Airport News

Airport News

Vienna International Airport’s impressive new terminal was more than 10 years in the making, but its COO, Julian Jäger, believes it was worth the wait, writes Steven Thompson.

When Julian Jäger returned to Vienna Airport in September 2011, he must have had a slight sense of déjà vu.

A lawyer by profession, he first joined the airport just over 10 years ago and even back then, Skylink, a new terminal which was intended to introduce a new level of passenger comfort and operational efficiency had already been two years in the making.

In the intervening years, Jäger moved from the legal team to head up airport charges, market development, statistics and marketing, before heading off to Malta International Airport in 2007 as their chief commercial officer, before becoming CEO a year later.

Upon his return to Vienna, this time as COO – the airport does not have a CEO – Jäger, alongside new CFO, Günther Ofner, made it their priority to get Skylink (now known as Check-in 3) up and running.

Soaring costs and falling passenger demand, which at one point led to the project being suspended and the cancellation of a number of construction contracts, had all contributed towards the delay.

Jäger, Ofner and airport operator, Flughafen Wien AG, finally got their wish when the new terminal opened for business in June 2012.

Dedicated to Austrian Airlines and Star Alliance, it has effectively created one huge terminal complex comprising Check-in 1 (formerly Terminal 1), Check-in 1A (formerly Terminal 1A), Check-in 2 (formerly Terminal 2) and the new Check-in 3 facility.

And, according to Jäger, it is already proving its worth. "Everything is much more convenient now as all three terminals are under one roof, which is very important for us as we want to make transferring through Vienna easy for passengers."

Jäger says that the new terminal has also enhanced security and immigration control by reducing wait times at queues to between three and five minutes and allowed for the introduction of a host of new shops and restaurants.

"I think by delivering everything under one roof we are able to offer a very comfortable and passenger-friendly-way of travelling," says Jäger.

The one-roof concept was certainly key for the airport as it was determined to retain its ability to offer 25 to 30 minute transfer times.

The fact that the gateway's connection times marginally improved during the third quarter of 2012 appear to have more than justified
the decision.

"We have kept our minimum connecting time of 25 minutes, which I think is quite outstanding in Europe," notes Jäger.

The new €740 million addition to the airport's infrastructure welcomed 300,000 travellers in its first two weeks of operation and now handles between 30,000 and 50,000 passengers daily.

Traffic growth
Check-in 3 alone can handle up to 14 million passengers, and the extra capacity is certainly needed as passenger traffic in Vienna is on the rise, with the airport set to handle more than 22 million passengers per annum for the first time in 2012.

Next on the agenda in terms of new or upgraded facilities, is the January 2013 opening of Vienna International Airport's revamped Terminal 1 as Check-in 1, a dedicated facility for airberlin and NIKI.

While Check-in 2 – which opened as Terminal 2 in 1960 – will either be demolished and rebuilt or receive a major revamp in the next two years.

The airport is also looking at the possibility of adding a third runway, which could become reality by 2021 if Flughafen Wien AG gets approval from the Austrian government and decides to go ahead with the option.

The Austrian authorities have already given provisional approval for the new runway and are expected to make a final decision in next 18 months.

"We believe that Vienna International Airport will handle 30 million passengers in 2020, which would mean roughly a growth of 4% a year between 2010 and 2020," states Jäger.

"This is fantastic, but we would be pretty full handling 30 million passengers with a two runway system of our configuration."

Talking about rising passenger numbers at the airport and expected growth to come, Jäger says: "A lot of airports in Europe are grumbling about their 2012 traffic figures, but it has been a good year for us, with excellent growth to Eastern Europe and North America, particularly in the first six months of the year.

"In 2010 we had growth of 8.7%. In 2011, it was 7.2% when we accommodated a record 21.1 million passengers and we've handled 5.6% more passengers in the first 10 months of 2012 than we did in the corresponding period last year, so in all honestly, it is difficult to get more of a traffic boost than what we've had in the last three years.

"Having said that, I think there's more to come. Indeed, with strong homegrown carriers like Austrian and NIKI as well as strong low-cost carriers, we are quite confident that we will deliver growth in the next few years as well."

Route development
As a Star Alliance hub, Vienna is eager to compete with Munich, Zurich and even Frankfurt for business, according to Jäger, although traditionally airports closer to home such as Prague and Budapest have been considered its biggest rivals.

This year, Vienna has added new routes to Punta Cana, Strasbourg, Tallinn, Varadero, Usedom, Toulouse and a handful of other destinations, but Jäger says the real growth at the moment is not coming from new routes, but from higher load factors and increased frequencies, in particular to Eastern Europe.

"It is the catchment area," admits Jäger. "We feel that in Vienna you can have a good yield and a good load factor. We are a strong economic and tourist centre and have a growing catchment area towards Eastern Europe.

"I think this is an excellent mix. That's why we feel that for a lot of airlines, we can offer very good business.

"From an operations perspective, we have been good in the past and we remain good, even with our new facilities. So, from an operational point of view, the system works excellently, and from an economic point of view, we have a very attractive incentive system, supporting new destinations and frequencies, in particular towards long-haul and towards the east.

"Whoever supports our strategy to create more transfer traffic in Vienna and to add additional destinations in East Europe and overseas gets very intensive support in the first few years of operation."

In real terms, this support means no landing charges on new long-haul destinations in the first year, an 80% discount in the second year and 60% in the third as well as 40% refund in the fourth year.

"We try to make the start as easy as possible," Jäger explains. "Then we are very confident that after two or three years, every airline should do good business here."

The icing on the cake for the airport is the fact that the Flughafen Wien Group is profitable, recently reporting a 5.1% increase in the first three quarters of 2012 and net profits of €71.7 million.

CFO, Günther Ofner, comments: "We are on the right course. The measures implemented to increase productivity, reduce costs and streamline the organisational structure are producing the intended results.

"We were also able to cut the costs for Check-in 3. For 2012, we are expecting positive net cash flow and a slight reduction in net debt. We are optimistic that we will reach all our targets for this year."

Flughafen Wien expects a negative fourth quarter of 2012, in part due to maintenance and repairs that were rescheduled for this period, as well as a slower growth in passenger volumes.

Net profit for the full 2012 financial year should therefore equal or be slightly lower than the first three quarters.

Jäger says: "The sound development of passenger traffic has had a positive effect on revenue and earnings. Our core business is developing well and we are optimistic that we will reach our forecast for an increase of roughly 5% in the number of passengers this year.

"Consequently, high quality services and a modern infrastructure are our top priority. The shopping offering at the airport will also be expanded in the near future. Detailed contract negotiations are now underway with several operators, and we are optimistic that the leases will be signed by the end of this year."

With traffic on the rise, profits up and a master plan taking shape, the airport appears in safe hands under the management team of Jäger and Ofner.