The Numbers Game

What constitutes the ideal number of ground handlers at an airport? Is there a magic formula that will provide both competition and an efficient use of infrastructure?


Pick a number, any number. Double it, then add or subtract — in fact, do almost anything you like with it, and your answer will represent the number of ground handlers at an airport somewhere in the world. From monopoly suppliers such as Dnata at Dubai international to the double-digit arenas of Amsterdam Schiphol and London Heathrow, it seems regulation and historical circumstances are bigger influences than optimization.

Across the European Union, liberalization regulations have without doubt played the primary role in changing the ground services landscape over the past 14 years. Directive 96/67/EC opened up the ground handling market to competition on a progressive basis. It was a necessary piece of legislation given the way monopoly suppliers held sway at many EU airports at the time. Airlines were complaining vociferously about the toxic combination of high prices and low service levels.

The Directive stipulated that at every EU airport handling in excess of 1 million passengers per annum, or 25,000 metric tons of cargo, there should be no fewer than two providers covering each category of service (baggage handling, ramp handling, fuel and oil handling, freight and mail handling). Moreover, at least one of these suppliers should be entirely independent of the airport or the dominant air carrier at that airport.

Exemptions are available, enabling airports suffering from space or capacity constraints to limit the number of handlers — though this is usually on a temporary basis. Overall, the policy has led to growth in the ground handling market across all service categories, and the European Commission is now considering modifying the Directive to deliver even greater market liberalization.

The magic number

It all begs the question of whether an airport can have too many, or too few, ground support providers. While the EU’s experience seems to indicate that going large generates benefits, Dnata is generally reported to offer a very competitive service and price. Proving that it’s not afraid of a competitive marketplace, Dnata has even pitched into the European market with the takeover of a number of ground handling operations.

And since 2007 Indian legislators have been floating the idea of limiting competition in ground handling. The suggested policy would view the airport operator, the flag carrier Air India, and one other provider as sufficient choice. Not surprisingly, airlines that self handle — particularly privately-owned Indian LCCs Jet Airways and Kingfisher — have campaigned vigorously against limitation, and the policy has been deferred time and again.

But it is not just governments looking to corral the ground handling market. Perhaps understandably, ground handlers themselves are also keen to see what many feel are appropriate limits on service provision. Aside from the obvious issue of self-preservation, there is the legitimate question of operational efficiency, whether within the terminal or on the ramp. “Space is a concern at many airports and that does compromise safety and costs,” agrees Stephan Beerli, spokesman for Swissport.

Ground handlers do themselves no favors, however, as they are not always at an airport as a result of traffic growth or a service request. “It could be strategy, meaning they want a flag on the airport,” Beerli suggests. This makes it hard to argue that the number of ground handlers is driven solely by market requirements. An expansionist company could be simply looking to stake a claim, perhaps as a precursor to bidding for existing suppliers’ clients.

In any case, Beerli believes that limiting numbers does not mean restricted competition. “When there are limits the airlines still have a free choice of the handlers that are present at the airport,” he says.

Airports aligned

Although embracing the competitive ethos, many airport operators concur that the number of ground service providers at any one airport cannot be allowed to grow completely unchecked.

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