In spite of the challenging environment around the COVID-19 pandemic, Budapest Airport (BUD) managed to create a smooth operational environment for cargo flights with support of the strong, dedicated teamwork and cooperation with all relevant stakeholders. These actions continue to deliver positive results. Jozsef Kossuth, Head of Cargo at Budapest Airport in an conversation with Ritika Arora Bhola, discusses how BUD has demonstrated that it understands the value of cargo as a revenue stream, and its proactive approach to building an air cargo handling solution and community that has not only benefitted its partners but the entire air cargo industry.
What’s the current situation at Budapest Airport following the COVID-19 lockdown? How is the airport reacting and responding to the pandemic?
The changing needs during the COVID-19 crisis required some adaptation of the work structure at BUD as well, but fortunately cargo has been a stable point in the airport operations at BUD. Medical cargo has been booming in the last few months, while we see a stable general cargo flow as well. We’ve been able to set up an entry protocol for the international crew of cargo flights quite early with the help of local authorities.
The rapid spread of the coronavirus has far-reaching consequences for the global economy. Nevertheless, the undisturbed transportation of goods must be ensured. Budapest Airport is working around the clock for maintaining seamless air cargo operations. As in addition to supporting the Hungarian economy, it also plays a key role in the operation of supply chains and in job retention in the related areas.
The demand for dedicated cargo flights has increased considerably. Currently, there is an average of 25-30 cargo flights commuting to Budapest per day. In the January – June period, with 3,111 full cargo flights (up 23.7 per cent than first half of 2019), BUD handled 63,855 tonnes air cargo, a 2.9 per cent drop from the same period in 2019. The balance changed in favour of imports versus exports, 60-40 per cent compared to the equally balanced export and import division in the past. The share of medical and pharmaceutical transport increased to about 20 per cent in the total volume.
BUD continues to play an important role in providing the markets with much-needed cargo, especially medical supplies. It can be assumed that approximately 15-20 per cent of the total traffic is connected to the current emergency, delivering primarily pharmaceutical products, such as PPE and sanitisers. In the last few months, the arrival of the special supplies at BUD was constant and given maximum support by the airport staff, the authorities and the Hungarian government.
The stable cargo volumes at BUD well confirms the hard work and efforts of all the stakeholders of the logistics market in Hungary, logistics companies, airlines, the relevant ministries and authorities, and our colleagues at the airport.
Budapest airport recently celebrated the launch of the first non-stop route to the capital city of the UAE, boosting the Middle East market. Apart from that, what are the new airline additions, both in terms of domestic and international operations?
Wizz Air launched flights between Budapest and Abu Dhabi in a strategic move for their business which has also seen them become a pseudo UAE airline with a local operating license. From a passenger perspective, this opens many doors in that region and whilst they have not stated any aspirations to move into the belly cargo business, this could change in time.
In addition, for several years, we have received scheduled flights from Dubai with Emirates and Doha with Qatar Airways, both of which have evolved into freighters in addition to daily passenger flights in the wake of the pandemic, thereby being very active in connecting belly cargo via their hubs.
In addition to the scheduled flights by Cargolux, Turkish Cargo, Qatar Cargo and Korean Air, the integrator and courier companies DHL Express, TNT Express, FedEx and UPS are also operating regularly. In the face of the emergency, some airlines, which normally transport passengers, were also carrying cargo. Over the past months, numerous flights by Wizz Air, LOT Polish Airlines, Hainan and Shanghai Airlines brought shipments from China. Large cargo charter flights are also arriving on a daily basis, operated by various different airlines. In general, air cargo traffic from Asia has increased.
The increased demand for cargo handling is much noticeable at the newly opened BUD Cargo City – the state-of-the-art, 32,800 square meter handling and forwarder facility.
Post-lockdown, how long would you estimate it would take for the industry to get back to business as usual? What will be the growth drivers?
There are various predictions regarding the total revitalisation of the air cargo industry, many say that the total recovery will happen after 2022.
Globally, the air cargo market showed 25-40 per cent decline in this period as compared to 2019.
The gradual reopening of production plants and e-commerce will be the major growth drivers. As a matter of fact, e-commerce traffic in Hungary has increased 21 per cent since the COVID-19 situation as compared to the three first months of 2019. Whatever the growth outcomes are, the BUD cargo team will continue in its pursuit of providing the ideal environment for cargo movement in the region.
What are the ideal strategies you are planning to consider in the runway to recovery?
BUD’s vision is to become the main air cargo gateway for the Central Eastern European region and a more important cargo bridge between East and West. With completing the recent developments, we believe we are on the right track.
As a cargo-friendly airport, developments in infrastructure needed to be made and BUD Cargo City was one of the key milestones that propelled us to have some of the best facilities in the region. There are other improvement actions in our list too, which we plan to implement soon. These will help us to not only fully recover but facilitate the volume increase of cargo traffic for the whole industry–freight forwarders, shippers, cargo airlines.
BUD Cargo City is really a game changer for BUD and our partners in the competitive landscape. The ‘cargo eyes’ in our region are now looking at BUD Cargo City which is resource-efficient and service-oriented, offering high-quality and fast service. The state-of-the-art facility has sufficient capacities that forwarders, handlers, and airline partners can use in order to provide the highest quality service for their customers. Everybody will notice in the wider network that distributing and collecting cargo via BUD is working flawlessly, and more and more partners will use it instead of the well-known larger hubs in Western Europe.
These are the ingredients which will generate even better outcomes and further growth. So, now is the time to optimise the business.
How do you look at India as an investment destination? Any plans for future trade with India?
India being the world’s 7th largest economy is very interesting for us, we see an opportunity for establishing a direct connection from BUD. We know that all of our freighter partners operate in India, so we definitely see the potentials of a direct connection. The Hungarian embassy and consulates in India are also fully engaged with BUD to secure flights as early as possible, post the crisis. The appetite seems very promising.
Where do trade activities with India stand at the moment? What are the significant items transported to and from between India and Budapest?
Hungary is very much a partner of India; the two countries have excellent political, trade, and business relationships. The export-import projects between the countries are supported strongly by political and business stakeholders. There are more than 40 major Indian enterprises in Hungary, creating more than 10,000 jobs for the country and almost all of them produce air cargo relevant goods. More Indian companies announced that they’ll invest in Hungary in the automotive and electronics sector.
We can see that air cargo between India and Hungary has its own stable market. The usual product range which is always typically transported by air between India and Budapest include automotive, electronics, perishables and pharma goods.
Tell us about the superior infrastructure and technologies installed at BUD Cargo City for supporting efficient supply chain operations– cargo handling and movement.
BUD Cargo City was handed over for operations on January 06, 2020. It provides state-of-the- art cargo infrastructure on a world-class level and operates to the great satisfaction of airlines and logistic companies.
The new facility has everything that a modern and efficient cargo handling procedures require, new dual view 180×180 X-ray machines, storage rooms for vulnerable, valuable and dangerous goods as well as live animals, and temperature controlled storage rooms and freezers.
In general, we can say, the opening of BUD Cargo City came at the right time and helped a lot to provide a stable background for the air cargo logistics business at BUD, supplying Hungary and Central Eastern Europe. This has proved very useful in these challenging times.
Looking at the current changing environment, what’s most critical to your mind for Budapest Airport to succeed?
The first challenge is to comply with the demand for innovation- Digitisation, automation, and improvement of service quality.
The second challenge is to follow the changing requirements of the logistics market and transformation of customer expectations. The development of the e-commerce business worldwide and its very special logistics service requirements mean challenge and opportunity for air cargo at the same time.
The third challenge is to have sufficient human resources for operations, from pilots to logistics managers and experts, from warehouse staff to truck drivers. Automation, self-driving trucks, and robots can help, but it is a major challenge for the entire logistics industry. The fourth challenge is the environmental impact. We have one world to live in, and we must protect it as much as we can from the negative effects we cause with our activities.
The cargo developments are continuing at BUD. Various actions such as the digitisation of cargo, focus on special cargo such as pharma and live animals, optimising the cargo environment, and a certified shipper program are part of the ‘to do’ list. An ambitious, long-term development master plan for the entire airport is also in the making.
For now, the entire BUD Cargo team is focussing on managing these challenging times of the coronavirus pandemic to best serve the needs of the Hungarian people. Meanwhile, we are also focussing on the ‘soft’ elements of our cargo environment. We just kicked off the implementation project of CEIV pharma with our handling and forwarder partners.
What is the main goal of Budapest airport and where do you see yourself in the years to come?
It’s now even more complicated to predict what will happen in the next few years, but in 10 years, we are positive that our cargo volume will be above 250,000 tonnes, and BUD will be the main air cargo gateway for the region.
Part of this outcome should of course see the BUD Cargo City Phase II constructed and made operational.
Budapest Airport recently accomplished the second phase of the new $37m Pier 1 in line with its deadline. What are the other projects in the pipeline?
Yes, there are exciting new developments on the passenger side at BUD. The Airport Development Directorate handed over the first phase of Pier 1 in January 2020, and BUD completed the construction of the new pier on June 22. The new building section increases the capacity of Terminal 2A by thousands of square meters, ensuring a comfortable waiting area for passengers which meet all expectations.
As we emerge from this crisis, we will further build on our capacities, ultimately in the shape of a brand new passenger terminal. This is because BUD will not only remain the gateway to Hungary for passenger and cargo operations, but also one of the fastest developing markets in Europe.