Serving one million passengers a month, the capital’s international airport is a constantly moving and changing asset, and a challenge to manage.
Managing an office building with thousands of workers and visitors every month is a challenge, but imagine catering to one million people in a month.
Budapest Ferenc Liszt International Airport recently celebrated the milestone of doing just that as the airport exceeded the threshold for the first time in its history, according to operator Budapest Airport Zrt.
“Last year we celebrated our nine millionth passenger in a year and now in July we have handled more than a million passengers in the space of a single month,” said Jost Lammers, CEO of Budapest Airport. “We are doing everything we can to maintain Budapest Airport as the most dynamically growing travel destination in the CEE region, and to ensure that business and leisure travelers, foreign investors and business partners will look upon Budapest and Hungary as an attractive location.”
The 100% privately owned Budapest Airport Zrt. is tasked with managing, operating and developing the international airport, reporting to the four companies that act as shareholders. In addition to running the airport itself, this includes property and asset managing real estate projects at and surrounding the airport, including cargo and logistics facilities, business park integrator buildings and eventually a proposed airport hotel. This is essentially the infrastructure that surrounds a modern European airport occupied by companies that rely on it to maintain their business role. In addition, the company also acts, to all intents and purposes, as a developer by providing specialist logistics and office space in addition to upgrading the airport buildings in order to improve efficiency. If all that isn’t enough, the company has the added responsibility for the air transport infrastructure and the promotion of Hungary as a flight destination.
Budapest Airport Zrt. owns the two terminals and surrounding land that totals almost 1,500 hectares. “We have been running the airport since 2007. This is not only property development, but the main activity is obviously operating the airport and providing the infrastructure for our passengers,” said René Droese, property director.
“At the moment there are no plans to re-open Terminal 1 for passenger traffic and there is therefore no outlay for maintenance and security. It is used as an event location with companies renting the terminal, but this is not sustainable for the long-term future as it is not revenue generating, so we are thinking about what we can do with the building and how we can best utilize the terminal. It would not be economic to re-open the terminal to passengers as Terminal 2 has enough capacity and this would also double costs for security. Terminal 1 is not really suited to be a passenger terminal as it is a heritage building, and therefore it is a long and difficult procedure to make modifications that requires consultations with architects and the authorities. So in terms of operational procedures, Terminal 1 is not state-of-the-art,” he added.
There is an option to construct a cargo facility next to Terminal 1 with direct access to the airport road infrastructure. However, cargo represents an uncertain market sector and is difficult to forecast, as long-term trends cannot be predicted in the same way as passenger numbers.
Budapest Airport is definitely planning to extend Terminal 2, however, with a “pier”, a structure providing additional boarding bridges to aircraft; the project is currently at the design and permitting stage. With tendering and construction contracts being concluded, the operator plans to open the pier in 2018. It will provide more capacity for the bigger passenger aircraft (configured with three rows of seating) that arrive from, for example, China and the Emirates, and long haul flights from Canada.
In the Airport Business Park between Terminal 1 and Terminal 2 there is 500,000 sqm available for greenfield development with access to both terminals and the main access road to the airport. This provides the potential for 100,000-150,000 sqm of logistics space. The first project has been completed with a development for DHL Global Forwarding. “We have concluded a 15- year lease in which it decided to bring two units under one roof. In the project we were in competition with more traditional logistics developers,” said Droese.
With regard to logistics development, Budapest Airport will design and construct tailor-made “integrator buildings” for TNT (8,000 sqm) and DHL Express (9,000 sqm) in a facility next to Terminal 1. Both facilities are due to be delivered in the summer of 2017. The operator has also recently handed-over a 2,000 sqm hangar facility to Wizz Air. “We have created long-term facilities based on long-term leases for companies working at the airport,” commented Droese.
Budapest Airport Zrt. is developing a hotel at Terminal 2 and a contract with an international operator has been signed. The development strategy of Budapest Airport is to sign up with a third party that has the expertise to operate a hotel and fill a vacuum, as currently there are no bedroom facilities at the international airport. The target opening is summer 2017.
With regard to the transport infrastructure there has been talk of an extension of the metro line or a railway connection directly to Terminal 2, but thus far there has been no feasibility study and therefore the idea is at the preparation stage only. Such a project is not regarded as easy to execute, as there are many stakeholders that need to be coordinated and a need for funds.
Given the additional risks with regard to infrastructure, yields for buildings in the airport area tend to be higher than, for example, an office building in the city center. An airport facility is seen as a lot more complicated, and it is difficult to lease airport offices, as tenants tend to be reluctant to commute there.