Ground handlers change tack as regulator rejects price cap

Dar es Salaam. Ground handling companies have come up with new demands after their proposal for the price cap was turned down by the regulator.

Ground handlers are on record to repeatedly ask the Tanzania Civil Aviation Authority (TCAA) to come up with the price cap with the view to avoiding price war.

However, the regulator’s director general Hamza Johari told The Citizen a fortnight ago that they would not set up the price cap, but instead keep on monitoring the market to ensure the level playing field as per the Civil Aviation Act.

“There is no need for the price cap because we are using principles that are in line with the Civil Aviation Act to monitor the market trend,” Mr Johari reacted to the question on stakeholders’ call for the price cap.

Adding: “So, setting the price cap could be going against the Civil Aviation Act.”

The reaction by TCAA comes nearly a month after the regulator announced its decision to fully liberalise the airport ground handling services. Unlike the past, Swissport Tanzania Chief Executive Officer Mrisho Yassin, now said he was aligning with TCAA, saying there was no point to control the price, but rather leave the market forces of supply and demand to determine it.

He said, since ground handlers differed in terms of how one has invested, it would be unhealthy to control the price.

However, he said, with full liberalisation, the regulator needed to tighten regulation of the market to ensure that every market player abided by the set standards.

“I have now changed my position. We don’t need the price cap. But What TCAA needs to do is to understand everything that is happening in the market so that we all adhere to safety and security standards,” said Mr Yassin.

Adding: “Price can self-regulate if we meet quality, safety, security and investment.”

Nas-Dar Airco head of corporate affairs and government relations Evans Mlelwa seemed to have been reading from a different script.

He told The Citizen that the government needed to amend the Civil Aviation Act so that TCAA could come up with the price cap.

Alternatively, he said, TCAA should have Key Performance Indicator (KPI) or yardstick that would be used as the benchmark for the monitoring of the ground handling sub-sector.

“The market is still small and therefore, it needs to be regulated somehow, somewhere,” opined Mr Mlelwa.

The market, at the Julius Nyerere International Airport (JNIA), for-instance, has over 30 airline customers, with Swissport Tanzania having 24 of them, and thus accounting for a lion’s share.

Next to Swissport is Nas-Dar Airco, and Celebi Tanzania Aviation Services Ltd, a new player in the market.

While Nas-Dar Airco has about nine airline customers, the later is at the stage of seeking customers and all is set to start operation any time soon.

Nas-Dar Airco’s Mlelwa cautioned that if the market was not well regulated, only ground handlers with financial muscles would be able to win airline customers and up their market shares.

“They (ground handlers with strong financial muscle) will still be able to survive even if they dampen prices. But things will be different to small and new entrants,” he said.

Celebi board director Gaudence Temu said if TCAA decided not to set the price cap, it would be meaningful if they created a level-playing field so that no one could have comparative advantage over others.

“Focus of every operator should be on safety, maintenance and investment in new equipment,” recommended Mr Temu, noting that this would enable them to deliver in accordance with the set standards.

In reaction, TCAA’s Johari assured ground handlers of a level-playing field.

“All ground handling service providers shall observe the principles of fair competition,” he insisted.

Going by the Decision of the Board of Directors of TCAA on liberalisation of Ground Handling Services (Decision No.1 of 2022), concessions shall not be granted on the basis of any form of favoritism or exclusivity at an airport and its Terminals.

TCAA came up with an idea to fully liberalise the ground handling business after it realised that passenger traffic, aircraft movements, as well as outbound and inbound cargo have been steadily growing year after year.