Historically, ground handling has been the low-profile "cousin" to the core airline industry. But this is changing - and so is the leadership requirement that goes with it. The latest watchwords in aviation ground handling are consolidation and globalisation. The truth is, the industry was ripe for consolidation, which has been fuelled by the desire of the emerging leaders - GlobeGround, Swissport, Worldwide Flight Services (WFS) - to become dominant players.
It appears that their moves are well-founded, because many airlines are concluding that certain airport-based services, particularly in outlying, non-hub locations, are better outsourced. As carriers continue to retract to their "core" business of managing the customer relationship, the demand for third-party aviation services must increase.
Consistent with scale and globalisation has come the need for more focus and sophistication in the management of ground-handling businesses. Traditionally, business development in the sector has been anchored in strong personal relationships and/or price-based competition. Increasingly, the decision-making behind outsourcing moves is changing and moving up the corporate ladder, particularly as the sophistication of buying executives on the airline side grows.
With labour costs spiralling in a high-demand/low-supply marketplace, ground handlers are having to find more advanced approaches to pricing and account management. The new major players in the industry have responded in kind, putting high-performing and high-potential talent at the helm. Two examples, one from either side of the Atlantic, illustrate the point.
Perhaps the most prominent and successful example has been GlobeGround, the wholly owned unit of Lufthansa Group. Since the early 1990s, the unit has been under the strong and focused leadership of Peter Bluth. A high-potential executive in his early 40s at the time, Bluth spotted an opportunity for the group to conduct a systematic, yet profitable, consolidation of quality global ground handlers into LAGS - Lufthansa Airport & Ground Services. Lufthansa Group bought into the idea and transferred Bluth into the leadership of what was then a small unit in LAGS, giving him the capital and moral support to make it happen. Today, Bluth is at the helm of the second largest global player in the industry and is on the look-out for interesting acquisition opportunities. He recently renamed and re-imaged the company as GlobeGround, reflecting its stature as a profitable business enterprise, largely independent of its corporate parent.
In North America, it took a divestiture to achieve a similar result. When AMR elected to sell off its non-core assets, New York private equity firm Castle Harlan snapped up the opportunity to buy AMR Services. The new owners picked up a business with great potential, but which had been living in the shadow of its massive big brother, American Airlines. Castle Harlan has wasted no time in freeing the business from its shackles. First came a name change to WFS, to reflect its independence and global scope. Then two high-performing regional businesses were acquired in Pittsburgh-based Aerolink and Miami-based MAS. Now, in possibly its most important move, the private equity firm has taken steps to transform the leadership of the company fundamentally.
Recognising the need for both continuity and new blood, Castle Harlan has been assembling a strong team at the top of WFS. Pete Pappas, a respected industry veteran who transferred from AMR, is chief executive, leveraging strong relationships with AMR (still about a quarter of the business) and other current and potential customers. Pappas has been complemented by "mid-30s up-and-comer" Mark Dunkerley, who was recruited from British Airways, where he recently led a remarkable turnaround in the carrier's Latin America & Caribbean division.
Dunkerley, in turn, has introduced several new-generation executives in key posts, including Doug Pinckney from Sea-Land as senior vice-president, sales and marketing. Notably, Pappas, Dunkerley and Pinckney are not ground handling executives. Each brings specific strategic and commercial skills to a business in need of reinvention. Perhaps more importantly, each brings a level of energy and creativity that is shaking the business at its roots.
As Swissport, GlobeGround and WFS have discovered, there is money to be made in ground handling. But doing so requires changes in how the game is played. These and other players in the sector will continue to propel consolidation and globalisation. In doing so, they are introducing to the industry a new breed of airline services executive, a strategically oriented, commercially focused and profit-demanding group of individuals - "the new handlers".n
Source: Airline Business
