The Numbers Game

Richard Montague, head of ramp operations at BAA, accepts limitations are unlawful and says London Heathrow can operate very effectively with any number of providers. “Having improved our punctuality at Heathrow over the past two years from 60 percent to over 80 percent while operating a multihandler operation on the busiest airfield in the world with 1,350 movements a day, I would have to say yes, we can operate efficiently with any number of handlers,” he notes.

However, he argues that putting a ceiling on numbers could actually deliver benefits. “Fewer handlers could potentially reduce the higher turnover of handling contracts we have seen in the industry, as handlers compete commercially on very small margins,” he says. “Is there a danger of lack of competition if there are too few handlers? With 12 primary ground handlers at London Heathrow we could probably argue that too few handlers is not something we have any experience of in recent years. However, it would seem the commercial pressure airlines place on handlers would preclude abuse of a lack of competition.”

There are practicalities to consider as well. Ostensibly, airlines have the autonomy to select a ground handling agent. But London Heathrow, like many other gateways, operates a change approvals process covering issues such as new entrants or airlines changing a handler. “There would be a point where the airport infrastructure would not support any more handling agents and we would have to deny the request,” notes Montague. “In practice, we work as hard as possible to support an airline’s choice of handler.”

Athens International Airport works under a number of operational practices and laws. One objective is providing a competitive environment for airport users. But it also wants to promote operational efficiency, particularly in the use of equipment and facilities.

These twin objectives are not necessarily mutually exclusive, but combining them is far from easy. A spokesperson for the Athens International says ground handling operations must be viable. If there are more providers than needed, then it will negatively affect ramp operations and the financial viability of the operators, not to mention the quality level of the services provided.

Although the danger of a lack of competition is acknowledged, Athens has restricted the number of handling companies, believing that the level of traffic cannot justify unchecked growth in provision. The spokesperson says a few operators can still generate some fierce competition.

Way out east

The optimal number of ground handlers is not just a European issue. At Hong Kong International Airport (HKIA), for example, ground services are generally non-exclusive. There are three ramp handlers and three aircraft line maintenance operators at HKIA. In addition, the Airport Authority can introduce additional operators at any time — if there are operational and market demands.

Says a spokesperson for the Airport Authority: “The number of ground handlers providing each service varies with the service nature. To strike a balance between adequate supply of high-quality services and healthy competition, we believe an optimal number of ground handlers at the airport should be maintained.”

Airlines also agree on the need for optimal efficiency but, like any customer, they insist on having a choice. Self-handling may be their preferred option, like the privately owned airlines of India, or they may be an enthusiastic outsourcer. The one imperative, as they struggle for profitability in a volatile market, is low cost.

Air New Zealand reports that supply and demand should dictate the number of ground handlers required at each particular airport, but notes that the airline is not of a sufficient size to ask a preferred supplier to open an operation at a particular destination.

Austrian also chooses from among the existing available options. Its spokesman, Michael Braun, meanwhile states simply that the optimum number of ground handlers at an airport is definitely more than one. “A monopoly situation has definitely to be avoided,” he says. “The ideal number of ground handlers — depending on the size of the airport — is three, maybe four if the airport is big. In reality, we see that usually three ground handling agents are enough to ensure competition.”

The experience of the EU shows that an open market situation can resolve the high-price, low- quality conundrum. But any new entrant must be viable and not unduly compromise the operational efficiency of other airport users.