2020: Tough Year for Aviation Handling Companies

posted on 1st January 2021 by Eddie Saunders
2020: Tough Year for Aviation Handling Companies

By Chinedu Eze

Aviation handling companies in the country had a very tough year in 2020, due to the coronavirus pandemic.

But succour came the way of the operators during the lockdown when cargo flights were allowed to operate to deliver essentials, especially medical items and food.

Then, it was followed by evacuation, which irregularity wouldn’t have been a sure source of income for the handling concerns, which deliver more services to scheduled passenger throughput than cargo services, especially on domestic flight operations.

The Managing Director of Skyway Aviation Handling Plc (SAHCO), Basil Agboarumi, told that handling companies faced same challenges airlines are facing, insisting that the situation was even worse for handling companies because they have not been allowed to increase the cost of their services, which follows processes and approvals, unlike the airlines that have increased ticket prices in response to economic realities.

He said the major challenge, however, was the fact that equipment used by handling companies are imported. Therefore, he stated that it is very difficult to acquire them presently because of the forex scarcity.

Agboarumi noted that while handling companies earn revenue in naira; they have to generate dollars to buy the essential equipment for their business.

“All our equipment is produced abroad. Forex is hard to get because our revenue is in Naira. Airlines recently increased ticket fares in tandem with the economic realities on ground but we cannot do so, unless we receive approval from the Nigerian Civil Aviation Authority (NCAA).

“We hope that in 2021 when coronavirus issues are dealt with, business will bounce back, but COVID-19 frustrated our efforts in 2020. We had to spend money, which we did not budget for to meet the new needs of Coronavirus protocol.

“We had to buy Personal Protective Equipment (PPEs) for our staff. We did not sack any of our workers. We sent them home and kept them on salary and when we brought them back we paid for them to be trained to become COVID-19 compliant in the bid to halt the spread of the pandemic. So there was new standard of operation (SOP) and we have to abide by it,” Agboarumi said.

Also the Chief Executive Officer of Mainstream Cargo Limited, Seyi Adewale said that Nigeria’s aviation ground handling companies who earn income through aircraft turnaround and passenger services may end the fourth quarter of 2020 financial results in the negative, adding that they have already posted Q3 financial losses.

THISDAY learnt that the Nigerian Aviation Handling Company Plc (NAHCO Aviance) posted N165.9 million loss for the second quarter of 2020 and estimates indicated that third quarter loss was above N100 million.

Also, Skypower Aviation Handling Company Plc (SAHCO) posted N98.3 million loss for half year and it was estimated that the company would still be in the negative zone by the end of third quarter and subsequently the end of the year.

However, the Association of Aviation Ground Handlers (AGHAN), made up of Nigerian Aviation Handling Company (NAHCO) Plc, the Skyway Aviation Handling Company (SAHCO) and Aviation Handling Services (AHS) had forecasted N20 billion loss in revenue generations in 2020 due to the COVID-19 pandemic, which devastated global economy since the beginning of the year.

Chairman, AGHAN, Adigun Olaniyi recently decried the advent of COVID-19 virus, saying it had grounded handling business in the sector, remarking that the unlocking of the economy by the federal government did not indicate the end to the crisis in the country.

Olaniyi regretted that due to the pandemic, the entire first quarter of 2020 was wasted, while a major part of the second quarter was also lost to the crisis, stressing that only the third and fourth quarter could be salvaged from 2020, but with the #endSARS and the recession that is currently plaguing the country, the handling companies are still in the financial quagmire.

“We buy our equipment in dollars and when we ordered for these equipment, the Naira was still N360 to a dollar. We have import duties to pay to respective bodies. The government did not give us import waiver as it did to the airlines and others, yet, an ordinary forklift is not produced here in Nigeria; we only assemble them in the country. Furthermore, the ground handlers charge for their services in naira.

“One can say cargo is coming in, but remember what we call the multiplier effect. If America can lose up to 30 million jobs so far because of the crisis, can you quantify the number of jobs we are going to lose in Nigeria?

“If the importers bring in goods for instance, and we decided to clear it free of charge and Nigerians don’t have enough capital to purchase the goods because they have lost their jobs, recession will be reinforced and the importers will not be encouraged to bring in additional goods. So, there is going to be reduction in the cargo inflow because there is no economic power to buy these goods and services,” he said.