Following the dwindling revenues occasioned by COVID-19 pandemic, the Federal Airports Authority of Nigeria (FAAN) has said it may not be able to pay full salary of staff as from May 2020 until the industry returns to normalcy.
The agency however assured that as soon as the revenue situation improves, the balance would be paid. 1knews reports that there has been fear over salary payment by FAAN following the suspension of both local and international flights in April.
Daily Trust learnt that with the flight suspension, the main source of revenue of the agency has been shut.
The authority announced the decision to cut staff salary in an internal memo with reference number FAAN/HQ/ADMIN/2020O5 dated May 19, 2020 and signed by General Manager, Administration, FAAN, M.D. Musa. Titled, “Notice on payment of staff salary” addressed to all staff, the memo stated that the measure was to ensure the survival of the organization.
It was learnt that Junior staff would be paid their full salary while Senior staff from levels 10 and above would take between 30 to 50 per cent pay cut. It was reported that the aviation industry has faced a downturn with the COVID-19 pandemic and the subsequent flights restriction as part of the measures to contain the spread of the virus.
Many airlines had since April cut salary staff by as much as 80 per cent in addition to asking their workers to proceed on compulsory leave without pay. Similarly, the Nigerian Airspace Management Agency (NAMA) was said to have held meetings with representatives of its workers over plan to pay half salary for the month of May.
Sources said the three unions rejected the proposal as talks are still ongoing to reach a compromise. Earlier in April, some stakeholders in the industry have advocated urgent grant for Aviation agencies like FAAN especially which runs its 22 airports including salary payment entirely with its internally generated revenue (IGR).
An industry player, Fortune Idu had earlier warned that FAAN might not be able to pay salary unless the Federal Government urgently intervened.
He said the effect of COVID-19 has taken a toll on the airports authority following the ban on local and international flights which has eaten deeply on the revenue generation of the authority. Idu, Chairman, NIGAV Centre and Airport Business Summit, said the COVID-19 has had negative impact on the authority which he described as the strongest player within the aviation industry.
More worrisome, he noted, was the fact that out of the 22 airports under the purview of FAAN, only two – The Murtala Muhammed International Airport (MMIA), Lagos and Nnamdi Azikiwe International Airport (NAIA), Abuja generate the revenue to maintain other airports and pay salaries.
With the extension of flight ban for another one month, it means the revenue of the authority maybe reduced to zero with fears that the agency might find it hard to meet its monthly obligations especially payment of salaries to its over 12,000 workers nationwide.
Idu however suggested that Federal Government should assist the agency in the recovery of outstanding debts currently owed it by airlines, agencies and states. More so there should be a state intervention to keep the airports running amidst the COVID-19 pandemic while charging the authority to also look inward and close wastage gaps.
“It must be emphasized here that the critical position of FAAN as the pillar of the fragile and slowly developing Nigeria aviation sector requires that careful consideration be made by government in taking decision concerning the organisation and as such, retrenchment of staff cannot be considered in this circumstance but serious effort should be made to reposition FAAN to save the industry.”
He also stressed the need for the organization to begin to run like a private sector-like business model to make at least 10 out of its 22 airports viable and self-sustaining. He advised the agency to drastically reduce all operational and overhead cost emanating from non-critical mission services; close all areas of procurement wastage so as to recoup up to 20% of its revenue from streamlined operational procurements in fire and other department.
Idu added: “Efforts should be made to optimise the land rental services through a collaborative effort by stakeholders which will see land allocation within airports serve as quick revenue generation to allow for five per cent returns on turnover.
“FAAN should consider direct involvement in retail concessions through part ownership of retail outlets under PPP agreement to create bigger retail shops. Implementation of full automation of the revenue collection system in all revenue points especially the parking lots and the Toll gates and others.
“The dilemma of FAAN is that it whereas has 22 airports in its kitty, the burden of paying both salaries and running costs of the entire airports sadly rests on the revenue generation of just two of the airports.
“It is rather unfortunate to note that in the aviation industry, FAAN is the only airport authority with such a peculiar business model of airport subsidization.”