AviaPartner, Europe’s largest ground handler, has big ambitions to grow strongly and sustainably out of this crisis. Chief executive Richard Prince explains how in this exclusive interview with ARGS editor Mark Pilling.
The 25-person strong Aviapartner management team met face-to-face for the first time in 20 months in early October in Malaga. That itself is remarkable for a business that operates in six European countries and has 10,500 employees. The enforced separation was just one of the effects of the pandemic that firms across all industries and geographies have been coping with.
The meeting was hosted by its executive chairman and main shareholder Laurent Levaux and chief executive Richard Prince to reinforce a rebound strategy for this handling enterprise which had reached annual revenues of about€500 million prior to the pandemic.
Levaux gave the team clear guidance on where he sees this business going in terms of growth, market and product opportunities and developing a firm that puts customer service, quality, reliability and its people at the forefront of everything it does, said Prince, who himself is new to the CEO role, having been promoted to the position in December 2019.
“Our chairman spoke about how the pandemic affected all of us. And how proud he is of Aviapartner’s people over the course of the past two years,” said 46-year-old Prince, who joined Aviapartner as its managing director for Italy in 2016 having held senior roles at Etihad Airport Services and Swissport and prior to that a career in the oil and gas industry.
“Pride and Team Recognition” sits alongside “Customer Intimacy” as key building blocks right in the middle of Aviapartner’s “Rebound Pyramid”, which was presented to the management team in Malaga, and sets out the cornerstones of the company’s strategy. At the bottom are the foundational blocks of Productivity and Safety, Quality, and Security. At the top is emerging topics of Social and Environmental Contribution.
This management tool is more than a recovery plan, it is designed to express Aviapartner’s ambition of seizing the opportunities presented by the pandemic and restore the handler back to growth. This is a trajectory Aviapartner has been on for the past 12 years growing from operations in 20 to over 40 airports during that time.
Headquartered in Belgium, Aviapartner was bought by Levaux 12 years ago from private equity owners to become a family-owned business once again. By 2019 it had grown to be the largest handling company in Europe handling 100 million passengers, 800 thousand turnarounds with an on-time performance of 98% and an outstanding safety performance..
Part of Levaux’s message to his managers is that AviaPartner is firmly independent, able to make decisions quickly, seize opportunities and that there is a long-term plan. “Our chairman is very clear that he wants to grow the business and sees the opportunity we have in front of us,” said Prince.
Managing the pandemic
However, back in early 2020, thoughts of growth were dashed when the pandemic took hold. As the number one handler in Italy, Aviapartner realised its impact earlier than most as Italy was at the epicentre of the spread of the virus in Europe, explained Prince. “Being in Italy made us react very early. We rapidly brought in action plans to close the business down to protect the organisation and people,” he said.
“It’s fair to say the impact of Covid was different country by country and even airport by airport,” said Prince. In Belgium, the bankruptcy of Swissport in May 2020 saw Aviapartner stepping in to pick up its customers, such as Brussels Airlines. “Overnight we had to pick up all of Swissport’s customers. It was a challenge, but we were able to get it done,” he added.
The collapse of Swissport in Belgium gave Aviapartner a bigger chunk of the marketalthough traffic was back then negligible. While its Brussels operations made this transition, other markets were moribund. “From Belgium we go to the other extreme. The Netherlands was the most impacted of all our operations,” said Prince. In 2020, its activity in Amsterdam were just 30% of its 2019 levels. “Effectively the business closed down,” he said.
Aviapartner took the right measures to manage spending and reduce its fixed costs. This involved talking to airports and suppliers to make sensible arrangements about managing the pandemic impact and coming out stronger together, using government furlough schemes across the countries it operates in, taking advantage of government grants where available and collecting monies owed in a diligent fashion, explained Prince.
On the customer side, Prince and Aviapartner use the phrase “customer intimacy”, where the company seeks to ensure it is “easy to talk to the decision-makers”. “We always remind ourselves that we are only here because of our airlines customers,” he said. In such difficult times, “Listening to our customers and understanding what they need from us is critical. ” he said.
Asked how he would like customers to describe Aviapartner, Prince said: “I hope they say we are a reliable, flexible partner providing great service, quality and safety and simple to do business with a very flat management structure and a commitment to achieving a consistency of service across all of our stations.”
Recovery phase
It is common for journalists to ask managers how their business in 2021 compares to 2019, the last “normal” year of operations since the pandemic began. Prince isn’t looking back though: “It doesn’t matter what 2019 was. It is about managing the situation we have in front of us today. It is about how we build, restructure and stabilise on the size of business we have today.”
By the end of 2021, Prince expects Aviapartner will see handling volumes of 55-60% of 2019 levels. After the lockdowns and travel restrictions during the first half of 2021, markets began to open in May. “The first four months of the year were very challenging. There was very little activity, and we had a lot of people on furlough,” he said. From May through to September there was a return to some reasonably healthy volumes, but the recovery was very market dependent.
The pandemic hit at the worse time for the European aviation business, coming as it did after the traditionally loss-making winter season. For Aviapartner, the government short-time work schemes were critical to reduce its cash burn, explained Prince. The company was never in danger of going into bankruptcy itself, he said.
Aviapartner’s cost-saving measures, as it has sought to make the business more resilient, mean it has been able to bring its breakeven point down substantially on the volumes it handles today, said Prince. The breakeven point will go up as handling volumes rise and the company adds back capacity and people.
For Prince, a key question is how can Aviapartner retain the flexibility and resilience it has built up during the pandemic? “I see significant industry challenges. The number one is the recruitment of the skills and personnel we need,” he said. During the pandemic many workers have left the industry and found jobs elsewhere and may be hard to tempt back. “People will say why work on the cold ramp when we can work in a comfortable Amazon warehouse,” he said.
“We are in a war for talent in every location. We are seeing it already and wage inflation will continue to grow,” said Prince.
Growth strategy
At the Malaga summit, Aviapartner’s managers heard from Levaux and Prince that its growth strategy, achieved either organically or through acquisitions, is based on three pillars. “Firstly, there are many opportunities ahead to grow our market share in the countries we currently operate in, either through airline and airport tenders or with network deals with customers as we expand into new markets,” said Prince.
Based on 2019 revenue figures, France is Aviapartner’s largest market with a 28% share, followed by Italy 18%, Belgium, 16%, Germany 12% and The Netherlands and Spain at 9% each. Aviapartner won a handling tender to begin operating in Spain in 2015 and this one is coming up for renewal at the end of 2022. “Our aspiration is to be successful again in that market,” stated Prince.
Its French business received a boost with Aviapartner winning a tender to begin service at Paris Orly to become the fourth licensed handler at the airport. It will start operations in March 2022.
Whether in Paris or potentially new markets, a clear opportunity for Aviapartner, as its network grows, is to handle existing customer airlines at the new stations. “We can simplify operational structures for the customer, and they get a consistent service across their network. Airlines choose us because Aviapartner improve quality, reduces complexity and we makes their life easier working with one reliable supplier across Europe,” explained Prince.
Aviapartner’s second growth pillar is to diversify its service offering at its existing stations. This could be in Fixed Base Operator (FBO) or private and general aviation, in lounge and VIP services or via an alliance with service providers at smaller airports. “We ask the question what can we do for airlines, airports or passengers?” said Prince.
In 2010, Aviapartner was only operating onegeneral aviation airport, at Nice in France. Now it has one of the largest general aviation handling businesses in Europe, with the latest expansion being the acquisition of Argos VIP, an Italian FBO operator. “This adds 14 airports to our portfolio. It’s a great fit, builds our brand and operation and broadens our network,” said Prince.
Another expansion area is airport lounges. Five years ago, Aviapartner had a single lounge in Rome Fiumicino. “Today, we are managing the Star Alliance Lounge in Rome where we have a 99% satisfaction score, we also have two AviaPartner lounges. We now also operate the Star lounge at Paris Charles de Gaulle and the British Airways lounge at Amsterdam and Linate,” said Prince. “We are about to open a new lounge in Rotterdam and we are constantly talking to airlines and airports about further lounge opportunities.”
New markets
The third and final growth pillar is to enter new countries with its core ground handling product. “Aviapartner is ready to move to new countries, and we have been asked several times over the past three years to do just that,” said Prince.
Approaches have come, at various times, from the UK, Croatia, Poland, Greece, and India. We will go if it makes sense. Any opportunity must be sustainable, profitable and build our network platform and allow us to offer our customers improved quality and safety. We operate as a Group, and importantly we think and act locally,” explained Prince. “Aviapartner succeeds where others fail because we understand the importance of setting very high global standards and delivering within local cultures.. Our strategy is to unite our European operations under a single ground handling banner. Our success in Brussels is a good example of how we work,” he said. “Airlines stay with us because we’ve got the best people, the best safety and our service delivery is very good.”
While returning the business to growth is at the heart of any CEO’s mission, for Prince and Levaux the aim is to redouble efforts on innovation and sustainability.
“Aviapartner have been innovating for many years, developing and refining is services, working in new ways and delivering what our customers need. In 2018 we launched a more detailed and robusy innovation strategy to encompass the needs to a changing world, a focus on technology, systems, equipment, process and what that means to services.” said Prince. This is not as exciting to the outside world as entering new markets, but the discipline of delivering digital transformation for process efficiency; reducing the carbon footprint through electric ground equipment; anti-collision technology to reduce accidents; improvements to the quality of life for employees; and simplification and automation of processes like load control and dispatching; is the bread and butter of creating a strong handling enterprise.
“In Malaga we talked a lot about sustainability,” said Prince. “We need to be a sustainable service provider and employer. We have to go beyond being just an employer and contribute more to a sustainable society. This is going to be very important now and into the future. We started our sustainability journey in 2013 with environmental targets and KPI’s. Today over 50% of our ground support equipment is electric, we recycle, reuse, we have a clear code of conduct for our procurement and we have environmental officers in our countries.”
Prince is pleased to report that Aviapartner has undertaken an assessment under the EcoVadis Sustainability methodology. Founded in 2007, EcoVadis claims it is the “world’s largest and most trusted provider of business sustainability ratings, creating a global network of more than 75,000 rated companies”.
“We believe we are at the forefront in this regard and are leading the industry towards a more sustainable future. We set the benchmark with industry cerfitications back in the early days of ISAGO [IATA Safety Audit for Ground Operations] and we are doing the same today” he said. Major industry players have been in touch with Prince to understand how Aviapartner performed in the EcoVadis benchmarking process. “According to the EcoVadis scorecard we scored in the top 2% of businesses to take it in our category. Our ambition is to build on that rating. This is a core competency for us.”
Prince speaks calmly and eloquently about Aviapartner’s plans with a sense of quiet determination. The vision of the chairman is clear – Aviapartner is on the rebound.
