Beyond GSE Rental

A variety of operators in Europe have opted to wipe expensive GSE from their balance sheets to concentrate precious funds on service enhancement instead. And, as Richard Rowe discovers, GSE rental is only the half of it. March 2003 The need for...

Call it class ridden, but as Peter Wehrli, Equipment Manager at Swiss handler Jet Aviation, points out: "Second hand does not always go down well in Europe. You need the quality."
Of course, business can also be highly seasonal and there is growing reluctance to invest heavily in new equipment that cannot be guaranteed optimum use - particularly when handling contracts can move on or dry up altogether.

It is little wonder that some handlers now look to invest available cash in product enhancement and growth rather than tying it up in equipment. Take GlobeGround, for example, which last summer sold its equipment to KLM Equipment Services (KES) and is now leasing the equipment back for use at its Amsterdam Schiphol operation.

Similarly, KES is now preparing to take over Martinair's GSE operation at Schiphol. It has agreed as part of the deal to invest $10 million in new equipment on behalf of Martinair over the next decade.

The trick is to really get under the skin of each operator to understand their needs, explains Hans van Geenhuizen, Managing Director, KES. "Ground handlers and airlines have different peaks," he says. "It could be that 70 percent of an operator's equipment is needed on a short-term lease arrangement, with 20 percent on long-term and the rest rented by the hour.

"The peaks are not always the same so if you know a user profile then you can really move the equipment around."
In addition, KES has also just begun a pooling and rental trial of GPUs at several gates at Schiphol.

Each unit has a user ID code and operators simply punch in and out, with KES calculating the cost based on actual use.

The trial is expected to generate valuable data which will then be sent to a variety of interested parties: maintenance customers are interested in fuel consumption, for example, while the airport authority is keen to learn about reduced congestion, improved safety and the environmental benefits of having less equipment transported around the airport.

"We just want to prove to customers that they can buy their power more cheaply," explains van Geenhuizen.

Fleet Services
"Ground handling is a people management business not an asset management business," contends Donald Meulebroek, Sales and Development Director at TCR International, another high profile GSE services provider.

Headquartered in Belgium, TCR has developed extensive GSE management operations in France, Germany, the Netherlands and, most recently, in the UK. Last year, GlobeGround (at London Heathrow) and KLM Ground Services (Heathrow and Amsterdam Schiphol) turned to TCR after securing large handling contracts.

GlobeGround awarded TCR UK a 10-year rental contract to supply two large aircraft tractors, two GPUs, three lower deck loaders, seven electric tractors, seven aircraft container trailers, and one set of motorised aircraft steps.

KLM Ground Services, on the other hand, awarded a three-year rental contract for a pushback tractor and high loader, while the same handler, through its Schiphol Brede Services division at Amsterdam Schiphol, awarded a 15-year rental contract (or 450,000 working hours) for eight towbarless AM500 tractors.

Another customer, UK handler Groundstar, is confident that the future will see even closer ties between ground handlers and companies such as TCR. Formed in 1999 following an Institutional Buy Out of three former handling entities, Groundstar has worked with TCR to transform its equipment procurement process.

The relationship began last year when Groundstar secured a major contract to handle Ryanair at the low cost carrier's London Stansted hub (see Ground Support Magazine, May 2002). Charged with sourcing nearly '2 million (US$3.5 million) of GSE in the six weeks from notification to start of contract, Groundstar knew that it had to look outside traditional procurement methods to be ready.

"We decided that one of the most unpredictable things about GSE, and particularly if used, is the maintenance side and we really wanted to avoid those headaches," explains Nigel Daniel, Managing Director.

As such, the handler awarded a five-year equipment rental contract to TCR UK that included the provision of repair and maintenance services, plus full training on a rolling replacement of equipment. TCR supplied more than 260 units of GSE including pushback tractors, electric tractors, aircraft steps, and baggage dollies. Most importantly, it provided the procurement stability that Groundstar so badly needed.

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