New Passenger Service Charge takes effect Sept.1—FAAN 

 

… Agency seeks understanding as revenue drop by 95%

 

Posted by Sade Williams 

 

The proposed new Passenger Service Charge (PSC) regime will take effect from September 1, 2020, the Federal Airports Authority of Nigeria (FAAN) has said.

The agency explained that the new increase is inevitable as its revenue has been greatly impacted following the lockdown of the country’s economy in the wake of the spread of the deadly Coronavirus COVID-19 pandemic.

Managing Director of FAAN, Captain Hamisu Yadudu made the declaration in Abuja on Thursday where he explained the rationale behind the 100 percent increase amid calls by airlines and associated businesses affected by the new regime.

Also, the decision of the federal government to increase its direct deduction from the Federal Airports Authority of Nigeria (FAAN) to 40% starting from 2021 which will lead to a shortfall of over 16 Million overhead cost for the agency among others are putting its finance in dire straits.

Yadudu said the present economic reality has made it imperative for FAAN to waste no time in reviewing the Passenger Service Charge (PSC), from N1000t to N2,000 per passenger come 1st September, 2020 affirming that the agency has not increased the Passenger Service Charge (PSC) since 2011, despite all the huge capital investments at the airports.

He said “you would recall that the Federal Government has continued to make massive investment in the aviation sector. Government’s effort to renew the nation’s dilapidated airport infrastructure and ensure safety in the industry has come at a very huge cost.

“Airport management is capital intensive. FAAN has not increased Passenger Service Charge (PSC) since 2011, despite all the huge capital investments at our airports. The current PSC charge of N1, 000 is no longer realistic as it does not correlate with realities of cost related inflation rate which the CBN has put at 12.82%.

“Besides, FAAN , until late 2019 was collecting the naira equivalent of PSC at an official rate of #305.50 – #344.38 to a dollar when airlines were collecting at subsisting market rate of about #362 to a dollar.

“It should be noted that ICAO’s recommendation in Doc. 9562 stipulates that revenue generated by airports be transparently re-invested wholly in operating and developing airport facilities.

“It is also worthy of note that the federal government is increasing its direct deduction from FAAN to 40% from 2021. With such deduction, the Authority will have a shortfall of over N16m on overhead cost. The Authority is however engaging the federal government to exempt her from this deduction.

“It has, therefore, become imperative to review the Passenger Service Charge (PSC), from N1000 – N2, 000 per passenger. This review which takes effect from 1st September, 2020, has already been communicated to the airlines.

“We therefore implore stakeholder, airport users and the general public to bear with us as the FAAN is laden with so much overhead cost of operation,” he said.

According to him, “The increase is a matter of necessity. Our revenue is down by over 95 percent. In that case, we will do whatever we can legitimately to ensure we carry out our duties.

“We need to survive. There is no better time than now for FAAN to do this,” he said.