Sometimes even the big boys get bullied. Take for example the mid- January announcement that ground-handling giant Swissport was bailing out of Singapore’s Changi Airport.

Although it surprised many, it wasn’t especially earth shaking news to much of the industry familiar with the ground handling sector. But before we get to that, it’s important to put things in context. The 2005 arrival of the Swiss-based, Spanish-owned company, which operates at 179 airports in 41 countries, was held up as yet another beacon of the island state’s laissez-faire economy. The opening-up to a third ground handler was meant to herald a new liberalised environment at Changi, breaking-up the cozy duopoly enjoyed by Singapore Airport Terminal Services (SATS) – a division of state controlled Singapore Airlines (SIA) – and Changi International Airport Services (CIAS), recently acquired by the Emirates group.

Swissport burst onto the scene in 2005 by scoring an immediate coup over SATS – which controlled an estimated 80 per cent of the ground handling business at Changi – by signingon SIA’s affiliate, Tiger Airways, to become the first ground handler at the brand new Budget Terminal. The ground handler then went on to secure Swiss International, Northwest and AirAsia and helped push overall ground handling charges at Changi down by nearly 15 per cent.

So, back to the main plot. Industry talk had been circulating for quite some time that not all was right in fiefdom of Changi. Not happy with the new entrant who was offering lower prices, the two entrenched players began massive under-cutting, say industry sources. The official reason for the pull-out from Swissport was attributed to both the “state of the airline sector” and “the fact that Swissport’s local operation is not of sufficient size to ensure its sound profitability.”

This omitted the fact that the loss of Northwest Cargo, after the US’ key cargo carrying mainline carrier was swallowed by Delta last year, significantly hurt Swissport’s Singapore operations. The carrier previously ran freighters into Changi, but these were scrapped in the far-reaching restructuring after the Delta take-over. The other key missing element only emerged publicly when Swissport’s spokesman, Stephan Beerli, stated that the airport may be open, but that it is “not truly deregulated or liberalised”, adding that in-built systems made competing with the incumbent handlers a losing battle.

“In the US or Europe, the environment is much more dynamic,” he said citing the case of London, where there are 8-10 ground-handlers. “You can get new customers in 3 months or 6 months or a year. In Singapore, after three years we just could not establish a reasonable customer base or volumes.” Beerli was of course too polite to blatantly state the obvious – that predatory pricing by Changi’s dynamic duo was the true heart of the matter.

In the end it matters, but its not life and death. The episode will no doubt be chalked up by Swissport and its parent, Ferrovial as simply a symptomatic aspect of doing business in Asia – even if it is squeaky clean Singapore.

For carriers, they will likely face higher ground handling fees, which in this current environment is clearly unhealthy. In fact, there is already talk that Swissport’s customers – now forced to go hat-in-hand to the duopoly – are being quoted rates 30 per cent higher than Swissport’s.

For Changi Airport – which prides itself as the region’s most open – and Singapore Inc, who tend to take things to heart far more than they should, it will undoubtedly be taken more seriously – as reputation and free market principles have both been simultaneously and worst of all – publicly – slapped.

Swissport will pack its bags and head for the departure lounge on 31 March, some $50 millionin the hole after only four years at Changi, leaving a slot open for any eager takers.