Africa: Nigerian aviation industry stakeholders bemoan 150% decrease in ground handling charges

aviation

The escalating decrease in charges of ground handling services has become a source of worry for stakeholders in the Nigerian aviation industry.

According to a report on thewillnigeria.com, the stakeholders have raised economic, security and safety alarms due to the massive drop of ground handling charges from $1,139 to only $400 on a Boeing 737 aircraft (narrow body airplane) or its equivalent, depending on the negotiating power of a foreign airline with a ground handling company.

THEWILL investigations show that ground handling rates in Nigeria remain the lowest in the entire African countries.

It was gathered that the three ground handling companies; Skyway Aviation Handling Company (SAHCO) Plc, Nigerian Aviation Handling Company (NAHCO) Plc and AHS Aviation Handling Services charge the lowest on the continent, despite having better Ground Support Equipment (GSE) than most of their counterparts in Africa.

The investigation further revealed that ground handling charges in Guinea, Senegal, Cameroon, Sierra Leone and Ghana for narrow body and wide body aircraft are way ahead of Nigeria.
The narrow body aircraft include B737, Airbus A320, ER 135 and ATR aircraft, while the wide body aircraft are categorised as B767, A330, B777, B747 and A380 aircraft.

READ: Africa: Nigeria’s SAHCO to provide aviation ground handling services for Ethiopian Airlines

A case in point is the fact that in Guinea, foreign airlines are charged $1,673 (narrow body); $4,715 (wide body), Senegal; $2,250 and $5,259, Cameroon; $1,400 and $4,500, Sierra Leone; $2,250 and $5,250 and Ghana with $1,500 and $4,150 for passenger flight.

Cargo flight attracts $2,300, $1,750, $2,300, and $2,500 in Senegal, Cameroon, Sierra Leone, Ghana, respectively for narrow body aircraft, while for wide body aircraft, the ground handling in those countries charge between $4,450 and $5,250 per flight.

Besides, further investigation by our correspondent revealed that while the above named countries charge the airlines appropriate rates, a narrow body aircraft attracts about $1,000 ground handling charges in Nigeria, while a wide body aircraft goes as low as $3,000 for passenger flight.

At times, it was gathered that the $1,000 ground handling rates could be as low as $400, depending on negotiations by such a foreign airline.

For cargo flight, foreign airlines pay as low as $1,300 and $3,850 for narrow and wide body aircraft, respectively.

It was further learnt that the current rates by the ground handling companies in Nigeria had been stagnant since 1986, despite the drop of naira against major currencies and the skyrocketed rates of acquisition of state-of-the-art equipment and training of personnel by the handlers.

Engr. Sam Oluwole, Chairman, Board of Trustees, Aviation Ground Handlers Association of Nigeria (AGHAN), regretted that the ground handling companies in 2021 currently charge far less what they were charging the foreign airlines in 1986, 35 years later.

READ: Africa: Ground handling firms sheathe sword over price

According to him, in 1986, ground handlers were charging $1,139 for handling of a B737 aircraft, but lamented that despite the free fall of naira and increase in the price of acquisition of GSE, the handlers go as low as $300 for the same service in 2021.

He described it as an unhealthy rivalry, which could lead to compromise of safety, security and loss of revenues for the government.

He said: “There are three aspects that concern us at the moment; economic, safety and security of the industry. As far back as 1986, grand handlers were charging about $1,139 to handle a narrow body aircraft for instance, but regrettably today, despite the crash of naira against the dollars and other currencies, some of the handlers charge as low as $300. Then a dollar was equal to 90k, but today, the same dollar is about N500, yet we are charging low.

“Another challenge here is that the Nigerian Government is losing considerably a lot of tax revenues because the handling companies pay 5 per cent annual turnover to the government and it is this money that they are using to acquire facilities, upgrade equipment, while the handlers too train personnel and pay workers’ welfare packages and insurance.”

Oluwole opined that the charges should follow the international standards, while the Nigerian Civil Aviation Authority (NCAA) should intervene to prevent economic sabotage against the country.

Besides, Barr. Chike Ogeah, former Chief Executive Officer, SAHCO, described as ridiculous the handling rates in Nigeria and called on ground handlers to come together to tackle the challenge.

Ogeah warned that if the rates continued unabated, safety and security may be compromised by the handlers.

“It shows that something is wrong for Nigeria to have the lowest handling rates on the continent. NCAA as the regulator must sit down with the handling companies to come out with a realistic regime for the handling companies.

“It is ridiculous for Nigeria to charge as low as what they are charging now. It doesn’t make sense. I think the coming onboard of AGHAN will address that. The only way their survivals will be guaranteed is for them to charge right. Mind you, some of the companies are listed on the Nigerian Stock Exchange (NSE) and they need to deliver to their shareholders,” he said.

Mr. Olumide Ohunayo, the Director, Research, Zenith Travels, in an interview with our correspondent called for immediate review of the current rates.

Ohunayo observed that the handling rates in Nigeria was the lowest on the continent, especially in the sub-region and called on NCAA to intervene in order to avoid collapse of safety, security and standards in the sector.

He said: “A time will come when safety might be affected if they continue to run their services below the cost of production. We cannot be different from the rest of the world. If the last approval was 1999, we are now in 2021, which is about 22 years later. So, we need to look at that figure, considering that the foreign exchange rate has risen, the naira has continued to depreciate and has never appreciated since 1999.

“There is no way that agreement of 1999 can be sustained in modern day and what we are doing now is that we are giving the foreign carriers profitability and shooting our own ground handlers on the foot. It is better that the regulatory authority and other agencies push forward this process, use whatever method that can bring about a competitive rate as compared to other countries.”

He charged the leadership of AGHAN, the umbrella body of ground handling companies in Nigeria to put forward an acceptable template that would be widely embraced by all, maintaining that handlers in Nigeria could not isolate themselves from the happenings in the rest of the world.

Besides, Mr. Tayo ojuri, aviation analyst said that thorough analytical study showed that Nigeria offers the lowest ground handling rate in West Africa in comparison to Ghana, Cameroon, Senegal and other francophone airports.

He attributed this to the historical antecedents and ownership of the ground handling companies, which he said evolved as government owned entities and airline subsidiaries, but said the major players; NAHCO and SAHCO are now listed on the stock exchange with strategic global alliances and significant investment in the purchase of equipment and development of infrastructure.

He explained that in order to ensure safe, secure and commercially operations, ground handling charges needed to be competitive and be a true reflection of cost of operations.

On the appropriate charges, Ojuri said the International Civil Aviation Organisation (ICAO) Document 9562 highlighted key considerations when determining ground handling charges.

He added: “Experience has shown that market-determined ground handling charges through competition provide the best outcome.

“We reckon ample negotiation coupled with meaningful consultations with the airlines based on transparent information is necessary to verify that airlines are subject to cost-related and effective ground handling charges. A suggested middle ground will be to develop Minimum handling rates.”

He called on NCAA to always be part of the negotiation process to ensure airlines and ground handling companies arrive at a mutual fee, which would ensure safe and secured operating environment for all.

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