Fagbemi: NAHCO Lost 70% of its Market Due to COVID-19
The Group Managing Director, Nigerian Aviation Handling Company Plc, Mrs. Olatokunbo Fagbemi, in this interview reveals that the company lost 70 per cent of its market during the coronavirus lockdown. This, she says has started picking. Chinedu Eze brings the excerpts:
What is the impact of COVID-19 on your operations since 2020?
Last year was a very, very challenging and interesting one, and this time last year we were projected for growth. And if you look at our figures, which were published, at the beginning of 2020, I think we had about 20 per cent or 30 per cent growth in the month of January. And by the end of the quarter it dwindled a bit because of, I think the impact of COVID-19 started in March. We made our projections for 2020, looking at the gains of November and December 2019, but we didn’t imagine that it was going to be what it was, but we were aware of what was happening in Asia in terms of COVID-19 disruptions. As part of our strategy for 2020, we took cognisance of the impact of SARs (Severe Acute Respiratory syndrome) and all the others ones and projected that their effect would not extend to Africa, as it happened in the past.
So we had our eye on COVID-19 but we never imagined it would have such devastating effect. As at March 2020, we had a business contingency plan and a business continuity plan as part of our operations policy. So one of the things that we did just before the lockdown was to do a business continuity plan again, reviewed it, attached names, and really rolled out what we intended to do if anything happened. What would we do? How do we shut down? We had that, and then we took it to our board and luckily we had a very good, strong board with good corporate governance.
We had to go back to the Board because we had to do things differently in response to the impact of COVID-19. We already had what we had planned for the year, an approved budget, approved revenue, but we now had to do things differently. We got the full support of the board.
We had meetings with our managers to update them. We did not fully envisage what was going to happen but that was what helped us to be able to move forward. We met with our staff, the union but not with everybody because we couldn’t wish to make everybody panic. So when the lockdown started and the shutdown of the aviation industry, we had already put our team in place. And kudos to our team, we have people that practically lived here for months, working in maintenance. Without activities and earning revenue, how are we going to fund everybody? And then there is also the issue of having so many people come around when you are talking about social distancing, and you didn’t even know what was happening. So, each unit selected the number of people that would stay. I wish to use this opportunity to commend our staff because without them we wouldn’t have survived. We wouldn’t be talking as we are talking now. And a lot of people had to make sacrifices to stay behind, not moving back and forth, to be able to ensure that things were happening.
For example, our maintenance team, the skeletal team that stayed on ground during the lockdown, spent that time in refurbishing equipment, painting, cleaning of the yard and making things work. So we had a smaller team doing the work that a lot of people would do. And that is a sacrifice for those people that did that. As things evolved, it turned out that, as you are aware, it was cargo that picked up. And cargo did not just pick up, it changed; it changed from cargo coming on freighters to cargo first being loaded in the aircraft with the seats inside the aircraft. So you can imagine how difficult it was. It was difficult moving cargo in aircraft, especially with social distancing protocols. But our team was able to successfully take up the challenge and they supported the airlines and today we can say that we had seamless cargo operations all through and that helped us. But we lost revenue. Everyone lost revenue. But it taught us how to do things differently, how to operate differently, how to manage our enterprise ourselves as a whole, differently.
So we also had to go back to our Board and let them know that these were the realities and we had the support of the Board to review our outlook for the year; look at things that were not tenable and say, okay how do we move forward? Last year was supposed to be a year of consolidation because we started our transformation plan and we had this investment plan to keep investing in equipment. We did some but we couldn’t do it to the level at which we wanted to do it to. But we still needed to have the support of the Board to say look, this is what we agreed, this is what the Board has told us to do, this is what we are now doing. As services began to increase, we began to call people back. And during the year, we met all our obligations to our staff, yes, we had to rework for those that were at home and at the end of the year, we are grateful to God that everything that we normally give to our staff at the end of the year, we are able to ensure that everybody had a nice end of year. We wouldn’t have finished the year the way we finished it successfully if not for them.
Just as you said earlier, the outbreak of COVID-19 had negative impact on your business. In terms of percentage, what was the drop between 2019 and 2020?
At a point in time, when it was really bad, it was as bad as almost like 70 per cent. When things were bad, but then it began to improve. And one of the other things that have been a challenge for us is the fact that we were spending more money in the course of our services because the dollar has gone up in value against the naira. The cost of everything has gone up but in Nigeria we charge less than every other person in the region. Sometimes we charge as low as 200 per cent to 300 per cent less. So we should be supported as ground handlers because we have put in a lot to support the businesses, especially the domestic market and we understand the challenges. But we also know that there is a time when there is need to be supported and we need that support now from every quarter. This is how we can really; really ensure that we recoup all that we put in to do this business.
On the financial side, what was the relief when the cargoes started coming?
The cargoes started to come and we were relieved that we had something, but it did not come at the rate of 2019 in terms of volume, no. But that it came and it was improving, that was a ray of hope for us that definitely we were on the right track. And it has helped in cushioning a lot of effects because as you are aware, more of our business is passenger services, aircraft handling.
So, yes, we had that support from cargo and we are still looking on for that. We actually have a new airline coming directly from China. We handle them and we can see their business picking up. All our airline clients have had an improvement in cargo. And we are happy for them and we are ready to support all the airline business whether it is DHL, Air France KLM, Qatar, Ethiopian etc. You know some were also doing belly cargo so when the passenger aircraft did not come in, then there was no belly cargo from airlines like Lufthansa. But as the passenger aircraft started to come in, we started having that cargo. We also had a lot of people come in to do charters and add up. So, yes, it wasn’t so bad.
You didn’t actually tell us how much the organisation lost during the COVID-19 lockdown and beyond?
You know COVID-19 has not ended that is why I said I want to wait till the end of the year. But I said that at a point in time we were hitting 70 per cent lose when it was at the tick of it and nothing was happening. And then we began to tapper down to about 20 per cent, 30 per cent. But we need to finish the year, when we finish the year we will practically say COVID-19 has impacted on everything, even though we didn’t realise it then as such in Nigeria, but that was the impact. Because cargo was going down, cargo goes down during the Chinese New Year, which is around February but it really dipped and then it kept dipping rather than picking up after. So, on the improvement of passenger services side, maybe yes, at the end of March but the impact was there already.
You made mention of the changing dynamic when it comes to cargo coming from freighter, aircraft to passenger, how easy is it to adjust from your own operational angle?
It has not been easy but we have had to do that. We had to review how we use our resources. So the kind of high loaders you will use for a freighter is different from the high loader you will use on the passenger services. So you will see that we need to be very strategic in how we deploy the use of our high loaders. You need more steps; you need more people because with the freighter you just practically roll it and roll it onto the high loader and it comes down. Now you have to do a bit more physical work, it is actually easier now; most of the airlines have removed the seats.
But initially when it started they had the seats on. But we understood where they are coming from; first, a lot of the things that were coming were to support CACOVID (Coalition Against COVID-19) and co. So as a citizen of Nigeria, we needed to do everything to support that. It wasn’t whether it was convenient, it wasn’t about the money, and it was this is what is needed at this point in time, aboding by the Coronavirus safety protocol.
That was the first approach, yes initially there was some resistance. But we sat down and we spoke to our people and then we also spoke to the airlines and said, if you are going to continue this way then put some form of safety to it; so that while we provide this service, we can provide it as safe as possible. And I think that is part of the reasons why the seats are out now so it is easier to move. Yes, we want freighters, it is purposely built for that job, it is easier to do but we also understand where the industry is and the dynamics and the needs of the industry.
To what extent do you think that Nigeria is maximising the shift in cargo freighting locally and what do you think domestic airlines can be doing differently?
I think that our domestic airlines should veer towards doing more cargo. And the other thing is that we haven’t properly, as a country structured cargo well enough to optimise the benefits of cargo. For example, there is no standard Nigerian packaging. When you see packages from China, you know that they are from China. When you see packages from England, you know they are from England, when you see packages from India, you know they are from India and also the kind of weight it has; that is a lot of work.
And some of the work may involve government closing their eyes to some banned items. For example, if you want to take things with some of these packages that maintain the temperature, I don’t think it is fabricated here. So will government close their eyes and say we ban some paper things but you can bring this type? Those are the kind of things that we had a discussion on with Nigeria Export Promotion Council (NEPC). So we have to standardize the process. We have even tried to do so to create some NAHCO packaging.