Price competition squeezing ground handling business in Nigeria


Competition between the two major handling companies in Nigeria has led to under-pricing of the services they render to airlines and other clients, and this has affected the growth of the business adversely, Basil Agboarumi, acting managing director of SAHCOL, says.
Agboarumi made this known last week at the League of Airports and Aviation Correspondents (LAAC) interactive gateway forum where he reiterated that ground handlers were charging below par due to the unnecessary price war.
He noted that businesses were looking for common grounds to pull resources as it was done in other climes, and called for regulators to standardise pricing of the services rendered.
“Cooperation is for the best of the industry; we as a company have identified cooperation as the tonic to building 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 stage of maturity. 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,” he said.
On the price war currently rocking the handling companies, he said for years despite the increase in exchange of the dollar to naira, the handling rates had remained the same even though airlines were currently changing their fares to adjust to trend.
“Let us look at the banking industry, for instance; there is a regulator that regulates their activities. The handling rates we pay in Nigeria has not changed over the years despite the fall in the value of the naira to dollars and other major currencies. The airlines have consistently changed their fares, but we have not done that for so many years. We still operate with the same tariff 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,” he said.
He called on government to support handling companies the way they have supported airlines stressing that the zero-tariff regime should be extended to handling companies too.