Cargo Freighting as Major Revenue Earner for Airports

Chinedu Eze

Most aviation experts are of the view that proliferation of airports could be good source of revenue to airport managers.

However, those who criticize the building of many airports, especially by the state governments, describe them as white elephant projects and feel bitter whenever some of the airports are handed over to the Federal Airports Authority of Nigeria (FAAN) to manage.

Many aviation experts have continued to insist that proliferation of airports is a mark of development, positing that even if the airports are not maximally utilized now, they would be needed in future as the country’s population increases and as the economy improves.

But the challenge faced by both FAAN and the state governments that own airports is how to make them generate enough money to sustain their maintenance, pay personnel and also make profit.

Industry stakeholders who brainstormed at the 3rd ChinetAviacargo Conference held in Lagos recently proffered solutions to this nagging question. For airports to become profitable there must be a radical departure from the conventional utilization of the facilities just for passenger facilitation, targeting aeronautical revenue alone; airports must be made to provide other services, including those unrelated to aviation.

The CEO for Asaba Airport Company, Christophe Penninck, brought this dilemma to the fore when he narrated the crossroads his company was in as the concessionaire of Asaba airport, located at the capital of Delta State. He averred that for an airport to generate enough revenue to justify its concessioning, the concessionaire must look broader beyond the known horizon and become inventive, businesswise. With massive land at his behest, Penninck said that he was beckoning at entrepreneurs and investors to come and establish businesses at the airport.

In his presentation at the CHINET conference he said Asaba airport is also positioning itself for the surge of cargo exports.

Penninck said the airport has strong local team, collaborates with agencies and has experienced and motivated staff to drive cargo exports.

For the future, he said the airport would deploy CAT I runway, full solar navigational aids, commence international and regional flights, will have 24 hours operations, will have developed non-aeronautical part – Airport City, and will be true gateway to South-South and South-East regions.

Chinet conference and the AviaCargo Committee set up by the management of FAAN have brought new sensitization to cargo freighting by air, especially perishables and other farm produce. Many industry stakeholders and exporters have realized the niche and unexplored potential market.

The International Air Transport Association (IATA) stated that air cargo transports over $6 trillion worth of goods annually, accounting for approximately 35 percent of world trade by value.

In the first half of 2021, a total of 16.7 metric tons of cargo was exported through airports across the world. And same period in 2022, a total of 17.7 was exported, leading to 6.2 percent increase from 2021 export figure.

But, in same period in 2023, a total of about 12.9 metric tons was airlifted leading to a further drop by 29.5 percent

IATA in its data for global air cargo markets, released in July 2022, showed cargo as having “taken a step back compared to the extra-ordinary performance of 2020-2021”.

IATA report blamed the poor performance due to volatility resulting from supply chain constraints and evolving economic conditions.

However, to boost cargo export, the Managing Director of FAAN, Kabir Yusuf Mohammed said FAAN in December 2022, assembled the best brains from various aviation cargo private and institutional stakeholders and made them Avia-Cargo Committee members to chart an implementable way forward for Nigeria to take the rightful number one position in Avia-Cargo exports in Africa within the next few years.

Mohammed said the avia-cargo committee was further charged to find solutions to bridging the turn-around time in cargo facilitation, financing-gaps in building and maintaining modern cargo infrastructure and facilities and lack of interest by local airlines in domestic cargo operations.

He also explained that the avia-cargo committee also had the responsibility of addressing lack of adequate insurance coverage in the cargo facilitation, lack of adequate standardization and certification of cargo items, particularly farm produce, etc and substandard packaging, processing and traceability challenges.

He recalled that recently, in company of the Avia-cargo committee members, FAAN did a ground-breaking ceremony for the first Aviation Cargo Village in Nigeria.

Mohammed explained that in this Avia-cargo village, the challenges of produce processing, packaging, certification, laboratory services, data gathering for traceability of products and produces would be tackled and surmounted.

This Aviation Cargo Villageis strategically located opposite the Cargo terminal along Murtala Muhammed International Airport (MMIA) Expressway, and sits on 27,357.137 square metres and according to FAAN Managing Director, the development would be driven through a public private partnership (PPP) model, a feat that would be replicated in other international and Cargo airports

“I believe that when our Aviation Cargo Village is fully established, we will be able to mitigate the challenges in the supply chain. All hands must be on deck to fast track the Aviation Cargo Village. FAAN needs the partnership of the private sector to really provide the necessary infrastructure that will make these airports truly cargo facilitating airports,” the FAAN MD said.

He said the Directorate of Commercial and Business Development would always be ready to facilitate the symbiotic relationship.

“We believe that with proper partnership, we can leverage on the land mass available in our airports, and establish world-class cargo facilities to further enhance cargo facilitations. Our fresh organic produce like cashew, avocado, exotic flowers, yams, etc must be well packaged, processed and certified to meet the destination standards. We have the capacity. I believe the synergy between FAAN and Avia-cargo Committee will quicken the change we desire to see in Cargo facilitation in Nigeria. We must export more than we import. And until this is achieved, our work is half done,” Mohammed said.

Also speaking during the CHINET conference, the Coordinator, Lagos State Office II, Standard Organisation of Nigeria, (SON), Moshood Adebayo Shittu, said compliance to the requirements of relevant standards and adherence to the recommendations stipulated in the codes of practice will ensure the production of quality agricultural products.

Shittu said the standards specify the quality, packaging and labelling requirements and methods of sampling and testing of these commodities.

He said the limits for Metallic Contaminants as well as the Maximum Residues Limits for Pesticides are prescribed in this standard, disclosing that the codes provides guideline for the cultivation, site management, soil requirements, planting, application of agro chemical – fertilizers, pesticide, storage and transportation as well as traceability and record keeping.

“With the implementation of these standards and codes of practice, efficiency, quality and safety are all being built into the agricultural value chain, starting from the farm (pre harvesting to harvesting, to processing, packaging labelling, storage and transportation) to table,” he added.

Cargo export is a niche market for Nigerian airports, but more importantly, the air freighting of Nigerian goods would be the tonic the nation needs to reinvigorate its economy.