Throwing Down the Gauntlet
As the ground support community gathers in Las Vegas for the third annual GSE Expo, it does so in the knowledge that this once neglected side of the business now has a higher profile than ever before, writes Richard Rowe.
By Richard Rowe
The world of ground support has yet to take top billing in the minds of airlines, and in truth probably never will, but it has nonetheless managed to steal a little more of the limelight. Such recognition is good news, but there comes with it the kind of scrutiny that can expose, warts and all.
Phone lines are buzzing between airlines, ground handlers, FBOs, and equipment manufacturers as they each seek to position themselves as key suppliers for the other. The environment on the ground has reached a level of competitive intensity that is likely to test the resolve and flexibility of the entire industry.
Market sophistication is now the name of the game. Power bases are forming. Buyers of ground services and GSE are more demanding. The importance of IT in GSE manufacturing and management is transforming how ground support organizations conduct business.
Industry watchwords have not really changed in the last 12 months, they have simply moved on a pace. The murmurs are still about industry consolidation, the impact of airline alliances, labor issues, and the internationalization of the whole ground services market.
Airlines may not always like it, but they have to deal with ground-based issues one way or the other. The management and maintenance of GSE, and ground services as a whole, have to be tackled in-house or farmed out.
Ground handling--a central link in the airline/handler/manufacturer chain--has advanced irrecoverably. The big Europeans have bought up the big Americans. Traditional reciprocal handling agreements between airlines have been replaced by tailored services offered by a gamut of young operators all eager to make their mark as airlines look for quality over convenience.
As a result, equipment manufacturers are faced with a new breed of customer that wants the same equipment as the airlines, but just a little bit faster. Lengthy lead times are no longer acceptable for organizations such as Aircraft Service International Group (ASIG), Swissport, and GlobeGround--three fine examples of this new breed of handler.
Swissport, in particular, is genuinely taking the traditional supplier-customer relationship forward. Peter Sturzenegger, Vice President Global Supply Management at Swissport International, has turned the company’s supply chain management on its head with recent initiatives.
Previously, Swissport’s more than 100 stations around the world operated very much at a local level in terms of sourcing and purchasing GSE. The result was massive duplication.
As Sturzenegger explains, what was needed was "a shift in paradigm from working vertically to working horizontally" to refine the overall value chain. "We centralized the responsibilities for sourcing and purchasing ground support equipment," he told GSE Today, "by working with local markets on conditions and then on preferred products and suppliers and contracting them centrally." Key Account Management of suppliers became vital.
The process began this spring and is working well, says Sturzenegger. "Once we have decided on the specification, the process is decentralized back to the individual station, and then all they have to do is communicate directly [with the manufacturer] concerning delivery and so on. We also decide on the financial conditions and whether we buy new or second hand."
As Sturzenegger explains, "This scheme represents a transfer of tasks and skills to those most able to perform those tasks. It has been a big culture change."
According to Sturzenegger, the saving potential on purchasing is approximately 15 percent. "It’s not just a question of pricing, as there is only so far you can go with manufacturers on price," he says. "It is also about optimizing our internal and external transactions and working very hard on our actual specifications."
Cover Story Special Report: Ground Services in North America Mergers and Apparitions By Richard Rowe July 2001 North America represents the largest ground services market in the world...