Operations from the ground up
Keith Mwanalushi looks at the expansion of ground support operators and equipment in the Middle East region as the pressure mounts to remain competitive and maintain commercial viability.
Regional airport development is undoubtedly significant and much needed, with the major Gulf carriers expanding at a pace that continues to outstrip the airport and air traffic control (ATC) infrastructure needed to support their growth.
The link between airport expansion and the need for robust ground-handling operations is pretty clear.
Today the Middle East region boasts something like 150 million passengers. The International Air Transport Association (IATA) and other organisations predict this traffic to grow to 383 million within two decades. On top of this growth, airport infrastructure will be renewed and expanded in many airports and hubs in line with these predicted developments.
“Swissport plans to strongly grow in the region too,” declared Mark Skinner, senior vice president for Middle East and the Africa region at Swissport International. “As a first step we set foot in Saudi Arabia in 2016; this start-up being one of the largest we have ever had,” Skinner continued.
Swissport’s Saudi Arabia operation and Gulf Air signed a comprehensive ground-handling services contract, including passenger and ramp-handling, baggage services, operations coordination and load control.
The agreement with Gulf Air followed a rigorous selection process and was effective from June 2016, making Bahrain’s national carrier the second Gulf carrier to appoint Swissport for its ground-handling services in the kingdom.
To ready the organisation across the kingdom, Swissport Saudi Arabia had to invest in a sizeable amount of ground support equipment (GSE) and recruited an additional 250 experienced aviation staff, besides strengthening the current set-up with a number of key position appointments.
“Our plans for this country are to grow our ground-handling business in the current three stations Jeddah (JED), Riyadh, (RUH) and Dammam (DMM), but also to expand into other business lines, such as cargo and further airports within the country,” Skinner said.
Besides entering the Saudi market, Swissport has also won the license to operate in Oman, where the company plans to launch in early 2017. Further Middle East start-ups will follow in the coming years. “Thus, both the traffic growth and also the development of modern airports will drive the demand for more and different GSE in the coming years,” Skinner added.
Swissport’s Saudi Arabia operation follows a joint venture agreement with the Al Jarwani Group for operations in Muscat, Oman.
Another interesting collaboration is the partnership between Satair Group and Dedienne Aerospace for GSE in the Middle East and Africa. Under the terms of the agreement, signed in 2016, Satair Group has become Dedienne Aerospace’s marketing conduit into operators based in this area for the GSE products.
Market analysts at Visiongain assessed that the airport ground-handling services market was valued at $54.351million in 2016. The ground-handling industry is predicted to grow at relatively strong rates over the next 10 years as a result of forecast demand for air transport, which is driving airline and airport infrastructure expansion. This has a direct impact on companies in terms of expanding their service offerings to accommodate the additional passenger, baggage and cargo capacity.
Swissport is committed to introducing new and innovative GSE in the Middle East markets it is entering. “The Saudi Arabia market entry in 2016 was one of the largest for Swissport ever, seeing us invest in all-new GSE for airports at Dammam (DMM), Riyadh (RUH) and Jeddah (JED),” said Skinner.
He added that Swissport would continue to bring new GSE to the market in line with growth and as airport infrastructure was upgraded. “For instance, we are introducing environmentally friendly electric tractors and low-emission GSE to Saudi Arabia’s airports,” he said. “Oman will see us invest in all-new and environmentally friendly equipment too.”
The electric GSE segment is expected to witness the highest share of demand within the market. The favourable growth is attributed to increasing spending by aviation authorities towards adopting eco-friendly equipment.
“This area [ground-handling] has come under pressure to reduce costs, so, looking for alternatives in GSE is of high importance,” commented Peter Martin, vice president for technical services at Dnata in Dubai.
Rental or operational leasing of GSE, though not as popular in the Middle East, can be a solution for some ground-handlers. Used GSE can also be used an effective solution to replace or back-up equipment.
Martin indicated that Dnata is currently working closely with manufactures in the GSE research and development phase to meet the company’s operational needs. “Our investment will be in line with the requirements we have identified,” he said.
Many ground-support providers are looking to GSE leasing rather than outright purchase as a financial solution to support their requirements. Swissport uses various kinds of financing for its equipment. “The appropriate option depends on many factors, such as local legislation, financing costs, type of GSE and so on,” Skinner explained.
Leasing equipment aims to reduce the high financial risk associated with GSE purchase. However, geographical and operational differences still play a critical role in determining the decision to buy or rent.
A frequent, and fairly straight forward response by GSE users, is to ask “why own, when you only want to use”? Understandably, owning GSE ties up capital and, if you make the wrong purchasing or maintenance decisions, this can have a negative impact on the bottom line. However, airport operators and ground-handlers will usually need solutions with a variety of plans, from short-term rentals to longer-term operating leases, with the flexibility to be tailored to specific needs.
“Leasing is definitely a way to go and we are currently investigating a central ownership model with leasing out to all stations,” Martin confirmed.
In terms of upgrading GSE, Martin explained that this changes with the central ownership model as equipment that is due for replacement could be reused in other stations that require less utilisation.
An incident in Canada that led to the death of a ramp agent due to the lack of a seat belt on a baggage tractor has put the spotlight back on the safe operation and updating of GSE to more strictly meet safety requirements – which can sometimes vary from one location to another.
David Burgess, vice president, global fleet management at Swissport, said the company’s GSE fleet in the Middle East (three stations in Saudi Arabia, with Oman effectively starting in April 2017) is brand new and meets International Air Transport Association (IATA) standards and local requirements.
“There has not been a need to upgrade GSE so far but when the need arises we do not foresee this being an issue as its imperative to maintain everything in a safe operable condition aligned to local regulations,” said Burgess.
“We are actively recruiting a head of regional fleet management for the Middle East and Africa and one of his responsibilities will be to ensure that he stays alert to changes in local GSE technical requirements and to put in place upgrade plans to meet these requirements through country GSE managers.”
Interestingly, in Turkey, low-cost carrier (LCC) Pegasus is now providing its own ground support with its own GSE, having been operating its own check-in, baggage and boarding services for its flights. This strategy is in contrast to most other LCCs that see cost benefits from outsourcing such services.
“We received our official license from the civil aviation authority in August 2015 and, subsequently, started hiring and training our personnel. Since June 2016 we have been operating the full ramp services with our own personnel and equipment,” said Pegasus CEO Mehmet Nane.
Pegasus took over the management of its entire ground operations for its flights at the main hub, Istanbul’s Sabiha Gokcen Airport.
Nane said, as part of the project, the airline created 1,000 new jobs. “We have also purchased the latest and most advanced technological equipment for our operations, which has not been utilised in Turkey previously. This allows us to run our ground service operations meticulously and we have invested €20 million ($21.2m) in doing so.”
Investment in new equipment saw the airline spend some €7.2 million ($7.6m) from a variety of suppliers. The list includes: 24 Durabus VivAir 104WL buses, five ambulifts (vehicles for carrying patients), as well as airstairs, conveyor belts, cleaning generators, baggage-carrying vehicles, and water and cesspit drainage equipment. Additionally, Pegasus purchased 13 pushbacks, five de-icing vehicles, 38 baggage trucks, 18 ground-power and two air starters, and air conditioners.
“By taking charge of all ramp services, we now offer our guests baggage loading and unloading, transfers between the terminal and aircraft, interior and exterior aircraft cleaning, cargo, de-icing, chute and all related services directly by our own personnel,” Nane concluded.