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Outsourcing handling becomes big business

The trend for outsourcing ground handling among airlines and airports continues and, as Rob Coppinger finds out, the new direction is bigger is better

In the last 12 months, Kuwait Airways, Malta Airlines and Philippines Airlines have all announced their intention to outsource their handling operations at domestic airports at least, if not those further afield. In the same period, well known international handling firms have expanded. Air services firm dnata announced a doubling of its Pakistan capacity with an investment of $18 million, Worldwide Flight Services (WFS) bought Consolidated Aviation Services (CAS) and a controlling stake in Fraport Cargo Services (FCS) while aviation services supplier Aviator purchased Swissport International’s Gatwick Airport operations. Swissport expanded into Cyprus and the Middle East. 


Speaking to Airline Cargo Management (ALCM), Worldwide Flight Services’ Group Chief Operating Officer, Barry Nassberg, describes the FCS purchase as a major step forward for the company in central Europe. He says: “In terms of growth, continued outsourcing, and geography of the FCS acquisition, that was a key area of development because that took us into the centre of Europe and into Germany. We were a minor player in the German market and that took us right to the top and that was an area we wanted to be.”


Fraport’s Senior Vice-President Cargo, Dirk Schusdziara, tells ALCM: “They [handlers] have to enter into strategic relationships in order to expand their global reach in the rapidly moving and highly competitive industry.” He adds that he has seen, ‘a strong consolidation in the cargo handling business recently.’ Fraport took that strategic step when it sold a controlling stake, a 51% share, in FCS to WFS. Schusdziara says of this: “The merger with WFS – the world’s biggest cargo handler – gave FCS the opportunity to be a part of a worldwide network. With the support of WFS Global, FCS is now able to offer international packages, which is very attractive for their customers and unique for an independent cargo handler in Frankfurt.”


At the end of July, FCS recorded a year-to-date increase of 27.7%. New customers and customers prolonging their contracts have contributed to this, according to Schusdziara.


Another example of strategic relationships is to be found on the Mediterranean island of Cyprus. It has seen its carrier, Cobalt, select Swissport for its ground handling services across not just one or two, but the airline’s network of 13 airports. Those airports include, Larnaca International Airport, Ben Gurion International Airport in Tel Aviv, Israel, Greece’s Eleftherios Venizelos International Airport, Heraklion International Nikos Kazantzakis Airport, Chania International Airport and Thessaloniki Macedonia International Airport; and in the UK, London Stansted Airport, East Midlands Airport, Manchester Airport, Glasgow International Airport, Dublin Airport and Cardiff International Airport.

This year Swissport has been expanding in the Middle East. The ground handler already handles 4.1 million tonnes of cargo a year on behalf of some 835 client-companies. Swissport Senior Vice-President Ground Handling, Middle East and Africa, Mark Skinner, says: “Swissport is particularly proud of being selected to contribute to the further development at Muscat International Airport with Oman being the second [Gulf Co-operation Council] country in which Swissport will operate.”


The unyielding trend of outsourcing handling is extending into areas that those in the industry never expected. Nassberg says: “I agree that outsourcing is more and more of interest to carriers that did not consider it in the past even at their hub locations. And this is something that three to four years ago was unheard of, but what we’re now hearing is that major European carriers are considering outsourcing at their home base.”


In Nassberg’s view, this preference for a handler at the hub that can be trusted with destination stations is also a reflection of airlines looking at handlers’ network capability and wanting to shrink the number of handlers globally. “They want to make things easier from a procurement standpoint.”   


The purchase of CAS and FCS is a part of WFS' approach to grow through ‘acquisition or organically', so it is ‘better positioned to take advantage of the network needs of an airline’. Nassberg finds that airlines are now more demanding in their key performance indicators, they expect more reporting and more analysis. “Years ago, airlines liked to work on the local level, those days are long gone and it’s now about comprehensive reporting on a centralised level,” says Nassberg. Airlines do not want to have to train many handlers in their corporate ways of working and so the preference is to work with a few. >>

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