Aviation
Chinedu Eze writes that ground handling services play a critical role in commercial aviation and contribute to the overall air safety in both scheduled and unscheduled operations. However, because their services are poorly priced, experts posit that their low financial status may threaten safety and security at the airports
No commercial aircraft can take off from any airport without the critical role of ground handlers that provide passenger and cargo services, from passenger check-in, aircraft cleaning, and cargo movement. Because of their important roles, they have access to both open and restricted areas of the airport and are involved in the security architecture of every airport in the world where scheduled services take place.
In Nigeria, commercial airlines engage the services of ground handlers, which provide a wide range of services, from aircraft flight, aircraft ground repositioning, preparation for and upon conclusion of a flight, including both customer service and ramp service functions.
But due to poor pricing, the handling companies, the federal government and airport managers lose huge revenues when compared to earnings attracted by ground handling services in other parts of the world, including the West African sub-region.
Pricing
Industry experts that specialise in ground handling services said Nigerian companies lose about N14.1 billion ($28,350,000) annually to inappropriate pricing of their services and taxes to the government that would have accrued from higher charges.
THISDAY learnt that the handling companies still charge between $300 to $1,000 to handle a narrow-body aircraft, rather than $1,400 to $1,600 charged in other African countries, while for the wide-body aircraft, they still charge about $3,000 instead of $5,000 that such services attract in sub-Saharan African countries.
There are indications that no fewer than 45 narrow-body aircraft on regional and international routes, which include Boeing B737, Airbus A320, ER 135, and ATR aircraft are handled daily at the nation’s international airports by the ground handling companies.
For wide-body aircraft like Boeing B767, A330, B777, and B747, at least 20 flights are handled daily by the ground handling companies.
For instance, the average handling rate in other West African countries for a narrow-body aircraft is $1,500, while it is about $300 to $1,000 per aircraft in Nigeria.
For wide-body aircraft, at least 20 are handled daily across the nation’s international airports by the handling companies, while 600 of such aircraft are handled monthly and 7,200 annually.
The handling companies handle 45 narrow-body aircraft daily, 1,350 monthly, and 16,200 annually.
Economic Benefits
This unfavourable situation has prompted stakeholders in the industry to warn that if the current rates being charged by both foreign and local airlines by the handling companies are not reviewed, the ground handlers may go under, while safety and security may also be jeopardised in the system.
They argued that the federal government is not deriving optimal economic benefits from international civil aviation through adequate payment for services offered by ground handling service providers even though the Nigerian aviation market is a force to reckon with in the West Africa sub-region and Africa as a whole because of the size of the economy and its population as well as the purchasing power of the middle class.
THISDAY learnt that the last time the ground handling tariff was reviewed in Nigeria was in 1999, but since then, airfares have skyrocketed, the dollar exchange rate has multiplied, giving vent to high inflation and diminishing the value of the naira.
Safety and Security
Experts noted that ground handling companies are barely surviving due to the low operating profit. They cannot afford to invest in innovative technology, modern equipment, recruit and retain quality manpower, and conduct training aimed at preventing incidents and accidents. They stressed that it is difficult to pay living wages to their staff, adding that if this continues, safety procedures would become a reactive exercise instead of being seen as a proactive measure.
They explained that there is a link between safety and operating revenue. According to them, while the handlers are fully committed to providing safe and secure ground handling operations, diminishing revenues due to low tariffs combined with the increasing cost of doing business would continue to put material pressure on safety and security as well as the long-term sustainability of the ground handling companies.
They added that a low-profit margin attracts low employee remuneration and that staff members face financial challenges and can become easy targets for criminals. The handlers said they want to enhance the security of the aerotropolis by paying living wages to staff.
Background
The Managing Director of Skyway Aviation Handling Company Plc (SAHCO), Mr. Basil Agboarumi, told THISDAY, “It is certainly unfortunate that this has been on and has been allowed to linger for this long. Let’s go back to the memory lane on why things are the way they are to date. For instance, SAHCO is one company that grew from the ashes of the defunct national carrier, Nigeria Airways. SAHCOL (as it was called then) was at that time the ground handling arm of Nigeria Airways. Then, the company was also the one doing handling for other foreign airlines operating in Nigeria. Nigeria Airways was also the one managing the Bilateral Air Services Agreement (BASA) arrangements with other countries.
Agboarumi noted that the world then was beginning to understand that the best way to perform better was for some of the loads on the airlines to be shelved so that the airlines could focus on flying and other companies could then begin to offer services to the airlines.
During that period, the airlines could just pay some peanuts to the ground handling companies because the handling companies belonged to them. But when ground handling companies became independent entities, they needed to charge adequately for the services they render.
Payment for Services
Agboarumi said that with such huge investment, the realities then dawned on the handling companies that they have to seek for a prevalent tariff as obtained in other countries to meet their financial obligations, sustain the quality of services they offer and also adequately pay their staff.
“As it is, the poor handling rate can no longer be overlooked if we want the future for the handling companies in this country. Yes, pricing is a function of demand and supply really, but no country in the world will leave the fixing of prices in the hands of those that receive our services. We discovered that when we were trying to do some things on the cargo pricing some time ago, the government summoned us. There are still laws that guide things we do,” Agboarumi said.
Effect of Poor Handling Rates on Operation
The Group Managing Director of the Nigerian Aviation Handling Company (NAHCO) Plc, Mrs. Olatokunbo Fagbemi, warned that the poor tariff on ground handling services might begin to affect the quality of services rendered and also may erode other facets of airport services, knowing that ground handling operations are embedded in different aspects of flight operations.
“NAHCO is a foremost ground handling company and we do not compromise in terms of safety and security of our operations. We are a customer-centric organisation, we are focused on our customers and how to deliver the services based on the level of agreement that we have with them.
“The challenge that we have is that over the last few years, our rates have been static and some have even gone down, meanwhile foreign exchange and cost of the living index have risen astronomically. We have been doing our best, ensuring that the safety and security of our customers are not compromised and we want to continue to be able to do that to any airline that we serve.
“In moving forward, we have to invest in our GSEs (ground equipment), facilities, and our people; we have done this and we will continue to do this, but within these astronomical costs that have not been matched with the right pricing, we need to review our rates. Can we continue to do that and survive as an organisation? The answer is no. Can we continue to offer the same level of services that we have been offering? The answer is no. We have done a five-year plan of where we need to invest; we will continue to do this. We know where the challenges are,” she said.
Demand
The Association of Ground Handlers of Nigeria (AGHAN) has called on the Nigerian Civil Aviation Authority (NCAA), which undertakes the safety and economic regulation of the industry to review the tariff for ground handling services.
President of the association, Olaniyi Adigun, explained that the rate the handlers are even demanding “is the benchmark below which you can not offer these services safely. Even, in deregulated economies around the world, we have benchmarks that are given; some may not be announced while the others are announced. What we are saying is that you can charge whatever you want, but you must not go below a framework that will harm the industry, harm the business, and cause safety issues.
“The NCAA is a regulator in charge of safety and security. The NCAA is also the regulator of the economics of the industry. AGHAN has approached the NCAA from a safety perspective. The regulation sets out boundaries by which an operator can operate and so many things. So, when you say the industry is regulated, it doesn’t mean there are no boundaries, it is just that the boundaries are clear and you can come and operate, but when it is deregulated, the boundaries are formed, every part of it is spelt out,” he said.
