German Airport Review

A new solar-powered cargo hub for FedEx Express is nearing completion at Cologne/Bonn. (FedEx), Left: BBI is now more than 1,000 days into its construction phase. (BBI)

During the first quarter of 2009 the German Airports Association (ADV) recorded a 9.3% overall drop in passenger traffic – with this in mind, Tom Allett presents our annual review of German airport news and views.


Berlin Airports
The Berlin Airports company changed its funding concept for Germany’s new Capital Airport Berlin Brandenburg International (BBI) during 2008.  In view of the emerging financial and economic crisis, Berlin, Brandenburg and the Federal Government (FG) had agreed with the airport company to guarantee €2.4 billion (US$3.4bn) for BBI by means of a 100% government loan.  The FG officially submitted a notification brief to the European Commission (EC) in March having been involved in preliminary talks since the beginning of this year.
After the May 13 announcement, the Mayor of Berlin and Chairman of the Supervisory Board of Berlin Airports, Klaus Wowereit, said: “We welcome the decision from Brussels.  The loan guarantee enables Berlin, Brandenburg and the government to secure a line of credit for the most important traffic and development project in the German capital region.  We now see ‘all systems go’ for the region’s biggest infrastructure project.”
As expected, the CEO of Berlin Airports, Dr Rainer Schwarz, was also delighted by the good news saying: “The decision gives us and the numerous banks ‘planning security’.  We now have the basis for concrete negotiations.  Our goal to successfully secure further funding for BBI in the second half of 2009 still remains.”
The first loan contribution is already available.  The European Investment Bank (EIB) and Berlin Airports have signed a loan agreement worth €400 million (US$567m) and intend to sign another worth €600 million (US$849m). 
Over at Tegel, as this edition went to press, the Berlin Airports company was about to introduce an initiative that would surely be welcomed by passengers at any airport in the world.  As from July 1 it will launch a campaign to provide better customer care for those leaving the airport by taxi.  In co-operation with local cab company representative bodies, a number of quality criteria and control mechanisms will be put in place to ensure that passengers taking a taxi from Tegel enjoy a high standard of service.  Vehicles will have to be clean and equipped with a fully functional cash-free payment system.  And drivers will no longer be allowed to refuse to drive short distances and they must have basic English skills for the benefit of their many international customers.  Access roads to the taxi rank will be fitted with barriers to ensure that only qualifying cabs and drivers can gain access.  Construction work for the redesigned waiting system should be complete by the time these words are read.
The annual fee of €70 (US$100) per taxi driver has been abolished; instead, drivers will now pay €0.50 (US$0.70) for each fare they pick up at the airport.
When the move was announced, Christian Wiesenhütter, Deputy Managing Director of the Berlin Chamber of Commerce and Industry, said: “The start of the new quality campaign at Tegel Airport is an important step towards ensuring that passengers enjoy the standard of service they should expect to receive at a major international airport. Unfriendly drivers who refuse short fares will become a thing of the past, while credit card payment becomes standard in all cars. We are particularly pleased to see that the airport is developing and implementing this concept in close co-operation with the taxi companies.”
Taxi driver representatives have recognised that the new standards not only benefit the passengers but also enhance the city’s image because a taxi is often a visitor’s first experience of a new destination and it’s important to create a good impression.
 

A new solar-powered cargo hub for FedEx Express is nearing completion at Cologne/Bonn. (FedEx), Left: BBI is now more than 1,000 days into its construction phase. (BBI)

Cologne/Bonn

On May 12, 2009, FedEx Express and Cologne Bonn Airport celebrated the topping-out ceremony for the cargo giant’s new Central and Eastern Europe.  The Cologne hub is scheduled for completion in 2010 and will be FedEx’s largest solar-powered gateway in the world – it is also its first solar-powered hub outside the US.  Together, the two organisations are investing approximately €140 million (US$195m) in the hub.  It is envisaged that FedEx will employ around 450 staff at the new site.  To date, the Central and Eastern Europe hub of FedEx Express has been based at Frankfurt Airport.
During the ceremony, Lutz Lienenkämper, the Minister for Construction and Transport of the State of North Rhine-Westphalia said: “The relocation of the FedEx hub is more than just an important milestone in the development of Cologne Bonn Airport.  It speaks of our ability to compete and strengthens North Rhine-Westphalia as a logistics centre over the long term.”
Michael Garvens, CEO of Flughafen Köln/Bonn GmbH added:  “With the topping-out ceremony, we are ringing in the last stage of construction of the new FedEx hub.  This project is strategically important for the airport.  The opening of the building next year will mark a turning point in the freight industry – when we take off together with our friends from FedEx.”
On a site with an area of approximately 538,195 sq ft (50,000m2), FedEx and the airport are building new ramp, freight and sort facilities with a fully-automated sort system.  Its solar power system is capable of producing about 1.3 gigawatt hours of electricity per year – equivalent to the annual consumption of more than 370 households.  To achieve this more than 172,000 sq ft (16,000m2) of solar panels will be installed on the building’s roof.
 
Fraport & Frankfurt Main
Despite the economic and financial crisis Fraport AG recorded a profit for the first quarter of 2009.  Unadjusted group revenue fell by 14.4% year-on-year to €452 million (US$631m).  However, adjusted for consolidation effects, revenue decline was only 1.5%.  Earnings before interest, tax, depreciation and amortization (EBITDA) dropped 13.5 % below the previous year’s level to €99.8 million (US$139.4m).
Fraport Group’s profit reached €22.3 million (US$31.1m) in the first three months of 2009, down 25.4% from the previous year’s level but the company says it also expects to be in the black for all of 2009.
In the January-to-March 2009 period, approximately 14 million passengers used the Fraport Group’s six majority-owned airports, 7.1% less than in the same period of 2008.  Cargo tonnage fell by 23.2% to nearly 451,000 metric tons.  The total number of passengers served by the Fraport Group’s airports (including minority-owned airports and those under management contract) slipped by 4.1% year-on-year to approximately 27.4 million and total cargo throughput slid by 18.1% to 657,300 metric tons.  With 10.9 million passengers, Frankfurt Airport welcomed 10.9% fewer passengers in the January-to-March 2009 period than in the previous year and registered a 23.3% drop in airfreight and airmail to 407,000 metric tons of cargo.
Though a respectable figure in these circumstances, the revenue total of €452 million mentioned earlier was down €76.2 million (US$106m) from the same period last year.  Some €67.3 million (US$94m) of this loss is attributable to the sale of Fraport’s ICTS Europe security subsidiary, which still generated income in the first quarter of 2008.  Another €3.3 million (US$4.6m) were due to the transfer of Fraport’s shares in Frankfurt-Hahn Airport to the state of Rhineland-Palatinate effective from January 1, 2009, and the ensuing loss of income and expenses generated by this subsidiary for the Fraport Group in the previous year.  In the reporting period, positive results were registered primarily at Lima and Antalya airports, whereas declining traffic resulted in a revenue loss of €22.5 million (US$31.4m) at Frankfurt Main (FRA).
Despite declining passenger traffic, FRA’s retail and food and beverage offerings obviously proved increasingly attractive as net retail sales revenue per passenger exceeded the €3 (US$4.1) mark per passenger for the first time, climbing from €2.89 (US$4) a year ago to €3.09 (US$4.31).
Adjusted, total operating expenses rose 5.4% from €356.8 million (US$497m) to €376.0 million (US$525m) from January to March.  Overall staff costs dropped 20.4% below the previous year’s level to €219.1 million (US$406.7m), mainly because of the aforementioned consolidation effects, but adjusted, staff costs increased by €6 million (US$8.3m) or 2.8%, primarily because of the implementation of Phase Two of the collective pay settlement for Fraport AG’s permanent staff as agreed in 2008.  Because of the sale of ICTS Europe the number of people employed by the Fraport Group in the first quarter of 2009 dropped by 9,210 (down 31.4%) year-on-year to an average of 20,131 employees.
In January, Frankfurt Main took a big step towards getting its fifth runway. (Fraport)

Non-staff costs climbed by €4.6 million (US$6.4m) or approximately 3%, to €157.6 million (US$220m).  The main reasons for this were higher expenditures at Lima Airport as well as increased energy and utility costs due to the unusually cold 2008/09 winter.
Group EBITDA dropped by €15.6 million (US$21.8m) or 13.5% year-on-year to €99.8 million (US$139.4m), chiefly because of declining traffic at Frankfurt Main and growing expenditures.  The EBITDA margin slightly improved from 21.8 to 22.1% owing to the elimination of the labour-intensive and low-margin ICTS Europe business.
Reaching €22.3 million (US$31.1m), Group profits were down €7.6 million (US$10.6m) or 25.4% year-on-year.  Basic earnings per share fell from €0.34 (US$0.47) to €0.26 (US$0.36).
As in the First Quarter, the global economic situation will determine the air traffic development outlook for the rest of the 2009 fiscal year, and Frankfurt Airport will not be able to escape this.  Fraport expects passenger volume to shrink by between 6% and 9%.  In line with this, the company says it anticipates Group EBITDA to reach approximately €500 million to €530 million (US$698m – 740m) and adds that Group profits will fall short of the 2008 level as previously forecast.
Fraport’s Executive Board Chairman Professor Dr Wilhelm Bender explained that he: “continued to be optimistic with regard to the time after the crisis,” despite the decline in traffic and profits anticipated for 2009.  When presenting Fraport’s interim report, he said: “Commencement of construction on the new runway set an important signal for the future viability and competitiveness of Frankfurt Airport and creates planning reliability for the airlines.
“With the completion of the new runway for the 2011 winter timetable, Frankfurt Airport and thus the entire Fraport Group will again participate at an over-proportionate rate in the catch-up effects of rebounding world air traffic that set in after every crisis, as experience has demonstrated.
“We are making profit, do not require any government subsidies and, with €4 billion, (US$5.6bn) are accomplishing a gigantic private investment for FRA’s expansion.”
On January 16, 2009, just one day after the British Government announced its support for a third runway at London’s Heathrow, Fraport released a statement reminding everyone of its progress in finalising its fifth (northwest) runway project, which is intended for landings only.  Four months later, on May 8, a ground-breaking ceremony marked the start of construction work. 
At the event, Dr Bender said: “Following more than ten years of intensive planning and extended approval procedures, we can today commence construction of Frankfurt Airport’s new northwest runway.  This runway will secure the future viability and competitiveness of Germany’s biggest aviation hub and will also secure the economic prosperity of the entire Frankfurt/Rhine-Main region.”
Three dignitaries from the Hesse region – Prime Minister, Roland Koch, Minister of Finance (and also Chairman of Fraport’s supervisory board) Karlheinz Weimar, and Minister of Economic affairs, Dieter Posch – joined Frankfurt’s Lord Mayor, Petra Roth, and Fraport’s Executive Board Member responsible for airport expansion, Dr Stefan Schulte, for the occasion as Professor Bender gave the signal to start construction work on the airport’s new runway.
Dr Schulte emphasized that the new runway will be operational in time for the airport’s 2011 winter timetable, saying:  “We are well within schedule and already have successfully completed the necessary preparatory work.”  From 2011, the number of co-ordinated aircraft movements will rise incrementally from today’s 80 plus, to 126 per hour during daytime operations.
“Over the long-term, this capacity gain will allow us to maintain our global competitive position among the world’s major hub airports,” he stressed, adding: “The airlines require more take-off and landing slots at FRA than are currently available.  We already have demand for 90 to 95 slots per hour but capacity constraints prevent us from meeting this.  Clearly, this indicates that our planning is geared to actual market requirements.”
Frankfurt’s expanded runway system will be able to accommodate about 700,000 aircraft movements per year compared to approximately 500,000 today.
A Fraport press release said: “For the 88 million annual passengers expected at FRA by the year 2020, Fraport will be able to offer first-class services as the world’s biggest international transfer airport.”
Frankfurt is already in the process of improving its cargo infrastructure in preparation for a forcecast that it will have to handle more than three million metric tons of cargo forecast by 2020.
Prime Minister Roland Koch said the runway announcement made it: “an historic day for the Frankfurt/Rhine-Main Region and Hesse.”  He declared that Frankfurt Airport’s expansion was the Hesse state government’s number one priority and that the decision in favour of expansion was a: “generation decision”.
“Fraport will invest €4 billion in the Airport Expansion Program (AEP) over the coming years.  Approximately 25,000 new jobs will be created at the airport and an additional 40,000 throughout the region.  These figures alone demonstrate that Frankfurt’s AEP is the biggest economic stimulus package of this decade,” Mr Koch stated.
He added: “Hesse’s vitality depends on mobility and the hub function in the heart of Germany and Europe.  The expansion of Frankfurt Airport is a key mobility factor.  If you look at how other major airports are now expanding or have already increased their capacities, you will understand the importance of this new runway for Frankfurt, for Hesse as a business location and for all of Germany.”
Frankfurt’s Lord Mayor, Petra Roth, emphasized that the city certainly appreciates how significant ‘its’ airport is, saying that it is: “of decisive importance for the continued positive economic development of both the city and the region”.  After highlighting the airport’s “favourable geographic location” she added: “I am convinced that if the airport is doing well, then the city of Frankfurt is doing well.”
Concluding the event, Prof Bender said: “Today, we have not only given the starting signal for constructing the new runway, but also we have given an important and enduring signal for the international competitiveness of Germany as a commercial aviation base.”
 

At the moment, Frankfurt-Hahn is facing a court battle which will decide the future on its night flights. (FFHG)

Frankfurt-Hahn

In the lead-up to the transfer of Fraport’s stake in Hahn to the State of Rhineland-Palatinate, the local government’s Secretary of State, in charge of Economics, Traffic, Agriculture and Viniculture, Mr Hendrik Hering, moved to reassure the airport staff that their jobs were safe.  Fraport sold its 65% share for a symbolic €1 (US$1.40) in order to free it from its long-term commitments to what has been a loss-making operation for the airport operators.  Fraport had suggested that the airport’s income could be boosted by the introduction of an airport development fee to be paid by passengers but Ryanair – Hahn’s dominant carrier – threatened to withdraw much of its fleet if the charge was introduced and perhaps withdraw completely from Hahn.
Following the takeover of shares, Minister Hering commented: “The reaction by Ryanair would have had disastrous consequences for the region’s labour market.  This would have jeopardized about 6,000 jobs immediately.  We couldn’t allow this to happen and therefore decided to take over Fraport AG’s shares in the airport.  Frankfurt-Hahn Airport has enormous development and performance potential.  We will use this potential to make the airport profitable.”
Among the measures that will drive profitability, said Hering, will be improved commercial activities, both in the terminal and through better use of the land surrounding the airport.
Current modernisation work involves extending the main terminal from 8,600 sq ft (800m2) to 48,487 sq ft (4,500m2), centralising the security area and expanding the area for retail, food & beverage to create a 19,375 sq ft (1,800m2) ‘marketplace’ for travelling consumers.  It is all part of a €120 million (US$167m) project which is scheduled for completion in 2011.
During the past eight years, Hahn’s passenger figures rose from 400,000 to nearly 4 million per year and the planned expansion will take its capacity to 8 million.
As this edition went to press, the airport’s MD Jörg Schumacher, was continuing to spread the message about what advantages is has to offer the local community and international businesses alike in the face of discussions about a possible ban on night flights.
On June 4, he summarised the advantages of his airport in a letter to the CEO of the German Haulage Contractors and Logistics Association (GHCLA), Heiner Rogge, saying: “Of course, our prosperous airport at Frankfurt-Hahn cannot replace Frankfurt Rhine-Main Airport, but Hahn has many advantages compared with the unfortunately often overloaded airport at Frankfurt/Main.  These will soon include the last few kilometres of an excellent link to the Rhine-Main region and high-speed routes to Benelux.  You do not find distraught cargo pilots circling in the sky because the runway at Hahn is overloaded – which has been extended in line with demand to 3,800m.  Another plus that should not be underestimated is the tremendous support Frankfurt-Hahn Airport enjoys amongst the population.”
Schumacher’s letter was prompted by statements made by logistics representatives to the aviation press club in Frankfurt/Main.  These referred to the millions invested by logistics companies in Frankfurt/Main in the light of the threatened ban on night flights.  The report on the event stated verbatim that: “Frankfurt, the number one freight transhipment centre in Europe, cannot be replaced by airports such as Hahn, Leipzig or Cologne/Bonn.”
In his letter to the GHCLA, Mr Schumacher referred to the fact that night flights were presenting no problems at Frankfurt-Hahn as there are no restrictions.  According to Schumacher, Frankfurt-Hahn is highlighted in the federal government’s recently adopted airport concept as a significant cargo airport, not least for this reason.  Both the federal government and the state government of Rhineland-Palatinate have agreed to the further development of Frankfurt-Hahn.
As recently as May 12, 2009, Rhineland-Palatinate’s Minister of Economic Affairs, Transport, Agriculture and Viticulture, Hendrik Hering, endorsed the state government’s intention to continue to make substantial investments in Frankfurt-Hahn.  A significant part of its future concept is to turn the airport into a major cargo hub.  In the letter to Heiner Rogge, Schumacher emphasised that the Frankfurt-Hahn airport company, together with the state government and private investors, would continue to make every effort to offer the logistics and haulage industry conditions that would be among the best in Germany.
Jörg Schumacher invited Heiner Rogge to Frankfurt-Hahn to form his own impressions of the airport and to jointly seek solutions that would further assist the logistics industry, even with the difficult conditions at Frankfurt/Main.
In his letter to Rogge, Mr Schumacher said: “When proceedings start before the higher administrative court in Kassel, the ban on night flights at Frankfurt-Main will become an even more explosive topic.  Whatever the outcome, this decision will, however, also clarify the future for the industry which you most successfully represent.”
 

After record passenger figures for Hamburg in 2008, traffic has levelled off so far this year. (FHG)

Hamburg-Fuhlsbüttel

At Hamburg-Fuhlsbüttel, as at most other facilities, 2008 was an eventful year.  After a first half in which the airport achieved a strong growth rate, business flattened out over the remainder of the year.  Hamburg handled 12.84 million passengers in 2008, a record result in passenger numbers (+0.5%), bringing the airport up to 98th place in the league table of the largest international airports (2007: 101st place).  Turnover fell slightly, by 1.5%, to €230.7 million (US$322.3m).  Total earnings of €39.3 million (US$54.9m) were 18.5% down on the previous year.  Aircraft load factors were higher in 2008, so that the number of aircraft movements declined by 0.8% to 172,064, despite the growth in passenger numbers.  The load factor rose from 71.7% to 72.2%.  Air freight also felt the effects of the weak economy, with air cargo trans-shipped at Hamburg Airport, excluding airmail and transit, dropping by 7.6% to 78,018 tonnes.  Flown air cargo rose by 3.7%, whilst truck trans-shipment declined by 9.6%.
 
 
Hanover
Hanover’s management team believes global sourcing and ‘just in time’ deliveries are becoming increasingly important to customers.  These, they say, are decisive factors in the airport’s above average air cargo growth rates when compared to the industry’s overall economic development.
Liane Heinze, the airport’s Director of Corporate Communication told Airports International: “The specific value of air transport compared to either land and sea transport lies in the speedy conveyance, high safety levels with regard to damages and theft, its lower capital commitment and reduced requirement for warehousing.
“Hanover Airport is playing a central role in the Innovative Lower Saxony project being run by its namesake’s state government.  It aims to be the leading technology and logistics location for Lower Saxony, and its chances of success are directly dependant upon having an efficient airport.”
To this end, Hanover Airport has started an ambitious expansion programme with a specific focus upon extending its cargo and logistics capabilities; investing up to €110 million (US$153.7m) in this segment by 2010.  The key element of the work is to connect the whole western side to the other areas of the airport via a road tunnel, thereby creating additional space for cargo and logistics facilities.
A 24-hour operating permit and generous land reserves put the airport in an excellent position with regards to infrastructure.  The Airport Business Park, with its direct taxiway connections to both runways, is another important factor in making the airport an efficient logistics location for the Hanover region’s numerous air cargo and logistics activities.
A new logistics centre adjoining the apron is currently under construction and when complete, will increase the cargo space here to more than 645,884 sq ft (60,000m2).  Construction of a 215,287 sq ft (20,000m2) World Cargo Centre for Garbe Logistic AG is planned to start on July 1, 2009, and should be completed at the beginning of 2010.
It will have direct apron access and the airport’s representatives are keen to point out its state-of-the-art safety provisions technology.  The airport’s management team also highlights what it describes as the facility’s: “perfect connection to the motorway network,” saying that the most important European East/West and North/South routes: “make it an ideal consolidation and distribution centre for the whole North German region and beyond.”
The proximity of the major sea ports (Hamburg, Bremen – plus, in future, the Jade Weser Port – around two hours away by road) and to various goods centres that act as interfaces to the rail network, underpin the multimodal possibilities of the location.
Hanover’s management team claims its airport has the strongest focus on tourism of any in North Germany.  At the beginning of 2008 it began to establish a travel marketing platform which raises awareness of the airport’s tourism profile and focuses on the activities and events available in North Germany.  It is also bringing attention to the 100-plus direct destinations available from Hanover.  With more than 35 travel agencies on site, it claims to be North Germany’s largest travel market and is open seven days a week.  In addition, Hanover Airport also ranks second nationwide in terms of routes to Russia and the CIS states.
 
Central German Airports Group
In the first quarter of 2009 overall passenger numbers declined by 6.6% at the two facilities of the Central German Airports Group (CGAG) to 787,105.  This breaks down to 445,352 passengers using Leipzig/Halle Airport, a fall of 5.1% against those of 2008 while passenger numbers at Dresden International Airport dropped by 8.4% to 341,753.
As the average overall decline amongst German airports was 9.3% during this time, the two CGAG members produced respectable results.
A CGAG press statement said business at the two airports was stable, a situation that is reflected by the number of passenger flights on offer through the summer season, which it says: “remains level from a quality and quantity point of view”.
Leipzig Halle and Dresden combined registered 20,668 take-offs and landings during the first quarter of this year, up 7.7% against figures for 2008.  This still represents a fall of 4.5% to 7,233 flights at Dresden Airport, but Leipzig/Halle achieved growth of 15.7% with 13,435 take-offs and landings.  This is primarily due to cargo flights being operated by DHL and Lufthansa Cargo, now that the DHL hub has become fully operational.  The amount of freight handled at Leipzig/Halle Airport rose to 113,356 tonnes, an increase of 72% over the figures for the first quarter of last year.  (See pages 12-15 to find out how Leipzig/Halle’s CEO thinks the airport is coping with the recession.)
 
Munich
In 2008 Munich set new annual records for its passenger traffic and the number of aircraft movements for the sixth year in a row as its total passenger volume climbed to 34.5 million.  Viewed against the backdrop of the sharp economic downturn in the second half of last year, this was a very respectable result.  Furthermore it significantly exceeded the average performance of many other German and European airports.  However, like many other major European hubs, including London Heathrow, Frankfurt, Madrid and Amsterdam, Munich ended 2008 with a decrease in total passenger numbers.
Despite this it sits in seventh position among Europe’s busiest airports, handling more passengers than London Gatwick for the first time.  Munich is also still among the leaders in terms of its traffic retention.  At its annual press conference in the spring, airport CEO Dr Michael Kerkloh pointed out that: “Only Rome airport was able to post a larger increase [than Munich] as a result of non-recurrent effects related to the Alitalia crisis.”
Alitalia’s long-running problems forced it to transfer a substantial share of its Milan flights to Rome Fiumicino airport, thus delivering a huge and not-to-be-repeated boost to its traffic figures – and this prevented Munich from moving into sixth place within the European rankings.  However, as Dr Kerkloh noted, Munich achieved 27th spot in the worldwide ‘league tables’.  “In 2008 we moved up another place, a remarkable achievement considering the city’s Riem Airport was ranked only 42nd globally in 1988, 15 places below its current slot.
Aircraft movements exceeded 432,000 in 2008, slightly ahead of the previous year’s level.
The total passenger volume showed a stronger growth rate than the number of aircraft movements illustrating that, as in previous years, the airlines have continually increased the size of their aircraft on Munich flights.
After Lufthansa, the other airline to have a very strong presence here is the Italian carrier Air Dolomiti, which serves 21 of its country’s destinations from Munich, meaning that there are more Italian destinations on Munich’s route network than German ones (21 versus 20 destinations).  Air Dolomiti has also introduced five new 116-seater Embraer 195 aircraft into service, thus offering more than 100 seats to many Italian destinations for the first time.
Intercontinental traffic has been boosted by the introduction of several long-haul flights: Lufthansa adding Mumbai, Shenyang and Singapore to its Munich schedule, while doubling its Seoul service to six departures a week.  At the same time, Korean Air is operating its first ever passenger flights from Munich with a connection to Seoul, and South African Airways increased its Johannesburg service from three flights a week to daily.  In 2008 Asian traffic was recorded as being up by 15%, but this looks unlikely to be repeated in 2009.
In terms of financial performance, preliminary figures for 2008 showed that the operating company FMG achieved an overall increase of just over 4% in total revenues last year, equating to approximately €826 million (US$1.15bn).  If the Group’s subsidiaries are included, that figure extends to more than €1 billion (US$1.4m).  This income is divided almost equally between revenues from the aviation and non-aviation sectors.
Despite the economic downturn, Munich is pushing ahead with major development plans. (FMG)

One thing that has been a ‘thorn in Munich’s side’ for some time now is its ground handling operation, which continues to lose money.
The airport’s Board of Directors has been for looking for a re-structuring solution that will enable it to reduce its handling staff costs, but this has brought it into conflict with the union.  A recent call for strike action collapsed when the courts ruled it to be illegal.
Dr Kerkloh told Airports International that Munich must make its ground handling profitable and competitive again.  It was a point he had made before at the airport’s annual press conference when he emphasized that this was necessary to get out of the red in order to: “ensure the economic durability of the FMG Group”.
He added that: “We think we can only turn things around by spinning off these activities into a newly formed subsidiary, because it will otherwise be impossible to solve the structural problems that exist there.  “As long as we have to pay public sector wages and salaries while facing competitors that have much lower personnel costs, and can thus offer lower prices, we will not escape this cost trap.”  He also said that by entering into competitive collective agreements it was possible to keep Munich’s ground handling activities and the 2,000 jobs they provide within the Group in the long term, adding: “And of course we will work to deliver fair transitional solutions and grandfathering regulations for the existing staff.”
The airport’s shareholders had instructed the Board of Directors to sign new agreements with the works council and the union involved by the end of March 2009, but this has proved difficult and at the time of writing (June) the situation is still unresolved.
It terms of traffic figures and financial performance, like everywhere, Munich’s future will depend to a large extent on how long the current economic crisis lasts and what form it will take.  Several airlines have temporarily reduced either capacity or departure frequencies on routes, though a few have dropped routes entirely.
Unsurprisingly the current weakened demand for air travel led to some intense debate at the public discussions held as part of the planning approval proceedings for Munich’s proposed third runway.
However, the airport’s press team says that despite the understandable emotions involved with this issue, the atmosphere at hearings has been: “Very objective and constructive”.
The debate stage is over now and the approval authority is in the process of making a thorough review of all the information and applications at its disposal and will make its decision in due course.
Commenting on the situation Dr Kerkloh said: “Critics of our expansion plan have seized on the current dip in demand as an opportunity to question our future traffic growth forecasts and thus the need for the third runway.  However, this argument overlooks three decisive facts.  First, the need for a new runway is no longer a future issue for us, we already need it now for the peak times we have when we can have lines of aircraft waiting to depart – landing and take-off slots are already scarce.  There are already large periods of the day we can no longer meet airlines’ requests for additional slots.
“Second, the long-term forecast on which our expansion plan is based is still valid.  From the time when our first forecast was prepared in 2004, right through to and including the first half of 2008, our actual traffic figures were constantly above the projected average growth rates.
“Third, I am convinced that the current dip in air traffic growth will have no lasting effects on long-term growth.  Everybody who follows the development of air traffic over an extended period knows that the trend has its ‘ups and downs’.”
Dr Kerkloh pointed towards the two oil crises at the beginning of the 1970s and 1980s, the Gulf war in the early 1990s and the terrorist attacks against the US on September 11, 2001 – all of them had a huge impact on airline traffic at the time.  “However,” he said: “they were generally followed by strong growth phases and when the global economy picks up again, this will no doubt bring another above-average rise in demand for air travel that will offset – or more than offset – the fall we see at the moment.”  He added: “if you look at these cycles it is evident that there is a clear link between the growth of the economy and air travel, it would be ‘fatal’ to stop working towards the future right now.  In fact phases like the current downturn present an opportunity to get our facilities ready to need the demand.
“I have no doubt that the current crisis will not last long, and will end in the foreseeable future.
“Not just in Germany, but internationally, governments are stimulating their own economy and trying to mitigate the effects of the downturn through massive investment in transportation infrastructure.  The same can be applied to the expansion of airport capacity.  Besides solving the serious capacity problems at the airport, it fits in with many widely-held views on how to deal with the crisis.  The only difference is that we are not financing the airport projects with tax money; we are going to pay for them ourselves.”
When it comes to studying recoveries though, the biggest difference for Munich this time around is that this time it stands shoulder to shoulder with a very strong partner in the form of Lufthansa.  The German flag carrier, which has an equal share in the ownership and fortunes of the airport’s impressive Terminal 2, has a large part of its fleet based here.  The editor believes the huge investment the airline has made at Munich over the last few years guarantees it won’t be withdrawing its services in a similar fashion to how BA did at London Gatwick when the going got tough.
On the freight side, the total freight tonnage recorded in 2008 was 260,000 tons, down 2.2%, but more positively, the Russian cargo carrier Polet Airlines has recently selected Munich as its primary European base as it expands into the scheduled air cargo market.  The Voronezh-based company has made its name in the heavyweight and over-size markets as one of only a few operators of the giant Antonov An-124.  Following the arrival of its first Ilyushin Il-96-400T, the airline now plans to offer services between Asia, the Commonwealth of Independent States (CIS) and Europe via Russia and has confirmed Munich as its principal European gateway.  These flights are likely to begin in July or August once Polet, the launch customer for the Il-96-400T, receives two further aircraft.
With around 30,000 employees at over 500 companies and public-sector bodies, Munich Airport is already one of Germany’s largest local workplaces, but if the third runway is built, by 2020 the workforce is expected to exceed well over 40,000.
Although the economic benefits of the airport’s potential expansion seem clear, Dr Kerkloh notes that the construction work will have a detrimental effect on some of the airport’s neighbours.  “We are well aware of this and for this reason it is also a personal priority for me to ensure that the reasonable interests of our neighbours are taken into account in this expansion measure.  This includes providing a compensation fund of €100 million with which we will provide support to projects in the region on a voluntary basis, above and beyond what is required by law.”
At the moment Frankfurt main is the only German airport that has produced a sustainability report, but Munich’s environmental team is currently working to produce its own, which should be available later this year.  Munich’s existing and planned environmental work will be featured in a future edition of Airports International.
Among the other notable projects currently being pushed forward is its plans to build a Terminal 2 satellite.  Initially this would involve building another storey on top of the existing baggage sorting hall on the eastern apron and expanding it to accommodate worthwhile passenger numbers.
Dr Kerkloh added: “In this way we will gain a number of aircraft parking positions close to the terminal building.  As and when required we can then carry out a modular expansion of this satellite by building a second, adjacent section of the building which will form a T-shaped structure.”
The construction of a second airport hotel – the Novotel – near the Visitors’ Park S-Bahn station is already well under way and is scheduled to open in the spring of 2010.  Intended to be a three-star establishment, the 250-room facility will offer a cheaper alternative to the existing 5-star Kempinski Hotel located between the two terminal buildings.  The Kempinski itself may also be enlarged to meet increasing demand, with plans in place to extend the eastern wing, adding 165 rooms and increasing capacity by 50%.
When you include the money to be spent on enhancing the airport’s ‘feeder systems’ – the road and rail links that would support any airport expansion – there are plans to invest more than €3 billion (US$4.1bn) on airport-related development by 2020.
With the airport having survived unscathed in 2008, Dr Kerkloh expects a drop in the airport’s 2009 passenger figures and summarized the situation by saying: “We will use the consolidation phase to fortify ourselves for the challenges ahead.  Because we are now taking an anti-cyclical approach and moving ahead with our major investment plans even during an economic downswing, we are particularly effective in bolstering the economy and the labour market.  When the upswing comes, the necessary capacity will then be available.  I believe that – in economic terms as well – we are thus sending an important signal.”
 

The approval of Neiderhein’s new operating licence has avoided a threatened withdrawal by Ryanair. (FNWG)

Neiderhein / Weeze

Politics continue to play a part in Neiderhein’s ongoing development.
When, on April 22, the OVG Court in Munster ruled in favour of a reduction in the airport’s operating hours to 05:30-23:30, it provoked an expectedly strong reaction from its dominant carrier Ryanair, whose last arrivals of the day would have been affected.
The Irish budget airline said it would close what it calls its Dusseldorf-Weeze base with, it claimed, the loss of 2.5 million passengers and 2,500 local jobs, if that decision was not overturned by April 29.  It also temporarily stopped accepting bookings on all flights affected by the change in the airport’s operating hours.
However, by May 1 the airport had been issued with a new operating licence, allowing Ryanair to continue to base aircraft and operate its full flight schedule from the airport.  The carrier is due to base its seventh Boeing 737-800 there this July.