Living in Interesting Times

Some 18 months ago, ground handling in South Africa underwent a fundamental change. On March 1, 2008, in a scene reminiscent of the most complex airport handovers, two new ground support companies began operations at South African airports.
Menzies and BIDAir had their work cut out that first day. The always dynamic nature of operations and an understandable, if not appreciated, reticence on behalf of the previous contract holder, led to a number of challenges — some foreseen, some not.
Bongani Maseko, director of operations at airport operator ACSA (Airports Company South Africa) was impressed with the response, however, describing it as “very refreshing.”
He continued: “The best equipment alone is not enough to see our business through such a change-over. It is people and management practices that make the real difference on the ground. Passengers will be increasingly able to enjoy the benefits of these new partnerships.”
So far, the prediction has proven accurate and the companies’ mandate fulfilled. Passengers are being processed efficiently, improved logistics have cut flight delays and safety and security have been enhanced.

Menzies’ success can be seen in an ever-increasing list of awards. Abu Dhabi-based Etihad Airways gave it the Most Improved Station Worldwide 2008 (for Johannesburg), Kenya Airways honored it with the Most Customer Compliments award while Cathay Pacific gave it the Most Improved Station (Johannesburg) both by relative and absolute score — the first time these awards have been given to the same airport.
Little wonder that Forsyth Black, Menzies senior vice president in South Africa says the company is “delighted and proud” of the quality of its operations since it started last March. It has recently added domestic start-up Airtime Airlines to its list of clients, opened a new lounge at Johannesburg and turned over 10,000 consecutive South African Express aircraft at Port Elizabeth, East London and George without a single delay. “That’s a whole year at 100 percent on-time performance,” beams Black.
Of course, all has not been plain sailing. Black notes that as the new boys on the block, Menzies initially struggled to get allocated the correct amount of space. “But we’re happy with what we’ve got now and as construction on the new terminals and refurbishments have progressed at OR Tambo (Johannesburg, JNB), Cape Town (CPT) and East London in particular, we’ve been able to trade up to better facilities,” he says. “The rental costs involved, however, are some of the highest we’ve experienced in the world.”
Aside from tackling costs, Menzies has also had to confront a problem that blights many South African airports — stolen luggage. “One of the most important issues ACSA wanted addressed by the new handlers was that of baggage pilferage, for which OR Tambo was notorious,” says Black. “We tackled this head-on and although it’s a constant battle, we are making headway and have had some impressive results so far.” In fact, TAP Portugal has given Menzies South Africa Best Baggage Performance Worldwide.
“We’ve spent a year changing the way people think and approach their work,” says Black. “From a Menzies point of view, we think that’s a huge positive and we’ve seen the results show through in our operations and continued efficiencies.”

Fellow new boy, BIDAir, has also had a rewarding 18 months. Bob Gurr, director of sales and marketing at BIDAir says the first six weeks were extremely tough as many airlines only committed to a handler very late in the process, some of them in the last week in the run-up to 1 March. “This made effective resource planning quite difficult and there is no doubt that we were short of both equipment and staff initially,” he admits. “Since mid-April 2008, however, service has been maintained at high levels.”
Like Menzies, BIDAir found facilities were both scarce and ill-equipped initially with some areas only being handed over by the airport authority at the last moment, sometimes even without electricity. Gurr informs the airport ramp environments in the country are not the most spacious and much of the handling activity takes place in cramped and congested areas. However, he stresses that hasn’t stopped the company offering a cost-effective business model.
“Different aircraft require different levels of resources,” he says. “Our operational efficiency is based on having the right resources available at the right time and we have been able to develop a planning model that meets all of our requirements. The difficult part comes with national handling contracts that require us to provide handling at some of the smaller airports.”

While the two companies have worked diligently to overcome the stresses and strains of operating a new contract at new facilities, their problems haven’t dissolved along with the sands of time. In fact, major challenges still lay ahead.
Perhaps the greatest battle will be with the new, third license holder. Swissport reportedly negotiated a private deal with flag carrier, South African Airways (SAA), and since October 2008 has taken over that slice of the market.
“With SAA making up approximately 35-40 percent of that market whoever handles them has an undoubted advantage,” says Gurr. “One of the problems is that only JNB and CPT have the volumes to really justify three handlers. The smaller airports plainly do not and there will undoubtedly be some rationalization in this area.”
Gurr points out there are also cost issues. He says the two handlers that commenced operations in March of last year are at a considerable disadvantage to that of the third licensee, which was returning to the market after a short absence and so could work with substantially the same widebody equipment it had available before. “They have not had to invest in GSE to anywhere near the levels of the other two,” claims the BIDAir Director.
The alleged injustice is clearly felt at Menzies too. It is reported the company invested more than $25 million (ZAR200 million) in the country based on the expectation that the entire market would be open to all ground handling companies, including more than $21 million (ZAR170 million) in equipment.
Says Black: “In our opinion, there is too much competition in the South African ground handling market, causing we believe some significant and negative market distorting behavior which is not at all healthy for competition in the longer-term. It may be good for prices in the short-term, but we do believe the cycle is turning back to the bad old days of cutthroat behavior leading to a drop in the very quality that the new market structure was put in place to improve.”

Durban and the Soccer World Cup
As if there wasn’t enough on their plate already, Menzies and BIDAir will also have to contend with two major events—a new airport opening at Le Mercy in Durban and the 2010 Soccer World Cup, routinely described as the biggest show in the world.
The new King Shaka International Airport has already caused a storm, with airlines questioning the need for it given the room for improvement at the existing gateway. However, Menzies’ Forsyth Black simply sees it as an opportunity to consolidate the company operations, his major concern being the 50 km difference in location for his workers.
Gurr at BIDAir says that although the ground handlers have not had much input in the areas in which they will operate, there is a great deal of expectation that the new facility will provide better space for airside operations and that all of the ground handlers’ requirements will be met.
“The switch from the old to the new is planned to take place overnight and will no doubt tax the transportation resources of the area,” he notes. “We are attempting to discuss the cost issue of moving with the airport authority as these will be quite substantial and at this stage the handlers are expected to foot the bill themselves.”
As for the Soccer World Cup, BIDAir will delay the retirement of some of their older equipment to cope with the influx of flights and passengers. Gurr believes the larger airports will cope reasonably well but describes the situation at the smaller host cities as “interesting.”
Menzies is awaiting the draw for the finals to make detailed plans but is already talking with ACSA about potential strategies. “It’s South Africa’s big moment on the world stage and we’re ready to make air passengers’ first impressions of South Africa a world-class one,” says Black.

For its part, ACSA will certainly be keeping their eye on how operations develop. Rishi Thakurdin, group manager, Safety, Legal & Compliance, ACSA, believes ground handling services are an integral part of an airport’s business and any failure would have a substantial impact on its reputation.
ACSA accordingly has a very strict service level agreement with its handling companies, fashioned after a thorough survey of worldwide trends. “We have a quality management system in place, which tracks not only service delivery, but also the softer aspects of client services and customer care,” he says.
“Our ground handling service providers are under pressure to perform, failing which they are penalized and could lose their right to operate at our airports,” he adds.
It seems there will be no let-up in the South African ground support market. From intense scrutiny to the world’s biggest event via fierce competition, the handling companies have plenty of challenges — and plenty of opportunities — to keep them busy. Interesting times, indeed.