Anyone talking to freight forwarders or ground handlers nowadays about Frankfurt Airport's air freight strategy and its “Relaunch 50” restructuring scheme, encounters a complete lack of understanding. Downscaling the role of air freight, especially in Covid-19 times, as recently announced by the Executive Board, “testifies an alarming loss of reality within the top management of the operator,” a critic reacted, not mincing his words. His statement is just one of a number of reactions expressing a total incomprehension of Fraport’s intention of dwarfing the air freight business.
In Liege, Frankfurt-Hahn, and Cologne-Bonn, the champagne will have been flowing a few days ago. The managers of the nearby located airports no doubt must have celebrated Rhine-Main Airport operator Fraport AG’s announcement that it would be restructuring its cargo business, leading to the impression that, in future, cargo will only play the second or even third fiddle at one of the largest freight hubs in Europe. This might lead to traffic losses, the local cargo industry fears. One hub’s loss is another hub’s gain, however.
Freight & Passenger Development
According to the plans tabled by the management some days ago, and valid as of 01JAN21, Fraport’s freight unit will become part of a newly created division named Freight & Passenger Development, headed by Simone Schwab (54), an expert in marketing, business development, communication, and digitalization. She will report to Alexander Laukenmann, responsible for security, flight, and terminal management, but will not hold a seat on Fraport’s Executive Board. Simultaneously with her taking on her new assignment, Fraport’s Labor Relation’s Director, Michael Mueller cedes his competencies for the airport operator’s cargo business. Hence, the current Cargo Chief, Philipp Conrady will no longer report to Mueller but to Ms. Schwab.
Cargo becomes voiceless
With Executive Board Member, Michael Mueller giving up responsibilities for the airport’s cargo affairs, there will be no air freight business representative available to speak up within Fraport’s top management, since Ms. Schwab has not been accorded a seat in the operator’s governing body.
As the downscaling of cargo was made public, the wider community reacted with disbelief. Meanwhile, however, many freight forwarders, ground handlers, and cargo airlines have started voicing protests.
“Mr. Schulte (CEO) and his crew keep promoting the construction of (pax) Terminal 3, but keep tight lipped when it comes to the contribution of cargo to Fraport’s traffic record and budget particularly in Covid-19 times,” was the indignant reaction of a Frankfurt-based forwarding agent when approached by CargoForwarder Global.
Cargo should be upscaled, not downscaled, experts hold
Another voice recommended that the top management should take a look out of its headquarters’ windows to get a clear view of the bigger picture: “In that case, they would see dozens of freighter aircraft constantly being loaded or unloaded in front of their eyes, landing or taking off, yet hardly any passenger traffic.”
That said, the agent added: “Instead of downscaling cargo as intended by Fraport’s bosses, it should give the freight division more responsibilities, admit cargo greater autonomy from passenger matters, and listen to cargo managers’ voices more carefully when it comes to infrastructural decisions, staffing, and operational issues.”
The “Relaunch 50” savings program is a reaction to the dramatic downturn of passenger traffic at the large Rhine-Main Airport (-68.4% from JAN-AUG20 y-o-y). In contrast, cargo volumes declined by only 13.6% during the first 8 months, measured against 2019 figures. This loss must be accredited to the absence of lower deck transport capacity that is expected to last for months if not for years depending on the recovery of passenger traffic.
And how does Fraport’s Executive Board react to these figures? Besides axing jobs and streamlining management levels to cut costs, it downscales cargo, its only source of revenue.
Long error list
This decision is one of a series of corporate mistakes made by the Fraport management, market observers hold. They recall the airport’s zigzag course in the case of Hahn Airport. In 2005, it bought the former U.S. Air Force base, located 120 km southwest of Frankfurt, in order to have a complementary airport offering 24/7 operations. Four years later, Fraport sold its stakes for 1 euro (sic !!) on the grounds that “Hahn would never become profitable.”
This was followed by the Frankfurt exit of FedEx that decided to choose Cologne-Bonn as its hub instead, due to the impending night flight ban at FRA torpedoing the business of every integrator, and reducing accessibility for cargo and passenger airlines in general.
Until now, the latest large mistake made by the management according to critics, was its canvassing for low cost carriers such as Ryanair, who were offered very favorable operational and financial conditions. Traditional customers like Lufthansa, Emirates, United, and others reacted sourly. Lufthansa even considered pulling off parts of its long-haul fleet and basing the aircraft in Munich, instead.
Given this dubious track record, it is not surprising that air freight, currently Fraport’s only cash cow, is facing devaluation and the loss of its voice on the company’s Executive Board.
It simply adds to the other errors made by the top deck.
Observers assume that Hahn, Liege, Brussels, or Cologne will welcome cargo airlines still operating at FRA but willing to relocate their traffic, with great pleasure.
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