Operations Review - SATS

Operations ReviewWe provide passengerservices, baggage handling,airfreight handling,apron services, inflightcatering, aviationsecurity, and airlinelinen laundering.14

equivalent of 10 soccer fields, and a capacity toproduce 45,000 meals a day. SICC1 has the latestcatering systems and equipment to ensure thatmeals served on board the aircraft are producedhygienically, are of the freshest quality and aredelivered punctually to the aircraft.To cope with future demands, the productioncapacity of SICC1 can be increased to 60,000 mealsa day through a Phase 2 building expansion.Developments at the SATSGroup during the year in reviewcontinued apace, in line withour efforts to stay at theforefront of the industry.Investments In State-Of-The-Art FacilitiesIn July 2000, we successfully moved our Groupheadquarters and catering operations to our newSATS Inflight Catering Centre 1 (SICC1). The oldpremises had to be demolished in order to makeway for the construction of Passenger Terminal 3at Changi Airport.Built at a cost of $217 million, the new SICC1 hasa gross floor area of 60,000 square metres, or theMeanwhile, construction of our sixth airfreightterminal, at a cost of $270 million, has beencompleted and we have begun partial operationssince April 2001. The 800,000 tonnes of handlingcapacity for this new airfreight terminal hasincreased SATS’ total cargo handling capacityto 2.1 million tonnes a year.Another major facility, the SATS Express CourierCentre 2, costing $30 million, is on schedule to becompleted in September 2001. This new purposebuiltfacility for DHL Worldwide Express, a longstandingpartner of SATS, will add another 180,000tonnes of handling capacity a year.Investment OverseasSATS acquired a 19.21% stake in Evergreen AirlineServices Corporation (EGAS), a company thatprovides ground handling services at Chiang KaiShek International Airport in Taipei. Our stake wasincreased to 20% in May 2001. EGAS is SATS’ secondinvestment with the Evergreen Group in Taiwan,having earlier invested in a 15% stake in EvergreenSky Catering Corporation at the same airport.15

Operations ReviewSATS has always stressedthe importance of providingexceptional customer servicein all areas of its business.Increasing Customer BaseAs at the end of fiscal year 2001, the SATS Groupprovided services to a total of 47 scheduled airlinescalling at Singapore Changi Airport. Two new airlinecustomer contracts were clinched during the year:• One of the world’s largest air cargo carriers,Evergreen International Airlines, commencedtwice-weekly B747 freighter services betweenSingapore and Taipei on 12 April 2000.• On 10 April 2000, we concluded a comprehensiveground handling agreement with TransmileAir which operates B737 scheduled freightercharters four times weekly between Singaporeand Penang.In addition, SATS was again appointed the officialground handling agent for one of the world’sleading air shows, Asian Aerospace 2000, the firstmajor air show to be held in the new millennium.Delivering Exceptional Customer ServiceSATS has always stressed the importance ofproviding exceptional customer service in allareas of its business.Our operations staff benefited from the Yes!To Exceptional Service training programme whichbegan in May 2000. The programme challenged staffto think laterally, adopt a “can-do” attitude andinstil a deep desire to improve service levels.The first working day of August has also beendesignated as SATS Service Day. Management staff,including the Chief Executives, worked alongsidethe operations staff to promote team spirit andto understand better the challenges faced byour employees.16

Awards & AccoladesOur commitment to service excellence has won usrecognition. Besides special mentions for outstandingservices and acts of honesty from local stationmanagers and the airport authorities, SATS receivedseveral awards including the Partners In ExcellenceSilver Award from British Airways; Overseas BestCaterer Award from All Nippon Airways; InternationalCatering Award from United Airlines; MostConsistent Caterer Award from Cathay PacificAirways; Airport Services Purchasing GroundHandling Supplier Award and Airport ServicesPurchasing Supplier Award from Qantas Airways.SATS Cargo received the ISO 14001 certificationfor our environmental management system.Both Apron Services and Baggage Services receivedtheir ISO 9002 certifications from the SingaporeProductivity & Standards Board in 2000.SATS Security Services and Edith Cowan Universityjointly received the Outstanding Achievement inCollaboration in Education & Training award fromthe Australian Business/Higher Education RoundTable. This award was in recognition of our jointefforts in developing a Diploma Programme inSecurity and Police Studies, launching scholarshipsfor these diplomas and introducing other initiativesto increase the level of aviation security worldwide.AwardsUnited Airlines InternationalCatering AwardSATS CateringQantas Airways/British AirwaysBest Station AwardSATSAll Nippon AirwaysOverseas Best Caterer Award (Bronze)SATS CateringBritish Airways “Partners In Excellence”Silver AwardSATS CateringCathay Pacific AirwaysMost Consistent Caterer AwardSATS CateringQantas Airways “Airport ServicesPurchasing Ground Handling Supplier” AwardSATS Airport ServicesQantas Airways “Airport ServicesPurchasing Supplier” AwardSATS Airport ServicesAustralian Business/Higher EducationRound Table Outstanding Achievement inCollaboration in Education & Training AwardSATS Security Services/Edith Cowan University17

Operations ReviewSATS serveda total of 24 millionpassengers at SingaporeChangi Airport,an increase of 10.6%over the previous year.18

Passenger HandlingAs a service-oriented company, SATS has alwaysbeen committed to making improvements for thecomfort of airline passengers. In June this year,SATS Premier Lounges in both terminals, set upfor airlines that do not have their own lounges,renovated their premises and expanded the rangeof refreshments provided.In October 2000, we started providing check-in andgate boarding services for Lufthansa German Airlines.SATS is committedto providing caring andefficient service to allour passengers.Passengers requiring special assistance such asthe wheelchair-bound, unaccompanied childrenand the elderly can make use of the Special ServicesLounges at each Passenger Terminal, which wereredesigned and moved to bigger premises.Passengers requiring help with lost baggage canapproach our mobile service desk at the baggageclaim belt. The Transfer Counters were alsoredesigned using a Lounge concept. Instead ofrow-queuing, a queue number system is now used.Passengers can now wait in comfort on sofa seatsuntil their queue numbers are called. These areexamples of our continuing efforts to be more visibleand accessible to the passengers, thus enhancingtheir convenience and comfort.We have formed a Products and Services Developmentcommittee to keep abreast of industry trends andcome up with new products and service innovations.Several ideas leveraging on information technologyare being worked on and we expect to implementthese in the coming year.19

Operations ReviewSATS handleda total of 75,560flights at SingaporeChangi Airport,an increase of 4.6%over the previous year.20

Baggage HandlingAny passenger would agree unreservedly thathaving one’s baggage miss the flight or mishandledwould spoil one’s travelling experience. That’s whySATS’ baggage handling unit has continually strivedto keep the number of mishandled cases to abare minimum.Our target for baggagedelivery is one of the mostchallenging amongstthe world’s major airports.There are several reasons why baggage can bemishandled, for instance, insufficient flightconnecting times or staff error. To achieve serviceexcellence, we have set a target of having fewerthan 1.1 pieces of mishandled baggage per 10,000departing passengers. In addition, we have also seta target of delivering the first bag on the baggageclaim belt within 12 minutes of an aircraft’s arrival.We have consistently met these targets, therebyassisting Changi Airport to maintain its leadingposition as a world-class international aviation hub.In July 2000, SATS Baggage Services, SIA GroundServices and the team of SIA staff stationed inKuala Lumpur were part of a forum to discussways to improve baggage handling for transferpassengers on the Singapore-Kuala Lumpur-Singapore shuttle flights. We also participatedin numerous discussions with the Civil AviationAuthority of Singapore and our airline clientson industry trends and developments to furtherimprove our baggage handling performance.21

Operations ReviewCargo and mail handledby SATS increased by6.1% to 1.43 milliontonnes in FY2001.22

Airfreight HandlingWe have constructed a new airfreight terminal(AFT6), equipped with a fully-automated materialhandling system capable of handling 800,000tonnes of cargo a year. Built at a cost of $270million, AFT 6 is one of the most sophisticatedairfreight facilities in the world. We began phasingin operations in April 2001, and expect the facilityto be fully operational by September 2001.Our cargo facilitiesare now fully-integratedwith an efficient cargooperations system,COSYS.We began construction of our second expresscourier centre (ECC2) in May 2000. Costing$30 million, ECC2 is expected to be operationalin September 2001. This 180,000 tonne-a-yearpurpose-built facility will be used mainly by DHLWorldwide Express to expand its operations hubin Singapore.With AFT6 and ECC2, our total cargo handlingcapacity will increase by 75% to 2,270,000 tonnesper year.In February 2001, we cut over a client serverbasedwarehouse management system, the CargoOperations System (COSYS), in all of our airfreightterminals. This user-friendly, integrated systemwill help our staff provide more accurate informationto customers such as real-time status of theircargo shipments. Additionally, hand-held RadioFrequency (RF) Data Terminals and the RF TagIdentification System will be progressively linkedto COSYS, thereby enabling faster and moreefficient tracking of shipments.23

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We invested $3.8 millionto renew and expand our groundsupport equipment, ensuring safeand efficient handling of a widevariety of aircraft types.Apron ServicesOur Apron Services unit embarked on a groundsupport equipment (GSE) fleet renewal andexpansion programme. Bulk purchasing of GSEbased on three-year requirements instead of annualtenders, has lowered unit prices. For instance, ourrecent purchase of 18 Joint Container-Pallet Loaders(JCPLs), equipment used for aircraft ramp handling,resulted in significant savings.To improve safety, we invested $183,000 inthree training mock-ups of the B747, B777 andA340 aircraft fuselage. With these mock-ups,trainees will have sufficient opportunities topractice operating ramp handling equipmentbefore they proceed with training on the aircraft.25

Operations ReviewSATS prepared atotal of 22.9 millionmeals in FY2001,an increase of 9.5%over the previous year.26

Inflight CateringWith the opening of SICC1 in July 2000, SATS now operates two of the mostmodern inflight kitchens in the world.On 11 July 2000, we commenced operations atour new SATS Inflight Catering Centre 1 (SICC1).This $217 million facility, with a gross area of 60,000square metres and production capacity of 45,000meals a day, is used for Singapore Airlines flights.SATS now operates two modern inflight cateringcentres that utilise the latest in catering technologyto boost productivity and efficiency, while maintainingthe highest standards of hygiene.SATS Catering has also embarked on a project tocreate a comprehensive database of airlines’ menusand recipes. This database helps to improve accuracyof meal preparation and efficiency in menu planningfor airline customers.Chefs with the midas touch… attending to every detail of meal preparation.Non-inflight catering businesses grew by 115.5%to S$4.7 million during the year. We continueto supply food items to the Tricon Group whichowns the Pizza Hut and Kentucky Fried Chickenoutlets in Singapore, and Farmland pizzas toBen Foods Company.27

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Our reputation as a regionalspecialist in the aviationsecurity industry has earnedus recognition and awards.Aviation Security ServicesFor the 805-member security force at SATSSecurity Services Pte Ltd (SSS), training andupgrading of our specialised aviation securityskills are continually emphasised. During theyear, we organised a series of aviation securitytraining packages for external parties – such asthe 5th Asia Pacific Aviation Security Conference& Exhibition held in April 2000.In addition, SSS organised training for 80 localand overseas organisations covering office security,cargo security, industrial security systems andother aspects of aviation security.We have a good reputation as a regional specialistin the aviation security industry. One of our policeconstables, PC Kusela Kumaran Selvarajah won theAviation Security Employee of the Year award jointlyorganised by the Aviation Security Internationaljournal, the International Air Transport Association(IATA) and the Airports Council International (ACI).This prestigious award serves to boost SATS Security’sprofile in the aviation security industry. We havealso earned other awards such as the Role Modelfor “High Performance Working Practices” fromthe International Labour Organisation, the QualityCircle Award (Bronze) from the National QualityCircle Convention and the National H.E.A.L.T.H.(Helping Employees Achieve Life-Time Health)Silver Award.29

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Airline Laundry ServicesALLS provides laundryservices to 32 airlines and17 other organisations.During the year in review, Aero Laundry & LinenServices Pte Ltd (ALLS) provided laundry servicesto another non-airline customer, Safra Resort &Country Club. A three-year contract valued at nearly$150,000 annually, the Safra account adds to ALLS’list of 32 airline clients, 12 airline-related clientssuch as companies operating the airport lounges,and 5 other clients comprising clubs, hotels andhospitality institutions.With its current facilities reaching a capacity of20 tonnes a day, ALLS appointed an Australianconsulting firm, Graham Jowsey & AssociatesPty Ltd, to conduct a critical review of its laundryoperations. The review looked at how productioncapacity could be increased to meet future demands.Based on the consultants’ findings, ALLS will becommissioning new laundry machines to boostcapacity by early 2002.31