Airports Show Their Colors

Cover Story Airports Show Their Colors While some airports in Europe prefer simply to oversee their ground service providers, others adopt a dual role as airport operator and ground service provider. Richard Rowe looks at how three major European...

According to De Rosa, all these initiatives form the basis of the next step in managing ramp safety at Heathrow, which will involve looking at the issue from a behavioural standpoint. "Really, we have got such liberalization here and so many physical constraints that we simply have to do these things," he comments.

At the other end of the scale to London Heathrow is Germany's Munich Airport. Another major international airport, it, too, is focused on achieving airside excellence, but does so as both airport operator and ground handling competitor.

Munich has always had its own handling operation, but saw a challenge in early 1999 when the liberalization process prompted the arrival of a third-party handling competitor on the ramp in the shape of Aviapartner.

Airports 2Today, despite Aviapartner's proven ability as a quality service provider, the airport retains its dominant market share. "This underlines the difficulties of some third parties to match the particular expectations of the airlines," claims Philipp Ahrens, Assisting Manager to the Director of Finance, Ground Handling Services at Munich.

It may also underline available market share and tight operating parameters for new entrants. Like other German airports that lost monopolies, Munich has strongly refuted accusations that it is well placed to use its infrastructure monopoly to charge higher rates for central infrastructure services.

Certainly, there is a genuine dilemma at airports where competition is required and yet large infrastructure is operated by the airport. Ahrens says that prices are transparent and the relationship with its competitor is good. He also notes that the EC recently sent consultants to examine how the Directive was being fulfilled at the airport. "We support and acknowledge the monitoring process as a good thing as we are confident in the quality of our services," says Ahrens.

But he admits that the question of infrastructure is an essential point. "Every airport has a different infrastructure and different opportunities for third party handlers," explains Ahrens. "Therefore, the EU Commission has to take into consideration the enormous variety of individual situations at airports, which makes further liberalization in this field not advisable."

The big question is whether a further opening of the handling market at Munich would promote "the desired quality that every airport is after and which the overall air traffic system requires," adds Ahrens.

Clearly, being an airport operator and a player on a competitive ramp requires a careful touch. "We always try to be fair to our third party handler; we will not give them any 'presents', but there will not be unfair competition. We will always try to provide them with all they want within the regulatory framework."

The ground handling department at Munich is an important profit center and one that is happy to take its expertise elsewhere. It has worked closely with the new airport in Athens and is currently providing consultancy services for baggage handling processing in Brussels.

Liberalization has, of course, had some consequences for Munich Airport. "Competition means not only lower revenues [for the airport] but it also means an even greater identification with quality and performance," says Ahrens. "This is the best way to differentiate oneself from other handlers, who might be working for a similar or a slightly lower price. Especially after September 11, airlines are focusing more and more on issues such as quality and safety."

This liberalization, together with outsourcing of ground services and global consolidation, has combined to create business opportunities for ground
handling providers. And there have been few better in seizing those opportunities than Fraport, the operator of Frankfurt Airport.

Fraport is a perfect example of an airport operator that not only continues to dominate its home ground handling market but has also aggressively pursued overseas opportunities —- and this has caused some friction. In the build up to and following liberalization, Fraport has been highlighted as the worst kind of former monopolist — one that continues to restrict competition at home and yet exports its own ground handling overseas. Ridiculous, says Fraport, which spends what it sees as too much time defending itself when it would rather get on with doing what it does best: using Frankfurt as an attractive reference 'model' for establishing an overseas network.

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