DR. PÉTER NOVOSZÁTH CSc. He is Associate Professor at the Institute of Economics, College of Dunaújváros. H-2401 Dunaújváros, Táncsics M. u. 1/A. Pf. 152. e-mail: [email protected] He is a co-author of The Development and Operation of Airports published by Dunaprint Ltd. and author of Airport Ownership in the European Union published by Polgari Szemle. DEVELOPMENT OF REGIONAL AIRPORTS ON DANUBE-AREA On the basis of German, Austrian, Hungarian, Serbian and Romanian examples 1. Conflicts of decentralised development model of regional airports in Germany 1.1. Airports are prestige objects for regional leaders Hahn airport, found in the Hunsrueck area of south-western Germany is a growth story that many operators of regional airports in similarly rural locations would love to emulate (Heymann – Vollenkemper, 2005). This explains why a considerable number of small airports have been expanded for commercial operations over the past few years. Further projects are in the planning stage. On the demand side, strong growth in the low-cost segment and bans on night flights at major airports in urban areas have provided support. In Germany the federal states that are ultimately responsible for the planning of airport projects. It is therefore understandable that state politicians often consider the expansion of a regional airport within their remit as more important than urgent infrastructure projects of supra-regional significance. Besides, the idea of having a local airport appeals to many regional politicians partly for prestige reasons. Many structurally weak regions hope to be able to replicate the local economic upswing that came about in the Hunsrueck area with the growth of Hahn airport. There is a little chance of the Hahn success story being repeated elsewhere. It goes without saying that having a small airport close by is a key geographical advantage for businesses. Most of airports project not necessary since Germans basically have sufficient airport capacities at their disposal. For example, it takes 64 % of the population less than 60 minutes to travel to the nearest commercial airport, and 95 % need less than 90 minutes (Luftverkehr für Deutschland, 2006). 1.2. Regional airports usually lack critical mass Economies of scale are of particular significance at airports. The oversupply of regional airports and their under-utilised capacities can meet the demand for slots in nearly all regions of Germany for the foreseeable future – despite the projected growth in air traffic. Many airport facilities incur high fixed costs which cannot be covered if passenger volumes are low. Furthermore, revenues from the second financial pillar, the non-aviation activities, are negligible at airports with little traffic. According to a study done for the European Commission an airport needs a critical mass of 0,5 to 2 millions passengers per year in order for it to be able to cover the cost of its operation. Only five of the 39 regional airports in Germany even passed the 500.000-passenger threshold in 2004. The biggest of them, Padernborn-Lippstadt, recorded no more than 1,3 million. Next in line were Weeze (Niederrhein) with 800.000 passengers and Karlsruhe with 600.000. 33 of the 39 regional airports still do not even handle 100.000 passengers; 19 have less than 10,000 (ADV 2006). 2 1.3. Regional airports under-utilised capacity led to cannibalisation The emergence of additional capacity of regional airports leads to strong cannibalisation of traffic from nearby airports. One example can be seen in the plans to expand the Kassel-Calden airport. This could take passengers away from Paderborn- Lippstadt, located a mere 75 km away. With 1,3 million passengers at present, Paderborn- Lippstadt more or less reached the break-even point for covering its costs. The appearance of a new competitor would probably keep the number of passengers at this airport short of critical mass. This means that jobs would be created in Kassel-Calden to the detriment of jobs in Paderborn-Lippstadt. Neither airport would generate enough business to cover costs, so both would remain dependent on subsidies. Besides, other airports in the area could also lose traffic to Kassel-Calden, e.g. Erfurt. The uncovered costs can be catalyst for neighbouring airports to engage in a subsidy contest in order to persuade an airline to fly from their location. This competition is reflected in low landing fees that are far short of the actual costs and in grants for launching new routes (so-called marketing subsidies). While the European Commission’s decision on Charleroi airport has reduced the possibilities for such subsidy competition, considerable scope remains. 2. Some features of centralised development model of regional airports in Austria Austria has one main international airport, "Vienna International Airport", and five regional airports located in Graz, Innsbruck, Klagenfurt, Linz-Hoersching and Salzburg. Each has its own procurement authority and most are undergoing expansion plans. Development and operation of Vienna International Airport, and the five regional airports located in Salzburg, Innsbruck, Linz, Graz and Klagenfurt is divided primarily between state appointed, public airport authorities, and those assigned by the Ministry of Transport. In all cases the state retains responsibility for radio communications, meteorological services and security, customs and immigration control. Air traffic control was formerly part of the Ministry of Transport but was turned into a private firm in 1994. Investment for airport infrastructure development is of increasing importance for regional industry and tourism requirements. Salzburg is the second largest airport in Austria. Due to the relocation of Munich Airport, the catchment area of Salzburg has grown to approximately 2.5 million inhabitants. In 2005, Salzburg's traffic reached 1,695,428 passengers, an increase of 19.24 percent compared to 2004. Total movements increased by 20.2 % in same period (Statistik Austria, 2006). The shares of scheduled passengers increased by 15.03 percent from 44,47 to 59,5 percent in period 2001-2005, while non-scheduled traffic declined from 55,53 to 40.5 percent over the same time frame. The sales revenues stated in the income statement were up by €6,3 million or 17,6 % to € 42,06 million over the previous year. Including work performed by the enterprise and capitalised, the airport achieved profit on ordinary activities of €45,04 million (Salzburg Airport, 2005). The U.S. firm Greiner Corporation in Tampa, Florida prepared a Master plan with a total investment volume of € 25 million (USD 22.7 million) which planned to invest till the year 2005. The plan included the expansion of the passenger terminal and a car park. Terminal 2 was opened for charter traffic in the end of 2003. A new hall for 100% hold baggage screening was constructed together with Terminal 2 in 2003. The program includes also new ramp service facilities, which completed in 2004. The Graz Airport Authority handled a total of 860,764 passengers in 2005, which is a decline of 0.18 percent compared to 2004. Flight movements totalled 18,880 in 2005. The annual profit of Graz Airport Authority amounted to €2,814,125 (Flughafen Graz, 2005). In October 1995 the Aviation Training Center Austria GmbH started operations. This enterprise is an official training centre for pilots. Graz Airport Authority invested a total of € 62 million 3 (USD 56 million) from 2002 till 2005. Investments included the construction of a tower, a new terminal facility and a general aviation centre. Innsbruck Airport handled 724,760 passengers (1.57 percent over 2004), of which 406,124 were charter passengers (56,04 %) in 2005. Cargo increased by 8.35 percent vis-à-vis 2004. Innsbruck Airport Authority presented its "Master plan 2010" in July 1998. It includes a total investment of € 13 million (USD 11.8 million) for modernisation of the departure facility, the construction of a car park and upgrading and modernisation of the terminal building including the 100% hold baggage screening area. The Linz Airport had a total of 13,955 scheduled movements in 2005, a decline of 6.49 percent. 32,548 tons of cargo were handled, representing an increase of 20.5 percent vis- à-vis 2004. A total of 689,168 passengers were handled a decline of 2.67 percent over 2004. The annual profit of Linz Airport amounted to €2,5 million (Blue Danube Airport Linz, 2005). Flughafen Linz Authority was built two taxiways to the runway by 2005 and an additional passenger terminal by 2007. Total investment volume was amount to € 10.9 million (USD 9.9 million). The Carinthia Airport Authority handled a total of 520,369 passengers in 2005, an increase of 7.95 percent compared to 2004. Total movements increased by 2.51 percent to 9,063 in 2005. Cargo business declined by 6.1 percent. The shares of scheduled passengers increased by 11.03 percent from 82,56 to 93,59 percent in period 2001-2005, while non- scheduled traffic declined from 17,44 to 6.41 percent over the same time frame. The annual profit of Carinthia Airport Authority amounted to €586 thousand (Klagenfurt Airport, 2005). The Carinthia Airport Authority invested a total of € 23.4 million (USD 21.3 million) by 2004. Investments included the renovation of the runway and the extension of the aprons, the expansion of the approach system to category III and the construction of a car park. 3. Far behind from competitors - regional airports in Hungary Despite of regional airports economic role is known as the catalytic impact, arising from the effect that air service accessibility can have on the region served by the airport, development of regional airport has run very lubberly. In Hungary neither regional airport would generate enough revenues yet to reach the break-even point for covering its costs.