Time is Money
The 'no frills' approach of Europe's low cost carriers is very much in evidence when buying ground services, but only certain types of ground handler need apply, writes Richard Rowe.
By Michelle Garetson/p>
By Richard Rowe
Once just a minor irritant for European flag carriers, ultra-aggressive, low cost airlines such as Ryanair and easyJet have become sophisticated, successful competitors in their own right. Throw into the mix the likes of Go, KLM's Buzz, and bmibaby, launched in March by British Midland, Europe's low cost airlines prove that there is at least one aviation sector in good health.
These nimble operators have gained considerable market share at the expense of traditional flag carriers that the low cost brigade regard as grandiose and wastefully inefficient. Ryanair's CEO Michael O'Leary commented at the Irish carrier's annual general meeting last year that the carriers requesting state aid after the terrorist attacks in the US were losing money hand over fist long before September 11.
While other airlines grounded aircraft, trimmed services and announced redundancies, Ryanair stood by its recent order of 150 new Boeing 737-800 aircraft, immediately reduced fares, and encouraged travel with every trick at its disposal. Such a move was justified when, in February, the airline announced record traffic (up 30 percent) and profit figures (35 percent) for the third quarter of 2001.
Launched in 1985, Ryanair is Europe's answer to the US low cost pioneer, Southwest. Imitation has taken the airline a long way and Ryanair is now Europe's largest low fares airline with 75 routes across 13 countries. It operates four main hubs: Dublin, its traditional home base; London Stansted, now its largest base; Brussels Charleroi in Belgium; and most recently, Frankfurt Hahn in Germany.
Flying Ryanair is by no means a lavish experience, but the airline makes no apologies for its 'you get what you pay for and enjoy the savings' attitude. It is equally hard-nosed in its approach to ground handling and the preferred model has generally seen the airline self-handle at Dublin and outsource elsewhere.
"Until recently, Dublin was our core station where we felt we needed total control," Charlie Clifton, Director of Operations, Ryanair told GSE Today.
Interestingly, the Dublin operation runs with an almost virtual staff. "About 50 to 60 percent of ground handling staff [at Dublin] we get through an agreement with recruitment agencies," explains Clifton. "The supervisors are all permanent."
Clifton acknowledges that using temporary workers sees high staff turnover, but is unrepentant as long as service targets are hit and costs are kept rock bottom. "It's a very efficient model," he says. "We get the flexibility, but also keep ground handling at arms length."
Overseas, Ryanair is equally canny about leveraging the best deal possible. "We would be reluctant to self-handle outside Ireland," says Clifton, perhaps with a casual reference to what rival low cost airline easyJet has attempted elsewhere (see sidebar, "Easy life?," below).
It would certainly be difficult to replicate Ryanair's Dublin model at say, London Stansted. Under TUPE (Transfer of Undertaking Protection of Employment) regulations, Ryanair would be legally obliged to inherit significant numbers of staff from the displaced ground service provider. "This would involve about 300 to 400 staff and all the costs that go with it," says Clifton.
As it is, Ryanair is currently changing its handling provider at London Stansted from Servisair to the much smaller UK ground handler, Groundstar. Ryanair sees its new supplier as being that little bit faster on its feet and able to offer dedicated staff for flights. "The company [Groundstar] is more able to replicate the model we have in place at Dublin," says Clifton.
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