By Dickson Omobola

Chairman of the Aviation Ground Handling Association, AGHAN, Mr Olaniyi Adigun, in this interview, discusses speculations that aviation ground handling companies are set to increase their rates.

Adigun said if true, the price increment will be understandable given the current state of the country’s economy and operating cost.

Excerpts:

Given the economic challenges in the country, there are indications that ground handling companies may increase their rates…

Today, when you talk about aviation, everybody thinks it is about the airlines. And that is because other sectors in the industry are not speaking out. Not because they are weak but because the airlines are at the forefront. With what is happening economically in Nigeria now, there is a need for ground handling companies to survive. Just like the airlines, ground handling companies operate in the same market and face the same economic reality. Our members (ground handlers) know their costs, they know when and what rate to determine, although we do not support price fixing. Ground handlers are private companies that have staff to pay, they buy machines at exorbitant prices, they have to pay government taxes and they have to guarantee safety. As you know, everything about aviation is safety, and safety starts on the ground. I can assure you that at the right time, these ground handling companies will do the needful. I know they are jogging their figures, and I know that they will do the needful. There is no way they can survive at that N70,000 for half handling  a B737. It is unfair.

Role of the NCAA in price determination

First, ground handling companies need to talk to the necessary bodies and create awareness. I think they are making necessary contacts. As I just said, N70,000 for half handling a B737 is unsustainable. For CRJ and Embraer, maybe they charge around N50,000 or N40,000, which is unsustainable either. It is not the Nigerian Civil Aviation Authority, NCAA, that will determine the rates. Even for airlines, it is not the NCAA that determines the price for airline tickets. What the law says is that you have to submit your fare to the NCAA and the NCAA should look at it and say if it is good enough. The NCAA does not know what it costs the ground handling companies to operate, so it cannot decide for them. What the NCAA does is to ensure that they don’t take advantage of the situation. I am sure that by the time these companies come out with their rates, people will react. If people react, the NCAA will also come in and look at it. There is always room for negotiation. If the ground handling companies find their way easily with the NCAA, I think they will also get the same justification, because the NCAA has been known to be neutral. So, if ground handling companies put forward their new rates, the NCAA will step in.

Justifications for potential increase

What was the cost of petrol before and what is the cost of petrol now? You can do your mathematics. What was the cost of diesel before and what is the cost of diesel now? You can project what the new rate will be. It is not rocket science. Most of these ground handling equipment are imported. The only local factor there, I would say, is the manpower. But even the manpower too, also has foreign inputs. For you to be an equipment handler, you must be trained. Those training are foreign training. Ground handling companies have certifications. They have more certifications than airlines, if I am right. They have what we call IATA Safety Audit for Ground Operations, ISAGO. They have the Regulated Agent third country validation process, RA3 among others. These are dollar-based training and certification without which you cannot operate. For RA3, they have to bring in the inspector to come and inspect, and you are paying in serious dollars. And they also have expiring dates. Because Nigeria has been categorised as one of the red zones when it comes to exports to Europe, no European carrier carries Nigerian exports without RA3. You cannot export to Europe without this.  No foreign equipment manufacturer will give you equipment on loan. It is cash and carry. We operate in a cash and carry economy. How do you want to compete with the likes of Swissport and Dubai National Air Travel Agency, DNATA, without these equipment? Aviation standards are global. There is no standard for Africa. The same equipment DNATA uses is the same equipment Skyway Aviation Handling Company, SAHCO, and Nigerian Aviation Handling Company, NAHCO,  use, and you have to pay. And if one doesn’t pay for this equipment, one cannot buy off-shelf. So, one needs to source for forex to pay; yet, airlines are paying N70,000. It is not rocket science. It is an understatement that ground handling companies are suffering. As I said, they will react accordingly. There are rules and regulations on what the International Civil Aviation Organisation, ICAO, International Air Transport Association, IATA, and NCAA say about increasing rates. Are there any justification for the increase? Yes. What is the justification? Economic reality. Both NAHCO and SAHCO are addressing the issue in the way that it will not run afoul of the law. I am very sure that the airline too will also be reasonable when they are negotiating.

The economy is biting harder and securing forex has become very difficult. What can government do to help the ground handling companies?

Forex is a general problem. Everybody, including the airlines and banking sector, needs forex. However, what we want government to do is to give us waivers on taxes. When we are bringing our machinery for operations, let government give us a tax break. Apart from waiver, they can give a tax rebate. There is this school of thought that says African countries rely heavily on taxes. Although axes generate money for government, it does not boost the economy. When you lower taxes, you have a lower cost of production. Lower cost of production in terms of goods and services translate into lower price or rates which also will boost demand and supply. With increase in demand and supply, you are attacking inflation. You are also creating employment. Taxes are just too much, let government look into that.

There are not many organisations into ground handling in Nigeria. The popular ones are NAHCO and SAHCO, why is that so?

That is because the ground handling sub-sector is highly capital intensive.  We talk about the certification. We talk about the equipment. Is it the warehouse? For you to have a warehouse, the facilities have to be of the highest standards; if not, foreign carriers or even domestic carriers will not manage with you. These things are very expensive. Ground handling company is not the same as a manufacturing company.