Ground handling companies require huge cash for operational equipment. In this interview with Aviation Correspondent KELVIN OSA-OKUNBOR, Skyways Aviation Handling Company Limited (SAHCOL) Managing Director Mr Oluropo Owolabi says zero tariff on such equipment, allocation of more space at airports to mount the equipment and reduction in multiple taxes can create a more conducive atmosphere for ancillary service providers.
The Skyways Aviation Handling Limited (SAHCOL) has invested in cargo warehouse to boost its operations. Has this project enhanced your operations?
We have just completed this project you mentioned and it is the biggest not only in Nigeria, but in West Africa and perhaps one of the largest in Africa. The investment in this project was borne out of the desire to enhance our operational capacity to give us an edge in cargo ground handling and passenger handling in Nigeria’s airports. We are driven by the need to boost our operational capacity, and one of the ways of achieving this is to pool resources to build facilities like the cargo house, which invariably will put us in a leading position as a foremost cargo, passenger and ground handling company. We operate around the airport where we simply carry out ancillary services to airlines and cargo companies. The new cargo warehouse is now assisting us to carry out our duties of cargo and passenger facilitation. Before the warehouse was built, facilitation was at a slower pace, but all that has improved now.
Double taxation is a major concern for operators. How is SAHCOL coping with this?
Well, ground handling companies and others in the aviation sector are grappling with many challenges. Overtime, as a company, we have made representations to the government to draw attention to the challenges we are facing in the business. Over taxation of ground handling companies is a key challenge for us and we (operators) think this should be seriously addressed by the government. It has always been a serious issue which is yet to be resolved, but I understand that presentations have been made to the Minister of Aviation, who has passed it to a committee to look into it and make appropriate recommendations. I am very positive that the government will look into it and come up with ways to assist us. All the multi-million Naira equipment we invested and pay duties on are stationed on the tarmac for our operations and cannot be parked on the street, yet we are still being billed by FAAN for this. Do they expect us to take our equipment like the FMC Commanders to the street? The government meant well for the industry when it said it was embarking on the upgrading of airports, but at the same time, it should be supportive when handling companies are buying new equipment to be able to facilitate passengers and airline needs. So, I sincerely believe that since airlines are enjoying zero tariff on aircraft spare parts, the same should be extended to handling companies on the equipment being imported by giving us duty free concession on spare parts. We have been agitating on this for long. As ground handling company, we complement the work of passenger airlines, by providing support services to their aircraft for passenger and cargo operations.
What are the major constraints SAHCOL is facing?
As a ground handling company, we operate in an environment that is logistic intensive. Consequently, we are constantly working to ensure that our operations run on schedule under circumstances that we can handle. But it is disturbing that we are not allocated enough space to position our operational equipment at the airside of major airports. We consider this a major challenge because after the airport authority, airlines and ground handling companies should be the next most important operators. Given this consideration, that we complement the responsibilities of airlines, we should be given more land space to carry put effective operations. After FAAN, the next most important entity that must be appreciated at the airports are the handling companies. The handling companies must be given more space. Our operational equipment needs to be positioned very close to an aircraft on arrival. Once an airport is built, there must be a place given to handling companies to position their equipment. You cannot expect an aircraft to arrive and then it takes about 20 minutes before you position your equipment that is not standard practice because there could be an emergency. That is why in most airports, you see some space allocated to airlines to park their equipment, so the handling companies too should be given a space to ensure that these equipment are parked well. These are challenges in most of our airports.
What is the way around this challenge?
FAAN should realise that airlines and handling companies are complementary to the airports and that they must be able to allocate space to them without extra cost to park their equipment. It is statutory. You cannot build an airport and not make provision for where equipment should be parked safely. They are modern equipment and if they are dilapidated, FAAN has the right to order their removal so as not to constitute hazard to safe and secure airport operations.
But as it is now, most of us are having new equipment because of new airlines that have started operations. The airport authority should do something about this to ease our operations. Also the charges imposed on the handling companies are exorbitant, especially the charge on space allocation. Many years ago, ground handling companies only paid charges from their annual profit to FAAN. To pay additional charges as we are being asked by the airport authority to pay now amounts to double taxation. The government must look into this issue so that FAAN would not ask us to pay charges on the space provided for us to park our handling equipment and at the same time expect us to pay certain per cent of our profit as tax that is harmful for our business. That would amount to double taxation and the earlier government looked into this, the better. We have complained and officially written to the Ministry of Aviation about this.
In what ways could the government assist ground handling companies?
We sincerely hope that the government would assist ground handling companies in implementing the rules that govern the procedures of clearance of cargo at the Customs facility at our airports. Putting in place very clearly designed operational procedures by all government agencies at the airports that deal with cargo will reduce the incessant closure of cargo warehouses. Such closure is not good for ground handling companies, because we lose billions of Naira. We think government could do more to improve security at the warehouse because inadequate security arrangement had forced us to engage extra hands to secure people’s baggage. Also, the government should intervene by increasing the size of airport aprons to avoid the congestion of cargo at peak periods because whenever there is cargo congestion at the apron we incur more cost as we have to engage extra hands to decongest the place. So, if there is expansion of the apron, it would make the operating environment more conducive. For now, we have to work extra hours with the men of the Nigeria Customs Service to decongest the tarmac because of the small size of the apron where the cargo freighters are parked. So, its a lot of workload.
The government could also provide modern conveyor belts at airports to make the passenger baggage reclaim seamless. If the conveyor belts are not working or are not good, passengers do not want to know whether or not it is our responsibility. So, we have to go extra mile by doubling our staff on shift to meet the challenges. Don’t forget that we also pay overtime allowances to our staff for working extra hours to be able to meet passengers’ expectations.
What was the impact of last year’s closure of the Customs bonded warehouse on the operations of SAHCOL?
We are even yet to get out of it. So, as it is now, it has been very difficult to compute our losses. No doubt, we lost millions of naira. Don’t forget that we have to increase our manpower to assist in the clearing of backlog of cargo teso be able to meet up with the expectations of our customers during the festive seasons.
What are the lessons from that episode?
The lessons learnt from that closure are very clear. It is a learning curve for all operators including clearing agents to follow due process in the clearance of cargo. If you are an agent and you wanted to clear goods on behalf of your client, you have to follow due process because you are not the custodian of the goods. In effect, what the Customs is saying is that things must be done properly henceforth. They have said there should be a streamlined procedure on ways goods are cleared. The clients have no business inside the warehouse. Let the agents bring out the goods for examination by the Customs after the Customs have finished their examination and certified it okay. The system introduced by the Customs will trigger information in the documents, not only here in Lagos but also in Abuja. This will ease clearance of the goods to be released and immediately the Customs get the release order, hand it over to licensed Customs Agent which in turn bring the release order to us after payment of all necessary handling charges. We then open our warehouse for the agent to locate the goods and thereafter load it into the waiting van and move out of our warehouse; and you have nothing to do with the Customs again. For example, if you have a cargo to clear as an agent, we will appreciate if you have cargo to clear tomorrow, why can’t you come today to process all your documentations once and for all and by the time you come to the warehouse the following day, it’s a matter of showing your documents to our officials for verification and thereafter get your cargo released within a very short period.
How is SAHCOL grappling with operational rules and procedures affecting cargo freighting?
The rules and procedures are applicable internationally and we should respect and operate as stipulated. The freighters arrive with their fuselage load of cargo. You offload to the cargo warehouse, palletise and de-palletise and stack them on to the racks for Customs examination. In fact, the new warehouse has taken cognisance of these procedures, so that cargo operations are not in a mess when the warehouse begins operations. It has taken care of passengers’ and customs needs and those of the airlines in terms of their pallets and for passengers as regards their baggage. Then Customs, in terms of facilities to be provided to allow them function well. All these are now being provided by SAHCOL.
When do you hope to inaugurate your new cargo warehouse?
Before the end of February 2015, we will start the test running of the facilities provided in the warehouse. The type of facilities there are a complete village on its own. We are looking at March 2015 for the formal opening of the new warehouse.
What is unique about your new cargo warehouse?
Just list all that is required in the handling of cargo, we have the facilities in place at the new warehouse. We have facilities for handling human remains, facilities for dangerous goods, for cold-room storage and for freezers. We also have facility for the handling of radio-active materials, for safe keeping of valuables. We have facility for perishables like Vaccines and Pharmaceutical products and so on. We are, therefore, providing facilities for all the necessary needs that are expected in a warehouse.
How is SAHCOL handling security around the airport as it affects its operations?
The provision of security gadgets to deter and detect dangerous tools such as guns, bombs and other explosive materials is that of the government. On our part, we assist the government in the provision of X-ray machines for the screening of exports and imports. It is, therefore, the job of the Customs to screen all in-bound and outbound goods. Ours is to accept the goods already screened by the Customs after they must have carried out 100 per cent checks of all imports. That is why we have de-palletisation of all imports. You don’t just carry goods from the tarmac and hand it over straight to the owner or clearing agents, it undergoes a lot of procedures. We are conscious of security and ensuring that banned items are not brought in through our warehouse. If you ask the Nigeria Drug Law Enforcement Agency (NDLEA) officials, they will tell you the level of cooperation between NDLEA and SAHCOL in this circumstance. They will tell you that we are partners in progress and if not excellent in ensuring that illegal items does not pass through our warehouse. Let me say this, SAHCOL has nothing to do with the process of detecting banned items. When agents bring goods, we have officials of the NDLEA, NAFDAC, Customs and Plant Quarantine and other security operatives to scrutinise all items. It is during such exercise that some of these illegal items are detected. All necessary procedures are carried out and completed before the cargos are handed over to us and there to the apron for onward loading into the aircraft.
Do you have plans to make SAHCOL a quoted company on the Nigerian Stock Exchange (NSE)?
We are surely working towards being listed on the stock exchange. But, our ambitious plans have been hampered by some factors not limited to the outbreak of the Ebola virus disease that affected many countries in West Africa. This came at a time when we had concluded plans to expand our operations in the West African Coast; otherwise we would have been operating in one or two other West African countries. However, anytime from now, once we get the green light on the resolution of the Ebola crisis, we will go back to those countries to resume negotiations.
How are you handling issues of global certification and training for SAHCOL staff?
We are driven by human capacity development, and this explains why we invest in the training of our staff.We have over the years benchmarked our operations within the requirements of global best practices.We have attained the certification of the global air transport body, International Air Transport Association (IATA). We achieved this over nine months ago.
What will you say is the motivation for your staff?
Industrial harmony has been paramount in the mind of our Chairman, Mr. Taiwo Afolabi, the Board and Management of SAHCOL. We appreciate that if the staff are not cooperative, it’s hard to achieve positive changes. The staff have been wonderful in making SAHCOL a success story. The management and board of the company have ensured that they are well remunerated and their welfare taken care of, including training and re-training to improve on their skill and proficiency. Our staff will continue to smile as we improve on our services. Our staffs are well taken care of and we hope to enhance their pay package based on our revenue. We plan to improve the quality of service so as to attract more clients.
If you want your staff to work well, you must endeavour to remunerate them well. You can’t afford to use your staff like slave. They know that we have zero tolerance on the issue of pilfering. It is on record that we’ve been doing that and also on record that our staff have seen passengers’ belongings and reported to the management which in turn returned such items to the rightful owners. They usually report back to us and we have always commended them for such good conduct. We give them commendation letter in addition to financial reward so as to encourage them to do more. At the same time, whoever messes up with passengers’ luggage or cargo, we show them the way out.
How will you rate SAHCOL in equipment acquisition?
We have the best ground handling equipment so far in the country. We are, however, not satisfied yet, because the more we improve and expand on our service delivery, the more we will need to acquire additional equipment to meet up with the demand of our clients. The types of equipment we use are not the type you buy and keep. The more the need arises, the more equipment we add.
Is SAHCOL expanding its clientele base?
We have many airlines that we cater for. In this business you gain some and lose some. That is the game. I can assure you that those we work for enjoy our services very well. We look forward for more customers in 2015. Our customers come first in our line of thought before any other thing. So far, on the domestic scene we handle almost 80 per cent of the airlines, while on the international we have 40 per cent of the business.
What is the scale of your operations?
There are few of our operations you can see and others you can’t. Don’t forget we operate in almost 18 airports in the country. Most state governments in the country are agitating for our presence to be felt there in their states. Right now, in addition to the 18 airports, we are also in Uyo, Asaba and Owerri.
W hat is the capacity of your new ware house?
The square meters of the space to accommodate cargo are over a 100, 000 square meters. The essence of the new warehouse is to handle exclusively exports, which the Minister is aggressively canvassing. The old warehouse will be totally dedicated for imports.
