Deregulation of Ground Handling Services at Airports

Diploma Thesis from the year 2008 in the subject Business economics - Economic Policy, grade: 2,3, Humboldt-University of Berlin, language: English, abstract: Current occurrence of strikes by ground and cabin staff, the formation of strategic alliances between airlines, mergers and acquisitions of ground handling (GH) companies and the expansion of airport infrastructures dominate the actual news in the aviation sector and reveal noticeable changes and new dynamics as well as new challenges in the industry. The changes did not only start now but began with the introduction of more competition into the market through the liberalization of airlines at the end of the 1980s which was followed by intensified airport competition and the deregulation of the GH market in 1996. The introduction of competition generally leads to more efficient market conditions. Overall, prices for flights have dropped considerably in the past two decades which has led to dramatic increases in air traffic demand and a new strategic environment for all market participants. Nevertheless, ongoing strikes by airline, GH and airport staff reveal that the situation in the aviation industry is far from optimal. The purpose of this paper is to examine the developments in the GH market with regard to their origins, current trends and potential future consequences. The main focus will lie on the analysis of the effects of the deregulation of ground handling services (GHS) at Community airports assessed by the EU Directive 96/67/EC in 1996. The liberalization process of the GH market shall be observed from different angles focusing on the broadly differing stakeholders' points of view. The thesis is structured as follows: First, an overall framework and background of developments in the aviation industry shall give an introduction to the subject. Second, the market structure of GHS in Europe with a focus on Germany shall be observed and connected to the broader framework of public regulation and deregulation. Third, the effects of the deregulation of GHS at airports will be further specified and elaborated. The analysis of the effects will be segmented into four parts: overall effects, effects on horizontal integration, effects on vertical integration and effects on the employees. Finally, the theoretical concepts and practical findings will be completed by real observations and empirical data obtained from interviews with different stakeholders in the GH industry.