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Airlines

Tools of the trade

The use of pre-owned ground support equipment depends on the operational and financial outlook of the operator. Keith Mwanalushi examines the benefits of the GSE rental market and which types make the best candidates for second-hand use
 

Airport operators and ground handlers are continuously evaluating cost saving measures when it comes to the deployment of their ground support equipment (GSE). The balance sheet is constantly under review, as such the decision of whether to lease, buy or even refurbish equipment is a critical one.

 

A number of ground handling operators are seeing their profit margin squeezed, either by the airlines or the airports; this has seen some companies run their operations with pre-owned GSE in order to achieve cost efficiencies.

 

Growing competition at airports allows for direct comparison, proving that ground handling organisations using lower-priced GSE can deliver the same performance as those who predominately, or even exclusively, have newly branded GSE in operation. One of the main reasons for companies sticking to well-known brands surrounds the common misconception that lower-priced, used GSE is poorer quality.

 

Bruno Motté, manager, remarketing department at GSE specialist TCR, has observed increased competition in the ground handling scene over the last few years, with increasing pressure on prices and services in both Europe and other mature markets. “Ground handlers are getting squeezed between requests for extra service flexibility on the one hand, and on the other, requests for reduced prices.”

 

In addition, Motté says contract durations are also experiencing a down pull, which increasingly puts the traditional ground handling business under a lot of pressure. “In this context, ground handlers have no other option than to look for alternative models that enable them to refocus on the ‘service’ part of their core business, limiting capital investment in GSE to reduce costs and subsequently improve price offers or service, and possibly their cash-flow position too,” Motté comments.

 

In the mid-90s, there were very few rental companies who were in a position to deal with the complexity of renting GSE. Consequently, with no-one to promote the concept, GSE rental was still terra incognita to a great extent. There was, quite understandably, some cautiousness, from both the handlers and the airlines, when it came to outsourcing such a strategic part of their complex handling process to small players who were just starting out.

 

Today, Motté feels that rental or operational leasing of GSE has earned its recognition. “Used GSE is definitely a valuable option that is being considered by ground handlers as a cost-effective, reliable and fast solution to complete, replace, back-up, or even build a new fleet for starting operations.”

 

He specifically turns to emerging and growing markets from a traffic perspective: “Be it Africa, Southeast Asia, or even Eastern Europe, we have plenty of mid-sized and small players, as well as newcomers looking to capture or increase their market share rapidly and at a lower cost. Used GSE appears as the perfect solution to grow quickly at a limited cost from an equipment point of view,” says Motté.

 

The trend has also spread to mature markets. Most of the key handlers and airlines now consider GSE rental as an efficient solution to source their equipment on a large scale and to secure their handling operations. In this regard, industry estimates show that in Europe about 20% of the GSEs are now rented through operational leasing agreements (compared to 1% at the end of the 90s).

 

North America and Asia, which have traditionally preferred to buy and own GSEs, are now becoming more interested in the used GSE and renting options.

 

Renting has become increasingly popular, particularly for seasonal equipment or as a replacement while other equipment is undergoing maintenance. This approach has also become a more cost-effective solution in times of economic uncertainties.

 

As more GSE manufacturers and dealers are investing in GSE repair and reconditioning for the second-hand market, there are a number of factors that have to be considered before a GSE is put through for second-hand use. For instance, a pre-owned GSE must be fully functional, only requiring the usual ongoing regular maintenance – just like any new unit does.

 

“Firstly, any item of GSE can be reconditioned if the right facilities and skills are available, and if it makes financial sense to do so,” indicates Ian French, managing director at UK-based Falcon Airside Limited. He continues: “However, if you weigh in the original price of ownership, reconditioning costs, technical complexity, and strategic importance, then deck loaders, heavy aircraft tow tractors, GPUs and passenger steps are prime and viable candidates above all other GSE.”

 

Motté points to cost, reliability and fast delivery as the main drivers that will make a handler consider a second-hand piece of GSE. “In most cases, the cost of a reconditioned unit is between 25 and 40% of the cost of a new one, and can be ready for shipment within a few weeks depending on the type of equipment.” >>


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