Swissport International recently signed an agreement with Finnair to take over baggage and apron services for the airline at its Helsinki Airport hub, in a five-year contract that takes effect on December 1. Airside International talks with Peter Speck head of corporate supply & GSE maintenance management at the company.
How does the new deal with Finnair differ from other airline contracts?
It’s a hub management contract, not a contract to handle an airline at an outstation. It’s also a long-term, five-year contract, reflecting the in-depth, long-term relationship we have entered into. We’re committed to helping Finnair achieve their cost reduction targets and to support the airline’s growth plans over the coming five years – and hopefully beyond.
Swissport’s hub-management concept is one of several modes of co-operation offered by Swissport to airlines ranging from single station, regional or multi-station, and network packages, right up to hub and base management and full outsourcing, where the closeness of the relationship extends towards an increasingly in-depth partnership.
Each of the partnerships is unique to the airline, but we are able to make use of the global experience we have in managing the main hub airports for several airlines, as well as managing the outsourced handling at major bases for several other airlines. Our current hub-management contracts, for example, include Swiss at Zurich, South African Airways at Johannesburg, Lufthansa at Munich, GOL at Guarulhos International, Ukraine International Airlines at Kiev and Cyprus Airways at Larnaca.
The general reasons for outsourcing handling to a specialist like Swissport apply to all of these models, such as reduction of handling rates and cost transparency; conversion of handling costs from fixed to variable; improving and/or maintaining the quality of handling services; and enabling the airline to focus on their core business. But where an airline outsources the management of services at its hub to Swissport, there are additional benefits that develop from the long-term and in-depth nature of the partnership.
For a carrier such as Finnair, which has ambitious growth plans, the aim from both sides is to further improve the quality, speed and cost-effectiveness of Finnair’s baggage handling and apron services, by applying Swissport’s extensive experience as a global player, and the world-class competences and processes that this brings. For Finnair, developing its partnership network like this is a key part of its strategy of structural changes, which aim for considerable cost savi ngs while facilitating growth through quality improvements, without increasing its fixed costs.
Although the partnership is tailored to each individual customer, the benefits from Swissport’s hub concept, in addition to a reduction of handling rates and cost transparency, and conversion of handling costs from fixed to variable, and improving the quality of handling services, include being able to take full advantage of Swissport’s global best-practice experience, by implementing the proven ‘Swissport Formula’. This incorporates an organisational review of process and measurement; review of labour agreements; introduction of KPI-based operations management; full access to innovative technologies, such as IT; benefiting from quality ground service equipment (GSE); and being able to collaborate with Swissport as a reliable, innovative and experienced strategic partner.
What contribution do the different partners make in a hub-management contract?
While the airline is outsourcing the majority of its handling responsibililties to Swissport, certain responsibilities remain on both sides of the partnership.
The airline will need to continue to assist in arranging licence approvals; support in assuring airport space at preferential rates; as well as things like supporting in the provision of attractive financial options for leases, loans and local guarantees; assisting with local labour market and labour law issues; arranging local legal support; and lobbying and networking on all levels.
For its part, Swissport will provide its operational hub and base experience; the Swissport brand and quality; a commitment from Swissport headquarters to assume professional project leadership up to operational start; and on-site project support by experienced field managers from its global network. In addition, we would provide operational and leadership training of local staff and management; best practice handling processes and operations; provision of high-quality ground equipment and access to innovative technologies; along with vast commercial expertise from more than 600 customer airlines; and, last but not least, our global procurement power and leverage.
What is the process of forming a hub outsourcing partnership?
The process takes place in three phases. In Phase 1, lasting one to two months, top-level initial talks begin, leading potentially to the first major milestone: a memorandum of understanding (MOU).
Phase 2 consists of two stages, the first of which also lasts on average one to two months, and involves work by an assigned project team on a feasibility study and an initial proposal initial proposal.
The second stage, following board approval consists of fine-tuning the co-operation model and the business plan, a process that generally takes from three to six months.
Phase 3 is the implementation phase, and the activation of the mobilisation plan. Generally lasting three to six months, this includes all the practical preaparations for start-up of operations, including things like the ordering of any necessary ground services equipment (GSE) and the arrangement of the appropriate staffing.
In the case of the Finnair contract, what apron services will you be providing?
Bag sorting, bag transport, loading/unloading, pushback, water/toilet services, de-icing.
Do you envisage acquiring new equipment to service the contract, or will you be using Finnair equipment?
We will be using the available equipment and acquiring new equipment to cater for Finnair’s growth plans.
What is the arrangement in terms of staff?
The agreement involves 500 staff transferring from Finnair’s current provider of these services at Helsinki, Barona Handling, under their current terms of employment.
Do you handle Finnair at other airports? Will you?
We handle Finnair at airports all across our network.
How do you train employees for your airside operations – does it vary from country to country or is it based on a standard operating manual?
This is a combination of the Swissport formula (standard training) and local training – for example covering security and safety regulations.
What are your product/service requirements for would-be suppliers?
There are a few main areas: GSE equipment; GSE maintenance; and uniforms.
Swissport will build on proven vendor relationships, but in terms of what I want from our suppliers in general, it is: Be customer facing, transparent and provide quality products and services; innovate and apply technology; be competitive and willing to grow with us; simplicity in regards to business conduct (easy to do business with); be in compliance with Swissport’s corporate supply management governance (centralised – decentralised functions).
What are looking for in terms of supplier relationships?
As there are different types of products and services, there are different strategies in regards to supplier relationships. For ground support equipment, this is a prime example of a strategic product, and our goal is therefore to establish a ‘value relationship’ with a limited number of key suppliers. For GSE maintenance, this is in many cases an example of a ‘bottleneck product’, where there are limited numbers of suppliers at each airport, and therefore little or no choice in terms of supplier. For uniforms, this is an example of a ‘leverage product’, where we take advantage of Swissport’s volume. Supplier strategy is a copy-paste of every Swissport operation, so there is no paradigm change for the addition of Helsinki.
Do you have service contracts with some or all of your suppliers?
Yes, existing contracts and relationships will be applied (Swissport global frame contracts and Logistics Concept). The GSE maintenance contract is currently under review (the existing contractual obligation between Finnair and its current supplier).
Are all ground vehicles based on leases with maintenance contracts?
If we are talking about a ‘total solution’ (operational lease, maintenance and fleet management): No.
You have spoken several times about The Swissport formula. For those who are not familiar with this, can you say more about what this is, and why it is important?
The Swissport formula is the standardisation and global alignment of our processes and standards that guarantees Swissport quality around the globe, regardless of local conditions or cultural differences. The benefits to customers are: Improved choice and access to innovative services globally; Consistent quality and reliability; Well-trained management and staff; Optimised solutions for global and local needs; and savings made through the application of standards.
Swissport has begun cargo handling services Tokyo’s Narita Airport on behalf of Virgin Atlantic Cargo.
The Zurich-based global provider has been operating passenger ground handling and ramp services at Narita for several years, and the addition of a cargo handling capability completes its portfolio at this key airport, allowing it to offer a full range of ground-handling services to airlines.
The handling warehouse in Narita South has ramp access and is capable of handling all kinds of products, including bonded cargo, valuables, temperature-sensitive and dangerous goods, with ample space for growth in both its office and handling areas. It became fully operational on November 12.
Rudolf Steiner, SVP Cargo Middle East & Asia at Swissport commented: “We are honoured and proud to be able to start up cargo services at Narita Airport and finally offer a one-stop-shop for an airline.”
Neil Ferdinando, Vice President Operations at Virgin Atlantic Cargo, added: “We are continuously looking for innovative solutions with our handlers, and we are convinced that we have made a good decision in appointing Swissport to handle our cargo at Narita.”
Here’s a bio/caption for Peter speck:
Pete Speck is responsible for all external purchasing of Swissair International. This includes all aspects of GSE procurement (from cradle to grave life cycle). He is based ar Zug and Zurich airports in Switzerland. Prior to his current position he served as the head of fleet management & supply chain integration for the company and as director of purchasing & fleet management Americas
based in Washington DC for several years. Before he joined Swissport in 2003 he held managerial
and executive level functions at Fairchild-Dornier, SR Technics and Swissair.
Sheldon here’s a link to Swissport stock shots. Rather than have a problem uploading them to you after downloading them to me, can you use this link and choose appropriate pics. Let me know if you want me to add captions.
http://www.swissport.com/news-media-center/logos-images-library/photos/
