FlightCare

Interview with Mr. Ignacio Garrido,
Managing Director of Flightcare

Spain’s foremost international handling company continues to grow in each and every aspect of this service industry. As far as airfreight is concerned, Flightcare Cargo has firmly set its sights on Madrid and Barcelona airports and is currently developing an even wider domestic network.

Q- By the end of year 2002, FCC created Flightcare, and by so doing it pulled together all its handling activities. Has Flightcare fulfilled all foreseen targets during these two years of activity?

IG.- I am convinced that we have. Flightcare is today a well-known company name, not only in Spain, but and also internationally . We are very well placed . From the internal organizational point of view, we have been successful in setting up a new structure, in a modern and functional way. We employ, between Brussels and Spain, almost 3,500 staff and we have now great expectations for further growth. Our plans are very optimistic but will depend very much on what will happen in Spain with the impending process of licence renewals at over 40 Spanish airports. The new Government will have fresh ideas but we will have to wait and see how this may affect the handling industry. However, there is one very important issue to be resolved before that: the Sector ’s labour agreement with the trade unions. Once this is achieved, then it is a matter of time before the the industry’s new liberalisation plans come into effect. Flightcare is, apart from Iberia, the only independent handling agent that already has a working social agreement. In fact there are two union agreements, one for cargo handling and one for passenger and ramp handling activities.

Q- Flightcare has successfully achieved important initiatives abroad, such as the handling concession in Brussels airport, under its wholly-owned subsidiary, Belgian Ground Services. Is it the first step towards a widening of the European activity for Flightcare?

IG.- We have just renewed the contract in Brussels for a further seven year period, up to October 2011. Last month, we were awarded the second handling concession at Ostend Airport. This is, to date, the only step we have been able to see concerning expansion in Europe. There is no doubt that further expansion outside Spain is our the main aim, and we have great interest in the international market as a whole, where we intend to expand both through open bidding processes as well as through acquisitions.

Q- After the confusing Morocco airports concession initially awarded to Flightcare, and shortly after granted to Globalia as the winning contender, have you taken any legal action in that country that might affect your relationship with that Group, with which you are current linked through joint ownership of Eurohandling and Iberhandling in Spain?

IG.- We have initiated legal action in Morocco and the court’s decision is in process. Once the legality of the issue is established, the Court will issue its verdict and action will be taken accordingly. At one moment in time, we were successful in seeing the award process being suspended, but this was later over-ruled. We can but believe in Justice. As to how this may affect our relationships, I would simply say that Globalia is a competitor in Morocco. For the moment, they have acquired the handling license and that must be respected. We must understand that one thing has nothing to do with the other.

Q- AENA Spanish airport authorities suggest that a third handling operator in Madrid and Barcelona will appear during the handling liberalization process in Spain. Do you think there is sufficient market share for another operator at either of these airports?

IG.- For the time being, the EU Directive only calls for two, but it does permit the Airport Authorities to authorise more. I personally believe that there is little room for a third and least of all in Madrid. Iberia alone deals with a large segment of the market, counting upon those airlines within its own alliance, to which it also offers handling services. The remaining market is insufficient to keep two more operators busy, even less if we consider the self-handling component. The handling business is one of volume and only with this parameter can profits be obtained.

Q- What do you believe will be the tendency in the future for those airlines with self handling concessions?

IG.- Self handling depends on the level of activity enjoyed by each Carrier at a given airport. As a commercial strategy, it is worthy of consideration, but we must bear in mind that these concessions call for a large investment in equipment, which is only justified by a predetermined volume of operations. I think that on a long-term basis, within an increasingly competitive environment, this idea will lose strength, from an economic point of view.

Q.- FCC (Flightcare´s parent company and one of Spain's foremost construction and services conglomerates) acquired Aldeasa Ogden in Madrid and Barcelona in 2001. What has been the result of this investment within the air freight industry, which has suffered from the world-wide economic slowdown over the last few years?

IG.- We entered the cargo world as a result of our policy of widening our activity portfolio. Over the last few years, and considering the worldwide crisis you mentioned previously, we have taken advantage of the crisis by restructuring the companies and reorganizing them so that they adapt to ensure continuation of what we consider to be a prime quality service. We found ourselves with workers coming from different companies and professional backgrounds, and so we successfully reached a social agreement to include them all under one unique structure. It was the first step to a whole reorganization of the service and modernising of the installations , which has been certified through the ISO 9000 quality audits and also the ISO 14000 for environmental issues. To put it in a nutshell, we started from scratch, initiating a complete restructuring at all levels. Commercial competition at this stage was very strong. For the time being, we are widening our customer portfolio and they are very satisfied with our efforts, Lufthansa included, a worldwide reference in this activity.

Q- Three years after your entering this business, what do you think of the liberalization of cargo terminal handling in Spain?

IG.- The liberalization of cargo handling in Spain has not come together with a hard fast respect of requirements and guarantees to protect the interests of authorised operators . This is a sector where we cannot appreciate why licenses are given out to anyone and everyone. The authorities have issued licenses to cargo handling companies that do not even have cool stores, not even security vaults…. and they compete with is in a totally unequal way. Whilst we are obliged to offer every facility, there are agents in Madrid and Barcelona who work without installations or facilities, leaving the perishable goods waiting outside in the open air, or subcontracting adequate space from other Operators whose installations are optimum. They should only be considered consolidators, and in no way should be authorised for full and efficient cargo handling.

Q- What are Flightcare Cargo possibilities for growth?

IG.- Figures are good and continue to improve. Madrid is in a good situation, with tonnage increasing, and our results also improving. In Barcelona, nearer to Europe by road, the volumes is less satisfying. We are building a network within in Spain: we have started business in Bilbao, Valencia, Málaga, Arrecife and Las Palmas. It is a serious long-term wager, which is FCC’s working philosophy. The airfreight business in our country is, needless to say, difficult. It comes principally from the belly space on passenger aircraft, as to start up a full freighter service with two-way traffic requires a strong commercial network, and Spain’s geographical location within Europe, is not ideal in this day and age. The centre of the European continent tends to absorb the greater volumes and flows. Cargo loads from Spain move by road to central European hubs to end up in in aircraft that take off from third countries, with Germany at the head of the list. In Spain there are few pure freighters and Madrid, on the other hand, suffers from noise restrictions and night operations, which does not promote the full freighter activity, which tends to establish itself in smaller alternate airports offering greater all-round incentives to the industry as a whole.

Q.- When did Flightcare decide to join the Aviance alliance and what benefits do you get from this international alliance of independent handling agents?

IG.- Aviance was founded in the year 2000 and we were one of the four founding members. It was born as a mirror effect of those alliances among airlines and more all less with the same goals: international growth, networking, training, etc., and all that whilst maintaining the local character of each of the individual handling companies. Those are the benefits Aviance brings to us… and it is already well identified in an international environment and is foreseen to continue increasing in the future.

Contact Details
	W: www.fcc.es