After just two years at the helm of struggling UK ground handler Groundstar, Managing Director Nigel Daniel has successfully employed outside-industry tactics to affect a remarkable turnaround, writes Richard Rowe.
Little more than two years ago, Groundstar, a company touted by some as the UK ground handling market's next big thing, was falling way short of expectations. Born out of an IBO (Institutional Buyout) in 1999 that brought three promising handling entities together, Groundstar shone brightly for a period, dimmed, and then seemed in danger of fizzling out altogether. That it didn't is testament to a highly focussed turnaround plan that has seen what remains a medium-sized, single-market ground handler totally buck the industry trend. The company has grown its business significantly at a time when much of the industry has simply dived for cover.
Today, the company is led by Nigel Daniel who first joined as Operations Director in June 2001 following eight years as Contract Manager and then Head of Operations for ground services at Britannia, and a short stint heading up Servisair's London Gatwick operation.
When Daniel arrived, Groundstar had operations at London's Heathrow and Stansted airports, Manchester, Birmingham, and a head office station in Newcastle. But the handler had lost focus and much of its good reputation. Targets were not being met and shareholders were contemplating their options.
Daniel was given a clear remit to stem the tide and restore the delivery of high quality handling. He was given a matter of months in which to make a difference. Together with his senior management team of Finance Director Donald McIntosh and Operations Director Tina Barbour, Daniel quickly got to work.
Almost immediately, some '100,000 was saved on rent and rates by closing a second, unnecessary head office in Birmingham. And within three months, every base where service quality had become unacceptable was stabilised.
However, the crucial balance between quality, price and return remained out of kilter. "This is the standard ground handling dilemma," explains Daniel. "Everyone says they will deliver quality, but really there is only so much you can deliver for a given price."
This realisation precipitated a fundamental rethink in how the company conducted business. Using tactics employed widely in other industries, but largely alien to ground handling, Daniel approached Groundstar's major customers to suggest that if he could continue to provide an improved quality service for the next six months and prove its long-term sustainability, maybe each carrier could reconsider the remuneration offered. Almost every carrier said 'yes.'
"This was a very different approach, as we were not just making promises to get the business," says Daniel. "We actually turned down business that we really needed from a revenue point of view, but couldn't make even a tiny return on."
And that was the key. Underpinning the whole strategy, then and now, was an understanding that Groundstar would not take a contract unless it made a return - a given in many sectors, but out of character for an industry known for clawing at business like a drowning man grabbing a piece of driftwood.
Given the timing, just months after 9/11, it was a scary but not necessarily difficult strategy to write, suggests Daniel. By spring 2002 - when he was promoted to Managing Director - the market had begun to understand the approach.
"This year alone we have walked away from in excess of '5 million ($8m) and stopped negotiations because the price was dipping below the point where we could make a return," he says.
Of course, Groundstar's manageable size certainly aided the cause. While the UK's dominant two handlers, Servisair and Aviance, each turned over around '130 million per annum, Groundstar's turnover was a more modest '18 million. Daniel calculated that if he could take 10 percent from each, Groundstar could add at least an extra '24 million in turnover.
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