Outsourcing Airside Services

But first, a disclaimer: I've worked on all sides of the fence - aerodrome owner/operator, airside services provider and as an aerodrome inspector auditing airports. However, none of the following should be attributed to any particular organisation or individuals with whom I've worked. I have deliberately confounded the following to highlight the issues I have seen and experienced when organisations outsource their airside operations and/or obligations.

Anything that can be has been outsourced in modern business. For the purposes of this article, let's use a rather broad definition of outsource and simply say that it is engaging a third-party organisation to provide a service to you that meets your business requirements. The reason for the breadth of this definition, is that I have seen a similar breadth in the outsourcing models used by aerodrome owners across Australia.

Without any real data to back me up, I'd say most people are familiar with the outsourcing of call-centre based customer service. But this more modern version involving "off-shoring" might grab all the attention but for years, small and medium businesses have been in the outsourcing game with respect to their legal and financial activities.

From my personal experience and a little research I did a while ago, I'd say that Australia's mining boom has driven the outsourcing of airside activities trend. Mining companies are very familiar with outsourcing business activities including things some would consider its core business. When the FIFO phenomenon took off*, mines required aerodromes to ferry workers in and out and staff to inspect and maintain them. Operating an aerodrome (some would later become airports), is obviously not core business for a mining company and thus, became fertile ground for outsourcing.

Scope Creep

At the very foundation of airside activity is the aerodrome serviceability inspection and, in the early days of mine site aerodrome operation, this was the focus of outsourcing efforts. But even now, I'm not so sure that there was a clear, shared understanding as to what was required of or wanted in an outsourced airside service provider.

The second big ticket item for me is wildlife hazard management and at some aerodromes this was as minimal as checking the runway for kangaroos before the flight. Still other tasks included changing runway lights, minor maintenance and replacement of markers, mowing, dragging and monitoring airside security during flights.

But again, what the aerodrome operator wanted out of the service provider and what the service provider was prepared to do or capable of doing didn't, in my observation, always line up. This was sometimes a case of the aerodrome owner not knowing themselves what was required to operate the aerodrome and in some cases the service provider not knowing how to execute the scope to which they had agreed.

In the later case, this was often the result of an already established support service provider (either the village operator or paramedic services provider) being given the responsibility for the aerodrome with little or no shared understanding of what that entails.

Buying Capability

While some businesses outsource to increase capacity, in this case we are generally speaking about gaining a capability - either a qualification, certification, specialist knowledge and/or experience. Into this void a number of organisations developed or harnessed their aerodrome operation expertise to offer aerodrome owners their capability as a service.

And this really opened up the potential of this market by giving aerodrome owners the option for a holistic outsourcing model and numerous potential service providers from which to choose. The opportunity to procure on-site aerodrome personnel with support from a larger, deeper pool of aerodrome operational expertise helped to usher in a new approach to outsourcing.

Just Don't Scratch It

Handing over the keys to your aerodrome requires trust and, in my personal opinion, I have seen a number of situations where that trust has been mis-placed. With respect to the arrangements to which I have seen, the more common failings on the part of the aerodrome operator have been:

• Mis-placed trust in the contract scope - Contract scopes are difficult to write, especially in a changing environment. For an aerodrome owner looking to outsource their airside activities, this task is often outsourced as well. Even consultants with the best of intentions need to work closely with the aerodrome owner to understand their needs and, as is often needed, to educate them on their needs.
• Mis-placed trust in the tender process - Every scope, regardless of how good, gets twisted and contorted during the tender process. Even setting aside non-conforming bids, as different parties negotiate, the meaning of clauses is discussed. In most cases and especially in the case of consultant-drafted scopes, the meanings may evolve beyond the original intent. Just on two years ago, I released a tender that I had carefully crafted and I was surprised by how many ways my words could be interpreted. To get the best result, I had to explain what I meant and in some cases, amend my words to make them clearer.
• Mis-placed trust in the contractor - There is no denying that some organisations in the outsourced services business are great at marketing but come up short on execution. I'm not suggesting any ill intent on the part of these businesses or any individuals but rather, that they have developed cultures that promote their business development performance above their execution capability. These organisations are typically good at hiring in expertise at the service-delivery level (for example the aerodrome or airport manager) but lack depth in their organisation when it comes to technical understanding and support.

The potential outcome of one or more of these failings can mean good people (on both sides) become locked into an ineffective contract that risks safety and performance while costing more than it should. 

One Step Too Far?

We haven't mentioned the aerodrome certificate yet (or for that matter, relevant security certification). It is possible, to surrender the aerodrome certificate and to permit the service provider to apply for it instead. This is a step I have always been reluctant to take.

I can see the attraction to an aerodrome owner wanting nothing to do with the operation of the aerodrome. But, I feel that it doesn't address the risks the owner is looking to avoid and in addition it raises a new one.

From my very non-expert understanding of workplace health and safety law, unless the agreement between the owner and the service provider reaches the level of long-term lease akin to "privatisation" of the airport, there still seems to be a link that could hold the owner as responsible for safety on site (either as a direct or influential PBCU (person conducting business or undertaking)). The nature of this responsibility has always seemed like a question in need of answering before going down this path.

The risk that is introduced, of course, is that poor performance of the service provider could lead to a loss or suspension of the certificate. The result being the closure of the aerodrome and the cessation of flights. While this would be drastic action on the part of the regulator and not lightly taken, the consequences could be felt for weeks or months before operations could be resumed.

In my experience, these two risk-related issues have been enough to steer owners away from this option but others have taken it with no catastrophic effects to date - maybe I am too cautious.

The Smörgåsbord of Operating Models

The above discussion has been leaning in one direction but there is a plethora options from which aerodrome owners can select an operating model that suits them. And they should look at it as an operating model first.

I was perhaps too harsh to the situation above involving outsourcing the aerodrome serviceability inspections to the mine site's village operator. This is a perfectly legitimate operating model provided that the aerodrome owner comes at it from a position of understanding what they are getting, what they are not getting and what they need to be safe and comply with the rules. If other activities must be undertaken, they can be retained in-house or likewise outsourced to suitable organisations as a compartmentalised service to be provided (ie they provide their own expertise).

In my last role, I developed a model where the service provider's actual service would be supply people trained to a basic aerodrome reporting officer level (some with experience) who would then be directed in their work by an in-house team of qualified supervisors using a system developed by the aerodrome owner. This model worked for me because I had the expertise and had built a team around me to support it (I'm also a control freak :) ) but it might not work for everyone.

Lessons Learned

There has to be something actionable out of this rant. So, in true modern blogging style, here are some hints & tips for those looking at outsourcing their airside services.

1. The Aerodrome Manual is King

Given that the aerodrome certificate rests upon compliance with this document (or the exposition in other jurisdictions), I believe any contract should also defer to it.

2. Retain Control of the Aerodrome Manual

If you follow step one, please consider retaining control of the aerodrome manual, even if you require an independent third party to help you maintain it. To defer to the manual in the contract and then give control to the service provider, would be like allowing them to write their own scope.

3. Consider Bringing some Expertise In-house

This will depend on the size of the operation but I have to say, and I admit that I am biased, I think it drives a better outcome regardless of the operating model. For smaller organisations, look to retain third-party expert advice that is free of potential conflicts.

4. Consider Potential Synergies for Contracted Service Providers

Again, depending on the level of operation at the aerodrome, an airside service provider might find other opportunities available on-site or nearby to either offset costs or maximise returns. A good example is providing aircraft-handling-related services that are wholly independent of the aerodrome operation.

If such a thing is to be permitted, consideration of safety responsibilities, commercial terms and potential clashes in demands must be made explicitly and prior to additional services being provided.

There will also need to be some clear guidelines on priorities as circumstances are bound to change...

5. Factor in Change Mechanisms

Include in the contract a mechanism to manage change. This change could be operational (increased traffic), environmental (increased wildlife activity) or regulatory (all aerodrome reporting officers must wear red hats). If you have followed step one, these changes will be incorporated into the aerodrome manual and therefore become enforceable under the contract.

But before you get to that, have a collaborative way of making those changes. There is always the potential that the change will have a commercial impact. Taking one of the examples from above, increased traffic might mean longer hours of operation and increased personnel requirements. The service provider will need confidence that the contract scope won't creep by stealth through the aerodrome manual and the aerodrome owner needs flexibility for when things, inevitably, change.

Obviously, there is a lot more to consider with the culture, risk appetite and business model of the aerodrome owner. And, of course, you could always go completely in-house!

Photo credit: a tweaked version of a photo by Negative Space

* And Moses says: