Operators charging below approved handling rates are sabotaging government – SAHCO chairman

In this interview, SAHCO Chairman Dr Taiwo Afolabi spoke on the trajectory of the handling firm, the new handling rates and other issues in the aviation industry. Excerpt: How will you assess the Nigerian aviation industry since SIFAX Group acquired the former Skypower Aviation Handling Company Limited (SAHCOL)? There has been a great deal of […]

In this interview, SAHCO Chairman Dr Taiwo Afolabi spoke on the trajectory of the handling firm, the new handling rates and other issues in the aviation industry. Excerpt:

How will you assess the Nigerian aviation industry since SIFAX Group acquired the former Skypower Aviation Handling Company Limited (SAHCOL)?

There has been a great deal of improvements and innovations in the sector. I will mention one which is airport infrastructure. The federal government in the last few years embarked on massive remodelling of various airport terminals across the country, especially in Lagos, Abuja and Port Harcourt.

What opportunities did you see in the sector that prompted your investment in the ground handling sub-sector?

The country’s aviation sector is big, with Nigeria being a key market in Africa that almost every foreign airline wants to fly into. Before SIFAX Group acquired the company in 2009, it was only the Nigerian Aviation Handling Company (NAHCO) Plc that was really playing and investing massively in the ground handling sub-sector of the industry.

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That was the motivation for coming to the industry. Even though the experience has been interesting, it comes with its challenges.

However, we have no regret about the decision, 12 years down the road.

A new handling rates is taking effect this year after about 38 years. What measures are you putting in place to ensure that not sabotaged by operators?

Two key things I know are important in the aviation industry; safety and service delivery, and no ground handling company wants to compromise on these. In order to improve our service offering, not compromise on safety and remain in business, the ground handling companies formed an association – Aviation Ground Handling Association of Nigeria (AGHAN) – to address some of the lingering challenges we all face.

On the handling rates, you will be surprised that the last time we reviewed the handing rates was over 30 years ago. Take for instance, air tickets have increased severally over the years, naira has been devalued, while the cost of the Ground Support Equipment (GSE) have also increased severally. The current rates are no longer sustainable as we find it very difficult to break even and acquire needed equipment to service our clients.

When we took over 12 years ago, naira was about N120 to a dollar, but now it is N560 and our rates have not been reviewed in all these years. You can then imagine the negative effect of this on our business and our ability to service our clients efficiently.

The first thing the association did upon formation was to take a second look at the rates, but of course that provoked a tug of war between the airlines and the ground handling companies. The airlines petitioned the National Assembly and we were wondering the rationale for that as we are a private business and need to keep our business afloat. They didn’t consider the huge investment we have made and the various micro-economic changes in the country that necessitated such review.

What I found ironic is that these airlines increase their tickets when they wish and nobody ever stopped them. Then, why should they stop us? Of recent, the domestic operators increased their tickets again and attributed this to the influx of travellers that now travel by air. Most people don’t want to travel by road again because of insecurity on the highways.

For over 35 years, no review of the rates ever took place. I remember I told the Chairman of NAHCO, Dr. Seinde Fadeni, that it seems they don’t even understand our importance in the sector. No flight can be successfully executed without the services of ground handling companies. It was so bad that we threatened to embark on an indefinite strike to draw the attention of the industry to our plights, but NCAA intervened and a resolution was reached.

In order to get every ground handling company on the same page and prevent sabotage, we signed a joint agreement binding us to the rates agreed upon and on no condition should the rates be reduced without the approval of the NCAA and the application for such must be backed by cogent reasons.

The document was then sent to the ground handling companies for implementation. So, that was the first step we took.

Also, there are sanctions prescribed for any company that undercuts the new NCAA approved rates. If anyone compromises the new rates, it means you are sabotaging the government because the government gets 5 per cent on our gross annual turnover. If you undercut the rates, it means you are a saboteur and we have sanctions in place so that the airlines will not be able to cut down the rates anymore.

How far have you gone with your negotiation with local airlines that are kicking against the implementation of the new rates?

 We have opened discussions with the airlines and made them see why we have to review the rates. You can check what these international airlines pay for ground handling in neighbouring countries like Ghana and Benin Republic.  It is far higher than the rates here.

What they are paying in the neighbouring countries is what we asked them to pay. However, NCAA waded in and what they said we should do is to give a discount of 25 per cent, which we have obliged in order to make everybody happy.