New Acsa spat over ground handling licence

By Time of article published Aug 24, 2008

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Cape Town - A fresh legal tussle over the ground handling services at Airports Company South Africa (Acsa) is looming, as Menzies Aviation, a subsidiary of London-listed John Menzies, is challenging the award of a ground handling licence to Swissport.

Menzies and BidAir Services were awarded ground handling licences earlier this year. Swissport's licence was granted last month, after the resolution of a legal spat between Acsa and Equity Aviation.

Forsyth Black, Menzies' senior vice-president for Africa, said on Friday that papers were lodged in the Witwatersrand high court two weeks ago.

The group believed a third licensee would "destroy the market", possibly within five years, said Black.

Menzies alleged that the way the Swissport licence was issued appeared to breach both its own licence as well as the legislation governing Acsa.

It is seeking either the cancellation of Swissport's licence or the limitation of its operation to OR Tambo International Airport.

Solomon Makgale, an Acsa spokesperson, said the state-owned enterprise would "certainly oppose the claim".

He said: "What the industry requires is competition. Through the appointment of a third company that is exactly what we've done."

Blake Sclanders, the vice-president for marketing in South Africa at Swissport, would not comment as the company did not wish to jeopardise the legal proceedings.

Equity, which emerged from the old ground handler Apron Services within the SAA stable, failed to apply when Acsa issued a new tender, as it did not believe its contract had expired.

But it lost a court bid challenging Acsa's decision, at the same time as Acsa appointed Menzies and BidAir as the first two licensees. The third licence was granted to Swissport once Equity's court challenge was resolved.

In the meantime, SAA and its low-cost carrier, Mango, appointed Swissport to replace Equity as their ground handler from February this year.

This lucrative interim contract gives Swissport an estimated 40 percent share of the local ground handling market.

SAA has launched a tender process for a permanent ground handling contract.

Menzies is the smallest of the three licensees that contract to provide ground handling services for about 30 airlines, including SA Express and Cathay Pacific, at six South African airports.

BidAir, owned by industrial and services conglomerate Bidvest, is the ground handler to British Airways/Comair and its low-cost carrier, Kulula (in which Bidvest holds a stake), among other airlines.

Black complained that Acsa had never formally told Menzies that Swissport would be entering the market.

"We have brought R200 million into South Africa and employed 1 000 people," he said.

"We are doing everything we said , and somehow we are having the rug pulled from under us. Obviously we've got a right to defend ourselves."

Makgale said Acsa had "made it clear", when Menzies and the other tendering parties had first submitted their bids, that it intended appointing a third ground handler.

Meanwhile, commentary in John Menzies' financial results for the year to June, released in London last week, said the South African operations were "overstaffed" and action was being taken to cut labour levels.

Black said the commentary was outdated, as just more than 100 people had been retrenched about three months ago.

Menzies had overemployed when it started operations, both because of uncertainty about Equity's contracts and the unusually few no-shows among South African workers against global standards, he said.

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