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Reconsidering the Role and Significance of Ground Handling to Better Address the Challenges of a Fast Evolving Air Transport Environment

General Observations on Changes in the Airport Ecosystem

The publication of the EU legislation governing the airport ecosystem, namely a Directive on Airport Charges (Dir. 2009/12/EC), a Regulation on Slots (Reg. 95/93) and a Directive on ground handling (Dir. 96/67/EC) – the trilogy forming the so-called “EU airport regulatory acquis” – is getting of age, and the industry has undergone very significant changes since their respective publication. Air traffic has surged from 1.4 billion passengers globally in 1996 to 1.2 billion in Europe alone last year. These changes have significantly impacted on the efficiency of a system which has shown worrying cracks in the immediate aftermath of the global pandemic, when major disruptions were felt at various airports throughout Europe during the summer of 2022, underlining the need for readjustment of the working relationships amongst airlines, airports and ground handlers.

I will not dwell on the immediate causes of these disruptions here, as it is clear that they were the results of a unique combination of factors and should hence not occur again any time soon, at least with that intensity. That said, they should not be overlooked either as they were, like any crisis, the symptom not only of the pandemic, but also of structural weaknesses which have crept in over time as they are not addressed by the antiquated regulatory acquis. We will try to identify the most important of them and offer solutions from the perspective of the ground handling providers.

Ecosystems Approach: Efficient Use and Pricing of Airport Capacity

The efficient use and pricing of airport capacity and ground handling services must align with operational realities to enhance connectivity, foster innovation, and optimize resource allocation. There are notable discrepancies in the current system, such as airports with over 50 million passengers served by only two ground handlers versus smaller airports with unlimited market access. This inconsistency creates an uneven playing field and may lead to suboptimal outcomes like cost-cutting and reduced service quality.

Markets dominated by a sigle carrier (with over 40% traffic share) limit the potential for other ground handlers, leading to cost-cutting measures and compromised service standards. Airports dominated by low-cost carriers (LCCs) exhibit different dynamics, requiring higher economies of scale for ground handlers due to price-sensitive passengers and frequent self-handling by LCCs. A thorough market analysis should precede competition enforcement, especially for markets around the 2 million passenger mark, while restrictions on ground handlers in larger markets should be minimized and justified transparently.

Specific Needs for Ground Handling

To ensure adequate competition and a level playing field, Directive 96/67/EC must be revisited. Although the Directive aims to promote fair competition, its implementation often falls short of market realities. Articles 6 and 7 allow for limiting the number of suppliers for certain services, which could be extended to passenger handling under specific conditions to enhance service quality and sustainability by allowing economies of scope that are otherwise difficult to realize.

Licensing durations should be adjusted based on market competitiveness, ranging from five years in less competitive markets to ten years in highly competitive ones, to balance investment recoupment and market dynamics. Transparent oversight mechanisms are essential for fair and efficient ground handling contract awards. Independent audits and yearly publication of accounts should be mandatory for airports providing handling services to ensure accountability and prevent conflicts of interest.

Investment in Infrastructure and Workforce Development

Investment in infrastructure, technology, and workforce development is vital to meet current and future demands while maintaining high service standards. The pressure to reduce costs has adversely affected salaries and employment attractiveness in ground handling, leading to unsustainably high turnover rates (up to 80% in some parts of Europe and North America) and associated operational challenges.

Quality standards should be harmonized at the European level, focusing on safety, financial stability, and environmental impact to avoid conflicting requirements across airports and ensure the provision of services that airlines require.

Conclusion

The legal and operational landscape in Europe has considerably changed since the 1990s. Independent ground handling activities are now dominant in most of the EU (they represented less than 35% of total turnarounds back in 1996). While competition is generally genuine across Europe at airports with more than 2 million passengers annually, it does not apply uniformly and has, in some cases, led to a race to the bottom. This may be due to a lack of minimum operating standards, which will be partly addressed with the new EASA Regulation in 2025 (expected application is only by 2028). 

The classical triangular relationship between airports – the “landlords” – airlines, as customers, and ground handlers as providers has proven to be quite resilient in the past and, with local tweaks and arrangements here and there, continues to be the dominant model today. But new models of cooperation should be envisaged, especially when it comes to decision-making. If each party of the triangle considers its own sphere of competence – typically the airlines and their flight schedules, the airports and their infrastructure development, and the ground handlers and their staff and equipment – outside of any form of scrutiny from the other two, then we won’t be able to resolve the limits of the current system and it is to be feared that other disruptions will soon occur again as air traffic grows inexorably. A new regulatory framework, if properly crafted, can provide a welcome basis on which to hold new working relationships amongst stakeholders.

Fabio Gamba

Director General

Airport Services Association (ASA