Murtala Muhammed Airport Terminal 2, operated by Bi-Courtney Aviation Services Ltd (BASL), has been having issues with the federal government for more than eight years. The company blames its insolvency and the parlous condition of the terminal on the government, while the latter accuses the former of trying to get more than it deserves through the back door. IME AKPAN reports.
On the ruins of the burnt domestic wing of the Murtala Muhammed Airport is located a terminal building called Murtala Muhammed Airport Terminal 2 (MMA2).
Operated by Bi-Courtney Aviation Services Ltd (BASL) on a build, operate and transfer, (BOT) arrangement for the Federal Airports Authority of Nigeria (FAAN), the facility, prior to the modernization of airport terminals across the country, was adjudged the best in Nigeria, nay West Africa and could truly match the exquisite pride that Miami, Tokyo, Johannesburg airports and the likes flaunt.
However, this facility, popularly called MMA2 is in dire financial strait as evidenced in the recent attempted takeover of its operations by Asset Management Company of Nigeria (AMCON) due to BASL’s inability to offset a N50- billion debts owed to the asset managers.
AMCON through its counsel, Mr. OlisaAgbakoba, had applied to the Lagos High Court in Lagos and obtained an order as receiver manager of BASL as a result of the debt overhang.
Consequently, BASL filed a counter application at the court and obtained an order restraining AMCON or its counsel from taking over the facility or any affiliate company run by Bi-Courtney Ltd.
The court categorically confirmed that that the order by Mr. OlisaAgbakoba (SAN) on behalf of AMCON constitutes a gross abuse of the process of court and was designed to ridicule the legal system. It (court) declared the order as nullity ab-initio which means that in the eye of the law, it never existed in the first place and any action taken by AMCON or its counsel or purported receiver further to the void order is also a nullity. The effect is that the order obtained by AMCON is illegal.”
“The position of Bi-Courtney remains that it is not indebted to AMCON or any person claiming through AMCON in any manner whatsoever. On the contrary, it is AMCON and the federal government of Nigeria that owe Bi-Courtney N132 billion which has remained unpaid till date,” said BASL’s chief operating officer, Ms. AdebisiAwoniyi.
However, she admitted that was in crisis due to its dwindling financial fortunes which she blamed on the federal government’s alleged refusal to hand over the general aviation terminal in Lagos to BASL. Besides, she said government’s action had contributed to the firm’s default in paying the loans obtained from a consortium of banks to construct the terminal
The banks included Zenith Bank Plc, GT Bank Plc, First Bank Plc, First City Monument Bank Plc, Access Bank Plc and the defunct Oceanic Bank which raised N20 billion part-financing.
Government’s alleged refusal to handover the GAT to BASL throws up one other issues which has strained the relationship between FAAN and the concessionaire. The federal government, through FAAN had insisted that GAT was never a part of the concession contract. While FAAN argued that the original term of the contract signed on April 24, 2004 was for 12 years, BASL said it was for a period of 36 years. FAAN also alleged that the addendum of February 2, 2007 purportedly extending the tenure of the concession to 36 years was done through the back door.
Government argued that section 2(1) and (2) of the Infrastructure Concession Regulatory Commission (ICRC) Act 2005 subjected concessions to the prior approval of the federal executive council (FEC).
It added: “However, the approval of FEC for the extension of the agreed tenure of 12 years to 36 years was not obtained. The substitution of the original term of 12 years for a new term of 36 years is inimical to the growth and development of the country’s air transport industry and against the national interest taking into consideration the provisions of the concession agreement between the federal government and bi-Courtney.”
The chairman of the company, Dr. Wale Babalakin, had, during one of the events to commemorate the operations of the terminal, expressed worry about the poor revenue yield from MMA2. Despite his belief in the efficacy of public-private partnership to grow the Nigerian economy, he said the terminal was yet to realize its full potentials.
He said the projected yearly revenue from services rendered had not been met and that in order to sustain the quality of service to the airlines, passengers and other users of the facility, BASL subsidized the operations with N12 billion, besides N35 billion sourced from banks to erect the structure.
“We are not raking in sufficient revenues from MMA2, which is a far cry from our projections and expectations. This had led to the banks getting worried over their returns. The banks even wrote a letter detailing how the non-compliance of the agreement by government is affecting our operations.
“It is unfortunate that we are still subsidizing this project with our own money. We are not making returns now, no thanks to the inability of the other parties to keep to the agreement. As at now, the banks feel that we are not servicing the loans we obtained for the construction of the terminal as we promised and we have to keep our own end of the bargain.
“The company according to the law is on its feet, but we have gone through financial problems. However, we promise to continually improve on our maintenance of the facilities we have, but it’s not that easy to do,” said Babalakin.
The terminal’s financial woes are further made worse by the small number of domestic airlines operating to sustain the facility. Prior to airlines’ recapitalisation in 2006, more that 20 domestic airlines were operating in the country. When the exercise was completed on April 30, 2007, many of notable carriers like ADC, Albarka, Chrome, Dasab, Fresh Air, Sosoliso and Space World could not make it. Recently, IRS, Associated Air and Chanchangi joined the club of dead airlines,
As of today, Aero, First Nation Airways, Overland Airways, Med-View Airline, Azman Air, and Dana Air are the only functional airlines operating from MMA2.
At a certain time, Aero threatened to pull out of the terminal due to exorbitant rent but BASL used the court to stop the move.
While Babalakin contended that MMA2 is supposed to house all the domestic operations, the biggest domestic airline, Arik Air, has shunned the terminal. The airline, which controls about 40 per cent of the domestic market, operates from GAT. The implication is that the BASL is denied access to passenger service charge which would have upped its revenue generation capacity. For instance, between 2006 and 2010, the airline had transported about 5.8 million passengers and it is believed that if the airline moved to MM2, the revenue profile of the terminal would be boosted by as much as 85 per cent.
Arik explained that in November 2007, it paid N160 million for a space at MMA2, but it was not provided with any. It therefore instituted a legal action against BASL at the Lagos High Court and vowed that it would rather wind up than relocate to MMA2.
Analysts attributed the terminal’s poor financial performance to the cost of doing business at MMA2. The argued that BASL businesses were groaning under the yoke of exorbitant rent.
As of today, only two banks, Guranty Trust Bank and Zenith operate from the terminal, while Access Bank, Skye Bank and Oceanic Bank (before its acquisition by Eco Bank) wound up their operations at the terminal when the annual rent was increased from N60 million to N80 million. The banks operate as pay/savings points with ATM machines for travellers and the airport community. UBA had only an ATM, which it removed long ago.
“Before the rent was increased astronomically, we wrote to the management of the terminal to consider the volume of business coming to us. They shunned us until we gave them notice that we would wind up our operation. They still did not take us seriously until when we moved. After some time, they made overtures to us but it was too late,” said a staff of Skye Bank who craved anonymity.
Signs that all was not well with the company began to manifest early in the year when its chillers began to function abysmally and caused discomfort to air travellers and other airport users. More so, the three lifts parked up. Consequently, the terminal managers embark on aggressive revenue drive, including but not limited to indiscriminate towing of vehicles alleged to have been parked at unauthorized places within the terminal building. When the lifts were finally repaired, the one that links the food court and the abandoned-four-star hotel parked up immediately and it has not been fixed ever since.
Awoniyi pledged that the company would spend N500 million to upgrade operational facilities at the terminal in 2014.
“Our plan is to become the best terminal that is International Civil Aviation Organisation (ICAO)-compliant in West Africa. In a difficult business environment, like ours, it is not easy to run an airport terminal,” she said.
