..Say Low Profit Margin Affecting Business
…Insist Handlers Complied With ICAO Recommendations For Increasing Rates
Aviation ground handling companies in Nigeria have appealed to the Federal Government to grant duty waivers and concessionary loans to the handlers to ensure the survival of their business
This is just as they lamented that the low profit margin by operators in the sector, has made business toxic.
The ground handlers pointed out that they needed the collaboration and support of the government to remain in business.
They spoke in separate interviews shortly after the stakeholders meeting at the weekend in Lagos.
Speaking, the Chairman, Aviation Ground Handlers Association of Nigeria (AGHAN),Mr. ‘Niyi Adigun, said that for almost a decade, the Federal Government had granted local airlines customs waivers, while handling companies with huge investments are treated differently by the same government.
He pointed out that the money paid by the company to clear imported operational equipment at the ports was killing their business.
Adigun argued that granting of such waiver would go a long way to make things easier for the handlers in view of the harsh economic environment where they operate .
The AGHAN Chairman appealed to the Federal Government to also facilitate concessionary loans for operators in the sector through the Central Bank of Nigeria (CBN) adding that this would help.them access loans on a single digit interest rate.
“Aviation is a catalyst to economic development and if you want to develop economically, all the sectors that contribute to economic development must be taken care of. The government should make this conducive for us in the name of ease-of-doing-business.
“We are also demanding duty waivers from the Federal Government. This is very important to sustain our operations. They have done so for airlines, they should also do the same for us too. We also import equipment into the country – Ground Support Equipment (GSE), push back and others. These things cost us hugely. If we can have a duty waiver, it will reduce our stress,” he said.
Speaking on the recent new safety threshold rates demanded by the ground handling companies, Adigun posited that the 15 per cent reduction in the initial demand was its own contribution towards the Minister of Aviation and Aerospace Development, Mr. Festus Keyamo’s Five-Point Agenda to make the aviation industry eco-friendly.
He made it cleared that the increment was due to the economic downturn, adding that the aviation sector was seriously bleeding.
On whether the ground handling companies complied with the International Civil Aviation Organisation’s (ICAO) recommendations for increasing rates, which included stakeholders’ engagement and justification for increment, Adigun said that they cannot do it without laying by the rules .
He assured that the handlers would continue to dialogue with the airlines for future review.
“What we did was right-pricing and I thank the Minister of Aviation and Capt. Chris Najomo, the Director-General Civil Aviation (DGCA) for their intervention.
“We need to stop this master-servant relationship when it concerns the airlines. Aviation is an ecosystem, which includes the ground handling companies and other sectors of the industry. Safety starts from ground, no matter how well-trained your pilots are, and the level of your facility, safety can be compromised on ground,” he said.
Also, speaking, the Chairman, Swissport, Otunba John Adebanjo, contended that local airlines needed to pay for the services rendered to them by the ground handling companies.
Adebanjo who also doubles as the Chairman of American Express, stated that Nigerian domestic airlines operating regional or international flights pay more for handling rates in other climes, wondering why the same could not be replicated in Nigeria by the same airlines.
He argued that local airlines have over the years increased airfares without any engagement with stakeholders as recommended by ICAO.
Handling companies, Adebanjo stated had complied with the directive of the Federal government as it concerns salary and welfare increase for staff, while cost of doing business had consistently skyrocketed in the last two years.
He appealed to the Federal Government to recognise the ground handling companies as a major player, just like the other sub-sectors of the industry.
“Since three or four years ago, the dollar rate has increased by almost 500 per cent. So, what we are asking for is to make it at par to what is going on. We are not asking for 500 per cent, all we are asking for is just a marginal increase, which they (airlines) have also requested for a discount and we have given this to them.
“Within the same period, the fuel price has increased, the salaries, rate of exchange have increased, among others,” Adebanjo said.
He, however decried the 15 per cent further reduction in the new handling rate, which according to him made the total new threshold rates to be about 220 per cent increase, depending on the aircraft type.
The ground handling companies, he said conceded to the reduction due to intervention by Keyamo and the Nigerian Civil Aviation Authority (NCAA),Capt. Chris Najomo.
“If at all we were going to give a discount, we had wanted to give just 5 per cent. Then, among ourselves, we decided to give 10 per cent, but the airlines wanted 20 per cent, which we disagreed with, but unfortunately, we both agreed to give 15 per cent present.
“We have an understanding that in six months’ time, we will come back again. We hope that before then, naira would have stabilised, the economy would have stabilised, then, we can take things from there,” he added.
On his part,the Executive Director, Commercial and Business Development, Nigerian Aviation Handling, Company(NAHCO),Prince Saheed Lasisi, explained that the new approval would enable the handlers to remain in business, but quickly added that both parties would need a review in the next 12 months.
Lasisi explained that the ground handling companies had wanted higher rates, but that the intervention by the Minister of Aviation.and Aerospace Development by Keyamo and Najomo compelled NAHCO to reduce its initial demand.
Lasisi maintained that the ground handling companies were part of the same ecosystem like airlines and others.
He argued that unlike the airlines that are benefitting from customs duty waivers on equipment importation and spare parts, these benefits were not extended the handlers
He appealed to the Federal Government to extend the same treatment given to the local airlines to the handlers also need such waivers to grow their business.
“We have equipment that is even up to $600,000. When we import this equipment in, we pay a huge duty. We need to have concessions on this duty payment and the spare parts too, which come from the Original Equipment Manufacturers (OEMs). Sometime in a year, we (NAHCO), spend up to $1 million in duty payment for just importing spare parts.
“When we get a concession or waiver, it will support our operations. With the regime of Bola Tinubu, the forex market has been streamlined and getting dollars is not as difficult as what you had in the past. If we don’t bring in our equipment, no airline is going to fly and we have to keep buying yearly,” he added.
Contributing to the issue, the Vice Chairman, AGHAN, Mr. Ahmed Bashir, stated
that the ground handling companies implemented the new safety threshold rates having complied with three principles for review – cost recovery, stakeholders engagement and non-discrimination and transparency.
On future review, Bashir said that some of the provisions entrenched in the agreement allowed for it
To buttress his point, Bashir said that in the interest of safety, there would be annual review, while all airlines with outstanding bills were mandated to pay up their debts.
The AGHAN Vice Chairman commended Keyamo and Najomo for their intervention and for resolving the issue amicably almost a year after.
According to him, “With this, we should not invite the NCAA anymore, it should be between the buyer and a seller for annual review, depending on the economic realities on ground. We are satisfied with that resolution. We just want to have a break-even. We have electricity, labour, insurance, diesel, equipment, foreign exchange, rental and other costs and others. The major drive of our business is diesel and we all know the cost of diesel in the market today.”
Bashir continued, “At every end of the year, we come to reality to review these economic indices, have an objective assessment, and bring out our justification to the airlines one-one-one to jointly review the rates.”
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