A host of major handling deals were unveiled in 2001, making it the busiest on record for a rapidly consolidating industry. KLM finalised the sale of its global cargo handling company Cargo Service Centre to Germany's D.Logistics while French firm Vinci paid US investment group Castle Harlan $295 million for Worldwide Flight Services, the former handling arm of American Airlines. Large airline outsource deals were struck with the acquisition by the UK's Go-Ahead of the handling activities of bmi british midland, and Penauille's purchase of Lufthansa's GlobeGround.

For the time being, the GlobeGround brand, and that of Servisair, another major Penauille handling operation, will remain active in the handling market. The original idea was to merge identities when Penauille stepped in, but this has been put off to concentrate on customer issues following the US attacks, says Peter Bluth, chief executive of both handlers.

The world leader in third-party handling, the combined GlobeGround and Servisair has sales of nearly $1 billion and operations at 200 airports. The brand merger has been put off, but they co-ordinate activities in as many other areas as possible.

In line with carrier cutbacks, handlers worldwide have seen volumes fall 20-30% in some markets. As they have with other suppliers, airlines have been seeking price reductions. But for many handlers they have reached the end of the road in cutting prices in a highly competitive industry.

"One of our airline customers asked for 15% off," says Peter O'Boyle, managing director of the UK's GHI and part of the Aviance handler alliance that has shed 700 jobs since September. "I said you've had it over the past few years, any more and you'll drive me out of business. People want money off but they say do not deteriorate the customer delivery - it is not possible. We are working under a very simple principle - if a contract does not make money we will walk away from it, and we have done so."

Aviapartner, Europe's number two handler, is happy its exposure has been limited because it has not expanded outside the continent, says president Alex Verougstraete. Like many in the industry, he saw changes that were far-reaching and structural for the handling business in 2001. It could be airline out-sourcing that drives the industry for the next couple of years.

Source: Airline Business