The inaugural AGS Global Networking Summit, held at the London Heathrow Marriott Hotel on 19-21 September, brought together delegates from airlines, ground handlers and other stakeholders in what proved to be a relaxed, yet productive environment in which to do business
The Summit included a welcome reception, networking dinner and plenty of opportunities to catch up over coffee – but the mainstay of this new event in the ground handling calendar is targeted, face-to-face meetings.
Setting the scene for the rest of the event, moderator Des Vertannes (who retired in 2014 after over 45 years in aviation – including six years with ground handler Menzies and a stint as global head of cargo at the International Air Transport Association) kicked off the Summit with a debate on the topic of mutual profitability.
The panel included representatives of both handlers and airlines: Ingrid Braeuninger, vice president sales and business development at Airport Terminal Services; Dieter Bruneel, head of ground operations for TUI Aviation; Mike Garland, director airport and corporate purchasing at American Airlines; and Jo Alex Tanem, CEO of Aviator Airport Alliance.
Starting the conversation, Vertannes outlined: “As the first two decades of this century have evolved we have been challenged by events like no other century before, from 9/11 to SARS to tsunamis to the global financial crisis.”
As the various segments of the industry have been squeezed, the challenge has been to continue not only meeting the expectations of clients, but also improving and enhancing services. Vertannes highlighted the role of aviation in fostering economic prosperity – and, indeed, in sustaining human life – around the world.
Integrating all of the services a handler provides with those of its partners, while ensuring each party makes money and has enough left to invest in equipment and facilities – this is the circle that must be squared. But what are some of the specific challenges involved?
Bruneel said infrastructure is a major issue, with congestion only growing worse as time goes on. On top of that, delays caused by air traffic control strikes in Europe have “never been as high as in 2018”, and are affecting the entire industry.
“It makes our infrastructure even more congested,” he pointed out, adding that a handler that is already operating at the limits of its capacity will struggle to ensure its client airlines meet their on-time-performance targets.
According to Braeuninger, there are two principal – and interconnected – challenges for handlers today: growing profitably in order to continue investing in the business; and the hire and training of staff, who are vital in achieving that aim.
Tanem spoke further on the issue of staff and skills. In regions such as the Nordics, where unemployment is as low as 3%, it can be difficult to attract new recruits and equally difficult to succeed in retaining them for any length of time – especially given that ground handling is at the lower end of the market and pay is close to the minimum wage.
In some locations, he said a significant proportion of Aviator’s workforce is drawn from outside locations, which can lead to a culture clash.
The company has a very specific approach when it comes to recruitment: “We like to recruit from places like McDonalds, where people are used to a strict regime and to working shifts. We also like to recruit people aged 40-50, because they know what they want, what they’re doing and where they’re going,” he added.
The panel discussion seemed to conclude that the root of the problem lies in the fact that today’s potential recruits have a different mindset to previous generations, who have been willing to work hard at the same job for decades.
Nowadays: “Young people have a life and they want to enjoy it!” Bruneel summed up. “They are not so interested in working extra hours, or being part of the airport community.”
Nonetheless, there is a need for bright young talent, and a motivated workforce, and Bruneel believes that it is necessary to “do things differently” in order to capture the imagination of today’s jobseekers. That means a greater focus on innovation, which in the aviation handling industry still lags behind other modes of transport, at least below the wing.
Braeuninger said the recruitment issue is no different for handlers than for any other type of business. It is necessary to identify what passion means to the new generation in order to understand how to motivate them. In her view: “We have to understand that people don’t stay in a job for 45 years anymore so we have to hit on something we can give them to take on their onward journey.
“Where do we fit in a person’s career path? What value – that is, skills – are we offering them? Are we interesting enough to keep new recruits for a few years, and then retain maybe 10% for longer [as they move up the ladder]?” she asked.
Tanem echoed Braeuninger’s opinion, suggesting that the aim should be to get the best out of employees during their natural tenure rather than try to hold on to them for an unrealistic length of time.
Taking the conversation in a different direction, Garland flipped the concept of a challenge and highlighted the opportunities instead. He said: “Post-9/11, we at American Airlines never recovered until we entered Chapter 11 bankruptcy and restructured. For a while it was all about cost, but there was no consideration of the cost of failure.”
Since the carrier’s merger with US Airways a few years ago, however, things have settled down and the focus has shifted towards customer loyalty based on a consistently high service level, even if that means paying a little more for ground handling. Seen from that perspective, the difficulties of the last couple of decades have led to opportunities for carriers to improve.
Tanem agreed that more airlines are now “getting out of survival mode”, where everything had centred on price. In light of that: “We need partnership thinking now.”
As Vertannes put it, “If you’re trying to squeeze every pip, you get to a point where you can’t enjoy the fruit… So it seems to me that collaborative working, alliances and better understanding are pivotal.”
The panel also discussed the importance of communication in achieving mutual benefits. Braeuninger observed that carriers are engaging much more with handlers than they once did, partly because procurement has become a more formalised process that requires more discussion and partly also because airlines are recognising the integral role that handlers play in their business.
As a result, she said: “We need to work together to jointly decide how to get the best value at the lowest cost point within the performance metrics that we have all set – how best to leverage each other’s ‘stuff’, essentially.”
And there’s a much more proactive attitude, it seems. Tanem noted that in years gone by, clients might have got in touch when something went wrong, whereas nowadays the company keeps customers informed every step of the way. Thus: “We set expectations for our employees and for our clients,” he said. “We are honest about our shortfalls – and that creates a climate of trust.”
Garland commented that American Airlines “respects partners who say they can’t do something at a particular cost and explain why. We don’t want someone trying to be a hero” in order to win a tender, and then having to cut corners or failing to meet agreed targets later on.
He considered: “It’s not about fighting fires: we are getting into the business of preventing fires to begin with.”
Bruneel pointed out that in the event of a problem, quite often the airline might have blamed the handler, who in turn might have blamed airport constraints. Airports might then pass that responsibility on to the government that manages them – hence, the move to privatise many airports, which has resulted in greater efficiencies but also higher costs as the margins of a private enterprise are rather different to those of a state authority.
There is also a “gap”, he continued, between operational and commercial aspects of the business. For example, if handlers ask for changes to infrastructure to help them meet their client airlines’ requirements, this tends to result in rates and charges being hiked up – and the commercial executives at those very airlines are quite often unwilling to pay those higher fees.
“You can’t blame the airport for not having good infrastructure if you are not willing to make the financial commitment to that yourself,” he contended. It’s a question of taking responsibility for one’s role in what is very much an interdependent system, he said, adding: “If one of us is not performing well, that has consequences for the rest of us.” |