Murtala Muhammed Airport terminal II (MMA2) is a classic case of the self-contradictions inherent in local business enterprises. The premier private-owned facility is consistently the best-run local airport in the country, but also an example of gross under-utilisation of airport facilities, and hurdles that await new investors, WOLE OYEBADE writes.
Air transport on the African continent has the lowest traffic year-on-year, accounting for only 2.1 per cent of the global volume.
African airlines,, indeed,, saw a 25.3 per cent traffic increase in October 2023 versus a year ago, according to records of the International Air Transport Association (IATA). October capacity was up 32.4 per cent causing load factor to decline four four percentage points to 70.3 per cent – the lowest among the regions despite the comparative advantage of 1.4 billion population.
IATA, the clearing house for over 280 world airlines, therefore projected that African carriers are expected to generate losses in both 2023 and 2024.
It stated that despite the “robust demand for air travel”, the continent “remains a difficult market in which to operate an airline, with economic, infrastructure, and connectivity challenges impacting the industry performance.”
In the most populous African country , for instance, Nigeria is an infrastructure and connectivity nightmare. There are 26 airports nationwide, but only four are viable. The rest are racking up debts with low infrastructure made worse by poor patronage of operating carriers.
IATA has been an advocate of Public Private Partnership (PPP) solution in the model of concessions to private investors (rather than more expensive privatisation of airports) – to give the region and its underutilised facilities facelifts, new attractions, and a win-win environment for all.
Nigeria is not new to such partnerships. But the outcome has been more of a new conflict of interests than a remedy for infrastructural gaps. Welcome to MMA2, Lagos!
Primus inter pares at a cost
MMA2, which was built and operated by Bi-Courtney Aviation Service Limited (BASL), is the best domestic terminal in the country, and a recent tour of the facility tells why.
Comparatively, the airport and its management tick all the boxes in terms of access, wayfinding, security and control, terminal design, improving décor, maintenance, and cleanliness. The facility also has strong ratings in seating, washrooms, family facilities, concierge, leisure and entertainment, accessible travel, WIFI services, shopping, and dining.
Chief Operating Officer of BASL, Tosan Duncan, said they are steadily repositioning MMA2 from being a mere airport terminal into an integral part of the travel experience for over eight thousand departing and arriving customers daily.
But quite challenging was its low occupancy rate of about 67 per cent on account of the economic downturn and dip in passenger traffic of airlines, which has led to 2.2 million passengers in 2022 (compared with 3.2 million in 2021).
Much more worrisome is an entire section – about one-third of the facility – that has never been used for passenger facilitation in the 16 years of MMA2 operations!
The Guardian learnt that the facility, at conception, is a hybrid of local and regional terminals. While the local section helps to enhance connectivity nationwide, its regional section services the African market. Together, BASL aims to optimise the potential of Lagos as the de facto regional hub of West and Central Africa.
Head of Operations BASL, Blessing Ewah, said all the regulatory agencies had assessed and approved the facility after all requirements were met.
Ewah said: “We are ready, the terminal is ready, gates 5 and 6 here have been dedicated for regional flights. We have invested over N600 million in the facilities for this operation and we have not recouped one naira since it all started in 2014,” he said.
He added that everything requested for and required according to standards for regional operations is in place. “The infrastructure is still in place. We are positive; it will be a beautiful thing for us to start regional operations this year,” he said.
Inquiries from the Nigeria Civil Aviation Authority (NCAA), the body saddled with such approvals in aviation, showed that the regional approval to MMA2 has been pending for those years, but for concerns over the proximity of domestic and international operations.
A senior official in the apex regulatory body affirmed that the facility is an additional capacity to passenger facilitation in Lagos, but “until they have met all requirements for such operations, we will continue to have this conversation.”
One-too-many-hurdles
MMA2 and BASL have rarely had smooth sailing with the relevant regulatory agencies ab initio.
Recall that the old domestic terminal (now MMA2), like all other terminals nationwide, used to be managed by the Federal Airports Authority of Nigeria (FAAN) until fire razed it in May 2000. Government of the day considered the cost of replacing the facility too burdensome, and opted for private investors that could shoulder the weight under a PPP scheme.
The plan completely transferred all development and operating risks to the private sector, specifically on a Build-Operate-Transfer (BOT) arrangement. The venture is the first of its kind in Nigeria. Biddings were received and the lot later fell on Bi-Courtney Limited, a wholly indigenous conglomerate and the parent company of Bi-Courtney Aviation Services Limited (BASL). The contract was awarded in 2003.
From equity of the owners/proprietors and loans from six banks, the terminal was completed and commenced operations on May 7, 2007. While the domestic terminal seamlessly ran better than international airports in the country and remains a pride of both friends and foes, it has also been a subject of a serious legal tussle between BASL and FAAN/FG. And this battle, still unsettled, has been described as a low point and a bad advertisement for the concession plan of successive administrations.
Part of the agreement was that BASL would operate the facility, as the sole domestic terminal in Lagos for a period of 10 to 15 years, with an addendum for an extension to 36 years as is the case for most such investments globally, given the huge capital-intensive nature of the venture.
BASL had later sought to explore the 36-year concession window, to help investors recoup the heavy investment that was described as “unprecedented” since the venture was first of its kind. FAAN, however, disagreed, insisting that the initial 10 to 15 years agreement was sacrosanct.
It was amidst the conflict that FAAN awarded the construction of General Aviation Terminal (GAT), Lagos, to rival operations of MMA2 and contravene part of the BASL/FAAN agreement, especially the monopoly clause.
When tested at an Arbitration Panel and law courts, up to the Court of Appeal, the rulings were in favour of BASL, including the allocation of the GAT to BASL, the endorsement of a 36 years concession period, and N132 billion penalty for “illegal” operation of GAT.
Better late than never
At the commemoration of the 16th anniversary of MMA2 recently, Chairman of BASL, Dr Bolanle Babalakin, reaffirmed that the company received the approval to operate local and regional flights out of the terminal, but regretted the attendant disregard for the rule of law.
Babalakin noted that by the ruling of the Supreme Court, the GAT of the Murtala Muhammed Airport (MMA), Lagos, is a part of MMA2.
He said: “I am alarmed that we have not commenced the regional operations because we went through the entire process and we were certified, but we have not been allowed to take-off. GAT is still operating illegally because based on the judgment of the Supreme court, the GAT is part of our facility.
“I hope those who have power and who have constitutional authority will know that you encourage enterprise when you follow the rule of law and once you follow the rule of law, your country will become an investment destination, but if people are looking at us from afar and saying they can’t come here when simple agreements are not being honoured, it’s not good for anybody in the country.”
A cargo operator, Abubakar Jimoh, also regretted that the situation has not changed in the last eight years despite interventions.
Jimoh noted that the National Assembly’s Joint Committee of Aviation that visited the facility in 2016 pledged to resolve the FAAN/BASL faceoff, describing it as a landmine for other concession programmes in the air transport sector.
“But it turned out to be hot air! All talks, no action. Are you therefore surprised that we have not been able to attract genuine investors to grow aviation in the last eight years, including the funny Nigeria Air project? The point is that the MMA2 partnership imbroglio is a testament to the fact that we are not a serious country and a red flag for genuine investors. We don’t keep the agreement and we are bad at dispute resolution.”
Aviation consultant, Sunday Olumegbon, reckoned that regional operation remains an asset for the Lagos airport and the country at large, and available capacity should not be left fallow.
Olumegbon noted that Gnassingbé Eyadema International Airport in Lome, and Asky Airlines are flourishing in that regard, citing their healthy numbers.
“But what can they do without the traffic from Nigeria? Not much. That tells you what we stand to gain when we put our best foot forward,” he said.
He advised that MMA2 and its capacity should complement MMIA for regional services.
“The controversial directive by the new minister instructing all foreign airlines to relocate to the new terminal was poorly thought-out and it backfired. A better advice or advisers should have closed ranks with MMA2, to use its regional facility under some strict conditions to be monitored by the NCAA/FAAN. I believe that is how to be progressive and make a statement on a new era in doing business.
“Economy-wise, regional operations will give more earnings to all, including regulators, Bi-Courtney and the airlines, by having more flights processed from MMA2. Also, it will be to the credit of Minister Festus Keyamo that the long-drawn MMA2 issues were not only resolved under his watch but the domestic and international terminals in Lagos were finally networked for efficient services. We have more to gain by working together and putting an end to shenanigans,” Olumegbon said.
