Transform your operations with a performance-based service model

Advancements in digital technology and the need for greater efficiency are driving change in baggage handling. As airports contend with increasing passenger volumes and rising expectations for seamless travel, effective end-to-end baggage operations are more critical than ever. Beyond choosing a baggage handling system and related technologies, true efficiency requires an optimal operation and maintenance strategy as well as the full and transparent collaboration of all stakeholders.

“Moving to performance-based contracts represents a strategic shift that can significantly enhance baggage operations.”
Jessica van Kruisbergen
Product Manager Airport Service Solutions

Many airports rely on external suppliers for operation and maintenance, through service contracts defined by specific tasks and labour requirements. However, given today’s complex demands, some airports are now considering a shift to performance-based service models, which focus on outcomes and leverage advanced technologies.

Traditional baggage service contracts focus on day-to-day operations, preventive maintenance performed on a fixed schedule, and on a break-fix model where repairs are made only when equipment fails. While these methods have been standard practice for years, shifts towards more proactive strategies can optimise efficiency and ensure predictable costs.

Exploiting the latest digital technologies

As digital technologies evolve, a performance-based approach is now a viable option through leveraging real-time data and advanced analytics to monitor and manage systems and processes. This service model also focuses on the customer’s desired outcomes rather than on the methods to achieve them. For airports, this approach aligns operational and maintenance activities with broader strategic goals. For instance, the service provider and airport could work together to achieve jointly defined objectives, such as increasing the bags-on-time rate or improving energy efficiency.

Performance-based contracts create long-term, mutually beneficial partnerships with transparent value creation. They foster data-driven decision-making, ensuring alignment and leading to guaranteed performance, improved total cost of ownership and predictable operations. These improvements collectively enhance passenger satisfaction by ensuring a smoother travel experience. Moreover, access to real-time data enables more informed decision-making and strategic planning, positioning airports for success in an increasingly competitive landscape.

Furthermore, performance-based contracts are generally recognised to be beneficial as they set clear expectations, as well as help to optimise systems and processes. Transitioning from a traditional service model cannot be completed overnight, and airports looking to make the shift may opt for a phased-in approach, while keeping the following key considerations in mind.

> Reviewing current operations

Conducting a comprehensive review of operational and maintenance practices helps identify key pain points, inefficiencies and areas where downtime significantly impacts operations. This assessment forms the foundation for setting clear objectives for a performance-based contract, such as reducing operational costs, improving system reliability, enhancing passenger satisfaction and increasing throughput.

> Engaging stakeholders

Operations, IT, finance, procurement and third-party stakeholders – including airlines and ground handlers – should be involved from the outset. Additionally, communicating with current service providers to understand their capability to shift to a performance-based model can provide valuable insights and foster a collaborative relationship.

> Selecting the right partner

Look for service providers with a proven track record and assess their technological capabilities. A capable supplier will be adaptable and will have the expertise to help smooth the transition by listening to your concerns and understanding your needs. Once a provider is selected, building a collaborative relationship is crucial for success.

> Developing a transition plan

The transition plan outlines the steps and timeline for moving to a performance-based contract. This should also include provisions for training staff, upgrading or integrating new technologies and setting up new performance metrics. Implementing advanced monitoring and data analytics tools is also important. Data from existing systems can be made accessible with the help of solutions such as smart sensors, while new systems are often digitally ready by design.

Moving to performance-based contracts represents a strategic shift that can significantly enhance baggage operations. By focusing on achieving business goals through digital solutions, airports can unlock new levels of efficiency, reliability, and cost savings. Following a structured approach and considering key factors will ensure a smooth and highly beneficial transition, setting the stage for success.

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