Why have airports dropped thir own handling services? - profit.
20+ years ago nearly all the airports in the UK provided ramp handing services either as a monopoly or with a single licensed competitor. Front of house was done by the airline or a contracted handling company.
Many airports grouped their handling charges in with landing fees and other airport charges so there was little clarity as to what was being charged for what; and importantly, little knowledge within the airports as to the costs of providing these differing services.
After the EU missives airports had to look more closely at their own costs and how their revenues were being generated. Around the same time airlines were becoming more 'procurement' orientated and started challenging specific aspects of ground handling charges, introducing bonus/penalty schemes and their own, targetted standards. Many airports subsequently found that their ground handling services were 'marginal' and decided to divest themselves of the headaches.
Airports now are, generally, (accepting that there are exceptions) facility managers with nearly all services either licensed or subcontracted to third parties.
GH