Boutique Hub

Dusseldorf International is thriving on a mix of network airlines, hybrids, leisure carriers and LCCs

Management and shareholders of Dusseldorf International no doubt felt a sense of satisfaction when analyzing traffic figures for 2009, which showed a mere 2% decline in passenger throughput to 17.8 million, with new traffic records set in July, August, October, November and December.

This is particularly impressive in comparison to the 5.9% decline experienced by European airports in aggregate last year, according to ACI Europe, and to a 4.8% average decrease for German airports. Data from the Assn. of German Airports show that DUS also outperformed its larger rivals Frankfurt and Munich, which saw their passenger traffic fall 4.9% and 5.4% respectively. Smaller airports such as Hamburg, Cologne/Bonn and Stuttgart also experienced larger passenger losses—4.7%, 5.8% and 10.1% respectively. Dusseldorf is now Europe’s 20th largest airport in terms of passenger numbers, ahead of Milan Malpensa and Brussels.

In the 2010 summer schedule, some 60 airlines operate at DUS offering direct flights to 170 destinations worldwide, including 120 in Europe and 15 within Germany. Largest airline in terms of movements is Lufthansa with 878 weekly flights, while Air Berlin takes the lead in terms of passengers. AB (including LTU) carried 6.4 million to/from DUS last year. LH (including Eurowings, CityLine and its Stuttgart-based partner ContactAir but excluding affiliates such as Swiss and Austrian) uplifted 4.4 million. Turkish Airlines was DUS’s largest foreign carrier with 430,127 passengers. The busiest route was Munich with 1.5 million passengers, followed by Berlin (905,785), Palma de Mallorca (809,984), London (723,333) and Zurich (665,474).

One of five slot-coordinated airports in Germany, DUS has two main parallel runways; 05R/23L is 3,000 m. (9,842 ft.) long and 05L/23R extends 2,700 m. (8,858 ft.). Crosswind runway 15/33 is closed temporarily owing to an obstacle. The airport is capable of handling up to 57 movements an hour, although its operating permit caps the number at 43/45, because of environmental restrictions as the airport is just 9 km./5.6 mi. from the city center. There is a night curfew and operating times are between 6 a.m. and 10 p.m. for takeoffs and 6 a.m. and 11 p.m. for landings. Airlines with a maintenance base at the airport (Air Berlin, Lufthansa, TUI and Condor) are permitted to land up to midnight.

In line with its under-one-roof concept, DUS has a single, architecturally attractive and user-friendly passenger terminal with three piers: A dedicated LH facility that also is used by its Star Alliance partners and a Schengen finger and non-Schengen pier that are used by all other operators. Annual passenger capacity is 22 million. There are 27 airbridges spread over the three piers plus 85 remote aircraft parking stands. It has 142 check-in counters that run on CUTE and 15 CUSS kiosks (six in the terminal building, eight in different car parks and one at a BMW dealership in Dusseldorf) that are operated and maintained by SITA Airport IT.  In 2005 DUS became the first airport to outsource its IT fully to SITA through a JV in which SITA holds 70% and Dusseldorf Flughafen GmbH the remainder.

Prior to 1997, ownership of the airport was split 50/50 between the state of North Rhine-Westphalia and the city of Dusseldorf. Following a devastating fire at the airport that year in which 17 people died, North Rhine-Westphalia sold its half-stake to Airport Partners GmbH, a consortium of Hochtief (60%) and Dublin Airport Authority (40%). The city continues to hold the remaining 50%. Last year DUS posted a profit of €38.1 million ($51.4 million) on revenue of €393.3 million, a deterioration of 1.8% and 5.9% respectively compared to 2008. Aviation revenue fell 6% to €260.7 million and nonaviation revenue slipped 5.7% to €132.7 million.

Larger Than Paris

A number of factors contributed to the airport’s successfully weathering the downturn, including its large catchment area, its strategy to become a hub and its diverse mix of network airlines, hybrids, leisure carriers and some LCCs, including two based hub carriers (LH and AB).

“The main strength of Dusseldorf Airport is its catchment area,” VP-Marketing & Strategy Lutz Honerla asserts. “There are some 18.3 million inhabitants living in a radius of 100 km. around the airport. This makes us comparable to the metropolitan areas of London, which has a population of around 21 million, and Paris with 18 million. We have by far the largest catchment area in Germany; only 9.8 million people live in the 100-km. zone around Frankfurt Airport and 6.3 million around Munich Airport.”

Despite its size, however, the region does not have the same cachet or market recognition as Frankfurt, Munich or Berlin. “No, it does not,” Honerla readily acknowledges. “Carriers in China or the Middle East, for instance, generally believe they have to fly into the largest airport or into the capital.” To try to counter the perception, “We promote the Rhine-Ruhr area,” which he admits is “not that well known abroad either.” A PowerPoint presentation packed with data from Eurostat and Germany’s Federal Statistical Office reveals that the region is in fact Europe’s third-largest and Germany’s largest economic region.

“The Dusseldorf area is the backbone of the German economy,” Honerla says. “GDP is almost triple the size of Berlin’s and double that of Munich.” More than a third of the 30 companies that comprise the blue chip DAX are headquartered in North Rhine-Westphalia, among them Lufthansa, as well as some 748,000 SMEs. For Honerla, the latter are “more important clients than the very large DAX [companies] because they are very export-oriented and they travel a lot.”

DUS’s catchment area reaches slightly into Belgium and quite extensively into the southeast of the Netherlands. “We are doing intensive marketing activities in this part of the Netherlands and we are extremely successful with it,” Honera claims, citing the airport’s excellent rail (it has two railway stations) and road connectivity, competitive car park prices and wide range of Mediterranean sun destinations as key reasons “why [Dutch travelers] prefer to go to DUS instead of their home airport Schiphol.” The number of people from the Netherlands who departed from DUS increased 10% to 1.2 million last year and doubled within four years.

Fat Market

Up to 40% of DUS passengers are traveling on business. “For airlines, we are what I call a ‘fat’ market. We have a stable and high amount of business traffic,” Honerla says, pointing out that “Emirates operates a twice-daily 777 in a traditional three-class configuration and last year opened an exclusive 600-sq.-m. first class lounge. Lufthansa likewise uses three-class widebodies on its intercontinental flights from DUS and has a dedicated first class and business class lounge here.”

Lufthansa launched its Private Air all-business-class intercontinental services on a BBJ and an A319CJ in March 2005 from Dusseldorf to capture some of the premium traffic at Germany’s largest O&D market without compromising its long-haul services at its Frankfurt and Munich hubs. But in 2008 it changed strategies and based three A340-300s here (subsequently replaced with new A330s), operating scheduled flights to Newark, Toronto, Chicago O’Hare (in summer) and Miami (in winter). It now lists DUS as one of its three hubs in Germany.

“The question is always where is the market, where are the passengers, where is the competition and where do you have to be to further improve your product,” LH VP-Direct Services Oliver Wagner tells ATW. He acknowledges that growing competition, especially from AB following its acquisition of LTU and shift into more of a scheduled airline focused on business traffic, “of course” played a significant role in LH’s new approach at DUS. “Lufthansa has always been present at Dusseldorf, since the launch of the new Lufthansa in 1955, but the strategic focus was on short- and medium-haul. The last couple of years, it is also on long-haul.”

The change in strategy coincided with a similar change by the airport, which had built a successful and growing business on point-to-point services. Passenger throughput rose from 14.8 million in 2002, its first year of operations in the fully renovated terminal, to 17.8 million in 2007. “When we rebuilt the airport, hub operations were not a consideration,” Honerla explains, noting that the change of strategy was motivated by two main ideas: To make better use of the airport’s limited slot capacity by attracting more widebody services and to add more long-haul destinations to fulfill its role as public infrastructure provider.

“We are still half-owned by public authorities and we want to connect this strong economic region to other economic regions worldwide, mainly in the US, China, India and Japan. Dusseldorf has the largest Japanese community in Europe,” he says. On average, it handles 12 daily long-haul departures to some 24 destinations, a mix of business and leisure-oriented routes. “Overall, we’re quite well covered in the US and Canada [with 11 nonstop routes and a twice-weekly AB service to San Francisco coming online May 12] but we’re not so strong in the East. We hope to have nonstop flights to Delhi, Mumbai, Beijing, Shanghai and Tokyo in the not-too-distant future,” he says.

In addition to talking to LH and AB, DUS is courting Air China, Hainan Airlines, Jet Airways, Kingfisher, ANA and JAL. “The Lufthansa board had encouraged us to try to attract more Star Alliance members, because Lufthansa can serve as feeder/de-feeder airline,” he adds. 

Easy Transfer

Lufthansa intends to increase its long-haul presence at DUS, Wagner affirms, adding, “The question is when.” The carrier is growing its medium-haul seat capacity 6% this summer schedule compared with the year-ago period and adding six new destinations in Europe, but no long-haul expansion is foreseen. “The rule of thumb is that you need between 7 and 10 [widebody] aircraft to run a really efficient intercontinental hub. So certainly the goal is not to stay with three aircraft but to grow further,” he says. “The results from a commercial point of view, also of course due to the crisis, are not where we expected them to be. We need a bit longer to really achieve sustainable profits.” 

From an operating point of view, LH is pleased with Dusseldorf’s performance. “Although it’s a big airport, the third-largest in Germany, it is still easy to reach and easy to use. It is an airport with short walks. We achieve extremely short transfer times,” Wagner says, pointing out that a minimum connect of 35 min. was one of the demands to the airport operator before committing to the “three-digit-million-dollar” investment to set up a hub at DUS. “We have [a MCT of] 45-60 minutes in Frankfurt. They promised us 35 minutes. Sometimes we make it in 30 minutes.”

DUS invested €200 million between 2007 and 2009 in its new transfer function, including an airside passenger walkway between Piers B and C, a new transfer facility in Pier A, a premium check-in area for LH and a new maintenance hangar for AB. “We had to convince our main airlines that it is possible to have a hub at DUS, that we have the infrastructure, that we can offer more than the others,” Honerla concludes. “We are a boutique hub; we’re smaller [than FRA or MUC], but that is our advantage.”