Change Agents

May 1, 2003

For nearly three decades, airport Terminal Services continues to grow its business by its ability to adapt to changes in the aviation marketplace, writes Michelle Garetson

May 2003

Big changes seem to happen in ten-year increments for Airport Terminal Services (ATS) headquartered in St. Louis, Missouri, and so far, this decade is holding true to that claim.

ATS was formed in 1975 as a subsidiary of Midcoast Aviation. Ten years later, Midcoast was bought by Ozark Airlines, which was then purchased by TWA the following year. In 1994, ATS was sold by TWA to Richard B. Hawes, a local St. Louis investor, who remains the current owner. This is not to suggest that ATS will be up for sale in the next year, but they are definitely poised for changes associated with growing a business.

CORE SERVICES When asked what ATS's core services are, ATS President, Sally Leible replies without hesitation, "The ramp. It's where
we started. We provide passenger services, fueling, cargo, and facility management." ATS has also added aircraft interior grooming and hopes to grow that aspect of business in the future and currently provides interior aircraft cleaning for American Airlines in all of ATS's ramp cities as a standard bill of work. Leible explains ATS's point of difference this way, "We're one of the very few US-owned handling companies. Our customers say they love to do business with us because we're accessible and responsive and we can do that largely because we are a medium-sized company that's privately owned. We don't have to go through layers and hoops for approvals. We're happy being a niche player."

Leible continues, "We are very diversified. We perform baggage tracing services for American Airlines at St. Louis, Fort Lauderdale, Ronald Reagan Washington National, and Philadelphia."

Probably one of the biggest changes for ATS, as with any aviation business, came as a result of September 11, 2001.

"After 9-11-01, we were given seven days and then our war risk insurance was cancelled," recalls Leible. "Also, because our fiscal runs from November to October, we had the unfortunate position of being one of the first aviation companies to go through the policy renewal process. We had a strong plan in place to be able to adjust to the drastic increase in premiums. We knew we wouldn't be able to raise our rates to our customers as substantially as our insurance carrier raised our premium rates. We currently are indemnified by our airline customers' for our war risk coverage."

Leible explains that the ATS portfolio includes the larger, domestic carriers, but they also handle an FBO at St. Louis. ATS has just received a multi-city contract with Aloha Airlines to begin June 1 and will open a new location at Burbank Airport in California, bringing the total to 33 ATS locations in North America. Two years ago, ATS purchased the ground handling services of CanCom of Calgary in Canada, and that, according to Leible, has turned out to be quite a good buy.

"One of the major reasons we went to Canada," she explains, "was because of WestJet and we're very pleased with that relationship. We also provide services in Canada for Air North, Continental, Northwest, Alaska, Horizon, Emery, UPS, and Burlington. And, we have several multi-city agreements with Alaska Airlines, American Trans Air, Frontier, and our newest with Aloha Airlines."

ATS also manages three common-use gates at the East Terminal at St. Louis for the airport.

"ATS has held this contract for over 25 years," says Leible. "We perform as an agent for the City of St. Louis wherein we manage ticket counter and gate facilities on their behalf. We assign gates to create maximum utilization and collect airport fees, such as landing fees, fuel flowage fees, facility fees, and FIS fees. Through these East Terminal common gates, the City of St. Louis can provide guarantee access to scheduled and charter air carriers."

Keeping an eye on things at the East Terminal is Station Manager, John Fay, who has been with ATS for seven years, following a 32-year career with Eastern Airlines, as well as three years with the Lambert St. Louis International Airport Authority, prior to coming to ATS.

"Our current project with this company will be rolling out our 'Activity Reporting System' within the next month or so," says Leible. "This technology will collect all activity performed on each flight ATS works, creating accountability and accuracy in our record keeping. We envision that our customers will eventually be able to have direct password access to their account and be able to determine at any time throughout a month how their account looks."

ATS owner, Richard Hawes, is also a principal owner in a customized computer software company based in St. Louis, that will develop and implement this system.

Another means of measurement, an important word at ATS, is the customer feedback program. "We want to be graded," says Leible. "We are constantly asking for feedback from our customers through surveys and our comment cards. If a report comes back that we feel is unacceptable, a member of the Executive Committee will contact the customer to find out why they were unhappy."

ATS's MAP (Minimal Acceptable Performance) metric is constantly referred to when working with clients.

"If you can't measure it, you can't manage it," explains Brian Wood, VP of Operations at ATS. "Our goal, for example, is to never have an employee injury. However, in the physical, fast-paced environment we work in, is that a reasonable goal to have? We operate on the basis of what is a minimally acceptable measurement. For injuries, we use an OSHA number that backs us into a MAP based on exceeding the industry standard. The philosophy behind the MAPS is to set them internally much higher than our customer's expectations. That way we can, through our trending, detect a problem and correct it before it makes our customer's radar screen or affects our service levels. All locations receive their numbers monthly so there are no surprises."

Wood offers that this makes for great competition among ATS's locations as no station wants to be seen as not making their MAPS. "At the end of our fiscal year, those stations exceeding their MAPS get great recognition in front of their peers at our fall Station Managers meeting."

He adds, "The system has been very successful for us. Our hours worked per injury, for example, has seen an improvement of over 200 percent over the last five years."

Bob Fleschert is ATS's Manager of Maintenance and GSE Equipment and is also responsible for equipment purchases. Fleschert is in charge of all of the 21 stations that perform GSE maintenance and liaison to the equipment manufacturers. He's a straight shooter and knows this business. "I wish there wouldn't be so many equipment mergers," says Fleschert half-jokingly. "We bid every project and it's getting tougher for me to put together three bids to submit." Fleschert started with ATS in 1978 and loves troubleshooting. He trains new maintenance employees and helps with start-ups at new locations. ATS has approximately 1,400 pieces of GSE and has GSE shops in 21 of its locations. St. Louis is the only location at this time that performs passenger boarding bridge and baggage systems maintenance.

It almost became a running joke - just about everyone who works at ATS-St. Louis has been with the company for 15 to 20 years.

"We are challenged with turnover like other service providers," explains Leible, "but we have a great core group that has been with this company almost from the start." She continues, "I grew up in this company. I started as a part-time station agent back in high school. A station agent did all positions; ramp, ticket counter, reservations and weight and balance. I eventually managed the facility, was later promoted to Director and then Vice President of Operations. I have held the position of President for the last five years."

Brian Wood's story is much the same. He also began with the company in high school and claims to have worked nearly every job ATS has. ATS promotes from within and they firmly believe in its employees and offers employee referral bonuses when positions become available that cannot be filled from the current pool.

Because they believe in their employees, the company this year has founded ATS University, which teaches leadership skills to those being promoted. The program was developed by a team at ATS and is being led by Sheldon Cash, Jr., Manager, Leadership Development, who is former military and can command attention from even some of the old guard at ATS.

Participants complete a preparatory course workbook to prepare them for the three-day course. The initial coursework is targeted at the supervisory group. The Leadership 201 course curriculum consists of the soft skills, the people skills, that leaders need to master to be successful, such as Team Building, Motivation, Conflict Management, Delegation, Time Management, Problem Solving, Goal Setting, and Coaching. The curriculum integrates the ATS culture and has been designed to have minimal lecture and maximum interaction.

"Toxic Waste" is a team building exercise. In this game, a team of people are required to move popcorn that represents "toxic waste" from an unsafe to a safe container using only the tools provided. This exercise demonstrates the importance of how team members need to communicate and work together as a single unit to successfully complete tasks that can seem impossible.

The course ends with a graduation ceremony involving a member of ATS executive management presenting the completion certificate and Leadership 201 lapel pin.

Said one 19-year employee, "I went into it as a nay-sayer, but came out a believer. I didn't think there was anything left for me to learn about this job."

Cash responds, "Well, if we can get that reaction from someone who's been here that long, then we'll be successful."

"We are now more involved in the strategic planning of our customers," says Leible. "Airlines are engaging us in their decision-making. There has never been a better time for outsourcing of services, but there has also never been more price pressures or risks associated with our customers - i.e. bankruptcies."

"Business has slowed due to the war mainly from the standpoint that our customers (carriers) are being selective with flights. They may only do three flights a day where they once did five or six. That affects us."

Leible is an active member of the Airline Services Council, which operates under the auspices of National Air Transport Association (NATA), and offers that the 22-member panel represents 90,000 employees and over US$2 billion in revenues. "Education and influencing lawmakers is a challenge," says Leible. "Lawmakers either don't know or hadn't given thought to who actually services aircraft. Many think the airlines do everything."