The North American ground handling market appears to be an intimidating and competitive environment for a small or medium-sized ground handler
North America’s ground handling market is dominated by the major US airlines, especially American Airlines, Delta, Southwest Airlines and United, who either have their own ground handling teams or outsource the work. They control around two thirds of the market and a lot of the remaining contracts have been seized by large European providers, such as Swissport, Menzies and WFS. Unsurprisingly, the bigger players have swallowed up a lot of smaller ground handlers over the past few years.
Despite the stiff competition, it remains possible for a medium-sized ground handler to survive, and even expand, especially when it acts as the subsidiary of a global enterprise that can provide financial support and strategic help. Two companies in this category are Eulen America and ISS World; both are thriving in the US market.
ISS World has been operating for 30 years in North America and has grown substantially. It offers services at 25 US airports, including five of the busiest 10 in the country. Over the past five years, ISS World’s growth has accelerated and operations have expanded by 100%.
“Our international links have definitely helped us to grow,” says Chelsi Bierschwale, ISS communications manager. “We have a global presence, with subject matter experts all over the world. When an opportunity to deliver a new service arises, we can call on the expertise of our 50-plus country counterparts to share best practices.
“We’re also looking to leverage global partnerships with airlines overseas, to grow our business in North America. We expect our rapid growth to continue and we’re predicting double-digit growth in the years ahead.”
Expansion
Eulen America has also benefited from being part of a much larger enterprise since it entered the US market in 2008. “We could define ourselves as a ‘small-big’ company. We’re not really alone in the US as we have our bigger parent in Spain to offer support,” explains Nodir Karimov, director, pricing and contract administration at Eulen America. “It means we can get help if we need to secure capital investment, and we can take advantage of Eulen’s vast business experience in 30 countries worldwide.”
Eulen’s decision to enter the ground handling market in the US was a courageous one in retrospect, however. The company had no experience of ground handling; nor had it operated before in North America. Founded in 1962 in Bilbao, Eulen initially specialised in facilities management, cleaning, security, logistics, healthcare, environmental and temporary employment services. Today, it has 86,000 employees offering 60 business services and reported market sales of around 1.5 billion euros in 2016.
The company has built its success on a constant search for new opportunities. When, in the late 1990s, it decided to further expand international operations – largely motivated by risk diversification – Eulen considered various options. Western Europe was disregarded as it was already a mature market where competition would be too fierce, and Eastern Europe and Africa were considered too politically unstable at that time.
Eulen opted in the end to buy businesses in Hispanic America, taking advantage of the linguistic and cultural links to Spain. The first purchase under the new direction was an American affiliate company in Chile. Then, more recently, in 2008, the company decided to buy an airport company in Miami. Though not strictly speaking in Hispanic America, Miami has large populations of Spanish-speaking people and lies at the crossroads between Latin America, North America and the Caribbean.
The company Eulen chose for a partial acquisition was Miami-based American Sales and Management (ASM) aviation services. Founded in 1994, ASM had a well-established business providing a full range of ground handling and passenger services for domestic and foreign carriers, including cabin cleaning and ramp services. It had a workforce of more than 2,200 at major US airports, with 1,000 employed at Miami International airport. The takeover began well in 2008 and Eulen acquired a 100% ownership stake in the corporation the following year, establishing Eulen America as its US subsidiary.
Since that time, the expansion of Eulen America has been impressive. In 2008, the company was present in five US states; it is now active in eight states, as well as at two airports in Jamaica, with a total workforce of more than 3,200. It has continued to expand its passenger services and ground handling operations by also providing security, janitorial and facilities management services. The company’s clients include American Airlines, US Airways, Bahamas Air, Delta, JetBlue and Spirit.
Some of the key differentiators that set Eulen America apart from its competitors are its “reputation for exceeding client expectations and very strong safety culture”, according to CEO Alejandro Fonseca. “We believe that investing in our human capital requires engagement and maximises people’s potential while providing added value to our client partners.”
A large proportion of Eulen America’s business is still in Florida, where it operates at Miami, Fort Lauderdale-Hollywood and Southwest Florida airports. “Miami airport is our backyard and our biggest station, which makes it easier to attract business. Having local links means we get things done faster and more efficiently, which the airlines like,” Karimov notes.
Making good use of technology
Eulen America, he says, has developed a reputation for embracing technology to improve performance. Technology is especially useful to organise cabin cleaning, which can be challenging for ground handling teams because of the fast turnarounds required. “On international flights of 10-15 hours, the planes need a lot of work and there’s more provisioning, but teams may have only 25 minutes to get them spotless,” Karimov says.
“If different teams get on board to clean, they can get on top of each if they rush around in an uncoordinated way, so we use tablet computers to tick off the list of everything that needs doing. We look after up to 300 flights a day at Miami and technology helps us to stay in control.”
Using the tablets, the Eulen cleaning teams know exactly where they are supposed to be at any given moment and their supervisors can keep track of their progress. The supervisors can also easily coordinate operations with Eulen’s warehouse to bring more provisions, if required.
Rigorous attention to detail is vital for ground handling teams who are under pressure to maintain tight security procedures, Karimov points out. “We have TSA operatives breathing down our necks so our employees need a lot of training to make sure they don’t miss anything when they do their searches,” he said. “If the TSA find something, even if they have planted it themselves as a test, it means a US$25,000 fine and a violation. It could also damage our reputation as a company.”
The tablets are also used to inform Eulen’s agents how many wheelchairs will be required for an incoming flight. “If we have 10 people requiring wheelchairs, we will provide 10, but probably have two on standby in case someone needs a wheelchair on the spot,” he said. “The airlines will also help to speed up processes by informing us if we can skip something, such as vent cleaning, because they are doing it at the next stop.”
The embrace of technology extends to the development of in-house Eulen America software with a third party. The software allows clients to access live data about which aircraft are coming in, which ones are in the process of being cleaned and how long that will take. “The airlines love being able to follow all our operations on board their aircraft. It’s the kind of high-tech approach that has given us a competitive edge over many competitors,” Karimov says.
A different story
To date, Eulen America has limited its growth to the US and the Caribbean, where it has ground handlers based at both Norman Manley Airport in Kingston and Sangster Airport in Montego Bay. One of its major competitors in Jamaica is All Jamaica Aviation Services (AJAS), which has around half the ground handling business available on the island.
AJAS is an entirely different success story to Eulen America and ISS World. It is not part of any wider networks and has only ever operated as a ground handler in one market. It was founded in 1941, when Lascelles DeMercado accepted an appointment to serve as ground handling agents for KLM’s first scheduled flight into Jamaica. In 1964, All Jamaica Aviation Services was formed specifically to handle airlines at both of Jamaica’s international airports, Norman Manley and Sangster. A few years later that name was changed to AJAS Limited.
AJAS grew into the largest ground handling company in Jamaica, working for all the major airlines operating into the island including Pan Am, Eastern, BOAC, and American Airlines, as well as charter operators. In 2013, it was acquired by Caricom Airlines Services, a company formed to solidify the company’s position as the dominant ground handling and cargo handling company in Jamaica.
Today, AJAS has more than 330 staff at Sangster and 220 at Norman Stanley providing the services required for passenger, ramp, load control and flight operations, support services, security supervision and cargo and mail warehouse. AJAS handles up to 600 flights and up to 25 airlines per month, as well as processing 15 million kg of cargo annually.
Dunstan Pryce, AJAS general manager, says the company has based its success on establishing long-term relationships with clients. “We have been working with many airlines for more than 40 years. They trust us. The best way to win new business is to continue to provide a high-quality service,” he said.
Competing with larger operations in a highly competitive industry demands creativity, however. “We have to find creative ways to keep our costs down so we can win tenders. That might mean investing in equipment that reduces mechanical costs, such as the stairs we use might be manual rather than electric,” he says.
Being based in the local area can be a factor when airlines choose ground handlers for the Jamaican market. “There are both upsides and downsides in being located here. The advantage is we have many local links and we’re well established. The disadvantage is it can be hard to maintain relations with overseas clients and we have to work hard at that,” Pryce considers.
Having established itself as the leading ground handler on Jamaica, AJAS wants to expand into other areas of the Caribbean, and potentially further afield. “Many of the ground handlers operating at airports in the West Indies are small, family-run operations, whereas we are a bigger organisation, which gives us some advantages of size and approach,” he remarks.
