By Rob Morris
Thomas Widegren on how taking a chance led to an established airport equipment maker in the region.
Some 15 years ago, Thomas Widegren was stood in an Italian-based office, gambling his company's fate on nothing more than a drawing pin.
With a world map before him, Cavotec Group's executive chairman closed his eyes and decided to expand the company where ever he placed the pin. Looking back, he believes randomly selecting Dubai was a defining moment for the airport, mining and marine equipment manufacturer.
If the Dubai Department of Civil Aviation is satisfied with what we are offering, it will consider us for Jebel Ali.
"We had a company in Italy, which I was responsible for, but myself and the co-directors could see it was a line of business we should no longer be in," Widegren says. "We sold it off leaving me with no work, so I had to find a new market and eventually came across Dubai."
Having taken a "leap of faith", Widegren researched Dubai's market and spotted huge potential for Cavotec's marine, mining and eventual airport operations. The latest financial figures suggest he was right, with the company's aviation business generating US$27.2 million in 2006 - a 10% increase compared with 2003.
Widegren says Cavotec's Middle East operation mostly focused on the marine industry until 2003. But during the past four years, the company has carved out an established aviation business. Cavotec Fladung develops mobile ‘caddy' units that are plugged into stationary aircraft to provide electricity, water and air conditioning before take off.
The caddy concept proved a big hit with Frankfurt airport operator Fraport AG. In recent years, the German company has bought several Cavotec products, encouraging other businesses like Fladung GmbH to follow suit.
Indeed, the airport equipment manufacturer established an alliance with Cavotec on January 1, 2004 following months of talks.
According to Widegren, Fladung's eponymous owner was keen to establish a partnership and secure the company's future following a serious illness. "It all started from there and we came into aviation on a banana; we slipped into it."
Despite settling quickly into aviation, Cavotec's management was surprised by the lack of progress across the industry. "We saw a world that was Stone Age because they [airline operators] have modern technology in new aircraft but on the ground they have no new development, no new ideas, nothing," Widegren says.
The Cavotec team noticed that airlines were losing revenue by keeping aircraft grounded for too long. Widegren and his co-directors subsequently devised a strategy to reduce turnaround times for refuelling and ground checks. "An aircraft is only earning money when it's flying," he says. "So we came in and looked at ideas for creating more efficient systems."
Removing unnecessary equipment and cutting staff were the obvious steps, according to Widegren. To further reduce turnaround times, Cavotec's design team developed a mobile caddy that plugs into the aircraft's belly. Widegren says providing electricity from under the plane creates more space for ground handling operators to work.
"You have less cooks making the soup, so we simplified the system while trying to increase efficiency and productivity. Normally, on a new large aircraft you can walk under it without any problems, which means you can also operate from underneath." Like Fraport AG, airport operators and civil aviation authorities in the Middle East were quick to enlist the caddy system. During the past four years, Cavotec has secured several clients, including Dubai Department of Civil Aviation, UAE carrier Emirates and chartered flights provider Royal Wings.
The company has worked on Concourse 2 at Dubai International Airport and is in talks with Qatar Airways about carrying out similar duties in Doha. Elsewhere, Cavotec supplies marine, mining and aviation services to some 40 countries across Europe, the Far East and Australia. The caddy system may be Cavotec's flagship aviation product, but Widegren and his colleagues are also keen to roll out new systems.
Its latest venture is a more energy efficient and environmentally-friendly air conditioning unit for aircraft landing in hot climates. Most planes carry an auxiliary power unit - a turbine located in the tail - which consumes some 800 litres of kerosene an hour.
It's a costly system that reduces airline profits while boosting fuelling company coffers, according to Widegren.
"If you have 120 aircraft sitting in Dubai and running on an auxiliary power unit (APU) it creates incredible pollution," he adds. "Why are they running APU? It comes down to aircraft not having technically competent air conditioning systems in place."
In most cases, pilots have no other choice than to run the APU unit while grounded. The system helps power the plane before take off, although airport operators in Zurich, Brussels and London are clamping down. Indeed, pilots flying out from these hubs can only switch the APU on two minutes before departing. "If you take Terminal 5 in London as an example, it is the first full green terminal in the world and it's forbidden to run the APU before leaving," Widegren says. Nevertheless, most airports still allow pilots to run the system for long periods on the ground. To reduce fuel consumption while the APU is active, Cavotec has developed a more energy efficient air conditioning unit.
The benefit for airlines is having a system that continues to cool the aircraft while cutting kerosene costs. Widegren says the unit is attracting interest from several authorities and airport operators, with orders expected soon.
Aside from the caddy unit and air conditioning systems, Cavotec is also developing a transportable tow bar for carriers. The idea came last June during a Q&A session at Airbus' A380 conference in Toulouse. An Emirates representative asked Widegren whether Cavotec could produce a tow bar small enough to carry onboard a plane. The delegate explained how pilots on five Emirates flights were forced to make emergency landings after passengers suffered heart attacks.
An aircraft is only earning money when it is flying, so we came in and looked at ideas for creating more efficient systems.
Once the respective passengers were treated, the pilots had to call in ground handlers to manually turn the aircraft round for take off. With a tow bar on board, workers can now use a lorry to reposition the plane.
The tow bar was developed by Widegren and his team soon after the conference. Airbus has already bought into the concept, with one A380 carrying the instrument. The aircraft manufacturer is expected to order more tow bars in the coming months.
Widegren: "Each A380 and other Airbuses down the line will have this as a standard. It's like having a spare wheel on a car, making it easier to move planes into position following an emergency landing."
The company's rapid rise since 2003 is attributed to capitalising on an untapped resource. Indeed, Widegren says there were no companies in the region providing a range of airport equipment services when he arrived. In his words, Cavotec is the market leader with only two smaller competitors operating in the region. "We are growing not only here but worldwide," he adds.
To cope with demand, Cavotec recently relocated to new premises in Jebel Ali Free Zone. The site, which cost $2.7 million, has 1000 m² of office and 4000 m² of warehousing for storing parts and manufacturing. "It's a message that we will increase our presence in the Middle East," Widegren says. "We are here for the next 20-30 years, which is what customers will look at."
Cavotec's grip on the aviation market helps in negotiations, according to Widegren. He believes the company's work with Dubai International Airport will prove invaluable when pitching for contracts once the new hub in Jebel Ali becomes operational.
Widegren: "We are in the picture and this issue is being discussed. If the Dubai Department of Civil Aviation is satisfied with what we are offering it will consider us for Jebel Ali and we will make a big effort to get the orders. We have our mobile and fixed systems and now air conditioning units, giving us additional value." While securing contracts is high on the agenda, Widegren also wants to launch a 24 hour service. If established, Cavotec will be on hand to provide air conditioning installation and caddy units around the clock. "We are working from Muskat to Cairo and I have confidence we will be able to deliver," he says.