When discussing the timeline of biblical and historical events, the terms common to the world are ante Christum; A.C. and before Christ; B.C. When discussing the aviation industry, nearly every conversation now includes “before 9/11” and “after 9/11.” The reality of 9/11 has turned the industry upside down and inside out … causing the airlines to re-evaluate business models, cut costs and review service levels with a fine-tooth comb. Since that infamous day, ground handling services and maintenance outsourcing has become a crucial part of the business model for all airlines, particularly for low-cost and smaller carriers. But there certainly has not been a one size fits all solution.
Contracts…they are a Changin’
Originally named Extreme Line Services, Elite Line Services (ELS) is part of the Five Star Airport Alliance — an airport baggage handling systems and terminal services provider. A fairly young company based in Dallas, ELS has been providing installation, operations and maintenance services for baggage handling systems, passenger boarding bridges, ground support equipment and other airport service needs for 13 years. Although ELS works with several major airlines and airports, the relationship with Alaska Airlines (AS) is quite unique, and perhaps even anomalous. ELS is not a vendor to AA and AA is not a customer; they are partners. Yet just as with any type of relationship, it takes time to get to know one another … it takes time to grow…it takes time to develop into what one hopes will be long-term.
After 9/11, business forecasting changed. Instead of projecting what would happen 15 years hence, the industry was struggling to know what would happen in the next 15 days. Alaska Airlines, like many other airlines, had been looking at the possibility of outsourcing various aspects of their ground handling services and maintenance not too long after 9/11 and with a loss of $15.3 million in 2004; it was no longer a choice.
On September 9, 2004, a new company, a new contract, new processes and almost entirely new employees were in place in both Anchorage and Seattle. When the decision was made to utilize ELS at both locations, a very short window was given to prepare. According to Dewey Kulzer, GSE program director, ELS, “In a matter of weeks, we recruited mechanics from all over the U.S. and got them badged and inplace.” The project was named “Shamu”, a name that still used today for many ELS internal reports. The final result was an ‘unprecedented’ seven-year contract between ELS and Alaska Airlines.
Though not an easy transition, there were a few Alaska Airline employees who “stood the test” and remained with ELS. Mike Vesco, hub manager, ELS, Anchorage and formerly a mechanic for Alaska Airlines, is one of them. Hired on with ELS as a mechanic at the Northwest Airlines GSE maintenance shop, which ELS manages in Anchorage, he was quickly promoted to crew chief for AS, then supervisor of the five outstations and finally hub manager for all of Alaska. “He’s an example of the quality of an individual that exists,” Kulzer says. “You simply need to give them the opportunities … it’s finding the right players for the right seats to build a highly effective team.”
Alaska Airlines owns the equipment and takes care of salaries, budgets and costs, while ELS writes the specifications, recommendations and works directly with the manufacturers and the purchasing department in making final arrangements. ELS staff are invited to Alaska Airlines’ internal bi-weekly meetings in which all aspects of the budget are openly discussed. “[AS] knows every nickel and dime on our books and they are involved every step of the way. It’s a total open book process with AS.” Kulzer says. “In fact, they know all of our costs, our profit and are involved in every step in creating both the yearly ELS budget and in our building an internal AS budget for them. Kulzer states that both parties want everything on top of the table, identifying and exposing all financial matters that affect the partnership, which is built at a senior level between AS and ELS insuring the relationship stays on track and the focus is not diluted.
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In our June/July issue, if you were paying attention, you saw a new listing of names on the Editor's Note page.