A shared-services model designed for the aviation industry
Expanding an airline network involves much more than securing aircraft, negotiating commercial opportunities and obtaining airport slots. Each new destination also requires a range of operational support functions, from preparing load sheets and managing customs formalities to coordinating catering, checking handling invoices and verifying revenue.
For decades, airlines have generally managed these responsibilities by building dedicated teams, investing in systems and training employees at each location. AGOS Aviation is proposing an alternative: applying the global capability centre model, widely used by multinational companies, to the aviation sector.
In banking, technology and manufacturing, global capability centres have become a way to centralise finance, operations and analytics within shared hubs serving multiple parts of a business. Many of these centres are based in India. AGOS is adapting the same approach to the specific requirements of airlines, bringing together backend functions that carriers have traditionally managed from their headquarters or individual stations.
The company, which began as a loadmaster business nearly 40 years ago, now provides a broad range of shared services for airlines. These include load control, customs management, catering coordination, invoice processing, revenue verification, contract management and crew scheduling.
Lowering the cost of internal operations
A case in point of the financial logic of the AGOS Aviation model is centralized load control.
An airline that performs this function in-house needs certified load controllers to cover departures 24/7 across multiple time zones. One position working 24 hours a day takes several employees if you include shift rotations, rest periods, leave and training.
But the costs don’t stop with employees. Airlines also have to pay for systems and licences, recurrent training, audits and contingency arrangements to ensure that operations can continue without a controller, especially during disruptions.
These commitments result in mostly fixed costs that airlines must reproduce for other functions administered within the same in-house framework.
AGOS aims to alleviate that burden by providing access to teams that have already been recruited, trained and are working to established standards. Its load controllers, customs specialists, invoice processors and other support professionals serve multiple partner airlines, allowing the company to pool resources and achieve economies of scale that individual carriers might find hard to duplicate on their own.
The pay-as-you-go commercial model also links costs to real service needs. Airlines can better align backend spending with flying rather than having a fixed cost base regardless of activity.
Scaling support as airline schedules change
Variable demand is yet another challenge for carriers, especially cargo operators with seasonal peaks or short-notice capacity increases.
An operator facing a busy period may need to add frequencies or secure an Aircraft, Crew, Maintenance and Insurance (ACMI) deal at short notice. It can be difficult to build the required in-house capacity within the available time. Instead, current employees could stretch teams and increase operational risk.
Once the demand dies down, airlines could be left with excess staffing costs or the tough job of cutting headcount.
AGOS offers an alternative solution, enabling operators to extend their service agreements to acquire more capacity. The extra support is there within a structured framework and is in line with the airline’s own procedures.” As activity slows, the support level can be lowered accordingly to reduce costs with demand.
The company says it has handled this type of operational variation on more than 110,000 flights, in more than 20 countries and 80 cities.
“For decades airlines have been rebuilding the same back-end functions over and over again, at every headquarters and every station. We believe that this capability can be shared, not diluted. Sanand Dhamija, managing director of AGOS Aviation, says an airline should be able to turn it on when they need it and wind it down when they don’t.
Standardizing processes across airline groups
Centralization can not only help manage costs and improve flexibility but also tackle inconsistencies that arise from backend responsibilities being split across different stations and local service providers.
When the reporting arrangements and accountability differ from one location to another, the procedures may also be different and the errors more difficult to identify and trace.
AGOS leverages a common framework to deliver consistent governance, reporting and accountability across each partner airline’s network. Standardized training, a 24/7 operating hub and structured recovery procedures aim to limit reliance on individuals or locations and reduce the risk of a single point of failure.
Moreover, it says that all services offered by the company are fully insured. Consistent procedures and operational discipline are needed for safety-critical activities such as load control and can also result in potential financial savings.
The arrangement does not require airlines to surrender control of their operating standards. AGOS works within the existing standard operating procedures (SOPs), systems and governance structures of each partner. At the beginning, airlines can outsource a single service and expand the relationship as confidence in the model grows.
Operational experience at the heart of the model
Outsourcing is not new to aviation. Aircraft leasing, third-party maintenance and ground handling were once regarded as activities too critical to entrust to external specialists. Over time, these arrangements became established features of the industry.
AGOS believes airline backend operations could follow a similar path, building on the experience it has accumulated over nearly four decades.
Its development began with a specialised task on the airport ramp: ensuring that an aircraft was loaded correctly. This work gave the company direct insight into airline operations, the pressures faced by frontline teams and the consequences of backend processes failing to function as intended.
As carriers including Atlas Air, CMA CGM Air Cargo and Silkway West Airlines entrusted AGOS with additional responsibilities, its services expanded to cover load control, customs, catering, station support and related operational processes. Each new function was developed using that practical experience and integrated into a common operating framework.
This background is a central part of the company’s positioning. Unlike a general outsourcing provider, AGOS draws on an organisation with direct experience of ramp operations. The teams preparing load sheets, processing invoices and coordinating customs documentation therefore work within a business familiar with the operational implications of their responsibilities for an aircraft and its departure.
Expanding into data, analytics and industry standards
AGOS is now looking to extend its capabilities beyond the delivery of day-to-day support services.
Its entry into the International Air Transport Association’s (IATA) Strategic Partnerships Programme provides the company with a platform to contribute to discussions around the industry standards underpinning its activities.
At the same time, AGOS is developing its capability centre to incorporate data and analytics alongside operational delivery. The objective is to evolve from providing backend services to becoming a broader operational partner, helping airlines improve their processes as well as manage them.
The wider business case for outsourcing ultimately depends on trust. Airlines must be confident that an external partner can perform critical backend functions with the same level of care and attention they would expect from their own teams.
AGOS has spent almost 40 years building that confidence, adding services and developing relationships with airlines over time. What began with the task of ensuring the correct aircraft load has evolved into a model designed to manage a much broader range of operations supporting each flight.
