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EUROPE

STATE – of – ART REPORT

FINAL VERSION

June, 2013, Budapest

Europe State – of – Art Report 1

EUROPE STATE – OF – ART REPORT

FINAL VERSION

June, 2013, Budapest


Partnership Agreement between Lead Partner and Partners of “airLED: Local economic development in airport catchment areas” - project No 4CE485P4CENTRAL EUROPE PROJECT

Report authors: Gábor AlbertJános BerényiNóra FejesViktor SerbánMiklós Siska

Editing: Miklós Siska

Drawings: Viktor Serbán

Gáborné Török

Data sources: see Sources and Annexes

Report done by: KTI Institute for Transport Sciences Nonprofit Ltd.


TABLE OF CONTENT

I. EXECUTIVE SUMMARY....................................................................................................................6

II. INTRODUCTION, AIRPORT CITY CONCEPT......................................................................................7

II.1. The role of the STATE-OF-ART REPORT in the airLED project...............................................13

II.2. Key output requirements and scope of the State-of-Art Report..........................................15

III. AIRPORTS AND AIRPORT REGIONS IN EUROPE.........................................................................16

III.1. General geographical overview of airports in Europe and interdependencies of air traffic and socio-economic situation of airport zones.................................................................................16

III.2. Passenger traffic of airports in Europe.................................................................................28

III.3. Cargo traffic of airports in Europe........................................................................................34

III.4. Air traffic and ownership of airports in Europe....................................................................37

IV. MARKET CHALLENGES FACING AIRPORTS................................................................................40

IV.1. Competition as a new driver of the changes of the airports.................................................40

IV.2 Reassessing market power...................................................................................................45

V. AIRPORT DEVELOPMENT..............................................................................................................52

V.1. Detailed analysis of selected European airport regions........................................................52

V.1.1 Munich Airport.............................................................................................................55

V.1.2. Zurich Airport................................................................................................................57

V.1.3. Vienna Airport..............................................................................................................59

V.1.4. Prague Airport..............................................................................................................62

V.1.5. Cologne-Bonn Airport...................................................................................................64

V.1.6. Brussels South Charleroi Airport...................................................................................67

V.1.7. Basel - Mulhouse Airport..............................................................................................69

V.1.8. Bratislava Airport..........................................................................................................72

V.1.9. Leipzig/Halle Airport.....................................................................................................74

V.2. Key success factors for airport development........................................................................76

V.3. Key success factors for airport generated local and regional economic development.........77

V.4. On and off-site airport development concepts.....................................................................79

VI. CONCLUSIONS..........................................................................................................................81

VI.1. Airport development criteria................................................................................................81Europe State – of – Art Report 4

VI.2. Airport impacts on surrounding regions...............................................................................83

VI.3. Airport city: a dream or realistic ambition?..........................................................................84

SOURCES AND ANNEXES......................................................................................................................85


I. EXECUTIVE SUMMARY

The airport city concept was developed in the USA by Dr. Kasarda considering the facts that airports are never static, they are constantly evolving in form and function. Most airports have developed significant non-aeronautical facilities, services and revenue streams in addition to their core aeronautical infrastructure and services.

In our study, in chapter 2 we present the theory and some doubts regarding its’ future, not only regarding on the future of airport cities but on the whole air traffic business.

In chapter 3 we describe the European aeronautical market. Statistics of passenger and cargo traffic, shares and structures of more than 500 European airports is presented

We also try to summarize the recent developments of the European aviation market with a focus mainly on the possibilities and challenges faced by the airports. We also present some solutions appeared in the last years in Europe in chapter 4.

Chapter 5 presents the main basic data and information regarding 9 different European airports: their geographical and socio-economical situation, revenue and EBIT, possibilities of development as they comment in their own annual reports.

Finally we draw up some recommendations and conclusions regarding the strategic development plans of European regional airports, with a focus on the possibilities to their development as “Airport cities”.


II. INTRODUCTION, AIRPORT CITY CONCEPT

To enable the project partners of airLED1 and other the future users of the output documents of this project it is important to understand the current situation of airports in Europe and especially in the Central-European region. It is very important to clarify the idea and the real appearance of Airport Cities in the closer and wider geographical “catchment area” of our project.

First of all it should be understood: what does “Airport City” mean, and what makes an airport city different from other airports or other cities?

The concept was published more than several decades ago in the USA, by John Kasarda. He is professor of management and director of the Kenan Institute of Private Enterprise at the University of North Carolina’s Kenan-Flagler Business School. He advises airports and government officials around the world on Airport City and Aerotropolis development.

The concept was formed and developed during the time and regarding on the evolution of airport cities in 2008. In this paper Dr. Kasarda summarized the concept as follows2:

“Airports like cities are never static. They are constantly evolving in form and function. Historically, airports have been understood as places where aircraft operate, including runways, control towers, terminals, hangers and other facilities which directly serve aircraft, passengers and cargo. This traditional understanding is giving way to much broader, more encompassing concept known as the Airport City which has became the 21st century way forward for many airports.

The Airport City model is grounded in the fact that in addition to their core aeronautical infrastructure and services, major airports have developed significant non-aeronautical facilities, services and revenue streams. At the same time they are extending their commercial reach and economic impact well beyond airport boundaries.

Airport Metamorphosis

Airport terminals are fast becoming luxurious shopping malls and artistic and recreational venues. No longer restricted to magazine shops, fast food outlets, and

1 For more details please visit our website on www.airLED.eu2 John D. Kasarda: Airport Cities: The Evolution; Chapter 1 (London: Insight Media, 2008)Europe State – of – Art Report 7

duty free, they now feature brand name boutiques, specialty retail, and upscale restaurants along with entertainment and cultural attractions. Hong Kong International, for instance, hosts more than 30 highend designer clothing shops. Singapore Changi offers cinemas, saunas, and a tropical butterfly forest, while Las Vegas McCarran has a museum and Amsterdam Schiphol a Dutch Master’s art gallery.

Others doing things differently include Frankfurt – which has the world’s largest airport clinic serving over 36,000 patients yearly – and Detroit Metro whose swank 420 room Westin Hotel is located just off its main terminal concourse as is Dallas Ft. Worth’s Grand Hyatt hotel which serves as a fly-in virtual corporate headquarters for many U.S. businesses. Beijing Capital Airport’s tenants include banks while Stockholm Arlanda’s intensively utilised chapel conducted nearly 500 weddings in 2007. Most major airports, of course, are diversifying, expanding, and upgrading their retail offerings, often incorporating shopping streets, gallerias, gourmet and culinary clusters, and arts, entertainment, and cultural zones. These are being complemented by local themed merchandise and dining outlets.

Given the significantly higher incomes of airline passengers (typically three to five times higher than national averages) and the huge volumes of passengers flowing through the terminals (up to 85 million annually compared to 8-12 million annually for a large mall), it is not surprising that major airport retail sales per square metre average three to four times greater than shopping malls and downtown shops. As a result, their terminal commercial lease rates tend to be the highest in the metropolitan area. In addition to incorporating a variety of commercial and entertainment venues into passenger terminals, airports are developing their landside areas with hospitality clusters, office and retail complexes, conference and exhibition centres, logistics and free trade zones and facilities for processing time-sensitive goods.

Revenues from such developments are being reinforced by major financial streams from advertising and parking. Consequently, many airports now receive greater percentages of their revenues from non-aeronautical sources than from aeronautical sources (e.g., landing fees, gate leases, passenger service charges). For some, such as Atlanta, Dallas, Hong Kong and Schiphol, non-aeronautical activities contribute approximately two-thirds of total airport revenues. These non-aeronautical revenues have become critical to airports meeting their facility modernisation and aeronautical infrastructure expansion needs, along with their being cost-competitive in attracting and retaining airlines.

Since non-aeronautical revenue flows are rising and relatively predictable (i.e., they are not as sensitive to business cycles in general), there is emerging interest in securitizing them for major up-front airport capital infusions. This, together with


airport monopoly or oligopoly position in major markets have made them favourite venture targets of investment firms such as the Blackstone Group and McQuarie Bank, who typically upgrade and expand airport commercial development to meet both user and shareholder expectations. Such rapid expansion of airport-centric commercial development is making today’s gateways leading urban growth generators as they become significant employment, shopping, trading, business meeting , entertainment and leisure destinations in their own right. These airports, in fact, are taking on many features of metropolitan central business districts, increasingly operating as regional and national points of multimodal surface transportation convergence and commercial development. This evolution in function and form has essentially transformed numerous city airports into airport cities.

Airport City Drivers

Airport Cities have evolved with different spatial forms predicated on available land and ground transportation infrastructure, yet virtually all emerged in response to four basic drivers:

1. Airports need to create new non-aeronautical revenue sources, both to compete and to better serve their traditional aviation functions.

2. The commercial sector’s pursuit of affordable, accessible land. 3. Increased gateway passengers and cargo traffic generated by airports. 4. Airports serving as a catalyst and magnet for landside business development.”

The idea is worldwide accepted and accordingly used in the different development projects and strategies of the airports not only in the USA, but on other continents as well. The airport city could be considered as the physical internet that connect the worldwide supply chains, the tourism nodes, places for face-to-face businesses and fast-shipping needs of different types of business together. It connects a metro region to the global economy, especially flows of time-sensitive products such as microelectronics, pharmaceuticals, aerospace equipment, medical instruments, and high-value perishables. The airport and its immediate environments are central nodes in such national and global movements.

In this context the different activities at and around the airport should be distinguished from one another. Güller and Güller3 provide a useful framework for classifying aeronautical and non-aeronautical activities. They describe three categories of activities based on the extent to which they are related to air traffic:

core aeronautical activities are part of the technical operation of the airport, directly supporting the air traffic function;

3 Mathis and Michael Güller. From Airport to Airport City. Airports Region Conference, Barcelona Spain, 2001.Europe State – of – Art Report 9

airport-related activities have a direct relation to air-freight or air-passenger movements, (e.g., logistics and distribution activities or terminal retail and hotels). Their competitiveness and/or business revenues are closely tied to the scale of air traffic;

airport-oriented activities choose the airport area because of the image of the airport and its typically excellent ground accessibility. The price of land and surface connectivity, rather than relation to air traffic, are key the factors in determining those activities locating in the airport area.

Dr. Kasarda adds to this that “along with air traffic patterns, surface connectivity, and land price, the nature of the local market (industrial structure and nearby resident population commercial demands) play a role in the nature of airport-area development and activities taking place. So do airport boundaries. Those airports with limited developable land will see substantial airport-related and airport-oriented commercial development taking place outside the fence. The boundaries of numerous airports were established many decades ago, well before they assumed significant commercial and competitive development roles. Yet ,just as urban development did not stop at the political boundaries of metropolitan area central cities, so airport-dependent development will not stop at the formal boundaries of airports. Moreover, since airports areas are attracting businesses, workers, and residents at a heightened pace (e.g., in the U.S., research has shown that employment growth near airports has been growing considerably faster than the metropolitan suburban area in which the airport is located), airport area commercial development reflects employee and resident needs in terms of incidental services. These include housing, recreation, food services, retail, health, child day care, veterinary services, et cetera that growing numbers of airport and airports-linked business employees desire (or even require). Often these needs are being provided in large mixed-use (commercial/residential) developments in the airport region. Hence, many airport areas have also become metropolitan population growth nodes.”4

During the last decade the concept and real life examples have further evolved, and nowadays professionals and researchers of the field speak about the “aerotropolis”. As more and more aviation-oriented businesses were being drawn to airport cities and along transportation corridors radiating from them, a new urban form has emerged stretching up to 30 kilometres outward from some airports. Analogous in shape to the traditional metropolis made up of a central city and its rings of commuter-heavy suburbs, the Aerotropolis consists of an airport city and outlying corridors and clusters of aviation-linked businesses and associated residential development.

4 John D. Kasarda: Airport Cities: The Evolution; Chapter 1 (London: Insight Media, 2008)Europe State – of – Art Report 10

Dr. Kasarda also believes that “although most aerotropolis development to date has been organic, spontaneous and haphazard – often spawning congestion and environmental problems – in the future it can be markedly improved through strategic infrastructure and urban planning.

Dedicated airport expressway links (aerolanes) and airport express trains (aerotrains) should efficiently connect airports to major regional business and residential concentrations.

Special truck-only lanes should be added to airport expressways, as should improved interchanges to reduce congestion.

Time-cost accessibility between key nodes should be the primary aerotropolis planning metric rather than distance.

Businesses should be steered to locate in proximity to the airport based on their frequency of use, further reducing traffic while improving time-cost access.

Airport area goods-processing activities (manufacturing, warehousing, trucking) should be spatially segregated from white-collar service facilities and airport passenger flows.

Noise and emission-sensitive commercial and residential developments should be sited outside high-intensity flight paths.

Cluster rather than strip development should be encouraged along airport transportation corridors with sufficient green space between clusters.

Form-based codes should establish general design standards for airport area buildings, walkways, travel lanes, landscaping, and public space.

Place-making and way-finding enhanced by thematic architectural features, public art, and iconic structures should make aerotropolis developments interpretable, navigable, and welcoming.

Mixed-use residential/commercial communities housing airport area workers and frequent air travellers should be developed with easy commutes and designed to human scale providing local services and sense of neighbourhood.

In short, aerotropolis development and sustainable "smart growth" can and should go hand-in-hand.”5

But there are some doubts regarding Dr. Kasarda’s concept as well, which can’t be ignored in the context of the airLED project as well. First of all the sustainability of air transport in its present form should be considered, especially since it is completely dependent on fossil fuels. The most severe consequence of this is whether the air traffic could be maintained the as a business-as-usual functioning, as the petroleum reserves of the earth are not inexhaustible. There is no airport without air traffic. The

5 John D. Kasarda: The Way Forward; Global Airport Cities; Insight Media, 2010Europe State – of – Art Report 11

aerotropolis development concept implies that air transport undergoes a radical change in technology over the next 50 years.

The second doubt regards the concentration of those infrastructures around the aerotropolis which are not unique to air transport. The aerotropolis concept represents a concentration of high-value assets and the aerotropolis also would become a hub for other critical infrastructure such as rail and road transport. Therefore the aerotropolis is a much broader area for security risk than one airport alone. The same observation could be applied to any conglomerations of infrastructure that are equally exposed to security threats.

Last but not least there are doubts whether air transport has become a driver of economic activity and trade at all, and thereby will it replace other components of international economic development. Some researchers presume that the aerotropolis could be a major partner in the development of an airport catchment area rather than a substitute for other inputs into these systems, such as maritime, road and rail transport.6

6 Airport futures: Towards a critique of the aerotropolis model by Michael B. Charles, Paul Barnes, Neal Ryan, Julia Clayton; http://www.sciencedirect.com/science/article/pii/S0016328707000699Europe State – of – Art Report 12

II.1. The role of the STATE-OF-ART REPORT in the airLED project

As business markets become national and international in scale, airports and their adjacent areas are increasingly being viewed as catalysts for local economic development. Their ability to generate jobs and attract new business is being used in many locations as a justification for public investments in new construction and expansion in and around airports. Anticipation of new business activity also calls for appropriate spatial planning. Yet few types of economic development have been as poorly predicted and implemented as development around airports. Airports are often located in poorer areas of the region, and because of the nuisance generated by the aircrafts the situation tends not to improve. Hence economic development in the vicinity of an airport has both economic and social impacts.

There is a massive amount of literature on the subject that mostly aims at quantifying the economic impacts. However, there is no satisfying model that aims at analysing various aspects of and interests linked to spatial and economic development. From a local authority perspective, knowing the scope of investments and financial frames is useful as it helps them to justify their involvement. However, in order to know how to best accompany development processes, a qualitative analysis is more useful than a quantitative one.

Integrated economic development linked to airports poses a major challenge. Ambition to achieve this calls for the functional division of tasks and scope of responsibility between cities and settlements in the vicinity of airports, and also the strengthened cooperation between various stakeholders, such as municipalities, development agencies and private companies.

The vision behind airLED project builds on the ongoing policy reflection with regards to the ‘Airport City’ concept, advocating the importance of appropriately planned airport-area development. In the frame of this concept, an Airport City is characterised by all the functions of a modern metropolitan centre being located on and immediately around major airport sites. It may entail arterial spines and clusters of aviation-linked and also other businesses with systematically planned transport connections radiating outwards up to 20 km from the airport.

The airLED project focuses on the economic development of catchment areas around airports, taking into account the direct, indirect and induced impacts of airport activities (both existing or expanding airports), all in the frame of polycentric territorial cooperation and governance. This means that the project aims primarily at enhancing the cooperation between public authorities and bodies concerned and having a stake


in the economic development of areas surrounding a given airport. The project partner expressed this goal in the Application Form as follows:

“The purpose of …'Regional and EU state-of-art' … is to set the scene by gaining deeper insight into European trends as regards Airport City development…(to achieve this it is needed) Desk research on sites with 'Airport City' characteristics, also synthesise outcome of EU reflections on project topics so far, utilising the knowledge and experience of associated partner such as ARC. Overview on what has been achieved in Europe."7

This study aims to present and provide an evaluation of the situation in the European airport market, taking stock of the new tendencies, the new challenges airports and surrounding regions face and the possible answers to these challenges.

The regional airports have a special status in the European air traffic. They are not big enough to be unavoidable but on the other hand they are big enough to influence their narrower and broader regions: both in terms of social and economic development. Therefore is it indispensable to study the solutions – with both good or bad results – of European regional airports, whether these answers are efficient or whether it is necessary to find new solutions.

On the basis of some European examples every project partner of airLED is able to situate their individual position in Central Europe and to create a vision on the future development of their airport catchment areas. The study tries to give some general methodological approach for investigating an individual situation hence they are different from airport region to airport region, with all their unique characteristics and similarities as well.

7 Application Form of „airLED” project, page 41.Europe State – of – Art Report 14

II.2. Key output requirements and scope of the State-of-Art Report

The State-of-Art Report concentrates on the following key factors of the various airports of Europe:

geographical situation of regional airports economic situation of regional airports (as business units) possible special role of regional airports in a liberalized air traffic market relations between efficient regional airports and the development of their

catchment areas

The EU State-of-Art report did not aim to discuss all of the questions and aspects which appear in the literature. It concentrates on some basic points which are indispensable to perform an analysis of the concrete situation of regional airports in Central Europe. First of all the current situation of airports, in terms of their markets, spatial development possibilities and relations with the stakeholders was evaluated. As a second point of view the different possibilities of a regional airport and its catchment area was considered whether what benefit the presence of the airport has on it’s the narrower and broader region. Finally it a number of solutions and strategies of airports and airport regions in Europe is discussed that made airports and surrounding developments a success.

To achieve these goals statistical data of the European Union, annual reports of airports and maps showing the geographical situation of selected airports, their linkage to the central business district of the city and infrastructure and businesses close to the airport were used. The aim was to demonstrate relations between passenger and freight movements, issues of connectivity, the revenue structure and profitability of airports also because airports are not only well concentrated points of economic activity but – in a certain scale – own assets of the municipality they belong to.

In the study there were used different statistical databases (Eurostat, ACI etc.), a large number of publications appeared in the last decades (mainly on internet). On this basis we elaborated several maps and tables in order to show the interrelations between airport performance and it’s socio-economic background (population, GDP, structure of economy, distance to CBD etc.) In this analysis we used the passenger and freight transport data of around 70-75 airports and their NUTS3 level indicators depending the geographical location of each airport8. In some cases there are more than one airport in one NUTS3 level region, in this cases we merged the same socio-economic indicator to all airports of the region. We didn’t aggregate the traffic data of these airports because they could be of different characteristics (airport city or not, large passenger hub or mainly cargo base).

8 The list of airports and their NUTS3 regions see in the Annex; due to the different availability of regional data in some analysis we couldn't use data of Italian airportsEurope State – of – Art Report 15

III. AIRPORTS AND AIRPORT REGIONS IN EUROPE

III.1. General geographical overview of airports in Europe and interdependencies of air traffic and socio-economic situation of airport zones

The starting point of the analysis was an overview of the basic statistical data available on European airports in order to understand which of them are or could be considered as airport cities or aerotropolises already and which have the highest potential to become one in the future. The focus of the analysis was the data regarding the passenger flows, the commercial movements of aircrafts and air-freight transport indices.

Aerotropolises and airport cities in Europe, 2012

1. figure


Dr. Kasarda publishes every year the list and the status of the aerotropolises and airport cities in the word9. The recent list includes 45 operational aerotropolises and airport cities, of which 12 are located in Europe. In our continent there are 8 of the 39 aerotropolises and airport cities in developing status. The operational European airport cities and aerotropolises are situated mainly in the central areas of the continent while the developing ones are located in the peripheral zones. (The map of 1. figure doesn’t include Moscow!)

The operational airport cities and aerotropolises are situated in the most developed areas of Europe. It should be remarked that the developments of airport cities or aerotropolises begun in those regions as well, which regions had the most possibilities of economic development in the early 2000. Unfortunately some of them have had to suffer the consequences of the crisis, e.g.: Budapest Liszt Ferenc Airport.

In the database of the EUROSTAT there are around 660 European airports included of which there are published figures available on 510 airports, like passenger, commercial movements and air cargo flows (in tonnes). Most of them are small, local airports with moderate passenger flows and few destinations served (see: 1. figure), only 314 facilities are major airports, which serve over 100 thousand passengers yearly.

9 http://www.aerotropolis.com/files/2013_AerotropolisStatus.pdfEurope State – of – Art Report 17

http://www.aerotropolis.com/files/2013_AerotropolisStatus.pdf

Major airports in Central Europe

1. figure

Nevertheless the location of the main Central European airports is in quite strong correlation with the economic development of the region10 (data on NUTS3 level), (see: 1. figure) independently from the distances between them within the country. Also the more dense populated and more developed regions generate a significant higher demand for air traffic services, both passenger and freight and as a consequence there are more international or regional airports operating.

(In this chapter we will use two basic statistical coefficients: the correlation coefficient – R – and the determination coefficient – R2 –. The correlation coefficient shows the power of the stochastic relationship between two different statistical variables. The value of the correlation coefficient can be between -1 and +1. If the value of the correlation coefficient is equal to 0, it means that there is no stochastic interdependency between the two variables. If the absolute value of the coefficient is 1, it means that there is functional relationship between

10 Source of figures 2-3: Eurostat regional yearbook 2012, European Commission; http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-HA-12-001/EN/KS-HA-12-001-EN.PDF


the two variables. In technical issues the values over 0,9 show strong relationship, in socio-economic issues the values over 0,7 show strong relationship. If the value is minus it means that the relationship is reciprocal: the larger is one variable the smaller is the other.

The determination coefficient is the square of the correlation coefficient. The values of a statistical variable can vary around the mean value of the variable and the determination coefficient shows those percentage of this variation which can be explained by the variation of the values of the independent variable.)

We have analyzed the linkage between the air traffic (both passenger and freight) of each airport and the average population, the GDP, the share of services in the GDP and the employment in the NUTS3 region of the airport. Although there are quite considerable differences between the sizes (territorial and as regards on population) of the NUTS3 regions, it was possible to show this correlation between these factors.

The source of every data is the EUROSTAT Database11: the air traffic includes passengers on board, and freight loaded and unloaded on each airport, GDP is calculated on current market prices and in PPS (Purchasing Power Standard) etc. as it is indicated in the database.

We have found that there are positive, but generally only medium strong correlations between the air passenger traffic or air freight transport (as dependent variables) and these independent variables. The most relevant indicator of them is the volume of GDP followed by the number of employed persons and the population of the NUTS3 region of the airport. The relations between these variables are the strongest in case of those airports which are not considered as airport cities or aerotropilises. It is very interesting that the correlations between these variables and the number of passengers or the air cargo volume are much weaker if we classify the airports by air passenger number or freight volume.

For example the correlation between the amount of GDP in current market prices and passenger traffic is almost 0,61 so the variation of this variable can explain more than 37% of the differences between the airports. It is very interesting, that there is significant difference between the group of aerotropolises and airport cities and the rest of the airports. In case of aerotropolises and airport cities (see 1. figure) the correlation is only 0,32 meanwhile in case of the rests of airports (see 1. figure) this ratio is almost 0,69. With other words: only 10% of air passenger traffic deviations could be explained by the differences of GDP of each NUTS3 region in case of the

11 http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_databaseEurope State – of – Art Report 19

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

airport cities and aerotropolises meanwhile almost the half (47%) of the differences of the other airport’s air passenger traffic could be explained with this factor.

Correlations between different socio-economic indicators and air passenger traffic/air cargo traffic volume, 2010

1. table

Popula-tion

GDPGDP (2)*

GDP PPS

GDP PPS (2)*

ServiceService

(2)*Employ-ment

GDP per

capita

GDP per capita (PPS)

Correlation, airports over 10 million pax. 0,1923 0,3479 0,0801 -0,0594 0,0057 0,2430 0,3701 0,2632 0,3186 -0,1084

Correlation, airports below 10 million pax. 0,2470 0,2803 0,5000 0,1086 0,3443 0,2169 0,2466 0,3433 0,0134 -0,1971

Correlation, airport city -0,0183 0,3205 0,0477 -0,0840 -0,2122 0,3670 0,4873 0,0345 0,3131 -0,0592

Correlation, others 0,6307 0,6883 0,1609 0,3990 0,1102 0,3215 0,1541 0,6963 0,3335 0,0396

Correlation, total 0,4266 0,6094 0,2526 0,3148 0,0902 0,3799 0,3157 0,5274 0,4478 0,1109

*Correlation between indicator and air cargo volume

Among the airport cities and aerotropolises the air passenger (0,37) and cargo (0,49) volume show medium strong correlation with the share of services in the GDP of the NUTS3 region. It is not surprising hence this type of airport development supposes the needs of this type of economy in the neighbourhood of those airports.

The relation between the amount of GDP or the level of GDP/persons don’t explain very much of the differences of air passenger traffic volume if we classify the regions and their airports by the number of traveller. In case of smaller airports even there couldn’t be find correlation between the number of air passengers and the economic development level of the region. In this case only the GDP volume and the air cargo volume show some considerable correlation in the group of smaller airports.


Relation between passenger traffic and GDP, airport cities and aerotropolises

1. figure

Most airport cities and aerotropolises are developed near to the largest air traffic hubs, they serve not only the population of the closer region but other regions as well.

Relation between passenger traffic and GDP, other airports

1. figure


Nevertheless the air passenger traffic in case of aerotropolises and airport cities the higher correlation can be demonstrated with the share of services in the GDP of each NUTS3 region (see 1. figure).

Relation between passenger traffic and share of services in GDP, airport cities and aerotropolises

1. figure

In case of the rest of airports the strongest correlation can be stated with the number of employed persons (see 1. figure).


Relation between passenger traffic and employment, other airports

1. figure

We have studied the relationship between the economic growth and the air passenger traffic growth in Europe as well. Due to the fact that in the Eurostat database there are GDP growth data available only on NUTS2 level we merged first the different, before mentioned European airport’s growth rates to their NUTS2 level. Unfortunately economic growth rate data are available only until 2010 therefore we were not able to include the last years’ tendencies in the study. So we realized the calculations with the figures between 2007-2010. The correlation we obtained is practical zero! It means that the changes in economic performance of the different regions of Europe had no stochastic functional influence on the development of the air passenger traffic of their airports (see 1. figure)! With other words: it is more important the level of the economic performance of a region than the dynamism of the economy!


Relation between economic growth and air traffic changes in Europe 2007-20101. figure

-20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

R² = 0.0131087152005915

There is no functional relation between GDP and air traffic growth!

air traffic, y/y Linear (air traffic, y/y)

We also have studied whether are differences between the groups of smaller and larger airports, or regional airports and airport cities or not. It is very important that there are no differences between these groups: in every case the dynamism of the air traffic volume of a region is independent from the changes of their economic growth. For example in case of the airport cities in Europe the determination coefficient is only 0,02! (see: 2. figure)


Relation between economic growth and air traffic changes in Europe 2007-20102. figure

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

R² = 0.0209189944708511

There is no functional relation between GDP and air traffic growth! Airport cities

air traffic, y/y Linear (air traffic, y/y)

The density of airports shows correlation with the share of R+D activity and the characteristic (urban or rural) of the regions as well (see: 1. figure).

The urban areas and the R+D activity centres need more air traffic relation as other regions due to higher incomes, higher movement activity rates both regarding on business activities and holidays.

The higher income level of the population, the more important role of “contact intensive” activities, like R+D, multinational companies’ headquarters, large universities need and at the same time can finance the relative quick air traffic in these regions.


Some air traffic generating factors in Europe, I

1. figureGDP/inhabitants (PPS); EU27=100% Inhabitants/km2; EU27=100%

Also the relative high density of airports can offer good connections between destinations of larger distances when travellers can visit the other city within one day without spending the night in the other place. The travel cost could be even smaller then a night in a hotel and the meetings can be arranged at the airports without any time loss of the travellers. On the other hand the density of airport offers good connections for people to other cities for visit them within a weekend contributing by this way to the development of city tourism as well.


Some air traffic generating factors in Europe, II

1. figure

Human resources in science and Urban-rural typology for NUTS3

technology (% of the active population) level


III.2. Passenger traffic of airports in Europe

The Airport Council International Europe (ACI-EUROPE12), the European division of the worldwide international organization of airports classifies the airports in 4 categories in one of their publications13:

small regional airport have less than 5 million passengers/year, regional airports have 5 – 10 million passengers/year, secondary hubs have 10 – 25 million passengers/year and major hubs have more than 25 million passengers/year.

Of all European airports which have communicated data to EUROSTAT 38,3% had less than 100.000 passengers in 2010; 28,1% of the airports served 100.000-1,000.000 passengers in this year; 21,6% of the airports had 1 – 5 million passengers and only 12,0% of the airports had more than 5 million passengers.

In other words: in Europe 88,0% of airports are small regional airports.

From the perspective of passenger traffic the data shows that 6,1% of all the European airports are regional airports; another 3,9% of the European airports are secondary hubs and only 2,0% of the European airports are major hubs.

The 2nd table lists airports that are the biggest hubs in Europe. Some of them are intercontinental hubs and some of them play “only” European-wide hub functions. The average share of European passengers at those airports which have more than 100.000 passengers annually was 73,0% in 2010 (46,4 intra-EU international and 26,6% national passengers). At the biggest intercontinental hubs, notably in London Heathrow, Paris Charles de Gaulle, Frankfurt am Main and Amsterdam Schiphol, this share was less than 60%, although they handle the largest intra-European traffic as well. In Europe there were only 13 airports where the non-EU member states’ citizens represent a share above 40%. The remaining of these airports the connection represents only a few special destinations and therefore this share could been less than 60%.

12 ACI EUROPE represents over 450 airports in 46 European countries, which handle 90% of commercial air traffic in Europe, more than 1,5 billion passengers each year; www.aci-europe.org13 An Outlook for Europe’s Airports, Facing the Challenges of the 21th Century; ACI-EUROPE 2010 Europe State – of – Art Report 28

TOP 10 European airports’ passenger and cargo traffic, 20101. table

City / AirportPassengers (thousands)

Total European destinations

share of Europe

LONDON – HEATHROW 66 015 30 975 46,9%PARIS – CHARLES DE GAULLE 59 001 31 589 53,5%FRANKFURT – MAIN 53 283 29 502 55,4%MADRID – BARAJAS 49 831 37 399 75,1%AMSTERDAM – SCHIPHOL 45 287 27 797 61,4%ROMA – FIUMICINO 36 720 27 692 75,4%MUNCHEN 34 796 26 594 76,4%LONDON – GATWICK 31 407 23 075 73,5%BARCELONA 29 198 25 221 86,4%PARIS – ORLY 25 568 19 010 74,4%

All these proportions show that the air traffic is very concentrated on a few locations. There are only 30 airports in Europe which have more than 10 million passengers in a year, but these airports served the 58,2% of all the 660 million passengers who travelled between the European airports in this year. The 1. table shows the number of arrivals to the larger airports of Europe. The main air passenger flows can be very well observed: one part of the traffic is generated by those people who are flying to the main holiday destinations of the Mediterranean region, the other large number of persons travel because of business to the main business centres of the so called “growth banana” regions, which are situated between London, Hamburg North of Italy and North of Spain (see: 1. figure) And last but not least there is considerable air traffic flow between the centres of Europe and the metropolises located in the peripheral regions of Europe, like Moscow, St. Petersburg, Helsinki or Istanbul.


Main air passenger connections in Europe in 20101. figure

In some smaller airports almost the total of passengers (97 – 100%) are from the EU (4 airports in France, 3 in Spain, 2 in Norway and 1–1 in Denmark, Greece, Portugal and Sweden). Those airports also have a very special local importance, as they are connected just with only 1–2 destinations and – except of Stockholm-Bromma airport – have less than 1 million passengers in a year.

The remaining 301 airports European airports, which have more than 100.000 passengers in terms of intra-European traffic, served between 60-97% of the total number of passengers in European destinations (see 3. figure).


Number of airports by intra-European traffic, 20103. figure

The “best connected” airports of Europe (TOP12) are listed below in 1. table.

TOP 12 European airports by number of connected airports, 20101. table

City / Airportpassengers

(thousand) intra – European Union

connected airports,

unitLONDON – GATWICK 31 407 96AMSTERDAM – SCHIPHOL 45 287 93PARIS – CHARLES DE GAULLE 59 001 90LONDON – STANSTED 18 586 90FRANKFURT AM MAIN 53 283 89MUNCHEN 34 796 86MADRID – BARAJAS 49 831 75ROMA – FIUMICINO 36 720 73BARCELONA 29 198 70PALMA DE MALLORCA 21 080 64LONDON – HEATHROW 66 015 60DUBLIN 18 427 60


The remaining 302 airports are connected to less than 60 other airports, most of them (149 airports, 47,5% of the total number of European airports) have connection to 10 other cities as a maximum.

In large countries like Norway, Sweden and Finland there are large distances between cities and the air-traffic is the natural solution for long distance journeys. Therefore in these countries one or more local hubs (like Helsinki) emerged, serving the small other national airports that are also connected with other airports too. But these hubs are mainly of local importance although they could serve some intercontinental destinations as well.

In other large countries like Germany, France or the United Kingdom there are real intercontinental hubs which play a regional role as well. But in these countries – aside from these big intercontinental hubs – there are real regional hubs too, which are connected with a large number of other cities in the country or in the larger geographical region (e.g. Stuttgart, or Düsseldorf).

Number of airports by yearly flight operations, 20101. figure

The Mediterranean holiday destinations are also well connected within Europe, mainly during the peak vacation season. Therefore in these countries there are some airports with a large number of passengers that have limited regional importance (from the point of view of the terrestrial traffic to other destinations within the country), only the destination gives them a special significance, like the Greek holiday islands (e.g. Corfu, Santorini etc.)Europe State – of – Art Report 32

Not only the number of passengers and the destinations but the number of operations is very concentrated. 66,7% of the majority of airports, have less than 20.000 operations (landing and take-off together) in a year. This means that the mean figure for daily operations is less than 55. On the other end of the list are the major hubs (2,5% of the total) that serve more than 550 landings and take-offs every day. (see 1. figureNumber of airports by yearly flight operations, 2010.)

Also the frequency of the connections shows high concentration. The majority (66,0%) of airports have generally less than 2,5 flights/day to the different destinations, only 4,0% of airports have more than 5 flights as an average to each of other airports. (4. figure)

Number of European airports by connection intensity (flight/destination/year), 2010

4. figure

600 1,200 1,800 2,400 3,000 3,600 4,200 4,8000

102030405060708090

Connection intensity

Connection intensity

max. flight/destination/year

num

ber o

f airp

orts


III.3. Cargo traffic of airports in Europe

The main air traffic hubs in Europe are not only the largest passenger air traffic hubs but the largest air cargo centres as well. It can be stated that within the top 30 airports, the majority, 24 airports belong to the top 30 airports, both in terms of passenger and cargo traffic handled. These 30 airports operate almost 9/10 part (89,9%) of the total freight transport of all the European airports: in total 12,7 million tons! At the same time these airports serve 56,9% of all the passengers (almost 725 million people) who are landing or leaving in European airports.

The dataset of Eurostat reveals, that air cargo traffic is dedicated mainly to intercontinental transport, because the European destinations represent a much smaller share, only 15,3% of the service (calculated by tons) compared to the passenger traffic. The top 10 airports in air cargo transport are as follows (1. table):

Cargo traffic at the main European airports, 20101. table

City Airport Total freight

of which Europe

share of Europe

Frankfurt FRA 2 133 330 232 491 10,9%Amsterdam AMS 1 523 805 111 940 7,3%London LHR 1 484 487 78 163 5,3%Leipzig LEJ 743 980 293 189 39,4%Cologne CGN 726 250 245 780 33,8%Liege LGG 674 360 110 629 16,4%Luxembourg LUX 656 653 61 363 9,3%Istanbul IST 498 047 42 662 8,6%Milan MXP 440 258 12 442 2,8%Madrid MAD 393 431 31 489 8,0%

It is also interesting that some smaller airports, like Leipzig, Cologne and perhaps Liege, are more focused on intra-European air cargo than the average airport in Europe in spite of the fact that they also serve a higher share of intercontinental transport as well.

Comparing the quantity of goods transported by air and the persons travelling by air reveals a considerable difference: while there are a lot of passengers between the large hubs of Europe and the Mediterranean area, the air cargo traffic is not too important in these relations (see Main air cargo connections in Europe, 2010). But the transport of goods and mail is much more significant between the key airports of


Europe and the peripheral airports which are situated mainly in the former Soviet Union.

Main air cargo connections in Europe, 20101. figure

Also it has to be highlighted that although generally the largest hubs are the most important both in terms of passenger and cargo traffic, there are some airports which play a decisive role only in terms of cargo traffic (see: Passenger and air cargo traffic atsome European airports, 2010). E.g. Liège has about 300 thousand passengers in a year but handles almost 675 thousand tons of cargo in a year. The situation is very similar in Luxembourg, in Leipzig or in London East Middlands airport too. Moderate passenger traffic combined with considerable cargo traffic: cargo traffic is the key although passenger traffic is also important.


Passenger and air cargo traffic at some European airports, 2010

1. table

City Airport

Passengers (arriving and

departing), persons; 2011

Cargo (loaded and unloaded),

tons; 2011

Leipzig LEJ 2 263 668 743 980

Cologne CGN 9 623 398 726 250

Liège LGG 305 281 674 360

Luxembourg LUX 1 790 791 656 653

London, East Midlands EMA 4 259 816 266 498

Milan BGY 8 416 961 112 249


III.4. Air traffic and ownership of airports in Europe

The ACI EUROPE publicised a study regarding on the ownership of the European airports. The study analyses the data of 403 airports. These airports served more than 1.336 million passengers in 201014. Most of these airports – more than 85% of them – are totally or in major part public owned (see 5. figure). Only 8,7% (35 airports) are completely private. These totally privatized airports serve 13,8% of passengers and 15,4% of freight traffic in Europe. The completely or in major part public owned airports serve the 71,5% of passengers and 72,8% of air cargo.

Majority of airports are mainly public owned but the largest airports are mainly private or totally private owned

5. figure

Airports Passengers Freight0%

20%

40%

60%

80%

100%

Share of airports by owners, passengers and freight transport, 2010

Public Part of admin. Public CorporatisedMixed private-public Public majority Mixed private-public Public minorityPrivate Fully privatised

We analysed also whether are there considerable differences between the structure of ownership of airports between the EU and non EU states. In France, Greece are several airports part of the public administration meanwhile in the non-EU member states only few of them although in some countries the only one airport is part of the public administration (Belarus and Moldavia).Both in the EU members and in the non-EU member countries only 1 of 5 airports are completely or in major part private owned. But the difference is considerable if we analyse the share of passengers served in mostly private owned airports: Istanbul Atatürk Airport, Zürich Airport, Moscow Domodedovo Airport and Antalya Airport are mostly private owned and they represent around 40% of the non-EU airport's passenger traffic. This share in case of the mostly private owned airports is only about 25%.

14In the different databases (Eurostat and ACI EUROPE) we have find data only of 238 airports of them, or their passenger traffic were less than 100 thousand persons in 2010.Europe State – of – Art Report 37

The shape is different if we classify the airports by the passenger volume (see 6.figure). The airports, which serve more than 10 million persons yearly, none of them belong formally to the public administration meanwhile 6% of the smaller airports are part of the public administration formally as well. Almost 1/3 part of the larger airports are totally or in major part private meanwhile only 1/6 part of the smaller airports belong mainly to the private sector. Due to this phenomenon more than 30% of the passengers of large airports take off in mostly private owned airports but only 20% of passengers of smaller airports use the services of private enterprises.

The private sector is more dominant in the larger airports, small airports are public

6. figure

pass

enge

r

airp

ort

pass

enge

r

airp

ort

pass

enge

r

airp

ort

pass

enge

r

airp

ort

pass

enge

r

airp

ort

Part of adm. Corp. public Public majority Public minority Fully privatised Public Mixed private-public Private

Ownership of airport operator/passengers

0%

20%

40%

60%

80%

Share of passengers and airports by ownership of airport, 2010

100 000 1 000 000 5 000 000 10 000 000 15 000 000

If we are analysing that airports which have less than 5 million passengers in a year, the dominance of the public ownership is more characteristic. Only 15% of them are mainly private owned and they serve only less than 13% of the passengers of this small airports. Part of these smaller airports serves mainly those public transport needs in outer regions of Finland, Norway or Sweden which couldn't be satisfied more effective with train or coach. In case of islands (Greece, Portugal, Spain) also could be better to serve transport needs with aircrafts as with other way. But the rest of small airports in France, Germany, Italy and in the United Kingdom have to compete with other transport modes

Also the recent ACI yearly reports state that those airports which have less than 5 million passengers in a year are not profitable (see 7. figure), they cannot cover their


cost by their revenues15. The study was elaborated on the basis of economic and financial results of 213 European airports which supported the work. These airports represent 72,4% (1.362 million passengers) of total European air passenger traffic in 2011.

Share of loss-making airports below 5 million passengers in 2011

7. figure

Airport is a high level capital intensive activity where the time of return of investment – due to large construction works – is very large and these investments can’t be extended or demolished in small steps. It could be one of the raisons why the smaller airports are, or remained in public ownership. Therefore is very important to study the particularities of the small regional airports whether have any speciality to offer to enable them to convert to a profitable airport operation.

To find new financial sources for the smaller airports is even more crucial as these airports which typically have less than 1 million passengers in a year cannot even cover their operating costs from this revenue. The airports which have 1 – 5 million passengers in a year also cannot finance all their costs, mainly the capital costs of the airport, meanwhile the fixed cost are more than 80% of the total airport costs and of which more than 30% are capital costs!

15 E.g. ACI EUROPE Economics Report 2012; https://www.aci-europe.org/policy/position-papers.html?view=group&group=1&id=6Europe State – of – Art Report 39

IV. MARKET CHALLENGES FACING AIRPORTS

IV.1. Competition as a new driver of the changes of the airports

The ACI EUROPE ordered a study which was published last year regarding on the situation of the competition of the airports in Europe. The short version of the information captured in the study highlights the following facts. 16 (In this complete chapter we summarize the main findings of the study.)

One of the conclusions of the study is, that “European policy makers and regulators have yet properly to appreciate the extent of the changes that have taken place. This is partly a matter of catching up with a still fast moving market but it is also because the data have not been brought together in a comprehensive way at the European level…”

The airports in Europe, but in other places of the world have double character: on one hand these are fundamentally local businesses, on the other hand they represent the most strategic key assets for the communities they serve. This business cannot be moved to a better location if the demand decreases, all they can do is aim to make their geographical position better, more competitive and more attractive as their competing airports.

Due to the capital intensive nature of the function of airports, fixed costs represent a large proportion: first of all the maintenance and replacement costs of infrastructure, but also the extensive regulatory obligations in areas such as security, fire fighting and airfield safety are not cheap either. But the most crucial loss for an airport is when an airline ceases operations at that place. An airport cannot reduce its costs correspondingly because this large infrastructure cannot be changed (in small) step by step: the airport cannot shut down half a runway or lease its terminal for another airport.

To lose every unit of traffic means not only that it will miss out the aeronautical revenues from airport charges, but it also means loses on the non-aeronautical revenue side as well, revenues from business areas such as shopping, food and beverage, car parking and so on, as a result of the decreasing number of passengers

16 Martin Hvidt Thelle, Torben Thorø Pedersen and Frederik Harhoff: Airport Competition in Europe, Copenhagen Economics, June, 2012 - ACI-EUROPEEurope State – of – Art Report 40

using its facilities. It should not be forgotten that today non-aeronautical revenues account for almost half of airports’ incomes in the case of a large number of airports.

Lost revenues conspire to create an intense competitive pressure on airport business. Therefore a good volume of passengers travelling through an airport is vital for survival and financial sustainability. It is a natural incentive for the airport to seek to enlarge its catchment area.

Airports, like any businesses, want to minimise their exposure to revenue loss. What can be done in such a situation? What is the best way they can do that? There are a lot of different solutions: roll up its sleeves, collect regional economic data, aim for traffic incentives, introduce competitive (low) airport charges and work on marketing, go out and get more clients. The good solutions vary airport by airport: focus on a special activity like cargo, offer special services to passengers or to airlines or work together with the shareholders (municipalities use to be shareholders of airports) and offer not only airport services but attract investors to the surrounding area by special spatial development policies.

Nevertheless European airports increasingly find that when they do that, they face tough competition from their peers in what is now an expanded airport market. The competitive pressures within the air transport sector have been underlined by broader consumer empowerment thanks to the internet and better surface access links. In other words: airports have a natural incentive to provide the best deal possible and most efficient infrastructure if they want to attract passengers and airlines and avoid those painful financial losses as consequence of large traffic losses. But the reality today is that airports can and do lose costumers. In the nowadays liberalized market the airlines and their passengers have far more choice when considering which airport to use. When airports lose a customer, the nature of airport economics ensures that the impact is extremely painful.

The scope of the changes, which have been realized on the aviation market over the last twenty years, the deregulation of airline markets included, made airline business models more focussed on the costs. In the meantime the technological developments achieved have increased the operational flexibilities of airlines as well as the information and choice available to passengers. Airports became more commercially focussed entities, often privately owned or run at arm’s-length from government.

Twenty years ago, before the liberalization process, European airports were still operated in an environment where national and state-owned airlines were strictly regulated, with limited freedom to compete across borders. There were only a few exceptions. Very much has been changed since then, with the liberalisation and extension of the European aviation market. In a way this could be one of the clearest


success stories of a single European market. It has to be considered that this fierce airline competition for passengers has implications for airports too.

The former beneficiaries of the regulated airport and airline market must now compete with each other for passengers and airlines and these have now significantly more choice than in the past. Even therefore the airports have had to become more commercially focussed. The result of these changes is a more competitive and dynamic airport market. However, airports are still too often regarded as monopoly infrastructure providers. But the commercial reality is evidently very different.

The competitive pressures on airports, resulting of the changes described above, have to be seen in the context of the economic nature of those businesses. A large part of airport costs are fix costs, partly a result of investment in infrastructure but also because of associated operating costs. The bigger part of costs on safety and security vary little with scale of traffic. This gives airports a natural incentive to attract traffic to defray those costs, an incentive which has been accentuated by the growing importance of commercial revenues. This transformed the whole concept of the structure of airport’s infrastructure (buildings, roads etc.) setting up from airport retail spaces or car creating large parking areas, which activities and the revenue originating of those business now almost are as important overall as aeronautical revenues. Airports are indeed two-sided businesses, engaging in a commercial relationship with both airlines and passengers.

The profitability of an airport is therefore crucially dependent on traffic volume. Revenues – air traffic, airport service and commercial related – increase in proportion to passenger numbers while airport’s costs increase more slowly because of the high fixed cost element. Airports therefore have to respond to increased passenger and airline choice by competing to both retain and attract traffic, although they cannot forget about cost reduction.

In many cases most airports cannot achieve the needed scale of passengers despite their geographical position, which may confer some advantage relative to consumers who live nearest the airport, they can attract only those people who live very close to the airport. As a result, the competition will play out amongst the increasing number of those passengers who have a choice between airports and amongst the airlines, the latter now free to fly between any two points in Europe.

As a consequence of all above, airport behaviour is constrained by the presence of competing airports and by the willingness of sufficient passengers and airlines to take their business elsewhere if price or quality is not satisfactory. Although this sensitivity of consumers to changes in price or quality, and any associated assessment of


market power, will vary from airport to airport there is substantial evidence that the competitive pressures on airports generally are increasing, with a disciplining effect on their behaviour.

The study has tested the strength of – and trends in – the competitive constraints on airports using empirical data and models for the European aviation market and as a result they were identifying three main changes driving competitive constraints on airports:

more footloose airlines, more choice for passengers and more active responses from other airports.

Footloose airlines and passenger choice

Airlines are making use of the freedom they have to fly between European airports and they have become more footloose, both able and willing to switch away from airports if conditions are not right. Analysing all scheduled airline capacity in Europe between 2002 and 2011 the research shows a high degree of switching by airlines as follows:

Many routes open and close: around 2,500 new routes were opened in 2011 while 2,000 were closed (an increase in both cases around 500 over the data of 2002).

A high degree of churn: the new line openings were around 20% of the total stock of routes while some 15% of existing routes were closed every year.

Route closures mean durable traffic loss: because the lost traffic is not usually readily replaced when routes close. In particularly where the airport has been dependent on a single carrier to operate a route it is or could be an enormous problem. Even where multiple carriers have operated a route the withdrawal of one usually leads to a continuing traffic loss for many years because of timetable variations, because passenger’s behaviour etc. As a result of all these variations the airport’s profitability suffers.

Bases and hubs: nowadays airlines do not only open and close individual routes but also open and close bases – or vary their size – at individual airports. Such changes in airport bases have even greater impacts on airports than the gradual and continuous modifications of routes. Although only few hub and base closures occur in an average year, airports should to be ready to compete both to defend existing base and hub operations but also to win additional based aircraft. The problem is that the market is not boundless therefore as a consequence if somebody attracts route(s) or base(s) somebody else (one or more airports) is/are losing them.


Airport responses

It can be stated that Europe’s airports are now more commercially focussed. Their ownership structure and as a consequence their management has also been transformed over the last few decades. During this period in total 80% of Europe’s airports have been reorganized as corporations. Most publicly owned airports now operate as commercial entities although only at arm’s-length from government. But private ownership is also a common feature of the largest airports: nearly half of European passenger journeys now start at an airport that is fully or partly owned by private shareholders. Therefore is not surprising that airports now undertake greater marketing and route development activities as ever: 96% of all European airports, small or large, are actively marketing their airports to airlines in order to capture as large share of the market as possible . There is evidence of an increased marketing spending as well. Airports have also, through incentive schemes and targeted investments, sought to differentiate their products, so as to cater for different airline types. New airports have also entered the market. There were 81 more airports in Europe with commercial jet services in 2008 than in 1996. And, there have also been significant increases in capacity on existing airports. This shows evidence that airports both spur competition and respond to it in a market where customers have choice.


IV.2 Reassessing market power

These above described phenomena demonstrate the increased flexibility of today’s airline business models. That flexibility is particularly apparent among point-to-point carriers but the growing trend towards consolidation of hub carriers is giving them more choice than in the past as to where to base their capacity. These findings of the mentioned study are also consistent with the publicly declared policies of many airlines. Perfectly understandably, they seek to optimise the profitability of their networks and are prepared to move their aircraft to do so. This proven willingness to switch means that the threat of switching has a credibility which gives such airlines a degree of buyer power relative to airports which is emphasised where they account for a high proportion of an airport’s overall traffic. At 8 out of 10 of Europe’s top 250 airports the largest resident carrier delivers more than 40% of capacity.

Nowadays passengers have more choice than in the past. With the rapid development in new routes, a large proportion of today’s passengers have a choice between two or more airports. It can be demonstrated that the degree of choice now available to passengers and how it has increased over recent years. This choice is apparently certified in the following phenomenon:

A large geographic overlap: Nearly two-thirds (63%) of European citizens are within two hours’ drive of at least two airports. This gives significant scope for airports to compete for passengers.

More choice for local departing passengers: The increase in the number of routes means that an increasing number of passengers can find a comparable service at a nearby airport: on average around half of European airports’ local departing passengers on intra-European routes have a choice of more than one reasonably attractive substitute airport for their chosen route, and that choice has increased significantly since 2002. The choice for departing passengers has increased at all of the ten largest European airports.

More choice for transfer passengers: between 2002 and 2011, the share of transfer passengers with a realistic transfer alternative increased from 57% to 63%. In addition, the share of transfer passengers having the option of at least one direct alternative increased since 2002.

More price-sensitive and better informed passengers: Not only passengers are becoming more price sensitive, in large part due to the internet but the most price sensitive passenger segment, namely leisure traffic, has grown the most. This means that, the market is overall more price sensitive than even a few years ago.

Destination switching: The greater share of leisure travel increases the scope for destination switching as holiday makers and airlines are willing to


switch one destination for another. As a result, resort airports in Spain, for example, are in competition with airports in Greece or Italy. City break alternatives also compete with one another.

The combination of these factors suggests that passengers have both a significant and increasing degree of choice over which airport to fly from; and informed by easily accessible information on the internet represents a competitive constraint on European airports which increasingly have to make themselves attractive to passengers.

Challenging the old presumption about market power

In the mentioned study five indicators were applied to assess the strength of identified competitive constraints, namely:

local departure market share; transfer market share, hosting multi-hub airlines; buyer power of larger carrier; inbound leisure share.

Applying these indicators to the data for 2011 across the 250 largest airports in Europe the study shows that a majority of airports in all size categories are affected by at least one of these constraints, and in many cases by several competitive constraints with a cumulative impact on market power. The researchers found that these constraints were increasing, and market power therefore weakening across the board. This applies to all categories of airport, with many of the largest airports subject to significant competition for transfer passengers as well as to airline buyer power deriving from choice of hub by multi-hub carriers. Amongst smaller airports, constraints emanate more from passenger departure choice and airline buyer power, as well as, in some cases, destination switching.

It was also stated that airports of all sizes and categories are therefore subject to many competitive constraints, increasing over time; and the cumulative impact these competitive constraints is likely to be significant in many cases. While this cannot amount to a determinative view on the market power possessed by European airports the researcher stated that there is sufficient evidence to challenge the old presumption of airports having significant market power. Rather, the starting point as elsewhere in the economy should be that the existence of market power needs to be proved rather than assumed.

On the basis of the analysis the researcher have concluded the following two recommendations:


Economic regulation of airports should be avoided in areas where competition is already effective. Retaining regulation in these circumstances is likely to distort behaviours and outcomes to the detriment of customers; and

Economic regulation of airports should also be rethought in areas where competition has yet sufficiently to develop to take more account of the competitive constraints that already exist and the potential for competition to develop further in line with current trends. There is a strong case for the regulator standing back and allowing the commercial parties to negotiate commercial outcomes subject only to limited regulatory recourse.

New business models on the airport market as answers to new challenges

In the last ten years from the enlarging process of the Union, the European citizens have enjoyed the benefits of the growing trade and tourism connections between all the regions of the continent. These benefits were also the results of the liberalisation processes of the EU air-traffic market. But this process has a result the changing business model in the air transport as well.

Governments are not willing to finance the airports’ infrastructure anymore and the airline companies can get unrestricted to the Europe-wide airport network. So the airports have evolved from being mere infrastructure providers – solely or mostly dependent on public subsidies – to self financing, diversified and competitive business enterprises.

On the other hand the crisis, which started in 2008 and with more or less intensity still remains today, had a result that there were fewer and more dominant airline groups on the market which could take decisions very quickly on launching or closing a new airline service in a certain airport. This position is further supported by the fact, that two-third of the European population have 2 or more airports at disposal within 2 hour driving distance from their residential neighbourhood. This competition will increase also because the European airports aim to attract a growing share of the passengers from the fast developing countries of the world too.

These competitive pressures mean that the business transformation of airports will continue in the near future and therefore new business models will emerge. Each airport is striving to leverage its unique market position and increase its economic and operational efficiency.

Airports have become business in their own right and this fact has allowed them to act as competitive driver for local and regional economic growth. The airport operators employ 156 thousand people directly but in total 1.200 thousand employees work on the airport sites. And for every 1.000 airport onsite jobs there are


around 2.100 indirect jobs supported nationally. It means that these airport-related jobs contribute €59 billion to the European GDP17.

As airport charges paid by airlines and passengers do not cover the cost of the infrastructure they use, other revenue sources had to be found and developed. European airports have thus become extremely efficient in generating revenues from an array of non-aeronautical activities such as retail, restaurants and bars, parking, conference centres, real estate, consulting, etc. These activities play an increasing role in financing the modernisation and expansion of airport facilities. They currently account for almost 50% of airport revenues, rising above 70% in some cases.

This development means that the airport business in Europe operates just in the same way as other competitive concerns – winning customers and delivering a return for shareholders, be they private or public, through operational and economic efficiency although more than ¾ part of the European airports are publicly owned but the society needs to invest the public sources also in a more profitable way.

Within Europe the crisis has accelerated the airline consolidation for network airlines, but also for low cost carriers (LCC). This is likely to result in significant route network concentration around 5 major airline groups, with the low cost segment becoming dominant for intra-European traffic – and more prone than ever to move aircraft and crews in search of the best market location. Overall, much fewer airlines for the existing 500 European airports mean that like any other business, there will be winners and losers at the end. Against this background, new airport business models are emerging in Europe, away from the traditional ones:

the hub airport, the regional spoke/hub destination airport and the leisure/low cost airport.

While they are not mutually exclusive, these new models involve tailor-made approaches to leverage each airport’s unique market position and strengths. This increasing specialisation reflects the need for each airport to secure their competitive advantage over others through diversification and innovation.

The ACI classifies the different business models for airports18 by their level between of established and emerging as follows:

Airport network: co-ordinated airport group at national and/or regional level (e.g.: AENA – Spain, LFV – Sweden, PPL – Poland, Manchester Airport Group – UK)

17 An Outlook for Europe’s Airports, Facing the Challenges of the 21th Century; ACI-EUROPE 201018 An Outlook for Europe’s Airports, Facing the Challenges of the 21th Century; ACI-EUROPE 2010Europe State – of – Art Report 48

Alliance anchor hub: hub where the major airline alliance groups connect (e.g.: London Heathrow, Paris Charles de Gaulle, Frankfurt am Main)

Airport city: airport that provides all major services of a city, without leaving the site (e.g.: Munich, Zurich)

Multi-modal port: airport city with strong intermodal connections (e.g.: Amsterdam – Schiphol)

Airport as final destination: airport that provides a retail/service centre for their own community (e.g.: Athens)

Business traffic: airport that tailors to business traffic (scheduled and/or non-scheduled) (e.g.: London City, Farnborough, Le Bourget)

“Low Cost” Base: airport which focuses on low cost airlines (e.g.: Bergamo, Charleroi, London Stansted)

Freight platform: airport specifically catering to the needs of freight operations (e.g.: Liege, Leipzig)

Other important fact is that today airports are not only instrumental in boosting tourism but they act as a magnet for the establishment of new business. The immediate proximity of a well-connected airport remains one of the top criteria for company location. It also helps attracting skilled labour and facilitates economic transformation. Moreover, for the islands and outermost regions of Europe airports are the lifeline. It is therefore no surprise that airports have developed into economic communities in their own right.

Around large hub airports these economic communities are now called Airport Cities, reflecting the fact that these airports are economic engines comparable to the metropolitan area they serve. Airport Cities have become a destination for business, shopping and leisure, based on multi-faceted development. They are the new global transportation and business centres of the 21th century.

Similarly, smaller airports have developed into dynamic micro-economies. Reflecting their specialisation and niche market positioning in segments such as cargo, business aviation or low cost point-to-point services, they have attracted warehouses, business complexes, leisure activities and hotels to service and complement their core business. In time many of these niche airports will evolve into larger ones, with even broader activity and income bases.

The new models represent a changing role of airports in the employment too. The airport offers the possibility to create now business and new jobs multiplying the number of business, services and employees. In the European airports are 156 thousand people employed as direct operators of the airports (e.g.: in airport management, maintenance, security etc.) while around 748 thousand people work for airlines or handling agents at airports (e.g.: flight crew, check-in staff, maintenance


crew etc.). But other 308 thousand people work on-site at airports in retail shops, restaurants, hotels and nearly 314 thousand people are employed in the civil aerospace sector (manufacture of aircraft systems, frames and engines etc.)

Only some examples: Paris Charles de Gaulle Airport (as an alliance anchor hub) offers about 90

thousand direct jobs on and around the airport and other 270 thousand indirect or inferred jobs in the Roissy employment basin.

Amsterdam Schiphol Airport (as a multi-modal port) represent nearly 2% of the hole Dutch GDP and will increase up to 2,8% in 2015 attracting freight companies and manufacturers who need the speedy delivery times for their own businesses.

Munich Airport (as a real airport city) is the second largest company of Bavaria and is expecting 41 thousand employees by 2020.

Not only big hubs offer a lot of indirect and inferred employment but airports of all sizes, even smaller regional airports like Birmingham International Airport, or Gothenburg Airport.

On the other hand: not only airports but carriers are changing. In the liberalised aviation market airlines have complete freedom to base an aircraft in any country or fly between any two airports in EU. As a result new airlines business models have emerged, fully reaping the benefits of a single aviation market. These so-called “Point-to-Point Carriers” offer direct connections between two cities, whereas traditional “network carriers” primarily operate in a hub-and-spoke system.

One key feature of Point-to-Point Carriers, such as Ryanair, easyJet or Sky-Europe is their flexibility to open and close new routes. If the conditions at one airport are not satisfactory to the airline or if the route is unprofitable, it may flexibly redeploy their aircraft (often at short notice) to another airport with a better offer. Route openings and closings (i.e. airline switching) respectively account for cca. 20% and 15% of the market. In 2011 alone, cca. 2500 new routes were opened, while cca. 2000 routes were closed. Is should be noted that also network carriers such as Lufthansa or Air France increasingly offer point-to-point operations from secondary airports, such as Marseille, Lyon, Nantes, Hamburg, Düsseldorf and others.

As a result of this market development, Point-to-Point operations represent a very substantial share of the traffic at European airports. At airports with traffic of less than 10 million passengers a year, these carriers even represent the majority of traffic. 84% of those airports which have more than 1 million passengers in a year cater for an airline which comprises more than 40% of the airport’s capacity. In total 74% of intra-European routes are served by single carriers.


On average, after the closure of a unique route (i.e. a route served by 1 airline) only 47% of the original capacity returns after 3 years. More than 90% of closed unique routes are not operated in the year following the closure. This has important repercussions on the competitive constraints on the airports – the ability (or the threat) to close a route or to switch to another airport puts the airline in a dominant position in its relationship with the airport. In the case of network carriers, the threat of de-hubbing (i.e. to close a hub or to shift capacity to another hub of the same airline group) constitutes an equally strong competitive constraint for hub airports. It is considerable that since 2000 have occurred 5 cases of de-hubbing in Europe.

Not only airports and airline carriers but passengers are changing too. In addition to more footloose airlines, passenger switching exerts considerable competitive constraints on airports. In today’s market, passengers have easy access to travel options and pricing and an increased choice when planning a flight journey. There are more airports available to travellers and there is significant overlap of routes serviced by neighbouring airports. The fact that these competing airports are serving the same destinations means even more choice for passengers.

In addition, there are also more travel options available for transfer passengers. They can also pick and choose their transfer hub. With this choice, passengers are now more price sensitive than before. And last but not least, high-speed rail often represents a good alternative to the plans on short distance. The railway stations are in, or close to the CBD, there are no time using security controls or check-in procedures, on the train is more space to move, etc. So rail typically captures 50% of the market when air routes compete with rail journeys of less than 4 hours. The passenger has the choice


V. AIRPORT DEVELOPMENT

V.1. Detailed analysis of selected European airport regions

In the following chapter we summarize some basic characteristics of different Central European airports. Some of them are real Airport Cities (Munich, Zurich and Vienna) while others are specialized airports (Low Cost Bases or Cargo Bases) or have no speciality “only” are the airport of a capital city (Bratislava and Prague). The aim of this chapter is to demonstrate that although relative older airports can be located near to a rather larger economic centre but they are not always successful. On the other hand an airport which is quite far from a CBD has to find a niche market in order to be successful.

The chapter deals mainly with transport connection issues because other relevant factors related with airport city developments (population and GDP amount, share of services in GDP, population density, human resources in science and research etc.) are not be easily influenced in relative short time and on district level, so they can't be considered as “development projects” related variables. Nevertheless also these information will be demonstrated.

Airport cities are always well connected not only with the CBD but with other economically important regions. They have access to highways, railways and other public transport lines. Also the city centre is within one hour distance by car. But on the other hand airport cities are well connected by air too: well connected means that direct connected with airports of other economically important cities.

The traffic connections and services related to the different airports – presented in this chapter – are resumed in the following (see:Connectivity of selected European airportsand city centres).


Connectivity of selected European airports and city centres2. table

AIRPORT CITY ACCESS

AVARAGE TRAVELING TIME FROM THE CITY

CENTRE [MIN]

DISTANCE FROM THE

CITY CENTRE

[KM]

OPERATING INTERVAL

[FROM - TO]

AVARAGE FOLLOW-UP TIME

[MIN]

DESTINATION (OPERATOR)

Munich Airport Munich

by car 30 38

by train 40 3:30-22:30 12 Munich Ostbahnhof

by bus 40 5:15-19:55 20 Munich Main Station

Zurich Airport Zurich

by car 15 12

by train 11 5:00-23:30 8 Zürich Hbf.

Vienna International Airport

Wien

by car 17 19

by train 16 5:36-23:36 30 Wien Mitte

by bus 20 0:30-23:50 30 Wien Morzinplatz/

Schwedenplatz

Vaclav Havel Airport

Prague

by car 25 15

by bus 46 6:30-21:30 30 Hlavni nádrazi

Cologne-Bonn Grengel Airport

Cologne/ Bonn

by car 17 16

by train 16 0-24 20 Köln Hbf.

Brussels South Charleroi Airport

Brussels

by car 51 61

by bus 60 7:30-23:59 30 Station Brussel-Zuid

EuroAirport Basel

by car 15 11

by bus 23 4:55-23:40 7-8 Basle Central Train

Station

Bratislava Airport Bratislava

by car 14 13

by bus 25 5:00-23:00 10 Central Station

Leipzig - Halle Leipzig by car 23 22


Airport by train 26 4:30-22:30 40 Leipzig Hbf.

Every small chapter contains a short geographical description – including map about transport connections of the airport –, data of the NUTS3 region of the airport regarding population and GDP, the share of the most important services etc.

We have collected data regarding on revenue, profitability and the share of air traffic and non-air traffic related incomes of the airport. These information can contribute to the understanding of the situation of each airport.


V.1.1 Munich Airport

V.1.1.1. Geographical situation

The Munich Airport is located on the North of Munich next to the Munich-Vienna highway (see 8. figure). The city centre is within reach of 40 minutes by car and there are public transport service connections by “S-Bahn” too.

Situation of Munich Airport to the city centre

8. figure

Population and economic situation in the catchment area

More than 1,6 million people (1,3 million in the city of Munich and another 0,3 million in the neighbourhood of the city) live in the immediate catchment area of the airport. The population of the broader region is more than 4,6 million people. Munich, and the broader Oberbayern region is one of the most important economic centres of Germany and Europe as well. The GDP per capita (on the PPS basis) is EUR 40 thousand/person. The role of the tercier sector, in particular the info-communication is very important: it represents almost 73,7% and 7,5% respectively of the GDP.


V.1.1.2 Revenue

The Munich Airport is one of the Europe’s largest hubs and serves more than 37 million people and 286 thousand tons cargo. This airport is dedicated mainly for passenger transport, the difference between its ranking by passengers and cargo are 6 positions. The airport is a complex and his revenue is growing in the last years constantly. In 2011 the total revenue was €1.150,6 million.

V.1.1.3 Profitability

The Munich Airport as a company is generating profit for his shareholders, the EBIT in 2011 was €334,6 million which represents 29,1% of the total revenue. This ratio belongs to the higher profitability ratios of the European Airport operator companies.

V.1.1.4 Air-traffic-related and non air-traffic-related activities (units, revenue, employees)

Munich Airport represents all the key “Airport City” characteristics. The air-traffic-related activities represent about 52% of the total revenue and the other (commercial, real estate, etc) are the other part of 48%. At and around the airport there are different offices, hotels and other service providers active including medical centre. The airport is one of the considerable employers, employing 6.864 persons Summary on “what does this airports successful” – special services/activities at/around the airport

The Munich Airport is one of the largest hubs in the European air traffic market. With a strong, strategically managed system it has an acceptable profitability which is based mainly on passenger transport and the development of non-aeronautical activities like special medical services.

The airport buildings and service areas are surrounded on two sides by the runways. Between the airport and the highway those buildings are located that belong to the close neighbourhood of the airport but residential areas or other activities are located further away from the airport.


V.1.2. Zurich Airport


The Zurich Airport is situated on the Nord of Zurich next to the “Unterland” highway (see 9. figure). The city centre could be arranged within 13 kilometres by car but there are public transport service connections by “S-Bahn” too.

Situation of Zurich Airport to the city centre

9. figure

V.1.2.1. Population and economic situation in the catchment area

In the closer catchment area live almost 1,4 million people, the population of the broader region is more than 3,0 million people. Unfortunately there are no comparable data in EUROSTAT database for the region’s economy.

V.1.2.2. Revenue

The Zurich Airport is one of Europe’s regional hubs and serves about 23 million people and 286 thousand tons cargo as well as Munich. Therefore this airport is dedicated mainly for passenger transport too, but the difference between his ranking by passengers and cargo is only 1 position. The airport is a complex company and his revenue is growing in spite of the bankruptcy of Swissair which used the airport


as base airport for the insolvency. In 2011 the total revenue of the airport reached CHF 905,4 million.

V.1.2.3. Profitability

The Zurich Airport as a company is generating profit for his shareholders, the EBIT in 2011 was CHF 283,8 million which represents 31,3% of the total revenue. This ratio belongs also to the higher profitability ratios of the European Airport operator companies.

V.1.2.4. Air-traffic-related and non air-traffic-related activities (units, revenue, employees)

The Zurich Airport is functioning also as an “Airport City”, although the air-traffic-related activities represent about 64% of the total revenue and the other (commercial, real estate, etc) activities gives the other part of 34%. At and around the airport are different offices, hotels and other service provider active. At the airport are employed 1.570 persons.

V.1.2.5. Summary on “what does this airports successful” – special services/activities at/around the airport

The Zurich Airport is one of the regional hubs in Europe. The new development plans include the enlargement of the offer of hotels, restaurants, offices and other facilities, including also a medical centre until 2017.

In the semi-circle in the South are situated the airport buildings and services, the two runways crosses each other around the buildings. The airport is surrounded by the residential areas of the neighbouring settlements


V.1.3. Vienna Airport


The Vienna Airport is situated on the East of Vienna next to the A4 highway (see 10.figureError: Reference source not found). The city centre could be arranged within 20 kilometres by car but there are public transport service connections by direct train, “S-Bahn” and 3 bus lines too.

Situation of Vienna Airport to the city centre

10. figure


In the closer catchment area live more than 1,7 million people, the population of the broader region is more than 3,4 million people. Wien is the political and economical centre of Austria with a strong and developed economy. The GDP per capita (on PPS basis) is about EUR 40 thousand/persons. The strongest sector is the tercier


sector (88,0% of the total GDP in the region) and the info-communication business is also very strong (8,6% of the region’s GDP).

V.1.3.3. Revenue

The Vienna Airport is one of Europe’s regional hubs and serves almost 20 million people and 200 thousand tons cargo. Therefore this airport is dedicated mainly for passenger transport too, but the difference between his ranking by passengers and cargo is only 2 positions. The Flughafen Wien Group provides complex infrastructure service. From the development and maintenance of the infrastructure required for flight operations and handling to diverse retail, gastronomy and parking management services and real estate marketing, nearly all activities are supervised directly by Flughafen Wien AG or indirectly by their subsidiaries. As a consequence, the Flughafen Wien Group covers the entire added value chain at Vienna Airport. In 2011 its total revenue reached EUR 582,0 million, which represents a growth of 9,0% on a yearly basis.


The Vienna Airport as a company is generating profit for his shareholders, the EBIT in 2011 was EUR 67,2 million, which represents only 11,5% of the total revenue because it was less by nearly 35% as in 2010. The EBIT sunk in every segment: in airport activities by 27,6% (from EUR 78,9 million to EUR 57,1 million), in handling by 98,9% (from EUR 15,1 million to EUR 0,2 million), in retail and properties by 20,2% (from EUR 38,0 million to EUR 30,3 million). Only in others was changed from EUR – 3,4 million to EUR 4,7 million.

V.1.3.5 Air-traffic-related and non air-traffic-related activities (units, revenue, employees)

The Vienna Airport is functioning also as an “Airport City”, although the air-traffic-related activities represent about 78% of the total revenue and the other (commercial, real estate, etc) activities gives the other part of 22%. At and around the airport are different offices, hotels and other service provider active. With nearly 19,000 employees, of which the Vienna Airport company is employing 4.525 persons, the airport region is one of the largest employers in the eastern region of Austria.

V.1.3.6 Summary on “what does this airports successful” – special services/activities at/around the airport

The Vienna Airport is one of the regional hubs in Europe. The company’s strategy is based on its success factors – an advantageous geographical location, capacity, attractive tariff system, high-quality services and security standards, close customer ties and opportunities outside the airport site. This strategy is supported by the company’s growth potential: solid financial management, sound growth in passengers and an extensive offering of destinations.Europe State – of – Art Report 60

With the rental of office space outside the terminal, the Flughafen Wien Group has created a further profitable area of business as a supplement to traditional airport operations. Not only the airlines, forwarding agents and air traffic control, but a growing number of companies are also benefiting from this close proximity to the airport and its dynamic business environment. The properties owned by the Flughafen Wien Group therefore represent an important location advantage and are in great demand, as is illustrated by the current high occupancy rate of over 85%.


V.1.4. Prague Airport


The Prague Airport is situated on the West of Prague, within the metropolitan area, next to the beltway around the city (see 11. figure). The capital centre could be arranged within 16 kilometres by car but there are public transport service connections by direct train and 2 bus lines connected to the metro lines too.

Situation of Prague Airport to the city centre

11. figure


In the closer catchment area live more than 1,2 million people, mainly in the capital city of the Czech Republic. To the broader catchment area could be counted almost the whole republic because the quite good connections. Prague is the political and economical centre of the Czech Republic with the strongest economy of the country. The GDP per capita (on PPS basis) is about EUR 42 thousand/persons. The strongest sector is the tercier sector (75,80% of the total GDP in the region) and the info-communication business is also very strong (6,2% of the region’s GDP).


V.1.4.3. Revenue

The Prague Airport is one of Europe’s regional airports, which serves almost 12 million people and 57 thousand tons cargo. This airport is dedicated also mainly for passenger transport, while the difference between his ranking by passengers and cargo is only 2 positions as well. The Václav Havel Prague Airport is a part of the Czech Aeroholding Group, created in 2011, together with the Czech Airlines and several air traffic related service providers as ground handling, technical maintenance of aircraft etc. The company is a fully state owned enterprise. In 2011 its total revenue reached CZK 2.287,3 million (EUR 91,5 million).


The Prague Airport as a company is generating profit for his shareholder, the EBIT in 2011 was CZK 302,0 million (EUR 12,1 million), which represents 13,2% of the total revenue.


The Prague Airport is functioning as a “Low cost base”; unfortunately there is no data regarding on the share of air-traffic-related and other (commercial, real estate, etc) activities. At the Czech Aeroholding are employed 1.814 persons. At and around the airport are some offices, hotels and other service provider active.


The Prague Airport is one of the regional airports in Europe. The company was recently restructured with the aim to make it a more profitable and efficient entity of the group. As a “low cost base” could offer good services for Czech citizens and foreign tourist for their leisure and business flights within Europe.

The success of the airport is depending very much on the surrounding area’s success like Prague itself and the neighbouring locations.


V.1.5. Cologne-Bonn Airport


The Cologne-Bonn Airport is situated between the two cities (see 12. figure). The former German capital centre could be arranged within 24 kilometres, Cologne within 15 kilometres by car but there are public transport service connections by direct “S-Bahn” lines with both cities too. The airport is also connected to the Cologne- Frankfurt high-speed railway line. The airport is situated near to one of Europe’s most dense highway network, to the German one also.

Situation of Cologne – Bonn Airport to the city centres

12. figure


In the closer catchment area live more than 1,3 million people, mainly in Köln. In the broader catchment area could be reached almost 4,4 million people; it is one of the most dense populated areas of Germany. The Köln region is a very developed region


of Europe, the two cities belong to the most developed areas of the continent. The GDP per capita (on PPS basis) was EUR 30,3 thousand/persons in the region but in the two cities it was considerably higher: in Bonn EUR 56,4 thousand/persons and in the city of Köln EUR 43,0 thousand/persons. The role of the tercier sector and the info-communication also was very strong in the last years. The share of the tercier sector of the region’s GDP was 75,8%, and the info-communication companies gave the 9,3% of the added value.

V.1.5.3. Revenue

The Cologne-Bonn Airport is one of Europe’s cargo centres and regional airports as well, which serves almost 10 million people but more than 726 thousand tons cargo. The airport is dedicated mainly for cargo transport, the difference between his ranking by passengers and cargo is 34 positions! This is the 5th largest cargo centres in Europe. The sales amount was EUR 271.5 million in 2011, of which 65.5 % relate to airport tax and ground handling services, 31.0 % to rental, leaseholds and supply services, and 3.5 % to other revenues.


The Cologne-Bonn Airport as a company is generating profit for his shareholder, the EBIT in 2011 was EUR 21,2 million, which represents 7,8% of the total revenue. The company could overcome of the decrease of the last years caused by the economic crisis and could almost reach the same figures as in 2007.


The Cologne-Bonn Airport is functioning – beside to be one of the greatest cargo bases in Europe – as a “low cost base”. 65.5 % of the sales revenue is related to airport tax and ground handling services, 31.0 % to rental, leaseholds and supply services, and 3.5 % to other revenues. At the Cologne-Bonn Airport company are employed 1.785 people.


The comfortable three-runway system together with the intercontinental runway as well as the provision of numerous terminals and cargo halls provide for additional increase in air traffic movements. The existing motorway and railway networks back up this development. The extremely favourable climatic conditions are another positive aspect, since the airport is located in a hardly fogbound region which is rarely affected by snow falls. These climatic conditions are especially favourable for the cargo traffic, but also the passenger traffic, and primarily promote services and the production industry.

Ten years ago, Cologne Bonn Airport was the first major airport in Germany to venture into this new traffic segment. Thanks to low-cost, the airport was able to overcome the worst Europe State – of – Art Report 65

crisis in its history. Many of the Germanwings passengers flew out of or into Cologne/Bonn. This Lufthansa subsidiary based in Cologne is today the third largest low-cost airline in Europe, after Ryanair and EasyJet. Alongside Germanwings, other low-cost airlines, such as Air Berlin, EasyJet, Norwegian, Air Maroc, Wizz Air, and as of May 2012 also Ryanair, fly into Cologne/Bonn Airport, which after Berlin-Tegel continues to be the second largest low-cost airport in Germany. The fact that the network carriers are integrating the low-cost model more and more into their business programme underlines this success. The low price, the general availability and online ticket reservation in the Internet have dramatically changed the air traffic landscape.

Cologne Bonn Airport is successful with low cost. This model has created and safeguarded many new jobs. At the same time, since 2002, the non-aviation area has almost trebled from 3,500 m² to approx. 10,000 m². The sales turnover in the shops, restaurants etc. has since doubled to more than € 80 million. Today, passengers and visitors have excellent opportunities of shopping in 33 stores and eating and drinking in 20 restaurants and bars.


V.1.6. Brussels South Charleroi Airport

V.1.6.1 Geographical situation

The Brussels South Charleroi Airport is a typical regional airport which is situated next to the A15 – A7 highways (see 13. figure). The Belgian capital city centre could be arranged within 45 minutes (60 kilometres) by car but there are public transport service connections by direct bus and railway lines too. The airport is close to different important economic centres of West Europe.

Situation of Brussels South Charleroi Airport to the city centre

13. figure


In the closer catchment area live only 0,4 million people, but in the broader catchment area, including Brussels could be reached more than 2,4 million people. The catchment area is slightly developed than the Hainaut province. The GDP per capita (on PPS basis) was EUR 21,4 thousand/persons, while on province level it Europe State – of – Art Report 67

was only EUR 19,0 thousand/persons. In the province the most important sector is the tercier sector: 75,2% of the total GDP but the info-communication activity represents only 2,9% of the added value of the province.

V.1.6.3. Revenue

The Brussels South Charleroi Airport is a typical “low-cost base”. It serves more than 5 million people but there is no cargo traffic. The airport is a very important base of Ryanair but other low-cost carrier as Wizzair and Jetairfly represent a considerable share of traffic too. The yearly sales revenue of the airport were EUR 87,5 million in 2011.

V.1.6.4.Profitability

The Brussels South Charleroi Airport is generating profit for his shareholders, the EBIT of the airport were EUR 16,6 million, which represents 19,0% of the total revenue. The result was increasing comparing with the years before.

V.1.6.5.Air-traffic-related and non air-traffic-related activities (units, revenue, employees)

Although Brussels South Charleroi Airport is functioning as a “low-cost base” the air traffic related revenues represent only 6,3% of the total revenue of the airport while handling 58,1% and other, non aeronautical incomes are 23,9% of the total. At the airports are employed 406 persons.

V.1.6.6.Summary on “what does this airports successful” – special services/activities at/around the airport

Brussels South Charleroi Airport is successful offering services exclusively for low-cost carriers and their passengers. The airport doesn’t intent to be more than a very cheap airport with the necessary infrastructure and services their clients need.

Even the longer way to the final destinations of the passengers could be compensated by the attractive prices and the very good connections to the main cities of Europe. There are no more and splendent infrastructure as needed for serving passengers of the low-cost carriers. The company’s management is focusing on guaranteeing an acceptable quality of services for passenger’s needs and the appropriate working conditions of the staff.

The company started to elaborate a new Master Plan for the developments for the next 20 years, but the results are not known for the time being.


V.1.7. Basel - Mulhouse Airport

V.1.7.1 Geographical situation

The Basel-Mulhouse Airport is also a typical regional airport which is situated next to the A35 highway (see 14. figure). Although the airport “belongs” to two cities and two countries, both cities are close to him. Basel could be arranged within 6 kilometres and Mulhouse within 22 kilometres by car.

Situation of Basel – Mulhouse Airport to the city centres

14. figure

V.1.7.2 Population and economic situation in the catchment area

In the closer catchment area live only 1,0 million people, but in the broader catchment area, including Alsac and Haut-Rhin in France, Freiburg in Germany and Nord-west Schweiz could be reached almost 5,9 million people. The level of the GDP per capita (on PPS basis) in the Haut-Rhin sub-region is similar to the Hainaut province in Belgium: EUR 21,8 thousand/persons but the whole region (not


considered the Swiss and German data) is developed. Not only the GDP per capita data is higher, but the role of air-traffic intensive activities is more important in the region. The share of tercier sector is 74,7% and the share of the info-communication is 3,4%.

V.1.7.3 Revenue

The Basel-Mulhouse Airport is a typical “low-cost base”. It serves more than 7,5 million people but moved only a few tons of cargo. The yearly sales revenue of the airport were EUR 101,3 million in 2011.

V.1.7.4 Profitability

The Basel-Mulhouse Airport is generating profit for his shareholders, the EBIT of the airport were EUR 19,4 million, which represents 19,2% of the total revenue. The result was almost doubled comparing with the year before.


As Basel-Mulhouse Airport is functioning also as a “low-cost base” the air traffic related revenues represent 63,0%, handling 26,0% and other, non aeronautical incomes only 11,0% of the total incomes. At the airports are employed 494 persons.

V.1.7.6 Existing development plans

In the passenger sector there are prospects of extending the Eastern European connections, of optimizing the range of classical business destinations and holiday flights as well as of diversifying the choice of flights through attracting additional airlines. In the freight sector the present old infrastructure will be replaced by a modern new freight terminal, which will be adapted to the needs of local industry, particularly pharmaceutical firms. Another important project for EuroAirport and the region is the direct railway connection to the airport. The current planning of the project foresees its opening in 2017-18. Another future construction project is the erection of a 2- and 3-star hotel complex with 200 rooms in immediate proximity to the Airport Terminal.


The extremely convenient location of EuroAirport at the heart of Western Europe and at the crossroads of three economically thriving regions explains the airport’s success.

The scheduled flight network includes between 60 and 80 airports in about 30 different countries, depending on the season. Normally they can be reached directly every day or at least several times a week without changing. At EuroAirport more than 20 different airlines


handle approximately 80-100 daily scheduled flights. The market leaders are easyJet and Air France, followed by Lufthansa with its subsidiary Swiss International Air Lines, as well as airberlin and British Airways.


V.1.8. Bratislava Airport


The Bratislava Airport is a small regional airport on the North-east of the city and it is situated next to the D1 highway (see 15. figure). The centre of the Slovak capital could be arranged within 30 minutes, 16 kilometres by car or passengers can travel there by public bus transport too.

Situation of Bratislava Airport to the city centre

15. figure

The Bratislava Airport is situated quite near to Vienna Airport (less than 100 km) serving almost the same population, like Charleroi and Brussels due to the possibilities of the common Schengen borders.

V.1.8.2 Population and economic situation in the catchment area

In the closer catchment area live only about 0,6 million people, but in the broader catchment area, including Bratislavsky kraj in Slovakia, Wien and Burgenland in Austria and Győr-Moson-Sopron in Hungary it could be reached almost 5,4 million people. Bratislava overtop the other Slovak regions in terms of economic development figures. The GDP per capita (on PPS basis) is quite similar than the


developed regions of the continent: EUR 43,1 thousand/persons. Also the role of the tercier sector is quite high, it represents the 80,8% of the region’s total GDP and the info-communication activity is important (5,6% of the GDP) as well.

V.1.8.3. Revenue

The Bratislava Airport is also a typical “low-cost base”. It serves almost 1,7 million people but moved only a few tons of cargo. Because of the moderate number of passengers and cargo traffic the yearly sales revenue of the airport were only EUR 27,3 million in 2011.


The Bratislava Airport is not profitable for his shareholders, it means for the Slovak state. The EBIT of the airport were EUR -3,1 million, which represents -11,3% of the total revenue. The loss was less than one year before.


Although the Bratislava Airport is functioning as a “low-cost base”, since the crises the number of passengers are decreasing (in 2007 2,2 million passengers comparing with 1,6 million in 2011) but the moved cargo volume is constantly increasing (2,0 thousand tons in 2007 and 20,5 thousand tons in 2011). The air traffic related and handling revenues represent 72,3%, commercial services 18,8% and other incomes 8,9% of the total incomes. At the airports are employed 621 persons.


For the time being there is no facts to be highlighted as “success” regarding on the Bratislava Airport. The company suffered recently from a lot of different factors: loss of several domestic carriers; persistent political influence; poor long-term planning for the airport due to frequent fluctuations in top management etc. Nevertheless there are possibilities to find niche markets in Central Europe between two larger airports like Vienna and Budapest, e.g. non-scheduled flights or different destinations of different carriers.

The airport is also very good located for those travellers who are involved in the car industry or in other flight sensitive activities and are visiting the triangle between Vienna, Budapest and Zilina.


V.1.9. Leipzig/Halle Airport


The Leipzig/Halle Airport is one of the most important cargo hubs in Europe on the North-west of the city and on the South-east of Halle, situated next to the crossing point of the A9 and A14 highways (see 16. figure). Leipzig could be arranged within 16 kilometres and Halle 22 kilometres by car or passengers can travel there by public transport (train, S-Bahn and bus), including intercity connections too.

Situation of Munich Airport to the city centre

16. figure


In the closer catchment area live only about 1,2 million people, but in the broader catchment area, including Sachsen it could be reached almost 4,2 million people.


The former GDR regions still are much less developed than the South-west part of Germany. The GDP per capita (on PPS basis) in Sachsen (region of Leipzig and Halle) is still considerably below the level of Bayern or Baden-Würtemberg: EUR 21,1 thousand/persons. In the two cities are a bit higher: EUR 25,4 thousand/ persons and EUR 22,6 thousand/persons. The role of the tercier sector is also less important (56,6%) in the GDP of Sachsen although in Leipzig it is a bit higher: 61,4%. Nevertheless the importance of info-communication activities is similar to other developed regions: 5,8% of the GDP.

V.1.9.3. Revenue

The Leipzig/Halle Airport is also a typical cargo base, although it serves as a small regional airport too. It serves almost 2,9 million people but moved more than 743 thousand tons of cargo. With this figure is the 2nd largest cargo basis in Germany, 5th in Europe and 26th in the world. The airport is the basis of two large air cargo enterprises: Aerologic and European Airt Transport Leipzig. There are other important air cargo carriers active at the airport e.g. DHL. The airport belongs to the Mitteldeutsche Flughafen AG. but there is no data available on the web regarding on financial facts of the company.


The airport belongs to the Mitteldeutsche Flughafen AG. but there is no data available on the web regarding on financial facts of the company.


The airport belongs to the Mitteldeutsche Flughafen AG. but there is no data available on the web regarding on financial facts of the company.


The success of the airport is based on their important role of Germany’s air cargo activity. It is supported by the good location and connection by highways and railways as well.


V.2. Key success factors for airport development

After having studied the sample of some European airports of diverse characteristics it can be stated that airports in Europe can be economically successful when they: have a minimum level of traffic; passenger or cargo: 10 million passenger as a

minimum, in case of freight there is not stated a minimum level for achieving profitability,

are well positioned on the changing air traffic market and have found the right niche market, if needed,

have a clear developed business strategy and can realize it, dispose of suitable economic background (purchasing power, strong air-

transport intensive sectors etc.), are good connected with the nearer and wider environment, have possibilities to diverse their services.

It is not indispensable to dispose of all of these factors but some of them are crucial, like strategic thinking and managing, good connectivity and the suitable economic background.

The suitable economic background supposes the relative high level of GDP and the importance of services in it. The most appropriate structure includes R+D activities, research and IT institutions, financial services etc. with high air travelling needs. But it is also very important that in the region of the airport live several million of population as well.

These factors are the basis for frequent air journeys because of business but also as leisure due to the relative high income level of those persons who are employed in these sectors. Also these activities attract lots of business travellers to these economic centres which generate needs for restaurants, hotels, exhibition centres or air cargo services. Finally the relative high number of workplaces can generate higher level housing needs close to the airport.

Smaller airports like Brussels South Charleroi can be more profitable than larger airports (e.g. Vienna Airport or Cologne/Bonn Airport). But there is a risk for those smaller airports to lose only one air carrier and as a consequence the results can fall.


V.3. Key success factors for airport generated local and regional economic development19

For a large number of economic activities the good connectivity with other regions is crucial, therefore airports constitute necessary infrastructure for this companies. This economic role use to be mentioned as the “catalytic impact”, arising from the effect that air service accessibility may have on the region, served by the airport. Access to markets and external and international transport links are considered as “absolutely essential” to business decisions. This catalytic impact operates through enhancing business efficiency and productivity by providing easy access to suppliers and consumers, mainly over medium and long distances. The global accessibility is one of the most important factors for business location in all European regions.

On the other hand, large airports are often fundamental enterprises for their national economies. For example the demise of Swissair had a very important impact for the loss of the Swiss economy by the reduction of services of the Zurich Airport. As another example can be mentioned the role of the Paris Charles de Gaulle Airport or Amsterdam Schiphol Airport which are real multi-modal interchange nodes and contribute to the development of not only the region but of the whole national economy creating strategic advantages by their networking position and enabling to enhance a broad range of economic activity, functioning as new development poles.

The global accessibility can be a basic decision element on business location decisions. For example the good connections of the Vienna Airport have enabled Vienna to provide the location for the East European headquarters of several global companies and this is the case in Prague and Budapest as well. While the strong “high tech” industries as a hinterland can also contribute to the economic development of the airport and the airport regions like in the cases of the Nice, Copenhagen or even of the Paris Charles de Gaulle Airport.

This “air intensive” business sectors can be the following:

Insurance, Banking and finance Printing and publishing Coke, petroleum and nuclear fuel Extraction Transport

19 Based on the study of ACI and York Aviation: „The social and economic impact of airports in Europe” January, 2004


Communication Research and development Basic materials Computer activities Precision and optical instruments Other business services

This are activities which needs more air traffic services to develop their business by contacting clients, suppliers and business partners.

Another important factor is the demand for services of the air traffic related activities and airports. The multiplying effect of these activities can contribute to the employment and the economic development of the region. Every million passengers can support almost 3 thousand jobs on national level, 2 thousand jobs on regional level and almost 1,5 thousand jobs on sub-regional level. In certain region air traffic connections are crucial for the development of tourism like in Spain, Greece or even Italy. But with the appearance of the low-cost airlines this sector took profit of the development of short city visits as well.


V.4. On and off-site airport development concepts

In the spatial development planning theories have appeared several different concepts which are on could be related with the airports’ development concepts. Some of these different theories are interrelated or, with other words are different stages or levels of spatial development of a certain area. In the following we would shortly present some examples: airport city, airport corridor and intermodal hubs as possible future ways of development of Central European airport regions.

Airport cities

The concept was created and developed by Dr. Kasarda in the United States. It focuses on the complex development of the whole airport area including not only the in-fence but out-fence areas. The concept is presented in details in chapter 2.

Airport corridors

Airport corridors can be developed between the airport area and the central business district. (CBD) The development activity focuses on the area which is situated along the transport corridor between the two important spaces: airport and CBD. Generally the development have an initial, natural phase as individual, relative smaller development are taken place influenced by more or less causal factors. In a more matured phase the whole region, which is situated between the airport and the CBD, is subject of a wider, mainly strategic spatial planning process.

Airport corridors can be developed between the airport or airport city and the CBD or the metropolitan poles of a metropolitan area. The concept is based on the demand for air traffic of certain activities. It could be the demand of businesses which need relatively high volume of movements on medium or large distance (which could be satisfied by air by the most appropriate way) independently of the fact that this need appears as a need of the supplier, client or of business trips.

Examples can be shown in different cities of the world. Only in Europe there are several airport corridors developed in Frankfurt, London, Paris, Amsterdam or in Madrid between the large air traffic hubs and the surrounding area. But it has not to be a major hub which can generate an airport corridor between the CBD and the airport. The same development process can be observed in Zürich or in Barcelona.

Intermodal hub

Intermodal hubs could be the first stage on the way of the development of an airport to an airport city or airport corridor. Neither the passengers nor the air cargo use to Europe State – of – Art Report 79

arrive at the airport, generally they have to change the transport mode and continue travelling to their final destination. Therefore airports are usually smaller or larger intermodal hubs as well where passengers can take a taxi or cargo can be loaded on trucks as a minimum. Nevertheless it is recommended that passengers and cargo could take the most appropriate transport mode they need for continuing the trip till their final destinations. As wider and smoother is the offer of transport mode possibilities at the airport as more successful could be the airport in the competition for passengers and cargo.

Passengers and couriers are considering the total travel or transport time as they are evaluating transport possibilities. Therefore not only the transit time within the airports is important but also the transit time at the airports while changing transport modes. The connectivity of the airport to the CBD or to the different regions in the hinterland of the airport is one of the factors which will be considered as travellers or shippers are evaluating the possibilities of the different airports which can solve their transport needs.


VI. CONCLUSIONS

VI.1. Airport development criteria

While determining the airport development criteria it should be considered several factors. These factors are related with the geographical, socio-economical and topological circumstances of the airport. The different criteria are as follows:

Geographical criteriao The situation of the airport regarding on the main city/region it serveso The situation of the competing airportso The meteorological characteristics of the airport

Topological criteriao Main connecting transport modeso Spatial development possibilities at and around the airporto Land use around the airport

Socio-economical criteriao Population in the catchment areao Economic situation in the catchment area (growth, structure,

employment etc.)o Business attractiveness of the catchment area

Regarding on geographical situation it was demonstrated that in the core regions there is a higher level of air traffic demand than in peripheral zones. The more important cities can be arranged within acceptable time (within 1-2 hours as a maximum) from an airport the more point-to-point connections are possible.

Because the fact that the majority of European citizens have possibility to choose at least between two airports to flight to/from airports compete among each other in level and specialities of services. The more competitive airport can attract more passengers and on this basis can achieve better economic performance. (Below 5 million passengers yearly airports are rarely profitable.)

The role of an airport in the complete transport network influences the development possibilities of the airport and its neighbourhood. The more variable and easy connection possibilities with other transport modes contribute to the larger passenger flow at the airport. It includes the connections to other airports as well.


Airports need enough space to grow if needed (new runways, passenger areas and/or other buildings and installations). Not only space but other infrastructures are indispensable to attract enterprises which needs or offer services of/for the airport.

It is also indispensable that the nature of the neighbouring areas of the airport shouldn't be controversy to the airport activities: in protected areas it isn't possible to enlarge the airport and to attract more connections because of noise. It can also negatively affect urbanisation developments.

The higher level of density of population contributes to the air traffic needs. It was demonstrated that in denser populated areas people travel by air more frequently. Also the higher living standard of the population generates more need for air traffic because those people spend more for holidays or city visits. The higher level of incomes is in strong correlation with the education and profession. In those service sectors which generate more air traffic, the share of higher educated people is also higher than the average in the economy.

It was also demonstrated that in those regions where the economic development level is higher, where the share of service is higher, where the employment is higher, the air traffic demand is also higher and as a consequence the possibilities of profitability of airports are also better.

The more attractive a region for investors is the more enterprises and institutions choose the region to settle down there. The large companies and institutions also generate economic development and air traffic as well. That is demonstrated by the fact as well that in those regions where the major air traffic hubs are, also several headquarters of major international companies can be found there.

Nevertheless it is very important that the stakeholders should have a common vision regarding on the future of the airport and their surrounding area to enable the airport or airport region to develop the appropriate strategic development plan and to follow the realization of this strategic development plan. It is shown that although most organizations have a strategic development plan, but without the appropriate tools for tracing, a high percentage of them can’t realize their strategic goals.

On the other hand, each airport has to consider their own possibilities and situation in the recent competition for air carriers, passengers and cargo taking in to consideration the financial possibilities of the shareholders for developing the airport and their catchment area as well.


VI.2. Airport impacts on surrounding regions

It is demonstrated that airports are dynamic motors of economic development in their smaller or wider catchment area by generating demand for services, materials and jobs not only at the airport but at the airport supplying companies as well. Airports make easier to connect business with other business situated on medium or long distance of the airport region. These relationships can exist between persons but can be developed between suppliers and clients as well of air transport intensive or sensitive business sectors like finance, R&D or other, mainly businesses of high added value.

Airports can have a positive impact on the tourist sector of their catchment area due to better connections to the world, to the possible leisure travellers of other regions. If there are possibilities for develop certain activities airports can help in concentrating not only R&D activities of those certain activities but also education, suppliers or clients of the activity in question, e.g. pharmaceutical industry or computer related activities.

Nevertheless it can’t be forgotten the possible negative impacts of the airport like noise and air pollution or safety problems (terrorism) when a high concentration of high value added activities are concentrated in a certain and smaller area. Therefore is also very important that airports have to prepare reliable strategic development plans with these regards also.


VI.3. Airport city: a dream or realistic ambition?

Airport city has a double meaning: while it could be a business model for several airports at the same time it is a new urban spatial development strategy for the airport region. The first concept belongs to the airport business management theory but the second is much more a concept of the municipalities of the airport’s surrounding area although in many cases these municipalities are shareholders of the airports!

It is shown that airports need have a certain passenger flow to be able develop and maintain such a lot of non-aeronautical business which can be considered as “airport city”. Based on low-cost carriers and low-cost travellers can’t achieve the revenue per sq.m. needed for the profitability of a top quality fashion shop or business centre at the airport. The same could be considered if we are talking about air traffic related services as aircraft maintenance or training of the airplane crew. It should be an airport where move enough aircraft which can profit of these services or there should exist enough service provider with the special manpower to offer these services at a high quality.

At those regions where the airport serves 15 million people in a year and there are direct flights to 40–50 destinations as a minimum while one air line carrier uses the airport as basic airport, there could be considered the development as an “airport city” offering a lot of non-aeronautical services for passengers and professionals in the air traffic related businesses. And on the other hand at those airports is needed to develop the offer of hotels and accommodations, restaurants, leisure and other special services (e.g. medical care, or entertainment).

At these regions can be projected the spatial planning by developing the airport’s surrounding area for air traffic related business activities and for residential area of these employees. If the need is strong enough it can projected the development between the airport region and the closest metropolitan poles for airport corridors. But in the meantime it can’t be forgotten develop the multimodal hubs because an airport of this level is functioning as a hub for the hinterland as well.

At airports and regions where these preconditions are not in place it is recommended to consider other possibilities to be a successful airport. First of all it should be studied the soci-economical environment of the airport and find the possible niche markets which could be appropriate for the airport. It can be “low-cost base”, or freight centre or other, special air traffic related activity. But in any case possibilities and strategic goals have to coincide! The airport city could be a dream for somebody while a realistic ambition for another.Europe State – of – Art Report 84

SOURCES AND ANNEXES

Sources and Annexes

Sources

1. John D. Kasarda: Airport Cities: The Evolution; Chapter 1 (London: Insight Media, 2008)

2. Mathis and Michael Güller. From Airport to Airport City. Airports Region Conference, Barcelona Spain, 2001.

3. John D. Kasarda: The Way Forward; Global Airport Cities; Insight Media, 20104. Airport futures: Towards a critique of the aerotropolis model by Michael B.

Charles, Paul Barnes, Neal Ryan, Julia Clayton5. http://www.aerotropolis.com/files/2013_AerotropolisStatus.pdf 6. Eurostat regional yearbook 2012, European Commission;

http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-HA-12-001/EN/KS-HA-12-001-EN.PDF

7. An Outlook for Europe’s Airports, Facing the Challenges of the 21th Century; ACI-EUROPE 2010

8. ACI EUROPE Economics Report 2012; https://www.aci-europe.org/policy/position-papers.html?view=group&group=1&id=6

9. Martin Hvidt Thelle, Torben Thorø Pedersen and Frederik Harhoff: Airport Competition in Europe, Copenhagen Economics, June, 2012 - ACI-EUROPE

10.ACI and York Aviation: „The social and economic impact of airports in Europe” January, 2004

11.http://www.aerotropolis.com/airportCities/publications 12.Annual reports of the studied airports


http://www.aerotropolis.com/files/2013_AerotropolisStatus.pdf

http://www.aerotropolis.com/airportCities/publications

https://www.aci-europe.org/policy/position-papers.html?view=group&group=1&id=6

https://www.aci-europe.org/policy/position-papers.html?view=group&group=1&id=6



Annex

Nr. NUTS3 region Airport

1 Wien WIEN/SCHWECHAT

2 Arr. de Bruxelles-Capitale BRUXELLES/NATIONAL

3 Arr. Charleroi CHARLEROI

4 Arr. Liège LIEGE/LIEGE (CIV)

5 Hlavní mesto Praha PRAHA/RUZYNE

6 Stuttgart, Stadtkreis STUTTGART

7 München, Kreisfreie Stadt MÜNCHEN

8 Berlin BERLIN/SCHÖNEFELD

9 Berlin BERLIN/TEGEL

10 Hamburg HAMBURG

11 Frankfurt am Main, Kreisfreie Stadt FRANKFURT/MAIN

12 Frankfurt am Main, Kreisfreie Stadt FRANKFURT-HAHN

13 Region Hannover HANNOVER

14 Düsseldorf, Kreisfreie Stadt DÜSSELDORF

15 Köln, Kreisfreie Stadt KÖLN/BONN

16 Leipzig, Kreisfreie Stadt LEIPZIG/HALLE

17 Byen København KØBENHAVN/KASTRUP

18 Thessaloniki THESSALONIKI/MAKEDONIA

19 Attiki ATHENS

20 Dodekanisos RODOS/DIAGORAS

21 Irakleio IRAKLION

22 Vizcaya BILBAO

23 Madrid MADRID/BARAJAS



24 Barcelona BARCELONA

25 Alicante / Alacant ALICANTE

26 Valencia / València VALENCIA

27 Eivissa, Formentera IBIZA

28 Mallorca PALMA DE MALLORCA

29 Málaga MALAGA

30 Sevilla SEVILLA

31 Fuerteventura FUERTEVENTURA

32 Gran Canaria GRAN CANARIA

33 Lanzarote LANZAROTE

34 Tenerife TENERIFE SUR/REINA SOFIA

35 Helsinki-Uusimaa HELSINKI/VANTAA

36 Paris PARIS/CHARLES DE GAULLE

37 Paris PARIS/ORLY

38 Oise BEAUVAIS-TILLE

39 Haut-Rhin BALE-MULHOUSE

40 Gironde BORDEAUX-MERIGNAC

41 Haute-Garonne TOULOUSE/BLAGNAC

42 Rhône LYON/SAINT-EXUPERY

43 Alpes-Maritimes NICE/CÔTE DAZUR

44 Bouches-du-Rhône MARSEILLE/PROVENCE

45 Budapest BUDAPEST/FERIHEGY

46 Dublin DUBLIN

47 Bergamo BERGAMO/ORIO AL SERIO



48 Milano MILANO/MALPENSA

49 Milano MILANO/LINATE

50 Napoli NAPOLI/CAPODICHINO

51 Catania CATANIA/FONTANAROSSA

52 Bologna BOLOGNA/BORGO PANIGALE

53 Roma ROMA/FIUMICINO

54 Luxembourg LUXEMBOURG/LUXEMBOURG

55 Riga RIGA

56 Groot-Amsterdam AMSTERDAM/SCHIPHOL

57 Miasto Warszawa WARSZAWA/CHOPINA

58 Grande Porto PORTO

59 Algarve FARO

60 Grande Lisboa LISBOA

61 Bucuresti BUCURESTI/HENRI COANDA

62 Stockholms län STOCKHOLM/ARLANDA

63 Västra Götalands län GOTEBORG/LANDVETTER

64 Bratislavský kraj BRATISLAVA/M.R.STEFANIK

65 Tyneside NEWCASTLE

66 Greater Manchester South MANCHESTER

67 Liverpool LIVERPOOL

68 Leicestershire CC and Rutland EAST MIDLANDS

69 Birmingham BIRMINGHAM

70 Luton LONDON/LUTON

71 Essex CC LONDON/STANSTED



72 Outer London - West and North West LONDON/HEATHROW

73 Surrey LONDON/GATWICK

74 Bristol, City of BRISTOL

75 Edinburgh, City of EDINBURGH

76 Glasgow City GLASGOW

77 East of Northern Ireland (UK) BELFAST/ALDERGROVE


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