The future of Ground Handling...

[ReadyToGo]

Ok. I'm interested to hear opinions on this.

I have been involved in the Civil Aviation industry for a long while, and ended my "career" in the business last year to go into something un-related. But my interest in aviation and the fact I still have a lot of good friends in Handling has kept me interested.

What do people see happening in the next few years. All I seem to hear is that the "big boys" at Servisair and Swissport are in trouble, with ballots, strike action, TUPE (I am speaking purely for NCL where my experience and friendships lie, so it may not be across the board...). While at the same time, "new boys" like GATE, are coming in and winning contracts. What is it that these companies can offer that the more "experienced" can't? Surely its more than just price, and if it is just price... why can they come in and undercut the more experienced companies?

RTG

[call100]

The way aviation is going it's all about price, price price. Not just in handling but in everything.
Contracts are being won purely on price. Thats why they are all cutting staff and wage bills, which in turn means they can't eventually cope with the contract they have gained.
Until there is some sort of agreement or legislation forcing a level of service throughout the industry at a reasonable cost HA's will always struggle to provide the service they promised.

[groundhogbhx]

The reason companies like Gate are coming in is because they make someone an offer they can't refuse. The theory is that an escalator is put on the contract for subsequent years to raise the price to a more realistic level. In the meantime they try to get more business to try and make up for the loses. If they don't make their targets they end up closing down or retreating to the airport they came from and the airlines end up paying the cost as their old HA's will welcome them back at much increased rates:ok:

[Dam]

I quite agree with those answers

You can see an airline sign a contract with a ground handling company because they offer the best price. Yet they can't deliver what they promised because in order to bring the price down they don't have enough workforce, trucks, push ...
so at the end of the contract the airline turn to another which offers a better price or seems to offer a better price
the 1st handling company get rid of some of its employees ....
and so on

the "funny" thing is to see most of the company (handling , airlines, airports...) investing serious amound of money in what they call Quality

[ReadyToGo]

Interesting answers, thanks folks. I expected something similar.

It surprises me that the bigger companies, (which should surely have bettre economies of scale) are struggling so badly, while a new venture can come in, buy new gear, hire new staff and still undercut the experienced ones, who already have experience, and a recognised name!

Makes me wonder how much the scale is for a handling contract. If these new companies can undercut so much, how much profit were the "experienced" agents making... and if they were making so much.. why have they had so many problems in recent years.

Anyone know how the newboys like Gate are doing?

RTG!

[Dropline]

They manage to undercut the established handling agents because they pay lower wages and offer inferior T&C's - eg no sick pay, flat rate overtime, no car park pass, no canteen cards...

[TurningFinals]

Sky Sky

I can sympathise. HIAL at INV do exactly the same thing. We get 20% off, but that still makes a bottle of coke cost £1.40!

[42psi]

IMHO the reason the new guys can come in and undercut is that their accountants/business managers lack airline/airport/handling experience/knowledge.

The result is that they make significant errors in the "assumptions" used to build the business plans and budgets (they use "supermarket" methodology believing it can apply to every market place/sector).

Based on these, they then invest in equipment/manpower believing that after after the first few years they'll start to see a payback.

As the penny drops they start by tightening the manpower numbers and then by doing the same with equipment numbers/maintenance where they can.

The result is that the agreed service levels can't be met .. customers start getting uppity and making threats ... eventually customers walk elsewhere.


But .. at the base of this are customers (airlines) who either can't/won't use their knowledge to realise they're being offerred a deal that just can't stack up.

Or maybe they do and are taking the view that handling agents are a "disposable item" and will just move on to the next low cost handling offer?



As for the "big boys" such as Servisair etc. they make the same promises but can survive longer because of the larger customer base.

Basically if you've upset airline A last week then for the rest of the month you make sure they get a good service and let airline B suffer for week two ... the following week you try and keep A & B happy while upsetting C .. and so on.

That way you give the impression you're doing something and as long as the gap before you get back to upsetting A is long enough they don't realise what's going on.

For this to work the customer base/flight nos simply need to be large enough.

[GRIZZLER]

I agree with what 42psi said about managers with no idea of the airline business....a few years ago Servisar at STN had a manager that came from sas catering/pizza hut!!!!! he was wood.....he might have known about food but aircraft..... NO.

At one time while i was on the headset waiting for a plane to push that had already lost 2 slots and might have to sit there 3 hours if it lost another....my next plane came by and pulled on stand...the manager said who is doing that one....i said i am, but this one will push in a few mins or it could be here for hours.....The manager said,cant you just push it out there and leave it and move onto the next one.....Doh!!!!!!

burger anyone:ok:

[dudleydick]

I moved from running a small airline (18 aircraft) to ground handling as CEO of a medium sized company in Africa. My personal observation of the ground handling business today (I am now retired) is that there are too many inexperienced managers running too many new and ambitious handling companies. These are not restricted to the Uk either.
I guess, as an old fashioned manager, I feel that the top man should have at least loaded a pallet or a bin, maybe even driven a bus, worn gloves and safety shoes - and more importantly stood at a check in desk and taken the flack from angry pax!. Behind my office door was always my reflective jacket, and I always wore my safety boots to work (fancy ones of course!!).
Too many startups are trying to get into what they believe is an easy profit business. The facts are different and airlines see ground handling as a necessary evil and want to drive down that cost as low as they can get away with.

[JB007]

...airlines see ground handling as a necessary evil and want to drive down that cost as low as they can get away with.

That sentence can be used to describe a whole host of 'overheads' in airlines today - including Pilots!