Opssys,
The UK market changed when the regional airports divested themselves of running their own ramp operations to meet the EU competitions legislation. Prior to this, the 'profit' of the main UK GHs was from the regional airports; the majors, where the GHs already ran ramps, fluctuated between good profit and big losses on a years by year basis - very few GHs achieved sustainable profits in the main 3 airports at the time LHR, LGW and MAN.
When the regional airports divested their ramps there were several factors:
- Regional airports rarely ran their ramps as fully costed departments
- The airports' fees did not reduce in true proportion to their costs
- GHs failed to secure the step change in fees required to operate full ramp operations over a sustainable time
- The airlines pleaded poverty (what's changed?) and, in particular, the UK based operators were accepting big increases in fees (monopoloies have the advantge - take it or don't operate) from national agencies in Europe and then offering the remains of their budgets within the UK. An example of this is a well known LoCo who was paying more than twice the UK rate for handling in another EU country.
Sadly, at around the same time as this was happening the UK GHs employed some high level 'hackers and slashers' who thought that there were huge savings to be made in labour, and other, costs without understanding the first thing about the dynamics of operating a GH at the coal face. They would cost on absolute basic provision, no 'flesh' for off schedule costs, training, GSE sustainability etc - even know of one who claimed that "regional airports did not have any administration costs and therefore did not need any administration budget". That led to operations failing to deliver against SLA's which, in turn, meant that when renewal time came around the airline was in the box seat.
Some of the airlines, at the same time, employed 'purchasing/procurement specialists' who were looking, not unreasonably, for the lowest cost but often did not manage to balance a fair price for a service delivered and would trade GHs off against each other knowing that redundancy, TUPE etc is a huge cost if the contract moves.
There have been signs, and examples, over the last couple of years of GHs fighting back and walking away from airline customers when they are not prepared to pay realistic prices for the service they want. Several airlines have followed their 'lower cost option' only to regret it and go back to their original GH at a realistic price.
Until the GHs have the confidence to back their costings AND are prepared to deliver what they have contracted the future will continue to look more red than black on their balance sheets.
GH