Investor AviAlliance is on its way to ascending into the top league of airport managers. Holding substantial capital shares in BUD, DUS, HAM, SJU, and ATH could just be the beginning. “We are always looking for opportunities to enlarge our line of business,” AviAlliance MD Gerhard Schroeder told CargoForwarder Global in an exclusive. The investor’s next scoop might be upping its stakes in Athens International Airport (ATH).
Currently, AviAlliance holds 40% in Athen’s Eleftherios Venizelos International, but is eager to acquire a further 30% that the Greek Government has committed to sell. A tender is underway with
French Group Vinci being AviAlliance’s toughest competitor, sources say. Should AviAlliance win the bid, ATH would be a heavyweight in the investor's existing network. "Our goal is always a
long-term commitment and the creation of synergies within our airport system," Mr. Schroeder explains.
ATH is the Mediterranean country’s largest airport, documented by 2019 traffic figures (25.6 mn pax, 95k cargo, 225.600 movements), and a financially interesting candidate evidenced by its EBITDA which amounts to €348 million.
“We came to stay”
In a video call with CFG, Gerhard Schroeder confirms that the Athens topic ranks very high on his company’s agenda. “What distinguishes us from other investors is that our strategy is aimed at a long-term commitment from which both sides benefit most,” the manager pronounces.
As demonstrated in Budapest, where the company took ownership in 2007, together with its consortium partners Caisse de dépôt et placement du Québec (CDPQ) and the investment arm Malton of the Singaporean sovereign wealth fund GIC.
“We came to Budapest to stay,” Mr. Schroeder emphasizes, clearly turning down the latest approach by the Hungarian Government to pave the way for a private consortium to acquire headed by Hungarian national Daniel Jellinek, an institutional investor belonging to Prime Minister Viktor Orban’s cosmos.
Scrap transformed into gold
BUD Liszt Ferenc International was the first privatized airport in Eastern Europe back in 2005, after the iron wall had crumbled.
Since then, the management and the airport’s shareholders have spent roughly €500 mn in the modernization, expansion and development of the once dilapidated location, converting it into the most modern and efficient airport in the region.
In particular, the completion of a brand-new, 32,000 m2 Cargo City on airport with a building for Ground Handling and one for Forwarders, has already proven its worth. “The entire space is already 100% leased by two cargo ground handlers and several well-known forwarders,” an enthused René Droese, BUD’s Chief Development Officer, reports. According to him, freight volumes have remained relatively stable since COVID-19 broke out last March, showing only a slight decrease of 2,7% in average underlined by additional frequencies provided by partners like Turkish Cargo now with a 4th flight per week between IST and BUD (CargoForwarder Global, 08NOV20) or Cargolux starting cargo service between Shenzhen and Budapest.
Austerity program hurts but was inevitable
A negligible figure when compared to stats presented by BUD’s direct competitors, such as nearby Vienna, down -20% y-o-y, Munich -46%, or Prague -32%.
However, the bitter pill is that the sharp drop in passenger traffic forced the BUD management to implement an austerity program, cutting all non-essential costs, axing jobs (34% of headcount) and postponing most of its future investments. But despite all these measures to overcome the current crisis, Budapest Airport started to collect requirements from the cargo community for the next phase of the Cargo City development since the first phase was “sold out” very quickly and the present cargo volume development and forecast are justifying this step, Mr. Droese confirms.
According to him, BUD’s cargo future looks bright. The catchment area, reachable by truck within 8 hours, consists of 16 Central Eastern European (CEE) countries, among them 11 EU Member States and 5 Balkan countries. This represents an annual cargo market of 1.5 million tons. The estimated e-commerce market value is about US$80 billion per annum.
DUS is squeezed into a regulatory corset
In contrast to BUD, Dusseldorf Airport, in which AviAlliance holds 30%, is less happy with the current situation and expects only a slow recovery of the freight business. Following the Air Berlin bankruptcy in 2017, substantially reducing the volumes handled at DUS since Air Berlin had based most of their long-haul pax aircraft there, the pandemic took another toll, leading to a near standstill of intercontinental flights. Hence, the freight business suffered enormously, as the vast majority of DUS handled shipments is traditionally flown in the holds of passenger aircraft, operated on long-haul routes. "Before the outbreak of COVID-19, we had 70 departures a week, but since then we are down to almost zero," cargo boss Lutz Honerla laments.
This summer, he succeeded long-term DUS Cargo boss Gerton Hulsman, who retired. "Although we have had a series of air freight charters in the past few months, we are not a first address for cargo traffic," Mr. Honerla admits. For example, the night flight ban limits the operational potential of DUS, reducing the location’s attractiveness for classic freight carriers, because of different loading and unloading processes eventually leading to time lags and missed slots.
Looking at e-Commerce
Meanwhile, carriers such as Emirates have begun offering long-distance flights again, offering lower deck transport capacity, which is a ray of hope for DUS Cargo. Mr. Honerla also eyes catching a slice of the booming e-commerce market. “Measured by purchasing power, North Rhine-Westphalia is the seventh strongest region worldwide, and by population we are the third largest area in Europe.”
He therefore believes that the high-flying e-commerce business opens new opportunities for his airport. “DUS could join forces as regional distribution hub for example with all relevant local e-commerce service providers in the adjacent area, provide the relevant airport infrastructure and connect with other airports in Europe like BUD for wider distribution. So we could become kind of an outpost for Budapest in parcel traffic, which would boost the synergies within the AviAlliance airport network as mentioned before and revitalize our common cargo project ‘connect differently’," Mr. Honerla explains.
The idea behind ‘connect differently’ are road feeder services linking the AviAlliance members DUS, BUD and HAM to load shipments coming from different catchment areas on board the most suitable flight.
That said, he denies recent rumors asserting the sale of DUS Cargo by the airport’s management. “There is no truth in these speculations,” adds Mr. Schroeder.
No PPE flights
The situation for air traffic and cargo activities is not rosy in Hamburg either, Alexander Müller, Head of the Airport’s freight division, confirms. “We’ve seen a few cargo charters here in the past couple of months, but overall, the business is running at a low level,” Mr. Müller states. Since Hamburg is a logistical stronghold for the production and distribution of nautical parts and aircraft components, there were always flights to transport these urgently needed goods. "But the PPE business has completely passed us by," he wonders.
Yet here too, passenger operations are tentatively picking up again, seen by Emirates for instance, serving Hamburg twice weekly with a B777 passenger jetliner. Also, Maltese carrier HiFly started operating HAM flights. More carriers are expected to follow suit, says the management. They sure will help to fill the 2016 inaugurated, state-of-the-art, 20,000 m² cargo terminal with air freight again.
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