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•Propose upward review of domestic rates from March 31
By Chinelo Obogo
Aviation Ground Handling Association of Nigeria (AGHAN), an association of ground handling companies in Nigeria, has proposed that an increase in domestic safety handling rate in Nigeria should take effect from March 31, 2024.
In a letter to the Director General, Nigerian Civil Aviation Authority, Capt. Chris Najomo and signed by Olaniyi Adigun (chairman), Ahmed Gulmah (vice chairman), Saheed Lasisi (financial adviser), the body said that domestic handling needs urgent review if handling companies are to operate safely, remain in business, render quality services and contribute meaningfully to the GDP. It pointed out that the five registered ground handling companies provide over 200,000 direct and indirect employments to Nigerians with material macroeconomic contributions to the economy by operating integrated customs bonded warehouses in the five major airports (Lagos, Port-Harcourt, Abuja, Enugu, and Kano), thereby contributing to revenue generation. AGHAN said in its letter that the last time domestic handling rates were reviewed in Nigeria was in September 2021 and that the reviewed rates came into effect in January 2022 when the US dollar was N400 compared to the current rate of N1,400. It also complained that ground handling rates have always been skewed in favour of the airlines given the antecedents of the older ground handling companies and that as at today, the handling rates in Nigeria is haphazardly done.
“Though, the sector is deregulated, but antecedents of the birth of the major ground handling companies has impeded its growth – the old ground handling companies were not formed to cover their costs or to make profit, but now, since the companies are in private hands and in the public domain through the Nigeria Stock Exchange (NSE), investors require a mild profit on their investments,” it said.
The body further explained that the current rates are not sustainable because of the impact of drop in naira against major currencies and impact on purchase of the Ground Support Equipment (GSE) and provision of facilities used in servicing the aircraft that are all procured abroad, hence, the base rate for domestic ramp operations as approved by NCAA in 2021 and the new rates proposed by AGHAN are: Aircraft type, B737, current rate N70, 000, proposed rate, N400, 000 per flight. For CRJ, EMB, current rate is N50, 000 and proposed rate is N250, 000 per flight. For Dash 8, current rate is N25, 000 and proposed rate is N150, 000 per flight.
“As ground handlers, all our equipment’s and spares are imported 100% and we have had to grapple with the consistent decline of the naira in the foreign exchange market for the past 24 months. On the local side, inflationary pressure has seen cost as diesel and other local consumables cost rise by over 200% since 2021. In addition, ground rent charged by FAAN was increased 100% while other charges such as apron passes have gone up by over 200%.
“We note that despite all these, ground handling rates have remained static for the past 24months. The ground handling sub-sector of the aviation industry has over the years absorbed the economic shocks for the sector. It is important that this is redressed to enable the ground handling companies continue to provide services in a safe and secure manner. With the paltry sum that we charge and have been charging over the years, there is no way the ground handling industry aviation sector will be able to be efficient and sustainable,” AGHAN said.
The body said that international and domestic have consistently reviewed the price of air tickets over the years, while the handling rates for ground handling companies have remain the same within the period. It cited instances of the cost of domestic flights from Lagos and Abuja which ranges between N90, 000 to N150, 000 for an economy class ticket. Similarly business class ranges between N180, 000 to N250, 000 depending on the airline, class of the ticket and the period the booking.
“For the international operators, with today’s rate, the cheapest flight on any airline; Lagos-London is $1,500 to $2,500 (economy seat). Yet, the handling rates have reduced despite the skyrocketing prices of equipment and machines and the constant change in air fares in the past two years. It is observed that globally 70 to 80 per cent of accidents start from the ground. So, to prevent these, the current rates needed urgent reviews. “Ground handlers are bearing the brunt and urgently require this lifeline to remain in business. It is common knowledge, that some of the airports in the country have low aircraft movement for passenger and cargo services, yet the handlers deploy their equipment to these airports provide services without being able to cover increased cost due to lack of scale. In these cases, we pay FAAN all the required charges, rentals, electricity, and others at full cost. Airlines carry out periodic maintenance; A-D-Checks on their aircraft, likewise the ground handling companies. Our equipment needs periodic maintenance, replacement, and upgrade. These we have been doing consistently to remain in business and ensure safety of operations,” AGHAN said.
The body also noted the cost of diesel has astronomically increased over the period, adding that since the last review in January 2021, the price of diesel was N205 per litre, January 2022, it increased to N367 per litre, January 2023 it further moved to N780 per litre and is currently selling at N1100 giving a cumulative increase of over 500%.
It said the inability of the ground handling companies to charge the appropriate handling rates has direct and indirect effect on security, safety, and economy and that a staff who is not well-remunerated but has access to the restricted areas of the industry is a security risk to equipment, travelers, and the entire aviation industry.
“Safety in aviation starts from the ground and only the ground can prevent air accident. A single incident to aircraft on the ground truncates its entire plans for the day, week, and months. To attain safety, the ground handling companies have different certification processes they go through, which further enhance their ratings and performances to their clients. All the ground handling companies are members of ISAGO and other international bodies.
“With the current rates we charge, it is difficult to sustain safety in the system, even though, members of AGHAN will continue to promote and practice safety in the discharge of their duties. In a bid to enhance safety in the industry, and meet international standards, our technical staff, including drivers must be adequately trained and certified and re-certified by both NCAA and international bodies, including the International Civil Aviation Organisation (ICAO) and the IATA’s Safety Audit of Ground Operations (ISAGO) and other bodies. Apart from the technical staff, the ground handling companies go through different certifications, which are periodically renewed. All these cost money and a large portion is in foreign currency,” it said.
