Ground-handling Operators Face Indirect Impact From High Oil Prices Too, Says IATA

KUALA LUMPUR, May 12 (Bernama) — Although the current high oil prices may not impact the ground-handling companies directly, the airlines still have to look at reducing ground operation costs, said International Air Transport Association Ground Handling Council (IGHC) chairman, Neale Millett.

“It will affect the ground-handling operations because if the airlines have to pay a lot for fuel, they don’t want to pass that on to the customers.

“Therefore they will try and save cost by cutting down on their ground-handling expenditure and operational costs … So they (high oil prices) are definitely affecting the industry right across the board,” he told reporters on the sidelines of the IATA Ground Operations Symposium here Monday.

The symposium is held in conjunction with the IGHC annual meeting, where industry players like ground-handling companies, airlines and airports will address issues such as rising fuel costs, global economic slowdown and environmental and security challenges.

Malaysia Airlines (MAS) director of operations, Datuk Tajuden Abu Bakar, said the doubling of oil price compared to a year ago has already triggered collapse of several carriers around the world while some braced for further turbulence, such macro-level concerns did have a direct impact on ground-handling operators. He said for MAS, ground-handling cost made up a big chunk of its total operational costs, which is about seven percent.

“There is not much co-relationship with ground handling cost and fuel (price increase), but we are paying the companies to service our transit.

“One way of cutting cost is we have to look at reviewing the rates with ground-handling companies … sometimes a tight competition among themselves promotes ground handlers to be creative and innovative on how we can together lower the cost but maintain quality,” he said.

Oil prices surged to US$126 (US$1=RM3.21) per barrel on Friday, recovering slightly at US$125 Monday.

On another note, Tajuden said, when airlines started to re-look at their operations to trim excesses that bleed them, including cutting the loss-making routes and reducing frequencies to align with real time passenger demand, the impact would also be felt at ground-handling operations.

“Fewer flights mean lesser ground handling,” he said.

Meanwhile, the event from May 12 to 14, saw the gathering of some 800 delegates this year, where MAS plays the role as the host airline.

– BERNAMA