EU Gateways

Airports in Germany, Austria and Switzerland are aiming to attract more services from the region, as they battle to become the main gateway into Central and Eastern Europe.

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By  Neil Denslow Published  June 6, 2004

|~|munich_m.jpg|~|Munich's Terminal 2|~|Germany, Switzerland and Austria have long been popular destinations for travellers from the Middle East looking to escape the region’s summer heat. However, the major airports in these countries are now seeking to attract more traffic from the region and elsewhere, as they compete to become the main gateway into the Eastern European countries that joined the EU last month. Carriers in the Middle East are a key factor in these plans, as they bring in both money-spinning traffic from the Gulf, as well as passengers from across their global networks. A spate of new route launches demonstrates how traffic from the region to Central Europe is developing. Last month, for instance, Emirates made its maiden flight to Vienna, marking the launch of a four-times a week service. Qatar Airways began serving the Austrian capital, via Munich, earlier this year, and it recently upped its frequency by two flights to five times a week. At the same time, QR also added two extra flights a week to both Frankfurt and Munich, raising its services to six and five times a week, respectively; Emirates already has a double-daily service to both cities. On 5th June, Etihad will launch a thrice-weekly service to Munich via Geneva, which will be increased to a daily service. The route is Etihad’s first European service after London Heathrow, and it will make EY the first Gulf carrier into Geneva. Emirates already serves Switzerland through flights to Zurich, which will also be added to Qatar’s network next month, when it launches a four times a week service. Middle East carriers are targeting these markets for a variety of reasons, which promise to make them profitable routes. Firstly, these countries have historically been popular destinations in their own right for travellers from the Middle East, for both business and leisure. Germany is, of course, a major economy with strong business links to the region — last year’s exports to the UAE alone, were worth US$ 3.2 billion — but it also attracts visitors for both tourism and healthcare. Although smaller, Austria and Switzerland also have important financial and economic centres, as well as popular tourist destinations. “These are growing markets,” says Ali Al Rais, regional manager, Arabian Peninsula, Iran, CIS & Central Asia, Qatar Airways. “Vienna [for instance] is doing very well, and hopefully, we soon are going to detach it from Munich [and fly direct],” he adds. The passengers on these services also tend to be fairly big spenders from both the Middle East and European ends. For this reason, Fraport, the operator of Frankfurt Airport, classes Middle East airlines as ‘value creating.’ “The aircraft are large, the load factors are high, and the people are spending good money in the non-aviation sector of the airport,” explains Achim Kümpel, executive manager, sales, Fraport. “One feature of Geneva is that the volume of the point-to-point market is not really big, but the yield is very high in both directions,” adds Yves-Daniel Viredaz, member of senior management & head of marketing, Geneva International Airport. “People coming from the Middle East to Geneva are used to flying business or first class and spending a lot of money. In the other direction, it is also partially true,” he continues. “The standard of living in Switzerland is quite high and people are looking for a high-end destination, and they are ready to spend money [on travel]… Also, since we don’t have direct services from the Geneva, there is huge potential to places like Thailand, India, China, Singapore and Hong Kong [via the Middle East],” he adds. “That is one argument that we are using to attract Emirates, for example. We have had talks with them, and it seems that in the medium-to-long term future they will come to Geneva,” Viredaz continues.||**|||~|Fraport.jpg|~|Achim Kümpel, executive manager, sales, Fraport|~|Aside from wealthier passengers, the major German airports in particular also offer access to large markets, which can generate both point-to-point traffic into the Middle East, as well as onwards traffic into the Far East and Australia. 35 million people live within a 200 km radius of Frankfurt, for instance, which the airport claims is the largest catchment market in Europe. Kümpel sees this as a key reason for serving Frankfurt over its rival German hub, Munich. “If you want to fly to Germany, and you are not a member of the Star Alliance, you have to think very deeply about how to fill your capacity,” he comments. “We have 35 million people in a 200 km radius… [whereas] Munich has a disadvantage in that 95% of the people who are in a 200 km radius of Munich are closer to Frankfurt,” he says. For this reason, Kümpel questions Etihad’s decision to launch services to Munich before Frankfurt. “Etihad says that Frankfurt is the smarter and more attractive destination, as we have more people and the better travel [infrastructure], but Munich gives you a lot of marketing support, which we don’t do,” Kümpel comments. “[Munich] gives you money… [and] this is why Etihad chose Munich, but in truth I am sure it was the wrong decision,” he adds. “They have marketing support, but there will be no market. We did very deep market research, and the planes will be empty. It’s the truth,” he predicts. However, Etihad is confident that the Geneva-Munich route will be profitable, highlighting the strong tourist traffic to Lake Geneva and the Black Forest from the Middle East, as well as the potential cargo and business traffic to these cities. “Geneva and Munich rank with London as leading financial and business centres of the world,” says Dr. Ahmed bin Saif Al Nahyan, Etihad’s chairman. The entrance of eight Eastern European countries into the EU last month has also greatly expanded the catchment area of the major airports in Central Europe, such as Vienna, Frankfurt and Munich. On 1st May, the Czech Republic, Estonia, Hungry, Latvia, Lithuania, Poland, Slovakia and Slovenia all joined the EU, and the greater freedom of movement and capital that allows is expected to create a boom in air travel. This was one of the key reasons why Emirates launched it service to Vienna last month. “Vienna [is] right at the heart of the newly expanded part of the European Union,” says Ghaith Al Ghaith, Emirates’ executive vice-president, commercial operations, worldwide. “Our decision to launch this route could not be timelier and it’s an opportunity that we couldn’t miss.” The EU expansion is creating opportunities for the major airports in Germany and Austria — and, to a lesser extent, Switzerland — and they are battling it out to become the main gateway into the region. Vienna International, in particular, has been heavily promoting itself in such a role, based on both Austrian Airlines’ strong network in that region and its favourable geographical position. Overall, the airport believes that the EU expansion will help grow its traffic by more than 8% a year for the next three years. “The EU expansion plays an important role for us because all of the [expansion] countries, like the Czech Republic, Slovakia, Hungary and Slovenia, are our catchment area,” comments Hans Mayer, communications manager, Vienna International Airport. “We are the logical entry point, if you arrive from Dubai, for example, and we have a very good network to spread out passengers to Eastern Europe and also Western Europe.”||**|||~|Geneva_m.jpg|~|Yves-Daniel Viredaz, head of marketing, Geneva International Airport|~|However, while Vienna is geographically closer to Easter European, German airports are also making a pitch to be the main gateway into the region. Fraport’s Kümpel, for instance, says that “we [Frankfurt] are the largest Eastern-cross in Europe… and we are working on developing these routes.” “Germany is a centrally located within Europe, and it is ideally suited to increase the number of feeding services into Eastern European,” agrees Alfons Wittl, marketing, head of traffic department, Munich International Airport. “Eastern European [traffic] has grown very strongly over the last year and a half from Munich,” he continues. The key to becoming the region’s hub, however, lies as much with the major home carrier as with the airport. In this regard, Vienna has an advantage because of Austrian’s long-standing services into the region — it had much greater access during the Cold War than other European carriers. “Vienna remains the major Easter European gateway in Europe, mainly because of Austrian Airlines’ services,” admits Munich’s Wittl. This is the biggest problem faced by Zurich Airport as it looks to become a Central European hub, as while it has the infrastructure to support such an operation, including a soon-to-be-opened new terminal, its home carrier, Swiss, doesn’t run a strong enough network. “The whole airport has been built up with the idea of being a hub airport, and all the systems are in place to be a hub airport… nevertheless, we have a problem: our national carrier,” admits Irene Eigenmann, manager, airline relations, for Unique, which operates Zurich. “[Swiss] are still our main customer, but they have cut down the network over the last three years and that is a problem. As an airport, we are ready to be [a hub] and are hoping to be a network hub in the future, but we need suppliers to do that,” she adds. However, even if an airport does have a strong home carrier, this does not necessarily guarantee that a Middle East airline will be able to access that network. In Vienna, for instance, Austrian is a member of the Star Alliance, and while the carrier does work with other airlines, notably Egyptair, it primarily co-operates with its alliance partners, which cuts down on the opportunities for independents. The same problem also exists in Germany, where Lufthansa’s membership of Star, and its strong ties with Qatar, prevent other airlines from accessing its network. “Emirates, for example, is not in the Star Alliance, so it is very difficult for them to get access to Lufthansa network to Eastern Europe or Austrian Airlines’ network,” comments Wittl. “Independent carriers, like Etihad, Emirates, Royal Jordanian and Syrianair are therefore looking for alternative independent carriers from Eastern Europe [to work with].” Locked out of the larger players, airlines from the region are working with smaller airlines instead to get the feeder traffic they need — Emirates, for instance, has a close relationship with Munich-based dBA for tackling routes in Germany. As such, for airports looking to attract carriers the number of airlines serving the hub already is a key measure, as it increases the number of possible partners. Frankfurt therefore boosts of the 180 different carriers serving the airport, while Munich promotes its ties to Eastern Europe. “Munich has more Eastern European airlines than Vienna or Frankfurt… [which] gives a much better opportunity for Middle East carriers [to develop relationships],” says Wittl. Munich, which opened a new terminal, Terminal 2, last year, and Zurich, with its soon-be-opened terminal, Dock E, also have plenty of additional capacity, which means that they can quickly grow, take on new flights and offer more flexible slot options. This is certainly an advantage over Frankfurt, which only has limited capacity and needs to juggle its crowded timetable to add new flights. “We have slots but it is very complicated to offer the right kind of slots,” admits Kümpel. “If you want one specific slot, you have to change 50 others to make the slot available.” However, the airport is seeking to expand its capacity by building a new runway, which should be opened in 2006/07. This has run into some local planning problems, but Kümpel is confident they will be overcome and, when they are, the airport will be able to handle an additional 120 flights per hour. In the meantime, it is focusing on persuading airlines to fly in bigger planes rather than adding frequency, and it is already talking to Middle East carriers about introducing services using A380 superjumbos. “The idea is to build the capacity and to use larger aircraft; it’s not all about frequencies,” says Kümpel “Frequency is important, but we are in a different situation to other airports. Our capacity is limited… this is why we say before flying twice-daily, think about a larger aircraft and we will help you to fill it.”||**||

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