Thomas Konietzko’s sales team now has another airport station added to its ground handling offering – Dar es Salaam, the largest city in the east African country of Tanzania. “We now have equipment on the ground, a managing director, 25 staff and are talking to several airlines,” says the Executive Vice-President Sales & Marketing at Çelebi Aviation Holding.
Çelebi’s first move into east Africa has gone ahead despite the ravages dealt to aviation by the pandemic and demonstrates the Group’s continued appetite of growth into emerging markets.
“We are constantly evaluating new opportunities, but our strategy for growth sees us going east and south,” says Konietzko, rather than contesting the congested western market. The addition of Tanzania to Çelebi’s footprint adds to its traditional home market in Turkey and operations in Frankfurt, Hungary, and India. In total, it is active at 40 airports and although it lost some staff in India, it has mostly been able to retain its people in Europe thanks to government-subsidised work schemes.
While Çelebi’s business development team scans for expansion prospects, Konietzko’s focus has firmly been on supporting customers and staff, rebuilding revenue, and managing the recovery under its “Rising Together” motto. While it is an incredibly challenging time for all parties in the aviation supply chain, for ground handlers the pandemic effect compounds acute pricing pressures prior to 2020.
“Prior to Covid-19, the industry was already in a price-war,” explains Konietzko, as airlines took advantage of intense handler competition enabling them to negotiate improved terms. “It was leading us to review our strategy, but now airlines are suffering even more, and causing us to further consider reductions of handling rates.”
Çelebi reacted quickly after the outbreak of the pandemic to cut and defer fees as
passenger and cargo volumes plummeted. However, for Konietzko the message from Çelebi to airline procurement departments has consistently been not to forgo the quality of service, the need for the highest safety standards, and the importance of on-time performance. “We had to focus on our 60 years of experience and try to deliver a different message,” he says.
“The effect of Covid has seen everybody in turmoil in both their private and business lives. I don’t think anybody really had a contingency plan for Covid,” says Konietzko. Çelebi has focused on risk mitigation, seeking to preserve cashflow and negotiating with airlines about terms as flights have restarted.
This has been difficult because inevitably airlines have resumed operations most often at significantly reduced levels, compared to their pre-Covid-19 schedules, playing havoc with GHA staff level planning, and sending the cost base out of kilter.
Handling rates were agreed based on pre-Covid frequencies and passenger/cargo volumes that do not apply today. “Where once a carrier had, say, daily flights, we might now be looking at once weekly flight to start with. How can we be expected to charge the same rates for this service and still guarantee an OTP and full staffing levels with significantly higher cost vs. revenue levels?” asks Konietzko. Çelebi’s costs have soared by 60% as by example in Budapest, partly due to huge drop in freight volumes and closed borders to passenger operating flights.
This balance of the need to help airlines back into service has made for delicate negotiations between carriers and Çelebi. “You do it station by station, airline by airline. It has been very tough. In the past, the sales and marketing team in ground handling have been working on compromising in all their negotiations with the airline procurement teams,” he says, with the competitive market bringing a round of cheaper rates and cost savings to airlines. “Now, we need to have a tougher approach in our discussions, as well as a part of risk mitigation in payment of overdues. We’ve asked for bank guarantees and at an extreme threaten to put airlines on ‘cash to carry’ terms.”
“Communication is always the key component as there will be a time after this pandemic. Let’s still look to provide solutions, not to be too self-focused and ask for favours you would not strive for yourself. People will remember,” he says.
Çelebi has increased some handling rates through the addition of Covid fees, actions linked with adjustments in traffic volumes and with the provision of additional services such as spraying, disinfecting and extra cleaning. “Negotiations have not always been successful on rates, but there have been opportunities to deliver early renewals and extend contract agreements early,” says Konietzko. “We try to manage 2021, void any increases and look to 2022.”
As negotiations continue, Çelebi is, like all others, looking at the opening of borders and the full resumption of international flights to kickstart recovery. That said, in its home market, which still represents a healthy proportion of its annual revenue, this summer has been “decent” with Turkey being open for overseas travellers. “It has been back to very much a normal operation and our key markets of Izmir, Antalya and Bodrum have seen strong charter traffic from the likes of TUI, Condor and Lufthansa and from Russia and Ukraine,” says Konietzko.
The theme of aviation sustainability is one Konietzko believes will continue to be a strong focus for the handling industry. It is a major focus at Çelebi. The firm has various strategies of sustainable solutions in place, including the roll-out of the Taxibot, a tractor controlled by the flight crew that transports the aircraft around the apron with its engines turned off, thus saving fuel.
Focusing on service quality and therefore on people and training is another key differentiator, says Konietzko. “We are very proud that the Çelebi Aviation Academy was the first in-house ground handling programme in May 2020 to be awarded IATA Training Validation Program Certification,” he says. This program recognizes excellence in training and development, as well as compliance with industry training standards and best practices.
“For us it is important to make sure we follow a sustainable development path in everything we do. It helps make people proud to work for Çelebi and means we don’t need to out-source,” explains Konietzko.
The need to manage today’s problems is paramount, but companies like Çelebi need to look forward at the same time. “Our focus is on digitalisation and automation to allow us to reduce our manpower requirements. Airlines will continue to push for lower rates and the winners in ground handling will be the ones who offer the same quality, and the same operational efficiency, without lowering safety standards, at a lower cost,” says Konietzko.