WFS: Still room for expansion

All new account wins are welcome, of course, but a series of deals signed by handler Worldwide Flight Services (WFS) in Brussels in recent months have been particularly gratifying to its president and chief executive (CEO) Olivier Bijaoui, writes Peter Conway. 
That’s because a bigger presence at the Belgian hub was one of the motives of WFS’ unsuccessful att-empt to merge with rival Avia-partner in 2012. As it is, by winning the business of Brussels Airlines, Cathay Pacific and another large carrier as yet unannounced (“I can’t yet name it, but it is a very big one, and it is not Saudia”), Bijaoui reckons WFS has now become the largest cargo handler at the airport.
He says that he walked away from talks with Aviapartner “because a certain number of criteria had to be met for the deal to happen and they were not. It would have required changes and we could not reach agreement with Aviapartner on those changes.”
Other prizes from the tie-up would have been a bigger presence in Amsterdam – where Bijaoui admits WFS remains a small to medium sized player – and a wide range of ramp operations across Europe. But he insists he is not disappointed. “It would have been great, but it did not happen, and at the end of the day we can live with it.”
Instead, WFS has been expanding its European business in other ways. On August 29 it announced a takeover of Swissport’s cargo business in Copenhagen, including a 4,200 sq m facility and 18,000 tonnes of throughput annually. That will merge with WFS’ existing operation, which was the first to break the SAS monopoly at the airport when it opened in 2006, and make it the largest independent cargo handler there.
The company has also finally broken into the Italian market after 15 years of trying, winning a concession to operate a new 5,000 sq m facility, which is due to open in 2016. “It is a market that has never had any proper competition in cargo handling, but finally the airport authority decided to tender for warehouse space for real,” says Bijaoui.
He now has hopes that Rome might follow the lead of its northern neighbour and allow a genuine independent to open there. “It is time,” he says. “It has been a long and winding road but I am hopeful that true competition has finally arrived.”
The addition of Italian operations would fill the last big gap on the map in Europe for WFS, with Bijaoui describing Italy “our last big headache”. He adds: “We now have good share in Spain, France, the UK, Germany, the Netherlands, Belgium and Austria, as well as the Copenhagen operation to serve Scandinavia. The only other country that might have some potential is Portugal.” He seems unconvinced about opportunities in Eastern Europe.
That does not mean WFS has run out of territory to expand into, however – far from it. The company has made forays into Africa recently and Bijaoui has his eye on Latin America. Deals that have already been done have included a new operation in Johannesburg and a partnership deal with Kenyan handler Transglobal to take over the management, operation and business development of its Nairobi cargo terminal.
Currently handling 52,000 tonnes a year, this has the capacity to cope with 200,000 tonnes.
Bijaoui implies that other deals are in the pipeline, saying that Africa “is a good place for us to grow”. Plans for South America seem to be less specific but he feels that the continent is starting “little by little” to open up to third party competition. “Europe is the most finished and organised region for handling, so we feel there is room to bring our know-how and expertise in generating networks in these parts of the world.”
Bijaoui would also like to export WFS’ expertise to Asia, but this is a market that is famously closed to outsiders. When the company opened a major new cargo terminal in Bangkok’s new Suvarnabhumi airport in 2006 there were hopes that attitudes in the region were changing. But there have been no other opportunities to tender since.
“Bangkok has been great for us and has been very stable, even during the coup, and we would certainly like to replicate that success elsewhere,” Bijaoui says. “But the market in Asia is opening up at a very slow pace.”
WFS also has a substantial handling presence in the US, having originally grown out of the AMR handling business, itself a spin-off from American Airlines. Activities there include some 40 ramp handling operations and 27 cargo stations.
Traditionally, a lot of third party handling in the US involved operating dedicated terminals for individual airlines, but over the past decade or so multi-user third party terminals have been growing in importance. WFS, for example, has just added Qatar Airways, Etihad and Air India to its New York operation and Asiana in Los Angeles. Bijaoui says more such deals are in the pipeline.
A year ago, the company also won a number of stations from American Airlines when it did a big re-tender of its business. In some locations – for example Dallas, Miami and New York – it is just providing the administration while the airline uses its own warehouse staff, and in others – such as Philadelphia, Boston and Houston – it is a full cargo handling service.
Qatar Airways has in fact awarded several contracts to WFS recently – four in the US and three in Europe this year alone – and examples like this are Bijaoui’s answer to the question of whatever happened to multi-airport deals. The rationale of creating global handlers was that they could be a key partner to carriers all over the world. But contracts still seem to be awarded on a station-by-station basis.
Bijaoui’s response is to point to the growing list of airlines – Qatar Airways, British Airways, United Airlines and others – who are increasingly awarding more stations to WFS. “Sometimes the tenders cover several cities, or sometimes just one: it depends on when the contracts come up for renewal. But it is clear that airlines are looking to work with fewer suppliers.”
There are also fewer handling companies in the market, he reckons, as the downturn and other market pressures remove weaker competitors. “In the downturn, some companies turned around and decided cargo was not the right business for them. But we decided the opposite, and have continued to invest in areas such as security and IT.”
It is this commitment and investment that he reckons is now bearing fruit. He is insistent that cargo remains the core business for WFS even though it has been making forays into other services which now account for 35 per cent of its turnover. These include VIP passenger handling in Hong Kong, Singapore and Bangkok, and a concession to manage a cruise terminal in Hong Kong.
“But cargo remains the heart of the company,” Bijaoui says. “If you look at Swissport and Menzies they are major ramp handlers, and while we have some ramp operations we are not in the same league. What makes us different is that cargo is the number one thing we think about and it is the number one priority for investment, even if we have created three or four other small businesses in areas where we believe we have something to offer.”