The only non-airline privately operated terminal in the country, JFK Terminal 4 offers its customers a choice of ground handlers including ASIG, Evergreen Eagle, Swissport and Triangle.
A new paradigm and model for public/private partnership, JFK International Air Terminal LLC (Terminal 4) is the first and only air terminal in the US to be developed and managed by a private operator. Typically, US air terminals are operated by airport authorities, an airline or a consortium of airlines that get together for the purpose of finding synergies and cost-savings in operating a terminal, as is the case at JFK Terminal 1. Terminal 4, a spacious, glass-encased, ultra-modern facility, which opened in May 2001, is a unique public/private joint venture between the Port Authority of New York and New Jersey and the private consortium, JFK International Air Terminal LLC, made up of three partners that include; Amsterdam Airport Schiphol, the operator of Amsterdam Airport; LCOR Inc., a US national real estate development concern and construction company and Lehman Brothers, investment bankers.
Located on 165 acres, the single largest parcel of land in JFK Airport's central terminal area, Terminal 4 accommodates more than 50 airlines with 40 operating on a regularly scheduled basis. Combined, these airlines offer direct service to more than 35 countries connecting to hundreds of cities worldwide. With 50 primary passport control positions and 20 customs stations, the terminal has the largest international arrivals facility in New York City. Currently the Terminal offers 16 contact gates, expandable to 32-36 gates; 17 hardstand parking positions, six of which have hydrant fueling capability and a total of nine parking positions for the A380 aircraft accounting for four contact gate positions, with five hardstand positions as back-up. Terminal 4 is one of the only terminals in the country that can handle everything from RJs to the A380. Having been designed in the mid-90s, the NLA (new large aircraft) was already in the distant future; therefore the building was designed with the infrastructure to accommodate the A380. It is also the only terminal with 24/7 custom and border protection services and just over a $45 million annual ground handling market. Since opening in 2001, Terminal 4 has increased its customer base by bringing in 19 new airlines with three new airlines signed on for 2005. Its goal is to be recognized as "The Terminal of Choice" and as airlines acquire longer range aircraft, Terminal 4 expects to continue to attract more airlines in coming years.
Quality and performance
Terminal 4 has a multi-level customer base - the traveling public; the airlines, which are both tenants and partners and the entities that service them including retail stores, government processing agencies, tower operations, etc. They have succeeded in meeting the challenge to create a financial structure that would allow the company to rebuild and manage the terminal, while still producing a positive experience for the airlines and passengers. "As a management company, JFK IAT oversees the entire operation from the time the aircraft leaves the taxiway to the time they enter the ramp and the passengers deplane and walk out our doors," explains Jim Fazio, Terminal 4's director of operations. "Managing the entire process takes the burden of managing the facility away from the airlines, allowing them to focus on their core business which is flying from point A to point B."
Terminal 4 is not just unique unto itself but is also located at an airport that is representative of uniquity, as it offers residency to nine other terminals, many of which compete for JFK IAT's airline customers. As a management company, Terminal 4's revenue stream is derived primarily from airline operations; therefore, the management team is constantly looking for new ways, not just in pricing and quality, to find a competitive advantage over the other terminals.
Quality and performance are continually being measured at Terminal 4. They will measure how long it takes from the first bag off the aircraft until it reaches the belt to the last bag picked up and leaving the building. A similar measuring process is used for checking in passengers and turn around times for each airline. In this capacity, JFK IAT also works closely with its government partners, CBP and the TSA, measuring passenger flows at peak times through various check-points to ensure minimum processing times are maintained.
Terminals 1 through 3 and 6 through 9 (Terminal 5 is currently decommissioned) are all operated by airlines that offer third party handling. Though airlines coming in to Terminal 4 can "self-handle," Terminal 4 also offers a choice of five ground handlers to their customers: Aircraft Service International Group (ASIG), Evergreen Aviation Ground Logistics Enterprises Inc. (Evergreen Eagle), Northwest Airlines (which declined an interview), Swissport USA Inc. and Triangle Aviation Services. "One of the things that we have done is to create a competitive ground handling market and an attractive set of options for the airlines which do not exist at any of the other terminals," says Fazio. "They [the airlines] don't have to worry about it, we worry about it for them ? and that sets us apart."
Terminal 4 controls what and how many ground handlers will perform operations. Using the revenue stream as a barometer, currently their plan is to continue to provide residency to the five existing ground handlers. "We don't want a predatory pricing market where everybody is just underbidding everyone else," says Fazio. "Then we are not going to get a quality product; we are not looking for the cheapest, we are looking for the best value." By offering choices, Terminal 4 hopes to ensure the highest quality of service for its airline partners, at the most competitive prices.
New kid on the block
Competitive ground handling services is good news for airlines and Aircraft Service International Group (ASIG) was the latest ground handler to be welcomed by the JFK 4 coterie, initiating operations just a year ago. Keith Ryan, president and CEO of ASIG is quick to point out, "normally most ramp operations have a friendly competitive environment where we all understand getting the aircraft out safely and on time is key, so service companies have a tendency to help one another, especially in 'the line of fire.'"
Over the past 50 years, ASIG has grown to become one of the industry's largest independent full-service providers of commercial aviation services including into-plane fueling, passenger service, deicing, load planning, flight dispatch, ramp service, cabin cleaning, cargo handling, fuel facility maintenance and baggage system maintenance. They employ 6,500 aviation service professionals worldwide, 56 of whom currently operate at Terminal 4 servicing Virgin Atlantic (ASIG was their supplier of choice) with loading and unloading, cabin cleaning and cargo line haul. Ryan expects to have 200 employees at Terminal 4 within the next 18 months. "We are constantly looking at opportunities to help our customers by providing quality service and we are anxious to help them save money," says Ryan. "As far as JFK goes, and Terminal 4 specifically, we invested millions of dollars to provide work at that terminal and for us to get the return on the investment back, we obviously need to grow the market and we feel that there's substantial organic growth available here."
Though ASIG is known as a fueling provider, in reality their ground handling business equals that of their fueling operations. In addition, ASIG is looking toward diversification into the area of mechanical maintenance for the airport authorities. "We are anxious to develop the third leg of the stool ? the one that deals with mechanical maintenance or any airport services that currently the landlords [airports] are bidding out," explains Ryan. In viewing Terminal 4 as a market that needed some fresh eyes from a service provider standpoint, ASIG also views the terminal's management as a very progressive group that's been open to new ways of doing business while remaining high on quality.
How to grow success
Evergreen International Aviation Inc., headquartered in Oregon, is a conglomerate of eight sister companies including global air charter transportation; helicopter aviation services; aircraft maintenance, sales and leasing; transportation solutions, ground handling operations and even agricultural enterprises. Evergreen Eagle provides ground handling services at more than 35 domestic airports one of which includes JFK Terminal 4 and 7 with approximately a staff of 500.
Eagle's portfolio of operations include cargo and baggage handling, mail handling, deicing, sorting and distribution, aviation hub management, aircraft fueling and ramp services, passenger services and more.
Evergreen is experiencing success with 150 employees at Terminal 4, 250 employees at Terminal 7 and over 100 employees on the Cargo side, servicing customers like Aviancia, Lan Chile, World Airways, UPS Kallitta, Varig Cargo and of course Evergreen International Airlines.
Evergreen will be moving into the newly constructed offices on the A concourse at Terminal 4 by early February 2005. According to Michael Falacara, assistant general manager, "our most recent contract has been very successful and we are continuing to grow and look forward to supplying a very good product to our customers."
Evergreen was awarded the Ground Handling and Aircraft Cleaning contract at Terminal 7 for British Airways in the Spring of 2004. This contract includes servicing British Airways, All Nippon Airways, Cathay Pacific, America West Airlines, Qantas and Iberia.
Falacara, who started at Evergreen 5 months ago but who has been at the JFK field for more than 18 years, will tell you one major positive change he has seen in recent years is the fact that there are many more women on the ramp now. "When I first came out on this field there were very few women," says Falacara. One of Falacara's first hires was a woman for the position of duty manager on the ramp.
Working smarter, not harder
Swissport International Ltd., based in Zurich, Switzerland, oversees a global network that covers major airports throughout the world. Swissport is an aviation services provider, offering a host of services, including ground and cargo handling. Once the ground handling division of Swiss Airlines, Swissport was founded in 1997. In just eight years, Swissport has grown substantially starting with a three station base, now operating in over 170 stations in 34 countries. Karen Clausen, Swissport's station manager at JFK Terminal 4 asserts that the current climate within the industry has forced airlines to focus on their core business, and outsource other related services. European carriers have been doing so even in their hubs for more than a decade. One is seeing that in recent years many large domestic carriers, who traditionally did everything themselves, have begun relying more on aviation service providers for a wide variety of services.
Servicing approximately 63 locations in the US, Swissport's JFK Terminal 4 station is the largest operation outside of Zurich and the largest at terminal 4 with approximately 2,011 employees servicing 45 customers. Swissport underwing services at JFK include but are not limited to ramp and cargo ramp handling, cabin grooming, deicing, equipment maintenance, ULD control, cargo warehousing and cargo drayage. Swissport also prides itself in offering an extensive passenger services product pallet ranging from check-in and lounge management, to manning airline city offices. In a city such as New York, which leads the world in many trends, Clausen feels that there is a lot of opportunity in providing a system of services currently not found in the industry today. "Swissport prides itself in offering an entire product pallet whilst remaining entirely flexible," says Clausen. An example is the ability to offer individualized contracts. "If you need it, we can provide it," says Clausen. The flexibility offered by moving from a traditional fixed contract would allow Clausen to say, "If your flight is booked we can bring in more manpower."
Swissport at JFK is ISO certified. This live quality management system has allowed Swissport at Terminal 4 to revise procedures and processes by looking at accountability measures, damage control and re-addressing their entire training structure. The ramp team concept improves accountability, where a team leader or supervisor and dedicated equipment are responsible for handling a number of airlines. "If you have the same group of people working the same type of equipment and the same airline all of the time, you can provide consistent service levels," says Clausen. "These Swissport team members are aware of what they should be looking out for in a particular airline."
Other product improvement initiatives by Swissport include "Project Sparkplug," the implementation of a new resource management database known as Maximo throughout the US Swissports' online University will allow Swissport to use this tool not only for the learning of policies and procedures, but also for customer specific training modules, an electronic measuring tool giving customers the ability to rate the services rendered and "Project Fifo (first in finding opportunities)," a program in which supervisors and lead employees review every aspect of their operation to determine where they can optimize utilization.
Looking at the ground handling industry, Clausen simply states, "I think the biggest problem in ground handling has been that traditionally we work harder rather than smarter. It's such a basic concept ? and there is so much potential."
It's a family affair
Triangle Aviation Services is a rare breed in today's ground handling industry. Probably the longest standing ground handling company at the JFK Airport, they are family owned and operated and have been in the business for 40 plus years, working with airlines such as Pan American and TWA who have long since disappeared. Though they are a relatively small company compared to ASIG and Swissport, John Grasser, VP of operations believes that the fact they are small and American-owned, gives them a competitive advantage when it comes to flexibility and quick response primarily because there are not as many levels in the decision-making process. However, he confides that in today's cost reduction climate certain airlines are going to multiple city deals which takes Triangle out of the market and puts them in the position of having to not only find niche carriers but needing to provide exceptional service to retain them. Grasser insists, "the competition is advantageous to the carriers because they have a choice, which affords them more opportunity then in a terminal where they are restricted to one ground handler and it makes the ground handling companies at Terminal 4 have to perform a little bit better."
Triangle handles the interline contract with Kennedy Airport Airlines Management Counsel Organization (KAAMCO), the consortium of airlines at JFK Airport, for which they are responsible for baggage transfers to the next carrier at any of the nine other terminals. Though Triangle is primarily known for its cleaning operations at industrial sites, terminals and office buildings; as a ground handler, they employ 350 employees at Terminal 4 and offer passenger services, baggage handling, ramp services and freighter operations.
The effort to privatize airport operations has seen success in other countries. The first private terminal facility in the US not run by an airline or government agency, JFK IAT will define itself by the strength of its customers and the quality of the service it provides. Other airports and municipalities around the country are watching the progress of Terminal 4 with interest. JFK Terminal 4, a beau ideal, could be that shining example for future terminals.