GOVERNMENT’S PASSION FOR AGRO-CARGO AIRPORTS

Many of the existing airports in Nigeria, both federal- and state-owned, are under-utilised in terms of passenger and cargo flow. Despite this, the fad now is that more state governors are embarking on building cargo airports. While doing that they have not taken into consideration the viability, sustainability and profitability of the facilities, thereby making many stakeholders to believe that the move is motivated by political and pecuniary interests and not economics. Emmanuel Olisemeke.

In recent years, there has been an upsurge in the establishment of airports by State governments, especially agro-cargo aerodromes.

The latest of such airports is the Gateway Agro-Cargo International Airport built and launched by the Ogun State government at the cost of N40 billion, according to Governor Dapo Abiodun.

In 2013, the Federal Government had designated 13 airports as perishable cargo facilities as part of efforts to diversify the Nigerian economy, grow national earnings and boost contributions of the aviation and agricultural sectors to the country’s gross domestic product.

The airports were Abuja, Akure, Calabar, Ilorin, Jalingo, Jos, Kano, Lagos, Makurdi, Minna, Owerri, Port Harcourt and Uyo airports.

The government had claimed that the designated airports would help to transform the aviation industry into the country’s major revenue earner.

It said the aviation sector had established a relationship with the ministry of agriculture and state governments to create storage infrastructure which will step up evacuation of agricultural products to the domestic market.

“The Nigerian aviation sector is establishing closer cooperation with the federal ministry of agriculture and state governments for concerted and strategic focus to this effort. The strategy is therefore to create the much-needed storage infrastructure in view of the large volume involved and to facilitate the evacuation of agricultural produce to domestic markets, in conformity with international standards,” the government said.

Out of the 13 airports initially earmarked for the pilot scheme, the perishable cargo project took off only at the Murtala Muhammed Airport, Lagos with the Nigerian Aviation Handling Company (NAHCO) Plc and Skyway Aviation Handling Company (SAHCO) Plc, providing the necessary infrastructural investments to support the storage and export of perishable goods.

The remaining 12 were abandoned after former President Muhammadu Buhari took over power in 2015 and refused to make any financial commitment to take the project to a logical conclusion.

Apart from the 13 designated airports, in the past 13 years, no fewer than 10 cargo airports have either been built or are under construction by the various state governments.

Among the oldest of the proposed cargo airports is the M.K.O Abiola International Airport in Osun State, which was conceived by the former governor, Mr. Rauf Aregbesola in 2009 on build-operate-transfer (BOT) basis for 30 years.

The Osun Airport has witnessed numerous changes in contract sums since the time it was conceived until 2017 when the government kept mute on the project.

As of 2015, the government announced that it would spend N11 billion on the airport construction, but by 2017, the figure increased astronautically to N69 billion as a result of expansion and other modern facilities that were included by the contractor and approved by the government.

Other aerodromes being conceived as cargo airports are Benue (Dauda), Niger (Minna), Imo (Owerri), Anambra (Umuleri), Akwa Ibom (Uyo), Ekiti (Ado-Ekiti), Edo (Auchi) and Ogun (Remo), which was commissioned in February 2023.

Unfortunately, most of the State governments hardly conduct feasibility studies on agro-cargo airports before embarking on the project despite committing billions of naira to them as most of them, even after completion, are largely unviable and remain inactive.

Many stakeholders in Nigeria’s aviation industry view airport projects as avenues for siphoning state funds. According to them, the proliferation is unnecessary, especially when other projects are begging for attention.

How sustainable?

Industry players have interrogated the economic sense and sustainability of the emerging airports considering several existing constraints.

Some months back, Ekiti State opened a new agro-allied cargo airport with the support of the Federal Government, African Development Bank (AfDB) and African Export Import Bank (AEIA). Interestingly, the airport is about 1:40mins drive and 55.3 kilometres from Akure Airport in Ondo State, which has been dormant for many years.

The emergence of more cargo airports may be justified by growing freight movement and the fact that stakeholders in the air cargo export business and government agencies have anticipated an increase in the volume of aviation cargo in the next five years, projecting an increase in exports data on goods and mails by a minimum of 25 per cent and 10 per cent yearly for the next five years, starting from 2023 and using the 2021 data as benchmark.

This projection was made at the CHINET Aviation and Cargo Conference held in Lagos, 2022.

Statistics by the Airport Council International (ACI) on air cargo show that about 2.15 million metric tonnes of cargo transited through African airports in 2021 with an 11.6 per cent increase from 2020 data.

The data also revealed that the Murtala Mohammed International Airport ranked fifth with 204,649 metric tons of cargo after Kenya, Egypt, South Africa and Ethiopia.

However, it is important to note that times are changing and governments and organisations that establish airports now do so in a manner that such investments are sustainable.

One grave concern of most stakeholders is that most states that are building cargo airports lack good roads to facilitate the movement of agricultural produce from farms to the airport for export.

This, according to the Group Managing Director, Finchglow Travels, Mr. Bernard Bankole, amounts to misplacement of priority and does not guarantee sustained patronage of such airports.

Besides, he said there are hardly long-term maintenance plans for some of the airports being constructed.

“You cannot be in a state where all the inter-state roads are bad and agro-cargo airport is the priority. You cannot be in a state where all the schools are mushrooms and teachers’ salaries are not paid, then, agro-cargo airport is what is important to you. Can we get our priority right? The government needs to get their priorities right. The concept is a beautiful one, but it is about setting priorities right,” Bernard stated.

Erstwhile Managing Director of the Federal Airports Authority of Nigeria (FAAN), Capt. Rabiu Yadudu said the airports established by State governments would serve as infrastructure for the present and the future.

He restated the commitment of FAAN to restructure the business of avia-cargo in Nigeria recommended in the interim report presented by the Avia-cargo Road map committee, which the agency constituted.

He said FAAN was working towards bringing on-stream the new cargo terminals in Port Harcourt and Abuja as part of the export processing zones project to boost import and export cargo revenues, adding that the designation of 13 airports as cargo airport free trade zones was a step towards achieving the goal.

For his part, the president, Aviation Safety Round Table Initiative (ARTI), Mr. Gabriel Olowo, said airports are not only expensive to build, but are also expensive to maintain.

He said there must be short- and long-term enforceable plans by succeeding governments before embarking on airport development if truly government was a continuum.

He described as “regrettable” a situation in which a governor leaves office and his successor abandons the project as it happened in the case of Ogun Cargo Airport.

Stakeholders have rooted for the setting up of internal mechanisms to ensure the quality of cargo for exports to sustain cargo airport activities and ensure consistent patronage by exporters and importers of cargo as certain produce from Nigeria are rejected or downgraded overseas and tagged untraceable, non-certified and unfit for consumption.

Air cargo players have also called for a centralised process of operations in avia-cargo, proper enlightenment of investors, complete automation of the clearance processes and improvement in the ease of doing business.

In an era where more airlines are expanding facilities for freight services due to increase in freight movement and in awareness of existing opportunities in avia-cargo business, maximisation of potential in this critical sector of the nation’s economy can be achieved by ensuring that the airports as channels of cargo activities are sustainable.

There is the need for State governments looking   forward to establishing cargo airports in Nigeria to conduct proper feasibility studies before embarking on such projects in the interest of the avia-cargo sub-sector that harbours several developmental opportunities.

Viability

Pushing the frontier of transporting agricultural cargo by air is no mean feat and the desire of developing cargo airports by many states is laudable if motivated by economics and not politics.

Lead Consultant ETIMFRI Aviation International, Mr. Amos Akpan, explained in an interview with our correspondent that requirements that would make a cargo airport viable are infrastructure, investors’ elasticity as well as ancillary businesses around the airport.

For a cargo airport to be viable, he posited that it must be supported and enhanced by the existence of cities with small and medium scale enterprises producing for export market as well as linked to cities that consume import products.

“There are huge costs in maintaining an international status airport. If those building international cargo airports do not want them to remain on state government subventions, they have to intentionally develop businesses that feed the economy of the airport,” he stressed.

He further said there was the need for the government to encourage entrepreneurs to establish farm estates, produce processing plants, and packaging companies as well as build fast rail and road infrastructure between the farm cities and the airport.

Besides, he said the investors in an international cargo airport must intentionally encourage the establishment and growth of ancillary facilities and allied businesses to attract the flow of import and export of cargo through that airport.

“In other words, cargo flight operators must bring in and take out cargo on each leg of flight as flying any leg of the flight empty is not profitable and such operations won’t last.

“This implies that the surrounding cities to the airport up to 150 kilometres must have manufacturing companies that import raw materials, spare parts, and consume or send out finished products. The solution is to provide access (link) between these cities and the cargo airport by rail, by road, or by sea.

“The government investing in cargo airports in Nigeria should create an environment for farmers to grow export produce like tomatoes, pepper, pineapples, tangerine, oranges, banana, avocado, tea, flowers. Some produce can be ready in six months and some in three years, maximum. Get and adhere to the specifications and standards acceptable in the regions and countries you intend to sell them to.

“Register the farms and the produce for traceability. Get a destination country’s certification. There are approved institutions that will make sure your produce is acceptable in the international market,” he said.

Akpan, opined that the government should give facilities like land, soft loans, and tax rebates to small and medium scale processing companies to add value to the farm produce.

He said the companies could turn the produce into products like pineapple juice, or dried concentrate, stressing that packaging and label companies would be set up to further push the growth of the sector in the country.

For his part, the Managing Director, Mainstay Cargo Aviation, Mr. Seyi Adewale said cargo airports springing forth in the country could be made viable especially with products they have comparative cost advantage.

“Yes, the cargo airports can be made viable. Areas to note may include: What commodities or agro produce/products the state owning the cargo airport has as competitive and comparative advantage and targets where the produce or products are needed both inside and outside the country, most especially.

“How do you improve on the quality and add value no matter how little to these produce or products? For instance, can you work with research companies such as International Institute of Tropical Agriculture (IITA) to improve on the seedlings for quicker, faster, pest resistant and more appealing produce?” he said.

Profitability, Requirements

The COVID-19 era showed many airline operators the profitability in running a sustainable cargo airport and cargo airline.

As many airlines converted their equipment to cargo aircraft, the movement of agro produce, pharmaceutical products and commodities became the new cash cow.

No doubt air cargo played a critical role both during and in the wake of the global COVID-19 pandemic.

Air freight not only plays an important role in supporting global supply chains, but also in providing much-needed relief to the aviation industry, particularly in a year where, according to IATA, around US$440 billion of market revenue is projected to be lost.

After the COVID-19 shutdown, more cargo airports began to spring up and airlines began to increase capacity of their airfreight with focus on profitability.

Cargo traffic requires a combination of multiple factors to grow, namely: strong connectivity, robust infrastructure and quality processes.

Connectivity is among the most important of factors – the availability and quality of air cargo capacity is central to the airport’s role as a cargo gateway or hub.

Leading cargo airports boast wide network coverage with diverse options of airlines and capacity types (freighter and belly hold).

The quality of infrastructure similarly plays a significant role in attracting cargo traffic, as sufficient capacity is required to minimise ground handling-related delays.

What this means is that those airports that have up-to-date cargo terminals are in a better position to compete.

In addition, availability of special handling facilities, especially for the cold chain, is an essential factor in attracting perishables and pharmaceutical cargo traffic.

Other factors that lie outside of the airport’s scope of control, can strongly determine the airport’s cargo prospects.

Ground infrastructure is critical in extending the airport’s catchment area to further inland markets and in increasing its competitive potential.

In addition, the quality of customs processes can heavily impact throughput times, distinguishing strong cargo airports from the rest.

These factors, alongside many others, further define how airports can successfully develop and stimulate cargo.

Many relate to infrastructure development, process improvement or areas such as regulation which lie outside the airport’s control.

Airports Council International (ACI) recently listed the top 10 airports in order of tonnes of cargo handled in 2022.

Figures are calculated by totalling all loaded and unloaded freight and mail at each airport throughout the course of the year.

The airports include Hong Kong International Airport (HKG) with 4, 199, 196 tonnes of cargo handled; Memphis International Airport (MEM), 4, 042, 679 tonnes of cargo handled; Ted Stevens Anchorage International Airport (ANC), USA, 3,461,603 tonnes of cargo handled; Shanghai Pudong International Airport (PVG), China, 3,117,216 tonnes of cargo handled.

Others include Louisville Muhammad Ali International Airport (SDF), Kentucky, 3,067,234 tonnes of cargo; Incheon International Airport (ICN), South Korea, 2,945,855 tonnes; Taiwan Taoyuan International Airport, 2,538,768 tonnes; Miami International Airport (MIA), 2,499,837 tonnes; Los Angeles International Airport (LAX), 2,489,854 tonnes Tokyo Narita International Airport (NRT), 2,399,298 tonnes.

Quotes:  The strategy is therefore to create the much-needed storage infrastructure in view of the large volume involved and to facilitate the evacuation of agricultural produce to domestic markets, in conformity with international standards,” the government said.