Aviation: What future for ground handlers?

There is a clamour for a review of the ground handling rates in the Nigerian aviation industry amid the revelation of losses amounting to billions of naira that should have accrued to the federal government, Daily Trust reports.

In recent times, there is an outcry from some Nigerian airlines wishing to fly into some African countries over the handling charges by operators in those countries.

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One airline said it was appalling when it was asked to pay $10,000 per landing in a West African country; a charge which would have made it practically impossible to break even on the route if costs of other of operations were added.

Operators in the ground handling sub-sector of the aviation industry say the handling rates in existence in Nigeria remain the lowest in the whole of Africa and the entire aviation world.

The ground handling firms with the responsibility for providing ground support services to airlines before take-off and after landing are critical to aviation safety.

Findings by Daily Trust indicate that the last time the handling rates were reviewed in Nigeria was 35 years ago when the exchange rate of the dollar was virtually at par with the Nigerian naira. This, the operators say is not healthy for the industry as it raises safety and economic concerns in addition to denying the federal government through the Federal Airports Authority of Nigeria (FAAN) billions of naira annually from the five percent gross annual turnover paid by the ground handling companies.

A ground handling operator said, “We see this as an economic sabotage against Nigeria.”

Findings indicate that ground handling rates in Nigeria hover around $400 to $1,139 (narrow-body aircraft) and $3,000 to $3,200 (wide body). This is said to be the lowest in Africa when compared with what is obtained in other African countries.

For instance, Ghana charges $1,500 for narrow body and $4,150 for wide body; Guinea charges $1,673 for narrow body and $4,715 for wide body; Senegal charges $2,250 (narrow body) and $5,259 (wide body); Cameroon ground handlers charge $1,400 (narrow body) and $4,500 (wide body); and Sierra Leone charges $2,250 (narrow body) and $5,250 (wide body).

It was learned that these rates have been in existence since the late 1980s and 1999, and experts argued that it had been worsened by naira depreciation over the decades. They, however, want the Nigerian Civil Aviation Authority (NCAA) to immediately wade in to address the disparities to engender competitiveness among the operators and position them for future challenges in the face of increasing operational costs and the prohibitive exchange rate/interest rate.

A former Managing Director (MD) of the Nigerian Aviation Handling Company (nahco aviance), Kayode Oluwasegun-Ojo, in a chat with our correspondent, said, “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.”

According to him, the situation, if not immediately salvaged, has serious implications for safety as aviation starts from the ground.

He further said, “If you charge for a service that is less than cost-reflective, it means you are not getting your cost back, and in 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.

“If you are charging less than cost, it means you are subsidising from somewhere, and this will have an impact on the service you provide, equipment on the ground and others.

“You know that most accidents/incidents in the aviation industry actually occur on take-off and landing. So, it is extremely important that we take care of what happens on the ground, and in this case, via the ground handlers in charging the cost-reflective tariff. That means you can recover costs with some margins for hospitality, including being able to pay taxes to the government. Companies that make losses will not be able to pay taxes.

“As you are aware, all the ground handling companies are locally owned now, and there is employment implication for staff. If these companies are not making money, thousands of people will be out of work.”

He explained that “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.”

On his part, a former MD of Skyway Aviation Handling Company Plc (SAHCO), Alhaji Oluropo Owolabi said the federal government was losing huge sums of money in foreign exchange (forex) over the issue.

Alhaji Owolabi said, “This issue has been on for more than a decade, and it is unfortunate that our government is sitting idly; acting as if this thing doesn’t affect them. It affects the government, forex, FAAN, and even NCAA – being regulatory. It is a tripartite agreement.

“When you fly straight to Ghana, within the next 25 minutes, you are in Accra. Then you ask how much they handle 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 is no authority to stamp its regulation on these airlines and call the ground handling companies to order. This act has painfully affected the revenues of the handlers and 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.

“The point is, how much were you paying for air tickets 10, five, and even three years ago? Is it the same as you are paying now? Handing prices must move at par with what we are paying on tickets.

“Don’t forget that the equipment we are using are imported and are cleared by the International Civil Aviation Organisation (ICAO) and the International Air Transport Association (IATA) before we can use them.”

On his part, the Chairman of the Board of Trustees of the Association of Ground Handlers of Nigeria (AGHAN), Engr Sam Oluwole, said the low handling the charge was one of the banes of the ground handling sub-sector.

Engr Oluwoye said, “As far back as 1986, ground handlers were charging about $1,139 to handle a narrow-body aircraft for instance, but regrettably today, despite the crash of the naira against the dollar 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 charging low.

“The airlines play on the infighting among the ground handling companies to pay them a token today, yet they are getting better services here than whatever they are getting outside the country. In Accra, Ghana, for instance, they are paying about $2,000 for the same service; if not lower.”

On the appropriate rates by handlers, he said, “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 and ICAO all have standards.

“There are terrorist activities going on around the world. What stops a terrorist to induce a worker who has access to restricted areas of the airport and has not been well-remunerated? That will not paint the image of our country in the right colours.

“NCAA should be able to regulate this by ensuring that the Service Level Agreements (SLAs) are maintained and there is no undercutting. An airline goes to Handler A, gets their rates, and goes to Handler B to cajole them to charge lower.

“Whatever we are agitating for is not increment per se, but we only want to regularise the rates. Whatever we are charging now is lower than what we did in the 1980s and early 1990s. We just want to be at par with other countries. That is where NCAA will come in; to play their roles as regulators, just as we have in the banking industry where the Central Bank of Nigeria (CBN) regulates activities in that sector.”

When contacted, spokesman of NCAA, Mr. Sam Adurogboye, said NCAA was not involved in fixing rates and therefore charged the operators to come together and agree on the appropriate rates that would sustain their operations.

He explained that “Aviation is a deregulated industry. We don’t fix rates for airlines or handling operators. So the ground handling firms should sit down together and agree on what is sustainable.”