The first two years of the 2020s have been characterized by a fight for survival for many ground handlers, enduring substantial numbers of layoffs or furloughed staff. But the ever-shifting industry consensus suggests flight volumes likely recover at some point around mid-decade.
Figure 1: The impact of COVID-19 to date
Note: (a) Capex figures based on the available proxy of investments made by Menzies Aviation from 2004-2019 based on Annual Reports
Source ICAD, IATA, Menzies Aviation Annual Reports 2004-2019
Figure 2: Never let a good crisis go to waste
Notes: (a) Based on 2020 Annual Reports (b) Includes employees in UK, Ireland, Belgium and Switzerland.
Source: KPMG analysis, April 2021.
The fundamentals underpinning growth in global travel will survive the COVID age, and we expect volumes to bounce back to and exceed pre-pandemic levels. Smart ground handlers can avoid repeating the mistakes of the post-2008 financial crash retrenchment, when many missed an opportunity to make necessary upgrades, reengineer processes and train core staff in the less stressful environment offered by temporarily depressed volumes. They will need to assess where the equivalent opportunities lie today.
Even going into 2019, the current model wasn't sustainable for outsourced ground handling. Whether it's for governance, safety, environmental or financial sustainability - the business model for ground handlers has to evolve. And it will need the enlightened self-interest of airports and airlines to succeed. For example, the next few years will see pressure to electrify ground support equipment. But it needs the business case to stack up - including recognition in airline contracts and adjusted airport electricity charges.