An armistice in SLA performance clauses, swifter payments and building long-term business partnerships are crucial steps in ensuring the industry’s collective survival against the coronavirus pandemic, GHI’s Americas Webinar has heard.
The session echoed GHI’s debut Webinar for the Asia region last month in championing stakeholder collaboration as the sector’s secret weapon against the Covid-19 crisis.
Panellists from American Airlines, TLD, Menzies Aviation and Avianca said that this must translate into a renewed spirit of cooperation, trust and innovation within the supply chain.
Mark Galasco, Regional CEO for North America and Latin America at TLD, said: “We need to partner more than we have in the past. We’ve had some highly collaborative situations where we’ve achieved a level of trust with each other as suppliers and customers that’s led to us sharing and evolve our visions together. We’ve got a long haul ahead so let’s start developing the plan.”
Boosting SLA flexibility was a key starting point, said Raul Barrera, SVP, Sales & Operations at Menzies Aviation, as he outlined the handler’s response to a 70% slump in volume across the Americas since the pandemic struck.
Menzies had removed bonus and penalty clauses within some contracts as it focused on meeting the immediate challenges of fulfilling Covid-hit schedules, he said.
“We have decided with a couple of customers to take a bonuses out of the SLA: it’s not fair to measure the operation in the same way right now. It’s a good example of working together: we both compromise for the benefit of our operation.”
Menzies had also insisted on shorter payment terms as it sought to preserve cashflow, Barrera added. “Before Covid we’d seen request for 60 and 90 day terms from customers and that’s not healthy for the industry. We have a strong stance but want to work together with customers to keep terms at 30 days max and implement a stronger weekly billing cycle.”
The same ‘firm but fair’ approach governed decisions over allocating the cost of increased operational complexity linked to Covid-19. Barerra concluded. “Whether it’s additional cleaning or rates built on full schedules that are no longer applicable, that pricing needs to be revised and adjusted. It could be flexible while their [the customer’s] operation returns to normal or it could be a more permanent adjustment.”
An online poll conducted during the GHI Webinar found 40% of industry stakeholders felt governments should pay for the extra costs of delivering Covid-19 precautionary measures at the airport.
However, it was wrong to expect any single party to foot the bill, according to Ruben Atehortua, Director of Cargo Operations at Avianca Cargo.
He said: “This cost is a reality. So, if all stakeholders who own the process don’t put in a little bit, then the industry isn’t going to work. It’s down to all of us and we should all assume our part.”
The emphasis on collaboration was echoed by Matt Fegan, Procurement Manager - International Airport Services at American Airlines. “This is something that impacts the entire industry…We’re forced to find creative solutions and collaborate. Maybe it starts with an airline and handler looking for ways to reduce cost then looping in airport authorities. Ultimately, we’ve got to work together.”
Watch the Webinar, which was attended by more than 300 aviation stakeholders, in full by clicking here
