Aviation companies operating at the country’s airports are suffering from low-profit margins as a result of low tariffs and rising costs of doing business in the country.
According to reports, ground handling rates in Nigeria are the lowest in Africa, with domestic operators paying handlers between N10,000 and N20,000 for full ground handling charges.
Foreign airline operators, for example, charge $1,673 for narrow-body aircraft and $4,715 for wide-body aircraft in Guinea, while Senegal charges $2,250 for narrow-body aircraft and $5,259 for wide-body aircraft.
Cameroon charges $1,400 for narrow-body planes and $4,500 for wide-body planes, whereas Ghana charges $1,500 for narrow-body planes and $4,150 for wide body planes.
As a result, aviation stakeholders have stated that low-profit margins would put a strain on safety and security, as well as the long-term viability of the country’s ground handling business.
They contended that ground-handling companies can no longer afford to invest in innovative technology, modern equipment, recruiting and retaining quality personnel, and providing training aimed at preventing incidents and accidents.
However, in Nigeria, the rates range from $400 to $1,139 (narrow-body) depending on the negotiating power of a foreign carrier, and from $3,000 to $3,200 (wide-body) depending on the negotiation power of the foreign carrier and local airlines.
Kayode Oluwasegun-Ojo, former managing director of Nigeria Aviation Handling Company (NAHCO), stated that the fees charged by aviation handling companies are not sustainable in order to drive growth in the industry.
“If you charge for a service that is less than cost-reflective, it means you are not recovering your costs, and in the long run, it will not be sustainable,” he explained. Because aviation is so important, a lack of sustainability has serious consequences.
“You know that most accidents and incidents in the aviation industry actually occur on take-off and landing. It is extremely important that we take care of what happens on the ground and in this case, via the ground handlers, in charging cost-reflective tariff.
“That means you can recover cost with some margins for hospitability, including being able to pay taxes to the government. Companies that make losses will not be able to pay taxes,” he pointed out.
“If Ghana is charging about $1,500 to handle narrow-body aircraft and Nigeria is charging this little, then something is wrong with our system. We must do something about helping our country and industry to grow. We have a huge market here and we must do something to boost the sector, starting from the ground handlers.”
Olumide Ohunayo, assistant secretary of the aviation round table, also spoke, saying that poor profit margins of aviation handling businesses will have an impact on safety. He urged that a standard be established since Nigeria cannot afford to be priced out of the region.
Ground-handling charges, according to aviation analyst Tayo Ojuri, must be competitive and reflect the true cost of operations in order to ensure safe and secure commercial operations; adding that, it should be set by the market through competition to ensure that they reflect the most cost-effective level for providing optimal ground handling services.