Global perspectives

posted on 5th June 2018

AGS assesses the ground handling market by talking to three key players

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BIIL looks to improve India’s ground handling offering

With its antiquated airports and infrastructure, sourcing quality ground handling services in India can be somewhat problematic for many global aviation companies. However, Bhadra International India Limited (BIIL) plans to change that.

Managing director Prem Bajaj says the company’s aim is to provide “world-class security and quality” ground handling services at India’s international airports. At present, BIIL’s main focus is Southern and Eastern India where it provides ground support services for ramp, passenger, cargo and general aviation at Chennai, Kolkata, Calicut, Coimbatore, Trivandrum, Trichy and Mangalore airports. In future, however, Bajaj plans to further expand the BIIL network by offering the professional handling services, so often in short supply, in one of the world’s fastest growing aviation markets. “We employ the most highly skilled staff and supply ground support for our customer airlines that is efficient, safe and always on-time,” he adds.

BIIL was formed by Bajaj back in 2000 when he realised that as the Indian economy was liberalised and grew, demand for aviation would also mushroom and modern ground handling services using the latest equipment would be required. BIIL has since spent over $100 million to procure the latest ground handling equipment and providing facilities to ensure personnel are properly trained to use the latest machinery.

Today, the company operates the latest models of passenger buses from Cobus, as well as Trepel cargo loaders, Rheinmetall Air Start Units, Schopf Push Back Tractors and state-of-the-art Conveyers. Insa Auto steps and air-conditioning units manufactured by TLD France and ground power units from Hitzinger are also deployed at airports where Bhadra has concessions, alongside battery driven tow-tugs and recently acquired forklift trucks.

Bajaj is a staunch supporter of the Indian government’s “go green” policies, which aim at reducing air pollution caused by the aviation industry. “Many workers at airports suffer from lung diseases because of diesel pollution,” he says. “I am working for the day when the majority of ground handling equipment will be eco-friendly.”

BIIL has joined with Danish-based ground handler, Novia, to improve the training of personnel. As a result, BIIL’s passenger handling, says Bajaj, “now has the expertise to deal with the passengers in a friendlier manner and with a humane touch, and with continual improvement to achieve the ultimate objective of 100% on-time performance of flights with utmost safety and security of passengers, cargo and aircraft movements.”

In the years ahead he says, Indian airports will continue to improve service levels with BIIL to the fore. ”In keeping with international norms, Indian airports, which until now were a neglected group, are rapidly modernising,” he explains. “Even some of the airports have been privatised and the facilities at the private airports such as Kochi, New Delhi, Bengaluru and Hyderabad are up to the best international standards.”

“Some of these, such as IGI Delhi, with 78 gates, 97 automated walkways and 95 immigration counters, now rank amongst the very best in the international arena. And the projected plans of India’s international and domestic airlines to add more than 1000 aircraft in the next five years are an indication of where civil aviation in India is going be in the near future.”

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Despite difficult market conditions, Per H. Utnegaard, President and CEO of ground handling giant Swissport International, is cautiously optimistic about the reminder of 2012.

AGS: Was 2011 a good year for Swissport?

Utnegaard: Despite the challenges, Swissport achieved a tremendous amount in 2011, including the successful completion of the sale of the group to PAI Partners. The transition to the new owners went extremely well, and PAI is an excellent partner for Swissport, further strengthening the group’s financial position, and supporting our strategy of pursuing profitable growth through providing consistent, high-quality, professional services, globally.

We had a good year – the 5th record year in a row. Revenue grew 7% and cash generation was good too. Highlights included the start of our contract to handle Lufthansa’s regional fleet in Munich; opening up cargo handling at Japan’s busiest international airport, Narita, where we already had passenger ground handling operations; and taking over the handling of Finnair’s passenger operations at its Helsinki hub – along with a multitude of other contract wins and improvements to the company’s products, procedures and processes at the 200 airports in 40 countries where we operate.

On the ground handling side, we had a good year overall. There were no major shortcomings and overall I am pleased with the performance. We began handling the regional fleet for Lufthansa in Munich on 1 January 2011, and the quality there has been extremely high. We achieved a major expansion of Japan, with good results and good quality, and we have finally been able to turn around the UK ground handling operation, where we have been struggling for many years, and we have also improved the business in the Americas.

AGS: How did you perform in cargo?

Utnegaard: In cargo, we were very pleased with the results. We finally had an excellent year in Israel and our cargo business in South Africa had a good year. Cargo in Germany had a very busy 2011, above expectations, and we’re certainly on the right track there. The restructuring of the Cargo UK business is also going according to our plan, and we have now moved the entire operation into one warehouse.

We also received further external recognition of our standards of excellence and the appreciation of our customers, winning another two major handling industry awards. Last March, for example, Swissport was named The Institute of Transport Management’s Best Ground Handling Company for the 11th year in succession – an award that we have won again in 2012.

AGS: What are the main challenges facing global ground handlers like Swissport in the year ahead?

Utnegaard: Three months into 2012, it is clear that this will be another challenging year for the aviation sector, although I am pleased to say that Swissport International has already achieved some major successes in the first quarter, and I am cautiously optimistic about our prospects for 2012 and beyond.

So far this year we have seen cargo volumes drop across the world, which are early warning signals that 2012 will be a challenging year. But I’m confident we will be able to manage this downturn, as we have done before.

It is extremely difficult to predict how 2012 will play out, because it is a highly volatile market. But I expect us to meet our budget targets and deliver the initiatives that we agreed – meaning that if the market is tough, we need to make sure that we also manage the cost base accordingly. We have a far more flexible cost base than we had in the past, and the advantage of having a global business is that we can also put our foot on the accelerator in markets that are growing, and we will continue to expand our business by following and serving our customers wherever they need us around the world.

In addition, the challenging conditions in some markets mean that more airlines and airports are coming to the conclusion that ground handling is not a core business of theirs and that it makes sense for them to convert fixed costs into variable costs – and it is our job to persuade them.

Therefore, in spite of the expected challenges for the aviation sector as a whole in 2012, I am positive about the opportunities ahead.

So, I am cautiously optimistic for 2012 – the market is highly volatile, but we have managed challenging market conditions in the past and 2012 will be no exception. We have excellent management in place across the world and we are well prepared to manage the challenges.

AGS: How do you offer consistency of service across such a large global network?

Utnegaard: We have an on-going process of standardising our processes and tools, and rolling out best practice around the world. As part of the development and maintenance of our standards worldwide, we are also continuing our successful supervisory and leadership training programmes and the standardisation of technical training for Cargo and Ground Handling. At the same time, we perform operational business reviews and gap analyses to further improve processes and the efficiency of our operations. On the technology side, we are developing further tools to continue to support our own processes and improve the customer experience, and applying these worldwide.

AGS: Have you recently won any new clients/contracts?

Utnegaard: There are too many to mention, but here are a few examples from around the world already this year. For example, Swissport Brazil has secured important long-term ground handling contract renewals with both GOL and Azul. Our business in Japan has also been going from strength to strength. Following the opening of cargo handling at Narita late last year, we have now opened a cargo handling facility at Kansai, and we are now running the entire hub for Finnair in Helsinki. Elsewhere in Europe, we have secured a number of new cargo customers at Amsterdam, including, most recently, Korean Air Cargo.

AGS: Are you offering any new services or facilities at any of your airports?

Utnegaard: As mentioned, recent enhancements include the addition of cargo handling at two key airports in Japan: Narita late last year and Kansai earlier this year. Further strategic additions are planned for this year, and we will continue to grow worldwide, following and servicing our customers wherever they need us around the world.

In terms of products, we have already introduced two significant innovations. On the ground handling side, we have launched an innovative and state-of-the art self-service solution that increases the quality and efficiency of missing-bag reporting. Passengers needing to report a bag that has been lost at the departure or transit airport will no longer have to queue in front of the ‘Lost and Found’ counter in the arrivals area – instead, the declaration can be conveniently done online from their home, office or hotel.

Introduced initially for our Geneva operation, we plan to expand this online solution to many other Swissport stations around the world, bringing this new application of the self-service concept into the post-flight experience. With self-check-in, ticketing and boarding already standardised, customer surveys have concluded that there is demand for an end-to-end self-service portfolio for the entire journey, and that a high number of travellers want to be in charge of their trip. Passengers who prefer personal assistance can still report their missing or mishandled bag at the airport using our kiosks, or queue at a staffed counter.

On the cargo side, Swissport has just become the first global independent handler to provide an advanced track-and-trace service for cargo customers and other partners via their mobile phones. Swissport’s successful Freightfinder track-and-trace service has been available for several years via the main internet browsers, and the company has now developed a mobile version of Freightfinder that will make it possible for customers and partners to check the status of shipments from their smartphone or tablet. This is available for the iPhone and iPad, BlackBerry, and all mobile phones or tablets using the Android operating system, meaning it can be accessed via the vast majority of smartphones worldwide.

This kind of technology is otherwise only available to one or two of the leading major global airlines, and so our ability to offer this kind of service to any of our airline customers and partners is a further example of the benefits customers receive from outsourcing to a specialist cargo handler, and in particular to the leading global handler, Swissport. This is a really useful innovation that is giving us a nice competitive advantage, demonstrating the value of our ability as a large, well-backed organisation to invest in innovation and new technology and lead the field in professionalising the handling sector.

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Worldwide Flight Services currently offers ground services to over 300 airlines at more than 120 of the world’s airports. But despite handling in excess of 3.5 million tonnes of cargo and 50 million passengers per year, Barry Nassberg, Chief Operating Officer of the WFS Group, is looking to further expand and deepen the company’s network.

AGS: 2011 was a tough year for the aviation industry; how did WFS fare?

Nassberg: Last year was satisfactory. After the big improvements of late 2009 and 2010, 2011 saw very little in the way of growth, it was more about stabilisation in the markets. That was especially true for cargo which drives our financial performance and accounts for about 60% of our global turnover. That means that our fortunes mirror the peaks and troughs in cargo volumes around the world. Last year, in the second part of the year in some markets, especially Europe, cargo suffered a downturn.

AGS: How is 2012 looking so far?

Nassberg: The market is stable now and we’re cautiously optimistic for 2012. We’re seeing some growth in Asia where Bangkok is our big Asian cargo operation. We’re also optimistic for Europe in the second half.

AGS: Are you confident that the Euro-area is now more financially sound?

Nassberg: Yes, to some extent, at least in terms of the stability of the Euro. For us, it’s really the way in which financial and economic stability drives the volumes that drives our growth. In terms of how we’re paid that’s a combination of the airlines and forwarders, it’s on a short term basis, so we’re less concerned with currency risk. The greater risk is economic stagnation, where people aren’t buying products, so goods are not being shipped. It’s more about fear in the markets and it’s driven by consumption. If people cut back and settle for what’s in season then that’s bad for us.

AGS: Is perishables an area you are targeting?

Nassberg: We do a lot of perishable work and this is a focus for us at more and more of our stations. They constitute a growing portion of our traffic. Many handlers don’t offer this service because of the upfront costs and instead outsource, but we choose to do it ourselves and are making the investment in it.

AGS: Which markets offer the greatest growth potential for WFS?

Nassberg: Europe is opening up certain markets for ramp and passenger services which could allow us entry. The EU is discussing this now, it won’t happen this year but the plan is to mandate that there must be three handlers at major airports in the EU. We are also watching Asia. We’ve had great success in Thailand after they decided to allow foreign entrants and there are opportunities coming up in Japan. In Korea, we’re seeing cracks in the door, there are some opportunities in China but we’re being very cautious there, and we’re also watching the Indo-China countries which have a lot of potential but which are all very closed markets at the moment. Indonesia is another, but that will take time.

AGS: You recently won a concession as part of a consortium to operate a cruise terminal in Hong Kong on the location of the former, legendary, Kai Tak airport. Will we see more of this from WFS in the future?

Nassberg: We will bid for more, absolutely. We hope to turn this into an area of activity for us starting with Asia and we have had a few other enquiries on this.

AGS: How does WFS offer consistency of service across such a wide network?

Nassberg: Obviously we meet all the external regulatory requirements and as well as the standards we agree to conform to with clients, as defined in the Service Level Agreements we sign. We also have internal measurements related to training, oversight etc. So basically we’re doing our own extensive internal auditing of our performance. Our stations work together to learn about best practices from other stations. In many cases, airlines work with us, and as they have got more centralised in terms of what they want across their network and how they measure the performance of ground handlers, so we have moved away from meeting the differing local desires of airline station managers to providing network solutions to airlines involving multiple stations.

AGS: Have you made any new investments you can tell us about?

Nassberg: Well, we won a major contract with Etihad in London which was a big success on the cargo side. That started in March. We’ve also opened new stations at Gatwick and Cork for cargo in the last few months. We are also close to announcing two new cargo stations in Africa which has been a real focus of growth for us. We launched two years ago in Durban and the two new ones are in South Africa as well.