UK Airport Ground Crew, Baggage Handler Industry Warn Of Imminent Collapse Without State Aid

British airport handlers and grounds crew are at risk of losing their jobs as airlines cancel flights and airports ponder shutting down due to the coronavirus pandemic.

The four companies which manage 90% of ground operations at British airports -- Swissport, Worldwide Flight Services, Dnata and Menzies -- warned that they might not be able to operate more than a few more weeks.

These firms employ some 25,000 people and are contracted by the airlines -- they do not work for them directly -- and operate on a "pay-as-you-go" basis.

John Menzies (parent of Menzies) has already said it will cut its workforce by more than half -- 17,500 people worldwide who work at 200 airports.

In a joint letter addressed to the Chancellor of the Exchequer Rishi Sunak, the four companies stated: "We have all been able to weather previous crises, whether 9/11, [severe acute respiratory syndrome] or the Icelandic volcanic eruption, but Covid-19 is different, as it is both global and longer-term."

They added that without their services – which include refueling, cleaning, baggage transfer, departure gate services and the loading and unloading of cargo -- "the airport infrastructure in the U.K. would grind to a halt for up to four months and it would take even longer to fully recover once the initial crisis is over.”

The letter added: “On average it takes 1-3 months to hire, train… new staff, and there is currently minimal transferability between airports. There is therefore a strong business interest in maintaining [the] existing workforce. Not to mention the desirability of avoiding unnecessary layoffs more generally.”

They also said the ground handling sector is a “critical part of the U.K.’s aviation industry.”

“We are requesting urgent dialogue between the government and our industry, regarding the support needed to ensure continued operational cashflow and secure employment for as many staff as possible,” they wrote. “Ground handlers are not represented by the main U.K. airline or airport operators’ industry associations. We have therefore not been included in any dialogue with the aviation sector held so far. This is quite simply the biggest crisis ever faced by our industry.”

The industry also suffers from low margins, while staffing comprises 70% of its costs.

Ground handlers also claim they have lost 95% of their revenues over the past few weeks.

Jason Holt, Swissport's boss in Western Europe, noted that Swissport and the other companies welcomed Sunak’s work retention scheme, under which the British government will cover 80% of the wages of retained workers up to a total of £2,500 ($3,100) a month.

But he warned that even with the government’s stated assistance, “the aviation industry remains in crisis…. I have profound doubts that the fundamental challenges for the industry, both now and in the future, are being addressed. Without immediate support with taxation and charges, operational flexibility, and the flow-through of the Chancellor’s announcement from last week into actual cash funding to support our workforce, we are perilously close to collapse.”

Holt added that if ground handlers went bankrupt, airports could no longer operate.

"The aviation system is a triangle of airlines, airports and ground handling businesses,” he said. "Without cargo and ground handling companies, international supply chains will stop functioning during the Covid-19 pandemic and recovery."

Henk van Klaveren, spokesman for the Airport Operators Association, warned: "It is a very serious issue, particularly for smaller airports where there is only one ground handling operator. These airports still need to operate, even with fewer flights. There's essential cargo, flights to isolated regions and so on."

However, as the British government has thus far refused to bail out U.K. airlines, it remains doubtful that it will rescue ancillary industries linked to airlines.

“Our message to the U.K. Government could not be clearer or more urgent,” said Craig Smyth, chief executive of Worldwide Flight Services. “Support and immediate action is needed now to maintain the U.K.’s cargo (and passenger) airport handling capability to ensure cargo supply lines can continue to operate at this time of national and international crisis, and for cargo and passenger airport handling services to be resilient and sustainable after the Covid-19 crisis has passed.”

Smyth added: “This is a situation we are anxious to avoid but, amidst all this uncertainty, we cannot continue to play the vital role we do in the nation’s economy and well-being without government help. Without this immediate support, even when Covid-19 is defeated, U.K. trade will continue to suffer long-term disruption because a major part of the supply chain infrastructure at U.K. airports needed to fuel the country’s recovery will have been shut down — and this will take many months to re-establish.”