Having established itself as the second biggest hub in Germany, bolstered by an excellent intercontinental footprint and of course the endeavour to be a very good employer for its staff, Munich Airport puts a lot of emphasis on the aspects of sustainability, profitability and social ability. Andreas von Puttkamer, Senior Vice President- Aviation speaks to Upamanyu Borah more on their capabilities around requirement-oriented expansion of infrastructure, solutions to demographic trends, and shaping of digital transformation, ultimately strengthening the airport’s resilience to life-changing situations.
What’s the current situation at Munich following the COVID-19 lockdown? What about the state of traffic flow, both in terms of domestic and international cargo?
As an integral part of critical infrastructure, Munich Airport has maintained uninterrupted operations, playing a role both in helping travellers to return home and in ensuring the ongoing rapid shipment of vital goods. In terms of the overall cargo trend, since the rapid escalation in COVID-19 spread, we have seen a year-on-year decrease of 66 per cent in freight turnover from March to June. At the low point in April, freight turnover was down 82 per cent, as compared with a 99 per cent decrease in passenger traffic.
By far the largest share of the freight handled in Munich is transported in the belly hold of passenger aircrafts, generally on long-haul routes. From March to June, belly freight showed a year-on-year decrease of 81 per cent, and in April alone, it was down 96 per cent. This steep drop was not fully offset by the ‘cargo-only’ segment, which bottomed out in March, with a 35 per cent year-on-year drop, but was already 16% higher in March to June than in the same period a year earlier.
Driven by a surge of +83 per cent in imports, mainly due to an increase in incoming shipments of medical protection equipment, the volume of freight carried on cargo-only flights reached a new all-time high in May. Following the sharp decline in exports in the early days of the crisis, they were already picking up again in May, with a year-on-year increase of 3 per cent.
The four integrators UPS, FedEx, DHL and TNT with operations base in Munich have kept their flight operations going throughout the crisis. As a result, they have handled approximately 58 per cent of the total freight volume. Whereas just 15 airlines were offering passenger flights and 17 different carriers were operating freight services in May.
How is the airport handling pressure during these times of emergency? Conversely, what do you see as the biggest untapped opportunities?
Our top priority during the crisis has naturally been to safeguard the health of our passengers and employees with an extensive package of measures to protect against infection. Limiting the enormous economic impact and ensuring the liquidity of the company has also been an important focus. For example, we reached an agreement with the staff representatives to introduce shorter working hours for around 7,000 of our approximately 10,000 employees. Another key move was the temporary suspension of passenger handling operations in Terminal 1 and in our satellite facility.
With air traffic greatly reduced owing to the coronavirus pandemic, we also temporarily shut down the south runway for maintenance work. I believe, as a consequence of the pandemic, we will seize the opportunity to move ahead decisively with the digitalisation of our handling processes and create additional touchless services for passengers.
From the connections point of view, are there any possibilities of airlines re-establishing their schedules to Munich to make the process of moving cargo more seamless amid the volatile environment?
From early June, the aviation sector has been showing clear signs of recovery, with many airlines ramping up flight operations and gradually adding destinations to our route network. Many European connections have been reactivated. Transatlantic and Asian traffic is also gradually restarting. In the meantime, 40 airlines are again offering flights from Munich to around 120 destinations, with demand trending upward.
On some routes, we’re seeing some very creative solutions in that regard. For example, Lufthansa is operating the outbound leg of its Munich to Delhi service as a cargo-only flight and the return leg as a passenger flight carrying belly freight.
Looking at the current changing environment, what’s most critical to your mind for Munich to succeed?
First, it comes down to when the global pandemic will be stopped and second, when the global economy gets back on track after the crisis is overcome.
How are the conversations with your airline partners proceeding?
These conversations are going very well. Our partners have been highly cooperative in their acceptance of our protective and hygiene measures. We’re optimistic that our airline customers will be back. Germany and especially Bavaria are considered ‘healthy markets’. The support of the economy by the federal government is also fostering trust in the market.
What are the ideal strategies you are planning to consider in the runway to recovery?
Against the backdrop of the severe impact on our financial situation, the Munich Airport Group had started to implement extensive measures to secure liquidity. We launched a package of groupwide measures to place tight limits on personnel and material costs, requiring extensive savings in all areas.
Last year, Munich Airport entered into the top five international airports in terms of hub connectivity, from its previous 11th position in 2018. What did you do best to take such a giant leap forward? Do you believe you are now in a position to compete with the world’s largest hubs?
A decisive factor behind this success is the close partnership with Lufthansa, specifically the construction and operation of Terminal 2 plus the satellite building. Lufthansa’s decision to make Munich the exclusive base for its A350 fleet and to transfer Airbus A380 aircraft to our airport delivered a massive boost to intercontinental services and our development as a hub. Also worth mentioning is Munich’s outstanding defined peak infrastructure.
Rather than trying to compete with the world’s biggest hubs, we are much more focussed on the quality of our services and the passenger experience. This is reflected in the ‘Five Star Airport’ status awarded to us by Skytrax.
Which airport developments have been the most influential, and how have they contributed to the growth?
As I mentioned before, the cooperation with Lufthansa in Munich is an important growth driver. We continually develop our infrastructure in line with changing needs. For instance, we have continued with the expansion of Terminal 1 even during the crisis.
A further clear signal that growth will continue at this location is the agreement recently signed by DHL and Munich Airport for the construction of a freight building with investment of 70 million euros.
Our investment in diversification, such as the establishment of the LabCampus innovation centre, will also contribute to the long-term success and growth of the airport.
Munich Airport has a roadmap for the future: the Corporate Strategy 2025. What role has technology to play therein?
At present we are concentrating on recovery and consolidation. However, our corporate strategy for the coming years is clearly focussed on climate-neutral growth. Through numerous innovative measures, Munich Airport will ensure airport operations that protect the environment and conserve resources, with the aim of gradually arriving at full decarbonisation.
By 2030, our goal is to eliminate 60 per cent of CO2 emissions ourselves by means of technical measures and the remaining 40 per cent through appropriate offsetting measures, preferably in the form of climate protection projects in the airport region. Munich Airport will invest a total of 150 million euros in this ambitious climate protection program. By 2050, Munich Airport aims to reduce its CO2 emissions to net zero. We are thus committed to the NetZero 2050 climate protection target of ACI Europe, the professional association of European airports.
What is the main goal of Munich airport and where do you see yourself in the years to come?
Our main goal is the climate-neutral development of our hub system.
We see ourselves in the future as a successful, full-service ‘airport city’, and will be increasingly engaged in consultations with other airports and in the construction of our unique LabCampus innovation site.
