Too Many Cooks?

Size matters
Still, reaching a certain critical size does appear to matter. Most major gateways, despite processing large volumes of passengers and cargo, have relatively small numbers of ground handling agents. Providing an efficient service requires room to maneuver and that room is a precious commodity, not easily given up.

Home carriers tend to self-handle at their hubs and generally no more than a handful of independents make up the numbers. Amsterdam is one example with KLM and three others. And India recently tried to limit the number of ground service providers to three — albeit unsuccessfully in the face of union pressures.

At HKIA, the space and facilities are allocated according to the needs of the company, as far as that is possible. The AA constantly evaluates the demand for additional space and facilities to ensure that service quality is not compromised.

Being a relatively new airport — it opened in 1998 — HKIA was able to take into account the various operational requirements during the planning and construction phases. Ground handlers’ facilities and equipment are located as close to their customary operation areas as possible. “Meanwhile, new locations for holding their equipment have been allocated to suit the changing operational needs of ground handlers,” says the spokesperson.

A new plan of attack
HKIA seems to represent a new trend in the industry. Unbridled competition, it seems, isn’t necessarily the best way forward. Yes, there must be choice but that choice doesn’t need to be limitless — rather they must be viable options, each offering quality service at a cost-effective price. Value for money, in other words.

For ground handlers to be able to offer that to clients in the current environment means consolidation, the space to operate and enough clients to make the operation pay.

The challenge for them will be in staying lean and mean — growing fat and losing flexibility could be fatal — and looking for efficiencies wherever possible. HKIA has used radio frequency identification (RFID) baggage tags for more than a year and late last year spent HK$18 million on new self-service kiosks.

It seems Hong Kong International Airport — not to mention the industry — has learned its lessons. The free market is still there but it has self-adjusted, leaving better, more efficient ground handlers with the space to do their job properly. Post-recession, there will doubtless be a re-think but for now, big is beautiful.