All Together Now

The 'one-roof' concept pursued by global airline alliances for ticketing and passenger handling activities is much harder to replicate when it comes to joint tendering for ramp services, discovers Richard Rowe May 2003 In April, four oneworld...

"Ground handling has been one of the most active areas of cooperation, in part because it was recognised that results could be achieved fairly quickly," comments Jukka Rahko, VP, Ground Operations at oneworld member, Finnair.

"It is important for Finnair and the whole group, because we have achieved a great deal," he continues. "In addition to ground handling, we also look at other opportunities such as joint lounge services."

While the past 12 months has seen this process take a step back while individual airlines concentrate on more pressing internal concerns, Rahko is confident that, in future, oneworld members will continue to make their vast collective experience in buying ground services count.

Location specific
To date, the sourcing of ground services has been approached very much on an airport-by-airport basis by both Star and oneworld.

"In principle, the possible handling partners for a joint tender process are assessed by local station management or, in some cases, through evaluation by headquarter departments," explains one ground handling purchasing manager at Lufthansa, a leading member of the Star Alliance.

Aircraft photo courtesy of Skyteam and AlitaliaIn the case of oneworld, alliance working groups audit every airport served by more than one alliance member, looking carefully at facilities and suppliers at each location. The process is usually led by the dominant member carrier, which works to identify a preferred supplier. Once identified, the preferred supplier then negotiates with each member airline individually.

Sometimes it is considered feasible for all partners to cooperate, while other times it can be more trouble than it is worth.

"There are many complexities," admits Blunt. "Airlines, for instance, might operate from different terminals, or be locked into long-term contracts with existing suppliers. And, sometimes, contracts cover all manner of regional arrangements that cover more than just ground handling and so are even harder to step away from."

Interestingly, while oneworld carriers at Zurich have come together inside the terminal, there have been no changes out on the ramp; existing ramp contracts are such that Swissport Zurich continues to handle American Airlines, Finnair, and Iberia, while Jet Aviation serves BA.

sidebar"In an ideal world, where competition allows, all our carriers would operate from the same location and same terminal using the same supplier, but clearly that is not possible at the moment," says Blunt.

For now, when members operate to the hub ofan alliance partner, the tendency is to team up with that homebase carrier if it offers third-party handling. Hence, in the case of oneworld, BA handles Finnair at London Heathrow and both the Finnish carrier and Iberia at Manchester.

"It is natural to try and get together," says Rahko.

But what happens when more than one member has
a major third-party ground handling operation at a location - surely there is great potential for squabbles?

Not so, claims Blunt, suggesting that cost is the key driver and there is little room for accommodating airline "peccadilloes," particularly in the current climate.

"In general, airlines are more attuned to working together," contends Blunt. "The golden rule is that we add value and improve service, with cost the key driver rather than the type of supplier or airline squabbles."

There are, however, many reasons why it does not always make sense to pool services and much often depends on the competitive environment at an airport and the suppliers available.

Airline purchasing managers certainly suggest that there are plenty of airports, particularly in Europe, where they would like to make things happen, but where it is currently very hard because markets have not fully opened.

worker image courtesy of Skyteam and Alitalia"In other cases, it could be that a oneworld carrier identifies a different supplier rather than someone from his own team," adds Blunt. "Similarly, one supplier just might not be able to take on all the carriers together."

The obstacles are the same for all the major alliances. Joint tendering can be complicated by the different scope of services and quality expectations among members, not to mention a lack of joint departure control systems. In addition, joint pricing for each alliance member can result in higher charges for the leading carrier at a specific location.

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