Price war, unhealthy rivalries fail to add to ground handling firms’ bottom line –SAHCOL Ag. MD

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*Agboarumi

In this interview with NewsGazette, the acting managing director of Skyway Aviation Handling Co Ltd, Mr. Basil Agboarumi speaks on many issues concerning ground handling firms in Nigeria, chiefly the price war which has become an ill wind that blows the bottom line of companies in the ground handling sub-sector no good, the challenges faced by ground handling firms and why the company is yet to be listed on the Nigeria Stock Exchange (NSE) among some other issues.

Impact of government’s export policy on company’s operations and revenue

If it is a policy of the government, I think it is good for the country; before now, Nigeria was just an import country and at a particular point in time in this country, exportation was totally dead. Other countries just produced and dumped whatever they produced in Nigeria. For the first time in this country, we have seen growth in export, which I think has to do with the policy of the government on production.

Business organisations are now looking inwards and coming with what we can give out to the outside world. It is no longer news that Nigeria is a blessed country with several raw materials that other parts of the world need. But, we have over the years show interest in what we can get from outside. The sincere fact is that exportation of goods and services has truly grown from 2015 till date.

At the moment, yam, vegetable, hair wigs, palm oil and others are the most export products from the aviation industry, not to talk of other sectors of the economy like maritime and others.

Delayed enlistment of SAHCOL on the stock exchange

The management is not reluctant to go to the Nigeria Stock Exchange (NSE), but there is time for every step to be taken by the organisation. Already, steps have been taken by the management to enlist us on the NSE. We are already having some discussions with the Securities and Exchange Commission (SEC) on the process of enlisting on the floor.

Even when SAHCOL was handed over to Sifax Group, we were still under the watchful eyes of the Bureau for Public Enterprises (BPE). If we had taken the wrong step, BPE would have kicked us. Also, as a business entity, the country’s economy had been very bad at a point. For example, Nigeria just came out of recession and as at the time of recession, I don’t think it takes any business sense for us to throw a company like this into the market, but now that we are out of recession, we believe this is the best time to go to the exchange and we have gone far on this.

Under-utilisation of ultra-modern bonded warehouse

Even for us as a company, we underrated the warehouse that we have; from time to time, we have audits from some of our clients. For instance, just recently an organisation that audits clients of a particular airline audited our facilities and said our facility is not the best in West Africa as we claimed, but it is the best on the continent. However, for us as an organisation, we have don’t blow our trumpet, but our clients can testify to our high quality service.

Also, one of the things we do is to consistently attract more clients to ourselves and the place to be in ground handling business in the country today is SAHCOL. Some of the operating airlines are diverting their businesses to our companies simply because of the high level of service we offer them. Cargo is secured and safe in SAHCOL. People come into our facilities and ask if they are in Nigeria.

Challenges of ground handling firms in Nigeria

Nigeria is a tough country to do business in and that doesn’t isolate us as a ground handling company. It takes courage to do business in this country. There are lots of things that work against the ground handling companies. For instance, the equipment that we use are heavy, bulky and cost a lot of money. To get an equipment into the country, you will require several millions of dollars and more so, they are not things you just go to the shelf to pick as you buy your cars. They are all produced abroad and we have to pay a lot of duties to bring them into our ramps for ground handling services.

As you are aware, the government recently approved waivers to the operating airlines to help them sustain their operations, but the fact is that the airlines don’t exist on their own. There are some other supporters of aviation that need to be looked at like the ground handling companies because safety starts from the ground. If there is no safety on the ground, there could be a problem in the air.

So, critically, government needs to support our operations through incentives that they approved for the airlines in the country. We need incentives for ground handling equipment. The ground handling business is an endangered species; everyone wants to collect from the ground handling company. For instance, one of the certifications we used to do with the International Safety Audit of Ground Operations (ISAGO) and not paid for, but now, we pay a lot of money to get that done. Also, before you can ship things through our corridor to Europe, there are some certifications you need to do, which cost us lots of money. We spend quite a lot to remain in business.

Just recently, an airline from Nigeria went to one of the neighbouring West African countries and on landing there, the authorities told the airline what it needed to pay to handle its Boeing 737 aircraft, but here, they get such services at close to nothing because of the unhealthy competition in our industry, but we believe that this time around, the government needs to come in to tackle that.

What to do to resolve price war

Let’s look at the banking industry for instance; there is a regulator that regulates their activities. For instance, the handling rates we pay in Nigeria has not changed over the years despite the fall in naira to dollars and other major currencies. The airlines have consistently change their fares, but we have not done that for so many years. We still operate with the same tariffs that we have been operating up to the time naira was N165 to a dollar and regrettably today, the rate has grown more than double. What it costs us to buy a ground handling equipment today has grown astronomically. It is not that the cost has changed, but whereby we were spending one naira to buy a ground handling equipment before, by the time we source for foreign exchange, you will see that it has gone to about N3. That’s the situation we have found ourselves. But, the airlines still pay the same amount of money they have been paying us even before then.

Rivalries among ground handling firms

Cooperation is for the best of the industry, we as a company we have identified cooperation as the tonic to build the industry. We will continue to do our best, take the right step and initiative to ensure that what can give us the kind of aviation that we desire in the future is done. There must come to a point whereby we will definitely need ourselves.

In other parts of the world, ground handling companies are pooling resources together; it is for us to get to that maturity stage. Even, airlines are cooperating now. When you have airlines in various parts of the world, they complement each other in passenger and cargo operations. We will have better aviation industry once we begin to look at the industry from that perspective.

Company’s market share in ground handling in Nigeria

For companies to do business with you they would have checked your books and they know you have the capacity and the technical know-how to give them the services they require. It doesn’t mean that because of this as a company, we have allowed price to enter us. We still need opportunities to do better.

We know we are growing and closing the gaps. For example, before SAHCOL was privatised in 2009, we maintained about 21 per cent of the market share, but today to the glory of God we have grown to about 48 per cent and we are not stopping there, we are still growing. Part of what we need to do is to train our staff and get state-of-the-art equipment into the system and that is what we are doing.

Nigeria’s aviation industry

SAHCOL can’t leave in isolation; there is a chain that connects all of us together and whatever that affects one aspect, affects every other. When you look at 2017 globally, the summary of the industry was that it was good for the industry and I want to believe that 2018 is already consolidating on that. We believe that the industry is moving forward and things are happening very fast. We have a minister that has the courage to want to do certain things.

Now, we are talking of having a national carrier, which we believe will be good for our aviation industry. We have come to a point where we have to realise that there is no Nigeria aviation, but global standards. That is why you see regulators that visit us regularly to determine our level of compliance. It means that we must do things in line with international best practices.

Where the world is going in aviation is cooperation; you can’t stand alone. As long as you have something to offer in aviation, the time has come whereby stakeholders in the industry must begin to relate with one and other and jointly take decisions that can move the industry forward.

 

 

 

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