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National Conferance on Civil Aviation: The Decade Ahead. Cargo Handling & Ground Handling What is happening, what to expect ahead. Atilla KORKMAZOGLU Delhi, October 2011. Air Transportion Development.

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national conferance on civil aviation the decade ahead

National Conferance onCivil Aviation: The Decade Ahead

Cargo Handling & Ground Handling

What is happening, what to expect ahead

Atilla KORKMAZOGLU Delhi, October 2011

slide2

Air Transportion Development

  • Though the ATM has revealed strong growth (6% CAGR between 1970-2010) in the past, only c.5% of world population has experienced air transportation

Travel per citizen (2009)

Russia,

Brasil

  • The future growth driver will be the improvement in wealth of emerging economies, mainly India, China, Russia and Brasil

China

India

Income per capita($, 2009)

2

slide3

Aircraft Manufacturing

Aircraft (Unit)

  • Development in global business relations between countries affects transportation markets positively in the past decade
  • Demand increased to air transportation while middle class got richer

Auto (Thousand units)

Ship (GT)

Global Manufacturing Volumes

Boeing & Airbus Manufacturing

  • Production orders made top in 2007 and deliveries in 2010, expected to increase in the future ......

Orders

Deliveries

3

slide4

Airlines Market

  • Open Skies, Developing Country Airlines , LCC , Crisis , Consolidation of National Carriers put higher pressure on major flagship carriers day by day.

LCCs Dominating the Seat Capacity

Large Scale Mergers among Airlines

UK

N.America

World

EU

Asia Pasific

4

slide5

Passenger and Cargo Forecast

  • Long-term passenger forecasts shows a world average of %4-5 percent increase until 2019 India expectations are around %7

Passenger Forecast

Cargo Movement Growth Forecast

  • Long-term cargo forecasts shows an average of
  • %5,9 percent increase until 2029 for the overall world while India expectation is around % 6,5
  • According to the forecasts freighter fleets will grow%69

5

Source: Boeing Reports

slide6

GNP Growth Rates

GNP Growth Rate

India

World

  • MiddleClass of India is between 325-350 mio, expected to be 600 mio in 2025.
  • Expected to be the 5. biggest consumption market.
  • Tourism has % 5,6 in GNP. %87 of tourist are airline passengers.
  • Growth rate of India Economy is higher than the world average
  • Economical conjunctures affect India less than most of the others...

6

Source: McKinsey Global Institute

slide7

Aviation in India - Current

  • India become the 9th civil aviation market in the last decade
  • Scheduled route numbers doubled in last 10 years by reaching up to 82
  • 72 National Airlines operate at India
  • Fleet size of 413 aircrafts
  • High Population per aircraft rate

7

Source: Ministery of Civil Aviation

slide8

Aviation in India - Future

  • Average growing rate for India will be annually %8,2 until 2029
  • Becoming the third biggest market in 2029 after US and China

8

Source: ACI publications

slide9

Air India;

IndiGO;

17,1%

19,2%

GoAir; 6,2%

Jet Airways;

18,1%

SpiceJet;

13,4%

Kingfisher;

19,8%

Jet Lite;

7,0%

  • Aviation in India - Domestic Carriers Positioning

Domestic Market Shares

new players

Go AirIndiGO

Kingfisher

SpiceJet

Air India Express

  • New domestic airlines established after 2005 has reached more than %50 of the domestic market share

9

slide10

Ground Handling Services

  • Ground and cargo handling services include a broad range of activities requiring significant operational and organizational expertise

Security Services

Exe. Aviation Services

Line Maint. Services

Ground Handling

Fuel Services

Ramp Services

Pax Services

Cargo &Mail Services

Station Mgt& Admin

10

slide11

Ground Handling Market Participants

  • Although airlines and airports continue to provide ground handling services, independent ground handlers are gaining share as the other participants (airlines/airports) focus on core business
  • Ground handling market size is currently close to $50 bn and is expected to reach $150 bn in 2030, which indicates more than 5 % CAGR.

Independents - Airlines/Airports

11

slide12

Ground Handling Market Key Trends

  • Who can adopt itself will be the survivor

Strong Growth:

The growth will be accompanied by pricing pressure

Changing Market Participants:

Airlines and airports focus on core business and dispose their handling activities

Barriers to Entry:

Liberalisation facilitates penetration

Airlines Purchasing Criteria:

Price and quality are the key criteria in selecting the service provider

Consolidation:

Still fragmented and new M&A activities are expected

12

slide13

Ground Handling Market – Rationale for Consolidation

Ground Handling

Airlines

  • Network Effect & Economies of Scale
  • Competitive Advantage
  • Consolidation and development of independent providers

Airports

  • Airport are moving away from operational control, focusing more on commercial activities
  • Low profits and rising cost pressures are resulting in focus on core business and outsourcing of GH activities.
  • Over the last 10 years several airlines
  • withdrawn from GH activites.
  • TP Sold ,
  • KL sold Cargo Services Centre,
  • LH sold Globe Ground,
  • AA sold WFS
  • SR/LX sold Swissport
  • BD sold ground handling activities
  • AY sold parts of its handling
  • PAL plans to sell of catering and GH Serv.

13

slide14

Ground Handling Company Consolidations

  • Independent handlers are not strong enough to facilitate large scale the consolidation process
    • Several owners of independent handers are considering to dispose their airport service
      • It is expected to see even more consolidations in the next decade

PAST

TODAY

Celebi

Budapest AGH

Celebi

AGI

ASIG

Boker

BBA

Menzies

Ground Star

CSC

Aero Ground

Odgen

MENZIES

AVIA PARTNER

SWISSPORT

Hudson

Dynair

Swiss

Port

Aviapartner

World Cargo

Globe Ground

Global

Servisair

Aer Lingus Handling

France Handling

SERVISAIR

Fraport

Sabena

Fraport

Tristar

SEN

WFS

WFS

FCC

Globalia

SPdH

SFS

FCC

Aeroporto di Roma

GROUNDFORCE

14

slide15

Leading Ground Handlers – Turnover vs Profit

(€mio, 2010) EBITDA

Turnover (€mio, 2010)

The difference among service providers is not too wide in terms of profitability contrary to turnover and stations network

Turnover

Locations

15

slide16

Air Traffic Figures in India- Past/Today/Future

CAGR 9,8 %

CAGR 10,6 %

  • In the past, domestic traffic has been the main driver for the development of aviation in India as well as it will be in the future

16

slide17

Air Transport Figures in India- Past/Today/Future

  • In the last 5 years, Indian airports experienced the drastic growth of the commercial air cargo served
  • Parallel to improving weight of Indian economy among the world trade, the growth in air freight can be over the expectation which still represents a strong growth

17

slide18

Ground Handling & Cargo Handling in India

International Airports-private

International Airports- government

Custom Airports - government

Large Domestic Airports - private

SRINAGAR

  • Metro airports already allowed independent handlers to provide ground handling works at respective airports
  • However, self handling activity of domestic airlines occupies substantial part of ground handling works at most of the metro airports

DELHI

Handlers: Celebi, BWFS, Air India/SATS, Cambata

Traffic : 30 mio pax,

700k ton cargo

  • MUMBAI
  • Handlers: Çelebi/NAS
  • Cambata,Air India
  • Traffic : 29 mio pax, 670k ton cargo

AMRITSAR

DELHI

JAIPUR

GUWAHATI

AHMEDABAD

KOLKATA

Handlers: Bhadra,

Air India

Traffic: 9 mio pax, 130k ton cargo

KOLKATA

NAGPUR

MUMBAI

HYDERABAD

  • BANGALORE
  • Handlers: Globe Ground
  • Air India/SATS
  • Traffic: 12 mio pax, 220k ton cargo
  • HYDERABAD
  • Handlers: Menzies,
  • Air India/SATS
  • Traffic: 8 mio pax, 80k ton cargo

GOA

BENGALURU

CHENNAI

PORT BLAIR

  • CHENNAI
  • Handlers: Menzies,
  • Air India/SATS
  • Traffic: 12 mio pax, 390k ton cargo
  • COCHIN
  • Handlers : BWFS ,Air India/SATS
  • Traffic : 4 mio pax, 40k ton cargo

CALICUT

COCHI

THIRUVANNA.

slide19

Ground Handling & Cargo in India –

Rationale for the privatisation of the services

Proven fact from the experiences of EU

access of independent/eligible GH companies and limiting the

number of self handlers increases the quality & safety at airports,

decrease the costs and eliminate the congestion

World trend

Share of independent

GH service provider

& Air Cargo Warehouse increases

All airports should privatise their GH services

&

Self handling should diminish at airports in India

Increasing capacity needs can only be fullfilled

with the help of professional GH services

with international service levels

New EU Directive proposal

Self handling airlines should not outsource their manpower :

outsource entire services to eligible handlers

or establish their own organization

19

slide20

Celebi Aviation Holding in India

  • Though Celebi’s has short history in India, its activities are expanding and it is expected that India becomes the main base of its aviation related activities in the near future
    • As of today, India is the largest location of the group in terms of employed staff
  • Çelebi has already invested 65 million USD for ground handling and air cargo warehouse activities in India and total investment will be some 100 mio USD in 2 years time

20

slide21

Celebi Aviation Holding in India – Future Positioning

  • Çelebi intends to intensify its presence and activities both in ground handling and air cargo warehousing services in India. In this respect, it is targeting
    • To provide ground handling works at all metro airports in the medium term
    • To provide ground handling works at international airports of the country which in total covers at least 95% of the international passenger traffic in the long run
    • To prode warehousing activities at least at four international airports
    • To become the leading independent airport service providers of the country

21

slide22

Thank You....

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