Airport investment boosts cargo prospects in Eastern Europe

Warsaw-big.jpg

There was a time when poor airport infrastructure in Central and Eastern Europe, and underdeveloped airline networks, left the region’s importers and exporters with little choice other than to truck their airfreight to and from hubs further west, such as Frankfurt, Paris and Amsterdam.

Local options serving manufacturers and consumers in Poland, Bulgaria, Hungary and the Czech Republic are now more viable, as economies recover and airports invest in better facilities.

Warsaw’s Chopin Airport (WAW) recently completed a new cargo apron to handle additional freighters. Located alongside the old cargo apron in the southern area of the airport, the new ramp can accommodate three wide-bodies such as AN-124s or six narrow-bodies.

The development follows last year’s opening of a second cargo terminal to stimulate competition in handling and drive down prices.

“We are currently working on a new long-term cargo development strategy and plan to extend our infrastructure further,” spokesman Przemysław Przybylski says. “The aim, as well as to retain our existing customers, is to capture market share from competing airports and road feeder services.”

WAW handles more than 70 percent of Poland’s air cargo traffic. Throughput in the first half of this year reached 27,300 tonnes, a year-over-year increase of 18.4 percent. Inbound cargo stood at 15,400 tonnes and outbound 11,900 tonnes. There was a 12.8 percent increase in international mail traffic during the period.

The biggest cargo carriers were LOT Polish Airlines, with 9,500 tonnes, followed by UPS, European Air Transport (the regional feeder airline for DHL), Emirates and TNT Airways.

LOT has introduced B787-8s for its services to JFK, Chicago, Toronto and Beijing, significantly enhancing belly-hold cargo capacity, but the national carrier has been in financial difficulty for several years. The European Commission approved a government bailout worth 200 million euros (US$267.6 million) in July. However, LOT is required to give up routes and slots at certain airports to ensure competitors are not disadvantaged.  

Emirates, which launched a Dubai-Warsaw service only in 2013, operates A330-200s or B777-200s according to season, but already, in its first, partial year of operations, took a 6 percent share at the airport thanks to its cargo-friendly passenger airplanes.

“As the largest cargo airport in northeast Europe, we have a large catchment area. The nearest airport with greater cargo throughput than Warsaw is Leipzig-Halle, around nine hours’ drive away,” Przybylski says. “Chopin Airport is a convenient location for cargo exchange between Russia, Asia, the Far East and northeast Europe. Airlines can save as much as one hour compared to other European hubs, and users benefit from shorter trucking distances. With the development of our infrastructure, we hope to capture some business from neighboring airports and become an attractive alternative to trucking cargo from the Baltic states, Hungary, the Czech Republic, Slovakia and Ukraine.”

Bulgaria’s Sofia Airport handled 7,546 tonnes of general cargo in January-June 2014, a decrease of 2.6 percent, partially offset by a 4.5 percent increase in mail to 874 tonnes. There was a slight bias in favor of import cargo.

Twenty passenger and four cargo airlines operate scheduled year-round services into the Bulgarian capital, with freighter and belly-hold cargo accounting for approximately equal shares of overall lift. The largest carriers are European Air Transport and Bulgaria Air. Among the fastest-growing airlines are Czech Airlines (up 50 percent this year), LOT (+25 percent), Qatar Airways, Lufthansa and Turkish Airlines.

Sofia boasts good road links to the neighboring countries on the Balkan Peninsula – Turkey, Greece, Romania, Serbia, Macedonia, Albania, Croatia and Slovenia.

The airport was certified for Cat IIIb very low visibility landings at the end of 2013. It claims to offer some of the lowest airport charges in the region, and says airline customers benefit from liberalized ground handling and fuel provision.

The collapse of Hungarian national carrier Malev Hungarian Airlines in 2012 forced Budapest Airport to shelve plans for an air cargo city. But with confidence returning to the market, the project, which includes the building of two cargo terminals, apron and related infrastructure, is back on the drawing board.

Construction of phase one, comprising an 118,000-square-foot (10,962-square-meter) warehouse with capacity of 150,000 tonnes of cargo per year, is set to begin late 2015. René Droese, property director responsible for cargo operations, says the airport’s main handler, Celebi, will lease space in the unit.

The development is close to Budapest’s Terminal 2, the recently built passenger terminal, convenient for belly-loading. The four integrators, which have less need for this connectivity, will remain at Terminal 1, where they can park more easily.

First-half cargo volume at BUD was 46,000 tonnes, level with H1 2013. The airport expects 1-2 percent growth for the full year. Imports exceed exports by 60 percent to 40 percent and around 85 percent of cargo is carried in freighter aircraft.

Turkish Cargo operates to Istanbul twice a week with an A330 freighter, while Cargolux and Azerbaijan’s Silk Way West run longer-haul scheduled services. Silk Way West launched direct flights to Baku last March using a B767 freighter.

DHL uses Budapest as a central and east European parcel hub, shuttling daily to and from Leipzig with a B767. Separately, DHL’s Global Forwarding arm opened a new logistics center adjoining the airport last year, handling airfreight, oceanfreight and trucked shipments.

Emirates will launch a daily passenger service to Dubai at the end of October, using A330s that offer 12-14 tonnes of cargo capacity, and is also considering adding Budapest to its freighter network.

A high-quality road network connects Hungary with Austria, Slovakia, Serbia, Croatia, Slovenia, Romania and Ukraine. “Budapest’s centralized geographic location serves rapidly growing local and regional electronics, automotive, pharmaceutical and biotech industries,” Droese says.

In October, BUD will introduce an improved incentive scheme for scheduled cargo carriers serving new destinations. Freighters with a maximum takeoff weight of more than 100 tonnes will pay no landing charges in year one, with support gradually reducing over the following three years.

Droese accepts that customers historically preferred Vienna, Budapest’s main competitor just 150 miles away, because of its better road infrastructure and bigger passenger network. Budapest has worked hard to attract new carriers, especially from Asia, but recognizes that it also has to convince forwarders, who are better established at Vienna, of its benefits.

VIE saw a modest increase of 1.6 percent in cargo throughput in 2013, reaching 256,000 tonnes. Cargo carriers accounted for 36 percent of the total, passenger airlines 34 percent and trucking 30 percent.

The airport is home to Lufthansa subsidiary Austrian Airlines and has had some success in encouraging other Star Alliance carriers such as EVA Air, Air China and Ethiopian Airlines to add Vienna to their schedules.

With its two intersecting runways likely to reach capacity soon after 2020, VIE aims to build a third runway. The project received a positive decision in the first instance in July 2012, but the Austrian Federal Administrative Court is working through a number of appeals against the development.

Prague in the neighboring Czech Republic is also trying to win traffic from Vienna and handled 25,000 tonnes of cargo from January to June, 1.7 percent ahead of the same period in 2013. Most freight flies belly-hold, with just five scheduled cargo airlines calling PRG – FedEx, China Airlines Cargo, Belarus-based Genex, TNT and Farnair Switzerland, which operates Czech Airlines Cargo services.

Road feeder services account for more than one-third of the cargo handled in Prague’s two cargo terminals. “Prague possesses all the attributes to serve as a cargo consolidation center for Central and Eastern Europe,” a spokeswoman says. New highways connect the airport with Germany’s southern provinces and with the eastern Czech Republic.

Leipzig/Halle (LEJ), Europe’s fifth-largest cargo hub, handled 442,109 tonnes of cargo between January and June, a growth rate of 0.9 percent, after seeing a full-year increase of 2.7 percent in 2013.

Its largest customer is DHL Express, which self-handles at a dedicated facility. The company is investing there to expand sorting capacity.

Key to LEJ’s success is its speed of handling, according to head of public relations Evelyn Schuster. Cargo on an inbound B747 freighter can be through the warehouse and on the truck within three hours of touchdown.

Among other benefits, Schuster cites twin, independently operated 11,800-foot (3,596-meter) runways;24/7 operation, with no slot system and no congestion; access to the trans-European highway system; and a direct rail link.     

Moscow’s Domodedovo International Airport suffered a 4.3 percent fall in first-half cargo traffic, handling 88,890 tonnes. PR manager Irina Kumina blames the decline on political instability as well as economic weakness causing shippers to switch to cheaper modes such as road transportation or water.

Russian airports largely depend on transit cargo. With the country’s widest route network, including domestic routes, DME offers unrivaled connectivity, Kumina says.

Belly-hold cargo represents 85 percent of DME’s total, although AirBridgeCargo and Korea’s Asiana operate scheduled B747 freighter flights. They were joined last year by privately owned Russian operator Transaero, using TU-204 freighters.

DME plans to open a new cargo terminal by the end of 2015, more than doubling its capacity to 405,000 tonnes per year.

  Like This Post