Yet, airlines and airports didn’t feel much appetite to retain or enter ground handling in the past decade: staff intensity, market uncertainty as well as low profit margins and high expenses contributed to outsourcing tendencies. While some airports kept ramp handling divisions through subsidiaries and larger network carriers took responsibility for handling passengers and cargo at their hubs, nowadays mainly third parties tap the ground handling value chain providing services from check-in, baggage loading, lost and found, ticketing to ramp supervision. Particularly Low Cost Carriers (LCC) refrained from ground handling involvement – too much complexity and preventable costs – many larger airports in liberalised markets abandoned ground services after discovering the pressure on price and performance burdened their balance sheets.
Outsourcing lowered costs for airlines and raised new performance issues
Approximately 25% of delays occur on the ground according to Eurocontrol and IATA. Meanwhile ground handling bears power to recover in-flight delays through efficient turnaround and handling services. The vast competition in handling markets contributed to dumping prices to attract airlines, which experienced a wooing by handlers. The disaffection of airline product delivery and performance management on one side and the handler’s aim to provide ground services to as many partners as possible, while managing available resources to produce low costs on the other hand unveiled new challenges. Customer focus, accountability for disruptions and shared goals to succeed were discarded along the way.
Ground handling experiences a trend reversal
The pandemic made airlines and airports revise their strategies with higher efforts to succeed in the competitive environment through more operational stability and customer focus. As air traffic continues to recover from the crisis, flight and ground operations are disrupted by lack of staff, lack of workforce experience, ever-growing operational expenses, adherence to service level agreements and much more. The effects are an unsteadiness in service delivery by all aviation stakeholders. These challenges caused several airlines and airports to return to their roots – taking charge of ground handling. Europe, the market with the greatest outsourcing tendencies, is now the frontrunner in rethinking ground handling.
Latvia’s national carrier profits from self-handling
airBaltic headed into 2022 by starting passenger self-handling at the Latvian national airlines’ Riga hub, after having it outsourced for 13 years. Inara Korotkevica, Passenger Handling and Service Delivery Manager at airBaltic says the decision to open an internal passenger services division is airBaltic’s investment in customer relationship: “We believe that passengers should receive our airBaltic hospitality from the moment they walk into the terminal.” The carrier accounts for check-in, boarding, lost and found as well as special passenger services, for instance taking care of unaccompanied minors and offering dedicated family service counters. She adds, “our approach is to go the extra mile for every passenger, to provide positive support under any circumstance."
To avoid hard cutover, airBaltic created a transition period, in which it took over more and more flights from the previous handling partner, predominantly to foster on-the-job learning for staff. At the start, a team of 70 handling agents took care of all airBaltic flights at Riga airport; for this summer the carrier has grown its handling division to 100 staff. Through self-handling, up to twelve check-in counters are now continuously opened from 5am to 11pm, offering common check-in to passengers at any time when they arrive at the airport. Registration kiosks and self bag-drop counters further enhance the passenger flow during peak times. The few low traffic periods of the day are covered for internal staff briefings and training. In addition, having ownership of passenger services within airBaltic’s organisational landscape at the hub improves the overall handling performance through a closer relationship to the customer service and ground operations departments as well as the carrier’s flight coordinators on the ramp. “Developing a hybrid handling model at our home base pays off for us, the customer feedback is very positive and partner airlines interestedly observe what we do," says Inara Korotkevica.
LCCs are driving the ground handling renaissance
More surprising than the turnaround trend in Europe itself is that LCCs are driving the change by being most active in setting up ground handling divisions, despite their hesitance adding any unnecessary complexity to the business model.
At the forefront was Ryanair in 2018, when it moved all Spanish airport stations to self-handling on the ramp and in passenger services, forming Azul Handling. Shortly thereafter, the Irish carrier expanded above and below the wing handling to its largest base London-Stansted through the foundation of Blue Handling, a cooperation of Ryanair and Omniserv. The main purpose was to improve the on-time performance and service delivery at critical stations within the carrier’s network. A successful endeavour; by the end of the first summer of operations, Ryanair reported a significant rise in performance and satisfaction levels by 90%.
In Spain further airlines followed the example of Ryanair to start self-handling. The conditions in the Iberian market were characterised by growth in handling costs, while performance and punctuality in peak-times lacked, causing operational constraints for the airlines. easyJet, Norwegian Air Shuttle and Jet2 have all set up self-handling or joint ventures at airport stations across the country.
Eurowings’ Wings Handling soars performance at Palma de Mallorca
In May 2021, Lufthansa Group LCC Eurowings entered the field of self-handling in Palma de Mallorca, where the carrier based five aircraft and operates up to 380 weekly flights this summer. Wings Handling is the name of Eurowings’ very own ground handling unit, taking responsibility for the entire ramp services including baggage handling, push back and ramp supervision. When the framework conditions became unfavourable for the airline by a lack of choice in potential partners and the current provider contract expired, Eurowings was determined to manage ground operations at their largest international station themselves. More than 270 staff contributed to Palma de Mallorca becoming the top on-time performance station in Eurowings’ network over 2021 summer season. The carrier’s flight schedule in Palma supports the self-handling endeavours: In a first wave of departures the based aircraft leave the station in the early morning, subsequently, a phase of arrivals from European airports begins and ensures a high utilisation of Wings Handling. To keep asset costs down, Eurowings opted to lease the GSE, hoping for the future to cooperate with other handlers at the airport in pooling of GSE. Another success factor is the airline’s close partnership for passenger handling and station supervision.
Service providers becoming close airline partners
Airline Assistance Switzerland (AAS) takes a stance in establishing such partnerships with airlines. Christian Schneider, AAS’ Chief Business Development Officer says: “Cooperation models in ground handling are critical for airlines, especially at hubs and large stations. We assist airlines with our competencies in ground services by developing strong relationships enabling airlines to focus on their core business.”
AAS recently expanded its business by tapping into new markets at German airports Dusseldorf and Hamburg through exclusive provision of services to a partnering airline. Christian Schneider says, the business approach of AAS is to be agile and dynamic by offering aviation services that reach beyond the traditional understanding of ground handling. The scope of operations thus includes payroll services, efficient flight profile management for air carriers and consulting for operational matters including passenger handling and mobility services.
The airport value chain can profit from ground handling activities
Even airports rediscover ramp and passenger services as a strategic lever to attract and retain airlines by offering tailored one-stop-shop solutions. Under the roof of Mitteldeutsche Airport Holding, Dresden and Leipzig/Halle Airport founded a passenger handling division in addition to previous existing ramp services subsidies, to offer airlines the full spectrum of handling.
Uwe Stange, Director of Passenger and Airport Services at PortGround, the holding’s handling company says for regional passenger airports like theirs, offering ground services is a strategic choice to attract passenger traffic. “We view it as a complete business case enabling us and partnering airlines to grow; it also strengthens relationships with airlines on a commercial and operational base.”
In terms of provision of services, he adds, “Now we directly serve the passengers passing through our terminals gaining a better understanding of what they want and need.” PortGround particularly focuses on cross-functional staff training and deployment of fit-for-need systems, entering a close cooperation with its IT provider to lead the airport services division to success.
The movements in ground services demonstrate the opportunities for airlines, handlers and airports to invest in customers, performance and partnership even during unprecedented times. The current reinvention of ground handling maps out a perspective for the post-pandemic future in aviation to achieve a competitive advantage despite the complexity of the operational environment.
