Manchester, UK-headquartered service provider Airline Services has more than doubled in size over the last three years; and further expansion is on the way
Nigel Daniel is managing director – handling for Airline Services, a man with decades of experience at handlers including Swissport and Aviapartner. But it is for Airline Services that he now manages a rapidly growing handling operation. The company ground handles at several UK gateways, although its biggest operation is to be found at London Gatwick, where it handles the aircraft of more than 20 carrier customers.
Ground handling is just one string to the Airline Services bow, however; it also de-ices at 12 UK airports, as well as offering what it refers to as aircraft ‘cleaning and presentation’ services at those same gateways. In fact aircraft interior and exterior cleaning and presentation form a very important part of the company’s product mix.
The growth that Airline Services is enjoying in its various service offerings can be seen in just some of the procurement decisions it has taken in recent months. Thus, for example, it has just received from Northern Ireland-based GSE supplier Mallaghan two large widebody de-icer rigs, an acquisition alone worth more than half a million pounds (US$660,000).
Also, to be received in December 2017 from the same supplier, were two high-lift catering units worth in the region of £300,000 ($400,000), while three water servicing units were also acquired in the not too distant past – for a total spend of just over a million pounds ($1.3 million) in recent months from just one GSE manufacturer.
Historically, Daniel notes, Airline Services acquired second-hand GSE but, he points out: “We now have the level of business and scale to buy new equipment, where the contract value and length of contract supports this level of investment.”
New GSE-related technologies are also catching Daniel’s eye. For instance, at the time of speaking to Airside he is in negotiations on a major contract that – if won – would see Airline Services handle at an airport in the north of England. If the tender is successful, Daniel is considering Mototok radio-controlled, towbarless, small electric tugs as an option for the new operation.
Also, on 8 December to be precise, Airline Services commenced work on an important new contract to clean low-cost carrier easyJet’s large aircraft fleet that flies through the west of England’s Bristol Airport. Bristol is actually easyJet’s second-largest operation in England, so this contract win was a major coup. Daniel is in talks for further expansion in this area of the operation with several airlines.
Airline Services has a comprehensive customer base covering its home market of the UK. It has contracts with all of the big UK and Irish carriers – easyJet, TUI, FlyBe, Thomas Cook and British Airways, as well as Ryanair. It also has contracts with some of the major non-UK carriers flying into British gateways, such as Emirates.
Staying competitive in a business with low margins
Growth won’t be achieved at any cost, however. “We will in some instances turn contracts away if the potential customer won’t pay enough for us to make a margin,” Daniel confirms. The airline handling business is known for its low profits, but some handlers and aircraft cleaning companies will take on work when there is no margin at all to be made, or worse than that large losses, he insists. “My frustration is that some of my competitors – and it is by no means all – will say one thing and do another.”
Some handlers and other service providers will seal the deal on a new contract and then worry about how the terms of the deal can be achieved at the agreed price, he argues. There is sometimes a disconnect between the sales guys and the operations people in a handler, Daniel suggests, which is why he ensures that there isn’t such a problem at Airline Services – the company’s sales people cannot sign off on the terms of any new tender without the approval of the company’s operations people first.
Staying profitable – and Airline Services is profitable in a tough operating environment – means that a handler has to be efficient. One way in which Airline Services ensures that it remains so is by having a multi-skilled labour force. For instance, Daniel highlights the fact that even though the UK requirement is for a de-icing capability to be always available between 15 September and 15 May each year, few of those days might actually involve de-icing operations.
Moreover, rarely in the UK will aircraft de-icing be required for more than five or six hours in the morning. This leaves the de-icing staff on Airline Services’ payroll with potentially plenty of downtime; the solution for this company at least has been to train its de-icing specialists in various aspects of aircraft cleaning and presentation, baggage handling and cabin work, ensuring that they can always be kept fully and gainfully employed.
Of course, making the most of a labour force is a vital part of any business, and no more so than for airline service providers. Employees make up more than half of the cost base for Airline Services, and that cost is increasing because of external factors that the company cannot control. Daniel notes the increasing level of NEST workplace pension contributions that a UK business now has to make for instance (the National Employment Savings Trust – NEST – requires UK businesses to make compulsory contributions to employee pensions).
Plus, the UK’s national living wage also rises on an annual basis as the government stipulates, and it is mandatory for businesses to pay their staff at this level as a minimum requirement. Daniel has no problem with the concept of the minimum wage, nor indeed the level at which it is set, but he does believe that – given the relatively low margins that an airline service provider typically earns – the consequent increases in labour costs have to be passed on to handlers’ customers. Some customers are understanding; others less so, he says. But this is an industry issue, not just a service provider issue, about which the industry has to have a clear understanding and good communication, he insists.
As of the time of writing, Airline Services remains committed to the UK market – and the UK market alone. But that may well change in the near future. “We would certainly not rule out moving into Europe for the right reasons,” Daniel agrees.
In fact, he confirms that the company has had discussions with Dutch airports and had a look at Italian airports with a view to broadening its footprint into continental Europe. “We might very well be active in Europe in some way within perhaps 18 months,” Daniel informs.