Evaluation on the adoption and impact of Ecommerce and related strategies in the Aviation Industry in Zimbabwe - Focus on GH

companies

An evaluation on the adoption and impact of E-Commerce and related strategies in the
aviation industry in Zimbabwe. A case of Ground Handling companies in Zimbabwe

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ABSTRACT

The adoption of ecommerce in the various sectors of industry has helped revamp businesses
and further aligned entities to the attainment of their corporate strategies as well as improve
their service delivery to their customers. In the aviation industry especially where we have
international authorities also governing how certain processes are to be coordinated, the
adoption of ecommerce technologies is fundamental to survival in the fast environment
where all players are evaluated on the same scale despite the country of origin.

Interventions which are coming on board from the other various players such as ICAO,
IATA, the local Authorities and the Government towards marketing the brand Zimbabwe of
late has also triggered the various players to adopt ecommerce technologies in their
value chain. Moreover, the advent of ecommerce in aviation industry in general has been
greatly adopted by the airlines hence the key service providers, Ground Handling companies
must be strategically aligned to provide seamless service by also adopting such
ecommerce technologies. This paper presents the findings on the study which seeks to
establish the extent of adoption of ecommerce technologies and strategies within the
aviation industry with focus on Ground Handling companies in Zimbabwe.

The study revealed that whilst some strides are being made towards adoption of
ecommerce in the ground handling business and more work is still to be done by the players
to fully adopt ecommerce technologies. The interviews and observations conducted the
responses were pointing to the fact that whilst there is consensus on the impact of
implementing ecommerce to the business, efforts have not fully benefitted these players
despite the huge investments which have been channelled towards this cause. There are
also other contributing factors hindering the full adoption of ecommerce which factors are
affecting the macro economic environment of the country as well as the political spheres.
Infrastructure limitations are also a contributing factor to the low adoption of ecommerce in
this sector to a lesser extent, but this challenge is further expounded by lack of foreign
currency required to procure some of the needed items.

The paper concludes with recommendations that all key stakeholders including the
Authorities should focus on jointly to provide a conducive environment for the ultimate
adoption of ecommerce technologies and strategies by the various players in the Ground
Handling sector of the Aviation industry in Zimbabwe.

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companies

Key words used in this paper include:

Ecommerce, B2B, B2C

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INTRODUCTION

The aviation industry in Zimbabwe is one which is heavily regulated with the various players
having to be compliant with several authorities which include the Civil Aviation
Authority of Zimbabwe and other international authorities such as ICAO, IATA, and
ISAGO. These various regulators have sets of legislatures which need to be adhered to by
the various players in the aviation industry. Additionally, each airline that will be handled by
the various ground handling companies will also set their own set of procedures on how
they would be handled. A combination of these stakeholders further makes this industry
very complex in terms of compliance which is a key requirement on all ground Handling
Companies. The main players in the case of aviation industry in Zimbabwe include but not
limited to the following:

 Civil Aviation Authority of Zimbabwe who act as the regulator.

 Ministry of Transport and Infrastructure Development who are the parent ministry
which maintains an oversight of the industry
 Various airlines, these basically are the main customers and are classified into two
categories viz
 Commercial airlines which include Emirates, British Airways etc
 Individual airlines.
 Ground Handling companies
 Catering service providers
 Lounge service providers

Roles performed by the key players indicated above:

MINISTRY OF TRANSPORT AND INFRASTRUCTURE DEVELOPMENT (MTID)

This is a government arm which sets legislature governing how the transport business is
conducted within the country. The Ministry directly reports to the Cabinet of Ministers in
Zimbabwe and eventually the President of the Republic of Zimbabwe. The Ministry of
Transport is also responsible for development of infrastructure such as roads, airport facilities
which include construction of new airport terminals, runway etc within the aviation industry.
Road network development is another key aspect which the Ministry of Transport handles.

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CIVIL AVIATION AUTHORITY OF ZIMBABWE (CAAZ)

This is the regulator within the aviation industry and the main function of the authority is
to ensure that all aviation players comply with national and international regulations as they
relate to aviation. The authority like in telecommunications, CAAZ periodically evaluates
compliance of players and to be players in the aviation industry. Additionally, the CAAZ is
responsible for the maintenance of all airport facilities which include provision of facilities
and Infrastructure. Most recently the authority developed the Victoria Falls International
Airport.

AIRLINES

These are the major customers at the various airports and they provide service to the
customers. Airlines must be compliant with the regulations both internationally and locally
as prescribed by the CAAZ.

GROUND HANDLERS

This paper will mainly focus on Ground Handlers as a player at the airports. A ground
handler in the case of Zimbabwe is a key service provider who operates on a ten-year
concession from the Civil Aviation Authority of Zimbabwe. The Mandate of Ground
Handlers is to provide services such as passenger handling, cargo handling, lounge services,
load control services

FUNCTIONS AND ROLES OF GROUND HANDLING COMPANIES

In Zimbabwe there are two main ground Handling companies which are namely National
Handling Services (NHS) and Aviation Ground Services (AGS). These are players who
operate on a 10year concession from the Civil Aviation Authority of Zimbabwe. These
ground handling companies provide various services to the airlines which range from
passenger handling, ramp handling, cargo handling, lounge and baggage services among a
host of key services. The services which are performed by the ground Handling companies is
further negotiated between the ground handler and the specific airline in line with what the
relevant ground handling company has been authorised by the Civil Aviation Authority of
Zimbabwe (CAAZ) to perform. Currently the services of National Handling Services are
distributed across all the international airports within the country whilst services provided

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by Aviation Ground Services (AGS) are mainly limited to the Robert Gabriel Mugabe
International Airport in Harare.

Focus will be on how these ground handling companies have implemented ecommerce
strategies and also assess the impact of these strategies in the service delivery for these
organisations. In this research we will focus on how each of the various organisations has
implemented ecommerce strategies and assess how these have contributed to the
organizations success and to a greater extent explore what ecommerce strategies each of
these companies may need to employ to gain competitive advantages in their execution
of their mandates and contribute positively to the aviation industry.

Brief understanding of the National Handling Services

The company was formed in 2012 and was previously a section within the Air Zimbabwe
group before being unbundled to have its own independent structures. The company operates
on a 10year concession from the Civil Aviation Authority of Zimbabwe where every
month the company remits 10% of its revenue to the CAAZ. National Handling Services and
the CAAZ all report to the same parent ministry, which is the Ministry of Transport and
despite having their different mandates, all companies have their respective Board of
Directors. National Handling Services has its presence at all International airports and
provides its customers with services at other smaller airports such as Buffalo Range airport
on request. The vision of the company is to be a world class service provider by 2020.

The Mandate of the National Handling Services

National Handling Services is mandated to providing the following services to customer

airlines

 Passenger Handling
 Cargo Handling
 Ramp Handling
 Lounge Services
 Lost Property services
 Shrink Wrapping services

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BRIEF UNDERSTANDING OF THE AVIATION GROUND SERVICES (AGS)

Founded in 2001, Aviation Ground Services (AGS) is a private and wholly Zimbabwean
owned company in the aviation industry. AGS' core business is aircraft handling, cargo
handling and warehousing. AGS handles both export and import flights and works directly
with a wide array of clients spanning different sectors.

The Mandate of Aviation Ground Services

Provides the following services to customers

 Cargo Handling
 Ramp Handling

DESCRIPTION OF THE SERVICES PROVIDED BY GROUND HANDLING

COMPANIES

Passenger Handling

This is an area NHS has a sole mandate to provide services on behalf of airlines which
include check in services, load control services. Airlines get into contracts with NHS for
these services through service level agreements which operate for a period of 5years. This
mandate allows NHS to provide check in services to passengers on behalf of the airlines.

Cargo Handling

In this aspect the company provides cargo services which include warehousing, break bulk,
cold room facilities among other functions to both incoming and outgoing passenger
freight. The Mandate also allows the ground handler to handle freighters which are large
planes which only carry cargo. On this function, both agencies have imports and export
warehouses where cargo is kept prior to delivery or eventual exporting. The function
accounts for the biggest cash cow for both companies as huge revenues are realised from
storage charges, handling and break-bulk charges which are dependent on several factors
such as volume, type of the cargo as well as the number of days the cargo is to be in the
warehouse. The CAAZ yearly journals show that AGS accounts for 60% of the Cargo
business whilst NHS accounts for 40% (CAAZ journal 2017)

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Ramp Handling

Basically, focuses on the provision of airside services such as pushback services and other
ground service equipment which is highly industry specific. This area defines the core of the
business and huge capital investments is channelled towards this end. In this function NHS
accounts for 85% of the business whilst AGS accounts for the 15% (CAAZ journal 2017)

Lost Property Services

This is a key passenger handling sub function that helps travelling passengers report lost
baggage up to the tracking of these baggage. The function is purely associated with
passenger handling and the function is purely on NHS.

Lounge service

This is a service where NHS operates business class lounges at all airports for the travelling
passengers. In these lounges luxurious services such as meals, good Internet in the comfort of
the lounges are provided.

ACRONYMS USED IN THIS RESEARCH

IATA means International Air Transport Association

CAAZ to mean Civil Aviation Authority of Zimbabwe

ICAO means International Civil Aviation Organisation

NHS to mean National Handling Services

AGS to mean Aviation Ground Services

MoT to mean Ministry of Transport and Infrastructure Development

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PROBLEM STATEMENT

Adopting ecommerce technologies has been advocated and rightly highlighted as a key
enabler to business growth. This has seen most companies inject huge investments toward
acquisition of ecommerce technologies but with very little to show for the huge investments
made. Uncoordinated investments which have been made toward ecommerce has even
triggered some organisations to put any requests for investments to be put on abeyance. This
has resulted in organisations having to do manual processes which are tedious and
disruptive in nature towards service delivery whereas there could be available technologies to
bring up competitive edge on how the business is conducted. The benefits which accrue
with the implementation of ecommerce such as reduction of operational costs and
improvements on quality of service has not been purely evident in most cases in the ground
handling business despite the adoption of ecommerce technologies which required huge
financial investment hence this paper seeks to establish the extent of the adoption of
ecommerce technologies in the aviation industry with emphasis on the ground handling
companies.

METHODOLOGY

The methodology employed to address the objective set above implemented semi-structured
interviews, observations, document/process reviews and questionnaires. According to the
IATA journal (2017), ground handling" refers to the myriad of services provided to an
aircraft in preparation for and upon conclusion of a flight, inclusive of those rendered before
it arrives at a terminal gate, those provided during the period it is on the gate and those which
are accomplished after the aircraft has departed for its next flight. These services are often
described in terms of "above the wing" and "below the wing" tasks. From this definition we
can establish that there are various other stakeholders and these entities formed part of
interviewees and were taken from a sample identified by the researcher using sample
variation and also the need to strike a balance as well as accessibility to the to be interviewed.
The prospective respondents were first identified and then contacted by telephone for an
appointment after which an email was sent to confirm prior the meeting.

Data Collection

Data collection involved semi-structured interviews observations, document/process reviews

and questionnaires with various role players in the aviation. The typical interviews lasted a

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maximum of 30 minutes. Below is a table showing the role players who were interviewed
during the process of data collection

Stakeholder Number interviewed % composition

MITD 2 13.3%

CAAZ 2 13.3%

Airline representatives 3 20%

Ground handling companies 8 53.4%

Total 15 100%

Given the above statistics, the sample from the ground handling companies had to cater for
different levels in terms of organisational hierarchy as shown below

In the above pie chart, it can be shown that Executive Management composed of 50% whilst
ICT and Infrastructure teams and Operations constituted 25% each of the interviewees from
each organisation that participated in the research. In this research, the researcher
intentionally ignored the issue of demographics as it was apparent that from the target
sample, the majority of the target were either going to give a biased opinion for research
purposes. For example all the executive managers in both companies are male and above
40years of age. The objective of this classification was to ensure that we obtain key

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information across the various levels within the organisations that is from decision makers,
users and facilitators of the technology

As part of further understanding the industry and the companies, the researcher reviewed the
websites for these two companies and other stakeholders where vital information was
obtained

OBSERVATIONS/ANALYSIS

In both companies there is no clear or documented e-commerce strategy in place.

Technology is implemented haphazardly and the fact that technology should enhance the
business is thus not represented in the company’s budgets where ICT endeavours do not have
top priority.

Kuo Chung Chang (2003) states that more and more conventional brick and mortar firms
see e-commerce initiatives as offering strategic opportunities to transcend their normal
operations. This study proposes that e-commerce initiatives are important strategic
initiatives and that firms with a stronger EC market orientation will be more successful.

The assertions by Chang (2003) do not resonate with what is holding within the Ground
Handling companies in Zimbabwe where the lack of a corresponding ecommerce
strategy is detrimental to the survival of these entities in an industry where technology is
the key driver. ICAO Secretary General, Dr Fang Liu (2018) also reiterated that ecommerce
is an opportunity for the aviation industry but emphasised the need to have proper
planning in place. The absence of a plan to detail how ecommerce will commensurate with
the corporate strategy is failure to plan and hence attainment and adoption is very difficult
to implement and evaluate as there is no yardstick to use in evaluating.

From the analysis it has been noted that in both companies there are information silos and
there are also numerous failed ICT projects across the divide. In NHS the fiscalisation
project has been on the cards for over 36 months whereas in AGS the drive to integrate the
main reporting system to the cargo handling system has gone outstanding for more than 48
months and this is after huge investments would have been made. This observation in other
terms can be a culmination of lack of ICT representation at those strategic levels within the
hierarchies of the organization. Top priority is given to operations sections where huge
capital outlays are required as compared to ICTs which are deemed support functions. It
was noted also that these ICT functions within these companies can be manned by one officer

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which is not ideal for an organisation that is centric on developing a robust ecommerce
mechanism. Manu Mash (2010) pointed out that some of the ICT project failures can be
attributed to the most popular organizational structures found in most large and medium
sized organizations that exist in Zimbabwe. What I mean to say is these failures are created
by bureaucracies top-heavy with non-ICT people that fail to include the right kind of
people who contribute in decision making process(s) as part of the upper level management
group. Key management decisions are made without adequate ICT input resulting in projects
going disastrously off the rails when previously brushed aside ICT aspects of a project
gradually emerge to be integral parts of the foundation of the solution.

Both companies have visions which spell improved service delivery and attainment of a
world class provider of ground handling services. These organisational visions should
place the existence of sound ecommerce strategies as top priorities as ecommerce is an
enhancing tool to the attainment of these goals and visions of the players.

The general organisational structures of these entities can be shown as below:

Managing Director

Finance Executive

Accounts ICT

In the above illustration of the general organisational structures, ICT function reports to the
Finance Executive who usually is not knowledgeable to the demands for adopting
ecommerce initiatives for executive management consideration. This further makes the
implementation of such initiatives complicated. Additionally, in the above illustration, the
Finance Executive is cost sensitive and for the adoption of ecommerce initiatives which are
mostly viewed as expenses rather than enablers to the business.

The researcher also noted that for a concession to be granted to any player, the authorities
viz the MITD and CAAZ do not focus on the readiness of an entity in terms of ecommerce
but rather focus is on operational readiness which basically points to availability of
equipment to provide ground handling services such as high loaders etc. This position was

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further confirmed by Dr Fang Liu the ICAO Secretary General in 2018 where he mentioned
that, authorities must have comprehensive aviation and airport development planning in
place, and how important it is for those aviation priorities to be strategically integrated into
the state’s overall national and urban development objective. The absence of such
initiatives at government level are not present to set a benchmark on would be players in the
ground handling sector of the aviation business in Zimbabwe.

It was also noted that all the companies had functional websites for communication purposes,
but these websites were only last updated some 18months ago and were only pushing
information to the customers without any pulling information into the business. These
websites do not have platforms revenue collection mechanisms such as the facilities to make
online payments, online invoicing among other functions which help define a modern
ecommerce platform.

The sector implements both ecommerce models especially when viewed per department
or functional are as shown below

Business area Ecommerce model Comment

Passenger Handling B2B, B2C Interfaces with Customer

airlines

Interfaces with passengers

Cargo Handling B2B, B2C,B2A Interfaces with cargo agents

Interfaces with airline

companies

Interfaces with government

agencies, Zimra etc

Finance and Administration B2B, B2C,B2A Interfaces with Airline

customers, service providers

Interfaces with government

agencies

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On the administration end, these Ground Handlers are using application systems which are
generally available on the market which are SAP and Pastel. All procurement issues and
payment platforms have been automated using the capabilities of these systems. Requests
for quotations, generation of purchase requisitions up to vendor analysis and ordering are
all being done seamlessly up to payment processing which is being handled by the Paynet
system in all cases. The adoption of these ecommerce technologies has drastically reduced
the procurement turn around as users have remote access to these platforms to process any
requests/approvals off work premises. However there remains a missing link on the part of
AGS where the billing of customer airlines is still being done manually creating a
duplication of the work process. The NHS has automated the billing cycle by engaging and
participating in the IATA clearing House which helps process billing as depicted below:

Mapfudza (2018) etal

The above model depicts a revenue collection model being used by NHS which is now
properly automated to represent a model ecommerce scenario. In this set up, the airline who
is the customer is a member of the IATA where the ground handler is an associate member

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and for all Handling charges, these are automatically invoiced as the services are rendered
and the service providers have to confirm accuracy online after which the airline will
authorise processing of payments which will trigger the Clearing House to effect payment to
the service provider in real time. This is a model scenario where there is coordination in the
value chain to both the airline and the ground handler. Servicing of obligations for other
equipment providers is also processed via the same clearing House such that revenue can be
realised online whilst also servicing obligations in real time using ecommerce technologies.
However this arrangement is under the threat of legislation as the government has
implemented forex controls which may negatively impact this viable arrangement. On the
other hand processing of invoicing by the other player, AGS is still a manual process
which takes long as the process turnaround is long. The impact of government policies is
that companies are forced to comply whilst legislation could negatively hamper businesses
from providing quality service with its customers. For instance in the case where NHS uses
the ICH to settle obligations with American Ground Suppliers who deal purely with Ground
Handling equipment. Absence of such technology in this aspect becomes expensive to the
company.

There is a notable high operational cost owing to long u automated processes within the
ground handling business. Lack of integrations between the key systems results induplication
of effort hence attracting a cost that could be avoided. Barry Kashambo, stressed that African
aviation must consider to adopt innovative approaches in a move to reduce their cost base as
they face growing competition at their home market. This is because by establishing an e-
commerce hub encompassing all logistics using digital channels, African aviation players
could generate more revenue at every step.

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RECOMMENDATIONS

Authorities such as the Government and Civil Aviation Authority of Zimbabwe should
properly put in place mechanisms and controls that Foster adoption of ecommerce
technologies and initiatives. Whilst availability of proper infrastructure is a challenge that
has been noted across the continent as a factor affecting adoption of ecommerce, in the
aviation industry, the Government and CAAZ could provide the general infrastructure
and allow the would be players to rent such infrastructure. At the airport we could make
do with a scenario like in Zambia where all players in an industry operate the SAP on an E-
E-Government model which makes it cheaper to support and implement the systems whilst
at the same time fostering adoption. The idea of a shared platform cod also work best for the
ground Handling companies as they tend to reduce on the total cost to ownership for ICT
equipment and capabilities. This idea could also ease and open up the sector where useful
software could be expensive to acquire. If the government is to acquire such platforms and
allow service providers to share and be on a hosted model

In adopting ecommerce strategies, the fast now swallow the slow as it is very important
for organisations to get the first movers advantage and get a quick return on their businesses.
The current cash shortages could be translated into a benefit as organisations should embrace
mobile payment methods such as one money, ECOCASH etc. These platforms could go on to
further compliment revenue collection options to the business models.

There is need to strategically align organisations using ecommerce. Technology should be

viewed along the lines of the quantifying what costs the firm incurs by not having
ecommerce rather than looking at the revenue collected by adopting ecommerce
technologies. There is need to have ICT be members of certain board of directors as well as
have representations from this key support function. The ICT department should also be
contributing at executive management level. This will cover the gap which currently exists as
stipulated above. This will help harness implementation of ICT projects in a
coordinated manner that can help the businesses realise a return on investment. Currently
these organisations are not realising value for money for the investments made towards
ecommerce as they should.

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There is also need to revisit the websites for both players and introduce features that resonate
the ecommerce features of buying and selling of Ground Handling services. For instance via
the website customers should be able to pick services they want, get a quotation and make a
payment online. Whilst the business requires getting the right mix in terms of brick and
mortar as well as the clicks, a revisit of the clicks should complement the bricks and mortar.

CONCLUSION

Whilst there are challenges in adoption of ecommerce strategies in the aviation sector as
highlighted above, some of the problems cannot be resolved by the ground handlers
single handedly. There is need for collective participation even of the authorities and the
government to promote full adoption of ecommerce in the area of the research. The ground
Handling companies also have to deal with the technophobia and fully embrace ecommerce.
Technology is there to stay and avoiding technology is only to the detriment of the
organization. Conclusively, the ground Handling companies in Zimbabwe have partially
adopted ecommerce strategies and hence have benefitted to a lesser extent, however there is
room for improvement in the adoption for the organizations to realise a good return and
strategic placement of their organisations through ecommerce.

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REFERENCES

 http://www.cae.com/civil-aviation

 https://www.eyerys.com/articles/types-e-commerce-models

 https://www.investopedia.com/terms/e/ecommerce.asp#ixzz5EE2vilFY

 https://www.skybrary.aero/index.php/Ground_Handling

 http://www.panapress.com/African-airlines-commit-to-reduce-costs-by-switching-to-e-
commerce-solutions--12-630531485-28-lang2-index.html

 https://www.kartrocket.com/blog/ecommerce-business-models-types-pros-cons/
http://ventureburn.com/2016/03/what-are-the-benefits-of-ecommerce-for-your-business/

 https://www.techzim.co.zw/2010/03/ict-as-a-valuable-strategic-asset-in-zimbabwe/

 www.nhszim.com

 www.caaz.co.zw

 www.mitd.gov.zw

 Civil Aviation Authority of Zimbabwe journal (2017)

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