FRA Emerging As New World Power

Building on a legacy of excellence, FCS is building new friends for Frankfurt air cargo in the 21st century. But whether in the air or on the ground, it’s all one big airplane at Frankfurt.

     Often the question is raised:
     “What has our local airport done lately?”
     From our vantage point, Frankfurt, Germany has emerged as the aerial gateway epicentre to Europe and the world for the 21st century.
     Change and growth have come fast and furious.
     Right now Fraport, the Frankfurt International Airport operator is involved with major construction projects to handle ever increasing volumes of air cargo and passenger business at home, while at the same time expert managers from the airport operator are fanning out around the globe with ambitious initiatives to spread hard-won German expertise and airport know-how to other airports around the world.
     Fraport has acquired Frankfurt Hahn, an ex-U.S. Air Force base.
     From that association Hahn has emerged, as landing strip to white-hot, discount carrier Ryanair and a low cost passenger hub on the continent is born and leading the way to tomorrow with plenty of cargo action to boot.
     Fraport is managing several airports in Europe, one in Latin America and will continue to offer all kinds of airport related know how and services abroad.
     To be sure this expansion has not always been a bed of roses.
     Fraport cannot again invest big money that has to be written off, as it did in Manila.
     But long term when you speak to top management here, the target is to produce about 50 percent of all revenues outside FRA.
     A big part of future expansion plans can be witnessed in Fraport’s Jacksonville, Florida operation.
     The local airport authority in that Florida U.S. city, asked for help.
     Fraport of course was all too happy to provide assistance.

Overlooking the busy ramp in front of terminal one at FRA is the office of Peter Schmitz, who once upon a time served as a logistics specialist with the German Air Force. With Herr Schmitz is Winfried Hartmann, managing director of Fraport Cargo Services GmbH. These executives see their success at FRA as blueprint for a growing number of airports served by Fraport worldwide.

     Fraport Executive Vice President Aviation Ground Services & Logistics, Peter Schmitz relates how the Jacksonville involvement is progressing:
     “We sent people to Florida to design and operate a baggage handling system that serves some 5 million passengers yearly at JAX:
     “Jacksonville turned out to be a challenging and interesting showcase to demonstrate our abilities in North America.
     “For the time being we work for the JaxPort authority exclusively.
     “But as we gain better understanding of how ground services are operated in America, (the requirement is quite different from Europe) we will offer our skills to other airlines and gateways as well.”
     The downward pressure to save money has not relented since 911 but in fact has heightened as the cost of fuel continues to rise.
     By now one is aware that world streams of aviation, and especially cargo following foreign trade, have shifted to the Far East.
     As example we can see at Le Bourget in Paris that overcapacity is opening the cost/revenue scissor even wider.
     It can be said that the growth of cargo volume is over proportional at FRA s well.
     We imagine ebullient airline reps rushing into Fraport Managing Director Cargo Services, Winfried Hartmann’s office shouting:
     “Yippee – I’ll soon have five freighters here for you instead of the three,” and being met with a smile and a quizzical glance as the next sentence follows.
     “What discount can we expect now?”
     Frankfurt, while welcoming everyone is feeling the pinch in terms of slots, a squeeze that will be lessened when FRA finally builds an additional runway.
     But as mentioned, expansion and new ideas have not always worked as planned although the search for new revenue streams continues.
     Tradeport Frankfurt as example had a promising start and seemed to take off but flattened out.
     Maybe Tradeport logistics activities rubbed a bit too close to the domains of the strong German forwarding industry.
     But lessons were learned including that forwarders with the strongest margins in the airfreight chain comprise a powerful not to be intruded upon force in the air cargo business.
     The positives here are an entrepreneurial spirit willing to explore new territory.
     Nothing ventured, nothing gained.
     But where does Fraport move in the future?
     Ground handling fees offer little room for growth because the reality is, return will not exceed 5%, max 7% of the total cost.
     “There is more business to be had from around the world especially as the culture of our service quality is better understood,” Mr. Hartmann said.
     One possible change heard in whispers right now is that Fraport Cargo Services may find a European or global partnership to offer a broader menu of services.
     But in any case these well-versed executives are eager, excited, animated and thinking about tomorrow.

Fraport Learns A New Dance

The Graf Zeppelin on its moveable anchor at Frankfurt just before both the hangars and the Graf were broken up by government order on May 6, 1940.

     Frankfurt am Main was the venue where German civil aviation developed faster than in other regions of the country.
     Here was the docking base for the giant Zeppelin Airships located southwest of the city, and the old airport as well.
     Both sat on the site of the current international fair grounds, “The Messe Frankfurt.”
     Back in the early 1930’s a pair of zeppelin hangars and a grand passenger terminal transformed the landscape into a new European landmark for air travellers, who flocked to the field in some cases just to dine around a reflecting pool and watch the air show.
     Deutsche Lufthansa was here at the beginning too ensconced in hangars and buildings that were owned and managed by the airport company,
     Flughafen Frankfurt Main AG which in turn was entirely controlled by civil institutions.
     Consequently all airport employees were public servants – a fact that played a major role in airport development post World War II.
     Although Frankfurt operated what was generally referred to as a “soft” monopoly, “The United States of Europe” the European Union or EU, overruled the FRA scheme.
     The EU said member countries would dance to a new tune.
     European Commission also said that there would no longer be monopolies in ground handling at major European airports.
     Airports just like the rest of Europe would open up for competition under the new EU ground handling directives as of 1998.
     Global as well as local third party ground handling providers blitzed the market looking for new business.
     Competition grew as seemingly endless double-digit growth rates in tonnage were recorded at FRA.
     But then 911 caused a big drop in business and rate slashing became the norm here.
     The fallout from all of this activity was that the highly trained and respected professional workforce at FRA, who had held employment almost as a birthright at FRA since its start-up some sixty years ago, were caught in a big squeeze in the new Europe as losses mounted all around.
     The challenge was how to keep the workforce and make its business profitable.
     After about 18 months of negotiating with the airport unions an agreement was reached to out-source the entire activity and a subsidiary, Fraport Cargo Services GmbH was formed on July 1, 2004.
     The service provider today is a 100 percent subsidiary of Fraport AG, a major tenant of facilities in “Cargo City South.”
     Elsewhere at the gateway, Lufthansa Cargo busy with its own freight, manages to handle about 9 percent of the third-party cargo throughput at FRA.
     Somehow the integrators coming to FRA must be considered like exotic birds.
     FedEx moves the second largest amount of cargo through FRA after Lufthansa.
     Third in volume is Korean but moving up fast are Emirates, Asiana, Cathay Pacific amongst the top ten leaders at FRA.
     Meanwhile competitors on the ground for Fraport Cargo Services include WFS, Globe, Swissport, Aviapartners and others.
     Remember LUG that was formed during the 1960’s to relieve import problems?
     Well they are still here too providing cargo handling.
     LUG, which may be the best name ever invented in any language for an air cargo company, is expanding its cargo      warehouse and handling center at Frankfurt Airport's CargoCity South by about 2,000 square meters of office space.
     The four-story 6,000 square-meter building will grow a new wing and, simultaneously, a fifth story over the expanded building.
     Costs are also mostly unchanged although impact from the IT-systems has lessened the blow a bit.
     Warehouse and ramp shift-regulated jobs and the share of labor on the cost-side of all providers are extremely high.
     Fraport has learned the new dance sometimes the hard way.
     “We have experienced quite an encouraging year,” Managing Director Winfried Hartmann said.
     “FCS continues to offer premium service.
     “We serve the same customers as before the outsourcing.
     “Our objective is to serve 50 percent of the freehand volume, some 18 percent of the entire tonnage at FRA.”
(Günter Mosler)