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Local aviation suffers revenue loss from 35yrs of static ground handling charges

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Airplane. Photo: PIXABAY

Underpricing regime and attendant low tariff foreign airlines currently remit to Nigeria is denying both grand handlers and local aviation huge revenue.

The situation, which is not unconnected with unhealthy rivalry among operators has further dwindled potential earnings for the sector.

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Concerned stakeholders said it was time the Nigerian Civil Aviation Authority (NCAA) had intervened to bring competing parties to a round-table and end the run of pittance remittances in the sector.

The Guardian learnt that the three ground handling companies, Skyway Aviation Handling Company (SAHCO) Plc, Nigerian Avia¬tion 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.

Though this arm of the aviation sector has since been deregulated, internal rivalry among operators has kept the tariff comparative low since the 1990s.

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In Guinea, for instance, a narrow-body like Boeing 737 or turboprops is charged $1,673, while wide-body like Boeing 767 or A330 is charged $4,715. Senegal charges $2,250 and $5,259 in that order. In Cameroon, it is $1,400 and $4,500. Sierra Leone charges $2,250 and $5,250, while Ghana charges $1,500 and $4,150 for passenger flight.

Narrow-body cargo aircraft attract $2,300, $1,750, $2,300, and $2,500 in Senegal, Cameroon, Sierra Leone, Ghana, respectively. For wide-body airplanes, ground handlers in those countries charge between $4,450 and $5,250 per flight.

Similar charges in Nigeria, however, range from $1,000 for a narrow-body, while a wide-body aircraft goes for as low as $3,000 for passenger aircraft.

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Sometimes, sources said, the $1,000 ground-handling rate could scale as low as $400, depending on the negotiating power by the foreign airline.

Chairman, Board of Trustees of Aviation Ground Handlers Association of Nigeria (AGHAN), Sam Oluwole, confirmed the situation, though regretted that the ground handling companies still charge far less than 1986 rates.

Oluwole noted that ground handlers then charged $1,139 for a B737 aircraft. But despite the free-fall of naira and increase in the cost of equipment, handlers go as low as $300 for the same service in 2021.

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“There are three aspects that concern us at the moment: economic, safety and security of the industry. As far back as 1986, ground handlers were charging about $1,139 when a dollar equals 90k. 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 five per cent annual turnover to the government and it is this money that they use to acquire facilities, upgrade equipment, while the handlers train personnel and pay workers’ welfare pack¬ages and insurance,” Oluwole said.

Former MD of NAHCO, Kayode Oluwasegun-Ojo, said the anomaly had dragged on for too long and was unsustainable for operators as well.

Oluwasegun-Ojo said: “If you charge for a service that is less than cost-reflective, it means you are not getting your cost back and in the long run, it will not be sustainable.

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“I think the NCAA has a great role to play here. It should call people together – airlines and the ground handling companies, let’s jaw-jaw. My experience in the banking industry is that you collaborate before you start competing.

“If Ghana is charging about $1,500 to handle narrow-body aircraft and Nigeria is charging this little, then something is wrong with our system. We must do something about helping our country and industry to grow. We have a huge market here and we must do something to boost the sector, starting from the ground handlers,” Oluwasegun-Ojo said.

Vice-Chairman of SAHCO Plc, Chike Ogeah, reckoned that it was imperative for the ground handling companies to come together and work together.

“Because a ground handling company wants to get the bulk of the clients, it gives services below its cost and that is dangerous. The rates are inelastic; it is open-ended. There is a particular amount of clients that everybody is trying to get because aviation is a specialised business, not a foodstuff business. So, by the time you look at passenger and cargo handlings, you will realize that you need to be able to enforce your own prices, which must be standard and must be realistic to ensure that safety is not compromised.

“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 survival 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.”

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