In this interview the group managing director of the Nigerian Aviation Handling Company (Nahco aviance), Mrs. Olatokunbo Fagbemi speaks on a number of issues including the change in the nomenclature of the company’s head, the company’s five-year development plan, divestment of Lufthansa, rivalry and price war between competing ground handling firms and why one seems to have the upper hand, among some other issues.
Ime Akpan
Diversification and management change
Sometime in the middle of last year, we had some changes in the ownership structure of the Nigerian Aviation Handling Company (nahco aviance) Plc.
As a result of that change, the board of directors also changed. I joined the board as a non-executive director sometime in August 2018. One of the things I was charged to do with the former managing director, Mr. Idris Yakubu was to look at the business review of the business itself because at every point in time, it is important for business like ours to look at where we are because you cannot plan to move forward if you don’t know where we are.
So, we had to invest and we are still investing with Klynveld Peat Marwick Goerdeler (KPMG) on a business review and as part of that review, the board and the management went to Kigali, Rwanda in November 2018 to do a strategic thinking of where we are and one of the things that came out of that strategic session was that we have a new vision, mission, a new core statement and core values.
So, we decided that we will run as a group structure because when you look at the audited financial statement of our company, you will realise that we have consolidated accounts and three subsidiaries. We have Nahco Free Trade Zone, Mainland Cargo and the Energy and Power Infrastructure Company. And all these companies were doing well.
The ones not doing well, we want to put them together so that we can get the full benefits of the business and based on that the former managing director resigned, we restructured and I became the group managing director in December, 2018.
Our new vision, which is not too far from the old vision we had is to be the leading service provider and reshaping our chosen market.
Our mission is to consistently provide exceptional services using professional teams, cutting edge technology and leading practices to deliver value to all stakeholders and our differentiating competent is service excellence. We have added empathy to our core value. Our core values are safety, integrity, reliability, respect and empathy.
Empathy for us is very important because we want to operate in the place of excellence so that we are not just saying we are delivering customer service, but we are delivering customer service from the perspective of ‘how do you feel?’ and hopefully we believe that whether it is for the internal or external customer that come, it will be a great place for people to work in and a learning organisation.
We want our turnover to grow by over five times and we want to grow across the Africa continent. We have a five-year strategic plan.
I am not saying the journey will be smooth, but we will achieve it. Like I told every one of our staff, it is not our intention to lay off staff, but it is our intention to get things right.
We will do everything to improve our people. We are going to invest heavily in our people and in automation. Automation does not mean that people will be laid off. Despite automation, people will still be employed. I know usually when we have changes like this, the first thing is that people are afraid, but things will be different and we will bring more professionalism.
Nahco today is the leader in this industry and we want to maintain that leadership. Nut we don’t want to be the leader without using excellent service. We want to be the leader, driving the business with innovations, with the right systems and right processes and using service excellence. In a nutshell, this is my story and it is very simple.
Five-year development plan
We are still fine-tuning the plan, which is why we are doing this with KPMG and we are going to set up a programme management office to drive it. We are looking at growth in the region of five to seven times, which is audacious, but we think it’s achievable given the plans that we have.
In terms of investment in equipment, in the last couple of months, we have invested about N1.9 billion in equipment, which we hope to double this year. You will begin to see the equipment by the end of the first quarter. By the end of the year, we will have spent about N3.6 billion in equipment. By September, we will have the next set of equipment coming in. That is what we are doing in terms of equipment.
We are going to have a master plan for our facilities, but I cannot give you a figure on that because it will be based on what comes out from our master plan. But what we are doing immediately is to ensure that we refurbish what we have in terms of our facilities. We will make them look better; these include our buildings, the warehouses amongst others and improve on all the processes within the system. We are also drawing up a people’s plan for our people.
Winning back clients
In terms of the loss of customers in the last two to three years, I wouldn’t say it was due to internal challenges because I have not done enough study to be able to tell you what the reasons are. What I will tell you is that we will do everything to retain the customers that we have and attract new ones. In fact, what we want to do is set new standards, bring professionalism into air service business. As we bring and improve on professionalism, desiring customers will come to us.
In terms of pricing, I can’t tell you how much the other side is charging because they are based on agreement. But the issues is, right now we are ground handling businesses; we are in a business in which our customers are stronger than us. Most of them are the airlines. That is the challenge we have in ground handling the world over; we have strong customers.
Most of these strong customers are also in the cost-cutting mode. So, essentially, there is no secret that this brings a lot of pressure on pricing. But, one thing that I have begun to discuss is that we should ensure that pressure on price does not drive any company to compromise security and safety. I will champion everything to ensure that the pressure on price does not compromise safety and security.
Rivalry between ground handling firms
I think we have to go back to the history of the two companies. Nahco aviance was set up by the foreign airlines. Why was it set up? There was a service gap for the foreign airlines because as at that time the Nigeria Airways had the Skypower Aviation Handling Company (SAHCO) Plc and it handled the Nigeria Airways. And Nigeria Airways was the leader in the Nigerian aviation business. On the other hand, there was a department in the Federal Airports Authority of Nigeria (FAAN) that did some handling. And so the foreign airlines were not getting as much value. So, Sabina, British Airways, KLM, Lufthansa, all of them came together and formed Nahco. They (foreign airlines) had 40 per cent (bloc) shares and 60 per cent for FAAN. That was how Nahco started and most of the people that came in from the foreign side were going into Nahco. SAHCO was set up strictly for Nigeria Airways and was focused for Nigeria Airways and was hardly doing business outside of Nigeria and maybe for African carriers.
Domestic was SAHCO’s fortune and if you cast your mind back, even the airlines on the domestic routes were doing self-handling. So, that was SAHCOL’s business.
The issue of creating subsidiaries in the Nigeria Airways for them to become autonomous started. A more autonomous SAHCO was a more business focus SAHCO trying to get businesses for itself. And then the integrated multi-user system environment (iMUSE) which was driven by Nahco and Sahcol was not able to compete effectively for passenger service in the international market. And one of the things that helped SAHCO was that the iMUSE was removed; so the common use technical equipment (CUTE) became open for everybody to compete.
As a business entity, I believe that SAHCO took advantage of that impact that happened in the business and the fact that it was now on its own to become fully commercial. So, SAHCO’s growth started gradually from the 1990s and in fact the business environment is growing and more airlines are coming in.
So, the market was getting bigger. Nahco and SAHCO were getting bigger. There is no doubt that customers have left from Nahco and SAHCO, but also we have had customers leaving SAHCO to Nahco. This is the basis of a competitive environment. There are areas of competition and there are areas of cooperation. They rent from us; we rent from them.
In determining price, we have to worry about the issue of anti-trust. However, I think that is an area the regulator should come in so that we don’t compete in such a manner that will affect safety.
Lufthansa’s divestment from Nahco
There is no problem. Lufthansa is still one of our best clients. But if you cast your mind back, a few years ago most of the foreign airlines began to divest from ground handling. It had nothing to do with Nigeria; it had nothing to do with Nahco. So it was a decision taken at the corporate level to exit ground handling, not only in Nigeria but also all over. So, Lufthansa in 2016 had taken that decision and so leaving Nahco was a corporate decision taken in 2016 that finally came into effect in 2018.
I don’t see why a decision that was taken in Frankfort, in United Kingdom that was taken for every country should be an issue, if there is no mischief in telling that story and mischief in receiving that story. If the truth is taken the way it is that somebody in Frankfort took a decision and it can be verified, I do not see why it affects our image. If the truth is told the way it is, it will not be interpreted another way. However, if the truth is told in another way, it will be interpreted as it is told. It is important to know that if Lufthansa had issues with us, they will not be doing business with us. But it is important to note that if Lufthansa had issues it would not be doing business with us.
Nahco’s market share
In terms of market share, I have been told that we have 65 per cent shares of the market and my question has always been that 65 per cent of what? One thing I can assure you is that we will maintain our leadership position in the market.
Nahco-labour relationship
This is a unionised environment; so the best we will do is to manage the unions. As far as I am concerned, I think if the truth is told, decisions are better taken.
So, for me, what I have done is that everything is on the table; if you know how much we have made, then, it is from what we make that we can use. Like I told them, we have issues with our people and equipment; all these things require equipment. So, we have to put these into consideration.
The negotiation for the condition of service started last year September and it went on for a while and because it went on for a while, there were different issues. I don’t know the issues…but I can confirm to you that all the basic issues in the condition of service, we have tactically agreed on them and there is nothing that is outstanding with respect to the condition of service. We know that people always use different situations to address different other issues because when you are annoyed about something, if something happens you may react in another way.
I think as at now, there are no more issues between union and management. We are on the same path.
We have resolved the other issues and people have expressed themselves in various ways in terms of when the negotiations were going on, maybe to push the hand of management to able to reach an agreed point, but that point has been reached, so I don’t see any other thing that is going on.
