Take Off for a Low-Cost Airport

31 August 2005 (Last Updated August 31st, 2005 18:30)

Frankfurt-Hahn appears to be achieving its targets for growth in the drive towards profitability. Future Airport looks at the figures from the German airport catering to low-cost airlines and cargo carriers.

Take Off for a Low-Cost Airport

In the last seven years, Frankfurt-Hahn has been developed from a small provincial airport into a competitive centre for low-cost aviation in Germany. Half-year results released in August 2005 show that Flughafen Frankfurt-Hahn GmbH, the airport’s operating company, is well on its way to achieving profitability, with growth in both passenger and cargo traffic.

"We are fully satisfied with our half-year results with regard to the further development of the airport," says management spokesman Jörg Schumacher.

The expansion plans of its largest low-cost customer have played a significant role in the airport's fortunes. Ryanair is the only low-cost airline in Europe that is making profits – of about €269m net in the year 2004–05. In April 2005, Ryanair stationed its sixth aircraft at Hahn. Ryanair currently flies to 23 destinations and, in the winter, the number will increase to 28 destinations in ten European countries.

Wizz Air, Hahn's second-largest customer, has enjoyed positive development in the Eastern European aviation market. "What Ryanair has done and is doing for our region, Wizz Air is now doing in Eastern Europe," says Schumacher. "Look, for example, at Katowice Airport in Poland. In 2003, about 258,000 passengers used the airport; but now, from January to April 2005, more than 261,000 passengers have already been carried, which means a growth of 141% compared with 2003."

Wizz Air started operations from Katowice for the first time in May 2004, and began operating from Frankfurt- Hahn in March 2005. Hahn’s third low-cost airline, Iceland Express, has been occupying an attractive niche since March 2005, with three weekly flights to Reykjavik.

CARGO

Air cargo is a very important growth generator for the airport, which is Germany’s fourth-largest freight airport. The sector saw growth of 54% in flown cargo. Including road feeder traffic, a total of 104,036t was handled in the half-year 2005 – 15% more than the same period in 2004. Evidence of Frankfurt-Hahn's strong position in the world's cargo market is provided by the recent arrival of British Airways World Cargo and Air New Zealand, and the increase in cargo flights by Aeroflot, which carries about 64% of the freight arriving at the airport.

"The airport’s 24-hour operation and flexibility, especially in the allocation of slots, is a key selling point."

A total of nine scheduled cargo airlines use Frankfurt- Hahn. The airport’s 24-hour operation and flexibility, especially in the allocation of slots, is a key selling point. For the whole year, the operating company expects about 235,000t of handled freight, including road feeder service, of which pure air freight will total 95,000t.

ECONOMIC DEVELOPMENT AND FORECAST

At Frankfurt-Hahn, turnover grew by 26% to €17.4m (compared with €13.8m in the half-year 2004). Earnings before interest, tax, depreciation and amortisation (EBIDTA) were reduced by 3% to €2.8m (€2.9m in 2004).

"Income from infrastructure charges, rents and parking, with a turnover of €5.7m and an increase of 35%, is one of the largest growth factors of the airport,’ reports Stefano Wulf, commercial director of Flughafen Frankfurt-Hahn GmbH. ‘Business with airlines accounted for about 22%.’

The efficiency of the low-cost concept is clearly shown by the increase in turnover, while at the same time reducing the EBITDA margin from 73% in 2002 to 16% in 2004.

INVESTMENT AND EXPANSION

A further factor in this success is the focus on investment, particularly in the expansion of the infrastructure of Frankfurt-Hahn. "We are investing in order to grow further and to safeguard the economic centre and employment generator that is Frankfurt-Hahn Airport," comments Schumacher.

The most important development project for Flughafen Frankfurt-Hahn GmbH at the moment is the extension of the runway from the current 3045m to 3800m. "We need the longer runway in order to offer existing and future customers the best service so that they can make their cargo flight schedules even more efficient, and we can keep them that way," says Schumacher.

The extended runway will make it possible to use cargo aircraft on longer routes with full fuel tanks and, at the same time, a full cargo. Long-haul cargo flights can thus be attracted to Hahn and, as a result, more jobs will be created. Flughafen Frankfurt-Hahn GmbH plans completion of the entire €37.5m project for about the middle of 2006.

"Long-haul cargo flights can thus be attracted to Hahn and, as a result, more jobs will be created."

Alongside the extension to the runway, the operator is actively involved with the expansion of the terminal. Here, the two existing terminals will be joined together to form one large terminal with an intermediate area of 3500m² for more shops and restaurants at a price of only €3.9m. In addition, there will be a brand new bus station with about 15 partly covered bus stops, including a footpath to the terminal, which is expected to be approved in October 2005.

On behalf of the Hahn Airport Association, new access to the airport site, part of which is already in operation, will also be built by the end of the year for €10m. A new office building, near the cargo check-in building, is also under construction, with completion planned for autumn 2006.

Since 1998, the Frankfurt-Hahn’s operating company has invested about €135m in expanding the low-cost airport. By comparison, the cost of Terminal 2 at Cologne/Bonn Airport was about €325m. Statistics such as these appear to indicate that a relatively low-cost project is due to reap very considerable rewards.