Full power out of the crisis

With double-digit increases, Munich Airport returns to the successful growth of recent years

When the global financial and economic crisis took hold in the summer of 2008, it was not long before the international aviation sector felt the effects. In the first half of 2008, Munich Airport posted a strong six percent increase in total passengers, four percent in airfreight and three percent in the number of take-offs and landings. During the next six months, the picture changed completely. In the second half of the year, growth in the number of passengers and the cargo tonnage turned into decreases. The same happened to the trend in total aircraft movements. In 2009 the air travel industry again had a difficult year. In Munich we experienced our first year-on-year decrease in total passengers following six consecutive years of growth. The five percent decline in the passenger figure at Munich Airport almost exactly matched the rate of shrinkage of the German economy as a whole in 2009.

However, the traffic numbers at Munich Airport – again in line with the overall economic trend – were also showing the first signs of recovery in the second half of 2009. Now, in the summer of 2010, these ‘green shoots’ have sprouted into dynamic, stable growth, with an extra boost in our case thanks to some aspects that set Munich Airport apart. For example, the quality of Munich’s hub function proved its worth during the crisis, with the volume of transit passengers remaining stable even in 2009, despite the overall decrease in traffic.

A number of appealing new long-haul connections launched during the current summer timetable period have further enhanced the attractiveness of our southern German hub and noticeably reinforced the upward trend here. With new services to Miami, Rijad and Tashkent, Lufthansa added three exciting new intercontinental destinations to its timetable. At the same time, Lufthansa’s Star Alliance partners Singapore Airlines, Continental Airlines and All Nippon Airways launched services to Singapore, New York and Tokyo. These new offerings in the long-haul segment were warmly welcomed by passengers right from the start: The number of passengers in this segment jumped by 12 percent in the first half of 2010 to 2.4 million.

The fact that the gains in long-haul traffic are stronger than overall traffic growth demonstrates the enormous potential of our airport. As our hub has developed over the past 15 years, the number of routes to and from Munich has steadily expanded. During the coming summer timetable period, scheduled services are offered from the Bavarian hub to 210 destinations in 65 countries around the world. Today, passengers departing from Munich can fly nonstop to more European destinations than from any other airport in Europe. As a result, we now have a dense network of connecting and feeder flights, providing an ideal basis for further development of long-haul traffic. In particular, Lufthansa and its Star Alliance partners plan to make greater use of this strategic option in the coming years. To realise these plans, Lufthansa will yet again add new aircraft to its long-haul fleet stationed in Munich, already numbering 25 wide-bodied jets.

In total, Munich Airport was used by nearly 16 million passengers in the first half of this year – a three percent increase over the same period in 2009. With this performance, our airport is well ahead of the overall trend of airports in Germany as a whole and across Europe. The average growth rate in the first half of 2010 for German airports, excluding Munich, was just 1.5 percent.

The noticeable rise in passenger demand at Munich Airport is an even greater achievement when we bear in mind that we faced a number of negative effects during the first half of the year that substantially slowed our traffic trend. It started with the unusually long, snowy winter, with the associated traffic delays, continued with the serious effects of a Lufthansa pilot strike, and culminated in the cloud of ash caused by the volcanic eruption in Iceland, which alone led to 6,500 flights being cancelled. Without these extraordinary events, our calculations show that the first-half increase in passenger traffic at Munich Airport would have been twice as large.

If we follow the traffic figures over the past three quarters, we can state – special effects aside – that we have experienced a steady upward trend that peaked during the past few months, at least for the time being. In both June and July 2010, with passenger volume reaching 3.2 million and 3.4 million respectively, we achieved double-digit year-on-year increases, as well as posting records for those particular months. We have also achieved the turnaround in the take-off and landing statistics. After continuing to record decreases until May of this year, we experienced a rise of two percent in June and three percent in July, as compared with the same months in the previous year. With these gains, Munich posted the best performance of any of Europe’s largest airports, which handle at least 25 million passengers per year.

As a result, the prospects look extremely rosy for the future development of Munich Airport. The current boom in traffic will probably result in a year-end total even higher than the record-setting year of 2008. As for Munich Airport’s long-term development, current forecasts indicate that passenger traffic will nearly double to approximately 58 million per year by 2025. To be in a position to handle the traffic of tomorrow, Munich Airport must be expanded in the coming years to meet demand.

At peak periods, the airport already frequently strains its capacity limits today. This applies particularly to the runway system at Munich Airport. With the two 4,000 metre parallel runways available at present, up to 90 schedulable take-offs and landings can be permitted. This falls far short of what is needed to satisfy airlines’ steadily increasing demand for slots. In the peak operating hours, even today airlines are requesting as many as 110 slots. Because many airlines do not have the option of moving flights to non-peak hours, the capacity limits of the runway system are already slowing our airports’ growth now.

The construction of a third runway will increase the airports’ capacity from the current level of 90, to 120 schedulable take-offs and landings an hour. This will raise Munich Airports’ runway capacity to a competitive level as compared with Europe’s other hubs and enable it to fully utilise its growth opportunities in the coming years. The approval process for the third runway is now in the final stages. Assuming that the planning authorities decide in favour of the application, the new runway can go into operation in 2014.

Official approval has already been granted to build a satellite facility for Terminal 2, which will allow the passenger handling capacity to keep pace with rising demand. The satellite terminal will be created by expanding the existing baggage sorting hall on the eastern apron of Munich Airport. The facility will have more than 60 gates, lounges, shops and attractive refreshment and dining options. An underground transport system will carry passengers to and from the main terminal. The first phase of the satellite project will include the creation of 27 additional aircraft park positions, adjacent to the terminal, to permit passengers to board and disembark quickly and conveniently. According to current plans, the new satellite terminal, which will be capable of handling 11 million passengers a year, will go into operation in 2014/15.

As an airport operating company striving to expand the airport and achieve further passenger growth, we have a heightened sense of responsibility towards future generations. In our business activities we therefore strictly adhere to the principles of sustainability, which we integrate into our corporate policy in the form of concrete ecological, economic and social objectives. In all three of these areas it is vital to preserve and strengthen the foundations for our business activities, to ensure that successful flight operations can be provided in the future. This will guarantee continued mobility and uphold the quality of this region as a place to live and do business.

What this means for everyday operations is clearly illustrated by our ecological targets. FMG, the airport operating company, has set the goal of carbon neutrality for the airport’s foreseeable growth by 2020 (based on the 2005 reference year). The CO2 emissions at Munich Airport under the control of FMG amounted to approximately 160,000 tonnes; according to this principle, by 2020 the airport’s annual emissions cannot exceed that level. This is definitely a challenge when we consider that, without strict emission-limiting efforts, CO2 emissions would rise parallel to traffic growth, resulting in an additional 50,000 to 70,000 tonnes of CO2 by 2020.

To save these quantities we have developed a Group-wide concept for the reduction of CO2 emissions, comprising numerous measures in diverse areas of the company. They start with the use of regenerative fuels for our ramp vehicles and extend to a mandatory requirement for the design of new buildings, to create CO2 savings of up to 40 percent, as compared with our existing buildings, through sustainable construction methods.

To anchor sustainability permanently in the guiding principles of our airport, we have made it part of our official corporate mission statement. The Group-wide objective now states that by 2015 we aim to make Munich Airport one of the most attractive, efficient and sustainable hub airports in the world. One of the clearest indications of the progress we have already made towards this goal is the frequency with which Munich Airport scores outstanding results in the major surveys conducted by the highly respected Skytrax Institute in London. In the Skytrax survey – the worlds largest such survey of airline passengers – Munich was voted Europe’s best airport four years in a row, from 2005 to 2008.

In the most recent Skytrax survey, Munich Airport won its fifth ‘European Champion’ title. The 2010 World Airport Awards were based on the responses of some 10 million passengers from all over the world. In global rankings Munich Airport was number four behind Singapore, Seoul and Hong Kong. More than 163 airports were evaluated. Munich Airport achieved at least four of a possible five stars in all 33 categories, and received top ratings from passengers for the outstanding transit passenger service and the attractive dining and leisure amenities: In each of these categories the Bavarian hub was voted number three worldwide. The friendliness and competence of the airport staff was a decisive factor in the high marks awarded to Munich Airport.

Munich’s selection for this award yet again this year is a reflection of the high esteem for a team achievement, to which the approximately 30,000 airport employees with 550 companies all contributed. The steady increase in passenger volume over the years has been flanked by continual growth in the airports’ ‘crew.’ During the past three years alone, despite the global economic crisis, a total of 2,000 new jobs have been created here. By expanding our airport now in a responsible manner, we are simultaneously bringing about the conditions that will enable the airport to steadily create new jobs and value in the future.

About the Author

Dr. Michael Kerkloh

Munich Airport is one of the most successful Airports in Europe. The airport is run by Flughafen München GmbH (FMG). Since September 2002 the management team is led by Dr. Michael Kerkloh. He is FMG’s President and CEO, and also serves as the company’s labour director. The 57-year-old Kerkloh embodies a new leadership generation in the German aviation industry. Born and raised in Ahlen in the Wesphalia region of western Germany, Kerkloh completed secondary school and military service before attending university in Göttingen, London and Frankfurt. He completed a degree in economics in 1979 and until 1985 held a lectureship in economic policy at the University of Frankfurt, where he also completed a doctorate in political science. Beginning his career in the aviation industry in 1987, Kerkloh was in charge of operational planning, organisational implementation and the coordination of aircraft handling at Frankfurt Airport. In 1995, he was one of two managing directors at Hamburg Airport. Dr. Michael Kerkloh quickly gained a reputation in Hamburg and far beyond as a highly competent aviation expert, whose innovative concepts and strategic foresight stands for modern, competitive airport management. Kerkloh, who favours a cooperative leadership style, sees team spirit and staff creativity as essential factors for business success. Since June 2009 he is one of three European representatives in the Governing Board of ACI World, the umbrella organisation of commercial airports worldwide. Since July 2009 Kerkloh is President of the Export Club Bayern e.V. He is a member of the Federation of German Industries (BDI) and chairs the traffic board of the Munich Chamber of Commerce (IHK).