Airport ground handlers to earn extra N15bn annually
… as FG approves new charges after 35yrs
Nigerian airport ground handling companies will be earning an extra N15 billion annually with the Federal Government’s approval of new aviation safety threshold charges for the first time in 35 years.
The Nigeria Civil Aviation Authority (NCAA) has now approved between $1,500 and $5,000 (passenger and cargo flights) for handlers to handle a narrow and wide-body aircraft, while domestic operators will now pay an average of N60,000, depending on the aircraft type.
Before now, handling companies charged an average of $650 and $3,000 (passenger and cargo flights) for a narrow and wide-body aircraft, while domestic operators paid an average of N22,500, depending on the aircraft type.
This shows an increase of 130.7 percent in charges for narrow-body aircraft and 66.6 percent wide-body aircraft. Ground handlers will also get a 166 percent increase from domestic operators.
Narrow-body aircraft include Boeing 737, Airbus A320, ER135, and ATR, while wide-body aircraft are B767, A330, B777, B747, and B787.
Checks show that no fewer than 45 narrow-body aircraft on regional and international routes, which include Boeing 737, Airbus A320, ER135 and ATR aircraft are handled daily at the nation’s international airports by the ground handling companies.
In addition to this, over 20 wide-body aircraft like B767, A330, B777 and B747 are also handled daily by the ground handling companies. This implies that ground handlers handle nothing less than 65 aircraft for regional and international operations.
Also for domestic operations, ground handlers handle nothing less than 200 narrow and small aircraft on local routes.
This implies that when ground handlers charged $650 for 45 narrow-body aircraft daily, they realised $29,250 daily. With the $1,500 new price regime on narrow-body aircraft, ground handlers would realise $67,500 daily. This implies that ground handlers will now make an additional $38,250 daily.
At N410 official exchange rate to a dollar, ground handlers would make an extra N15.7 million daily and N5.7 billion on narrow-body aircraft annually.
For 20 wide-body aircraft, when ground handlers charged $3,000, they realised $60,000. With the $5,000 new price regime on wide-body aircraft, ground handlers would realise $100,000 daily. This implies that ground handlers would make an extra $40,000 (N16.4m) daily and N5.99 billion annually on wide-body aircraft.
For domestic operations, when ground handlers charged N22,500 on 250 narrow and small aircraft on local routes across Nigeria daily, they realised N5.6 million and N2 billion. With the N60,000 new price regime on narrow and small body aircraft, ground handlers would realise N15 million and N5.5 billion annually. That is an extra N3.5 billion annually.
In all, ground handlers would make an extra N15 billion annually for local and international operations.
The new charges, which will bring relief to ground handlers, are expected to commence October 1, 2021, for international carriers, and January 1, 2022, for domestic operators. This was contained in a circular issued by the NCAA made available to BusinessDay.
The last time Africa’s biggest economy amended its ground handling rates was in 1986.
With this approval, the Nigerian Aviation Handling Company plc (NAHCO), Skyway Aviation Handling Company plc (SAHCO), Precision Aviation Handling Company Limited (PAHCOL), and Swissport Handling Company, can now charge the same handling rates as their counterparts in the sub-African countries.
Before now, ground handling companies lamented over low operating charges, which they said could drive many operators out of business.
Olaniyi Adigun, chairman, Aviation Ground Handling Association of Nigeria (AGHAN), commends the minister of aviation for having the foresight to come to the rescue of the ground handling companies.
Adigun says the Federal Government saved ground handlers from extinction because the low pricing was gradually killing the ground handling sub-sector, as income derived from their operations could not sustain them vis-à-vis the current reality on the ground.
“Dollars have gone up and these equipment are foreign; 80 percent of our training is foreign and to cap it all, the aviation industry is global. Low control is global anywhere in the world; the same training and requirements for Africa and anywhere in the world. Most of what we do requires dollars and for you to even operate in this sector, you must be certificated, which can only be achieved through training,” he explains.
Ahmed Bashir, vice chairman, AGHAN, also lauds the efforts of the NCAA for reviewing the current safety threshold handling rates and ensuring compliance with the International Air Transport Association (IATA), the International Civil Aviation Organisation (ICAO) Safety, and other international bodies.
He notes that to ensure the ground handlers are financially stronger and remain a critical component of the industry, NCAA tried to ensure that the industry does not collapse, adding that without the ground handlers, NCAA will also be out of business. “You cannot buy modern equipment if you are financially weak, you cannot attract and retain quality manpower if you are economically weak. So, the economic regulation is to ensure that we have a healthy and vibrant industry,” Bashir says.
With the old regime, the government and service providers were losing money, and with this, they could not attract quality staff and carry out efficient training, Adigun states further.
“The government is getting 5 percent of our total annual revenue and with more money we will have improved manpower, create more jobs for teeming Nigerians.
“As it is, we have a lot of unemployed youths, but we are not able to attract them and even the ones that we have, we couldn’t retain them. There will be better service delivery, safer sky, and encouragement of more investors to come in,” he says.
The Federal Government through its agencies gets five percent from ground handlers’ annual revenue.
A circular signed by Nuhu, dated September 6, 2021, with the reference number: NCAA/DG/AIR/11/16/315, addressed to “All Airlines and Ground Handling Companies” (foreign and local), with the subject: ‘Safety Threshold Ground Handling Charges,’ noted that the new ground handling charges would take effect from October 1, 2021, for international carriers and January 1, 2022, for domestic airline operators.
The circular read in part: “All stakeholders are invited to note that the new ground handling rates for international and domestic operations will become effective on 1st October 2021 and 1st January 2022, respectively.
“All stakeholders are directed to ensure full compliance with the safety threshold ground handling charges. Any change to these charges must be done in informal consultation with and approval of the NCAA. Please be guided accordingly.”