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Print ArticleKLM has changed its approach to purchasing ground services by forging what it considers a breakthrough global procurement agreement.
June/July 2004
The difficult financial situation that has haunted so many carriers around the world has resulted in airline executives exploring a raft of potential solutions to drive down costs and help return their businesses to profitable ways.
One potential beneficiary could be the industry's handful of multinational ground handling organizations, which continue to report a greater willingness amongst carriers to adopt a more strategic approach to buying ground services.
The pace of change remains slow, and almost non-existent at hub locations, but there are signs that carriers large and small are increasingly open to replacing traditional local and ad hoc purchasing arrangements at outstations by developing longer-term deals struck with fewer, and usually larger, key suppliers.
In the current climate, the arguments for doing so can sound persuasive. Carriers have an opportunity to reduce costs by working close
ly with a supplier on handling processes and specifications. And while close coordination between parties can bring greater standardization to a handling product, the concentration of business volume with fewer suppliers can also simplify a carrier's communication of its needs across its network. This, in turn, can result in products being rolled out much faster and with greater flexibility in terms of network development.
These are certainly some of the benefits that KLM had in mind when it announced, on April 1, the conclusion of a five-year global cooperation frame agreement with Swissport International, a multinational handler headquartered in Zurich. The agreement sees Swissport provide ground services at more than 60 of KLM's outstations worldwide. The Dutch carrier's Amsterdam Schiphol hub remains unaffected.
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