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Strategies for infrastructure development of airports: A comparison between
Milan Malpensa and Berlin Brandenburg International.
Conference Paper · February 2008
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Beria P., Scholz A.
1
Strategies for infrastructure development of airports:
A comparison between Milan Malpensa and Berlin
Brandenburg International.
Paolo Beria∗, Aaron B. Scholz°
DiAP, Politecnico di Milano, Milano, Italy;
Institute for Economic Policy Research (IWW),Universität Karlsruhe (TH), Karlsruhe, Germany
Abstract
The present paper analyses two airport investment projects in Europe, namely the realised investment of
Milan Malpensa and the planned investment of Berlin Brandenburg International. The paper evaluates the
history of the projects, their objectives, demand forecasts, assessment methodologies and the main
carrier’s strategy. A comparison between expectations and actual outcomes for Malpensa ten years after
its opening examines important parameters for airport investments. Finally, these parameters are analysed
for the planned investment of Berlin Brandenburg International.
Keywords: airport, infrastructure investment, assessment
1. Introduction
Airports are the infrastructure for air transportation and are therefore reason and cause
for delays in aviation. The only way out of this loop is seen by decision-makers in
infrastructure investments which enlarge capacity and reduce delays. The present paper
analyses the realised investment of the airport Milan Malpensa and the planned
expansion of Berlin-Schoenefeld to Berlin Brandenburg International (BBI). Both
projects are analysed in respect to their histories, aims, demand forecasts, main carriers’
strategies and their assessment methodologies. Similarities and differences between the
projects will be identified and will show that similar conditions exist for both cases. An
ex-post appraisal for Malpensa ten years after its opening will demonstrate the current
situation of the airport and will compare the outcome with its ex-ante expectations. The
vertical analysis of Malpensa airport indicates characteristics which can be conveyed to
other airport infrastructure projects with comparable conditions. The authors argue why
comparisons between BBI and Malpensa are permissible and derive conditions for
successful airport infrastructure investments. The paper is structured in four parts. In a
first step, recent developments in the European air market are described. Afterwards, an exante description of Milan Malpensa is carried out followed by an ex-ante analysis of BBI.
The following section deals with the current situation of Milan Malpensa from an ex-post
point of view. Finally, both projects will be compared and conclusions will be drawn.
2. Recent developments in the air transportation market
The European air transport sector is passing through a transition period. The outcomes
of European liberalisation have been very large and sharply influenced the continental
travel patterns. Transition started with the 1987 package and ended in 1993, with the
full application of the “open sky” regime (Button et al., 1998). The market answered
positively to the new conditions. With the exclusion of the first years after September
11, 2001, demand has been constantly increasing and forecasts are still optimistic.
However, the transition from the previous market structure to a fully liberalised
European market is still incomplete. Two key elements are still missing:
∗
Address: DiAP - Politecnico di Milano, Via Bonardi 3, 20133 Milano (Italy). Tel.: (+39)02.2399.5424. E-mail:
paolo.beria@polimi.it.
° Address: Universitaet Karlsruhe (TH), Institute for Economic Policy Research (IWW), Kaiserstr. 12, 76131
Karlsruhe (Germany). Tel.: (+49)721.608.4226. E-mail: aaron.scholz@iww.uni-karlsruhe.de
Beria P., Scholz A.
2
ƒ
Intercontinental routes are still regimented by “bilateral agreements”, with the
exclusion of Euro-Atlantic routes opened since March 2008 and Open Sky
Agreements between several countries (Oum et al., 2001).
ƒ Slots assignment in airports is based on the “grandfathers’ rights” principle,
constituting, in case of congestion, a barrier to entrance of newcomers.
Moreover, the probable process of industrial concentration of former flag-carriers
and/or other airlines is still incomplete (Burghouwt and Hakfoort, 2001). Some mergers
of major carriers already occurred as well as mergers of low cost airlines. Concentration
of low cost carriers (LCC) is still lower than that of global carriers (Eurocontrol, 2005),
but the tendency goes into the same direction.
A key question in this changing context is the survival of the “Hub & Spokes” scheme
(“H&S” in the following). It has been successfully introduced mainly by large carriers,
first in the US, in order to lower costs since the liberalisation started (Button, 2002).
Also in Europe the concentration on few main airports has been sharp, but in a more
limited way due to particular urban structures and national interests. Conversely, the
low cost model of European carriers uses, with very few exceptions, a pure “Point to
Point” (“P2P” in the following) configuration.
The two main features of H&S networks are spatial and temporal concentration
(Burghouwt and de Wit, 2005; Reynolds-Feighan, 2001; Alderighi et al. 2007), both
scarcely found in the low cost supply, usually organised as P2P. The success of LCC
and their increasing market share (Eurocontrol, 2005) apparently suggests the
marginalisation of H&S amplified by particular European geographic and demographic
conditions. Nevertheless, a deeper analysis suggests that the role of H&S scheme will
remain important due to increasing airlines alliances and intercontinental traffic
(Burghouwt and Hakfoort, 2001). The system will most likely coexist with low cost
airlines on direct routes from secondary airports (Dobruszkes, 2006) and the future
European configuration is expected to be multi-layered, with long haul traffic
concentrated in few large hubs and an increasing P2P market between airports.
Competition between the two “layers” is limited due to the differences in characteristics
of supply and demand.
One large constraint for the air sector are capacity limitations on airports. Expansion
projects on existing airports (e.g. London, Amsterdam, Frankfurt, Rome) as well as new
airport investments are realised or already planned (e.g. Munich, Oslo, Athens, Milan
and, in future, Berlin). The paper will analyse two of these infrastructure projects, Milan
Malpensa and the future Berlin airport.
3. “Malpensa 2000” project
Today, Malpensa airport is the main Milan and the second largest Italian airport.
Between 1998 and 2007 Malpensa was the main hub of Alitalia. Malpensa is located
approx. 50 km northwest of Milan, at the western border of a wide and economically
active area accounting 3.9 million of inhabitants and inversely cone-shaped between
Milan and the Alps. The other airports of the metropolitan area are Linate, 7 km east of
Milan city centre, and Bergamo Orio al Serio, approx. 50 km east of Milan. Linate was
the former main airport and since the opening of Malpensa, Linate is the “city airport”
with business oriented P2P traffic. Orio al Serio is serving another rich and
economically performing area (Bergamo and Brescia provinces). Since some years it
focuses on LCC and it is now one of the best performing Italian airports in terms of
passenger growth rate.
Beria P., Scholz A.
3
History of the project
The first idea of expanding the existing airport dates back to the 1970’s. A second
development plan was proposed in 1981. Both projects were suspended.
Initially, the airport expansion was seen as the answer to two rising problems:
ƒ Linate city airport was approaching its maximum capacity estimated at 7 Mpax1.
It was becoming too close to the expanding city and neither extension nor
upgrading was possible.
ƒ An expansion of the Malpensa airport was seen as a possible solution to the
environmental problem of Linate (especially noise pollution).
The facility was included in the 1983 regional transport planning (Regione
Lombardia, 1983), although with a limited geographical role. In 1985 SEA (the airport
franchisee) produced a new Master Plan for airport development. The plan confirms the
initial traffic forecasts of 12 million passengers. On the basis of it, two national laws
allocated resources (equivalent to approximately 480 M€) for the construction.
In 1986 the General Transport Plan of Italy included the development of Malpensa
airport in order to make it a “large airport for Northern Italy” and the Malpensa 2000
project Master Plan was approved by Lombardy Regional Council. One year later, in
1987, the Malpensa 2000 project received also the final approval of the national
Ministry of Transport.
The construction of Malpensa 2000 started in the year 1990. The upgrade of the
existing airport consisted of: runways renewal and extension, brand new taxiways,
aprons, passenger terminal, new control tower, a cargo centre, a train station, access
roads from the old terminal. Thus, the project dealt with new buildings/civil works, but
also with technological and organisational components.
In 1993 the Christophensen Group labelled Malpensa 2000 as an airport of European
importance and included the project into the TEN-T priority list to make it a primary
gateway to southern Europe. In December 1994 the European Investment Bank granted
a 15-years loan of approximately 200 M€. As stated by the Bank, it was assumed that
all international flights switch from Linate to Malpensa. Such a switch, announced also
by the airport concessionaire SEA, was almost totally disregarded.
On October 25, 1998 Malpensa airport opened and traffic forecasts were already
exceeded in less than one year (16.5 Mpax in 1999).
Investments to guarantee surface accessibility to the airport, which was fundamental
for the project performance, were neither part of Malpensa 2000 project nor managed
by the concessionaire. These were financed later, by dedicated regional and national
laws and plans, and have still not been completed by 2007.
After the opening of Malpensa discussions on the share of traffic between Linate and
the Malpensa were again an issue at stake. Before the opening, some government
decrees were issued aiming to force as much traffic as possible from Linate to
Malpensa, except the Milan-Rome shuttle. In consequence of this, many airlines stood
up against this decision, complaining for its anti-competitive character that would have
favoured Alitalia (Shandwick, 1998). The main objective of the flight switch, was to
ensure a consistent demand for the new infrastructure, in order to allow Alitalia to set
up hub operations in the new airport without duplicating services.
The European Commission supported the airlines opposing to the decision and one
year later another government decree made the switch conditions less strict. Thanks to
this decree, numerous national and EU routes moved back to the city airport or were
duplicated.
1
This estimation resulted later very conservative. During 1997 the airport reached a traffic of 14 Mpax.
Beria P., Scholz A.
4
The first problems of Malpensa started very soon. After few years of cooperation
KLM broke the alliance with Alitalia, mainly caused by political reasons. One of the
pillars of the alliance was the hub at Malpensa that was reduced in favour of a bi-hub
system with Rome, with many duplicated routes.
Recently, the situation has worsened rapidly. Alitalia’s financial problems became
evident and no more sustainable. The competition between airlines as well as the high
industrial costs and the fact that Alitalia was organised at three airports (Linate,
Malpensa and Rome Fiumicino) lead to a crisis of the former Italian flag carrier. In the
beginning of 2007 the government tried to privatise Alitalia without success because of
very strict conditions. At the end of 2007 a new tender has been set, eventually showing
the interest of AirFrance-KLM, but in April 2008) the merger failed again. In order to
stop financial losses of Alitalia, the airline issued an emergency industrial plan, whose
main element is the abandon of the hub at Malpensa and a concentration of flight
activities in Rome.
Project aims
The main driver for the construction of the new airport came from SEA which is
owned by local authorities. SEA provided a large part of the funds for Malpensa 2000.
Other actors with different roles and objectives were involved in the Malpensa project.
Among them: the Italian Government, the European Community, the local authorities,
the EIB, etc. One important actor, which entered late in the process, is the former Italian
flag carrier, Alitalia, which is supposed to be the main Malpensa customer.
According to the Master Plan (Italairport, 1985) the initial goals of Malpensa 2000
were:
i)
aligning the airport to European standards, in terms both of air traffic
movements and of operational capacity,
ii)
developing Malpensa into a modern and efficient system that was held before
by Milan Linate,
iii)
turning the airport into the major hub of southern Europe, the major airport of
Northern Italy and the second major national airport by 2000 (FEEM, 2002;
but not stated into original laws).
By analysing the documents and plans published during the years, it becomes quite
evident that the role and the objectives of the project were strictly dependent on the
actor/stakeholder and therefore substantially changed over time. Furthermore, the
objectives, that were primarily formulated at the local level, became national and then
supranational.
Table 1: Malpensa project goals.
Objectives
Local
Project initial phase
Increase Milan airport
system capacity
After inclusion into TEN-T
Economic development
Economic development
Hub of Northern Italy
Northern Italy hub
Allow wide body
aircrafts
National
Allow wide body
aircrafts
Main Alitalia hub
Create a “hub” airport
EU
Present (2006)
Increase local air traffic capacity
Intercontinental hub
Reduce negative environmental
effects
Beria P., Scholz A.
5
Gateway for international and
intercontinental traffic in
southern Europe
Alitalia
No role
hub, try to catch passengers
using other hubs.
Undefined role for
Malpensa and Fiumicino
as hubs
Abandonment of
Malpensa hub (2007)
Demand forecasts
Numerous traffic forecasts have been produced during the decision-making process.
Passenger numbers have always been increasing, with the exception of the studies
around the 1980s, due to the consideration of oil crisis effects.
The following diagrams summarise the main forecasts for passengers and goods
traffic. The figures refer to the overall Milan traffic (Linate + Malpensa); the share
between the two airports has only been forecasted since 1984. Such forecasts are drawn
above the trend of actual traffic (in pax/year and ton/year) and an estimation2 of Milan
system capacity (for passengers only). Some comments about the difference between
forecasted and actual volumes will be provided later.
Figure 1: Malpensa passenger traffic forecasts and comparison with actual data and capacity. Numbers in
pax/year.(Source:EVA TREN, 2008)
Linate + Malpensa passenger traffic and forecasts
35.000.000
30.000.000
25.000.000
20.000.000
15.000.000
10.000.000
5.000.000
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
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95
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96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
-
max calculated capacity
actual traffic
Malpensa 2000 Master Plan (198
Cranfield University (2000)
IATA (1993, in TEN-T application)
Odoni (1996)
Figure 2: Malpensa freight traffic forecasts and comparison with actual data and capacity (Source:EVA
TREN, 2008)
2
The capacity estimation is carried out by the author. It is based on official documents and past traffic
figures.
Beria P., Scholz A.
6
Linate + Malpensa goods traffic and forecasts
500.000
400.000
300.000
200.000
100.000
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
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95
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96
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97
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98
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99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
-
real data
British Airports International (1980)
IATA (1993, in TEN-T application)
Odoni (1996)
Carriers’ strategies
The Milan airport system’s reorganisation started in 1997 and was largely based on
the strategies of Alitalia. Historically, Alitalia did not have a clear H&S network but
Rome Fiumicino was always the base of Alitalia. Intercontinental flights to the US and
to other major international destinations departed from Milan (Malpensa) since decades,
but not in a H&S scheme, involving feeder routes and timetable coordination. Only
some connecting flights were possible, mainly between national and intercontinental
destinations.
In the new competitive environment since 1997 due to effects of liberalisation,
Alitalia tried to reorganise its network in analogy with the leading European carriers and
focusing on a H&S scheme. The strategic best location for an Italian hub in
geographical and organisational terms is Rome. Geographically Rome is the barycentre
for north-south national traffic. Organisationally, it was the historical base of the
maintenance operations and for the whole labour force. Nevertheless, commercially,
Northern Italy was by far, and still is, the largest and richest Italian market. Due to
Alitalia’s low perceived quality, the limited network and Rome’s airport logistic limits,
a large part of Northern Italian traffic was captured by other European carriers. They fed
their consolidated hubs via frequent flights from the major northern Italian airports,
including Milan Linate.
Even if the decision of expanding Malpensa was decided regardless of future
strategies of Alitalia, the expansion of the airport was seen as the opportunity to
strengthen Alitalia’s position and to regain a large quota of long haul connecting traffic.
In this sense, the need to reorganise Alitalia’s network, together with problems of
Rome Fiumicino airport and political pressure, made it feasible to switch the hub of
Alitalia from Rome to Malpensa. The design of an airport capable of H&S operations
was a hazard that the airport concessionaire had accepted ten years before Alitalia
decided to move to Malpensa. More precisely, Alitalia never stated, at the beginning of
the 1990s, that it planned to set its hub at Malpensa. The first public statement is found
in the “1998-2001 Industrial Plan” (Giannelli, 2003) more than ten years after the
approval of the airport Master Plan.
The network strategy chosen by the airline since 1998, after the opening of the new
airport, can be summarised as follows:
Beria P., Scholz A.
ƒ
ƒ
ƒ
ƒ
7
main hub in Milan Malpensa for EU and intercontinental flights, fed by short
haul routes;
full integration with Amsterdam Schiphol hub of the former partner KLM;
secondary hub for national north-south connections in Rome Fiumicino,
including some intercontinental flights for the leisure and institutional market;
stop of all routes from Milan Linate, apart the shuttle Milan – Rome.
The alliance with KLM and the reorganisation of the network were the evidence of
Alitalia’s management’s will to transform the airline into a global carrier. The main
markets would have been Italy, Europe, Mediterranean and North America. An
expanding segment was the emerging and still not fully served Balkan market.
Assessment
An option analysis is not available among the reviewed documents. The 1985 Master
Plan dealt with the expansion of Malpensa but did not analyse other opportunities for
the whole Milan airport system. Minor options were explored but the general layout, the
position and the dimension of Malpensa was never questioned. Also the do-nothing
option was not considered in the official documents.
The absence of a consistent option analysis can be explained as follows. The EIA and
the Master Plan were produced by SEA or its affiliates. Being the concessionaire of
Linate and Malpensa it made no sense for SEA to evaluate and consider the
development of third party airports. At the same time, the localisation of the new
terminal assumed the present configuration due to the availability of areas only in the
west side of the airport (Balducci, 1988). Possible alternatives had been eliminated
because of environmental or technical reasons.
Concerning financial aspects and assessment, SEA provided from its own budget
approx. 18% of the total costs, plus the EIB loans of another 33%. It is likely that both
internally assessed such investment. The TEN-T budget covered 2.8% of costs and the
grant followed the simple procedures required, including the declaration of some
limited financial details. The state, providing the 46% of the funds, did not produce any
public appraisal of such investment. This analysis could have shown the opportunity of
granting such an amount (or a lower one, or no funding at all) due to the large selffinancing capability of the airport or to the existence of better alternatives.
An economic Cost Benefit Analysis does not exist. The Master Plan has the format of
a land use plan, not including any comprehensive assessment.
The only document that can be considered an evaluation is an impact assessment
(Gruppo CLAS, LIUC-CRMT, CERTeT, 1995) carried out during the building phase.
The analysis estimated, for the middle term scenario, the creation of 50.000 new jobs.
For the long period, 100.000 new jobs are supposed to be generated by the project.
Milan and Varese are the two cities mostly advantaged by the employment effects.
According to the analysis, the “added value” would increase substantially because of the
airport. The airport’s presence was supposed to boost the economic regional
development by making the area more attractive for high tech firms. Nevertheless, the
document cannot be considered a complete assessment of the infrastructure project as it
does not provided an indicator of investment efficiency nor an estimation of the trade
offs. Moreover, one must notice that the impact assessment was done many years after
the approval of the investment.
The 1985 Master Plan includes an environmental study, but it does not meet the
requirements of the recent EU legislation. Some months before the airport opening, in
June 1998, the Ministry of Environment required a further EIA for Malpensa Airport. In
accordance with this study both the Regione Lombardia and the Ministry of the
Beria P., Scholz A.
8
Environment derive different comments from the study3. The Ministry of the
Environment’s decree affirmed that traffic forecasts for Malpensa were largely
underestimated, mainly due the inclusion of Malpensa in the TEN-T network and the
new hub-role of the airport that had never been considered in the past.
In a more transparent decision process, assessment should have been carried out by an
administrative body, with a planning vision, and not by the concessionaire of the airport
itself, whose vision was naturally limited to the extent of its franchise.
4. “Berlin Brandenburg International” project
Berlin is Germany’s capital and its largest city with a population of 3.4 million. The
economy of the city is mainly based on the service sector. Among the 30 German DAX
(German stock market index) companies only Siemens runs one of its headquarters in
Berlin whereas a large number of national and international companies established
secondary departments in the city. Nevertheless, after the reunification Berlin did not
completely catch up as it was expected with Germany’s major economic centres, such
as Munich, Hamburg, Frankfurt and the Ruhr area.
Since the beginning of the new century the air transportation market in Berlin
increased above-average. Passenger numbers in Berlin developed from 11 million
(1995) to 18.5 million passengers (2006) which correspond to a total increase of 68%.
The major driver for the development at Berlin’s airport has been the boom of LCC,
which mainly use Berlin-Schoenefeld as their Berlin destination. An end of the general
LCC boom is not in sight, even though growth factors are declining.
Figure 3: Development of passengers at major German airports (Source: BMVBS, 2007a4)
Passenger index
220
210
200
Index (1995=100)
190
Index Berlin
Airport System
180
170
Index Frankfurt
(FRA)
160
150
Index Germany
total
140
Index Dusseldorf
(DUS)
130
120
Index Munich
(MUC)
110
100
90
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year
3
Both of them can be read at the page (visit 23/06/2006):
http://www.cartografia.regione.lombardia.it/silvia/VIA\procedure/nazionale/sg/fasi.asp?id=132
4
Data for 2006 has been taken from the Annual report 2006 of Fraport (Frankfurt airport) and from the
Annual report 2006 of Berlin Schönefeld GmbH.
Beria P., Scholz A.
9
History of the project
Berlin’s airport’s history began with the opening of Tempelhof as a civil airport in
1923. The beginning of the Cold War saw the division of Germany, with both sides
developing airports to suit their respective needs (Vaughan, 2006). A key role played
the divided former capital Berlin. The four allied powers of WWII, France, Great
Britain, Soviet Union and USA, had sectors in the capital which have been dependent
on transportation accessibility. The other two airports have been inaugurated in 1945
(Schoenefeld) and in 1948 (Tegel) with different objectives. Tegel is located like
Tempelhof in former West-Berlin and after the airlift campaign the French took over the
airport and started its transformation into a civil airport.
Berlin-Schoenefeld was used by the Soviets mainly for military activities. Aeroflot
operated few civil connections in the beginning but increasing numbers of civil
passengers lead to the reconstruction of Schoenefeld into the major airport of the
German Democratic Republic and its national flag carrier Interflug (Fröhlich et al.,
NN).
With the fall of the Berlin Wall three airports serve the city. All of them have been
incorporated into a joint airport system under the roof of Berlin Brandenburg
International GmbH (FBS), a public company responsible for the three airports. Over
the years each airport has developed its own strategy and has served different
customers. Tegel has become the main airport of Berlin with regular European and few
intercontinental flights and the largest number of passengers. Schoenefeld serves as the
second airport with international and national flights and a fast growing LCC share.
Tempelhof is by far the smallest airport of Berlin. Mainly national flights and a very
small number of international flights are located at Tempelhof. Nevertheless,
Tempelhof became popular for business travellers because it is located in the city centre
of Berlin within a short distance to Berlin’s main sites.
Since the beginning of the 1990s and the foundation of the public company, the idea
of a single Berlin airport exists befitting the capital of a major country (Vaughan, 2006).
Caused by their inner-city location it is impossible for Tegel and Tempelhof to expand
its capacity and to upgrade their taxiways for wide-body aircrafts. Therefore, the only
feasible alternative for expanding an existing to a high-tech airport for future capacities
is the airport of Berlin-Schoenefeld. In 1999 the official redevelopment plan for Berlin
Brandenburg International has been submitted to the responsible authority and it was
approved by 2004 (BMVBS, 2007b).
Project aims
The BBI concept has been developed after German’s reunification. Since then the city
has been responsible for three independent airports. The long term objective of the
Federal state of Berlin and Brandenburg was to concentrate flight activities at one
modern airport with short distances between the terminals and to the inner-city of
Berlin. Centralising the activities at one airport would lead to economies of scale (e.g.
higher productivity) and economies of scope (e.g. optimising slot prices) which can not
be realised at three different locations. Short travel times to the inner-city of Berlin
should be achieved by a direct highway connection and a train station for short- and
long-distance trips below the terminal. Customers may benefit from the single airport
and its concentrated flight activities by higher frequencies, shorter distances and transfer
possibilities between different airlines.
The new airport should serve the needs of a capital city and it should be competitive
with the primary airports of Germany and Europe. Schoenefeld P2P traffic and selected
long-haul connections are expected to be operated at BBI. According to its geographical
location a focus will be placed on connections towards Eastern Europe and Asia where
Beria P., Scholz A.
10
flight times are around one hour less than from the major European hubs, such as
London, Paris, Frankfurt, Amsterdam or Rome.
Beside impacts on the transportation network of Berlin, impacts on the regional
economy and the regional labour market have been major drivers for decision makers to
support BBI (see section Assessment for further details). Especially in regions where
unemployment is very significant and welfare is substandard, positive economic
impacts are an important driver for infrastructure investments.
Two more infrastructure investments and therefore their successes are related to BBI;
the so called airport city and the business park. Both commercial sites are provided by
the Berlin airports. The airport city will be located right in front of the terminal building
and it is aimed at shopping and business meetings (Berlin Schoenefeld GmbH, 2007c).
The business park will be located around five minutes away from the airport. On an area
of 109 hectares a new district will be developed, including commercial, logistic retail
and service sites, office buildings and hotels (Berlin Schoenefeld GmbH, 2007d). Both
infrastructures promote their investments with short distances to the airport and their
direct accessibility to German’s rail and road networks.
Demand forecasts
The passenger numbers at the three Berlin airports between 1991 and 2004 developed
below the German average. Passenger numbers on the German international airports
increased by 5.4% p.a. whereas the growth rate at Berlin’s airports was “only” 4.9% p.a.
The total increase in Berlin was 86% compared to 97% on all German airports together
(Lufthansa, 2006).
Since 2002 a completely different picture has emerged and a more dynamic situation
can be observed at Berlin’s airports. Passenger numbers outflank the German average,
e.g. 9% in 2003 (average 4.9%) and 11.8% in 2004 (average 9.7%). Lufthansa expects
the trend to continue because the LCC market in Berlin is still expandable (Lufthansa,
2006). Tourism plays an increasing role and further cultural and leisure sites are
planned or already realised (e.g. museums).
Demand forecasts for the Berlin airport system expect the recent trend to continue. A
publication of the Berlin airports calculates the passenger numbers to 23 million in 2012
including a total growth of 95% (7% p.a.) between 2002 and 2012 (Baum et al., 2005).
The maximum capacity of BBI can be expanded to 40 million passengers caused by the
modular structure of the terminal. The expansion is limited to the terminal capacity in
case that larger aircrafts will approach Berlin but runway capacity keeps constant
(maximum number of departing aircrafts).
The study is based on the two assumptions that BBI will open in 2010 and that the
underlined passenger trend continues (no further passenger boom caused by the opening
of BBI). Recently, the opening date was postponed to 2012 and further uncertainties
still exist (e.g. second tender process has started for the terminal because of
irregularities during the first tender). Nevertheless, demand forecasts for 2006 and 2007
were exceeded so that it is very likely that the expected 23 million passengers in 2012
can be achieved even with the delay in the project.
Carriers’ strategies
Analysing the present situation at the three Berlin airports, it comes out that Tegel is
Berlin’s major airport with 1,900 departures per week, whereas Schoenefeld offers 740
and Tempelhof only 160 flights per week. The same situation can be observed when
looking at passenger numbers. The 18.5 million passengers in 2006 are subdivided into
11.8 million at Tegel, 6 million at Schoenefeld and 0.6 million passengers at
Tempelhof. The highest increase in passenger numbers can be observed at Schoenefeld
Beria P., Scholz A.
11
(+19%) and Tempelhof (+16%) but from a much lower level than at Tegel (+6%)
(Berlin Schoenefeld GmbH, 2007a).
The key players in the Berlin airline market are Lufthansa and Air Berlin. Lufthansa
offers around 670 and Air Berlin around 600 flights per week from Berlin’s airports
which lead to a market power of 45% of the total flights per week. Both airlines use
Tegel as its Berlin destination. Smaller shares have Low-Cost-Carrier, like easyJet,
Germanwings and TUIfly. The paper concentrates on the possible future strategies of
the two dominating airlines, Lufthansa and Air Berlin and their relationship to the new
airport BBI. The cargo sector is neglected because BBI is mainly developed for and
justified by passenger transport. The night-flight ban at BBI makes the airport less
interesting for cargo transport where flexibility especially for Integrators, is a main
driver for airport choice. Furthermore, with the airport of Leipzig/Halle which is the
cargo hub of DHL and a major destination for Lufthansa Cargo, a cargo focused airport
without night-flight ban is only 140 km away from BBI and much more interesting for
airlines.
Lufthansa the former German flag carrier is still the market leader in Germany and
one of Europe’s largest airlines. In 2006 Lufthansa transported around 53 million
passengers and can be classified as a full-service global carrier which optimises its
network based on business passengers (Tagesspiegel, 2007). Over the last decades
Lufthansa’s network developed from a single hub-structure with Frankfurt being the
hub into a two hub system with some further airports offering point-to-point
connections (Alderighi et al., 2007). The two hubs are now Frankfurt and Munich
whereas point-to-point connections are offered from Düsseldorf, Hamburg and Berlin.
The current situation in Berlin with its three city airports is interpreted by Lufthansa
as very inefficient and the potential to bundle passenger numbers at one of the airports
to operate efficient point-to-point connections is not seen. Compared to Düsseldorf or
Hamburg, Berlin has also a much smaller share of business travellers which is another
counter argument for a strong role of Berlin’s airports in the Lufthansa network
(Tagesspiegel, 2007). Nevertheless, Lufthansa supports the one airport solution at BBI
to create a strong capital airport (Lufthansa, 2006).
In the long-run Lufthansa expects that Berlin will become a world metropolis in ten to
twenty years which includes an important aviation basis (Tagesspiegel, 2007). Concrete
targets of Lufthansa for BBI are not communicated to the public and are classified as
confidential. General comments include that a single modern airport can be used more
efficiently than three independent airports and that good infrastructure further attracts
business (Tagesspiegel, 2007). Such general explanations have been very common
during the reunification process in Germany. Berlin was expected to become the major
economic centre of Germany. Businesses and economic activities were supposed to be
attracted by the capital. Reality was different and Berlin did not perform as expected.
The future situation of Lufthansa at BBI will be heavily dependent on the performance
of the city as a whole. If passenger demand especially business passengers increase
significantly further point-to-point connections even inter-continental routes are
possible. Nevertheless, the focus of Lufthansa is on its two hubs. Both airports are
planning new runways which have been strongly promoted by Lufthansa whereas BBI
has only been supported moderately.
For these reasons other competitors have to play major roles at BBI for the success of
the new airport. Can the second largest German airline, Air Berlin become a key player
at BBI?
Air Berlin was launched in 1978 under the US flight allowance but operated out of
Germany (Air Berlin, 2007a). With the US allowance Air Berlin was able to approach
Berlin-Tegel (West Berlin). Since the reunification Air Berlin expanded to become the
Beria P., Scholz A.
12
second largest German airline. Evolving from a low-cost-carrier approach, Air Berlin
developed its own business model, called low-cost hybrid (Air Berlin, 2007d). The
network includes elements of a low-cost-carrier, e.g. uniform fleet5, direct marketing via
the internet, short turnaround times, and elements of traditional carriers, such as
frequent flyer scheme, catering onboard, business class and seat reservations (Air
Berlin, 2007c). It can be interpreted as an innovative mixture of a hub-and-spoke and a
point-to-point strategy (Alderighi et al., 2007).
In 2007 Air Berlin started a code-share agreement with Condor and plans to extend it
by 20096. Air Berlin expects to strengthen its long-haul connections with Condor
especially with travel agents. Furthermore, coordinated flight schedules between
Condor and Air Berlin/LTU are expected to strengthen Air Berlin’s market power and
underline its long-term objective to protect the company from future impairments of
single destinations.
The flight schedules within the Air Berlin group are centrally coordinated for
efficiency reasons but Air Berlin does not offer a full hub and spoke system. Only a
modest but increasing percentage of connection flights are offered (Alderighi et al.,
2007). In case that connection flights are available, flight schedules are coordinated
within the network (e.g. Frankfurt to Seville via Palma de Mallorca). Each of the
partners within the group has historically developed its own major airport. LTU
operates mainly from Düsseldorf and Munich and Air Berlin uses Berlin-Tegel,
Düsseldorf, Nuremberg and Palma de Mallorca as its main airports (Alderighi et al.,
2007). There is no evidence that Air Berlin will bundle its activities at one single hub
neither at one of the existing nor at a “new” airport.
Assessment
A detailed study on the economic effects of BBI was conducted in 2005 by the Institute
of Transport Science at Cologne University (Baum et al., 2005). The study aims at
estimating the expansion effects of Berlin-Schoenefeld and its transformation into BBI
concerning employment, income, social product, purchasing power, location status and
fiscal revenues. Effects are calculated on both the national and regional economy.
The calculated effects of BBI can be distinguished between the following impacts
(Baum et al., 2005):
ƒ Direct impacts (jobs resulting from planning and construction of the airport and
the transport service at BBI),
ƒ Indirect impacts (jobs resulting from contractors and their expenses at the airport
during planning, construction and production of goods and services),
ƒ Spin-off impacts (jobs resulting from income generations of employees related
to construction and operation),
ƒ Purchasing power impacts of the Berlin airport system (resulting from expenses
of the airline passengers),
ƒ Site impacts of BBI to the region (e.g. cost reduction effects, increase in
productivity),
ƒ Fiscal impacts (tax increases).
Nowadays, the employment effect of Berlin Airports is around 33,600 working places
(Berlin Schoenefeld GmbH, 2007b). After opening the new airport these numbers are
expected to increase to 73,000 jobs, respectively 39,400 new jobs will be created by
BBI primarily through increasing passenger numbers and additional purchasing power
5
Air Berlin (including dba) operates mainly A320 and B 737 aircrafts (Air Berlin, 2007b). The takeover
of LTU also included A321 and A330 aircrafts.
6
The German cartel office audits the merger and has to give its approval.
Beria P., Scholz A.
13
effects (Baum et al., 2005). Furthermore, the study calculated the net income effects of
BBI compared to the current airport system with 1.4 billion € and the gross value added
with 2.0 billion € (Baum et al., 2005). Table 2 summarises the major findings.
Table 2: Effects of BBI on productivity (Baum et al. 2005).
Effect
Passengers (million)
Employees of companies at airport
Expenditures of companies at airport
(ongoing personnel and expenses and
investments) (M€)
No. of direct, indirect and spin-off jobs
created (total)
No. of direct, indirect and spin-off jobs
created (regional)
Additional tax revenues (total)
Berlin airport
system 2004
14.9
14,500
23.4
18,400
Percentage
change
+57%
+27%
1,008
1,166
+16%
30,700
34,100
+11%
25,000
28,400
14%
BBI airport 2012
+511 M€ (of which are 87 M€ for the federal state and
the local authorities of Berlin/Brandenburg)
An analysis assessing the value for investment capital, such as Cost-Benefit-Analysis,
has not been carried out. Especially in regions where unemployment rates are much
above and income is under German average, like it is in Berlin and Brandenburg7,
positive economic impacts are considered by decision makers as the most important
issue and driver for new infrastructure investments. The governing major of Berlin
underlines the importance of the airport: “Berlin’s airports are one of the main motors
of growth in Berlin’s economy” and with BBI thousands of jobs would be secured
(Berlin Schoenefeld GmbH, 2006).
5. Malpensa 2000 experience under an ex-post perspective
Actual demand
Malpensa has shown for the first ten years a very good performance. All actual traffic
values have been above ex-ante forecasts since the first year of operation. The 2006
value was already above the declared maximum capacity before the upgrade.
The passenger forecasts used in the Master Plan perfectly lied in the general trends up
to 1995, before Malpensa’s opening. The explosion of demand, starting in 1998, is not
present in the forecasts. The forecast was underestimated for the most recent years.
However, cargo forecasts by Odoni (1993) fit better. The former ones had been slightly
underestimated and more recent ones were slightly too optimistic.
Some facts were not considered ex-ante and heavily affected the coherence of the
traffic forecasts.
i)
Forecasts didn’t foresee any discontinuity in trends, applying a constant
increase in demand without any event capable to change the market. In other
words, they supposed that in the 90s the sector was mature, while it is not yet
mature today. In fact, the sector experienced a radical decrease in operational
costs and benefited from the effects of continental liberalisation. The mix of
these factors generated an “unexpected explosion” in the demand.
7
Unemployment rates of September 2007: Berlin 14.9%, Brandenburg 13.8% and German average 8.4%
(Source: Bundesagentur für Arbeit, Oktober 2007)
Gross national product per person (average between 2004 – 2006): Berlin 23,300 €, Brandenburg 19,000
€ and German average 27,300 € (Source Bertelsmann Stiftung, 2007)
Beria P., Scholz A.
14
ii)
Forecasts do not consider minor airports which had very high increases in
traffic due to LCC during these years. The largest is Bergamo Orio al Serio the
5th largest Italian airport in 2006.
iii)
The transfer to Malpensa of all Alitalia intercontinental flights was
unpredicted. The decision matured around 1995, at the moment of Malpensa
inclusion in TEN-T list.
iv)
The capacity of the airport system (and of Malpensa in particular) was
overestimated according to 1985 forecasts (more that 25 MPax capacity for a
forecast of less than 14 MPax). In fact, it turned out to be necessary for the
“unpredicted” effect of the air transport boom occurring in the second half of
the 1990s.
Some more detailed analysis of the market in Italy and in Europe can be useful to
further define the context of the Malpensa airport construction.
Figure 4: Air sector indexes. Passenger volumes, 1993=100, some data for Alitalia not available.
(Sources: CNIT, various years; ENAC, 2005; Alitalia website).
300
250
200
150
100
50
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
0
index MILAN
index GNP
index ITALY
1993=100
index ALITALIA
The comparison of passenger indexes for Milan, Italy and Alitalia, together with
GNP, evidence some phenomena. In particular, the decoupling of GNP from Italian
total traffic occurred around 1996 and should be a proof of the (positive) effect of air
market liberalisation. Moreover, the stagnating situation of Alitalia in terms of
passenger numbers shows the loss of market share of the company due to the
competition and internal problems, even if the market was rapidly expanding. The
trends clearly show the effect of Malpensa since 1999, when the Milan trend became
substantially different from the Italian trend. Since 2005 the two trends have become
similar, testifying the consolidation of the situation with the end of Milan’s “artificial”
expansion8. The abandonment of Malpensa by Alitalia and the following reorganisation
will change the trends again.
State of surface connections
The old airport terminal was linked to A8 highway only, by a 2 lanes road (SS336).
No rail access existed. The success of Malpensa airport was at least partially linked to
the surface accesses. Since the beginning the surface accessibility has been seen as a
8
The “Malpensa effect” can be roughly quantified in approx. 2.5 Mpax.
Beria P., Scholz A.
15
potential weakness and cause of constraint for the project development (Italairport,
1985; Centro Studi PIM, 1993; Odoni, 1993; Centro Studi PIM, 1998; Giannelli, 2003).
In fact, the lack of a minimal network of road and rail access to Malpensa was
potentially capable to make the whole potential of the airport ineffective. Although the
basic rail and highway accesses had soon been realised, both the percept and the actual
access times make Malpensa still a “far” infrastructure. This is also due to the fact that a
large part of the planned infrastructure is still missing or in construction.
The planning of the surface accesses was managed mainly by the regional
government through dedicated plans and agreements. The two fundamental documents
were the agreement signed in 1999 and the regional financial plan (Regione Lombardia,
1999). Both were signed after the opening of the airport. The plans deal with the
development or design of around 40 road and rail access investments, to be completed
during a period of 7-8 years. The financing is shared between Regione Lombardia and
the State. The cost estimation for the whole plan was over 5000 M€9.
Only some of the planned links were completed during the first year of airport
operations. Other accesses, despite considered as relevant in 1996 are still not operative.
The rail service is still limited to a shuttle train (2007). The roads are better integrated
than rail services and congestion is at an acceptable level (in comparison with the
overall regional situation in Milan). Many liberalised shuttle bus services connect the
airport with Milan and other main cities of the region.
The documents reporting plans and cost estimations for Malpensa’s surface access are
simple shopping lists of infrastructural investments. Only limited references can be
found about demand forecasts, simulations or cost benefit analysis for these
infrastructures.
A further problem of public access to the airport is its farness from the east-west main
line (Turin-Milan-Venice). An integration of the airport into the rail axis cannot be
carried out efficiently. Moreover, the airport is also far from the north-south line
(Milan-Naples). This means that the only non-dedicated intercity connection serving the
airport is the Switzerland to Milan axis. All other possible connections with major cities
must be added to the actual offer, with obvious problems of frequency and cost
coverage (e.g. Turin-Malpensa or Venice-Brescia-Malpensa). Actually, these
connections do not exist nor are these planned. Also the regional services suffer from
the same problem, with Malpensa quite far from the present consolidated radial lines.
Air network configuration until 2007
As described before, the 1998 network consisted of a main hub in Milan. Rome
airport maintained a role as national hub and some long haul flights for P2P traffic.
Despite the switch between the two airports, the large majority of labour force remained
in Rome, due to Unions’ pressures. Every day approximately 250 workers are moved
from their base (Rome) to their workplace (Milan)10.
We cannot say if the network adopted by Alitalia in 1998 was sustainable, because it
soon changed. From 1998 to 2007 some “adjustments” were applied:
ƒ Linate regained a strong role as P2P airport for national and European flights,
ƒ Some intercontinental flights were moved back to Rome or duplicated,
ƒ The national and European feeder network was not only duplicated to connect
both Malpensa and Fiumicino, but many cities were connected also with Milan
Linate.
9
It is worth noting that these infrastructures are not dedicated to airport accessibility, but have also a
wider regional role. Some of them are also unlinked with the airport.
10
Source: La Repubblica, 08/10/2007.
Beria P., Scholz A.
16
Moreover, the industrial partnership with KLM, that was supposed to become a
merger in the future, ended in 2000. This fact was, together with the intrinsic
weaknesses of the airport’s design and accessibility, the main threat to Malpensa’s
success.
This scheme clearly does not allow to fully benefit of the economies of scale of H&S
system. Moreover, both long haul and feeder routes in a duplicated network may have
problems to reach adequate load factors. This generated extra costs, to be added to the
high production costs of the airline, possibly driving it to bankrupt.
The motivations of this hybrid (and failing) configuration should be found in the
i)
political and labour unions pressures to maintain the full employment of
Rome base without moving workers to Milan, and
ii)
the management choice of trying to become a global carrier without the
market power, the necessary assets11 and appropriate industrial partnerships.
State of Alitalia carrier and effect of Malpensa on its wealth
It might be argued that Malpensa was the cause of the crisis of Alitalia. In a sense it is
true, since the duplication of the network revealed more and more the financial and
operational difficulties of the carrier. Without the existence of extra-costs due to the
maintenance and personnel transfer between the base of Rome and the hub of Milan,
Alitalia’s difficulties would have been “hidden” by the two-digits increase in air
demand. While many other carriers produced hundreds of millions of profits during
these booming years, Alitalia would have simply survived.
This means that the weaknesses of Alitalia were sharpened by the choices regarding
the new airport, but not strictly caused by it. Independently from the new hub and its
problems (such as unsatisfying regional accessibility and the existence of market
preferred alternatives), the carrier suffers, of a profound lack of strategy, of an
overvaluation of its possibilities, of the absence of industrial partners, of unsustainable
extra-costs due to very favourable labour conditions.
The present transition industrial plan and possible outcomes
The situation is radically changing once again and is still underway at the moment of
writing.
In 2007 the financial situation of the airline has become unsustainable12 and it was not
possible for Alitalia to keep two separate hubs anymore. The 2008 – 2010 Industrial
Plan for Alitalia (Alitalia, 2007) is characterised by the following key elements:
ƒ Stop of hub operations and focus on a P2P business network at Malpensa. A
limited number of intercontinental routes will be maintained,
ƒ All feeder routes will be closed. The majority of flights will be operated from
Rome,
ƒ Introduction of a low cost brand for leisure tourism at Malpensa (“Volareweb”),
ƒ Enforcing of cargo segment in Malpensa,
ƒ Abandon of unprofitable intercontinental routes from both airports,
ƒ Reduction of the short haul fleet.
The tentative of the plan is to stop the losses and start a consolidation phase after the
expected privatisation. The abandonment of Malpensa is the obvious consequence of
the expensive network configuration and work force management adopted during the
last ten years. The abandonment is heavily criticised by local politics and stakeholders,
mainly using the argument of employment losses.
11
12
Mainly the fleet, largely inadequate both to feeder services and to long haul quality connections.
Alitalia press release, 30/08/2007.
Beria P., Scholz A.
17
It is out of this paper aims to draw and demonstrate possible scenarios for Alitalia and
Malpensa. One issue is however clear. The downfall of the two actors, Alitalia and
Malpensa, was clearly interlinked and future strategies of one actor will directly
influence the success of the other. A hub airport is one side of a two sided system. The
weakness of the carrier will be reflected, at least for the next years, to the airport whose
Alitalia is the main customer. Other configurations may rise in the future, maybe even
better than the present one, but the transition will be difficult also for the airport, despite
the importance of its local market. It does not make any sense to say that having a hub is
better than not having it, or that the loss of the hub will jeopardise the local economy. It
is possible to imagine that the sudden disappearing of a large actor like Alitalia from
one of the more promising and attractive European markets, will free up capacity and
stimulate the supply of many direct connections from other airlines, finally benefiting
the airport and the area.
6. A parallel analysis of the two projects
The two projects present some important similarities. Without the claim to provide
suggestions to any of the actors, it seems interesting to reflect on such similarities in
order to better understand the past and the future of both schemes.
Context
The socio-economic contexts of the two airports present some similarities. In both
cases, the population catchment area is similar, around 3-4 million people. The
economic character of the two cities is however different. Berlin is a capital city with a
stagnating economy and Milan has a strong economic environment especially in the
industry and service sector without being a capital. In terms of land use, the two areas
are completely different. Milan is the head of a large and spread urban area, while
Berlin even if with low densities is one single city surrounded by a rural area.
The airport systems are similar. In both cases the initial configuration is made of three
airports, each one with a different history and a different mission. Each airport system
has been developed independently and each airport has had its own target group.
Moreover, both airport systems are “secondary systems”, trying to expand their market
and their influence.
Market
The relative position of both cities in the air market is similar. Even though Milan is
the main economic centre of Italy and Berlin is the capital and the largest German city,
both cities are not the main airport of the flag carrier and both aim to a better position.
However, the structural changes in the air market in the last ten years made the attempt
impossible. The increasing competition led former flag carriers to optimise their
structure to stay competitive. These airlines are no longer “flag-carriers”, but they are
still the largest and most powerful players in the national market.
Market drivers became key decision-making parameters for airlines when choosing
their strategic bases whereas the influence of local authorities was reduced with increase
in competition. Both airport infrastructure investments were not be driven by the main
national carrier. Lufthansa still plans with Frankfurt and Munich as its hubs and has not
planned to switch to Berlin. The decision to build Malpensa during the 1980s came
when Alitalia was still a state-planned airline and airport was politically decided by
local and central authorities with no consideration of industrial structure and market13.
13
Only at the end of the Nineties, during the short period of alliance with KLM, the focus on Malpensa
was justified by the market.
Beria P., Scholz A.
18
Airport
Also the airport side presents some interesting similarities and common issues. The
dimension of both airports is comparable and both airports are designed as modular
structures (capacity between 25 and 40 Mpax p.a.).
Both airport concessionaires had and still have a precise expansion strategy. It is
based not only on air business (i.e. expanding their capacity), but also on non-aviation
aspects, mainly real estate investments. The airports aim to use part of their highly
accessible and attractive land properties to develop large business and services centres.
An airport needs extensive investments for accessibility (usually paid by public sector)
to serve the users. Surface accessibility, joint with the air accessibility, makes these
areas very suitable for business and raises considerably the real estate prices.
Another question is the expected role of a hub airport. Malpensa aimed to became the
main Italian and Alitalia airport, despite the powerful resistances. By contrast, BBI did
not focus on hub operations, because it was recognised that it is unlikely to settle a large
carrier at BBI.
Both airports did not undergo a CBA, despite it is considered one of the main tools for
public investment assessment. Both projects were assessed using an impact analysis,
quantifying employment and added values. Trade offs and costs of the investments were
not quantified, despite the probable social feasibility of both airports.
Finally, the decision making process followed similar paths. In both cases demand
was not overestimated, despite the general occurrence in literature of demand
overestimations (Flyvbjerg et al., 2003). Malpensa was expected to start with 12 Mpax
p.a., while the 1st year traffic was already 16.5 Mpax. Forecasts for Berlin’s airports for
2006 and 2007 were also exceeded and it is likely that the 23 Mpax p.a. for 2012 will be
easily reached. Naess et al. (2005) suggest a possible explanation for traffic
underestimation. Projects with large adverse impacts are easier approved with lower
traffic than vice versa.
Despite comprehensive differences in economic parameters between the regions of
Milan and Berlin, such as welfare, unemployment rate, income structure, future
expectations, etc., it can be stated that similarities in the main parameters for decision
makers on the airport investment exist. Both airports serve a similar catchment area, are
secondary airports for the main flag carriers, are seen as airports with good future
performances, consolidate a multi-airport system into one major airport, are interesting
opportunities for secondary airlines and will be powerful competitors for the leading
European airports in attracting aspiring airlines. These similarities justify, in the opinion
of the authors, a comparison of the two airport projects with the aim of learning from
the experiences of Malpensa.
Malpensa was conceived and designed to become a major hub for Alitalia despite the
fact that the airline’s strategy was not defined during the decision-making for the
airport. The resulting bi-hub-strategy of Alitalia with Rome Fiumcino and Milan
Malpensa led to duplicated costs for Alitalia. Together with a weak financial basis, the
strategy caused enormous problems to the carrier, eventually effecting Malpensa. In the
short term, the fundamental change in Alitalia’s business strategy, e.g. dismissal of the
Milan hub or merger with another airline, will drive the airport into a crisis. Its
disadvantage towards the two other airports of Milan, which are still in use and have
high growth rates, would increase. With Malpensa being no longer a major hub which
usually attracts further traffic it is unlikely that it would be preferred by passengers for
continental or feeder traffic, also because of its unsatisfactory regional accessibility
which is the contrary with the other two airports of Milan. However, we can argue that
in the medium-long term the airport may have a new role for P2P traffic, due to its
Beria P., Scholz A.
19
potential strengths. Firstly, it is serving an economically vital area, with an increasing
demand. Secondly, it is now largely unused and there are no capacity constraints,
eventually becoming attractive for other airlines. The condition for this potential to
newly rise is, however, an aggressive tariff policy strongly driven by efficiency.
Decision-makers for BBI chose a different strategy and did not focus on a single
airline for future expectations. Lufthansa has a long term business strategy with
Frankfurt and Munich as its hubs. AirBerlin, the second largest German carrier, applies
a multi-base strategy instead of a hub-and-spoke network with Berlin being one of its
bases, neither the most important nor the largest one in the network. A comprehensive
change of this business model is unlikely, neither will Berlin become the dominant basis
for AirBerlin. Based on these two long-term strategies, BBI is planned to become the
only airport serving Berlin, but not a hub airport. BBI should become an airport with a
number of point-to-point connections by national as well as international carriers. This
tendency is expected by decision-makers to continue as Berlin is the main tourist side of
Germany and passenger demand in the catchment’s area is sufficient to feed such pointto-point connections.
The parallel analysis of Malpensa and BBI projects shows two important issues to be
considered for this kind of airport infrastructure investments. The first deals with the
importance of surface accesses. The second is the importance of consideration of market
context in a deregulated market.
Malpensa faced both problems, which are now, approx. ten years after opening,
causing serious problems to the airport. In contrary, the BBI project seems to correctly
take care of both despite the initial aims were the same.
In detail, the first key point for success is considered in the surface access of the
airport. Protests against the closure of Tempelhof and the ongoing discussion about a
better access to Malpensa show the importance of short distance and good access to the
airport from the surrounding area. For passengers it is not the total distance in
kilometres that is essential but the “perceived-distance” depending on access time,
costs, flexibility and convenience. At Malpensa the basic rail and highway accesses
were realised soon. However, the access time is in respect to the distance from the city
centre to Malpensa, very long. Therefore, it makes the airport a “far away” transport
infrastructure, especially for business travellers. To avoid these problems BBI plans to
open direct links to the German motorway, high-speed rail network and regional trains.
Looking at the market context, the case of Malpensa shows that after deregulation of
the European air market a focus of an airport on one single airline is seen as very
critical. The air transport market is still very dynamic despite its huge growth rates in
the last decade and mergers and acquisitions have influenced long-term business
strategies of airlines fundamentally. Therefore, having different carrier options reduces
risks and minimise uncertainties for the success of the airport investment. The fact that
in the case of BBI it has been conceived in a deregulated market, prevented BBI from
having a destiny similar to Malpensa’s.
Acknowledgements
The authors wish to thank Emma Zecca and Eleonora Odendahl for their kind support
as well as Carola Schulz for revising our work and for giving helpful suggestions.
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