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Experts decry inappropriate handling charges; insists only right pricing can sustain business

Ground handling professionals past and present have waded in on what they describe as inappropriate pricing for services in Nigeria and have called for a review. According to them, Nigeria is the worst paid in the industry globally despite providing the best services with the best equipment. They have called for a review which they feel will enable ground handlers regularise their business and enable them pay taxes, keep jobs and more. ANTHONY OMOH writes

PLAYERS that have been in and around the ground handling sub-sector of the aviation industry have observed the disparity in not just handling charges between Nigeria in comparison to other nations in the sub-region but have alluded to the losses in billions supposed to be accruable to Nigeria.

This, according to a cross section of experts, is not the best thing for the country as they believe that cost- reflective pricing of would help the economics of not only the ground handlers but the nation at large as the implications of undercharging are far reaching and would impact safety, security as well as efficiency.

The current handling rates within the region in comparison with what is charged in Nigeria is a far cry and efforts by ground handlers in the country to regularize the rates are still  dragging as handlers  are seemingly charging lower than they did in the late 80s and early 90s.

Price rates obtained by NigerianFLIGHTDECK within the sub-region and beyond shows that in Guinea handling charges for a narrow bodied aircraft like B737, Airbus A320, ER 135, 145s and ATR aircraft and CRJs is $1.673 while it charges $4, 715 for wide bodied aircraft as while B767, A330, B777, B747 and A380 aircraft.

In comparison to Nigeria, this is a far cry as 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 also dependent on negotiation.

Guinea however is just one of many as in Senegal the charges for narrow bodied aircraft are $2, 250 while it charges $5, 259 for wide bodied aircraft; Cameroon charges $ 1,400 for narrow bodies and $4, 500 for wide bodies.

In Sierra Leone the charges are $2,250 for narrow body and $5,250 for wide body and in Ghana charges for narrow body aircraft are from $1,500 while wide bodies in the West African country are $4,150 all this shows clearly the disparity and the fact that ground handling in Nigeria is not priced right.

A former managing director of the Nigerian Aviation Handling Company (NAHCO), Mr. Kayode Oluwasegun-Ojo, explained that the impact of this price disparity and inappropriate rates charged in Nigeria is humongous.

According to him, 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.

He stressed that lack of sustainability for aviation has serious implications because aviation actually starts from the ground and you land back on the ground.

He said,” If you are charging less than cost, it means you are subsidizing from somewhere and this will have 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 cost with some margins for hospitability, including being able to pay taxes to the government. Companies that make losses will not be able to pay taxes.

He said that all the ground handling companies are locally-owned and there is employment implication for staff if these companies are not making money as thousands will be out of work.

This is why he canvassed the right price to be fixed to ensure some competitiveness with the region.

“There should be price fixing for narrow body and wide body aircraft. You should have a minimum level you can go, but don’t charge yourself out of business. If you are already operating below the bottom, honestly, it is not sustainable. There is implication on safety, security, job employment and the government. If companies are not making sufficient profit, it will affect the level of tax they will pay,” he advocated.

He called on the intervention of the Nigerian Civil Aviation Authority (NCAA) stating that if Ghana is charging about $1,500 to handle narrow body aircraft and Nigeria is charging as little as $400, then, something is wrong with the system.

Aviation analyst, Tayo ojuri, who agreed with the above submission, said that thorough analytical study shows that Nigeria offers the lowest ground handling rate in West Africa in comparison to Ghana, Cameroon, Senegal and other Francophone airports.

He said however that it was important that a safe and reliable flight requires a whole range of ground services to be safely and successfully completed on the ground between aircraft arrival and departure according to a common set of requirements that can be implemented worldwide in a standardized manner.

He said,” In order to ensure safe, secure and commercially operations, ground handling charges need to be competitive and be a true reflection of cost of operations.

He advised a discussion to form around the current alarming scenario and canvassed the need to be expedient to adopt as a practice the so-called Collaborative Decision Making, a world-renowned concept that provides for airport decisions to be made taking into account all parties involved in the operation-airport, airlines and ground handling operators.

“We are optimistic this will improve airport operation efficiency, enhance passenger facilitation process and optimitise Service Level Agreements with airlines.

Another former Managing director, this time of the Skyway Aviation Handling Company (SAHCO), Alhaji Oluropo Owolabi, in his submission said it was saddening that the decades old situation subsist because government is sitting idle, acting as if this thing doesn’t affect them.

According to him, it affects the government, foreign exchange, FAAN and even the NCAA being the regulatory. It is a tripartite agreement.

He said,” 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.

“This act, 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.

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

He stressed that all this are tied to the economics, safety and security impacts of inappropriate ground handling charges and needs decisive steps to change the present narrative.

Chairman, Board of Trustees, Association of Ground Handlers of Nigeria (AGHAN), Engr. Sam Oluwole, said the low charges in the country is in no way commensurate with the quality of service, the safety and security that ground handlers render daily.

He said,” There are three aspects that concern us at the moment; economic, safety and security of the industry. 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 naira against the dollars and other currencies, some of the handlers charge as low as $300. Then a dollar was equal to 90 kobo, but today, the same dollar is about N500, yet we are charging low.”

He sadly said that are airlines playing on the infighting among the ground handling companies to pay them a token and  they are still getting better services than whatever they are getting outside the country.

He stated,“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 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.

“There are terrorism 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,” Oluwole stressed

Former Managing Director, SAHCO, Barr. Chike Ogeah, urged the two handling companies to come together and work together stressing that as long as those two handling companies are not working in tandem and setting the bars for themselves, they will continue undercutting each other.

He said,”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 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.

Olumide Ohunayo on his part said it is obvious that the Nigerian handling companies are not catered for and put into consideration at any point, despite the state-of-the-art equipment they deploy for services.

According to the Head of Research, Zenith Travel, with what is obtainable have right away, it is the foreign airlines that are making money, yet, giving Nigeria the highest ticket fares with very low ground handling rate.

He said,“The airlines have monopolized the fares and making outrageous gains at the expense of Nigeria and the ground handling companies.”

He tasked AGHAN on the unfavourable rates charged,” I think they should be more united in tackling this issue of unfavorably handling rates; they should stand together and take this issue with the regulatory authority.

“The regulatory authority has no other option than to support the ground handling companies in achieving and commensurate charges for ground handling to international companies and other ground handling companies. That will support growth in Nigeria.

“And for the ground handling companies, as they continue to push for this, they should not lower their standards, they should continue to get their certification and be members of all the international affiliated handling companies with regards to safety and security. This makes it impossible for anybody to say they cannot pay or they cannot allow them to handle them. “

About NigerianFlightDeck

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Nigerianflightdeck is an online news and magazine platform reporting business stories with a bias for aviation and travel. It is borne out of the intention to inform, educate as well as alter perceptions with balanced reportage.

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