Low cost carriers – the market’s natural LEAN for ground handlers?

In April, 2014 LCCs increased their activity to over 136 200 flights per week thus overrunning the performance of all three major airline alliances, reports Innovata. The latest development proves that while airlines worldwide are transferring to the summer schedules, low cost carriers are strengthening their presence in various regions even further. In the meantime, the situation has a direct impact on the ground handling segment due to an increasing pressure on the providers to fit within the conventional 30-40 minutes turnaround time thus driving for a further optimization of the relevant processes.

In comparison to the same period of time in 2013, in the first quarter of 2014 low cost carries increased the intensity of their schedule by another 8%, or by over 10 000 flights per week. According to Innovata, as a result of the latest development, now LCCs correspond to almost 22% of the global airline capacity thus overrunning Oneworld (15.3%), SkyTeam Alliance (17.2%) and Star Alliance (20.3%).

“Today few will be surprised by the success of the low fare flight industry. LCCs are developing both geography and operations wise generating sometimes truly impressive traffic flows, particularly for smaller airports. However, their expansion directly affects the ground handling industry, which has witnessed a significant transformation over the last 10 years,” shares Darius Aleknavicius, the CEO of Baltic Ground Services.

When it comes to servicing legacy and low cost carriers, almost every step differs. Unlike traditional carriers, LCCs do not offer free in-flight catering and thus it takes less time to load the supplies. Since their passengers acquire less meals and beverages on board (and spend less time on flight), LCCs’ aircraft do not require substantial cleaning after each flight. Moreover, while mostly operating on short-haul routes, many LCCs prefer their aircraft to be fuelled up to full capacity in the morning prior to the first flight thus liberating themselves from a lengthy fuelling process after each flight.

According to A. Aleknavicius, while servicing, for example, a wide-body aircraft, the fuelling alone might take over 20 minutes. The process is being conducted usually between passengers’ disembarking and boarding times thus prolonging the overall ground time of an aircraft for additional time.

Additionally, since many LCC passengers travel with the hand luggage only (due to short distance of their travel and the LCC baggage policy), baggage loading/unloading also takes substantially less time. As a result, due to much simplified set of the required services, ground handling companies are able to fit within the conventional 40 minutes of aircraft turnaround time or, in certain cases, they even make it into 25-30 minutes.

“Since legacy carriers require more services, their aircraft are usually being serviced within 50-60 minutes or even more, especially if we are talking about such aircraft as Boeing 747. In the meantime, while servicing a low coster’s Boeing 737 or A320, many works are being carried out along the passengers’ disembarking and boarding process, and sometimes certain procedures like a minor cabin cleaning process are being carried out by the cabin crew itself. However, in order to fit within the time limits, the process of performing all of the services must be strictly coordinated. Otherwise, any additional aircraft downtime may lead to sanctions from the carrier,” comments D. Aleknavicius.

LCCs maintain a very tight schedule, with some of them keeping their fleets for 11-12 hours or more in the sky. Moreover, one aircraft is usually being operated on several destinations during the day thus any correlation of an aircraft’s real-time take-off from the scheduled one directly triggers a chain of delays as concerns the carrier’s other flights. In order to motivate ground handling providers to stay within the acceptable service time limits, LCCs apply penalties for every flight delayed due to GH’s actions. They also supervise the overall punctuality of their flights. Should poor figures (lower than 90-95%) be related to ground handling services, the provider is sure to see a 7-10% decrease in the next payment from the LCC.

However, despite the very strict and specific needs, LCCs are still highly desirable customers for ground handlers, particularly in secondary airports. While servicing LCCs requires fewer people (due to a homogeneous fleet structure), they also generate significant traffic flows, both passenger and flight density wise. In addition, they drive GH providers towards cost optimization while adapting the pricing policy to the carriers’ business model.

“LCCs’ evolvement has made a noticeable impact on the development of the ground handling industry. Some may claim that they have pushed the handling prices down. But their main contribution is our motivation to further optimize our processes and become more LEAN. For instance, according to the latest results for January/February 2014, our team is proud to have maintained the highest on-time performance within the entire Wizz Air’s ground handling network. Moreover, it is with the support of our customers that we were able to achieve the overall OTP rate over 99% in 2013!” – shares the CEO of Baltic Ground Services. “In addition, LCCs are also constantly pushing us to seek new solutions and develop our own IT-products such as portable departure control systems. And should low cost airlines continue their expansion, their business philosophy is sure to see a larger reflection in the global ground handling industry.”