FAAN increases passenger service charge by 100%
Starting from September 1, 2020 the Passenger Service Charge (PSC) will go up by 100 per cent as announced by the Federal Airports Authority of Nigeria (FAAN).
The agency's
Managing Director, Cap. Rabiu Yadudu who made the announcement on Thursday
August 27, said the decision was influenced by the loss recorded in the
aviation sector due to the Coornavirus pandemic.
Following the review
of the PSC, 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.
Yadudu 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.”
“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.
“It is worthy of
note 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 N16billion on overhead
cost. The Authority is however engaging the federal government to exempt her
from this deduction.”
On what the charges
would be used for, Yadudu added;
“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.”
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