Why aviation handling rates no longer sustainable – Ground handlers

Ground handling companies in the country have declared that the current handling rates charged by airlines, especially the domestic operators, were no longer sustainable, fearing that if not reviewed upward in the next few months, the sub-sector may collapse totally.

Handling companies through the Aviation Ground Handlers Association of Nigeria (AGHAN), had proposed N400, 000 per flight for a Boeing 737 aircraft or its equivalent, N250,000 for CRJ or Embraer aircraft and N150,000 for Dash 8 airplanes.

Currently, the rates are N70,000 for B737, N50,000 for CRJ and Embraer, while Dash 8 is handled at N25,000 per flight or their equivalents.

AGHAN had also proposed April 1, 2024 for the take-off of the new regime and sought the approval of the Nigeria Civil Aviation Authority (NCAA) for full implementation of the new rates.

Some of the stakeholders spoken with, told our correspondent that the Federal Government needed to as a matter of urgency come to the aid of investors in the industry to prevent their premature deaths.

Bello Salihu, the Managing Director, Butake Handling Company Ltd, in an interview said that the business environment in the Nigerian aviation industry was bleeding, requiring attention from the government.

For instance, he lamented that the cost of doing business in the aviation industry had skyrocketed in the last few months.

He stressed that the cost of diesel had risen from about N700 less than a year ago to about N1,700 in the northern parts of the country, without any attendant increase in rates charged by the handlers.

Salihu explained that for the handlers to remain in business, upward review of handling rates for airlines was inevitable, maintaining that as of now, the handling companies were still charging just N70,000 for an hour of turnaround handing of a B737 for instance when the cost of diesel for same period had surpassed the rates.

He explained that the airline operators in the last meeting held with the umbrella body of the domestic carriers; Airline Operators of Nigeria (AON), admitted that the industry was toxic and needed some adjustments in terms of charges, but the two were yet to reach agreed acceptable review rates.

Salihu, however, said that the handling companies through its association – AGHAN would continue to consult with the airlines according to the standards and recommended practices of the International Civil Aviation Organisation (ICAO), stressing that the body led by Olaniyi Adigun, its Chairman was leading the dialogue.

He said: “This discussion is necessary between AON and ground handling companies because none of us can do without the other. Therefore, we cannot suffocate and enjoy their services, otherwise, if any part suffocates, it will lead to immediate flight disruption. This will lead to missed connections.

“For instance, if you are flying from Abuja to Lagos for a 6pm flight for further connections, and by 6:30pm, you have not departed Abuja, how can you make the connection? You didn’t leave Abuja not because you don’t have fuel or the equipment, but because you have no machines to operate your equipment to provide a motorised gang to disembark or board your passengers.

“Similarly, when you arrive Lagos and your machine at the ramp, you can’t evacuate your luggage for one hour because they don’t have the operational vehicle and vice-versa. If the airlines can’t fly as a result of the high cost of operations, it will slow down the economic activities.”

Besides, Prince Saheed Lasisi, Group Executive Director, Commercial and International Business, Nigerian Aviation Handling Company (NAHCO) Plc, said that the slight upward review in handling rates would not affect airfares by airlines.

Like Salihu, he lamented that the cost of production had increased across the board, including among the airline operators.

He, however, refused to blame the airlines or any other organizations for the recent hike in prices of goods and services, attributing this to the crash in naira and the difficult operating environment across all sectors.

Lasisi, declared that NAHCO was not immune from the present global economic challenge, noting that some countries in recent weeks had fallen into recession.

He also clarified that the handling rates review would not affect the international airlines as the airlines are billed in dollars, but expressed that same equipment, personnel and turnaround time are expended on domestic operators who are still billed low.

He said: “Like I said earlier, we are not increasing the international rates because they are charged in dollars. I think we are covered to an extent in the international market. Can you compare the N70,000 that we charge the domestic airline operators with the $1,200 that we charge the international airlines? And they are the same equipment with the same turnaround period. You can see that the difference is huge. The N70,000 we presently charge is not even up to $50 at the moment.

“We are not saying we want to charge the domestic airline operators the same $1,200 that we charge international airlines that use the same machine as theirs, but because of the frequencies and the local contents, we have to support our operators.

“These are private companies and not government agencies that can decide to subsidise their clients. We are also in business to make a little profit and with lots of responsibilities. We also have our staff to train, pay and need to acquire new equipment to upgrade ourselves to our clients.”

Lasisi canvassed for customs duty waivers for handling companies in Nigeria, lamenting that for every equipment imported into the country, NAHCO pays between 15 to 20 per cent on the value of the facility as customs duties, stressing that such an amount of money could have been diverted for other developmental projects.

Adenike Aboderin, Managing Director, Skyway Aviation Handling Company (SAHCO) Plc, dismissed the claim that the little increase in handling rates would lead to reduced passengers or airfares.

Aboderin insisted that the cost of doing business in the country had increased significantly in recent times, which had further put pressure on ground handling companies.

She explained that this prompted the handlers to take difficult decisions about their pricing, maintaining that SAHCO for instance was doing everything it could to keep its rates as low as possible while still providing the high-quality service expected from it by the customers.

She added: “As a ground handler, our goal is to provide our customers with the best possible service at a fair price. We have a lot of costs associated with providing our services, including labour costs, equipment costs, and overhead expenses. We strive to keep our rates as low as possible, while still providing the quality of service that our customers expect. We provide a vital service to the aviation industry.

“Without us, airlines would not be able to operate as efficiently or effectively. We help to keep planes on schedule, ensure that passengers and goods are safely and securely processed, and provide other important services. We understand that the cost of flying is a concern for many people, but we believe that our services are worth the price.”

Aboderin further advocated tax incentives or subsidies to ground handlers and low interest rates on loan facilities, arguing that this would help them to offset the costs of doing business.

She also added that investment in infrastructure improvements, such as new or upgraded facilities at the airports would also make it easier for ground handlers to do their jobs.

She further suggested training and development opportunities for ground handlers, to help improve the quality of service, while also streamlining regulations and processes for the handlers.