Stakeholders in the ground handling section of Nigeria’s aviation industry, have called on the Federal Government to extend incentives to ground handling companies to ensure sustanability of the ecosystem.
The stakeholders made their concern known to journalists amid the ₦9 billion airline debt.
The Federal Government had approved a 30 per cent discount on debts owed by airlines to the Nigeria Civil Aviation Authority (NCAA), the Federal Airports Authority of Nigeria (FAAN), and other regulatory agencies.
The intervention is to cushion the effects of high operational costs, amid the aviation fuel crisis; however, the ground handlers say they are facing huge financial constraints as well.
The handlers had earlier called out airlines over a ₦9 billion debt, warning to embark on a strike, but was shelved following the NCAA’s intervention.
The Chairman of Aviation Ground Handlers Association of Nigeria (AGHAN), Mr Olaniyi Adigun, insisted that the aviation industry was a chain that is only as strong as its weakest link.
According to him, airlines are business partners of ground handlers and have come a long way together.
“Every organisation is seeking for survival and we as ground handling companies too, we need to survive the situation. The debts are piling up, we are talking of N9 billion.
“This is not little money for a sub-sector in the aviation industry. All attempts by our individual members to collect this money from the airlines have proved abortive.
“We surely know that the airlines, too, have their own problems, but these services have been rendered and they need to be paid for, irrespective of the excuses they have.
“I believe the excuses can be sorted out, incidents at the ramp and others.
“Globally, incidents and accidents do happen and there are lots of procedures to be followed by all parties. For instance, we have the insurance companies that should take care of whatever incident or accident at the ramp.
“Again, if you continue to hold on to this money, how do you expect the airlines to survive? How will they pay the insurance premiums? How will the insurance companies compensate the affected companies?
“The situation is negatively impacting the operations of the ground handlers, the welfare of their staff and other activities, too,” he said.
According to Adigun, it wasn’t right to acquire aircraft worth multiple millions and the airline refuses to pay the little amount owed to handling companies.
“If the airlines have any issue with the ground handling companies, they should go ahead and resolve it legally and in accordance with industry standards.
“We are all facing the industry challenges together- high cost of aviation fuel, diesel, insurance and charges, among others,” he said.
Mr Olumide Ohunayo, Director of Research at Zenith Travels, backed the called for incentives.
Ohunayo noted that the current ₦9 billion debt owed by airlines as a symptom of a larger systemic failure, arguing that incentives should flow to all private investors in the ecosystem.
He argued that ground handling companies were privately owned just like the airlines, and so, whatever incentive that is being given to a section of the industry should flow around other investors.
“So, I think as we have listened to the airlines, we should also listen to the ground handlers, airport concessionaires, too.
“I think all other private investors in the aviation ecosystem being affected by this fuel price directly or through their services to the airlines should also be considered.
“I think the credit window to the airlines should be looked at and should not be more than two weeks moving forward, while the outstanding debts can now be negotiated on the terms of payment by the airlines.
“I cannot ask private investors to waive debts owed if the same organisation is holding them liable for any damages to their equipment.
“The NCAA should intervene and the past liabilities should also be worked out and the maximum credit that must be given moving forward.
“N9 billion is huge and it is surprising that the handlers could allow the liability to climb to that figure before raising an alarm,” he said.
Ohunayo, therefore, calls for the harmonious relationship between handlers
Mr Amos Akpan, Managing Director of Flights & Logistics Solution Ltd., also warned against “fire brigade” approaches.
According to Akpan, the country cannot continue to apply piecemeal palliative measures as solutions to recurrent problems.
He argued that instead of asking for handouts, the industry needs a redesigned national policy framework that ensures aviation becomes a catalyst for economic flow rather than a recipient of emergency aid.
He argued that instead of asking for handouts, the industry needed a redesigned national policy framework that ensures aviation becomes a catalyst for economic flow rather than a recipient of emergency aid.
“The only way to avoid cumulation of debt is spot payment on provision of handling service, or prepayment before service is offered.
“There is a standard handling agreement with addendum that states terms and conditions of payment entered between the airline and the handling company. Spot prices are usually applied to ad-hoc and charter operators.
“Debts accumulate because the cost of operations is more than the income of the airlines.
“The airline’s management has to allocate from the revenue they received to pay for the necessary items in the cost of operations column,” he said.
Capt. Samuel Caulcrick, a former Rector at the Nigerian College of Aviation Technology (NCAT) said that a relief for handling companies could only come in the form of discounting their obligations to the federal government.
Caulcrick said that to address accumulation of such amounts of depts, various technology platforms for instant credit should be approached.
He also noted, however, that it would be earlier if processed by a singular financial clearing institution such as the International Air Transport Association (IATA) or through a dedicated vehicle like the proposed Aviation Development Bank.
On the airlines and ground handlers, Caulcrick said: “It is an ecosystem – they all depend on each other.
“If the airlines suspended operations, it would dent the earnings of the ground handlers as the bulk of their services are for the domestic carriers,” he said.
However, Mr Chris Aligbe, Chief Executive Officer of Belujane Konsult, posits that the financial realities of ground handlers do not justify government intervention.
“I do not think incentives are necessary for handlers. The margin of profitability for airlines is incredibly low compared to airports and handling companies.
“Anything that distorts operational costs impacts airlines far more,” said Aligbe.
He further pointed out that ground handlers do not face the same “fuel-heavy” cost structure that plagues the airline sub-sector.
He suggested that the handlers’ primary problem, debt, should be solved through better business systems rather than government bailouts. (NAN)
