Chinedu Eze
Ground handling companies in the Nigerian aviation industry have urged the federal government to grant them duty waivers and concessionary loans in order to expand their business, acquire more state of art equipment and render better service to airlines.
The operators argued that that the low profit margin for operators in the sector, made business toxic, with very lean finances, saying that they needed the collaboration and support of the government to remain in business.
The operators made this known in Lagos at the weekend after stakeholders’ meeting with the Minister of Aviation and Aerospace Development, Festus Keyamo.
The Chairman, Aviation Ground Handlers Association of Nigeria (AGHAN), Mr. ‘Niyi Adigun, 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 stated that this would assist them to access loans on a single digit interest rate.
“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,” he said.
Adigun also 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 the Minister’s Five-Point Agenda to make the aviation industry eco-friendly.
He explained that the increment was due to the country’s economic downturn, adding that the aviation sector was seriously bleeding.
Adigun enphasised that the handling companies complied with 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 Capt. 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,” he said.
The Chairman of Swissport, Otunba John Adebanjo, said indigenous airlines needed to pay for the services rendered by the handlers.
Adebanjo, 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 emphasised that the indigenous airlines had severally, over the years, increased airfares 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 cost of doing business had consistently skyrocketed in the last two years.
For business growth, he appealed to the government to recognise the handlers as a major player, 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 the 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 five 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.
The Executive Director, Commercial and Business Development, NAHCO, Prince Saheed Lasisi, 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 like 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 handlers too needed such waivers to grow their business.
“We have equipment that is even up to $600,000. When we import this equipment in, we pay a huge duty. We need to have concessions on this duty payment and the spare parts too, which come from the Original Equipment Manufacturers (OEMs). Sometime in a year, we (NAHCO), spend 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.
Vice Chairman, AGHAN, Mr. Ahmed Bashir, 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, stakeholders engagement and non-discrimination and transparency.
On the possibility of future review, Bashir posited that some of the provisions entrenched in the agreement allowed this.
For instance, he said in the interest of safety, there would be annual review, while all airlines with outstanding bills were mandated to pay up their debts.
He also said: “With this, we should not invite the NCAA anymore, it should be between the buyer and a seller for annual review, depending on the economic realities on ground. We are satisfied with that resolution.
“So, we just want to have a break-even. We have electricity, labour, insurance, diesel, equipment, foreign exchange, rental and other costs and others. The major drive of our business is diesel and we all know the cost of diesel in the market today.
“So, at every end of the year, we come to reality to review these economic indices, have an objective assessment, and bring out our justification to the airlines one-one-one to jointly review the rates.”