To say Leipzig/Halle Airport occupies a unique niche in the realm of global airports is no exaggeration. As a relatively ‘young’ airport – one of many that emerged in Eastern Europe in the years after the fall the ‘Iron Curtain’ in the early 1990’s – it offers many things that traditional air cargo hubs in Europe cannot. Most notably: Vast land space for expansion and 24/7 operations – no small feat in otherwise congested airport situations around Europe. And also, as in life, young for an airport also means up-to-date with the latest infrastructure.
It is of course natural to be unabashedly enthusiastic about the airport’s potential for the CEO of Mitteldeutsche Flughafen AG, the parent company of Leipzig/Halle airport, Markus Kopp. For Kopp, who previously spend some 20 years on the airline side of the business, Leipzig/Halle “is simply the best place in Europe for infrastructure.”
“It is the good thing about being young – the younger you are as an airport, the better the infrastructure you have,” he says, pointing to the airports two runways, modern terminal facilities including a perishables centre, veterinary facilities, one passenger and two cargo rail tracks directly into the airport, excellent road connectivity and substantial land for expansion and building of cargo related facilities. And having being granted one of Germany’s longest expiring permits for 24-hour operations by the country’s highest court is clearly a lynch pin of the airport’s unique selling point.
The problem in Europe he notes, is that, “we have too many airports”. As such the only way to survive and really be competitive is to differentiate from the competitors, which is exactly what Leipzig/Halle did, Kopp says. “I think Leipzig/Halle is the biggest success story in logistics in the airport branch in the last 30 years. You can look at Leipzig/ Halle as a pretty young airport and have you ever seen – other than maybe the Middle East – certainly not in Europe, such a success and volume growth in such a short time – not 20 years , but only in the last 10 years? I am absolutely positive that there is no better place in Europe for infrastructure than Leipzig/Halle,” he says.
While he notes it’s been and continues to be a fairly tough environment in Europe. “But we’re the lucky ones,” he says pointing to volume growth of 2.7 per cent in 2013 year-on-year, pushing volumes up to 887,101 tonnes. “If look at growth figures last nine years, we’ve always had double digit growth, but at a certain point however, we are still happy to have single digit growth,” he says in reference to the creeping recovery of global air freight markets. The first quarter this year saw 1.1 per cent growth year-on-year, with March alone seeing 2.1 per cent growth to 78,434 tonnes.
DHL cornerstone
Clearly a big part of the airport’s success is due to its largest customer being DHL Aviation, the aircraft operating side of the business for DHL Express, which shifted its European hub to Leipzig/Halle in 2008. Alongside DHL at the airport is the unique eight freighter joint venture between DHL Express and Lufthansa Cargo, Aerologic, which Kopp says is doing well with stable operations for two or three years now.
And then there are the more traditional cargo carriers in the form of Polar Air, Kalita Air, the former World Airways which is no longer in business and a substantial number of charter flights, which is one of the other niches for Leipzig/Halle. These charters include quite a number by charter brokers like Chapman Freeborn, but also due to the strong historic links to the Russian market, a lot of Russian charter carriers make use of Leipzig/Halle because of the infrastructure, Kopp says.
In fact Russian operator Volga Dneper is the second biggest customer and has two AN-124s based at the airport for the North Atlantic Treaty Organisation (NATO) under the Ruslan Salis company which is a joint venture of the Antonov state enterprise (Ukraine) and the Volga- Dnepr group of companies. The airport has also become the main maintenance centre in Europe for the group and Volga Dneper subsidiary AirBridgeCargo (ABC) also runs scheduled services from the airport, the most recent being weekly services between Leipzig/Halle and Moscow Sheremetyevo.
Well served by rail and road, Kopp says with “all the discussion ongoing about sustainability and pollution etc, I’m sure that the interconnection between rail, road and air will be one of the strategic challenges of the future for all airports and Leipzig/Halle has it already.” He added that the airport has all the infrastructure necessary – perishables centre, veterinary facilities, highly secured cargo capability and also space to add additional facilities as requirements dictate.
“At moment we are looking forward to expand and enlarge facilities together with our customers because we see the volume which we are having right now, it’s at the limit for the moment,” he adds Although Kopp notes that DHL’s business may not see the growth figures of the past, it is doing very well and is being driven by changing production and consumption patterns and new phenomenon like online retailing which he notes that “is becoming a key part of integrator business today.”
Kopp is always in search of new customers and he says Leipzig/Halle is in “good talks with all the integrators”. He adds that the airport is best used as a hub because the markets around it are not significant enough to fill up an aircraft. “But you don’t find many airports – Hong Kong being maybe one exception – where you can fill up an aircraft. For all the other airports it’s a question of consolidation.”
But the airport does have some significant manufacturing in the surrounding area, including car manufacturers – Porsche has its largest production centre nearby and Volkswagen also has a big facility – and there is also growing semiconductor and solar panel manufacturing. These players tend to create need for charter flights, not scheduled ones, however.
Kopp notes that all the big forwarders are focusing on life sciences, building up facilities near the airport to consolidate pharmaceutical and life science cargo and using Leipzig/Halle’s capabilities to uplift. He also points to the “good geographic location of Leipzig/Halle being near to the most dynamic growth regions in Europe which are in the East. So in the long run I think none of the carriers can get along without looking at Leipzig/Halle.”
As the number two airport in Germany some distance behind Frankfurt and a bit ahead of Cologne Bonn, Kopp says, “we will not reach Frankfurt because of the belly capacity. Frankfurt will always stay No. 1. It might be that Cologne-Bonn may at some point have higher volume growth, but that will end soon because of the capacity constraints there. And with all the people living near the airport I’m pretty sure there will be one day they will lose their night flights. The pressure will get bigger and bigger and as soon as Cologne Bonn wants to expand, the whole process of public consultation will begin.” “The only airport which doesn’t have these restrictions is Leipzig/Halle and there is no better place for investors, particularly from Asia,” he adds.
Focus on strategy
Kopp observes there are still many players in the industry who don’t focus on strategy. “Because of the volatility which we have, they are always thinking about how to survive the next three years for instance, instead of taking time and thinking ‘how are we going to develop over next 12-15 years?’, he says. “If you take the time to have such a view on the whole supply chain and if you’re thinking about doing something in Europe, I’m absolutely sure Leipzig/Halle is the place to go. I don’t know any other airport that has such a clear focus on logistics,” he says.
As a general strategy Kopp said Leipzig/Halle will work at fulfilling the needs of two biggest customers – DHL and Volga Dneper – as well as “concentrating on niche markets to enlarge our competencies to create added value for our customers to enlarge our cost competitive advantage in the future and to really focus on niches where both partners have a clear win-win situation, getting more revenues in and the customers, be it the forwarders or airlines, to get a very high product and added value that they can charge their customers.”
Another key part of Leipzig/Halle’s strategy is to closely cooperate with other airports – two in the US and four Asian – including Memphis along with Pudong and Shenzhen in China. “With those partners we have a very close relationship and we exchange ideas.
As a medium-sized company it’s very important to have partners to have a network in China that supports us to get the right contacts to open the right doors. It’s also important that the Chinese are promoting the relationship trying to find ways to cooperate and we are using their competencies for trade fairs etc.”
This partnership concept was recently advanced through a strategic airport cooperation agreement with China’s Henan Province Airport Group which manages Zhengzhou Xinzheng International Airport. The agreement is designed to enable the organisations to develop air freight flights together and strengthen both airports as central hubs for the distribution of goods in China and Europe. The central Chinese government in Beijing is increasing its efforts to move industries into new inland Chinese development zones and as a result Zhengzhou has been growing in prominence as a high tech manufacturing base.
“The interest on the part of the Chinese confirms that the expansion and investments in the airport and logistics facilities at Leipzig/Halle have paid off. We’re also expecting greater commitment from Asian investors operating in both the industry and commerce sectors,” said the Mayor of Leipzig, Burkhard Jung.
“We’ve found a highly promising partner to network our ambitious region with the European continent in the shape of Leipzig/Halle, the fifth largest cargo airport in Europe,” said An Huiyuan, chairman of the Henan Province Airport Group. “We selected Leipzig/Halle because we value the airport’s central location, its outstanding intermodal transport links and its unrestricted operating times. Based on these factors, we’re expecting our cooperation arrangement to be constructive and successful.”
The Zhengzhou officials said they have identified Leipzig/Halle Airport with its 24-hour operating permit for airfreight shipments as an ideal site for transporting goods between Europe and China.
“We’ve now managed to expand our global cooperation network to four Asian and two American partner airports as a result of this agreement with Zhengzhou Xinzheng International Airport. Consequently, we’ll be able to work even more intensively on developing new airfreight services and expanding existing ones,” said Kopp. “The benefits of being able to handle airfreight round the clock will divert additional flows of goods through Leipzig/Halle.”
