Established in 1992, Buenos Aires-headquartered CrossRacer Group offers a range of services under three separate divisions. The three divisions act as independent companies, but provide strong synergies in order to provide a wide range of services under one roof.
CrossRacer Cargo Services acts as a general sales and handling agent, originally founded in 1992 in Buenos Aires to take care of Swissair’s cargo activities there. CrossRacer Transport (founded in 2008) is involved in the transport of crew and passengers as well as baggage delivery. Finally, CrossRacer Airport Services was set up in 2004 to provide ground handling services including those pertaining to passengers, cargo, aircraft operations and ramp supervision, as well as special services such as the care of disabled passengers or unaccompanied minors. It was granted a licence by airport operator Aeropuertos Argentina in 2008 to handle all executive/private flights across the country, including both passenger and freight operations, offering services such as Customs clearance, weight and balance checks and multilingual staff where appropriate.
Director Alex Verschoor notes: “Business has increased at Ezeiza Ministro Pistarini International Airport as renowned carriers have started to fly to Buenos Aires in the last couple of years (KLM in 2011, Emirates Airline in 2012 and Turkish Airlines, also in 2012). We handle eight widebody aircraft (B748s, B773s, B772s and B763s) and three narrowbody aircraft (A319s and A320s) each day.”
CrossRacer Group’s client airlines include Lufthansa, United Airlines, SKY Airline, KLM, Emirates Airline, Delta Air Lines, Aeromexico, Turkish Airlines, Air Canada, Qatar Airways, Boliviana de Aviación, South African Airways Cargo, Swiss WorldCargo, Swiss International Air Lines, Etihad and Singapore Airlines. Several of these carriers make use of more than one of the Group’s divisions – for instance, CrossRacer provides passenger handling services for Lufthansa at Ezeiza as well as ground handling for the airline at São Paulo’s Guarulhos–Governador André Franco Montoro International and Rio de Janeiro’s Galeão–Antonio Carlos Jobim International airports in Brazil. The company is also present (offline) at Montevideo’s Carrasco International Airport in Uruguay and Jorge Chávez International airport in Lima, Peru.
He continued: “The ground handling business has grown considerably in these past years in Argentina and of course it is directly related to the airline business situation. We all know how volatile this industry is, therefore we must always be proactive and adapt to carriers’ needs and demands.”
For instance, he pointed out that recently a considerable number of airlines have started flying to São Paulo as part of their strategy to grow in South America, and he believes this trend will continue in the coming years.
Verschoor added: “It is our intention to expand our business in a slow and safe way, not only in the region but beyond as well – especially with our latest business unit, which is Airport Lounges. We started this in early 2013. CrossRacer owns and operates the Star Alliance Lounge in Buenos Aires, on behalf of Star Alliance.”
BFS – Twin Challenges
Bangkok Flight Services (BFS), a Worldwide Flight Services (WFS) company, offers full passenger, ramp and cargo handling services at Bangkok Suvarnabhumi Airport. It handles all types of aircraft, from private charters to full service mainline carriers, including the A380.
According to BFS managing director Stewart Sinclair: “Over the past two to three years the two major challenges we face have been the political situation and the very high rate of employment in Thailand that makes recruiting and retaining staff a big challenge.”
He explained: “The result of the political turmoil has been very unpredictable passenger and freight demands based on whether the economy is seen to be recovering or in a downturn, depending on whether the country is in turmoil or in a period of calm. In periods of calm the economy tends to grow quickly but equally when the political situation worsens then sentiment, both at home and abroad, causes a downward trend that can be quite sharp. This volatility can mean a change of 15% of passenger volumes and 5-8% in cargo volumes, which makes planning very challenging. The political challenge is fairly unique to Thailand.”
As for the issue of high employment, this is not unique in the region – but Thailand’s employment rate is over 99%, which is extremely high by any comparison. Sinclair noted that around 350,000 overseas workers are employed in Thailand, mostly in the construction and industrial fishing industries. However, he said: “As an operator at an airport this is not an option for us because of the security requirements at an airport. In particular, our passenger services staff are nearly all graduates as this seems to be the education level required to ensure good English language skills. As you can imagine, there are a great many other opportunities in many other sectors for potential employees to choose from, and working in the airport environment requires shift work in an out-of-town environment with fewer opportunities for eating and shopping during break times,” making it potentially less attractive to graduates than other employment options. BFS currently employs 4,000 staff.
SATS – Looking for Consistency
Singapore Airport Terminal Services (SATS) offers food solutions including in-flight catering, commercial catering, food production and food distribution, as well as a full range of passenger, apron and air cargo handling services. The company is active across the Far East – headquartered in Singapore, SATS is also present in Australia, China, Hong Kong, India, Indonesia, Japan, the Maldives, the Philippines, Taiwan and Vietnam.
“In Asia, rapid growth in passenger traffic coupled with rising manpower costs can lead to inconsistent service levels,” comments Alex Hungate, president and CEO of SATS. “Airlines increasingly recognise the importance of partnering with reliable ground handlers to maintain consistent service standards across their stations.
“As Asia’s leading food solutions and gateway services company with a presence in 44 airports, SATS sees the opportunity to offer a consistent standard of exceptional services at every touchpoint within our network and to provide airline customers with assured end-to-end handling of their passengers and air freight,” Hungate went on. “We will continue to leverage our state-of-the-art facilities and comprehensive suite of services to obtain scale advantages; we will also harness technology to drive greater efficiencies, create new service benefits and provide seamless connectivity for customers across our network.”
As part of this drive for high standards, in September, SATS attained the European Union (EU) Regulated Agents (RA3) accreditation, making it the first ground handler in Singapore to do so. This certification confirms that SATS meets the stringent security requirements for screening air cargo and mail entering the EU. Ronald Yeo, SATS senior vice president for cargo services, said: “Even though Singapore is a ‘green’ listed country and is therefore exempt from this requirement, we voluntarily undertook the RA3 certification process as an added layer of validation. With this accreditation, airlines shipping mail and cargo via SATS can be assured that our operations meet exacting security standards, and fulfil their ACC3 (Air Cargo or Mail Carrier operating into the Union from a Third Country Airport) obligations.”
Menzies – quality and safety worldwide
Menzies Aviation has grown to be second largest ground handler in the world with 151 stations in 32 countries with 21,000 staff. As EVP Operations, Mervyn Walker says, “Menzies Aviation offers passenger and cargo and ramp handling from Auckland to Bogota and from Gothenburg to Cape Town. We have over 500 airline customers so we handle all of the world’s major airlines at some location.”
He goes on, “No ground handler is truly global so in any market we choose to operate in we try to have regional density so we can provide good cost effective cover as we do for example in Australia, New Zealand, USA, Colombia, UK, South Africa , Eastern Europe and Spain.
“In the past year we acquired Skystar in Australia and New Zealand and Desacol in Colombia.
We have opened new cargo terminals in Montreal and Toronto. We have opened in Detriot for ground handling and start new stations in ground handling in Denver and Toronto soon. In February we open a new cargo terminal in San Francisco.”
Walker explains the main challenge faced by Menzies Aviation in an increasingly competitive market:
“We work hard to make only 5% return on sales on a $1.3BN USD dollar turnover business. We are a totally transparent listed business on the London Stock Exchange and we work hard to compete with many of our competitors who are owned by venture capitalists with very short term goals.”
Throughout the company’s worldwide operation, safety and security are paramount: “We have a smart auditing tool and we audit over 60,000 turns per annum to ensure we comply with our SOPs.” says Walker. “It’s all about the people and this year for example we will put 3000 staff through our LEAD programme. We are doing well, our aircraft incident rate is 0.041 per 1000 turns and our staff incidents are 0.101 per 100 FTEs. No matter what station we are in, safety and security comes first, it always comes before profit.”
AHS Ghana is a Menzies Aviation partner based at Kotoka International Airport, Accra. Managing Director Ron Ket told AGS about some of the challenges inherent to operating in West Africa. They include the volatility of the local currency, the amount of baggage carried by local passengers when travelling, and the unreliable quality of airport infrastructure. Ket says, “Ensuring constant safety and security of operations in Africa is a tough challenge. However, with the daily application of the Menzies Aviation Safety and Security procedures, AHS Ghana has managed to have no incidents in the past eight years and is regularly commended by its customers for its high standards.”
Çelebi – sustaining excellence
Based in Turkey, Çelebi Aviation Holding provides passenger, ramp, cargo, security and business aviation services to 300 customers at 36 airports in Turkey, Austria, Hungary, India, Germany and most recently, Saudi Arabia. With a turnover of Ä224 million in 2013, its customers include Turkish Airlines, Lufthansa Group, Onur Air, British Airways, Alitalia, Emirates, Saudi Arabian Airlines, DHL, Cargolux, Kuwait Airways and others.
A management spokesperson for Çelebi said, “Each country has its own legislation and rules. One of the main challenges is the different legal environments with different regulations, requiring a diversified management approach. For example in Turkey, Saudi Arabia and in India, foreign investors may not hold over a certain percentage in the company. There is no such rule in Europe. In India a regulation is proposed to prohibit self-handling, which is not the case in other countries. Çelebi is managing this challenge through close monitoring of the legal environment, making regional partnerships and also a more decentralised management strategy. Regional CEO assignment in India is a part of this strategy.
“Another challenge for Çelebi is to provide the same level of operational excellence (which is generally above the industry standard) at all stations. Çelebi is managing this challenge through building solid bridges with its customers, understanding their needs, with the help of its 56 year experience. This requires high level of efficiency since a company has to generate profit. This reality has been the main driver of Çelebi for a long time.”
Aero Services Egypt – focus on safety
ASE provides passenger, ramp and cargo handling to airlines including Airberlin group, Aegean Airlines, LOT Polish Airlines, Qantas, Air Europa, Fly Dubai, NAS air, and Airarabia at 12 airports throughout Egypt.
Managing director Omar Hanno told us, “As safety is and has always been one of the main challenges in the aviation industry, ASE is always compliant with the international safety standards. Our focus is on continuous training to our team members from top to bottom and from bottom to top.”
The company’s internal auditing, safety management systems and on-the-job training are, as Hanno says, “the pillars of our success in being registered as an ISAGO and ISO certified company. For the last three years all of these were vital elements to achieve smooth, safe operation, and keep our performance on track to meet our partners’ expectations.”
Hanno continues, “One of the other challenges is that each airline has its own ground operations manual, so to ensure standardization of procedures we have implemented the IGOM as our main reference for ground operations.”
“Last but not least,” he concludes, “facing our challenges requires us all working in the aviation industry to be up-to-date by participating in different task forces and working groups, and reporting for a better and safer work environment.”
Gapura Angkasa – local focus
Gapura Angkasa is Indonesia’s leading ground handler. It provides a full spectrum of ground services at 38 airports throughout the country, to international and domestic airlines as well as private jets and military aviation. As well as ramp and passenger handling, the company offers many other services including lounges and limousines, flight operations, and meet-and-greet.
AGS spoke to Sucipto, Gapura Angkasa’s corporate secretary, who explained that, like most of the ground handlers we spoke to, one of the company’s major challenges is “Customers demanding an increase in ground handling services without any extra handling charge.”
He goes on, “Another constraint is Indonesian government policy relating to wages [which affects] our operating cost. This encourages business transformation, using technology as a substitute for human labour in operational activities.”
“Safety and security are the highest of our corporate values,” Sucipto continues. “Therefore, we make ISAGO our benchmark in implementing systems and procedures to prioritize safety.” Sucipto said.
The company is also committed to improving its ground support equipment with new technology and fail-safe systems, and to operating in an environmentally friendly manner.
Sucipto concludes, “The management of Gapura Angkasa has decided not to expand overseas, but concentrate on internal consolidation, and anticipate the ASEAN single market in 2015.”
Nahco aviance – on-going transformation
A member of the aviance alliance, Nigerian Aviation Handling Company PLC (nahco aviance) is Nigeria’s foremost ground aviation handling company. In 2010 it became the first ground handling company in West Africa to receive ISAGO certification. nahco aviance employs more than 1,700 Nigerian and expatriate staff and in 2013 generated N8.1 billion (US$49 million) in revenue. The company currently serves more than 35 airlines at seven airports across Nigeria, has provisional licence to operate in Liberia, and is working on licences for Cote D’Ivoire and Senegal.
A spokesman said, “Generally, the aviation sector continues to witness new challenges. This is not peculiar to Nigeria. You must be aware of the global terrorism battle. Also, infrastructural challenges and multiple taxation are some of those challenges.
He concludes, “nahco aviance, is without doubt, a stickler to high safety standards. We remain committed to our long term plan of being the reference point for aviation ground handling business in the entire African region. For a company whose transformation is still on-going, we project to be at the optimum level by the time the current reorganization process crystalises in the next few years.”
The Russian Market
The Russian ground handling market is under threat due to the deterioration of relations between Russia and Western countries, which may negatively affect the business of many Russian ground handlers.
In response to the recent decision by the EU and the US to impose a ban on the supplies of dual-use products to Russia, the Russian government has already restricted imports of engineering products from Western countries and has not ruled out the possibility of the imposition of other bans, including ground handling equipment .
This may negatively affect the industry and result in its decline. Due to a series of economic and political crises in Russia, the country’s GSE production has not practically developed, also due to a need for local producers to comply with strict international standards.
Currently the majority of local manufacturers produce out-dated equipment, the majority of which was designed during the Soviet era, or small-scale copies of imported equipment. The Russian ground handling industry remains heavily dependent on foreign equipment and the rise of import duties or the imposition of a ban on its supplies may have a catastrophic effect on the business of many Russian ground handlers. Despite recent statements by some top officials, in particular Dmitry Rogozin, Russia’s first deputy prime-minister, that Russian manufacturers will be able to easily replace importers in the domestic market, the majority of Russian airlines have serious fears that the imposition of mutual sanctions may result in a significant decline of the quality of ground handling services provided in Russia both by local airports and independent operators.
UTG Aviation is Russia’s first independent ground handler. Operating at Moscow’s three largest airports, it serves more than 65,000 flights a year. Customer airlines include Cathay Pacific, EasyJet, LOT, Thai Airways, KLM, Fly Dubai, Air Malta, UTair, Red Wings, Georgian Airways, Air Armenia and many others.
Mikhail Ilyin, director of marketing, says: “We are fully dependent on the number of operations performed by our customers – the airlines. Therefore, the sanctions can affect our performance in the case of their impact of the aviation industry, as a whole. It is currently too early to evaluate the impact of sanctions on the Russian ground handling and aviation industry.”
dnata – balancing growth, quality and price
In 2013 – 2014 dnata posted a record revenue of US$ 2.1 billion, a 14% increase over the previous year. The company has more than doubled its revenue in the past five years and has operations in 90 cities on five continents, serving more than 250 airlines.
“Our challenge is to keep delivering the consistently high quality service our customers have come to expect of us, whilst managing growth,” explains dnata president, Gary Chapman. “To us, business excellence means pushing for innovation and efficiencies, while keeping a close eye on the bottom line, and never compromising on safety and operational standards.”
Locally, one of the challenges faced by dnata is, as Chapman says “never-ending, rapid growth often within constrained facilities”. Al Makhtoum International Airport (DWC), opened in 2010, with a US$32 billion expansion plan already in place which will make it potentially the world’s largest and busiest airport. Dubai International (DXB) also continues to grow. Although there are no plans to develop it further after 2015, many airlines continue to add flights to and from the airport.
Chapman continues, “To meet the challenges created by regular construction and ongoing growth, we must cleverly manage ground handling and cargo operations. Our team in Dubai have become extremely skilled at identifying ways to make our operations more efficient, without compromising safety and service quality.
Worldwide, dnata faces, along with many other handling companies, constant pressure to deliver quality services at greatly reduced rates. However, Chapman believes this trend is changing: “More airlines realise the ‘cost of handling’ is more than just the rate in the Annex B. Service failures, aircraft delays and damage can prove far more costly.
“In this context, dnata has taken the position that we will not ‘chase’ contracts to a price level where the contract is not sustainable and where we cannot support the required investment in people, equipment, and facilities.”
AeroGround – striving for growth
AeroGround is a wholly owned subsidiary of Flughafen München GmbH. Together with its sister companies Aerogate and Cargogate, AeroGround services more than 220,000 flights movements and more 80,000 tons of cargo each year.
One of the main challenges faced by AeroGround is the low level of unemployment in the Munich area, which leads to competition for staff between attractive local employers. AeroGround sources suitable staff from other European countries to counter this. The company also aims to reduce the number of temporary staff it employs to 5% by mid-2015.
Michael Richter, Managing Director of AeroGround and aerogate, says, “Airlines are trying to cut costs on ground handling services while expecting highest standards of quality, safety and security. Furthermore there is a demand for highest flexibility regarding delayed inbounds and flight irregularities.”
He continues, “The competitive environment for AeroGround will continue to be challenging and exciting in the future. One reason is the competitive pressure on German aviation companies (for example through civil aviation tax) and the resultant tough consolidation cuts which have a great influence on price competition for ground handling services.” Despite this, the company is optimistic, seeing additional growth opportunities in the extension projects currently underway at Munich airport’s terminals 1 and 2.
Aeroground is also following a strategy of expansion off-campus. This includes the ground.net project, a strategic alliance with Goldair Handling in Greece and AAS in Switzerland. ground.net has been created to provide airlines with a multi-station alternative to the global players. The alliance aims ultimately to create a European Ground Handling network. Aeroground is also stepping up its efforts to acquire ground handling licences at other airports throughout the world, with the focus on German speaking countries. In addition, as part of a consortium, AeroGround is taking part in tendering procedures for the second ground handling licence in Saudi Arabia.