Finding a balance

posted on 25th April 2018

Siegfried Pasler (managing director AeroGround Munich) and Christian Stoschek (managing director AeroGround Munich & Berlin) talk to AGS about the changing – and challenging – German ground handling market

Subsidiaries of Munich Airport, AeroGround Munich and AeroGround Berlin offer landside and airside handling services – including aircraft, baggage and passenger handling – at Munich as well as at Berlin’s Tegel and Schönefeld gateways.

How is business at the airports you serve? Any particular highlights or low points recently? What is driving these trends?
Stoschek: Of course, the insolvency of Air Berlin in 2017 affected our business in Munich and Berlin, so now we are focusing on balancing this gap.
Also we observe increasing polarisation in airlines’ business models. On the one hand, there are premium carriers with complex network and transit links, especially as part of long-haul and hub traffic. On the other, there are low-cost carriers, especially in European traffic, with extremely short turnaround times and a reduced range of ground handling services.
The challenge for AeroGround as a universal provider is to offer all our customers individualised service packages and tailored handling processes meeting the specific quality standards and product requirements demanded in handling.

How is the market performing generally across Germany?
Pasler: We assume that the rate of inflation in Germany will rise in the medium term compared to past years. At the same time, employee representatives enforced sharp wage increases in recent negotiations. That, coupled with further growing shortage of skilled workers, has diminished profitability in the ground handling business, where margins were already weak.
We are convinced that, after many years of steady decline in prices, sustainable ground handling operations can be preserved only if price increases are able to 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’s naturally a difficult balancing act – and one that has to be tackled together with our customers.

Are any of the challenges you face unique, or do you have to deal with pretty much the same issues that confront all handlers at airports around the world?
Stoschek: In Berlin we face a very unique challenge as the new airport, Berlin-Brandenburg (BER), is still not open yet. The infrastructure at Berlin-Tegel and Schönefeld airports is insufficient and old, which also affects our ground handling processes.
Overall, the major opportunity we see in the medium term is digitisation. The goal is to leverage technological possibilities optimally to enable efficient, flexible planning and controlling of operations.
A further major challenge is to develop solutions for the increasing shortage of skilled workers in ground handling. Greater process automation will be necessary to achieve that, especially in passenger handling. We also have to ensure we’re seen as an attractive employer so as to avoid increased staff turnover among skilled workers.

Are you investing in any particular area of your business?
Pasler: We are focusing on the right mix – we aren’t investing more, but better: This includes the areas of innovations management with different projects and cooperation partners, digitisation solutions in general and alternative drives for green GSE. In addition, we are working on new measures for staff qualification, recruiting and employer branding.

What are your views on the question of automation versus job losses in the ground handling sector?
Pasler: Both in Munich and Berlin, but generally in Germany, we are concerned with full employment and at the same time lack of employees, especially in relatively low-skilled and physically demanding activities. To keep up with the growth in air traffic, we need more efficient use of available personnel. If we don’t solve these issues, the ground handling processes will become a bottleneck for aviation. Of course, automation and digitisation must ensure a higher degree of reliability and security.