Favourable government schemes such as UDAN and 100 per cent FDI in ground handling has encouraged and enabled foreign investors to enter the Indian market. Besides, as e-commerce industry in India grows, transportation of cargo, especially by air, will swell in the future. These factors together will lead to growth in demand for ground handling services. In this feature, we talk about the present scenario of India’s ground handling industry, understand its past and potential future.
Ritika Arora Bhola
Efficient loading, unloading and handling of cargo at the airports and cargo terminals ensuring smooth supply chain operations and further resulting in shorter turnaround time at the airports, is definitely what the air cargo sector strives for. Ground handling – a core component of the air cargo sector, is considered critical for the success of air cargo operations.
With the Indian air cargo industry experiencing a strong growth over the past few years, professional and specialised ground handling services have become significant and has witnessed positive outlook by the airlines and airports across India. Even the Ministry of Civil Aviation indicating the importance of ground handling in the air cargo sector, revised the ground handling policy last year mandating that airports should have at least three certified agencies providing proficient ground handling services. According to the reports, ground handling in India is expected to grow at a positive double digit CAGR during FY’2019 – FY’2025. It predicts that the future catalysts will be the entry of new domestic and foreign stakeholders in the airport ground handling services market and airlines increasing their fleet sizes and completion of construction of new airports.
Talking about the ground handling business in India which is on a good growth path although fragmented with lesser number of players, Yogendra Tomer, President, Aroon Aviation Services says, “Key factors determining the growth of ground handling in India will be the entry of new domestic and foreign stakeholders in the airport ground handling services market, airlines increasing their fleet sizes and upgrading of Greenfield and construction of Brownfield airports in the country. The Indian ground handling services market is fragmented with limited number of stakeholders. Because of that, in my view, the government should proactively allow entry of more stake holders in ground handling sector depending upon the passengers and cargo handling capacity at the airport and number of flights operated via that particular airport, to create a competitive scenario in the market.”
According to Tomer, revenue from passenger and ramp handling services has accounted for a higher share in the market due to the large number of and high frequency of passenger flights in India.
Murali Ramachandran, CEO- India, Celebi Aviation, stresses on the other crucial yet neglected side of the sector. Ramachandran expalins, “Ground handling is a capital-intensive business and requires a highly-trained and skilled-workforce due to the sensitive nature of this business. Ground handlers bring in a one-stop service proposition to the airlines and implements best practices from service and safety perspective which is very critical to reduce cost exposures in this sector. This also allows airlines to focus on their core business of flying. With the new policy in place at most gateway airports, the use of contract manpower has substantially reduced. Unfortunately, due to various reasons, the policy is yet to be implemented at many airports. At such airports, the domestic airlines continue to use outsourced manpower companies. Apart from being cost averse, this is also a model of concern from the safety, security and service quality perspective.”
Challenges in India’s ground handling sector
Scattered and inefficient ground handling operations at the airports are the reason why airports are unable to better manage the utility of the premium spaces within the airport premises.
Ramachandran stresses that a major challenge faced by the industry is the lack of interest of the domestic airlines in outsourcing ground handling services to certified service providers. This is resulting in the shortage of trained staff on the ground and also inhibits the few companies serving the Indian market to present a strong business case in their favour. Additionally, Ramachandran says that the sudden rise in air traffic coupled with increasing demands and expectations of passengers from their travel experience is posing serious challenges like apron congestion, pressure to provide automated terminals, hassle-free security check-ins, along with efficient passenger, cargo and luggage management transportation systems. These challenges are making the ground handlers continuously re-structure their business models and adapt to the requirements of the changing market.
Further, Ramachandran adds, “The ground handling policy in India prohibits airlines from using outsourced manpower taken from non-bonafied and non-certified contractors. The airlines have been given a choice to either self-handle operations through its employees who are assigned such roles or engage with certified firms like us.” Some of the domestic airlines in India choose to self-handle their flights. Domestic airlines need to realise the cost benefits and other value propositions/benefits of outsourcing ground handling services to certified players. Although, in the present scenario, some major players do outsource.
While ground handling companies are quite hopeful that the domestic airlines in India will gradually understand the need to partner with certified ground handling players, Ramachandran feels the implementation of a dedicated policy will make it mandatory for the airlines to either partner with ground handling companies or expose themselves to high levels of investment and large workforce requirements.
Ground handling business in India- 2019 – 2025
Based on market reports, the Ground Support Equipment (GSE) business is expected to grow from USD 7.5 billion in 2019 to USD 9.7 billion by 2025, at a CAGR of 4.45 per cent from 2019 to 2025. Some of the factors that are expected to fuel the growth of the ground support equipment market is rising demand for electric ground support equipment, increasing warehouse operations at airports, and ongoing expansions of airports to cater to the rising global air passenger traffic. Increasing demands of warehousing at airports in the form of Air Cargo Logistics Centers (ACLC) or as a Cargo City are also expected to fuel growth of the market. Other growth factors of the ground handling business are due to increasing number of tourists in India and consolidation of air cargo capacity at airports. All of these are supported by technological improvements in GSE.
The GSE market is expected to be led by the mobile segment from 2019 to 2025. Mobile GSE can be moved around airports without any restriction and can be used to service aircraft parked at remote bays. The rise in capacity expansions of existing airports and adoption of automation technology has led to increased aircrafts and cargo movements which eventually have contributed to increased demand for mobile GSE. GSE operatorsprefer to operate cost-effective autonomous equipment such as semi-autonomous pushbacks, autonomous passenger boarding bridges, autonomous aircraft taxiing, and driverless bus and baggage tractors in the aviation sector. Similarly, Taxibots are being used worldwide to save precious fuel. It is a robot-used aircraft tractor for taxiing an aircraft from a parking bay to runway and vice versa. With Taxibot, it is possible to tow an aircraft from the parking bay to the runway with its engines switched off and passengers on board. 40 TaxiBots are slated to be operational at Indian airports in 4 years. Mumbai airport is next in line after New Delhi airport with Bengaluru airport to follow. Introduced by KSU Aviation, TaxiBots were deployed at Delhi airport in October 2018.
2019 will witness Indian aviation scale new peaks with the government aiming to take UDAN international and planning to construct over 100 new airports. In a rapidly evolving aviation landscape, the importance of efficient and professional ground handling shall only grow as citizens will demand better managed airports that offer a safe and secure flying experience. Therefore, it is imperative upon the centre to create an enabling ecosystem that nurtures the evolution of a professional and responsible ground handling industry in India.
Analysts at Ken Research in their latest publication ‘India Ground Handling Services Market Outlook to 2026’ believe that new ground handling companies should target airports in tier II cities of India and increase their focus on security and customer centricity in service provision to gain larger ground in the market.
Besides, in a laudable move towards ensuring better and safer airports in the country, Airports Authority of India (AAI) in 2018 invited bids for issuing licenses to agencies to provide ground handling services at 93 airports under its control. As per the bidding process, the service provider that quotes the highest royalty that it can pay AAI in lieu of carrying out ground handling services at an airport will be the awarded the Ground Handling (GH) license.