18 WORLD ANALYSIS
these KPIs. More than any other cultural change that QAS has benefi ted from is this empowerment of all employees to chart a positive impact on our daily operations. The fi scal costs of investing and incentivising these programmes is well over 1% of annual revenue; but the results coming in are limitless.
“In a marketplace with two distinct
groups of service providers, the multi- national bundling services companies countered by the small independent operators focusing on niche services, we are in a unique situation. The continued downsizing of the airline industry has driven the ground handling industry into lower margins, with more providers competing for fewer partners. Stability in the ground handling sector will only come through a similar downsizing; either acquisition or current providers unable to sustain viability due to depressed handling rates; and this downsizing is evolutionary. Only the strong will survive. Through investing in our employees and partner relationships, realigning our goals with culture and diversifying for strategic growth, I believe QAS is secure in our position during the evolutionary process on the horizon.”
Total recall
According to Jack Evans, CEO of California- based Total Airport Services, it has been a mixed year. Cargo tonnages handled were up in 2012 by 3% over 2011 fi gures; similarly, cargo aircraft handled increased by 6%, and passenger aircraft served was up by 5%. Looking ahead, Jack believes that tonnages could be up by 22% this coming year and that passenger handling might increase by 17%.
“ In July 2011 we took over a LH
warehouse contract that was previously operated by an international competitor. That improved our tonnage numbers, otherwise 2012 was pretty much fl at. For cargo aircraft ground handling, 2012 was generally our same customers bringing back some of the fl ights that they had previously cut out. Passenger aircraft saw something of an increase as Spirit Airlines made Chicago a hub and started fl ying more aircraft in and out of there. “For 2013, we have already won two new contracts for warehousing in Chicago as an international competitor withdrew from the market. It has actually thrown the Chicago market into a free-fi re zone, as carriers scramble to fi nd service providers. The market is further complicated as one former major competitor has been failing to meet payroll demands and may be disappearing from the North American scene. The two carriers we picked up for warehousing were Cargolux and Jet Blue. “Last year was a tough year to be in the aviation service business. We are
GROUND HANDLING INTERNATIONAL APRIL 2013
doing well because we carefully manage productivity and are selective on what contracts we go after. We have a high level of service that we will maintain and we will not discount pricing just to buy revenue. Some of the major service providers are pretty desperate right now and are doing some really crazy things.
“Last year started out miserably, with the carriers cutting way back on fl ights and cargo. The only thing that made the fi rst fi ve months worthwhile was the Apple iPad. March 2012 was hugely successful because Apple was fl ying so many iPads out of China. In June things started picking up and we had a very good fourth quarter. The fourth quarter was so good, that by mid-November we were back on budget, even though four of the fi rst fi ve months of the year were miserable. October and November, and then even December were that good. For 2013 we have seen a slight decrease from the fourth quarter, but not as much as in 2012. The aircraft and tonnages appear to be coming back slowly. From our numbers above (the 22% increase in cargo tonnage and 17% increase in cargo aircraft), we are expecting 2013 to be our best year yet – and we’ve now been in business since 2005. “Our GSE expenses were down slightly in 2012 but will probably double in 2013. Some of that is related to new business, but some of it is replacement that had been put on hold. For staffi ng, we are not having trouble fi nding personnel: we provide benefi ts like health care, vacation and sick days off, but some of our competitors have eliminated these to be more competitive. So we are trying to provide employee benefi ts while still remaining competitive - and it is challenging. “Our staffi ng numbers went up about 10% in 2012 and will go up another 15-20% over this year. We have started providing more training to our employees rather than what appears to be the trend to do less. In Chicago a competitor had a beltloader burn up on the ramp because it caught fi re. I believe that 15 of their employees stood around and watched it burn because no-one knew how to use the fi re extinguisher. This competitor, one that’s known not to provide training but does low-ball contracts to get revenue, has just had an employee have his foot amputated because he was doing something with a pallet that he shouldn’t have been. “We have started doing more centralised training of Supervisors and that has been hugely successful, as we train people and then move them up from within. “For the marketplace in 2013, it appears that there are two forces at work. On the carriers, we’ve seen some carriers that are tired of having a lousy service and damaged aircraft and which appear to be making the move back to quality rather than the lowest
price. I think they are beginning to realise that immediate savings in price doesn’t make up for all the damage over time. “On the other hand, we are seeing
more crazy things from service providers to try and survive. I would contend that buying revenue doesn’t make up for poor management in the long-run. I would defi ne poor management as not taking care of your employees (in other words, allowing benefi ts), non-existent training and cuts in safety. Unfortunately, poor management can survive for a while if they have deep pockets. If they can survive until the economy turns around, then maybe it wasn’t poor, just expedient. That’s a different model from the one we use, though.”
ATS on a roll
Another company to have experienced tremendous growth over the last 12 months is that of ATS. “The most signifi cant growth was the expanded relationship with American Airlines in the US and Canada, with new contracts awarded in existing and new locations, to include services in cargo, aircraft cleaning, passenger services and ramp,” relates Sally Leible. “This expansion resulted in 14 contracts and the hiring of over 400 employees, all of whom were deployed within 90 days. We were extremely pleased to be successful with Virgin America in Palm Springs, Portland and the newest location announced in San Jose. In Vancouver, ATS expanded its passenger service offerings with Virgin Atlantic and Air France/KLM. Spirit awarded us both passenger and ramp services in Dallas Fort Worth, which resulted in the addition of over 100 employees to our operation. Ramp and passenger services for Lufthansa and Swiss were awarded to us in Montreal, also. We also gained an aircraft towing contract for Jazz there, too. Another signing was that of Japan Airlines in San Diego.”
In addition to all this, Sally says that cargo service was expanded with American, Delta, ANA and Hawaiian, Jet Blue and Frontier airlines. To round it all off, ATS was awarded both passenger and ramp services for Southwest Airlines in Key West. Overall, ATS experienced double digit growth over this period.
Last year also saw ATS continue to invest in GSE for both new contracts and replacement and/or retirement units. Most signifi cant was the LSI conversion project to comply with California emissions for motorised vehicles. This project has resulted in approximately 40 units converted to LSI regulatory specifi cation over a 12 month period, involving over US$350,000 in outlay.
But there has been more signifi cant
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