Month: April 2018

Sky tough. Ground sound.

What contributes a good or even great business?
There are definitely many ways to measure.

However, to me, the key is in ROE or better yet, ROIC.

By and large, Airlines businesses generate low ROIC or even minus.
Flying in the sky is tough.
Assets are huge and competitions are tight.
It is an almost perfect competition in work.

However, handling the airlines grounding is generally milder.
Be it passengers handling, cargo handling or owning airports.

There are regulations, licenses and oversights either by Government or Standardisation bodies.
To a city, Airport is generally monopoly or duopoly.
To an Airport, it is more effective to give license to mono or duo established Ground handlers based on fulfilment of strict criteria and also the more important factor of good track records.

The barrier of entry of such ground handling businesses is much higher.

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