Why the resistance at a time when airlines are desperate to cut costs? Beerli says Swissport can offer 15-20% savings, and Rutkowski says costs at WFS are probably 25% below those of legacy carriers. Yet still airlines are apparently not tempted to outsource wholesale.One problem, handlers agree, is union and staff issues. "Every week customers say to me that if they could get rid of the 50 staff employed at their hub, they would outsource," says Alex Verougstraete, president and chief executive of European handler Aviapartner. "But it is not easy. They have been employing some of these staff for 25 years and it would cost a lot to get rid of them." Beerli thinks there is a control issue too. "They fear losing control, but in fact we can define the standards they need. We can clearly define targets, service levels, incentive programmes, bonuses - these are the tools in which we specialise," he says.Another reason may be that airlines are still focused heavily on price over network synergies - something that has probably been reinforced by the tough financial times of the past three years. One fact often stated by the handlers, for example, is that airlines are looking to use fewer partners, to cut down on administration and simplify negotiations. Willis agrees, but says airlines still have an overriding wish to get the best price at each airport. "They are not yet prepared to pay a higher price at one location just because you are a global handler," he says. "So there is a trend to have fewer suppliers, but airlines still want the best deal."Rutkowski says that in the USA price is even more important than that. "We hear of foreign carriers wanting to use fewer suppliers, but in the USA it is just the opposite," he says. "They want the best price and are not afraid to deal with multiple ground-handling contracts to get it. In the current financial environment they are after every penny they can save."
Talk of global synergies is probably premature. Aviapartner has focused on building density in European countries such as Belgium, France, Germany and Italy, rather than "planting the flag", as Verougstraete puts it, at airports around the world. The reason, he says, is that airport operations need to be close to each other to benefit from such synergies as joint marketing and training. "The more airports you have, the more economies of scale, provided they are within a reasonable distance of each other. It would help us to have another station in Europe, but not in South America," he says.As evidence of the success of this strategy, Verougstraete points to a number of deals - as many as 30, he says - where Aviapartner handles a carrier in more than one airport in a particular country. For example, it recently signed a deal with Air France to handle it in Bologna, Turin and Venice. "Customer demands are differont on different continents," Verougstraete says. "Handling in Europe is not the same as in the USA - airlines want different services and the handler has different responsibilities. So it makes more sense to look for deals on a regional basis."At Swissport, Beerlagrees, although he sees this kind of deal as the first step to larger-scale outsourcing. "If a carrier gives us a regional contract and it works out, then they will be more confident to outsource a larger piece of the business," he says. "We clearly sense an increased openness to such ideas. Airlines are still quite opportunistic about ground-handling purchasing, but there is more strategic thinking. They will start by outsourcing a bit, and then a bit more. It will take time, but sooner or later we will get there."Verougstraete notes that even in their hubs, carriers such as British Airways and Lufthansa have begun outsourcing some handling services - the operation of lounges and wheelchairs, for example. "They are likely to stick for longer to the parts of the service that involve direct contact with customers, but other elements are being subcontracted," he says.A further sign that outsourcing is slowly extending its grip is that almost no airline is expanding its in-house handling operations. Verougstraete says he has "no knowledge in the last five years" of such a thing. Willis points to the example of Air France"In Paris, they have subcontracted out their regional routes and moved their handling staff to long haul. So they keep the staff they have, but they are not hiring more people."Low-cost airlines, which have no legacies of staff, are also overwhelmingly outsourcing, making them prime customers for the big handling companies. "We are happy - they are adding to the general market growth," says Verougstraete.