February 6, 2023

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Threshold Handling Tariff Threatens Ground Handling Safety, Manpower, Profitability

8 min read

There is no iota of doubt that nearly all of each of the value chains in the Nigerian air transport industry is bedevilled with what should be the fair and economic rates to charge in consonance with the prevailing economic reality in the country.

This has been the bane for the airlines who currently charged $30 for a one-hour flight they were charging $55 about three decades ago. Other variables that go into the fare computation such as fuel, insurance, landing and parking among others which maintain such volatility that, when juxtaposed with the current economic reality using the prevailing monetary and macroeconomics indices from the Central Bank of Nigeria, CBN, and the Federal Bureau of Statistics, FBS, would make any with a modicum knowledge of commerce, shudder with awe.

For example, is it the airport managers that do not have one or two albatrosses in respect of what represents fair and economic rate they ought to have been charging so as to commensurate with their Service Delivery Level, SDL, and the economic reality of the country?

The Air Navigation Service Provider, ANSP, is also replete with silent agitation of its charges as not representing economic reality in the country. The weather forecaster, Nigerian Meteorological Agency, NIMET, who hitherto had been offering its highly precious service almost for gratis, has of recent sounded it loud and clear that it would begin to charge modestly to reflect recent capital investment on equipment and the invaluable development of her human capital through pieces of training, and the value placed on the safety-critical services it renders. Hence all who hitherto, had enjoyed the service for gratis have all been put on notice of a “modest” fee henceforth if they will continue the use of the agency’s services.

Albeit, eminent professionals who breathe, eat, drink, and live for air safety have made a clarion call to the regulatory authority, Nigerian Civil Aviation Authority, NCAA, to be proactive in its oversight by giving very urgent attention to the groaning of the nation’s ground handlers who of recent have been clamouring for the Nigerian Civil Aviation Authority, NCAA, to glean over its training manuals, and also to give attention to the prevailing Safety Threshold Handling Rates, STHR, which does not afford a break-even for the ground handlers.

The pioneer Commissioner/Chief Executive Officer, Accident Investigation Bureau, Dr Sam Oduselu, in a chat averred that the current Safety Threshold Handling Rates, STHR, just barely covers the cost of ground handling services. He lamented on the current safety threshold handling rates and described them as a clear and present danger that should be immediately addressed without an iota of delay.

Right: Mrs Olatokunbo Fagbemi, Group Managing Director/CEO, Nahco Plc. with Akin Kola-Akinlade, At Eko 89.7fm, Alahusa Ikeja, after a talk show on the program, AVIATION WATCH. (File photo)

Engr Oduselu, avionics, who was a former Director of Airworthiness, Nigerian Civil Aviation Authority, NCAA, warned that handling rates that barely cover the cost, will make equipment re-fleeting very hard and will hinder proper staff motivation which will be inimical to safety and profitability.

He said maintaining the status quo of ground handlers tariff will be tantamount to someone saying prayers to the devil. He added that any rate that does not represent the economic reality of the day is most likely to lure service providers to cut corners and just barely render service.

Oduselu who made known to aviation journalists 13 years ago, after the tortuous search for the crashed Beechcraft 1900D, belonging to Wings Aviation, which was initially believed to have miraculously disappeared, while highlighting the recommendations of investigators on the accident, disclosed that a new safety feature was imperative for aircraft flying the nation’s airspace and those without it would be under compulsion to retrofit in their aircraft:- Automatic Air Collision Avoidance System, Auto-ACAS.

The preliminary report of the accident further recommended that the Electronic Location Identity, ELT, be retrofitted in all aircraft flying Nigeria’s airspace. And the Nigerian Civil Aviation Authority, NCAA, promptly installed a control centre at the aviation house. The regulator compelled all airlines to install in their cockpit if they had none, a transponder to enable aircraft to be tracked, anywhere within the nation’s airspace. Engr Oduselu, noted that most times, economic oversight could unwittingly creep in and become the albatross to air safety.

He also identified the Covid-19 pandemic as another culprit that devastated the ground handlers. Oduselu called on the federal government to as a matter of urgency, give a hard look at the funding of the sector, and the riddle pose by the Safety Threshold Handling Rates, STHR, would be unravelled by tweaking the rates a little to allow for modest profit for the groaning ground handlers.

As harrowing as the effect of poor threshold handling rates is on the ground handlers, the Group Managing Director, NAHCO, Mrs Olatokunbo Fagbemi, vowed that her organization will by no means lower her service delivery level. Nahco she said, will not compromise on the safety and security of her operations. She described NAHCO as an unrepentant customer-centric organization, and nothing will be allowed to undermine this resolve, she said.

She identified the bane of the ground handlers as static Safety Threshold Handling Rates. Fagbemi lamented that when inflation had ravaged the economy and the foreign exchange regime had sunk into the abyss while the cost of living index had risen astronomically thus providing a mismatch in the rates and the current economic realities. Yet, she assured the airlines of top-notch service.

Olatokunbo Fagbemi, one of the foremost internationally certified airport professional managers in Nigeria, appealed to the NCAA to give attention to the plight of ground handlers as it is imperative they upwardly review the Safety Threshold Handling Rates, thus preventing them from choking under the inclement economic condition prevailing in the country.

Mr Basil Agboarumi, Managing Director/CEO, Sahco Plc

A glimpse on the actual losses to ground handlers, the industry and the national economy revealed that at least the government had lost over 50% of the revenue she ought to have made if the proper rate regime had been in force.

Also, a comparative analysis of what the operators charged in comparison to other countries on the West Coast of Africa revealed Nigeria charged the least. In Guinea, narrow-body aircraft is charged $1,673, wide-body aircraft pays in the range of $4,715. In Senegal, narrow-body aircraft is charged circa $2,250. While the wide body is charged about $5,259. In Cameroon, narrow-body aircraft part with circa $1,400 for narrow-body aircraft. While for the wide-body aircraft, $4,500 is charged. Sierra Leone charges $2,250 for narrow-body and $5,250 for the wide body. While charges for narrow-body aircraft in Ghana is $1,500, wide-body aircraft is billed $4,150.

The ground handling companies with the giant of Africa, Nigeria, charges fees as ridiculously low as $1000 for narrow-body aircraft and $4,000 for the wide-body aircraft. Experts observed that such a rate would barely cover the cost, taken cognizance of the free fall of the local currency against the US dollar.

The Nahco CEO, Mrs Fagbemi, thus chronicled ground handlers requests to the government thus; “we expect a lot from the government. You can put this in three; first, low rate of interest to support our business so that we can support the airlines. Also, all these grants and waivers given to the airlines, we will like to have some of them, too. We want a waiver in our business and equipment. We will like to access dollars at the same rate the airlines are buying. We need this to further enhance our business so that we can reduce the pressure on our operations”, she said.

Mr Basil Agboarumi, Managing Director, Sahco Plc, said the government was expected to give the nod of approval to the request for review of the Safety Tresh hold tariff, as presented to it.

He said government intervention in the past attempt to review an aspect of the rates informed the reason the entire ground handling sub-sector was cultivating the partnership of government in the new tariff regime being demanded to reflect the economic reality of the day.

Sahco helmsman explained that “there is no country in the world that will leave the fixing of prices in the hands of those that run the show. We discovered that when we were trying to do some things on the cargo pricing some time ago, the government summoned us. There are still laws that guide things we do”.

He highlighted the rationale for involving government strongly in the new tariff being sought to say, “after so many years of not reviewing our rates in some aspects of the business, the government sent correspondences to us on how we should go about that and in order not to make the same mistakes of the past, we think it is necessary for us to involve the government and the government has a role to play”.

Agboarumi said the road to the new tariff seemed tortuous but the operators were ready to follow through. He explained, “even ICAO has told us the steps to take before we effect any change in price. We are a law-abiding business people, so, we have to follow the processes and procedures. We are engaging with the public and we are educating the people. We have been in some circle whereby some of the airlines have said it publicly that price review of the handling rate was unavoidable”.

He explained further the contrasting challenges of inflation and responsibility to discharge quality service with the state of the art equipment had bestowed enormous responsibility on ground handlers in Nigeria.

He volunteered, “between 2020 and now, we have seen a major leap in terms of the forex that used to be N350 to now over N500 to a dollar and we are a heavy consumer of forex. Nobody wants to hear if there is a failure in ground handling services. So, we have the duty to provide not just ground handling services, but the best ground handling services that can compete with any other in the world and for us to do that, we need the equipment to do that because the world is changing in terms of equipment”.

He further narrated the obligations of the call to service delivery in the face of national economic challenges thus, “ground handling equipment, personnel and certification are changing. So, we have to change with the developments around the world. In fact, you have to pay the right salaries and remunerations to attract and retain your best hands”.

Agboarumi lamented that the companies “are losing trained manpower to another aspect of the sector, we are losing trained manpower. Just as you train pilots for aircraft, we also have to train our staff, but unfortunately, we are losing them to the US, Europe and other parts of Africa. The services of our personnel are sought after. We are even losing staff to some of the start-up airlines”.

He argued that ”any rates below the established safety threshold, ground handling rates have the tendency to jeopardize safety and security and loss of revenue to the Federal Government through the 5 per cent concessionary fees pay by the handling companies to the government

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