Jetstar's ground handler backs out

Changi Airport's newest ground handler has terminated its contract with its first and only airline customer, The Straits Times has learnt.

The decision by the United States-based Aircraft Service International Group (ASIG), which started serving low-cost carrier Jetstar about eight months ago, is a big blow to Changi Airport's plans to inject competition into the ground-handling market.

ASIG and Jetstar both confirmed the decision to split but neither would say why, except that it is due to a commercial disagreement.

The airline has already appointed Sats, which used to handle its flights before ASIG came into the picture, to take over from July 22, a spokesman said.

Singapore-based Jetstar Asia and its Australian affiliate, Jetstar Airways, operate a total of about 630 weekly flights to and from Singapore.

The priority now is to ensure travellers are not affected during the transition, the airline and ground handler both said.

An ASIG spokesman said: "We will continue to work closely with Jetstar and Changi Airport to provide our customers and the travelling public with safe and timely service."

This is the key focus for the airport, said Changi Airport Group spokesman Robin Goh.

The latest developments come about eight months after cracks first appeared in the Jetstar- ASIG partnership.

On the first day of operations last October, manpower constraints led to massive chaos, with flight delays and baggage issues for thousands of Jetstar passengers.

Despite the bad start, sources said service levels have improved since then and the latest development is unlikely to be related to the earlier fiasco.

It is not clear if ASIG will exit the Singapore market after its contract with Jetstar ends.

But industry analysts said it would be tough for the firm to find new customers in a highly competitive space dominated by incumbents Sats and Dnata.

ASIG declined to comment on its future plans.

Also uncertain is the fate of its close to 300 workers, some of whom have already been served termination letters, sources said.

The ground handler, which employs more than 8,500 people across its operations, has a significant presence in the US and Canada. It also has operations in Britain.

With air traffic growing strongly in Asia, ASIG had grand plans to expand its foothold in this region when it was awarded Changi Airport's third ground-handling licence in 2011.

But it was tough to make headway. After much effort, ASIG clinched Jetstar as its first customer last year.

If the firm decides to exit the Singapore market, it would be the second time this has happened.

Changi Airport first brought in a third ground handler, Swissport, in 2005. But the global European company quit in 2009 after four loss-making years.

karam@sph.com.sg

This article was first published on June 04, 2015.
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