FAAN’s pension crisis deepens as liabilities exceed N200bn

Joy Agwunobi 

The Federal Airports Authority of Nigeria (FAAN) is currently burdened with a pension liability that has escalated to over N200 billion, a challenge traced back to the agency’s inability to join the National Pension Commission (PenCom) scheme during its rollout in 2004.

This situation was disclosed by Ilitrus Ahmadu, National President of the Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) and leader of the Joint Aviation Trade Union’s Forum during the second annual strategic aviation trade unions leadership conference, themed “Synergy for Safety and Productivity: Management-Labour Collaboration,” held in Lagos.

Providing insights into the root of the problem, Ahmadu stated, “FAAN failed to comply with the pension reforms introduced in 2004. As required by law, PenCom directed the agency to calculate and remit outstanding pension contributions for its workers and management. An assessment conducted about five years ago placed the liability at over N150 billion, but FAAN’s inability to meet its monthly remittance target of N350 million has caused the debt to accumulate  to over N200 billion.”

The union leader revealed that the agency is still paying retirees under the old pension scheme, adding that this financial strain creates an unsustainable situation. He described the scenario as a ticking time bomb, warning that it could have far-reaching consequences for FAAN’s operations and the planned concession of major airports across the country.

“The issue of FAAN’s pension liability is a significant factor in discussions surrounding airport concessioning,” he explained. “With such a massive internal debt, it is impractical to concession these airports without addressing the financial burden, we raised this issue with the former Minister of Aviation, emphasising that removing key revenue-generating airports from FAAN’s portfolio would cripple the agency, especially when it is already paying over N650 million monthly to address pension obligations. The agency cannot survive under these circumstances.”

Ahmadu also expressed concern over Nigeria’s lack of strategic utilisation of Bilateral Air Service Agreements (BASA), which he argued heavily favoured foreign airlines at the country’s expense. He pointed out that billions of naira are lost annually due to dormant BASA routes, a situation compounded by Nigeria’s failure to fully engage with the Single African Air Transport Market (SAATM).

According to him, “We are challenged because the Single African Air Transport Market (SAATM) has started. The pilot implementation project has started in some states. If we pride ourselves as a frontline state, promoting SAATM, why are we against an investment in a national carrier when the government has determined that it doesn’t have money to invest”.

The union leader recalled the 51 per cent  to 49 per cent  partnership arrangement under which Virgin Nigeria operated, suggesting it as a viable model for a new national carrier. “When the government opened opportunities for stakeholders to partner on this, there was little interest. We must seize this opportunity rather than dismiss it because of past failures.”

Ahmadu further lamented that the failure to establish a national carrier has weakened Nigeria’s position in regional and global aviation markets. “Smaller airlines are claiming a significant share of our market. Meanwhile, larger Nigerian carriers are underperforming, unable to compete effectively. If we don’t act now to liberalise and strengthen our aviation sector, Nigeria will fall behind its peers in Africa,” he warned.