AGHAN set to roll out new handling rate

IN view of the high inflation, weak exchange force and other economic challenges thrown at the various sectors of Nigeria’s economy which have made the ease of doing business almost unprofitable, the Aviation Ground Handling Association of Nigeria (AGHAN) is set to roll out new handling rates in the domestic air transport.

In its submission to the director general of the Nigeria Civil Aviation Authority (NCAA), dated January 26, 2024 and sighted by the Nigerian Tribune titled ‘ Proposed Increase In Domestic Safety Handling Rate In Nigeria, AGHAN  attributed reasons for the proposed increase to the consistent decline of the naira in the foreign exchange market for the past 24 months ,which had put financial pressure on the handling business where all equipment and spares are imported 100 percent.

In a statement jointly signed by the chairman of the association, Mr aokaniyi Adigun, his Vice chairman, Ahmed Bashorun Gulmah and the financial adviser, Prince Saheed Lasisi respectively, AGHAN, while stating that it no longer make sense to continue to charge the same rate in the face of the present economic hardship, revealed how the last time the association increased their rate was about two years ago.

According to AGHAN, “The last time domestic handling rates were reviewed in Nigeria was in September 2021 and the reviewed rates came into effect in January 2022 exactly two years ago. This was at a time when the United States dollar was N400.00, but today, as we all know, a dollar is over N1400.

The history behind ground handling rates is that they have always been skewed in favour of the airlines given the antecedents of the older ground handling companies. “This is more so today given the collective power of the airline clients.

“Till today, the handling rates in Nigeria is haphazardly done. Though the sector is deregulated, the antecedent 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.

The base rate for domestic ramp operations as approved by NCAA in 2021 and the proposed new rates by AGHAN which put into considerations the aircraft types and the current rate in naira and the proposed based rate in naira indicated that:

B737

70,000

400,000

Per Flight

CRJ, EMB

50,000

250,000

Per Flight

Dash 8

25,000

150,000

Per Flight

“As ground handlers, all our equipment’s and spares are imported 100 percent 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 percent since 2021.

In addition, ground rent charged by FAAN was increased 100 percent while other charges such as apron passes have gone up by over 200 percent.

“We note that despite all this, ground handling rates have remained static for the past 24 months. The ground handling subsector 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.

The current rates are not sustainable because of the impact of the drop in naira against major currencies, the impact on purchase of the Ground Support Equipment (GSE), and provision of facilities used in servicing the aircraft that are all procured abroad.

Citing the sharp rise in the prices of tickets because of the economic challenges, AGHAN referred to how international and domestic airlines have consistently reviewed upward air tickets over the years, whereas the handling rates for ground handling companies have remained the same within the period.

“On the domestic side, Lagos and Abuja flight for instance is 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 was activated by an air traveller.

“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 2 years!

“It is observed that globally 70 to 80 percent 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”.