Maurizio Interprets the SGHA
Maurizio Anichini
Introductions
What is the value of time?
• Preparation time to close an agreement?
• SLA – When is this discussed?
• What is the basis of the negotiation strategy ?
– OTP
– Value for money
– Expertise
– Global
– Safety record
Objectives
• Improve understanding of:
–SGHA background & framework
• Assist in:
–Making better use of the SGHA
–Identifying critical elements
Session Outline
1.
2.
3.
4.
5.
6.
7.
Definitions & background
GSPs & the SGHA
Structure
Liability
Simplified procedure Annex B
Versions
Examples
Definitions
• SGHA
–Standard only if it corresponds, to text published in IATA AHM 810
–Differences are recorded in Annex B
Background
• 1958: Standardisation of ground handling agreements expressed 11 airlines • 1964: European Traffic Committee approves the 1st SGHA
Background
• 1969: European Traffic Committee replaced by Ground Handling Committee
• 1974: Ground Handling Committee becomes Airport Handling Committee • 2nd revision to SGHA
Background
• 1983: AHM810 & 820 evolve into new AHM810 – AHM810: Agreements between IATA carriers
– AHM820: Agreements between IATA carriers and non‐airline handlers
• 5‐Year revision cycle effective
Background
• 1988: 1st IATA IGHC meets in YMQ. Replaces Airport Handling Committee
• 1990: Annex B Simplified Procedure approved & implemented
• 1993: “R” item deleted
• 1998: Article 8 amended
• 2003: New Annex A and addition of AHM810A
Updates
• 2004: AHM810A incorporated in Main Agreement
• 2008: AHM810 Yellow pages in Main Agreement (Cargo liability)
• 2013: Cargo liability
QUESTIONS ?
Environment & Use of SGHA
• Reciprocal agreements between 2 carriers providing similar services
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Evolution since 1950’s
• Airlines re‐focus on ‘Core business’
• Independent handlers expand market
• SGHA is revised to reflect the evolution
• Carriers form alliances
• Handlers form alliances & associations: ASA
Bilateral agreements
Using the SGHA as a tool
• Does not provide answers..
• What you put in is…what you get out of it
• Preparation is everything
• Why involve Ops people?
Using the SGHA to..
• Make staff aware of its content
• Build & strengthen relationships • Efficient operations & clear SLAs
QUESTIONS ?
Structure
• Main agreement
– Articles & Sub articles
• Annex A
– Sections
• Annex B – Paragraphs
Structure
1. PROVISION OF SERVICES 2. FAIR PRACTICES 3. SUBCONTRACTING OF SERVICES 4. CARRIER'S REPRESENTATION 5. STANDARD OF WORK 6. REMUNERATION 7. ACCOUNTING AND PAYMENT 8. LIABILITY AND INDEMNITY 9. ARBITRATION 10.STAMP DUTIES, REGISTRATION FEES 11.DURATION, MODIFICATION AND TERMINATION 12.AUTHORIZATION TO CONTRACT Annex A: Sections
1.
2.
3.
4.
5.
6.
7.
8.
MANAGEMENT FUNCTIONS
PASSENGER SERVICES
RAMP SERVICES
LOAD CONTROL AND FLIGHT OPERATIONS
CARGO AND MAIL WAREHOUSE SERVICES
SUPPORT SERVICES
SECURITY
AIRCRAFT MAINTENANCE
Annex B: Paragraphs
• Agreed upon specific items
• What have you Included & Excluded?
• Mutually agreed or Specific?
• Get out of it…what you have put in
The 2013 Main Agreement
QUESTIONS ?
Defining Liability
• Legal liability is the legal bound obligation to pay debts.
In law, a person is legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. Legal liability can arise from various areas of law, such as contracts, tort judgments or settlements, taxes, or fines given by government agencies. Liabilities may be covered by insurance, although typically insurance covers liability arising from negligent torts rather than intentional wrongs or breach of contract. Liability may also be imposed joint and severally in certain cases…
SGHA & Liability
• No liability prior to 1998
• Evolution of GSP • Accountability for actions to achieve fewer aircraft damages
• Airlines manage their risk exposure
SGHA & Liability ‐ 1998
“Handling Company shall take responsibility for any damage it causes to the Carrier’s Aircraft by negligent operation of GSE. The maximum limit of liability is USD1.5 million, however, if damage is below USD3,000 the Carrier can not claim”
Pro‐Active option
• Does your GSP profile itself as…?
• Transparent and shares: –Incidents, Accidents, Near‐misses
–Number of injuries
–Reported vs unreported events
Impact..
$ 4 to 12 B/per year
..on the Industry
Complex
Safety Oversight
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•
•
•
ICAO Annex 19
SGHA Sub Article 5.12
IOSA & ISAGO SMS implemented?
QUESTIONS ?
Simplify…Annex B
Document Management: Simplified procedure
• How many active agreements do you have?
• Do you sign the Main Agreement?
• Annex A & B?
• Use templates or copy & paste?
Significant elements
• The Title
• The Version
• Principal Offices of the Parties
• Date of effectiveness
• Validity
• Preamble
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Common mistakes
Common mistakes
PREAMBLE: This Annex B is prepared in accordance with the simplified procedure whereby the Parties agree that the terms of the Main Agreement and Annex A of the SGHA of January 2013 as published by the International Air Transport Association shall apply to this Annex B if such terms were repeated here in full. By signing this Annex B, the Parties confirm that they are familiar with the aforementioned Main Agreement and Annex A.
Agreements coding & numbering
Annex B1.0
Specifies Annex B
Location
Revision
number
Test your understanding..
Air noProfit” signed an SGHA with DoItRight GSP
Annex B1.0
How would you number the 1st
revision of the Annex B?
Annex B2.0
Annex B1.1
QUESTIONS ?
Devils & Details
• DO NOT copy and paste from other SGHAs • Use the templates available for each version from the IATA AHM
• Develop and use a records management system and coding to track agreements
• Make sure you use the corresponding Annex A coding with the specific version of the main agreement and record this in Annex B
QUESTIONS ?
Other agreement templates
• Standard Transportation Documents Service Main
Agreement AHM815
• Standard Training Agreement AHM 817
• Ground Handling Charge Note AHM830
• Truck Handling AHM 813
• Yellow pages
Case studies & examples
Scenario: Duration & Termination
• An airline signed an Annex B with a GSP. The specified period of validity is 1 Jan 2014 – 31 Dec 2014. • Airline requests, with agreement from GSP to extend the validity by 1 month. • Is there an obligation to provide 60‐day notice as specified in the Annex B?
• Giving notice in November 2014? • Can they consider the contract ‘automatically’
terminated from 1 Feb 2003 ?
Scenario: Strike
Alitalia pilots go on strike for even more money on their meal allowances. The strike totally halts the AZ operations.
1. Should their GSP still be paid
2. Why ?
3. If Yes, How much ?
Scenario: Sub-contracting & Liability
Turbulence airlines have contracted Maurizio’s Bumper
handling company to handle flights in Bangkok. Turbulence
have leased an aircraft from Air noProfit to operate today.
As Maurizio’s Bumper handling company is very busy and
the flight is late, they have subcontracted Superfast Ground
Services to handle this flight.
Superfast Ground Services has a handling contract with Air
noProfit .
Unfortunately during the turnaround, the belt loader
damages the aircraft. Who is liable (all contracts are SGHA
2013).
Scenario: Annex A references
You are starting a ground handling company at an
airport where PRM handling is licensed to a
specialised company. How are you going to cover
PRM handling with your customer airlines ?
Provide ?
Arrange ?
Subcontract ?
Scenario: Liability
Ricky’s ground handling services has a valid Annex B based on the 2008
version of the IATA SGHA with his customer Air noProfit .
The handling company’s catering truck was approaching the Air noProfit
aircraft in retracted position. After having taken up its position below the
rear door, the driver engaged the hoisting mechanism in order to line up
the truck’s lifting cabin with the door. Unfortunately, members of the
aircrew opened the door as the hoist was rising. The door was seriously
damaged.
Ricky’s catering team was operating according to the procedures set in
the local Aviation Academy indicating that the catering vehicle should be
in its final position prior to the door being opened.
In your opinion, how will responsibilities be established
Scenario: Bay incursion
Airline A has a contract with GH 1 who sub
contracts some of the work for airline A to GH 2
GH 2 is driving a Pax Step behind Airline A, en
route to a parking area when the step hits Airline
A.
Airline A operates a 777, can they claim for
unlimited damages?
Why, Why not?
Scenario: Follow me…
International Airport with a follow me car
operation.
•A380 follows car to stand
•Follow me car turns off to look at equipment parked
over the line
•Gate automated guidance system turned on when
follow me car pulls off by GSP Marshaller
•A380 engine 1 impacts a push back tractor that
belongs to another GH
•How is the liability assigned?
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Scenario: Tow tractor
• B737 NLG collapses due to tow bar failure,
investigation reveals that tow bar is mechanically
correct and shear pins are up to manufacturer
specification.
• Investigation reveals that the GSP is using a
tractor with too much power however the carrier
never supplied any guidance on what tractor to
use, so they have followed their own internal
procedures.
Your thoughts?
Scenario: Due diligence & Termination
Air noProfit hires a new contracts manager who asks to
review the contracts in place. He finds the following in one
Annex B:
11.2
“notwithstanding sub-article 11.4 of the main
agreement the duration of this annex B has been agreed to
cover a fixed period of three (3) years”
11.4
“notwithstanding 11.4 and 11.5 of main agreement
this agreement shall continue in force until terminated by
either party. Notice must be given by registered letter 60
days in advance to the end of a flight plan period”
Your interpretation?
Take aways
• Do not change the wording of the SGHA and of the Annex A
• Use the Annex B to record all agreed points, changes and variations.
• PREPARATION is key, do your research and involve the right people
• Validity of your contract will depend on what you negotiated and ‘notwithstood’ in the Annex B
Take aways
• First liability clause in Main Agreement introduced in SGHA 1998, was changed in 2004 and increased the exposure of the handler
• Safety oversight, SMS, ISAGO
• ICAO Annex 19
• Simplified Annex B: Print & Sign
• Do not change Preamble