Closing the gap

posted on 14th May 2019
Closing the gap

AeroGround is looking to add new clients after German carrier Germania ceased operations, write Justin Burns

German ground handler AeroGround has had an interesting and challenging start to 2019 after the collapse of Germania.

The impact was low at its Munich station but it has been a different story in Berlin where it has had a negative effect on business.Christian Stoschek, Managing Director, AeroGround says with over 3,000 flights from Berlin-Tegel and Berlin-Schönefeld, Germania was an “important customer” for AeroGround Berlin and the handler is now working on closing this gap.Other airlines could soon follow in his opinion. “We expect further consolidation and more airline insolvencies in the near future. We are concerned about lower costs and idle time costs due to short-notice insolvencies,” says.There are challenges and Siegfried Pasler, Managing Director, AeroGround, feels the biggest are irregularity and off-schedule operations of airline customers from crew strikes, crowded airspace, missing air traffic controllers, lack of capacity on the airline side on crews and aircraft, inadequate infrastructure at airports, and very tight circulation planning of airlines.
Others he notes are “no bag” tariffs of airlines which mean for GHs “significantly additional expenses” in handling hand luggage that lead increasingly to delays (in loading hand luggage at the aircraft/gate) while another is to overcome the staff shortage in general.
Indeed, Stoschek believes staff recruiting at reasonable labour costs will be more and more the key factor of success of GHs. “Factors as company culture, management and leadership behaviour, social benefits and prospects for personal growth are also very relevant to counter steer an increasing skills shortage,” he adds.
ATC and handler industrial action has also impacted operations and Pasler notes in general the impact is an increased lack of plannability due to irregularities in daily operation. “Strikes mean a loss of revenue. High collective agreements make services on the ground more expensive,” he says.
There are opportunities due to ever-increasing passenger numbers and more airline routes from different emerging markets. Pasler says the three biggest are participating in general market growth; price increase – quality and reliability of GH are holding higher significance at airlines; and another is obtaining new handling licenses in the DACH region.
Margins are always tight, but Pasler says AeroGround is convinced after many years of steady decline in prices, sustainable GH operations can be preserved only if price increases can be agreed with customers in the short and medium term. “Given the generally low level of plane ticket prices and strained financial situation of many airlines, that is naturally a difficult balancing act – and one that has to be tackled together with customers,” he adds.
In his view, it is less a question of increasing margins but more of a question for GHs in covering increasing labour costs and costs of irregular situations and off-schedule operations.
But will there be more consolidation? “We believe that ground handling is still a local market, which need an expertise on the local labour market and specific requirements of operation depending on individual airport infrastructure,” he says. “We believe that strategic partnerships and network collaborations, like the European ground handling alliance, are more beneficial than establishing an international global company.”
Stoschek notes diversification of services is an important aspect for further development but developing new services and entering new sectors always has to be “well analysed as it increases complexity” in administration and management.