Estimating Aircraft Ground Handling Costs: Part 2– Handling Estimates & Cost Considerations

> | March 30, 2016 | 0 Comments
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Estimating Aircraft Ground Handling Costs: Part 2– Handling Estimates & Cost Considerations
This business aviation blog post continues from our article last week, titled “Estimating Aircraft Ground Handling Costs: Part 1 – Basic Considerations.

If you’re a business aircraft operator conducting a mission to a new destination where you haven’t been before, obtaining a price estimate in advance is pretty much a standard practice – especially in the case of cost-sensitive charter operations. When doing so, you’ll want to see a full itemization of services, and ground support equipment (GSE) requirements, to avoid any unexpected surprises.

The following is an overview of what you need to know:

1. Handling estimates

Many business aircraft operators request handling cost estimates prior to day of operation. For an accurate estimate it’s important to itemize your exact schedule as well as ground service and support requirements. Note that costs may change, day of operation, depending on additional services requested after arrival or if you’re estimated time of arrival (ETA) or estimated time of departure (ETD) changes. If you obtain an estimate from one handler but, upon arrival, use a different handler, costs may be quite different for the same services. In addition, if your estimate is obtained far out from day of operation – several months in advance for example – handing service fees and airport charges could change, drastically in some cases.

2. Staying within an estimated cost estimate

Any changes to ETA/ETD, length of time on the ground, or services requested after arrival will change (likely increase) your handling costs. This includes after hours arrivals/departures, having to park on a more expensive commercial ramp, changes to in-flight catering and/or local transport arrangements, and short notice requests.

3. Credit and special services fees

Be aware that you’ll pay a fee for all credit extended by your local ground handler. Typically your ground handler will add an admin fee to all charges for which they extended credit. The alternative, however, of paying directly for all services at destination could be a nightmare scenario, as you’d need to run around to all sorts of offices on the airfield and increase likelihood of operational delays and others issues.

4. Always use the ground handler you’ve pre-arranged

From time to time we run across cases where an operator has set up services with one handler but uses a different handler upon arrival. This may occur because a competitor handler shows up at your aircraft first. Always ensure that the handler you use at a destination is the same one you’ve received the quote/confirmation from. Otherwise, you may be liable for a cancellation charge, from the first handler, and a higher fee structure from the second.

5. Supervisory agents

At more remote airports – particularly domestic airfields with language issues, credit challenges, and/or commercial handlers unaccustomed to GA requirements – you may opt to have your 3rd-party provider bring in a supervisory agent from out of the area. There will be additional costs involved with this which include travel, hotel and per diem expenses; however, this local assistance is usually well worth the cost. Keep in mind that if your schedule changes at the last minute and you no longer require pre-arranged services, costs will likely still be incurred.

6. Handling fees change from time to time

Handling fee structures may change on an annual basis. In general, we don’t see big spikes in local handling fee charges, but fees may be impacted by inflation, local tax rates, the status of the local economy, and changes in airport fees.

7. Local tax considerations

Local taxes often add to your handling bill at certain destinations. In Europe, for example, average value added tax (VAT) assessment is about 19% on top of all handling charges. Other countries, including Australia and Canada, assess a Goods and Services Tax (GST) to all handling and support services rendered. Additionally, there may be assorted local airport taxes that operators may be subject to, depending on the destination.

8. Cancellation fees

In some cases ground handlers may charge a fee for cancelling pre-arranged services, or if you change schedule on short notice. While there are more ground handlers that do not charge cancellation fees than those that do, it’s always best to check in advance. Cancellation fees may apply to schedule changes made less than 24 hours prior to ETA. This is because, in part, the handler may already have personnel and equipment lined up for your arrival. Or, they may have brought personnel or support equipment in from off-airport specifically to look after your planned arrival.

9. Tips when changing pre-arranged handling

In cases where requested ground handing is no longer needed it’s always best to cancel these arrangements without delay. Ground handlers who charge cancellation fees often have fixed fee structures in place. Some, for example, will assess a 25% fee for service cancellations up to 48 hours out, a 50% fee for cancellation 24 – 48 hours prior to ETA, and 100% if your arrival is cancelled less than 12 hours out.

10. Expensive locations

Beijing (ZBAA) is one of the more expensive destinations for handling, parking and airport charges. It may cost a larger jet operator $15,000 or so to make a stop here (not including fuel or in-flight catering). And, this does not include landing permit and nav fees. Brazil can also be very expensive for aircraft handling, particularly at larger airports such as Sao Paulo Guarulhos (SBGR). North Asia is typically much more expensive, in terms of handling and airport fees, compared to Southeast Asia.

Conclusion

In general, we’re seeing international handling costs rise due to higher airport fees, personnel costs and taxes. Where there is competition between ground handlers, at particular locations, handling costs may not increase as quickly. It’s suggested that operators obtain handling cost estimates in advance of each mission. Ensure that you specify all the services needed, in your cost estimate request, and be aware of cancellation fees, especially for short notice schedule changes.

Questions?

If you have any questions about this article or would like assistance estimating your next trip, contact me at fredquinonez@univ-wea.com.

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Trip Cost Estimator Fred Quinonez has been in the aviation industry almost 24 years and tis an expert at estimating general aviation (GA) trip costs. Fred takes a comprehensive approach in proactively estimating costs for upcoming client trips and recently received an Employee of the Quarter award. With a background that includes over 10 years with the U.S. Navy, 4 years in active reserves with the U.S. Air Force and a degree in Electronics Engineering Technology, Fred has enjoyed a varied career and has established a wide range of expertise throughout the industry. He can be reached at fredquinonez@univ-wea.com.

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