Buying power

posted on 27th June 2018

Larry Laney is director ground support at Southwest Airlines. He sits on the carrier’s team that handles equipment acquisitions for all Southwest sites in which it owns GSE. His department is also responsible for nationwide equipment maintenance, as well as the disposal of obsolete GSE. Southwest currently owns more than 18,000 items of GSE

Q: How often would you assess your GSE requirements and begin the process of making new acquisitions?

A: Southwest Airlines’ budget cycle runs from January through December, and typically we start our planning process for the following year in August and September. The acquisition process normally starts late in the first quarter. Thus, we place orders late in the first quarter and then as needed throughout the year, with equipment also being delivered throughout the year.

Q: Presumably you have a given budget for a given time period to cover all acquisitions?

A: Absolutely. We always strive to be on or under budget – however, this is the airline business, and there is always the unknown.

Q: Do you or your colleagues assess whether to purchase or to lease, depending on the situation?

A: Southwest has looked at leasing ground equipment on many occasions. There is a cost associated with leasing and when you know you need equipment and plan to have it in your fleet for 15 to 18 years, it just doesn’t make financial sense if you can afford to purchase the equipment up front. On the other hand, we do lease some equipment in certain situations – such as particularly expensive equipment that is leased in order to do a proof of concept before making any decision to purchase, or in cases in which we need to delay purchase to remain on budget, or in order to meet specific short-term needs.

Q: Do you have preferred manufacturers that you turn to for GSE, or would you begin each tender process with a completely open mind?

A: We do have primary manufacturers based on each equipment type and our agreements can run from two to three years. Our agreements are not exclusive, however, and we are very open-minded and track what is happening in the marketplace. It is our responsibility to make sure that we provide our employees with the best tools to do their job at the best value for our company. We are also very open-minded when it comes to new technology that make us more efficient, reduces injuries and protects our assets. Occasionally, we will send out requests for proposals or information to the major manufacturers to make sure we are getting the best possible value.

Q: What are the main criteria that you use when selecting your GSE and GSE suppliers?

A: I am sure we use the same criteria as most airlines: price, company history and financial health, production rates and lead times, warranty and parts support, training programmes, etc. Fleet standardisation is also very important to us, although not at any cost.

Q: Would you say that the US market is particularly good in terms of GSE offerings? Or are there certain gaps in coverage that have to be filled with units produced elsewhere? Is it competitive on the price of GSE units compared to foreign equipment?

A: North America has the largest aviation market in the world and Southwest only flies B737s, so the US market has been well able to fill our needs. Today, most of the manufacturers build and sell worldwide and the biggest concern to us buying GSE built overseas is that the shipping cost and the currency exchange takes away any competitive advantage of doing so.