Posted by Sade Williams
Aviation analysts in aviation sector have expressed worry of the disparity in the charges of ground handling companies in Nigeria as well as in comparison with other countries in the West African Sub,-region, saying the situation in Nigeria if not checked urgently could impact safety as it was already impacting revenue generation negatively.
A cross section of the analyst who who spoke on the matter noted that Federal Airports Authority of Nigeria (FAAN) was losing billions of naira annually from the 5 per cent gross annual turnover paid by the ground handling companies as some even say it is an economic sabotage against Nigeria.
For instance, it is observed that ground handling rates in Nigeria is the lowest in the entire African countries, if not the world and this has been a thorny issue for over a decade.
Checks by The Traveleport show that in Guinea, the charges are $1,673 for narrow bodied aircraft and $4,715 for wide bodied aircraft, in Senegal, it is $2,250 for narrow bodied aircraft and $5,259 for wide bodied aircraft and in Cameroon, the handlers charge $1,400 for narrow bodied and $4,500 for wide bodied.
Further investigation shows that in Sierra Leone, the charges are $2,250 for narrow bodied aircraft and $5,250 for wide body aircraft while in Ghana, it is $1,500 for narrow bodied aircraft and $4,150 wide bodied aircraft.
However, in Nigeria, the rates oscillate between $400 and $1,139 for narrow bodied aircraft, depending on the negotiating power of a foreign carrier and $3,000 and $3,200 for wide bodied aircraft, depending on the negotiation of the foreign carrier.
It was learnt that these rates have been in force since late 1980s and 1999.
For clarity purposes, the the narrow body aircraft include B737, Airbus A320, ER 135 and ATR aircraft, while the wide bodied aircraft are categorised as B767, A330, B777, B747 and A380 aircraft.
Kayode Oluwasegun-Ojo, a former Managing Director of Nigerian Aviation Handling Company (NAHCO), PLC, while speaking on the right pricing noted that clearly, the rates the ground handling companies are charging are not sustainable.
‘…but I may not be able to be specific on the right rates. What I think they are doing right now is subsidizing from other aspects to do the business. That is not a sustainable model for business in the long run. Whatever that is not sustainable, you will eventually crash.
“If you charge for a service that is less than cost-reflective, it means you are not getting your cost back and on the long run, it will not be sustainable. Lack of sustainability for aviation has serious implications because aviation actually starts from the ground and you land back on the ground. It is the ground handling companies that do that.
“I think the Nigeria Civil Aviation Authority (NCAA) has a great role to play here; it should call people together – airlines and the ground handling companies, let’s jaw-jaw. My experience in the banking industry is that you collaborate before you start competing.
” If Ghana is charging about $1,500 to handle narrow body aircraft and Nigeria is charging this little, then, something is wrong with our system. We must do something about helping our country and industry to grow. We have a huge market here and we must do something to boost the sector, starting from the ground handlers”, he said.
Also speaking, Ahaji Oluropo Owolabi, a former Managing director of Skyway Aviation Handling Company (SAHCO), decried the economic, safety and security impacts of inappropriate ground handling charges.
According to him, the issue has been on for more than a decade, adding that ‘it is unfortunate that our government is sitting idle, acting as if this thing doesn’t affect them. It affects the government, foreign exchange, FAAN and even the NCAA being the regulatory. It is a tripartite agreement.
“When you fly straight, within the next 25 minutes, you are in Accra. Then, you ask how much they handle a wide and narrow body aircraft over there. It is completely different from what they are paying in Nigeria. In fact, it is a peanut. When you move further to other West African countries, you will see the disparities and they are unbelievable. Move to South Africa, Europe and America, the disparities are unbelievable.
” We are a country that is suffering just because there was no authority to be able to stamp their regulation on these airlines and call the ground handling companies to order”, he said.
Owolabi regret that ‘it has painfully affected the revenues of the handlers, the take home of FAAN at the end of the year. The total sales that we pay as remuneration to FAAN at the end of every year surely will diminish. It is what we take that we pay for. As we are losing, FAAN is losing and NCAA is not taking up its responsibility to ensure everything is being done rightly”, he lamented.
Barr. Chike Ogeah, another former Chief Executive Officer, SAHCO and current Vice-president, Sifax Group, advised the ground handling companies to work together to achieve a common aim by putting safety first.
“The two handling companies must come together and work together. As long as those two handling companies are not working in tandem and setting the bars for themselves, knowing that the most important issue in the aviation business is safety. If they realize that, then they will not want to be undercutting themselves because that is where the greatest problem lies.
” Because a ground handling company wants to get the bulk of the clients, gives services below its cost and that is dangerous. The rates are inelastic, it is open ended. There is a particular amount of client that everybody is trying to get because aviation is a specialized business, not a food stuff business. It is a specific business. So, by the time you look at passenger and cargo handlings, you will realize that you need to be able to enforce your own prices, which must be standard and must be realistic to ensure that safety is not compromised.
According to Ogeah, the whole scenario shows that something is wrong with the system.
“For Nigeria to have the lowest handling charges on the continent shows that there is something wrong. NCAA as the regulator must sit down with the handling companies to come out with a realistic regime for the handling companies.
” It is ridiculous for Nigeria to charge as low as what they are charging now. It doesn’t make sense. I think the coming onboard of AGHAN will address that. The only way their survivals will be guaranteed is for them to charge right. Mind you, some of the companies are listed on the Nigerian Stock Exchange (NSE) and they need to deliver to their shareholders.
Engr. Sam Oluwole, Chairman, Board of Trustees, Association of Ground Handlers of Nigeria (AGHAN), noted that the bane of the sub-sector currently is the extremely low charges by ground handling operators in Nigeria, ‘which is not commensurate with the quality of service that we render daily, the safety and security.
“There are three aspects that concern us at the moment; economic, safety and security of the industry. As far back as 1986, grand handlers were charging about $1,139 to handle a narrow body aircraft for instance, but regrettably today, despite the crash of naira against the dollars and other currencies, some of the handlers charge as low as $300. Then a dollar was equal to 90k, but today, the same dollar is about N500, yet we are charge low fees.
” The challenge here is that the Nigerian Government is losing considerably a lot of tax revenues because the handling companies pay 5 per cent annual turnover to the government and it is this money that they are using to acquire facilities, upgrade equipment, while the handlers too train personnel and pay workers’ welfare packages and insurance.
“We have been static over the years and because we have been static, we find it very difficult to maintain relevant standards. As you know, aviation is international business with safety as our hallmark. If this continues, there is this tendency that one may want to compromise on safety if care is not taken.
” We need to work out something that will be a win-win situation for the airlines and ourselves. I mean something that will enable us to still be in business and provide adequate service to our customers. There are standards set by international organisations on this; IATA, ICAO all have standards