A Critical Analysis of Ground Handling Service Benchmarking at European Hub Airports

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A Critical Analysis of Ground Handling Service Benchmarking at European Hub Airports Jez G
University of the Fraser Valley
Bus 430
AB2
Prof. Joe Ilsever

This paper will critically analyze a paper published in the International Journal of Production Economics in January 2009 (Volume 117, Issue 1) (Schmidberger, Bals, Hartmann, & Jahns, 2009) concerning the development and application of a Performance Management System (PMS) for air-side crews in some of the major European hub airports. This study is valuable in that the benchmarking principles established here are relevant to other industries since the same process for developing this holistic benchmarking process can be adapted and applied to generic business processes. This critique will focus on three major components of this discussion of the benchmarking process, first the conditions that increase the demand for benchmarking considerations prior to benchmarking, and the problems benchmarking can be used to fix. Second, this paper will analyze Schmidberger’s discussion of the development of the PMS including its integration with the business strategies of associated corporations. The third and final section of discussion will be concerning the discussion of the post-validation of the PMS and recognition of performance gaps and potentially under-emphasized sections of the study. The Under-Emphasized Demand for Benchmarking

Performance in the aviation industry is extensively studied and evaluated on quite a routine basis. Due to the high levels of competition and often relatively slim profit margins enterprises in aviation are constantly seeking ways to cut costs and increase efficiency (SAS Group, 2005). Ways of increasing efficiency are often classified into two major categories, vertical and horizontal integration (Sitkin & Bowen, 2010). Horizontal integration involves taking a firm’s existing business processes to a new market to expand market share, this can be difficult for airlines, and often they will elect to enter into code-sharing agreements with competitors in the new markets rather than complete expansion into these potentially saturated areas. This leaves vertical integration as a very attractive option for expansion and efficiency improvements, the process for this integration involves the analysis of both upstream and downstream components of the value chain. This is where ground handling should be considered, however both airlines and airports tend to focus on other areas such as overall airport performance with very little emphasis on such a critical component of the airline industry (Francis, Humphreys, & Fry, 2002).

Deregulation has also had a large effect on the demand for airport comparisons and benchmarking. Opening the market for airside ground services up to a wider range of firms is excellent in terms of encouraging healthy competition and an open market; however it also introduces choice to airlines and airport authorities. For these choices to be made effectively there must be more research done into the ability of firms to replace traditional ground handling service providers (such as government or airport supplied entities). The research currently done in the post-deregulation era of European aviation has focused on several key areas such as financial, qualitative, political, or ecological perspectives (Murillo-Melchor, 1999). While these studies are useful from an overall airport efficiency standpoint, they do not place sufficient focus on ground handling to allow entities to decide who should provide their services. This is a specific division of aviation that has a larger impact on overall efficiency than the majority of current studies indicate, Schmidberger’s critique does a good job of recognizing this and discussing developing benchmarking processes accordingly. Developing a Standardized PMS in a Non-Standardized Industry

A difficulty with a standardized PMS of airside airport services stems from...
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