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Low-cost and Lufthansa bring winter cheer to Frankfurt airport

[BERLIN] Ryanair and Lufthansa will drive growth at Frankfurt airport this winter, helping Germany's largest hub to boost passenger numbers by around 5 per cent this year, airport operator Fraport said on Thursday.

Fraport had been slow to open up Frankfurt, one of Europe's busiest and most expensive airports, to low-cost carriers. After passenger numbers dropped last year it agreed discounts for Ryanair at the expense of angering main customer Lufthansa.

"We are also achieving solid growth in Frankfurt again, where we made the necessary strategic decisions at the right time," Fraport CEO Stefan Schulte said as the group reported third-quarter core profit in line with expectations.

Ryanair previously served Frankfurt from Hahn, around 120 km (75 miles) away, but is expanding rapidly after starting flights to the city this year. Lufthansa is benefiting from extra demand caused by the collapse of local rival Air Berlin.

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Lufthansa is even using a larger 747 jumbo jet, usually used for long-haul flights, 60 times on the Frankfurt-Berlin route this month.

EasyJet, another low-cost British competitor, could also soon feature on the Frankfurt departure boards.

The British airline, which plans to take on some of Air Berlin's operations at Berlin Tegel, has been granted slots at Frankfurt, Fraport said and these are likely to be used for flights to Berlin.

Passenger numbers at Frankfurt rose 6.3 percent in October, taking year-to-date growth to 4.8 percent, Fraport said.

Low-cost carriers currently account for only 2.8 per cent of traffic at Frankfurt. The DLR German aerospace centre said in a study last month that low-cost carriers made up 25 per cent of traffic from German airports this summer.

Analysts at Credit Suisse last week said Fraport had to win volumes from Lufthansa's budget unit Eurowings, which it plans to grow following Air Berlin's demise, for Frankfurt or risk losing market share in Germany.

Lufthansa has said that until costs come down at Frankfurt, the group will not move Eurowings there.

While budget carriers help to increase overall passenger numbers, they can have a negative impact on retail spending figures. Net retail revenue per passenger at Frankfurt dropped 4.7 per cent to 3.02 euros in the quarter.

Passengers on intercontinental routes typically spend three times as much as short-haul passengers, CFO Matthias Zieschang said.

CEO Schulte said it was the right decision to open up to low-cost carriers because it was a growing market segment.

Fraport reported in-line third-quarter earnings before interest, tax, depreciation and amortisation of 387.7 million euros (S$613.6 million).

It maintained a forecast for 2017 core profit of about 980 million to 1.02 billion euros.

Fraport also increased the passenger forecast for 14 Greek regional airports that it took over this year to around 10 per cent growth in 2017 from a previous forecast of over 5 per cent.

REUTERS

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