The sky’s the limit: New terminals and a growing number of aircraft are set to boost aviation

The current infrastructure drive under way in Nigeria includes both upgrades and expansions to the country’s existing airports. Beyond the need to keep up with demand for passenger travel and cargo services, Nigeria has several specific goals in mind for its aviation sector: boosting government revenue from its facilities, providing easier access to export markets for those currently situated far from the main international airports, and facilitating a lower-cost operating environment for airlines, which have struggled in recent times to provide safe, reliable and sustainable services on a for-profit basis.

There are also plans in place to transform Lagos into a regional transport centre. “Lagos is a natural choice for an airline hub,” Oliver Eberendu, CEO of Revilo Aerospace, told OBG. “Even as a gateway airport, Lagos makes far greater sense than Nairobi or Johannesburg for trade originating from Europe.”

RISING REVENUES: The Federal Airports Authority of Nigeria (FAAN), which operates the airports, forecasts a five-fold jump in revenue, to roughly N126bn ($793.8m) from the typical level of N24bn ($151.2m), according to public statements from George Uriesi, the authority’s managing director. The planned airport renovations will boost capacity and also expand retail activity within the departure terminals. To build new terminals, Nigeria plans to use a $500m loan from the China Export-Import Bank, finalised on a state visit to China in July 2013. It expects that amount to be sufficient to cover five new international terminals and six new cargo terminals.

PARTNERING UP: The terminals are likely to be built and operated as public-private partnerships (PPPs), similar to other new pieces of transportation infrastructure in Nigeria. Four of them – in Lagos, Port Harcourt, Kano and Abuja – are to be built by the China Civil Engineering Construction Corporation (CCECC), a Chinese state-owned firm currently working in Nigeria as the contractor on several existing infrastructure projects. Indeed, with the loan finalised, work was expected to begin in the second half of 2013. During the Nigerian delegation’s state visit in July, CCECC’s president Yuan Li pledged to complete the terminals by 2015, implying a 20-month construction period. The new terminals in Port Harcourt and Kano will be crucial in helping expand traffic beyond Lagos and Abuja, which were responsible for an estimated 90% of overall airport revenue in 2011. “Nigeria should not only develop the airport facilities themselves but also develop the connections between terminals and improve feeder infrastructure to the airports,” Kayode T Oluwasegun-Ojo, CEO of the Nigerian Aviation Handling Company, told OBG.

REGIONAL HUB: The sector’s expansion is being driven by ambitious goals for air transport. “With nearly 170m people and a central location, Nigeria is the trigger to aviation growth in Africa and has a clear capacity to become a hub for air travel on the continent,” Ogungbangbe Thomas, CEO of CITA Petroleum, told OBG. “However, current challenges include a paucity of direct flights around Africa, and we lack a flagship airline.” In achieving growth, the government is targeting an expansion in greenfield maintenance, repair and operations (MRO) facilities where possible. According to the Federal National Civil Aviation Policy, published in April 2013 by the Ministry of Aviation, “Nigeria has the potential to be an MRO hub due to its growing aircraft fleet, location advantage and availability of technical manpower.”

Under the policy, any foreign investment projects which are seen to further the goal of developing MRO capacity may be eligible for a number of tax incentives. Some domestic MRO capacity has since developed: in 2011 Aerocontractors, a regional airline, opened a MRO facility in Lagos and Port Harcourt to service its own aircraft and third-party aircraft. In addition, Lufthansa Technik also signed a memorandum of understanding in 2009 for the set up of a MRO hub at Nnamdi Azikiwe Airport, and Bombardier opened a line maintenance facility in Lagos in 2013.