This year’s event, held in the beautiful environs of Bali, proved to be as popular as ever. In all, over 1,000 organised one -to-one meetings were held and the two days of conference was split between papers on topical issues and special interest streams. In addition, there were industry workshops for those interested in the possibilities of IT; in all, with the huge networking opportunities included, delegates were able to profit to the maximum from their time away from their offices.
Arguably the most anticipated paper of the lot is the financial review and KPMG’s Robin Cartwright, now a regular at GHI events, was on hand to try and make sense of the numbers appertaining to the handling market (or, perhaps more precisely, the lack of them). It’s been a quiet period in the wake of the Swissport takeover of Servisair (and the subsequent acquisition of Swissport by the HNA Group) and whilst the jury is still out on the size of the global handling market (a question that drops into my Inbox on a regular basis), a cautious US$50-60bn might be a good guess. Despite the fact that it’s a sector notorious for low margins, nonetheless it seems to continue to thrive, a fact illustrated by the ongoing interest shown by the private equity companies.
If handling company activity had been quiet, the same cannot be said for the airlines: once again, the low cost sector is blazing a contrail that has left more traditional airlines struggling in their wake. Airline consolidation is continuing around the world, including Asia, and whilst some markets remain difficult to enter (India and China amongst them), the emergence of the third party handler has not gone unnoticed. True, the dizzy heights of liberalisation enjoyed in Western Europe have yet to be realised in the Far East but with network expansion and high growth markets has come the concept of outsourcing. Not only that: handlers are now more willing to look at different operational models, and so leasing and renting of equipment is coming more and more into focus, a thought that a decade back was in its infancy for most in the region. The likes of GSE manufacturer Nepean and Singapore-based Aviation Equipment Leasing attest to the fact, as does TCR; and there are even rumours of US offerings in the not-too-distant future.
Analysts know, of course, that it’s the emerging markets that post the greatest growth figures and effectively lead the sector: on this point, some of Robin’s findings were eye-openers. China is predicted to be the biggest air transport entity by 2030, with India fetching up in third place (by 2031). Moreover, by 2034 Indonesia could well occupy fifth position. These are challenging prognostications indeed but all these countries, frankly, are beset by all manner of difficulties when it comes to aviation. Indian handling policy is still in dispute eight years after attempts were made to impose revisions and outside the metropolitan stations, service levels and infrastructure are often in abeyance. China has erected something of a barrier to foreign handling companies wishing to serve the airline sector, whilst Indonesia, with it useful geographical position, is not making the best use of its strategic importance and requires focussed investment. So-called mega-hubs are on the rise also: from 18 at present, the speaker predicted some 35 by 2034.
Current leaders in the Far East in terms of handling are SATS and Celebi, although the list of those involved seems to grow year on year. And whilst liberalisation my well be the goal for many in the region, this needs to be tempered with the level of competition: too much could ruin the dish.
Interest from the audience brought up a number of key questions: was more handling consolidation on the horizon? Robin thought so, and mentioned the brand building exercise that was Swissport as a good role model. What about the top ten handlers compared to the other 90%: were both sectors likely to grow? Again, his research pointed to the affirmative. Outsourcing was gathering pace, albeit at a modest rate in Asia, where networking was providing the spur. He concluded on data, saying that EBIT figures may not be available to all yet handling margins ought (and had been recorded) to be above 5%.
Safety thirst
Ground damage, as regular readers know only too well, is a topic that is never far from these pages. A safer ramp is in each and every stakeholder’s interest – yet the appalling fact is that the industry’s bill seems (again, because of an absence of firm figures and costs, something that could be rectified by a compulsory database) to grow each year. Legal Associate Kate Seaton tackled the harsh reality of doing business on the ramp in her paper, dwelling on the thorny issue of consequential vis-a-vis direct loss, an area that might be considered to have more than its fair share of shades of grey. At bottom, Article 8 is open to interpretation (indeed, this verb was also the main undercurrent of Maurizio Anichini’s specialist stream, in which he tried to guide the audience through the maze of the SGHA), and because of that, together with the question of local jurisprudence, it is seldom straightforward to resolve a dispute centring on this subject.
In admitting that the handler’s operating landscape had grown tougher over the last couple of decades, Kate’s feelings were that there was scope for tidying up the wording in this part of the IATA manual. On the question of wording, and whether IATA was happy with the existing format, she believed that too much detail would prove onerous; there was something of a Catch-22 about this. Given that the AHM 660 is merely a recommendation, though, there is clearly room for improvement. Other questions posed by those present brought up another fascinating issue, namely how the SLA fits into the picture. SGHA 8.5 and 8.1 may well aid the handler but the SLA could bind the GSP in terms of documentation. Kate stated that by and large the SLA was not usually considered in her cases, but that its presence was indeed a valid point. As for the area of airport negligence (a case was cited wherein damage was occasioned through the misapplication of ramp markings), she felt that it was essential initially to establish whether there was a contractual relationship extant. It was yet another grey area, and one subject to the prevailing legal doctrines.
Typical of the mixed bag of other papers on the first day was Tom Abbott’s look at employee disenchantment. As one whose life has been given over to guiding and enhancing company employee performance, he was distressed to relate that a recent Gallup poll, conducted worldwide, found that just 13% of those quizzed about their work ethic admitted being engaged. On the ramp, as is well known, loyalty is a fragile bond, easily snapped by the lure of slightly better conditions or slightly better hourly rates at a competitor’s company. Retaining staff and keeping them productive as well as happy is a job for the HR department (and one reason that this magazine is holding its second HR event in Lisbon in May); but there’s no easy answer to this conundrum.
Citing the success story that has been Westjet , from 300 staff 20 years ago to 10,000 employees today, Tom was at pains to point out that this carrier’s path had been a rocky one. Buttressing this was the litany of failed carriers that have lined the path of those who have found success: but why had they fallen? His credo was a simple, alliterative triptych: listen, learn, laugh. Join these three and take them into the workplace, was his philosophy, although incremental steps, rather than bounds, would be his advised pace.
Of payment… and PRMs
Thinking of flying on a low cost carrier? Make sure you do your homework first. Scoot’s Benson Tan unashamedly told the audience that his carrier liked the simple approach: check in at home, turn up with hand luggage and flow through the airport with rapidity. But don’t expect anything, anything for free. Charging for electric so that you can top up your mobile’s battery is par for the course at Scoot, as is the few dollars for a bottle of water. We shouldn’t be surprised; after all, US carriers tend to remain airborne because of their ancillary revenues. The days of onboard frills have been dwindling steadily and the result appears to be that of fleet growth: Scoot is scheduled to have 12 aircraft by the end of this year, which would seem to prove the point. Benson added that his business model was built on IATA’s SGHA: there were no dramatic differences and that, coupled with realistic SLAs and remote station monitoring, was proving a successful recipe for the newcomer.
The subject of refining the model was also within Jason Cameron’s remit, and he spoke on how Qantaslink, with operations across 17 stations, many of them remote, had managed to draw all the strands together and come up with a reporting tool, that of LISO, which stands for Lead Indicator Safety Oversight. Sceptical at first of this application, he quickly came to realise its potential. In all, 72 handlers are involved and the constant stream of data allows the head office to appraise, on a monthly basis, the performance of stations in the network. If nothing else, here was a powerful example of how data CAN be extracted and CAN be applied to the benefit of all in a group: performance has been enhanced and any hiccoughs can quickly be addressed. Other carriers, take note! Jason answered several queries on the initiative and whilst he couldn’t confirm categoricallythat safety had been improved, nonetheless a more detailed overview certainly cut the risk element. And as for any resistance in terms of data collection, that had not been in evidence.
Sasha Miokovic from JetStar Asia added a little local colour to the proceedings when he spoke on enhanced passenger experience. In this instance it was all to do with FAST, the quick check-in initiative that had been rolled out at Singapore’s Changi with great success. The airport had been keen on pioneering self service and there have been benefits all round, with uptake having climbed by 55% since its inception. Included in the scenario are the mobile boarding pass; the self-service kiosk and the auto bag drop. Answering delegate questions, he felt that a shared kiosk situation could well be entertained and he was convinced that the traditional face to face check- in was disappearing, although this would not be an overnight affair.
Have you ever paused to consider the ramifications of 98 wheelchairs on a flight? WFS’ James Carey certainly has, for this was a real situation for him. PRMs and their accommodation is a worldwide issue, not just a local one. And ageing population, one that is not simply increasing in numbers but one that is also enjoying better health and thus happy to travel, has meant an explosion in demand for specialist handling. Take Delhi: there, 1,400-1,600 PRMs are handled DAILY. In fact, this is now 1% of total passenger throughput at the airport. Similar patterns have been observed in both Bangkok and Hong Kong, where the PRM is often in transit. The prevailing regulations on PRM carriage derive from Europe and the US, but challenges abound, and they are not always obvious. How about the PRM boarding an ATR? What about manpower deficits? What about volume predictions? There is also the growing problem of the bogus PRM, the one who takes a wheelchair to expedite progress through a large terminal and then abandons it and walks unaided. Here, if requested, a handler complies and he or she has to be careful of their questioning phraseology should they suspect the passenger’s motives. The real issue lies in the possibility that a fake PRM receives a chair at the expense of a genuine request – and that has to be avoided at all costs. The pressure is certainly on the handler today, moreso than ever, and the swelling numbers of PRMs render this duty an onerous one.
Airport handler: boon or bane?
One subject that is not dear to many an independent handler’s heart is that of the airport handler. Often the latter is given bad press and the supposition is that the airport handler is in a privileged position. To put the record straight, Wolfgang Fasching of Vienna airport talked about the airport’s handling role. He felt that the last round of EU regulations did indeed discriminate against the airport handler – but were they better or worse than the independents?
Asking an airport to cease handling was easy – but asking an airline to stop was much less so. Because of this, the airport is often targeted by a disgruntled third party handler although, to be fair, handling is a local affair and each airport is a separate entity. An impressive 1% of Austria’s GDP is down to its airport; although, when compared to an independent, an airport’s cost levels can be higher. On its side, though, is the ability to shape the customer’s experience. A key question posed revolved around liberalisation, which had depressed handling rates – how had Vienna coped with this? Here, it was largely down to the size of the market share (significant at Vienna); and the fact that it handles the dominant carrier gives it a market edge.
Risk assessment and root cause analysis were presented by Twiga Aero’s Brenda Aremo-Anichini; e-invoicing was explained by Shantanu Sathaye of Accelya, and there were some thoughts on future strategies, courtesy of Bauhaus Luftfahrt. Here, the intriguingly-titled Five Minute Turnaround attracted many delegates. These topics all helped to maintain the pace in the special interest streams. In turn, Max Corsi dwelled on the progress of IGOM and ISAGO, and brought some good news. IATA has finally realised that, despite its best intentions, audits were still being requested by airlines from ISAGO certified stations. There has been no expansion in pool membership after seven years so now a Charter of Professional Auditors is being established. Auditors can be drawn from airlines, GSPs, airport authorities or regulators. The GSP will pay for the audit according to its scope (ie extent) and fees will be fixed per discipline, as will travel fees. Airlines will also be required to pay into a fund for the maintenance programme. More importantly, they will accept the ISAGO audit in lieu of their own. October 2016 is the trial and roll-out date, with December 2017 set as the launch date for the full model. Could this be the moment of truth? Watch out for updates within these pages.
Time for debate
IT and cargo formed the two panel sessions. This latter topic, cargo, remains the poster child of the sector, seemingly mired in an outdated framework that will not, or cannot, advance. A panel of freight experts analysed where the sector was heading and what it would take to bring it up to par with the rest of the handling community. Asia is progressing in terms of cargo (witness the huge airport project underway in Turkey) yet, as has been mentioned, Jakarta remains congested and desperately needs a smart hub to grapple with the growing volumes there.
The absence of a mandate, in David Ambridge’s view, was why the sector still lagged. E-services are being deployed , but these are in the minority. Freight forwarders would do well to come together and sit around a table, thought Christian Bergfelder, although he felt that they feared change. The question of why passengers can be boarded in 20 minutes yet freight sits around for two days in an expensive warehouse was not easily answered. Onno Boots wondered whether IATA was a facilitator or a roadblock; and John Batten queried why the integrator was 25 years ahead of the pack. Was the business model flawed? There is a palpable fear of change from both customer and forwarder, that much is clear. Is the freight forwarder really necessary? There is also the problem of someone setting the example for others to follow; after all, if the big entities don’t have the systems in place, then their smaller counterparts certainly won’t either.
It was felt that if IATA’s goals in this sector were unattainable, more realistic targets ought to be set. However, if IATA was unable to get its members to the desired levels, then this begged the question of what to do next. There was agreement from those in the room that the cargo sector dynamic had changed 20 years ago and that maybe an organisation such as ASA was the one to lead it to the promised land of the twenty-first century. The wordy 35 page document that forms the SLA also came in for criticism: with just five measurements necessary, why so much paperwork? Ultimately it was felt that there was a need to focus more on the customer (the driver is, after all, the customer’s customer); that the freight forwarder did not really understand the carrier’s wants; and that the cargo handler was handling more than was needed.
In summary, it was a packedthree days for delegates, many of whom expressed their enjoyment with the event before they left.
