Aviation sector needs to give up the blame game

The next flight I book might just be on Icelandair. The airline last week sent two baggage handlers on every flight to Amsterdam to help out with a severe shortage of ground staff at Schiphol airport. It is considering extending the practice to other routes.

In Europe’s summer of travel chaos, when thousands of flights have been cancelled for lack of baggage handlers, cleaners and security staff, kudos to Icelandair for being imaginative about how to smooth customers’ journeys.

Right now, many other airlines, airports and ground services companies seem more interested in blaming each other for the breakdown in Europe’s aviation network than in coming up with solutions.

Last week, Heathrow blamed airlines for overambitious flight schedules as it limited passengers to 100,000 a day. The airport said it had warned carriers for months about insufficient airline ground handling staff. The Emirates airline responded by accusing Heathrow of incompetence. And the Airport Services Association, which represents ground handlers and other service providers, is blaming a competitive environment that is neither “socially nor operationally sustainable”.

The blame game is a convenient way to deflect the criticism coming from frustrated passengers. But it will not resolve deeper problems in the aviation supply chain. The chaotic recovery from the pandemic has revealed the fragility of the ground services sector, for too long regarded as little more than a commodity in the aviation ecosystem.

When Europe’s ground services market was liberalised in 1996, it rightly broke open a sector that had been run by national monopolies and helped to lower airline costs and, in turn, air fares.

But there is an argument that, as new entrants have raced for market share, the focus on cost-cutting has been misguided. A joint study by the airport and ground services associations and trade unions as far back as 2018 found that, while ground handling costs had increased significantly, service providers were still under pressure to cut prices and shorten handling times. The financial pressure had led to “a deterioration of the overall economic situation of ground handling service providers”, and restricted their ability to invest, it concluded.

A recent study by KPMG suggests that airlines have been “penny-wise, pound-foolish”.

And with labour accounting for 70 per cent of ground handling costs, wages and security of employment had taken a hit from the “cost-cutting spiral”, one large ground services company told me. Staff tend to be on contract, allowing providers to cut workforces quickly. They are often paid poorly for jobs that require working in all weathers at all hours and enormous physical stamina. In a post-pandemic world of wider labour shortages, many ground staff laid off during the pandemic have found better paid, less gruelling work elsewhere.

In UK airports, vacancies for cleaners are up more than 700 per cent in a year, 200 per cent for security staff and 138 per cent for baggage handlers, according to job search engine Adzuna.

Olivier Jankovec, director-general of the airports trade association ACI Europe, says that pay and conditions may well have to improve to attract services workers. But in the longer term, the answer to building resilience is investment in digitalisation and automation. To do that, contracts between airlines and service providers have to deliver healthy returns.

Andrew Lobbenberg, aviation analyst at HSBC, says “the market needs to understand we need to pay more”. Contracts must focus on performance and on sharing both the pain and gain of improving efficiency.

The result will be higher costs to airlines, which are facing enormous strains from losses incurred in the pandemic, higher fuel charges and the transition to lower-carbon flying.

For the rest of us, that will only add to the upward pressure on air fares. Between 1998 and 2019, aviation was able to reduce the average return air fare by 60 per cent, thanks to operations and technological improvements, according to Iata, the aviation trade body. But the system has been stretched to its limits.

With a global recession looming, aviation’s stakeholders urgently need to bury the blame. The sector needs to learn the lesson of the pandemic and work together to build resilience. “During the pandemic we saw really constructive collaboration [in the industry] on securing more predictable rules,” said Lobbenberg. “That unified force has really broken down.”

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