Budding in the CEE

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Budapest Airport (BUD) is operated by Budapest Airport Zrt. Through its BUD Future project, Budapest Airport aims to be the aviation hub of the CEE region. Jo Murray was there and saw just how much scope this location has to offer

The site is vast. Equal in size to London Heathrow, BUD sits on a huge parcel of land conveniently located 16km outside the city. And yet, for some purposes, this airport – with a colourful history – is almost a well-kept secret. At peak times it is an exaggeration to say that 25% of runway capacity is utilised. But there is very much a sentiment that momentum building at this airport as a consequence of both significant investment in facilities and also burgeoning interest from airlines, maintenance providers, cargo handlers and other stakeholders is helping to fuel this airport’s growth. There is definitely a sentiment of community.

But let us go back to 1938 when the site for this airport was selected to serve as a military airfield. An airport blueprint was drawn up in 1939 and then came WWII and BUD was bombed by the Luftwaffe, the Soviet military machine and also the allies – a triple whammy. In fact building work today still has to consider the effects of sustained bombing over several years.

By 1950, BUD opened its doors as a commercial airport – implementing the plans drawn up in 1939, including a German Bauhaus-style terminal building which today is listed. This curious “retro” building now serves as Terminal 1 – the low cost carrier terminal which plays host to 2 million passengers a year.

Of course in 1950, Hungary operated under Soviet rule which meant state ownership. Colloquially known as the “Aeroflot model”, the modus operandi was to combine airline, airline, ground handling, maintenance and other services into one huge limping state enterprise with burgeoning staff numbers and low levels of productivity accompanied by high costs. Hungary did, in fact, depart from this model before the Soviet bloc came to an end but, nevertheless, the model took its toll on the extent to which the airport could develop commercially.

By the early 1980s, Terminal 2 had been built and Malev – the state airline – was pushing through 2.2 million passengers a year. In 1998 – with communism well behind it – BUD undertook the construction of Terminal 2B which could accommodate 4 million passengers. By the turn of the millennium, the low cost carrier boom had arrived in Hungary and Wizzair set up home at the airport.

By this stage, the Hungarian Government had decided to privatise the airport and sold the operating rights at the airport – not the land – to BAA under a 75-year lease. When BAA was sold to Ferrovial, the Spanish group decided to sell certain foreign assets and this included BUD. By June 2007, HOCHTIEF AirPort and a band of investors had acquired the airport. At the time HOCHTIEF AirPort bought a 37.5% interest and the Hungarian state retained 25%; that 25% is now being transferred to HOCHTIEF AirPort too. Next on the agenda is the likely sale of HOCHTIEF AirPort to an airport management group as operating airports is not core to HOCHTIEF’s activities – but that situation is yet to be revealed.

Today, the airport follows a modern outsourcing model which, in part, has allowed the airport to reduce the number of staff by half and achieve massive efficiencies. For example, both facilities management and refuelling functions are carried out by BUD-owned companies, not directly by the airport. This means that facilities management and refuelling are core activities to the companies that conduct them – they are not bolt-on functions performed as part bundled services delivered by a monolithic state enterprise.

The airport infrastructure itself is impressive. It boasts two parallel runways (Runway 1 (13R-31L) is 3,010m; and Runway 2 (13L-31R) is 3,707m) with the terminal buildings located roughly between them. The runways can accommodate any category aircraft, although it is not envisaged in the foreseeable future that the A380 will visit the airport as future routes into the airport are unlikely to be A380 enabled.

MRO facilities come from two directions and accommodate the entire narrow-body range: Lufthansa Technik has been a tenant for 11 years and has just signed up for another 10: while Aeroplex is also a long-term tenant being 10% owned by BUD. A further Lufthansa Technik maintenance hangar is also planned.

Despite boasting an excellent winter operations record, complacency has no place at BUD as they will invest almost €2 million this year in upgrading some their winter fleet with the acquisition of five  sweepers and one new blower, making the overall snow clearing performance even better than it is today.

An engine test stand is expected to be complete by 2012 – that contract is out for tender at present – and an apron extension has already been completed. This new pavement structure runs in front of  the SkyCourt – a new centrally located building which was formally opened on March 27, 2011, and links the existing Terminals 2A and 2B. The contemporary glass structure offers an impressive view of the apron and provides passengers with a fabulous view of the airfield. It is a superb 28,000m2 piece of architecture which came in at a cost of €261 million, including a new baggage handling system.

Terminal 2 is expected to be developed further with one, or maybe two, new piers carrying eight or nine passenger boarding bridges – but those investments are very much at the planning stage and will be performed as passenger traffic demands new infrastructure investment.

Perhaps the most exciting development for the airfield is BUD’s €30 million investment in its new Cargo City; phase 1 of which was opened in September 2011. Celebi Cargo and Malev have signed contracts to take up the square footage offered by the first building; now talks are underway for the occupancy of the second building. There is also 5,000m2 of office space.

The cargo facility holds plenty of promise for the airport. In terms of road logistics it is situated very close to the Budapest ring road and it is located within a trucking radius of numerous eastern, central and western European cities. There is the capability to develop the airport to accommodate up to 2 million tonnes of cargo per annum – but BUD is a long way from this today.

In fact, today, BUD’s cargo figures are more like 80,000 tonnes but the airport management can see no reason why this should not be doubled or even trebled within the foreseeable future.

Essentially, BUD’s proposition to the airline and third-party services community is that it offers an abundance of capacity at a very strategic location between east and west. Airport management say it is a question of when it will be tapped; not if.