Ground handling services are under-priced in Nigeria – SAHCO MD/CEO
Aviation is a very big industry, but very little is known about ground handling, what roles do ground handling companies play in the industry?
It is very unfortunate that before now people had not been able to capture the importance of ground handling to aviation. But ground handling is the heart of aviation. If you must talk about safety in the air, you have to get it right on ground because everything happens on ground before takeoff to the sky.
Let me start from passenger handling. By the time a passenger buys its ticket, he needs to get checked in. We act as partners to airlines on ground. From the time a passenger has to check in; from the point you buy your tickets from your agent, which could be done anywhere outside the airport, by the time you get to the airport, after you enter the terminal building, the first person you meet is the ground handling agent. We receive you on behalf of the airline. Many people don’t get to see airline staff. You may not even have a contact with them because the ground handling takes care of the check-in process. Then we have what we call the boarding gate. By the time you get to the boarding gate, the ground handler is there to guide you into the aircraft.
When an aircraft takes off from its destination and it is landing in that destination, it is the duty of the ground handlers. All the complements the aircraft would need while it is on ground - from the passenger’s step, to the ground power units, to the air conditioner’s unit, to possibly the off-loading of the aircraft in terms of cargo or luggage, in terms of management of the load of the aircraft - are duties of ground handlers. These are specialised aspects of ground handling.
In fact, sometimes an aircraft might not even take off from the destination if they are not sure there is a ground handling agent on ground. Do you know that an aircraft can even carry a car or container, how do you off-load such into an aircraft if you don’t have ground handling services. We have complements of equipment we utilise to ensure that ground handling is done in the right way.
As a major ground handling company, what has been SAHCO’s exploit in the aviation industry?
SAHCO has grown. We operate from 18 airports in Nigeria . Fortunately, SAHCO came out of the ashes of the Nigeria Airways. It is the only surviving aspect of the Nigeria Airways. It used to be the ground operation unit of the Nigeria Airways. The government, in its wisdom, privatised SAHCO in 2009. The Sifax Group came in through Dr. Taiwo Afolabi to buy off SAHCO 100 per cent. From that day, the company began a new journey to glory. A lot of good things have happened to SAHCO.
The first thing that was done was a massive deployment of equipment into SAHCO, which began to give a new life to the organisation. We had to do some certifications, like the Safety Audit for Ground Operations (ISAGO), ISAGO certification, RA3 certification. At that time, we had a warehouse, but we couldn’t say it was anything compared to best practices outside the world. So we immediately started a project to have a totally new warehouse that could match the best anywhere in the world. As at 2014, we had one of the best warehouses anywhere in the world. In fact, this warehouse is the best in West Africa and it stands as one of the best in Africa. It is fully automated with all the complements of what a Customs bonded warehouse could be in terms of cold room, in terms of having a fault, a valuable room and every other complement that a warehouse could have. I can tell you that we have 22 loading bays. Whether during rain or sunny day, our work is not obstructed. Then we have all the equipment for loading and off-loading.
At the time SAHCO was bought over, what was the state of the company? What is the level of investment that has actually gone into it?
SAHCO was sold at N5.25billion. As I talk to you today, its asset has risen to more than N15billion,. It is a continuous growth. There are a lot of equipment coming in, worth about N1billion. As at that time, how many airlines were we handling? But between 2009 and now, all the new airlines that came into Nigeria came to us. The fortunes of the company have actually grown, in terms of facilities and confidence from customers.
What was the unique selling point that attracted more clients to you?
First, I want to believe that we were blessed to have a right investor in the person of Dr. Taiwo Afolabi. We have seen companies privatised in this country but they didn’t get to survive. That was the first thing. Again, most times when companies are privatised, the first thing they do is to reduce the number of staff. At the time SIFAX Group took over SAHCO, we had a staff strength of about 900, but today, our staff strength is about 1,500.
Secondly we boosted the confidence of the company through the deployment of modern brand new equipment. We also set up a training school to train all our staff.
SAHCO recently listed on the Nigerian Stock Exchange (NSE), what was the motivation behind this?
When SAHCO was privatised in 2009, there was a share purchase agreement signed between it and the government, through the Bureau for Public Enterprises (BPE). SAHCO was actually handed over to the SIFAX Group 100 per cent, with the agreement that after a period of time, a percentage should be divested to the Nigerian public. Sometime in 2017 when the director-general of the BPE came in, he referred us back to the share purchase agreement, saying it was time for us to go public. So we divested some of the shares to the Nigerian public.
What has been the response from the public since the Initial Public Offering (IPO) was opened?
The IPO is still on. It opened on November 12 and will close on December 19. These shares have been shared among 774 local governments. We just had a meeting with the courier that distributed the shares. He came in with the forms which indicated that they have actually done their own part.
The minimum you can get is 500 units. Each unit costs about N2,500, which every Nigerian can afford. It is just for people to be educated to get the form. Even if they can’t go to the bank, the form can be obtained on our website.
What is the capacity of your warehouse and what are the things it handles?
We can take about 300 tons of cargo. And we have a segment for perishable goods. We have cold rooms. We have a lot of imports coming in. We have a section in the warehouse for human remains. We also have a section for valuables and a vault for items that cannot just be kept in the open. We also have a section for bulk cargos.
How do you guard against theft in the warehouse?
Since we opened this warehouse in 2014, the issue of theft has been addressed. When we were building we took crowd control into consideration. If you are not licensed you cannot access our warehouse. From this office, up to our warehouse, is well covered with CCTV. There is a monitoring process. So there are people that are paid to monitor. We have various security and surveillance systems that monitor everything that comes in and goes out of the warehouse.
In terms of cargo, what are those things exported outside the country?
Recently, Nigerian exports have grown. We have perishable items like vegetable. I have seen all sorts of things being exported, up to human hair, vehicle parts, slippers, edible and non-edible things. I have seen palm oil being exported. So Nigerians are getting used to exports. The major problem we have is how to package our products. So government has to look at the aspect of packaging.
Are there no challenges?
First, ground handling is underpriced in Nigeria, and I think that needs to change. There is the need to change the music because ground handling is much capital intensive. The maintenance cost of equipment is huge, and for us to continue to operate safely, there is the need to look at that. The staff that handle up to $2m equipment and aircraft have to be well paid. So users of ground handling need to pay the right amount. We have also observed that most times the government is looking at giving the airlines a soft landing, they don’t look at ground handlings. Recently, we were talking about taking Value Added Tax (VAT) away from airlines, what about the ground handling company?
Have you made a case for it?
Yes we are talking. It is not only them that are talking, we have been talking. We have driven so much campaign in terms of waiver, but nobody has decided to listen to us. If you need to bring ground handling equipment into the country, you have to book, they have to produce specially for us. That is the situation we found ourselves. And the equipment we were buying at N1 three years ago now costs N3 , for example. We are talking about 300 per cent increase, yet we must operate safely.
We also paid from our nose to do certifications. You cannot say you are leaving anything undone. Even before we do business with airlines, they do a lot of audit on us. Are you using the right equipment? Are they well maintained as and when due? They want to be sure that trainings are done and when due. They double-check everything. All these things cost a lot of money.
We have 1,500 KVA generators which run overnight to ensure that goods in the cold room are always protected. All these things cost money.
When you say under-pricing, does it mean the charges are not commensurate with the services you render?
That is exactly what I mean. It is good that we begin to look at it. We all must be seen to be doing the right thing. Unfortunately , 2009 was the last time a rate was reviewed by the government for ground handling. From 2009 till date, there was increase in running cost. Even from cargo to ramp operations, we have not increased our rate.
When will you say is the busiest period in your warehouse?
This time of the year.