Airside talks to one of the world’s big gest handlers about how it acquires new and replacement GSE. Cost, whether of outright purchase or long-term lease, is crucial, but there are many other factors to be taken into account
Menzies Aviation provides ramp, passenger and cargo services at 132 stations around the world. It services 71 million passengers and 1.7 million tonnes of cargo a year and, to do that, it needs a lot of equipment! In fact, Menzies boasts no less than 7,200 GSE units, incorporating both purchased and leased equipment, reveals network manager technical standards and compliance Paul Drever.
The decision whether to buy or to lease depends quite considerably on the type of operation already in place at a particular Menzies station, he explains. “If we have an operation where all of the GSE is leased, we would in most cases continue with the same trend.”
But most of the GSE that Menzies uses is owned by the handler. When purchasing equipment, various factors such as the airport’s location, the type of GSE required for the location (which itself is a function of many different variables, including the type of aircraft being serviced), the after-sales service required and the available maintenance support for the product all come into play as issues for consideration. Moreover, in many cases, the decision as to what will be acquired will depend largely on the types of equipment the handler already employs at a given airport.
GSE pooling is, in limited cases, a third potential option. Menzies pools ground power units at Amsterdam Schiphol Airport, for example. The GPUs are accessed by means of a swipe card system so that the user is registered and recorded. This helps to address, at least in part, some of the perennial bugbears associated with GSE pooling, including who is responsible for cost of repair in the case of damage to equipment and who is using the GSE at any given point in time. Other challenges of pooling include who pays the cost of insurance and whether the pooled GSE will fully meet the specifications of all the handlers using it.
Menzies has set GSE depreciation periods based on the types and makes of the equipment, defined periods that factor in such variables as climatic conditions at different stations and the quality of the equipment. However, it doesn’t necessarily replace the GSE when the end of the depreciation period has been reached. The unit will be assessed and, if it remains in a good, serviceable condition it will continue in operation.
Otherwise, GSE may be acquired to service wholly new client carriers at a given facility, or where an existing carrier customer has stepped up its operations through an airport at which Menzies handles its aircraft on the ramp, its passengers and/or its cargo.
As for actually taking the decision to buy, station managers have a set budget to purchase GSE and can look to make their own acquisitions, Drever informs. In such a case, the station or financial manager will present a business case to the board. If approval is given, the purchasing process can then take place. Menzies has preferred suppliers of its equipment, and station managers cannot purchase any make of GSE without head office approval for the GSE manufacturer.
The handler has ‘preferred supplier’ agreements with certain GSE providers and it is unusual for any station to deviate from the list of preferred suppliers, which is available to the station managers on the company’s Intranet site. The handler’s specifications are already determined, so if an order is placed, it will be to the Menzies standard relative to that location.
“There are quite a number of degrees of quality when it comes to GSE, and Menzies avoids the lesser qualities,” Drever observes. “An open tender process could be considered, but it would depend who the players were because financing GSE acquisition is not just a question of initial purchase cost – it is in most cases a long-term investment for which cost of ownership is the guideline for financial investment.”
Each of the handler’s preferred suppliers has been ‘vetted’ before an invitation to become a Menzies preferred supplier is offered, but factors such as change of ownership, financial problems or quality issues within its preferred group of suppliers could also affect the choice of manufacturer that the handler turns to in order to meet its procurement needs.
Environmentally harmful GSE emissions and the wider impact of handling operations on the environment are concerns for everybody in the aviation business and Menzies is by no means unique in feeling the effect of pressures in this regard. It is another influence on its procurement decision-making. “The days of ordering a piece of GSE without first taking into consideration associated airport environmental requirements are over,” Drever insists.
However, he warns: “As each emission level for engines become more stringent, so do the problems for GSE. Catalysers can become clogged and we must bear in mind that GSE are not road machines; the engine levels that many airports now ask for are of the highest specifications, which in GSE may not perform correctly because of the units’ low-speed use.”
The GSE that Menzies chooses to acquire, and the specifications of that equipment, are also changing as the nature of the aircraft that Menzies handles evolves. Thus, for example, with the coming of composite aircraft such as the B787 ‘Dreamliner’ and A350 XWB models, it has become very important to avoid aircraft damage at all costs. “You cannot ‘patch up’ a composite part and the damage is not always visible, so it is of the utmost importance that all aircraft hits are reported,” Drever notes.
As a result, Menzies is looking at proximity systems on loaders and stairs to warn the operator of distances on approach, and other options such as automatic stops a short distance from the aircraft until such time as the vehicle’s drive system is activated.
Making the right decision
Whether to lease or to purchase GSE, and of what type, should certainly not exclusively come down to financial considerations, Drever considers. “This was the case in the past but many GSE users have found the balance of finance, quality, after-sales and user satisfaction all play a part in the purchasing and cost of ownership.”
Whatever the decision: “For many GSE users it is probably their second-biggest investment in the business after their staff, so purchasing wisely is key,” Drever concludes.