FG approves rate increase for ground handling companies

Thirty-five years after the ground handling companies in Nigeria operated static handling rates, the Federal Government through the Nigerian Civil Aviation Authority (NCAA) has approved new “safety threshold ground handling charges,” for the sub-sector.

With this approval, the ground handling companies in Nigeria, the Nigerian Aviation Handling Company (NAHCO) Plc, the Skyway Aviation Handling Company (SAHCO) Plc, Precision Aviation Handling Company Limited (PAHCOL) and the Swissport Handling Company, can now charge the same handling rates as their counterparts in the sub-African countries.

This is as the umbrella body of ground handling companies in Nigeria, the Association of Ground Handling Company of Nigeria (AGHAN) has commended Sen. Hadi Sirika, Minister of Aviation and Capt. Musa Nuhu, the Director-General of NCAA for saving the sub-sector from extinction, saying that before the approval, activities in the handling sector were nearing collapse.

A document obtained by Daily Independent indicated that NCAA has now approved between $1,500 and $5,000 (passenger and cargo flights) as the new safety threshold handling charges for narrow and wide body aircraft, respectively, while for domestic operators it is now between N20,000 and N70,000, depending on the aircraft type.

Narrow body aircraft include Boeing B737, Airbus A320, ER 135 and ATR, while wide body aircraft are B767, A330, B777, B747 and B787.

Daily Independent had reported exclusively in August that the last time handling rates were amended in Nigeria was in 1986 and that international airlines were still paying as low as $400 to handle narrow body aircraft, while they were charged between $1,000 and $1,500 for wide body aircraft.

Daily Independent had gathered that in Guinea, foreign airlines are charged $1,673 (narrow body); $4,715 (wide body), Senegal; $2,250 and $5,259, Cameroon; $1,400 and $4,500, Sierra Leone; $2,250 and $5,250, Ghana, with $1,500 and $4,150 for passenger flight.

Cargo flight attracts $2,300, $1,750, $2,300, and $2,500 in Senegal, Cameroon, Sierra Leone, Ghana, respectively, for narrow body aircraft, while for wide body aircraft, the ground handling in those countries charge between $4,450 and $5,250 per flight.

Statistics obtained by Daily Independent had indicated that the Federal Government and the handling companies were losing an estimated $28,350,000 (about N14.175 billion) annually to inappropriate handling rates.

Besides, another circular signed by Nuhu, dated September 6, 2021 with the reference number: NCAA/DG/ AIR/11/16/315, addressed to All Airlines and Ground Handling Companies (foreign and local) and sighted by our correspondent, set different dates for the commencement of the new charges.

The circular with the subject, ‘Safety Threshold Ground Handling Charges’, said that the new ground handling charges would take effect from October 1, 2021 for international carriers and January 1, 2022 for domestic airline operators.

NCAA said the new rates reflected market realities and close rank with applicable charges within the Economic Community of West African States (ECOWAS) region.

The circular read in part, “All stakeholders are invited to note that the new ground handling rates for international and domestic operations will become effective on 1st October, 2021 and 1st January, 2022, respectively.

“All stakeholders are directed to ensure full compliance with the safety threshold ground handling charges. Any change to these charges must be done in formal consultation with and approval of the NCAA. Please be guided accordingly.”

Commenting on the development, Mr. Olaniyi Adigun, Chairman, AGHAN, said that the approval of the new safety threshold handling rates by NCAA would save the ground handling companies from extinction, while it would also increase the sub-sector’s Gross Domestic Product (GDP) contribution to the country’s economy.

Adigun said with the new regime, the Federal Government’s five percent gross annual revenue collection from the handlers would increase, while the handling companies would also be able to increase employment generation, acquire more state-of-the-art equipment to shore up their operations and attract and retain top notch personnel.

Adigun lamented that efforts to increase the charges had failed in the past and wondered how a 35 years old handling rates could sustain the industry in 2021.

Besides, he lauded Siirka for the audacious move, saying that his singular action had further saved the ground handling sub-sector from collapse.

“We want to appreciate the Honourable Minister of Aviation, Sen. Hadi Sirika, for having the foresight to come to the rescue of the ground handling companies. In fact, the Federal Government saved us from extinction because the low pricing was gradually killing the ground handling sub-sector in Nigeria. Income derived from our operations could not sustain us vis-à-vis the current reality on ground.

“Dollars have gone up and these equipment are foreign; 80 percent of our training is foreign and to cap it all, the aviation industry is global. Low control is global anywhere in the world; the same training and requirements for Africa and anywhere in the world. Most of what we do require dollars and for you to even operate in this sector, you must be certificated, which can only be achieved through training.

“Just as we all know, the outbreak of COVID-19 pandemic affected government revenues. We all know that the Federal Government through its agencies gets 5 percent from our gross annual revenues. Before the new regime, an operation that cost $4,000 elsewhere, we were doing it at $400. At $4,000, the government’s 5 percent is about $200 and that is what Ghanaian’s government gets for instance, while the Nigerian government is getting just $20. Look at the disparity. That is a lot of capital flight out of the country.”

To prevent sabotage among its members, Adigun pointed out that AGHAN was coming out with a Memorandum of Understanding (MoU), which would spell out severe punishment to offenders, insisting that the new rates would benefit all players.

Besides, Mr. Ahmed Bashir, the Vice Chairman, AGHAN, declared that the NCAA intervention was timely.

Bashir, pointed out that the regulator’s action was part of its economic regulation of the industry, entrenched in the Nigerian Civil Aviation Regulations 2015 (Nig.CARs 2015).

He explained that a stronger ground handling sub-sector would further improve the safety and security records of the industry, while the nation’s economy would be more robust.

(Courtesy Daily Independent: Excluding headline)