FAAN hikes passenger service charge by 100%

From Faith Yahaya, Abuja

 

The Federal Airports Authority of Nigeria (FAAN) yesterday said starting from September 1, this year, Passenger Service Charge (PSC) will go up by 100 per cent.

Under the charge regime, domestic passengers who used to pay N1000 will now pay N2000, while international passengers within the Economic Community of West African States (ECOWAS) region will now pay $80 while others will pay $100.

Before the increment international passengers generally paid $50 as service charge.

Its Managing Director, Cap. Rabiu Yadudu, in a chat with reporters, said the increment was imperative in view of the loss recorded in the aviation sector.

According to him, the current revenue of the agency was down by 95per cent, hence the need to review the passenger charge.

He said: “Airport management is capital intensive. FAAN has not increased PSC since 2011, despite all the huge capital investments at our airports. The current PSC charge of N1,000 is no longer realistic as it does not correlate with realities of cost-related inflation rate which the CBN has put at 12.82per 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.

“It has, therefore, become imperative to review the PSC, from N1000 to N2,000 per passenger. This review which takes effect from September 1, 2020 has already been communicated to the airlines.

“The passenger service charge for domestic flight was N1000 but it will now be N2000. For an international flight, it was $50 for all but now, passengers within the ECOWAS region will be made to pay $80 while intercontinental passengers will be paying $100. So the increment is by $50.

“This increase is just a matter of necessity. If it is not necessary for us to increase, you will never see this increase. Secondly, our revenue is down by over 95perc ent. FAAN is a service delivery agency and if you are delivering service and your revenue is down by 95per cent, what do you do? You will do whatever you can legitimately to continue to deliver the service with the same level of quality.

“The increase of PSC does not even assure or guarantee us that we will be back to normal but it is just the beginning. This is just one aspect of the necessity because we need to survive and keep delivering and that is why we are increasing it.”

On the timing for the increment, he said: “You have to understand that almost every aspect of our operation is business and in this modern-day, it is relative.

“If you look at it from the aspect of the passengers and airlines, it is clearly not the most appropriate time but if you look at it from the point of view of the service providers that is about to be consumed by the pandemic and the economic situation, then there is no better time for FAAN than this time because it would have been worse if we just sit down and fold our arms.”

Speaking further on why the agency decided to increase the charges, he said: “It is worthy of note that the Federal Government is increasing its direct deduction from FAAN to 40 per cent from 2021.

Read Also: FAAN lied, I didn’t flout airport protocol – Fintiri

 

“With such deduction, the Authority will have a shortfall of over N16billion on overhead cost. The Authority is however engaging the federal government to exempt her from this deduction.”

The agency urged stakeholders, airport users, and the general public to bear with it as it is laden with so much overhead cost of operation.

On what the charges would be used for, FAAN chief said: “It should be noted that ICAO’s recommendation in Doc. 9562 stipulates that revenue generated by airports be transparently re-invested wholly in operating and developing airport facilities.

“Even before the increase, the PSC we receive is what we use to pay our salaries, our overheads and almost all our costs. Now that we are short in revenue, of course, the increment will be used to further improve our facilities.

“Most of our airports have dilapidated structures and airports are over 30 years old. We have a lot of work to do, improve the airfield infrastructure, the runway, the taxiway, the pavement and infrastructure facilities within the terminal like the equipment for baggage handling, air conditioning, almost everything within the airport needs refurbishment and with this, we hope to achieve more improvement.”

On its readiness to resume international flight operation, he said: “I think we are prepared for the international flight operations because the COVID-19 protocols are the same and do not change. The COVID-19 protocol is at the domestic and we are going to implement them in the international terminal with some improvement.

“The major difference is the fact that the passengers will be coming from other countries which will necessitate health protocols and the protocols will be coming through the presidential task force.”

On the number of airlines that would resume flight operations in the country, Yadudu said he could not ascertain their number as a result of the loss recorded by some airlines.

He said: “When we say we are opening the airport from 29th, let us not assume that every airline will be ready to come back, just like the Federal Government took their time and FAAN also, in every country, the airport companies are taking their time to determine the day they will be ready.

“When we open and say we are ready, some airlines have gone into bankruptcy, some are not ready, some will not come back. So, the assumption that all airlines will come back is wrong.  We are opening the airports, it is left for airlines to come whenever they are ready.

To cushion the loss recorded by the sector, Yadudu said it was optimistic that it would get intervention from the federal government.

“Yes, FAAN is getting intervention from the federal government but we are yet to know the amount because we have not received the intervention. We are very sure we are getting intervention but we don’t know when it will come.”

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