By Iroyin Yoruba Television
The Federal Airports Authority of Nigeria and the operator of Murtala Muhammed Airport Terminal Two in Lagos have offered different approaches to the question of how Nigeria can increase revenue from its aviation sector without undermining passenger growth or the commercial sustainability of airlines.
The contrasting positions emerged during discussions at the 30th Annual Conference of the League of Airport and Aviation Correspondents in Lagos, where industry stakeholders examined how government revenue demands can be balanced with the need to build a stronger and more competitive aviation industry.
FAAN argued that Nigeria needs greater transparency and a comprehensive review of taxes, levies and charges imposed throughout the aviation sector. Bi-Courtney Aviation Services Limited, the operator of MMA2, took a different approach, arguing that the industry could generate more revenue by reducing some charges, encouraging passenger growth and adopting a model that prioritises expansion of traffic.
The disagreement highlights a long-running challenge facing Nigeria’s aviation industry: government agencies require adequate revenue to maintain airports and provide essential services, while airlines and terminal operators need a cost structure that allows them to remain commercially viable.
The issue has become increasingly important as passenger traffic continues to recover and operators seek ways to expand services.
FAAN CALLS FOR A REVIEW OF REVENUE STRUCTURE
FAAN’s position centres on the need to examine the current structure of aviation charges and improve transparency across the industry.
The agency believes that revenue collection should be examined comprehensively rather than focusing on individual charges in isolation.
Representing the FAAN management at the conference, the agency’s Director of Finance and Accounts, Ayodele Olatiregun, said the authority recognised the importance of balancing revenue generation with sector growth.
The argument reflects the financial responsibilities carried by airport authorities.
Airports require continuous investment in runways, terminals, passenger-processing facilities, security systems, lighting, navigation-related infrastructure and other facilities. They also require personnel and maintenance programmes to keep operations running safely.
Revenue generated through aviation charges contributes to these activities.
However, the structure and level of those charges can influence the cost of air travel. When airlines face higher operating costs, some of those costs may eventually be reflected in ticket prices.
Higher ticket prices can affect demand, particularly in a market where a large proportion of travellers remain highly sensitive to fares.
FAAN’s position therefore recognises that the revenue system must be reviewed in a way that provides adequate funding while avoiding distortions that could weaken the market.
MMA2 OPERATOR FAVOURS A GROWTH-DRIVEN MODEL
Bi-Courtney Aviation Services Limited, which operates MMA2, placed greater emphasis on passenger growth.
The company argued that reducing the cost burden on aviation operators could encourage increased passenger traffic and ultimately produce stronger overall revenue for the industry.
The position is based on a different approach to revenue generation.
Rather than relying primarily on higher charges, a growth-driven model seeks to increase the number of passengers using aviation services and expand the commercial activities associated with airport operations.
For an airport terminal operator, more passengers can mean greater opportunities from passenger-related services, retail, parking, concessions, advertising and other commercial activities.
The approach also recognises the importance of airline economics.
Airlines require sufficient demand to operate profitable schedules. If operating costs become too high, carriers may reduce frequencies, abandon marginal routes or increase fares.
A system that lowers unnecessary costs while stimulating demand could therefore potentially generate additional economic activity throughout the aviation value chain.
The challenge is determining how much revenue government agencies can afford to sacrifice in the short term in pursuit of longer-term traffic growth.
PASSENGER TRAFFIC IS CENTRAL TO THE DEBATE
The dispute comes at a time when domestic passenger traffic has continued to recover following the severe disruption caused by the COVID-19 pandemic.
FAAN said domestic passenger numbers have improved since the pandemic, although international traffic remains particularly important to aviation-sector revenue.
The distinction matters because international passengers and flights can generate significant commercial activity for airports.
International terminals often support longer-haul services, foreign airlines, cargo operations, duty-free and retail businesses, parking, ground transportation and other related services.
Domestic aviation, meanwhile, plays an important role in connecting Nigeria’s major economic centres.
For airlines, passenger traffic is the foundation of the business.
Aircraft need sufficiently strong demand to justify routes and frequencies, while airports need traffic to sustain commercial activities.
That means policies designed solely around revenue collection could have unintended consequences if they discourage passengers or make airlines less competitive.
THE COST OF AIR TRAVEL
One of the major issues behind the revenue debate is the cost of air travel in Nigeria.
Airlines operate in an environment affected by fuel prices, aircraft leasing costs, maintenance, insurance, foreign exchange movements, spare parts, airport charges, navigation fees, taxes and other expenses.
Many of these costs are either directly or indirectly influenced by conditions outside the control of individual airlines.
The more expensive it becomes to operate a flight, the more difficult it may be for airlines to offer affordable fares while maintaining commercially sustainable operations.
This is why industry stakeholders frequently argue that government should avoid imposing unnecessary charges.
At the same time, aviation authorities argue that infrastructure and regulatory services cannot be provided without reliable funding.
The current debate is therefore not simply about whether charges should be increased or reduced. It is also about identifying which charges are necessary, how they are collected, how transparently they are administered and whether the money generated is being used effectively.
TRANSPARENCY AS A KEY ISSUE
FAAN’s call for greater transparency introduces another important element into the discussion.
Aviation stakeholders need clarity about the various taxes, levies and charges imposed on airlines and passengers.
Where multiple agencies collect different fees, operators may find it difficult to understand the total cost of doing business.
Greater transparency could help industry participants identify duplication, unnecessary charges or areas where administrative processes could be simplified.
It could also help government demonstrate how aviation revenues are being used.
For passengers, transparency can make it easier to understand why taxes and other charges form part of the final cost of an airline ticket.
For airlines, a clearer structure can improve financial planning and reduce uncertainty.
For airports and government agencies, transparent revenue systems can strengthen accountability.
THE NEED TO PROTECT AIRLINE VIABILITY
Any review of aviation revenue will also need to consider the financial condition of Nigerian airlines.
Domestic carriers operate in a challenging environment in which relatively small changes in operating costs can affect route profitability.
Airlines must maintain aircraft, meet regulatory requirements, employ trained personnel and deal with fluctuating fuel and foreign exchange costs.
A passenger-growth strategy will therefore depend partly on airlines having enough financial capacity to maintain and expand services.
If charges become excessive, operators may have fewer resources available for fleet expansion, route development and service improvements.
Conversely, if charges are reduced without ensuring that airports and regulators have sufficient alternative revenue sources, infrastructure and safety-related services could suffer.
This creates the central policy dilemma.
Nigeria needs an aviation industry that is affordable enough to stimulate demand but financially strong enough to fund infrastructure and maintain safety standards.
AIRPORT COMMERCIALISATION COULD PROVIDE ANOTHER OPTION
The debate also points to the potential importance of non-aeronautical revenue.
Modern airports generate money from far more than landing fees and passenger charges.
Retail shops, restaurants, advertising, car parks, lounges, cargo facilities, property development and other commercial activities can provide important additional income.
Aviation stakeholders could therefore explore ways of increasing these sources of revenue rather than relying heavily on taxes and charges.
Higher passenger traffic can make such businesses more attractive.
Airport operators can also improve commercial returns by making terminals more convenient and attractive to passengers.
This approach requires investment, however.
Airports must provide facilities that encourage passengers to spend money while waiting for flights. Better passenger experiences can therefore become part of a wider commercial strategy.
WHY INTERNATIONAL TRAFFIC MATTERS
International passenger traffic remains particularly significant for Nigeria’s aviation revenue structure.
International operations connect Nigeria to major commercial centres across Africa, Europe, the Middle East and other regions.
They also support tourism, business travel, investment and trade.
A competitive aviation environment can make Nigeria more accessible to international businesses and visitors.
However, international airlines also compare operating costs across different airports and countries.
If Nigerian airports become substantially more expensive than competing regional hubs, airlines may reconsider frequencies or route expansion.
The revenue debate therefore has an international dimension.
Nigeria must generate enough income from aviation infrastructure while maintaining a cost environment that allows the country to compete for international air services.
WHAT A BALANCED APPROACH COULD LOOK LIKE
The positions presented by FAAN and Bi-Courtney are different, but they are not necessarily impossible to reconcile.
A balanced approach could involve a detailed review of every major aviation charge, identifying which fees are essential and which could be reduced or redesigned.
Government agencies could also examine whether some charges should be fixed rather than percentage-based, depending on their purpose and impact on airlines.
At the same time, airport operators could be encouraged to increase commercial income through better use of terminal facilities and passenger services.
Improved transparency could make the entire system easier to understand.
The ultimate objective would be to create a system in which government receives sufficient revenue, airports can maintain and improve infrastructure, airlines remain commercially viable and passengers are not unnecessarily burdened.
THE WIDER ECONOMIC IMPACT
The aviation industry has effects beyond airports and airlines.
Reliable air transportation supports business travel, tourism, logistics, investment and regional economic integration.
For companies operating across Nigeria’s large geographic area, air travel can reduce the time required to move people between major cities.
A growing aviation industry can also create employment in areas such as aircraft maintenance, airport operations, security, catering, hospitality, logistics and ground handling.
That means policies that increase or reduce aviation costs can have broader economic consequences.
If lower charges contribute to stronger passenger growth, the additional activity could benefit businesses throughout the aviation ecosystem.
If improved revenue collection provides airports with the resources required for better infrastructure, that could also support long-term economic growth.
The challenge for policymakers is ensuring that the immediate revenue needs of public agencies do not undermine the broader economic value of a growing aviation industry.
NEXT STEPS
The divergent views from FAAN and Bi-Courtney are likely to contribute to a wider discussion about the future financing of Nigeria’s aviation sector.
The sector will need to examine its revenue structure as passenger numbers, airline operations and airport infrastructure continue to evolve.
Stakeholders will also have to consider the financial realities of airlines, the infrastructure requirements of airports and the need for effective aviation regulation.
For passengers, the outcome of that debate could ultimately influence ticket prices and the quality of airport services.
For airlines, it could determine how much room they have to expand routes and invest in aircraft.
For government, it could determine how effectively aviation can serve as both a source of public revenue and a driver of economic activity.
The disagreement between FAAN and the MMA2 operator therefore represents more than a difference over airport charges.
It reflects two competing philosophies about how Nigeria should develop its aviation industry: one placing greater emphasis on reviewing and strengthening revenue structures, and the other arguing that lower costs and increased passenger traffic can produce greater economic returns.
Finding the right balance will be critical if Nigeria is to build an aviation sector that is financially sustainable, commercially competitive and capable of supporting the country’s wider economic ambitions.