every engineering job in any airport, because they have all it takes to do the job. But unfortunately, this department has been made redundant and almost dead because of political interference and patronage. A lot of jobs that the engineering department of FAAN is supposed to do are already contracted out. They will be sitting in their offices and contractors will just come from outside and say they were told to come and fix electricity in some place without recourse to the department.

“Operations department which is key within any airport, given their role under facilitation is supposed to be equipped in such a manner that when you enter into Murtala Muhammed  International Airport for instance, you will know that you are entering an airport. I know how this place was when it first opened in the 70s. We have an underground area that can take care of 6,000 cars, but it has been abandoned after spending more than N600 million to renovate it. They were citing security reasons. But in the past, there used to be CCTV covering the entire area such that vehicles coming from the toll gate would have been seen far ahead. It has been abandoned till now and only God knows what is happening there.

“There are some underground chambers under that building where every rain that falls on top of Murtala Muhammed International Airport goes into. Ask FAAN if anyone even knows the volume of water that is secured there. That place is a ticking time bomb. We have abandoned so many things. How many of our elevators are working? People find it difficult to move from the ground floor to the sixth floor because the system has collapsed. Maybe this is one of the reasons that have informed the talk of concessioning our airports so that all these facilities will be put in place.

“If FAAN is unbundled, it will create job opportunities and it will run as a private body but there could be a small body to oversee it. There are some parts of FAAN that can be severed in totality and run independently of what is now known as FAAN. We can have a Managing Director of FAAN engineering company, another Managing Director for another company, then a group Managing Director who will coordinate the MDs of the other companies.

“FAAN as presently constituted is too big to be managed by an MD because there is no proper coordination. There is too much political interest and interference and that is the root cause of the problems in the aviation industry. We now see that pilots are being brought in to come and head these agencies, but what gives them the leverage to manage people? They fly people; they are fleet captains. What kind of administrative acumen and capacity have they acquired? We have seen them all. There is also this Nigerian factor that if for instance, you are a soldier and you are made the MD of a company, there is a tendency for you to bring in your friends who are also retired soldiers. Maybe that is what is going on now, because we see that the Minister is a pilot and he is bringing in his colleagues who are also pilots into the system. That alone does not make them the best that we require. There are technocrats outside who can run these agencies more effectively than some of the people that are already on board.  I am not criticizing anyone of them; I have tremendous respect for them but the truth of the matter is that we must depart from the current path that we are following,”

Air transport workers want FAAN corporatisatised

The FAAN branch chairman of the Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), Danjuma Ahmed , is staunchly against unbundling but is in favour of corporatisation. Corporatisation is the process of transforming state assets, government agencies or municipal organisations into corporations – to subject them to corporate ownership or control.

Speaking with Daily Sun, Ahmed says the process of unbundling will be very cumbersome. He says the organisations being proposed by the chairman of aviation committee in the House of Representatives already exist as departments in the agency.

“Unbundling is not a very good idea. As an entity that has been set up by an Act of Parliament, the challenges involved in unbundling are enormous. The lawmaker proposed that three separate organisations be created from FAAN  but each of them already exists as departments. He talked about having a Federal Airports Property Company but FAAN has a department that takes care of all our property, assets and facilities within the airport and this department has a director. We have engineers, surveyors and other professionals in charge of that department. We also have the operations department that is in charge of loaning of the facilities.

“If you now say that you want to unbundle, it means that you are going to create chief executives for these different entities, so instead of one CEO, you will be talking about three CEOs and each of those CEOs will have their paraphernalia of office. It will be so cumbersome that it will be difficult to manage and there would be conflict. Because FAAN was established as an Act of parliament, you have to first amend the Act, then create new laws that will give the new organisation legal backing. It will be too cumbersome.

“The best option is to corporatise FAAN and allow it operate as a corporate entity that can go to the stock market, get their money from the public and run the airports. This method is practiced successfully all over the world, even in South Africa here. There is the Airport Company of South Africa and we also have the Airport Company of Ghana. The Act that established FAAN allows it to be commercialised and that is why we can do business with different companies without recourse to anybody.

“This current National Handling Company (NAHCO) used to be a subsidiary of FAAN but it is now a company on its own. So corporatisation of FAAN is very possible.  If the government says that they do not have the money to finance our capital projects, we will go to the stock market and sell some of our shares to get capital but the government is going to totally hands off it. The least the Federal Government can do is to purchase some shares just for it to have a national identity but the majority would be owned by private hands.”

The SUN

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