On The Bubble

Feature On The Bubble GSEAviation industry insiders do not anticipate Year 2003 to be the Year of the Rebound, but it should provide some hope toward recovery, writes Michelle Garetson By Michelle Garetson/p> By Michelle Garetson December...


Feature

On The Bubble

GSEAviation industry insiders do not anticipate Year 2003 to be the Year of the Rebound, but it should provide some hope toward recovery, writes Michelle Garetson

By Michelle Garetson/p>

By Michelle Garetson

December 2002

Certainly, 2002 was going to be an incredible year of shake ups, let downs, and cautious optimism following the tragic events of September 11, 2001. Looking back, much of this proved true with a few high-profile bankruptcies such as US Airways and aircraft manufacturer Fairchild Dornier, as well as the continuing saga with United Airlines. Successful models such as Southwest Airlines, Ryannair, easyJet, and JetBlue surfaced from the rubble of legacy carriers' shifting and showed profits despite news reports of dwindling numbers of business and leisure travellers. The ground support equipment and ground support services sectors were captive audiences in watching how much effect the airline troubles would have and for how long the effect would last.

Overview
August 2000 was the last time an in-depth analysis was conducted for GSE Today and even that report was more specific to the ground support equipment sector than the ground support industry as a whole. Still, a lot of good information came out in that study and painted a fairly rosy picture for our industry for five years out.

But no one could have or would have predicted the tragedy that occured a year later. No one could have known that the aviation industry would be sabotaged with its own equipment. In the air and on the ground, everyone felt the continental shift when airplanes were grounded, personnel layoffs ensued, filled order books emptied, and bankruptcy lawyers circled crippled aviation businesses.

This report will attempt to provide a snapshot of where the aviation ground support industry is at this moment, as well as to offer a view to trends for the coming year, and how the past and present have interacted with each other in order to shape the future. Information featured has been gathered from news data, industry correspondence and interviews.

Then and Now
Some of the August 2000 predictions stayed the course, although there were slight dips and detours in the road forward. The prediction of cargo increasing, especially in the Asian markets, came true and is a continuing trend. Mergers, acquisitions, and alliances continued, although some probably out of necessity rather than desire. American Airlines Chairman and CEO, Don Carty in a speech in May called for the lifting of investment restrictions citing that "In other industries, globalization is fueling mergers and acquisitions and other sorts of business combinations." Carty went on to encourage Congress to amend the law to provide the right for foreign investment on a fully reciprocal basis.

While the potential for greater efficiencies in operations throughout — If aviation did move to a truly globalized industry, oversight of this entity would fall on whose shoulders? FAA? JAA? CAA? There would probably have to be a WAA (World Aviation Administration) developed to ensure policies and procedures were consistent for all of the continents involved and that there would be equitable enforcement of the rules and regulations. Oversight and management of ground services companies also may have to change as a result of a globalized aviation industry. Presently, companies such as GlobeGround, Swissport, and Signature Flight Support have operations worldwide, but are seen by their parent companies as being distinctly different in the North American and European markets — with different management 'trees' and objectives, as well as separate budgets and decision making powers.

2002 Mergers, Acquisitions,
& Alliances
Some of the key M&As in 2002
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