Miami-based Alliance Ground International (AGI) is on a growth mission as it expands from its cargo roots. It has made bold acquisitions, starting in the US and Canada, and is now looking further afield. Chief Executive Jared Azcuy talked to Mark Pilling
Jared Azcuy has a clear vision for his business. “We want to be a US$3 billion business as soon as possible, but I would say to get to triple our size it will take about five years,” he said, speaking from his Miami office base.
Today AGI’s annual turnover is a little shy of a billion dollars, with Azcuy explaining that the company will see revenues rise to $900plus million in 2023. Under its private ownership, AGI does not release detailed financial information.
The $3 billion revenue target is aspirational, but there is a determined focus about Azcuy and AGI’s approach. His explanation of the growth plan illustrates a pragmatic assessment of business ambitions and market opportunities and one that would place AGI among the largest in the global services arena.
For Azcuy and his tight-knit management team this vision will be achieved via a continuation of AGI’s strong organic growth and carefully chosen acquisitions, enabled by AGI’s non-hierarchical management approach to customers alongside treating its own people with care and attention.
AGI has already been successful on the acquisition front, having completed some significant deals in the past 12-18 months.
However, for many in the global services world AGI will be an unfamiliar name. The company has almost exclusively been active in the US, and as its simple “The Cargo People” slogan testifies, its background is in air freight.
Azcuy explained that AGI traces its roots back to the early 2000s when a veteran of the US aviation handling industry Tony Romeo, along with Azcuy and other partners, formed a business called Cargo Force.
Azcuy began in the industry in 1993 at a handler that was part of Worldwide Flight Services (recently acquired by Singapore’s SATS Group), moving on to manage an aviation fuelling firm, and then a fixed based operator, before the formation of Cargo Force.
By 2017, the Alliance Ground family had grown to incorporate cargo, ramp and mail handling units, in addition to a cargo screening business. The group was sold to a private equity consortium that year, and then, four years later, acquired by US-based private equity firms Audax Private Equity and Greenbriar Equity Group, both with experience in the aviation, transportation and logistics fields, for an undisclosed amount in June 2021.
“The beautiful thing about private equity ownership is that they come in with a great deal of experience and know-how on how to really boost the business,” explained Azcuy.
“They resonated with our turnkey growth strategy where not only had we shown proven double-digit organic growth over time, but also able to show what levers of growth we intended on to supercharge the business forward,” said Azcuy.
Audax and Greenbriar hooked on to the growth strategy presented by Azcuy’s team, which sees a major opportunity to rise from its roots in cargo handling on two main axes.
The first is to diversify from cargo handling into passenger and ground handling, which was done through two acquisitions in 2022. The second is for AGI to export its business model to new continents, with Europe and Latin America being the initial regions selected for AGI.
A main strand of the strategy is to add services other than cargo to AGI’s mix, although cargo will always be AGI’s core business. However, as air cargo rates normalised over the past year or so, and supply chain issues eased, after the hectic pandemic times, the aim is to bring in new business lines, said Azcuy.
“It has been good to have [passenger] terminal work, which has been on the upswing as well. It has been helpful and shows that our theory and concept is well proven,” said Azcuy.
“The question was what else can we do that is complementary?” he asked.
With AGI already on the ground at 13 US airports the answer was clear because “our [airport] infrastructure is already built out,” said Azcuy. “So, passenger expansion was a natural evolution.” In addition, Azcuy believes that as airport aprons become more congested “having a ground handler that is doing both [cargo and passenger handling] definitely adds value.
“While AGI’s core business will always be grounded in cargo, I think in the new world it would seem to me that it is logical that the handler of tomorrow is doing both cargo and passenger work,” he stated.
The number of stations, countries and employees on the AGI roster is constantly growing. “It is sometimes hard to keep up,” noted Azcuy. However, the current count is the business has 63 stations, over 250 customers and 12,000 employees.
“In percentage terms, 70% of our business comes from our cargo handling business which will always be the focus of the platform, 15% is ramp/ground handling primarily for widebody freighters, 10% is above-wing passenger terminal services and there’s 5% from our mail handling services,” said Azcuy.
“Pandemic or no pandemic, we’ve always grown organically, and we’ve enjoyed double-digit growth year after year,” said Azcuy. “It is in the post-pandemic world where we started into the passenger side of the business with acquisitions, still a small portion of our business today but growing and complementary to the core cargo business. Up until then we were purely freight and mail handling services.”
In 2022, AGI acquired two businesses. The first, in a deal completed in July of last year, was Texas-based Total Airport Services (TAS), which had cargo, ramp, and passenger handling services across eight locations in the US including Chicago O’Hare, San Francisco, George Bush Intercontinental (IAH), and Rickenbacker International Airports.
The addition of TAS brought 1,600 employees and a business that handled 5 million passengers a year and some 330,000 tons of cargo per year.
Two days later, AGI announced it had acquired Airport Terminal Services (ATS), a St Louis-based services operator that traces its roots back to 1975. Its private owners bought the business from Trans World Airways in 1994.
The ATS move is AGI’s biggest so far, with this firm’s 5,500 employees and locations in the US and Canada described by Azcuy at the time of the deal as “allowing us to build our presence in the airport terminal and passenger side of the business”.
“When choosing a company to acquire we consider whether it will feel like a good match culturally with AGI. At the same time, we want to diversify our services,” said Azcuy.
“There is a focus in the industry to consolidate. Our sense is it’s good for the airports and for the business community. You’ve got a brand of players that are qualified and have resources to really support our airline partners,” he said.
“In addition, consolidation at the airport level is also helpful to the airports. From the operational standpoint, I think it makes sense for airports to have fewer players. There should be enough that there is reasonable competition, but it should lead to better safety standards,” he believed.
In acquisitions, there is no doubt that money talks, but there is more to winning a deal than simply money. “What stood us apart was the fact that we did not have overlap and our intention was to keep a separate management team for this new division of passenger ground handling business,” said Azcuy.
“I think that’s what Sally would tell you why they went with me and AGI,” said Azcuy. He is referring to Sally Leible, the president of ATS and a supervisory board member of the Airport Services Association, who has chosen to retire from ATS when the handover is fully implemented.
“When you’re handing off a business that you’ve grown for many years, and I can totally sympathise there, you want it to be in good hands and you want to protect your folks,” said Azcuy. “I think we presented that best option. It wasn’t so much about the price. It was really about the theory, and our commitment to augment their already-existing management team. And we were true to that. We kept our word.”
Retaining the management experience of a business is important to Azcuy and AGI as it makes acquisitions. “When you are doing an acquisition the most difficult part is people management. I think any handler can tell you that. So having the best management team is what makes the best company. It’s not equipment, it’s not anything else but people that makes a company successful.”
Azcuy’s philosophy is to ensure diversification will not distract management teams from their core mission. “This is one of the mistakes that I’ve seen happen in my 30 years in the industry,” he said.
“We have a core of services that we share, but we want dedicated leadership throughout each line of business,” said Azcuy. “As we grow, you can expect that from us. We are not going to go the cheap route and synergise to death a company and find we’ve lost our strengths along the way.”
The second strand of AGI’s diversification drive is geographic. “We have announced a strategy into Europe, which we’re working on,” said Azcuy. “And then later this year, we will start a strategy into South America. The idea is to create a global company North American based but a global company.”
AGI has outside consultants helping it find potential businesses to buy. This can be tough in markets alien to Azcuy and his team. “What we are looking for is a specific culture and people that will fit in with ours, so we are definitely picky,” said Azcuy.
Since September 2022, handling industry veteran Olivier Bijaoui has been advising AGI on its next phase of expansion outside North America. Bijaoui worked for WFS for 20 years with 12 years spent as its president.
Azcuy is confident AGI will get its first deal in Europe over the line this year and is working with another consultant to assist it in Latin America, with the first deal there likely in 2024.
“It is hard to sift through a very fragmented marketplace and find the gems, and so we do take our time,” said Azcuy.
“Ours is a cargo first growth strategy, with the idea to chase cargo nodes,” said Azcuy. “That’s how we pick partnerships and where we want to grow. I think we can do things a little bit differently and add value.”
Once established in cargo in a region or station, AGI will seek out passenger and ground handling opportunities there.
In addition to looking overseas, AGI continues to work on gaining access to new US airports. “It’s no secret we are not in Dallas Ft Worth today in cargo, or Houston and Seattle. These are key markets we are missing,” said Azcuy.
“The only thing that’s stopping us is limited airport infrastructure. We are working with airports to gain access, and they are helpful in that regard, they want to work with us,” he said.
What changes in customer requirements has AGI seen in the post-Covid market? “Post-pandemic, quality and service are number one,” said Azcuy.
“Talking specifically about cargo, you get what you pay for,” he added. “During the cargo spike, players that were not as good were flushed out. There’s a hidden cost to bad service for airlines that you can get with a very cheap rate.”
A similar effect is taking place in passenger and ground handling, a year or two later compared to cargo handling. “We have seen airlines returning from the pandemic, the public struggles with labour that we are all facing, and a realisation among customers that quality of handling is paramount,” he noted.
“Everybody knows the handling cost has gone up because labour cost has gone up tremendously, and the labour market has changed,” explained Azcuy. “We have had to change with it, not just in the sense of rates, and in the sense of wages, but beyond that into asking, ‘what is your service offering to your customers?’”
“This is a tough industry. We are not a tech campus where people can come and go and work remotely,” said Azcuy. “We need physical hands at work. That’s why we have shied away from remote working even in our headquarters. If our people need physically to be at work, we should follow the same principle at our HQ. It’s something I’m criticised for. However, it just makes sense. It’s only fair.”
This issue comes back to how Azcuy and AGI’s management team want to run the business and retain its spirit as it grows. “It’s about our culture. How you treat people and the ethos you live by as a company,” he stated.
“We have a tremendous talent pool that has stayed with us for many years,” he said, as a proof point that AGI is a firm where people are treated well and with respect and therefore want to stick around. The fact AGI retained a significant amount of its workers during Covid is further testament to that approach.
In June, AGI unveiled a new brand identity for the group and its four businesses. “The idea was to really represent that we are one company,” said Azcuy. “Yes, there are different branches and different schools of business, but we are one company with the same culture, and it is important that everyone feels they are treated in the same way.”
So, Alliance Ground International, the legacy cargo business, becomes AGI Cargo; ATS becomes AGI Ground; TCSC, its security outfit, becomes AGI Secure; and Cargo Force becomes AGI Post. TAS, one of the acquired handlers, is part of AGI Ground, while MIC Cargo, a handling firm bought by AGI in 2021 and based in Chicago, comes under AGI Cargo.
After the labour shortages experienced last year, AGI has overall caught up. “We have definitely recalibrated ourselves to the new world on the labour front and are staffed up everywhere,” said Azcuy.
“Now it’s about stabilising workforce turnover,” he stated. “Our aim is to bring the same theory we’ve had on the cargo side to the passenger side that this is not just a job but a career. Just like I started, 30 years ago, in an entry level position, straight out of college, we want everybody else to think that one day they can be the CEO of tomorrow.”
Safety is an area on which AGI has placed increased focus in the past few years. “It’s critical in this environment of higher [staff] turnover that all of us, including airline partners, are living in,” said Azcuy. “We are constantly retraining, making sure safety is never missed because it is paramount in our industry and AGI’s number one priority in our mission statement.
“We have a large safety team that we’ve grown by 60% in the past three years,” explained Azcuy. “This is partly to make sure that with many new people coming into the industry we are protecting safety standards.”
Making use of AI
“I think technology is a path forward for the better handler of tomorrow,” said Azcuy, and it will play an increasingly important role for AGI. He is especially curious about how artificial intelligence (AI) can be leveraged to help the business and specifically to improve safety.
“Initially I was very ambivalent about the whole AI thing. I thought it was fancy sounding, but I wanted to know if we could use it in a smart and practical way,” he said.
Azcuy wants to expand the use of AI in safety and security applications, two of his business priorities. AGI is already working with a third party that is using AI and cameras to monitor and analyse pushbacks with a view to improving safety in this process, he explained. In another example, it is developing a cargo dock management system that will synchronise the cargo loading operation, reducing truck idle times, and speed up the process.
As AGI grows, Azcuy’s aim is to retain the customer-centric DNA he believes the company has become known for. “Many times, I’ve seen it where management becomes too far removed from the customer; then you don’t know what your customer wants. That’s when you start losing sight of what’s important.”
“We do things a little bit differently at AGI and I think that’s what makes us special,” he said. “There’s a speed to things too. We can make decisions very quickly and are known for being flexible and nimble.
“I think having those characteristics and continuing to grow the company is what I’m invested in. I want to make sure we don’t lose that magic,” concluded Azcuy.