Olubunmi Kuku says the Federal Airport Authority of Nigeria (FAAN) is working to diversify its revenue streams. Kuku mentioned the critical role cargo can play in this diversification effort. As FAAN’s managing director, she discussed this at the Business Day CEO’s Forum last week. Responding to economic uncertainties, she emphasized that Nigeria’s airports currently rely heavily on passengers for revenue.
Kuku highlighted the significant effort involved in generating 80% of revenue from aeronautical services. Comparatively, developed airport companies globally have succeeded in diversifying their income. “We are doing quite a bit of work as it relates to route development and, of course, seeing how we diversify our revenue base,” she said. She noted that large airport companies worldwide have about 46% non-aeronautical revenue and 54% aeronautical revenue.
These companies are less dependent on airlines or passenger traffic for revenue. Instead, they focus on real estate, commercial businesses, and airport cities. “In Nigeria, our revenue is skewed towards 80-20%,” Kuku stated. “80% aeronautical and 20% non-aeronautical revenue means we rely heavily on passenger traffic. But we have a lot of work to do to reach that phase of diversification.”
To diversify its revenue streams, FAAN is developing trade corridors and enhancing cargo infrastructure. “It is an interesting time for us in this market, especially considering our potential to be an export nation,” Kuku remarked. She pointed out that Nigeria has historically focused on imports, neglecting cargo opportunities. FAAN is leveraging existing infrastructure and forming joint ventures to drive diversification further.
Furthermore, Kuku emphasized the need for incentives to attract investors amidst challenges like inflation and foreign exchange fluctuations. “We need to put incentives in place that will attract investors, considering some of our airports are designated special economic zones,” she added. These incentives include tax benefits and special economic zone perks.
Regarding CO2 emissions, Kuku stated that FAAN is adapting its strategy successfully. “FAAN is currently on level 2 of the ACI’s carbon accreditation programme,” she noted. The agency is mapping out steps to reduce its carbon footprint. “We are introducing electric buses and leveraging solar energy at some of our secondary airports,” she concluded.