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SAHCOL AG. MD, Basil Agboarumi

Ground handling business have gone beyond aggressive price warring-Agboarumi

ACTING Managing Director of Skyway Aviation Handling Company Limited (SAHCOL), Mr. Basil Agboarumi was guest of the League of Airports and Aviation Correspondent(LAACs) Gateway forum where he talked about the unhealthy rivalry that has created a price war in the industry as well as call for zero tariff for ground Handlers to import equipment as well as the imbroglio generated about the company’s enlistment in the Nigeria Stock Exchange. Nigerianflightdeck.com was there. Excerpts.

 

In the last two years, government’s policy has shifted towards promoting of export, rather than import, how has this impacted on your operations and revenues?

If it is a policy of the government, I think it is good for the country; before now, Nigeria was just an import country and at a particular point in time in this country, exportation was totally dead. Other countries just produced and dumped whatever they produced in Nigeria. For the first time in this country, we have seen growth in export, which I think has to do with the policy of the government on production. Business organizations are now looking inwards and coming with what we can give out to the outside world. It is no longer news that Nigeria is a blessed country with several raw materials that other parts of the world need. But, we have over the years show interest in what we can get from outside. The sincere fact is that exportation of goods and services has truly grown from 2015 till date. At the moment, yam, vegetable, hair wigs, palm oil and others are the most export products from the aviation industry, not to talk of other sectors of the economy like maritime and others.

Some of the challenges ground handling operators face include a conducive business environment to operate in, how do you think government can step in to improve the situation for you?

Nigeria is a tough country to do business in and that doesn’t isolate us as a ground handling company. It takes courage to do business in this country. There are lots of things that work against the ground handling companies. For instance, the equipment that we use are heavy, bulky and cost a lot of money. To get just an equipment into the country, you will require several millions of dollars and more so, they are not things you just go to the shelf to pick as you buy your cars. They are all produced abroad and we have to pay a lot of duties to bring them into our ramps for ground handling services. As you are aware, the government recently approved waivers to the operating airlines to help them sustain their operations, but the fact is that the airlines don’t exist on their own. There are some other supporters of aviation that need to be looked at like the ground handling companies because safety starts from the ground. If there is no safety on the ground, there could be a problem in the air. So, critically, government needs to support our operations through incentives that they approved for the airlines in the country. We need incentives for ground handling equipment. The ground handling business is an endanger specie, everyone wants to collects from the ground handling company. For instance, one of the certifications we used to do with the International Safety Audit of Ground Operations (ISAGO) and not paid for, but now, we pay a lot of money to get that done. Also, before you can shift things through our corridor to Europe, there are some certifications you need to do, which cost us lots of money. We spend quite a lot to remain in business and we believe that the government needs to come out with policies that will reduce the sums that we spend and make us fall in line with the international best practices. Despite all these, there is price war in the system among the operators and we think the Ministry of Transport, Aviation unit, or the Nigerian Civil Aviation Authority (NCAA) can come in. As a ground handling company, we are losing a lot of money. If you look at the categories of airlines as they operate in other parts of the world, they spend a specific amount of money on ground handling services, but in Nigeria, possibly because of pressure from us and our competitors, these charges have totally gone down. Airlines come into the country and pay peanuts for ground handling services, which they can’t even get in our neighbouring African countries.

Just recently, an airline from Nigeria went to one of the neighbouring West African countries and          landing there, the authorities told the airline what it needed to pay to handle its Boeing 737 aircraft, but here, they get such services at close to nothing because of the unhealthy competition in our industry, but we believe that this time around, the government needs to come in to tackle that.

There have been some allegations of security compromise; especially on drug trafficking, against some ground handling staff in the sector, what is the management doing to address the situation?

I disagree that there is security comprise by our ground handling staff, one thing I want you to understand is that SAHCOL is a very responsible ground handling organisation and we do our business with high level of integrity. When you come into our warehouse, you will see some of the equipment we put in place to ensure security of cargo is not compromised. Even as a company, we have about four levels of security to support other security measures that the government has put in place. As a company, we have zero tolerance for security breach or theft on customers’ cargo. We put in a lot daily to ensure that our gateways still remain the preferred ones for import and export. Every SAHCOL staff goes through police background check. This is something that we do consistently.

At our warehouse, we have the Closed-Circuit Television (CCTV) cameras mounted in strategic places. This is apart from the human security that we have there; we have internal and external security arrangements that we have engaged. We also have officials of the National Drug Law Enforcement Agency (NDLEA), the police, Civil Defence and several others. Having said that just like in every organisation, you still have some bad eggs in the system. People can go to any length to breach security measures, but the right security gadgets have helped us to arrest some of these unscrupulous elements in our midst. There is a policy in SAHCOL that anyone that is caught to have aided criminal activities is flushed out immediately and handed over to the police for further prosecution.

SAHCOL has been enmeshed in crisis over the company’s refusal to be enlisted on the stock exchange, nine years after privatisation. The allegation is that the company ought to have been enlisted on the stock exchange five years after privatisation, why is the management reluctant to go public?

The management is not reluctant to go to the Nigeria Stock Exchange (NSE), but there is time for every step to be taken by the organisation. Already, steps have been taken by the management to enlist us on the NSE. We are already having some discussions with the Securities and Exchange Commission (SEC) on the process of enlisting on the floor. Even when SAHCOL was handed over to Sifax Group, we were still under the watchful eyes of the Bureau for Public Enterprises (BPE). If we had taken the wrong step, BPE would have kicked us. Also, as a business entity, the country’s economy had been very bad at a point. For example, Nigeria just came out of recession and as at the time of recession, I don’t think it takes any business sense for us to throw a company like this into the market, but now that we are out of recession, we believe this is the best time to go to the exchange and we have gone far on this.

The Federal Government is planning to concession some of the major airports in the country in the first phase, is SAHCOL willing to participate in the exercise?

When we get to the bridge, we will know how to cross it. The fact is that if government says it wants to take a policy decision, it is good for us to see whatever the government is putting on our table. We are a business organisation and will always be interested in doing businesses, but if the offer is not what we are interested in; we will go our own way.

Between passenger and cargo handling, which one is more profitable to your organisation?

I think we need to look at the direction the world is going. One thing about aviation is that it is not sleeping and things are moving very fast. The time has come for Nigeria for us to begin to look at things as they happen in the global industry. Recently, two of our clients, United Airlines and another carrier, pulled out of the country due to the poor economy. Aviation is a family and what affects one, affects all. The world is going towards cooperation. All stakeholders are pulling their resources together to enhance cooperation. For instance, when we are talking about passenger handling now in the countries of the world, you may not need handlers to check you into your aircraft and sometimes, you can do it in the comfort of your room. That’s a threat on ground handling business.

What was the volume of cargo handled by SAHCOL in the first quarter of 2018 when compared to the same period in 2017?

Unfortunately, I don’t have the details of our operations in the first quarter of 2017, but mind you, then, we were still in recession. However, I can tell you that whatever we recorded in the first quarter of 2018 was an improvement from 2017. There is definitely an improvement. Also, the foreign exchange is stable now unlike in the first quarter of 2017 when people were not sure of what the situation would be tomorrow, but today, there is stability in foreign exchange and it has aided the amount of cargo coming into the country or moving out.

There is an allegation that your company has poor welfare packages for its workers, including anti-labour practices and engages in casualization among others, how has this improved under your watch?

SAHCOL is a unionised organisation and when you are talking about poor welfare packages, sometimes, you may not really what is poor, but I can tell you as a company, we pay above the minimum wage of the Federal Government. We pay far above that. Even when the recession was on, we never owed our staff a month salary. We don’t extend salaries to the other month. Just recently, we came up with a new condition of service for our workers which went through a very rigorous process with the two unions in our establishment. So, I want to say anti-labour practices don’t exist in our organisation. Also, we don’t have casuals in SAHCOL.

What are you doing to effectively utilise your ultra-modern warehouse to the maximum to increase returns?

Even for us as a company, we underrate the warehouse that we have; from time to time, we have audits from some of our clients. For instance, just recently an organisation that audits clients of a particular airline audited our facilities and said our facility is not the best in West Africa as we claimed, but it is the best on the continent. However, for us as an organisation, we have don’t blow our trumpet, but our clients can testify to our high-quality service.

Also, one of the things we do is to consistently attract more clients to ourselves and the place to be in ground handling business in the country today is SAHCOL. Some of the operating airlines are diverting their businesses to our companies simply because of the high level of service we offer them. Cargo is secured and safe in SAHCOL. People come into oor facilities and ask if they are in Nigeria.

There are reports about your airside operational vehicles colliding with aircraft at the tarmac, what is your organisation doing to curtail this?

For us as an organisation, we put a lot into training. Recently, we had to take all our staff to what we call Safety Management Training (SMS). This is a continuous exercise, we are engaging with our staff. There is nobody that would leave his house with the intention of having an accident, but sometimes, incidents and accidents happen. What happens to us as a company is that when such incidents or accidents happen, we tend to learn from it. Even, the ministry of aviation has an agency called the Accident Investigation Bureau (AIB), which is a major parastatal in the sector and it is like that in other parts of the world too. The most important thing is what we learn from past incidents or accidents. Sometimes, we need to be given kudos in this part of the world and as an organisation; we are doing our best to ensure that we keep to international best practices.

What is SAHCOL’s total Market share

For companies to do business with you they would have checked your books and they know you have the capacity and the technical know-how to give them the services they require. It doesn’t mean that because of this as a company, we have allowed price to enter us. We still need opportunities to do better. We know we are growing and closing the gaps. For example, before SAHCOL was privatised in 2009, we maintained about 21 per cent of the market share, but today to the glory of God, we have grown to about 48 per cent and we are not stopping there, we are still growing. Part of what we need to do is to train our staff and get modern and state-of-the-art equipment into the system and that is what we are doing and closing the gap even as we are stepping up on our services.

How much is SAHCOL projecting for business expansion and training in 2018?

As you are aware, the Nigeria budget just came out from the National Assembly in May, so, we are planning in line with that. Companies have budgets in order to plan. We have submitted our proposals to the board of directors and until they sit, we can’t know what they will approve.

As the Acting Managing Director of SAHCOL, what will be the focus of your management?

One thing we need to know is that it is not about me, but about SAHCOL as a company. One thing I can tell you now we have going for us is that we are a very solid team, driving the affairs of SAHCOL. One thing we are trying together is to build people, consolidate on the company we have now and become better. That is exactly what we are doing and that is our focus andwe are not distracted from it because we are pushing it. We are building a company where by people that have the right ideas are allowed to express themselves without shutting them down. We knew we have the best of minds in the industry, we knew we have best of people in the industry and we are tapping into that talent to build a global company.

What is your assessment of the Nigerian aviation industry, generally?

I said earlier that SAHCOL can’t leave in isolation of the industry, there is a chain that connects all of us together and whatever that affects one aspect, it affects every other. When you look at 2017 globally, the summary of the industry was that it was good for the industry and I want to believe that 2018 is already consolidating on that. We believe that the industry is moving forward and things are happening very fast. We have a minister that has the courage to want to do certain things. Now, we are talking of having a national carrier, which we believe will be good for our aviation industry. We have come to a point where we have to realise that there is no Nigeria aviation, but global standards. That is why you see regulators that visit us regularly to determine our level of compliance. It means that we must do things in line with international best practices. Where the world is going in aviation is cooperation, you can’t stand alone. As long as you have something to offer in aviation, the time has come whereby stakeholders in the industry must begin to relate with one and other and jointly take decisions that can move the industry forward.

There is a rivalry between the two ground handling companies in the sector, how can this be resolved for the growth of the industry?

Cooperation is for the best of the industry, we as a company we have identified cooperation as the tonic to build the industry. We will continue to do our best, take the right step and initiative to ensure that what can give us the kind of aviation that we desire in the future is done. there must come to a point whereby we will definitely need ourselves. In other parts of the world, ground handling companies are pooling resources together, it is for us to get to that maturity stage. Even, airlines are cooperating now. When you have airlines in various parts of the world, they complement each other in passenger and cargo operations. We will have better aviation industry once we begin to look at the industry from that perspective.

You spoke about price war earlier and you said it was necessary for NCAA to intervene in it, how exactly do you want the agency to come in?

Let’s look at the banking industry for instance; there is a regulator that regulates their activities. For instance, the handling rates we pay in Nigeria has not changed over the years despite the fall in naira to dollars and other major currencies.

The airlines have consistently change their fares, but we have not done that for so many years. We still operate with the same tariff that we have been operating up to the time naira was N165 to a dollar and regrettably today, the rate has grown more than double. What it costs us to buy a ground handling equipment today has grown astronomically. It is not that the cost has changed, but whereby we were spending one naira to buy a ground handling equipment before, by the time we source for foreign exchange, you will see that it has gone to about N3. That’s the situation we have found ourselves. But, the airlines still pay the same amount of money they have been paying us even before then.

What is SAHCOL doing to retain its good hands that are leaving in droves?

When it comes to life, you can’t stop anyone from aspiring further. Men are no created to be stagnant and that is why you have migration. Workers in companies too do that. As much as possible as a company, we will try to keep our goods hands and we don’t want anyone to leave after joining us, but you can’t stop people from moving. If we do that, it becomes an anti-labour practice that you spoke about earlier. We are doing a lot to retain our staff as long as we can.  People have plans for their lives and careers and people will move from time to time. SAHCOL still has the best of staff in the system with the best of training. We are consistently training our workers and as much as possible, we are retaining our staff

About anthony omoh

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I am a Journalist with a passion for developmental stories and nigerianflightdeck.com was born out of passion for reporting the travel, business and aviation sub-sector. This site is an expression of my ideals and creativity as a reporter and my discretion as a publisher. I am extremely content doing this and I am sure when you read my stories you'd understand that I touch people and that's why

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