The Federal Airports Authority of Nigeria (FAAN) has announced an increase in the payment of service charge per passenger as a means of mitigating the effect of the over N16bn shortfall in the Agency’s revenue, accounting for 95 per cent loss of income due to the closure of commercial air activities for months.
Disclosing this in Abuja, on Thursday, the Managing Director of FAAN, Capt Rabiu Yadudu, said from 1st of September 2020, passengers will pay N2,000 as service charge instead of N1, 000 for domestic flights while for ECOWAS member countries, passengers will pay $80, while passengers will pay $100 as service charge for Intercontinental flights.
Yadudu explained that “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 realist as it does not correlate with the realities of cost-related inflation rate which the CBN has put at 12.82 per cent.
“Besides, FAAN, until late 2019 were collecting the naira equivalent of PSC at an official rate of #305.50 -#344.38 to a dollar when airlines were collecting at subsisting market rate of about #362 to a dollar.”
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He stated further that the Federal Government is increasing its direct deduction from FAAN to 40 per cent from 2021. “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.
“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 September 1, 2020, has already been communicated to the airlines,” Yadudu explained.
“We, therefore, implore stakeholders, airport users and the general public to bear with us as the FAAN is laden with the overhead cost of operation”.
He said the increased was a matter of necessity, “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.
“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 survival, then there is no better time than this time, this is an increase of over 3 per cent on a ticket for the international, from $50 -$80 on ECOWAS ticket and $100 for Intercontinental tickets” he stated.
The MD said the Agency was expecting intervention funds from the Federal Government but did not know how much will be given to the organisation and was also not aware when the funds will come.
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