ground support

Ground Support Equipment

Industry Insight

Date April 2016

Synopsis

Current trends

  • Domestic and foreign airlines serving the U.S. carried an all-time high of 895.5 million system-wide passengers in 2015
  • The baggage and cargo handling service segment is expected to see strong growth in support of passenger growth

Key statistics

  • Primary segments: Aircraft refueling, maintenance and repair; ramp handling and aircraft marshaling, parking and towing; passenger ground handling (conveyance and baggage)
  • Significant companies: AERO Specialties, Inc., Aviapartner, Aviation Ground Handling Pty, IMAI Aero-Equipment Mfg. Co., TLD, TUG Technologies, NMC-Wollard, JBT AeroTech, Eagle, Hobart
  • Common equipment types: Aircraft pushback and tow tractors, baggage tractors, cargo transporters, lower and main deck cargo loaders, air start up units, ground power units, mobile and walk-behind belt loaders, lavatory trucks, service trucks, passenger vans, baggage carts, towbars, crew stairs, container dollies, parts dollies

Industry continues to outsource: The continuing global trend of outsourcing airport operations services to fixed-base operators (“FBOs”) will benefit ground handling service companies. According to International Air Transport Association, more than 50 percent of the key commercial airliners hire FBOs for their ground operations. There are many reasons to outsource. Managing increasing security and fuel costs are direct impediments to self-handing. The need to acquire ground support equipment specifically engineered for new aircraft can be costly. Finally, meeting the increasing quality expectations of passengers is often better served by dedicated experts.
 

Emerging markets present opportunity: While the U.S. currently represents the largest market for ground handling systems, increasing air travel and cargo shipments in countries like China, India and Brazil are presenting opportunity. Airports are expected to expand infrastructure to accommodate growing traffic along with support service.
 

Secondary market has rebounded: The overall market for used ground support equipment remains strong. While some segments have done better than others, growth is expected to support airport expansions and increased passenger traffic. The oversupply that saturated the marketplace following the Great Recession has largely been absorbed, and prices have normalized. Sellers now appear willing to hold equipment until they achieve desired pricing, an indicator that the distress seen earlier in the decade has worked its way through the market. Equipment ten years old and newer is most desirable, attracting large buyer pools and strong resale values. These later-model assets offer buyers an opportunity to purchase more fuel efficient equipment equipped with modern technology at a discounted price.
 

Environmental and safety standards driving demand: Environmental standards in the U.S. imposed at the state and federal levels requiring reduced emissions and cleaner air quality have accelerated the obsolescence factors associated with some equipment. The replacement of fossil fuel-powered equipment with “greener” alternatives has already occurred in geographic areas under such mandates, increasing the desirability of battery powered and other eco-friendly equipment. Some airports have taken advantage of the Voluntary Airport Low Emissions (“VALE”) program, which provides assistance to operators looking to reduce a variety of airport ground emissions, including ground support equipment upgrades.