Poiu wrote:Spot on Inquirer, Aviapartner and Swissport are in a fierce competition, which pushes both of them in the red.
Thanks for the confirmation of what I already feared.
Poiu wrote:At first glance the airlines are the winners as they pay less handling costs, but ultimately it results in a lower service level offered to the passengers.
Indeed, and it's clear the short term profits are no longer outweighing the long term costs.
Poiu wrote:Handling companies have been sqeezed by airlines. Somebody will need to pay the bill.
And at present, that bill is passed on to the ground staff, if one starts to look carefully.
flightlover wrote:Do you mean we should just shut up and swallow every cost cutting measure they lay down on us? The bucket is filled to the brim. If not overflowing already.
A couple of weeks ago, there was an interview with the President of BAC, Mr. Mark De Scheemaeker in the wake of the then Aviapartners strike in which is basically said the same and showed understanding for the reasons of that strike, while you can hardly accuse the man of being left leaning or having much union sympathy, can you?
b720 wrote:If handling agents squeezed, they need to cut costs. There is no other way, or shut down. Cutting costs will ultimately affect employees. They will need to work longer for same pay, or they will have to be replaced with cheaper contracts.
The problem here may be that it's just not possible to operate profitably at the prices agreed to.
One shouldn't forget this kind of work is very labour intensive and labour costs are extremely high in Belgium, so even if the fees agreed to still look reasonable when compared to what is paid elsewhere, they may in fact be too low to cover the full costs of it all.
I wonder what cost cutting you think of in a sub-process in which you need to unload say 100 bags from a plane? It's basically all labour cost?
jan_olieslagers wrote:If only two companies are offering such services, and both are making a loss, I cannot help wondering how these companies are managed. I should think no board of shareholders will accept a management that negotiates unprofitable contracts..?
I think it tells you more about the cost of labour costs than it does about the way in which both companies are run. Without knowing all the ins and outs of either one, but it's not very likely to assume BOTH would be as badly run and completely unable to be turned around in BRU, especially not since they have worldwide experience in house on how to do it.
Can they be better managed? Most probably yes, there's always room for improvements and their communication skills towards their staff are demonstratively very poor, to start with.
Yet will it make the whole difference? Most likely not, and that's the main issue.
jan_olieslagers wrote:I should think no board of shareholders will accept a management that negotiates unprofitable contracts..?
The question is how much negotiating is really going on?
Or are they rather being dictated prices by their customers, based on international benchmarking and risks to swap if they don't match the demands? I can see how a management is pushed to signing up to unprofitable contracts in order to safeguard production volume, rather than risk losing a customer, in the hope that by doing so they will buy time and hurt the competitor more than themselves.
And then the all important question is: what to do about it?
Well, remember it's BAC which basically kick started -or at least aggravated- the problem by inviting Vueling in, to which ryanair reacted in panic by announcing they were going to come to BRU too (more and sooner), after which Brussels Airlines (and others), didn't remain idle either.
Market dynamics thus played their full role faster than both BAC or anybody could have dreamt it, which was truely fantastic news for BAC as they saw their passenger numbers explode over 2014 and 2015 as well as their profits too, but not everybody at the airport may have benefitted to the same extend from this commercial boom, if they did at all.
As such, it may be appropriate for BAC to re-consider their commercial strategy in order to decide if indeed they should be as happy with every additional passenger than they were at first.
From the latest comments through their CEO Mr. A. Feist, it sounds as if they have now understood that especially regional low cost passengers aren't such a wealth to have for them after all, in the long run. Understandable new insight indeed, given the financial stress the airlines bringing those in have brought to the vital subcontractors working on the airport and their repeat breakdowns which have devastated the reputation and reliability of the whole airport, also amongst other categories of passengers!
The idea of BAC to fill their unused capacity with additional and mainly low cost passengers was a good one on paper, but the side effects of it -i.e. the total destruction of the airport's reputation and reliability- is unwanted and massive long term collateral damage which may outweigh any short term benefits.
Short term, BAC should consider mechanisms to let those who do not directly benefit from the much increased volumes and much stronger competition (like for instance the handlers), have their part of the newly generated profits too, so they do not go under.
An airport without ground handling companies is not an airport, so the 2 should at the very least be cross feeding each other to some extend.
It's a bit unreal to have one company (BAC) pocketing millions of money thanks to new passengers flowing through their premises, whereas another company (actually you could see them as a department of the airport, which they are too at some airports) living in the same economic habitat is suffering from that, especially since both companies need each other for their long term economic survival.
The idea has been mentioned to increase the airport fees by half a euro or a euro for the handlers: I think such isn't needed. What may be appropriate however is for BAC to come up with a financial mechanism to deviate a similar amount of the currents airports fees to its handling companies in order to help them to be profitable and thus survive and to increase its service and reliability again.
