In the northernmost area of Western Europe, the Scandinavian region is home to a dynamic aircraft ground handling industry. As a result, it offers a wealth of opportunities to all the players in the supply chain, such as providers of bridges, IT systems, sorting facilities and more because there are many airport construction projects going on.
The Challenges of Growth
With strong growth a struggle that naturally comes for many airports, these entities seek to keep up with it, similar to many other regions.
“The large airports have master plans for the development of the airports, and the aircraft ground handling infrastructure is included. All larger airports are investing heavily (or have just invested) in increasing capacity and creating more side businesses around the airport,” says Andreas Vassilaros, business improvement director at Aviator. “The construction projects combined with the growth means more remote stands, more gate changes, and many times it drives the amount of ground support equipment (GSE) due to increased transportation time airside.
“The new constructions will improve the situation, but I think many times the constructions are too late and too small,” he continues. “We also see that there are some plans for improving sorting, but not really investing in further automation, which could be possible.”
Another issue that has changed very fast is the decreased number of checked-in luggage per passenger. Not only is the amount of hand luggage larger, but the size of those pieces is also increasing.
“At the gate, this means that you have to send hand luggage down to be loaded due to space in the cabin. For the infrastructure, this means that the airports have to build slides for the bags from the gate, since the ground handling staff are not allowed to walk with the bags in the stairs due to personnel safety,” Vassilaros says. “The increased number of hand luggage is also increasing the need for staff at the gate and it is affecting on-time performance (OTP) due to finding space in the cabin for all luggage.
“In general, we would like to see further collaboration between the stakeholders at the airport (airport, airline, ground handler, security etc.) to create the best possible airports and optimize processes,” he adds. “Infrastructure, information technology (IT) and processes are even more interlinked in the increasing digitized world.”
A Varied Competitive Picture
Despite the common growth trend, the aircraft ground handling infrastructure has its own peculiarities in each of the Scandinavian countries.
Historically ground handling was performed by the local airlines, mainly by Scandinavian Airlines System (SAS) as it was the biggest player in Scandinavia. Sterling Airways, Braathens and other minor airlines have also had their own ground handling services which included both airside as well as landside activities.
“But as the ground handling industry has been under transition from being a subdivision of airlines to becoming an industry of its own right, this has also had an influence on the Scandinavian market,” says Ivar Busk, an aviation consultant. “Several ground handling providers have tried to come into the Scandinavian market with various degrees of success. At the same time, there is also a different approach in the way the industry is managed in the different Scandinavian countries in relation to how the airports are organized, operated and owned.”
In Denmark, the biggest airport is Copenhagen Airport (CPH) which is primarily owned by private capital, but the Danish state has still a 35 percent share in the airport.
“Copenhagen Airport itself does not perform any ground handling at the aircraft sites, but facilitates various operational tasks, such as the provision of stairs, ground power, jet bridges, marshaling services etc.,” says Busk. “As SAS in the past had more than 50 percent of the traffic, it obviously had most of the ground handling. But they also performed, and still perform, third party handling. The ground handling is performed by SAS Ground Handling (SGH), a fully owned subsidiary of SAS. Several other ground handling companies have come into the market over time and today there are three main ground handling service providers in CPH – SGH, Aviator and Menzies.”
The other three biggest domestic airports in Denmark are Aalborg, Arhus and Billund.
“They have mostly their own handling companies as part of the airports’ structure. The owners are the local municipalities and some private investors,” says Busk.
When it comes to Sweden, the geography is quite different with a much larger extension than Denmark and about 40 domestic airports.
“The airports are managed mostly by Swedavia which is a Swedish state-owned company, they own and operates 10 airports including Stockholm Arlanda (ARN), Göteborg (GOT) and Malmö (MMX),” says Busk. “Other airports are operated by the Air Force and local municipalities. Swedavia has also a ground handling function which operates in competition with other purely ground handling companies and performs handling at many of the Swedish domestic line stations. In the biggest Swedish airports the other big players are SGH (in ARN, GOT and MMX) but also Aviator and Menzies (in ARN, GOT and MMX).”
“Swedavia has expanded in the ground handling market at the line stations, combining it with other duties at the airport, and in that way making it impossible for any commercial alternatives and creating a monopoly at many line stations,” Vassilaros says. “Looking forward I do not see new entrants at the moment.”
In Norway, there is yet another structure when it comes to airport operations and ground handling.
“Avinor is a wholly owned state limited company under the Norwegian Ministry of Transport and Communication and is responsible for 45 state owned airports. Twelve of the airports are operated in cooperation with the Norwegian Armed Forces. Avinor does not perform any ground handling,” says Busk. “The main airport is Oslo and it has only two operating ground handling companies, which are SGH and Menzies. Handling at the domestic line stations is now performed by two major ground handling companies, these are Aviator and Widerøe. Before 2016, SGH was also operating at the domestic line stations, but then Widerøe took over all the activities of SGH including all equipment, employees and buildings.”
“With regard to the market penetration of ground handling players, the change is really how SAS GH has outsourced or are on their way to outsource all non-hub business,” adds Vassilaros.
Equipment Arrangements
Before 2014, every ground handling company in Scandinavia had its own GSE setup, which created congested ramp areas and made it difficult to find enough parking space.
“In recent times, however the TCR group (a GSE rental and service company) has entered the market offering a unique and comprehensive range of GSE types and services which support the ground handling process in general. In Scandinavia, TCR have their main activities in Oslo and at the Norwegian line stations, in Copenhagen and Göteborg, Stockolm Arlanda and Malmø,” says Busk, noting SGH has begun shifting toward electric GSE in line with national/international policies.
“We have replacement plans for GSE that we follow, and we also have to invest due to growth. It is really about all types of GSE. Replacement is almost always new GSE to cater for the very strict environmental restrictions at the airports in Scandinavia. We always prefer electrical GSE if it can work well in our conditions,” says Vassilaros. “At times, we do refurbishment if that is feasible, since we have very competent GSE workshops at our larger stations. The GSE industry has started to develop more new technology features and it is very interesting to evaluate and test new features, such as guiding, GSE tracking etc.”
Busk believes that despite the opportunities offered by the ground handling industry in Scandinavia an important point to consider for suppliers wanting to enter the Scandinavian market is that nearly all employees are organized in various unions and this has always been a challenge for establishing new companies.
“Moreover, due to the number of ground handling companies, the competition is tough and therefore price and service quality are key for having success,” he says. “Another obstacle is that Scandinavia is a high cost area so it can be difficult to compete on price.”
