Optimizing Processes

In response to EU legislation and the changing needs of airlines, Munich Airport in Germany is launching a new ground handling company, explains Graham Newton.

These are busy times for Munich Airport (MUC). Since the opening of the greenfield site in 1992 the number of passengers has more than doubled. In 2004, 27 million passengers passed through the gateway compared to 12 million in the first year of operation. Aircraft movements have similarly taken off, increasing from an initial 175,000 to 2004’s total of 370,000.

Early indications are that 2005 will continue the trend. In the first six months of the year, passenger traffic has increased by approximately seven percent and there has been a six percent hike in take-offs and landings. Munich is now Europe’s eighth largest hub airport and, in 2004, the fastest growing airport in the European top 10.

The airport’s success has many contributory factors, perhaps chief of which is its location at the heart of Europe. With the expansion of the European Union (EU) Munich’s catchment area includes not only Southern Germany and parts of Switzerland, Austria and northern Italy but also the Czech Republic. Flights to most parts of Europe are plentiful and short. It also benefits from Bavaria’s per-capita income levels — one of the highest in Europe.

Another important step was taken in June 2003 with the opening of Terminal 2. The facility was built in conjunction with German flag carrier — Lufthansa — and doubled the capacity of the gateway to 50 million passengers per annum, establishing the airport as a true hub in the process.

New long-haul routes to destinations such as Montreal and Delhi soon followed and the 2005 summer schedule has also brought twice-daily flights to Chicago O’Hare and Washington Dulles — the type of service only viable or profitable from a hub.

Other developments include the reorganization of Terminal 1, now primed for more efficient operations. The building has been split into three distinct areas; low-cost carriers operate from one sector; high-security flights, such as those to the US, are in another and charter and leisure traffic operate from a third zone.

In addition, the airport operating company, Flughafen München GmbH (FMG), has just announced plans for a third runway. Management has stressed the necessity of avoiding anticipated bottlenecks in the coming years and the existing system — two parallel, 4,000 meter-long runways with independent operations and a limit of 89 movements per hour — would be operating at full capacity as early as 2008 if growth continues at current levels. By 2010 demand will have outstripped capacity.

A New Player

FMG has also been looking behind the scenes at its structure and processes, aware that the vagaries of the airline market and the surety of new legislation cannot be answered by bricks and mortar alone.

Ground handling has been a particular focus. Currently, an airport division offers a service alongside pan-European concern, Aviapartner. It has been difficult for the airport to compete effectively, however and higher operating costs, resulting largely from public-sector wage agreements, coupled with ever-decreasing margins in a fiercely competitive market, has led to significant losses.

Accordingly, FMG has decided a third entity should enter the fray—a new ground handling subsidiary by the name of MUC Ground Services Flughafen München GmbH. MUC Ground started operations end March 2005 with ramp handling of Air Dolomiti, and before the end of the 2005 summer schedule will handle about 20 percent of the daily movements at Munich Airport. It will initially recruit through temping agencies and then hire on a permanent basis after a collective agreement is signed.

There are plenty of good reasons for the new company. To begin with, EU regulations stipulate that ground handling services must be separate from airport operating companies as of 2007. Furthermore, airports of Munich’s size must open up the market by allowing at least one additional competitor.

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