Aviation ground handling companies demand tax waivers to ease operations 

Ground handling companies in the Nigerian aviation industry are calling on the Federal Government to grant them duty waivers and concessionary loans so that they can operate their businesses effectively.

The operators also warned that the low margin profit for operators in the sector made business toxic, saying that they needed the collaboration and support of the government to remain in business. The operators made this demand in separate interviews over the weekend in Lagos.

‘Niyi Adigun, the Chairman of the Aviation Ground Handlers Association of Nigeria (AGHAN), in an interview, observed that for almost a decade, the Federal Government had granted indigenous airlines customs waivers, while handling companies with huge investments are treated differently by the government.

Adigun declared that the huge money paid by the company to clear imported operational equipment at the ports was killing their business. According to him, granting of such waiver would go a long way in ameliorating the harsh economic conditions handlers in the sector are exposed to.

Also, the AGHAN Chairman appealed to the Federal Government to facilitate concessionary loans for operators in the sector through the Central Bank of Nigeria (CBN).

He posited that this would assist them to access loans on a single-digit interest rate.

He added: “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.”

Also, Adigun defended the recent new safety threshold rates demanded by the ground handling companies, saying that the 15 per cent reduction in its initial demand was its own contribution towards Mr. Festus Keyamo, the Minister of Aviation and Aerospace Development’s Five-Point Agenda to make the aviation industry eco-friendly.

He decried that the increase was due to the country’s economic downturn, adding that the aviation sector was seriously bleeding.

Adigun insisted that the handling companies ccomplywith the International Civil Aviation Organisation’s (ICAO) recommendations for increasing rates, which included stakeholders’ engagement and justification for increment, assuring 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 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.”

Also, Otunba John Adebanjo, Chairman of Swissport, said that the indigenous airlines needed to pay for the services rendered by the handlers.

Adebajo, who is also the Chairman of American Express, stated that Nigerian 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 pointed out that the indigenous airlines had, over the years, increased airfares severally, even without consulting stakeholders as recommended by ICAO.

Besides, Adebanjo said that the handling companies had complied with the directive of the government on salary and welfare increase for staff, while the ost of doing business had consistently skyrocketed in the last two years.

For business growth, he appealed to the government to recognise the handlers as major players, just like the other sub-sectors of the industry.

He further justified the increase, saying: “Since that 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 further expressed dissatisfaction with the 15 per cent further reduction in the new handling rate, which made the total new threshold rates to be about 220 per cent increase, depending on the aircraft type.

He, however, said the handlers conceded to the reduction due to intervention by Keyamo and 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.

Prince Saheed Lasisi, Executive Director, Commercial and Business Development, NAHCO, said that the new approval would enable the handlers to remain in business, but said both parties would need a review in the next 12 months.

Like Adebanjo, he explained that the handlers had wanted higher rates, but the mediation by Keyamo and Najomo compelled NAHCO to reduce its initial demand.

Lasisi further maintained that the handling companies were part of the same ecosystem as airlines and others.

He expressed that, unlike the airlines that are benefitting from customs duty waivers on equipment importation and spare parts, the reverse was the case with handling companies.

He insisted that the ndler also needed such waivers to grow titsbusiness.

“We have equipment that is even up to $600,000. When we import this equipment, we pay a huge duty. We need to have concessions on this duty payment and the spare part which comes from the Original Equipment Manufacturers (OEMs). Sometime in a year, we (NAHCO) pend 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.

Mr. Ahmed Bashir, Vice Chairman, AGHAN, thanked Keyamo and Najomo for amicably resolving the issue almost a year after.

Bashir declared that the handlers implemented the new safety threshold rates after complying with three principles for review: cost recovery, stakeholder engagement, non-discrimination, and transparency.

On the possibility of future review, Bashir posited that some of the provisions entrenched in the agreement allowed this.