Airlines have secured cargo handling rate reductions of as much as 67% in some European markets between 2020 and 2025, but that competitive pressure is now reversing as multi-country handling networks absorb the remaining independent operators, consultant Olivier Bijaoui of OB Invest told the Aviation Connect event in Athens.

How did the market consolidate?

Between 2000 and 2020, the cargo handling industry shed dozens of independent operators through acquisition or exit, Bijaoui told delegates. The larger players responded by stitching together networks across multiple countries, giving airlines the ability to tender for several stations with a single supplier rather than managing a fragmented roster of regional contractors spread across borders.

The bigger handlers then competed aggressively for new business. Research into European handling markets suggests that contest pulled unit costs sharply lower, with rates down by as much as 67% in some markets over the five years to 2025.

The combination of multi-country reach, lower per-unit pricing and upfront incentives transformed tendering outcomes across the period. The savings arrived with contractual concessions carriers had not previously seen. "The competitive nature of the market even resulted in some handlers offering a signing bonus when airlines sign a new contract," Bijaoui said.

What is changing in the supplier base?

The past six years have produced a second wave of consolidation, this time through mergers between the larger networks themselves rather than takeovers of small independents.

Bijaoui drew a sharp distinction between the first wave, which built international networks out of regional operators, and the second wave, which is now reducing the credible alternatives that gave procurement teams leverage at the negotiating table.

Consistent price compression has weakened the smaller operators who might otherwise keep the networks in check, eroding the credibility they need to win or renew major contracts, Bijaoui argued. The result is fewer credible competitors for tenders — the very field that produced those signing bonuses and double-digit rate cuts in 2020-2025.

If market exits and consolidation continue, airlines could find themselves choosing among a limited number of large international networks, with weaker service levels and higher unit prices the likely outcome.

What does this mean for airline procurement?

The narrowing of the field shifts bargaining power back to the surviving networks, Bijaoui warned. "What we are seeing is global networks taking more importance but there needs to be a response to this and an initiative because ultimately airlines will suffer whether they like it or not," he said.

He sharpened the point for airline procurement teams in the room. "When you are an airline and you have less and less potential choice, then the power goes in the other direction and then the procurement [teams], as good as they are, will not succeed because they have no choice," Bijaoui told the conference.

What is Bijaoui's prescription?

He called on the industry to preserve enough credible suppliers for competition to remain effective and sustainable over time. "I am all for competition and all for bringing this industry the capacity to have the best possible service at the right price, but there is a moment where somebody has to react to what the situation is," he said.

He added: "Airlines have to be very careful about the fact that their choice is getting slimmer and slimmer, and it will have an impact on their price whether they like it or not."

The open question is whether that reaction comes from airline procurement teams, airport authorities or national regulators — or from the handlers themselves. The direction of travel in cargo handling now points the opposite way to the 2020-2025 window, when competition alone delivered headline rate relief for carriers across selected European markets.