Stiff Competition Force Handling Companies to Crash Service Prices
Basil Agboarumi
Chinedu Eze
Two Nigerian leading ground handling firms, the Nigerian Aviation Handing Company Plc and the Skyway Aviation Handling Company Plc are engaged in stiff competition that have forced them to crash the amount they charge for their services.
THISDAY investigations revealed that the competition is so rife that the two companies, which enjoy a duopoly in the industry charge about 30 per cent of the cost of service in other countries, including West African nations.
This even forced the Nigerian Civil Aviation Authority to intervene recently and expressed fear that the low cost of their services could compromise safety as the two companies may not have the resources to maintain their service and equipment at the given safety standard.
Confirming the stiff competition between the two operators, the Managing Director of SAHCOL, Mr. Basil Agboarumi told THISDAY that the competition between the two companies had been like that for a long time.
He said among aviation ground handling companies in the world, NAHCO and SAHCOL are the most underpaid; yet the two companies go through the same certification like similar companies in other parts of the world.
“We go through the same certification, we conduct similar training, we deploy similar equipment and in addition to that; we are operating in a very harsh environment. NCAA has called our attention to this because they said it might compromise safety. We had a meeting with them. They fear that the low prices could be detrimental to safety so we hope they resolve this problem,” he said.
Agboarumi, said the low price they charge for their services was not good for business because the airlines seem to be exploiting the handling companies, noting that it was the same world standard service that they offer to their customers and due to the efficiency of SAHCOL service, the company has even won global awards.
“What is happening is not right for business. The airlines have so much money but they pay us peanuts. Ground handling companies are the same all over the world. We allow ourselves to be ripped off by airlines. We are not supposed to compete on prices; we are supposed to compete on services. Go to other West African countries and find out what they charge on handling Boeing 737. We are engaging in unhealthy competition, while cost of operation is very high. We go through a lot to remain in business,” Agboarumi said.
But his counterpart, the Group Managing Director of NAHCO, Mrs. Olatokunbo Fagbemi, in her reaction acknowledged the move being made by NCAA to address the low pricing of ground handling companies in Nigeria.
Fagbemi, spoke during an interaction with aviation journalists at the Murtala Muhammed Airport (MMA), Lagos on Wednesday and explained that in order to address the imbalance in pricing among ground handlers in the sector, operators have formed an association where some of the salient issues would be addressed.
However, Fagbemi said NAHCO was not competing on pricing, but quality services rendered to its clients, promising that it would continue to discharge qualitative services to its clients despite the challenges in the sector.
“In terms of pricing, I think it is not just the ground handling sub-sector, but the entire environment and we have been speaking with NCAA. We need the protection of the regulatory agency in whatever we are doing.
“Before the change in foreign exchange, some of the airlines were paying in dollars and when the foreign exchange went haywire, it was not factored in it. However, it is something we believe we can resolve.
“We can discuss with the airlines to let them know we can’t continue that way, but, between us and the Skyway Aviation Handling Company (SAHCO) Plc, we believe we have better understanding on issues. But, for us at NAHCO, we compete on service, not pricing,” Fagbemi added.
