Managing Director of Skyway Aviation Handling Company Limited, Olurepo Owolabi, in this interview with Chinedu Eze, said there should be incentives to encourage agro-allied exports. He also called for a review of the policy that gives the Nigerian Customs Service duty waivers for aircraft and aircraft equipment imports, saying it is a threat to safety
Let uslook at cargo handling in 2015? Has the government addressed some of the challenges highlighted earlier; then what do you want the government to do in 2016?
Well, the year has run to an end and we are very, very grateful to God Almighty. The year itself on handling has been very, very productive, challenging and intimidating for investors, who may not feel like coming because of the commitments on the equipment, rates charges for clearing by aviation agencies and even some of the governments vis-à-vis the issue of been present in some of the airports that has been built.This is because you need minimum of five equipment in any location successfully, which means you need a Ground Support Equipment (GPU), you need step, you need air condition and then you need a tow truck, you need baggage cart for loads, you need cargo king, which is for loading, without going for the heavy equipment. I am talking as or let’s say you have an aircraft Airbus A300-400 or 500, that is the one I am making reference to because when you now look at other areas of having tow bridges and so on then you will be thinking of the FMC, push backs and heavy equipment being on it.
So that has been a challenge and do we really at SAHCOL address some of the issues not minding cost and what it has created looking at the foreign exchange and all that is happening in the country? Then the answer will be yes, that we have been doing that. Within the year we bought a lot of equipment and we even regretted because of the way the Customs are treating us at the port. A single push back was zeroed to pay almost about N60 million and that push back is very essential. It is the push back that pushes the aircraft just within five minutes, it is done. And you can imagine how many aircraft it will push, but it is essential you must buy it and when you want to buy you must buy the correct one. This is why I will keep on re-emphasizing the need for government to review its tariffs on imported safety critical equipment. And that is why the state governments in their own wisdom have decided to open up by building airports. If any government decides to build an airport, it should not only look at the idea of flying in and out of the airport, it should also look at the commercial value and abide by regulatory standard in ensuring that it has the necessary equipment for handling.
Maybe at the time they are built some of them may not have enough of such commercial value but in the long run he needs these things because of the way our roads are. No businessman wants to die on the road. They still believe that flying is still the best means of travel. And if we are looking for investment in your state then you must be able to provide such facilities as a governor.
You just mentioned that Customs charges are high but a few months ago government gave a waiver for such equipment for companies, who are players in this sector to come in without much duty, does it mean that SAHCOL is unable to tap into that?
We did, but it was a mere promise, the policy was never implemented. It was zeroed down to even spare parts for airlines and I don’t how they can pick airlines before picking the handling companies that are seriously in need of the equipment. Because come to think of it, we have about five handling companies in the country only two or three are noticeable if you look at it. There are five handling companies or six in the country today because they couldn’t even compete because of the heavy monetary attachment on this equipment that should be acquired. And you need these equipment to carry baggage, you need it to assist passengers to come down, you need to assist the aircraft to start their engine, you need to assist the aircraft in cooling the cabin; I can continue to mention the needs that without any handling company there is no airport, and without any handling company there is no airline because the airline relies on handling company.
The Federal Airports Authority of Nigeria (FAAN) relies on us to provide these services to the airlines, yet the charges they ask us to pay are outrageous. So we are in a fix. FAAN is on our neck with heavy bills, we are in a fix, when we come to equipment the Customs are on our neck, even when we talk to some of them that these equipment do not even move out, that it is within the tarmac and by the time they come up with the bills, you don’t even make any effort to remove it, demurrage comes in and then you are at the mercy of demurrage and you are at the mercy of the Customs. I think the government needs to sincerely look into these issues that we have been shouting on as long as they are looking for improved safety in air travel.
And that brings me to the issue of what happened at Bauchi airport just recently when ladder was used to disembark passengers in a Boeing 737-500 aircraft. As a policy we don’t use ladder. If you check all our statement that we have been issuing to the public, we have been re-emphasizing the need to give handling services to professionals. If you don’t handle you don’t get involved in what you don’t do. Handling is a professional job that you do and when you are doing it you are trained to do so. You have all the necessary things that it entails to do so. If you build an airport you need to call the handling companies to assist you in providing the enabling environment and the needed service, but you need to help them to set up. And the issue is very simple, you have some of these airports that are just handling one flight a day and I have enumerated all the equipment that needed to be put into that airport.
You need the staff, how much did they pay? Peanuts. Some of it does not even pay the salary of a single staff. So do you want us to put our equipment in these airports? The answer is no. We cannot do that but some of the governors in their own wisdom parley with us, they assist us in coming to their airports to put some of our equipment there. And they assist us in a way for us to be able to locate and make sure that safety is part of their prerequisite and that is what we are doing. We did it in Birnin Kebbi, we have our equipment there, we have assisted Air Peace when they arrived during the opening of the place. We have done it in Maiduguri, when the man insisted, we told him our problems, he said he is ready to assist in the logistics but at the same time they need to do more if they needed the services of a reputable handling companies.
What do you think state governments should do to insist that the relevant equipment are in place for those of them who are building airports and those who propose to build more airports because of safety and security?
Handling, as I said is not Nigerian rules and regulations, it is an international norm. It is a standard. There is a standard. There are things that are needed in this airport, so when any government builds an airport or intends to build it should put those things in place. Just like Lagos State, they are trying to build an airport at Lekki, we have been called in to be part of them for their negotiations, we have been part of it, briefing them as giving them advice at no cost. But when it comes to the final drawing they need to assist in getting equipment to those airports. Equipment are essential, whether it is a propeller aircraft, a Boeing B737 or Boeing B747, we never know, that is the more reason these three, four, five essential things that I have mentioned earlier are needed in any airport in the world.There are some very small airline that do operate into the airport that do not need the service of steps because they have in built steps, so they use that but at the same time they need dolly, they need tow tugs, they need other things to be able to complement the load they are carrying. But you observe that some of them, you see them sending loaders to the airport, that are not part of our staff to carry loads. The security of every airport lies on FAAN. When you are not in the business of handling don’t get yourself involved. You are an airline, you strictly stick to taking your passengers from point A to point B, the issue of handling their baggage, handling the passengers and handling every other thing belongs to us, belongs to the handling company and nobody else. And that is why we need the state government to realize that whenever they are building airport they should invite the ground handling companies to come and advise them. And these are part of the prerequisite that the Nigerian Civil Aviation Authority (NCAA) need to re-emphasize from time to time as they are doing for the Nigerian Airspace Management Agency (NAMA), and some other things because they are the regulator.
Organizations like you may not be able to access foreign exchange from the Central Bank of Nigeria (CBN) window, getting foreign exchange from the parallel market is prohibitively high and it is unfriendly for your business.At the rate at which the dollar is going for the naira, it may be hard for those of you who are in private business, what do you think government should do to make it a bit affordable and convenient so that if you need to carry out repairs of your equipment that it will reduce cost for you?
I am happy that you even raise this issue, as I am talking to you we have about four of our equipment that are still at the Wharf because of the heavy tariff that is placed on them. We are looking here and there to see how we can get them. And what the Chairman/Chief Executive Dr. Taiwo Afolabi believes is that he doesn’t believe in half measure, if you want to handle, you handle with equipment that are seasoned, not dilapidated equipment that we have. I can assure you, as at today, all our equipment are almost 85 to 87 per cent new. The same thing we have done on our warehouse, we have the best warehouse in Africa as it is being said. People have come from abroad and they have seen us, the process that we have initiated keeps away touts and other unsavoury activities. So it is there for people to see, such organisations doing this need encouragement, how is government encouraging us? Is it by giving us high tariffs that will not allow us to function? And the sad part of it is that the moment you raise a little penny to the cost of service to these airlines they start kicking, they threaten to go to A handling company or B handling company and because that is what you rely on in even trying to make ends meet, you are saddled to do what you will do and not raise the tariff on them. You cannot raise tariff even on the goods, they kick, that is why if government is looking at issues like this and looking at the future of what we are looking at which is the e xport, we are prepared for it.
We have more than six freezers for storage, for export, because we believe that the next future of Nigeria lies on export of goods, not only on import, so we are prepared, just to tell you how much money that has been tied down to be able to meet up with this demand, we really need the help of the federal government and then we need succour from FAAN by not giving us charges that are not even acceptable in the world. The former Minister of Aviation set up some committees to look into the tariff but the report of the committees never saw the light of the day. So this sort of thing needs to be addressed. I am surprised that some newspapers were reporting that people were using ladders to come down from an airplane, well it happened but we never get ourselves involved in such a thing. Because the height of the aircraft you are looking at if anybody should fall from that height that is disaster, they don’t get up, I am telling you. Once somebody falls off from that height you think it is very low, the height is about five plus meters, but it looks low. Nobody jumps from that place and then gets up without having any mishap. And it is time for us to do things the way it is done internationally.
I attended a press conference some weeks back on agro-allied and the person said that SAHCOL has the best facilities. I want you to look at the immediate potential of agro-allied produce from Nigeria, including packaging and export?
First of all, if you watch all my interviews since last year before even the government decided to look at this issue of export for our products, I have been talking about it and trying to ask the Standard Organisation of Nigeria that they need to do more by involving other government agencies. What we have today is a lot of bottlenecks.
Llet me start with the airports, have the agencies been trained to change their mind on how to assist export? How many agencies do check on export before even allowed to go out of the country? The bottlenecks, you move from A, B, C, D, E, F and as you are moving the tariff is going up. For a farmer do you think he will wait to see such a thing? Facilities, how many airports have the needed facilities? For us, we said we are planning for the future, we spent so much, it is not that we have the money, banks have been supporting us and so on, and then we were preparing for the future because we believe that export is the future of this country not oil. And based on that as they said, they are correct, we have almost six now will be ready, fridge and freezers for export and import into this country. And when I say six freezers, the volumes, some it is up to this room per one. And how it cools it, you have the electricity tariff that is going to be on us. Then in addition to this, even while we are trying to encourage this, you still have this logistics, the packaging companies have they woken up to come up with Standard Organization standard with export promotion council standard to find out how yam tubers or any tuber at all could be packaged? How are oranges going to be packaged? There are mangoes that are so big produced in the northern part of the country, how could they be packaged?
Those people need to braze up to work together with SON and then to be able to create the packaging. Packaging encourages you to even earn more; the way we are sending out our things as of today is not good. I saw them yesterday while I was passing through, they were sending out ‘Ugu’ (pumpkin) leaves. You know we can handle it. Ugu leaves when it comes to us even if the flight is canceled we can still put it at the correct temperature because we have the facility. So you see the way they package it, it will arrive in good condition at South Africa or any other place that these things are needed. But they will be willing to spend more money on it if it is well packaged. The airlines are flying back empty in their bellies, fourteen pallets, seventeen pallets of cargo that comes to this country, they fly back empty, why can’t we make the best use of it? If you are sending tuber of yam, banana, all these things even through the sea, it takes two, three weeks before it arrives to your destination but within 48 hours at the airport here it will reach your destination. And the cost will be minimal compared to what you even pay on going by sea because those who are flying empty, once they see things that they could convey on return flight, it will give those importers opportunity to have lower tariffs.And then the owners of these freighters will look at it to see how they can reduce and give some succor to the exporters and importers; that is what other countries are doing in the world. We need to braze up. The SON, the Nigeria Export Promotion Council should invite those people doing packaging to come forward to look at areas on how to package. You see a lot of changes in orange juice packaging in the country now, you have a choice, even some tempt you when you don’t want to drink it, that is what is done abroad, let’s use this opportunity for us to be able to move forward.
In some fora you have canvassed that FAAN should lower or consolidate their charges in a way that handling companies and airlines are not over tasked for them to remain in business, the second lap of the question is the fact that FAAN is not giving you enough land in the airport for your expansion. How do you want the new regime to look into the situation?
By the special grace of God we are going to visit the new Minister and we are going to represent our case. They have collected out land that we paid for, we are only waiting for clearance for them to give us the necessary documents and they turned it into a car park. With all what you have seen here they are doing everything to have a car park in our front, car parks are built outside. When you want to clear things, you walk across to the cargo village to canvass to do your transaction, when you are ready to carry your cargo, you send for the load, it comes in a lorry or whatever it comes in. so what they have done is barbaric. And we have been emphasizing this issue several times. The painful aspect of it is that even this equipment that we have been talking about doesn’t even leave the tarmac, that we pay heavy money on it, can you believe that FAAN still wants us to pay tax on it per year and at the same time they are getting five per cent on the total revenue we made in a year. That is not even double taxation it is triple taxation. I have pointed it out several times and we are still on it, it has not been rectified. There is no way the equipment I am using to make the money, you want to tax me on it and at the same time you want to collect the total revenue whether gain or loss you still collect your five per cent. Am I just working for FAAN? What of the other shareholders? Those investors are running away because there is no way you could make money in such environment.
Somebody also raised this issue, he said that FAAN’s concentrate on aeronautical charges, that they have to look at non-aeronautical so that they will lower the tariffs for aeronautical in order to make exports cheaper?
I am leaving the issue of FAAN collecting fee on baggage that comes in or on baggage that goes out. The question I want to ask them is very simple. Please can they tell me exactly what they have contributed either in terms of equipment, are they the one that provided the equipment for me? Or are they the one that provided the equipment that brings it out even to the customers? This is an enlightened country, issues like this should be looked into, if you want to make revenue, you are free to make revenue. When you are even making revenue at my own detriment, you are still charging me, you are still giving me heavy tariff, you are still charging me on even the equipment, that is why I said they charge us double or triple taxation. Such things that I use my equipment to bring out, you collect some revenue from them, the one that is going out you collect some revenue from it but you never pay a dime, you did not assist me in an y of the equipment that generated this activity. So how do you go about it?
There is clamour for stronger airlines because presently the airlines are weak. It is believed that the handling companies will benefit tremendously if domestic carriers operate profitably, what do you think government should do to assist the airlines who are the major clients you have so that when it is well with them naturally it will also translate to fortune for you?
When you say airlines are you making reference to international or to our core domestic carriers? For domestic airlines I think we need to come together. The issue of using only your name in airline industry should be forgotten. I will give an example. I heard that recently Delta has bought Virgin. Are you saying that Virgin is not good enough as a name? Or are you saying that Delta is not good as a name? This is because they are not myopic. When you look at Nigerians which I am part of it as a whole, this issue of saying it is me, needs to be forgotten if we want to be in business. Whatever is happening in this airline that I am making reference to is the same thing that is happening in the companies, that the company will float today tomorrow you will see it collapse, you will be seeing only one name, that is not healthy. Some of the airlines are epileptic, they need to come together and plan their routes.
The government needs to assist them too in the tariff they are given especially to some of these areas that are needed since our roads are dangerous. You want business to flourish in any of these states, you need to create an environment that will be able to allow businessmen to do their business. They are businessmen, two hours, three hours they want to come back from their business and they move on. That is the type of business they are looking at. So Nigerian operators should come together, that is one. Two, I think the issue of having sixth freedom whereby one international airline operates to more than one airport in the country should be looked into. If you pick Abuja, you pick Lagos fine, if you pick Lagos, you pick Kano fine, but when you have multiple locations to all these airports is not good for the domestic carriers.I remember in the olden days when there was connection from Benin-Lagos by air, Lagos-London by air, Benin-Lagos is being picked by Nigeria Airways. Then London maybe to Gatwick by British Airways but that Benin-Lagos that is being operated by Nigerian Airways is being paid for by British Airways under a code share agreement. But the foreign airlines have seen that there is no need for the code-share so they have stopped because they can get multiple entry points without partnering with local airlines. So all that they are operating is point to point,you use your own money to come from Port Harcourt to Lagos to come and take flight. Nigeria is a country where we travel a lot, no airline can afford not to use us, so they are milking us, ripping off our travellers with high fares.
So you have Port Harcourt-Lagos on local, it is supposed to be on any other airline because they have a code share. Once the airlines that are coming and they know this is the situation and they need passengers you see them having alliance with them, even when they are bringing their passengers back to Lagos. I can sit down here today and route my ticket even when it was not allowed I can route my ticket on British Airways, I can route my ticket from here to any part of the world whereas the agreement is between Lagos and London. The other code share, moving from London to other places needs to have some little money that needs to reflect to the government, I don’t know whether that is being done or not, that is why you have millions of their money still stagnant here, that they are waiting for them to be exported because you use your ticket, from here I can go to Orlando from here only on one single airline. So we are losing a lot of money on these areas and I know that there was a section before that was handling the commercial agreement with international airlines. I don’t know whether that section has been abandoned and if it is not abandoned these are the areas at least the government should look into. Because to me these carriers are making a lot of money out of us and we are not making anything out of them.
