A Renaissance hub

With the opening of the new Malpensa airport, northern Italy may at last achieve its ambition of challenging northern Europe's major hubs.

On the face of it, the transfer of international flights to Milan's shiny new airport at Malpensa should hardly have caused much of a fuss. Yet fuss there has certainly been.

The plan looked straightforward enough. Malpensa, previously an out-of town airport catering largely for charter traffic some way north west of the city, would open its brand new terminal and runway capacity in early October. A couple of weeks later the bulk of international services would then move from Milan's overburdened city airport of Linate, leaving it to serve only the main domestic trunk route down to Rome.

Grumbles were perhaps to be expected from airlines having to make the hike out to Malpensa, some 48km (30 miles) outside the city, but the controversy has gone deeper than that.

From the start, accusations flew over a hometown decision designed to favour Alitalia. The European Commission, already keeping an eagle-eyed watch on the Italian flag carrier in the wake of last year's injection of state aid, weighed into the argument. Just weeks before the official transfer to Malpensa on 25 October, the Italian Government was forced to come up with a last minute compromise.

But then there was always more riding on Malpensa than a shift of capacity. For Milan's airport operator SEA, Alitalia and the nation at large, Malpensa represents not just an airport expansion but Italy's best real chance of creating an intercontinental hub to rival those of northern Europe.

SEA has not been shy of pressing home the point, nor of questioning the motives of Malpensa's "enemies" - seen as the European hubs and airlines that stand to lose if it succeeds. "This airport represents a fundamental change in traffic flows in Europe. That is the reason why some European companies have been against Malpensa," says Claudio Mazzesi, SEA's director for corporate communications and image.

He has a point. The bulk of northern Italy's long-haul passenger and cargo traffic has for years been making its way across the border to pick up long-haul flights from major European hubs such as London, Madrid and Frankfurt. Now northern Italy wants its traffic back.

In the 1970s there had been plans to expand Malpensa, but only in 1985 did the project come alive with a commitment from the government to include the airport as a cornerstone of its transport strategy.

Perhaps most astonishing is the fact that northern Italy has no major hub. Milan may only be a medium-sized city of 1.5 million people, but the surrounding urban sprawl takes the numbers up to 6 million. Broaden the catchment area to some 250km around the city and there are some 24 million.

That alone, claims SEA, puts the region alongside London and Paris as the third major metropolitan area in Europe. By rights, argues SEA, its hub should be at least on the same scale as that of Amsterdam or even Frankfurt.

The region also has the economic strength. It accounts for at least half of the Italian economy and makes up the bulk of its industrial output. Rome may hold the reins of power, but it is Milan and its stock market that holds the wealth.

Even without a serious intercontinental hub to its name, northern Italy already accounts for nearly three quarters of the country's air transport industry. Milan makes up more than one-third. Alongside the tourists, flocking to the region's cultural gems and ski resorts, more than half of tickets are going to the lucrative business traveller.

But while demand has been plentiful - with passenger demand still racing along at close to 8% - the air transport infrastructure has not.

Linate has struggled to cope. With its single main runway and modest terminal space, the airport was originally designed to handle 6 million passengers. This year it is on course to take 15 million. "We have a market which is pushing but we haven't had the capacity," says Mazzesi.

Malpensa, with two parallel runways and a massive new terminal (with two satellites, 44 piers and 66 gates), will effectively add the same capacity again to the Milan system. With further building work planned, including a possible third satellite and use of the original north terminal, the airport's passenger capacity should top the 20 million mark within the next five years.

SEA also suggest that when Malpensa has had time to establish itself, there is no reason why Linate should not re-emerge as a regional European hub. "It could be reinstated once Malpensa is on its feet," says Mazzesi, pointing the experience in Paris where Orly was revived after giving time for Charles de Gaulle to take hold. The compromise worked out with the EC will anyway mean that its rundown is less sudden than planned.

If all goes according to plan, the Milan system would indeed be pushing its way towards the top of the European league within the next decade, with annual passenger throughput above 40 million.

So far the omens look good. Milan has already leapfrogged Zurich in the first half of this year to become Europe's seventh largest passenger system.

Some 16 new airlines signed up to fly into Milan over the summer thanks to the newly available slots at Malpensa. Although the tally of new entrants is largely made up of European low-cost and regional carriers, there are a couple of longer haul names including Northwest Airlines. SEA believes that other intercontinental services will follow.

The cause may be helped further by some loosening up of the bilateral air agreements which have occasionally added to the constraints on flying to Milan. The Italian Government has already begun negotiations towards a US open skies pact and SEA believes that other bilateral talks will follow, allowing Milan to fill in some obvious gaps.

A mere 1% of the traffic through Linate comes from beyond Europe, with a handful of services to Africa and the Middle East. Even adding in Malpensa's existing service to Asia and America only brings the total for the Milan system to 13%.

But SEA's ambitions for Malpensa are not simply about increasing the spread of destinations. The real goal lies in building new connecting opportunities that Linate could not offer but for which Malpensa was designed.

"A passenger making a transfer at Malpensa won't have to walk more than 200m [650ft] for an intercontinental flight and just cross the terminal to make intra-European connections," says Mazzesi. He adds that the goal is to achieve the 40-50% of connecting passengers achieved by other European hubs.

Until now, Italy's main focus on hub building has centred around Rome, home to the country's politicians and its flag carrier.

But while the strategy may have made good political sense, it was weak on geography. Italy's capital is close to 500km from Milan - much the same distance as Frankfurt - and plainly in the wrong direction for many key long-haul destinations. By contrast, hubs such as Zurich and Munich are a short hop north.

SEA estimates that around half of passengers travelling out of Milan to Frankfurt, Amsterdam and Madrid are then using those hubs to connect onto other services. Given that each of those routes has close to 500,000 passengers a year, the numbers are hard to ignore. On the major Milan-London route, with over 1.3 million passengers a year, SEA estimates that some 30% are also connecting.

Although the Rome shuttle dwarfs other routes with close to 3 million passengers a year, the percentage currently flying to the capital to connect is at only 16%. The implication is that at least twice as many northern Italians travelling through Milan are connecting in hubs other than Rome.

Alitalia itself has already done the mathematics. Now back in profit and reasserting itself after years in the wilderness, the carrier has made no secret of the fact that Malpensa will be at the centre of its new strategy. It was no accident that the date set for implementing its alliance strategy with KLM coincided with the opening of the new airport. That alliance brings with it access to other partners, including Northwest and Braathens, both among the recent wave of new entrants at Malpensa.

Alitalia and SEA continue to tread carefully around the sensibilities of Rome. Both have gone out of their way to stress that the Italian capital remains a powerful destination in its own right. Yet SEA discreetly admits that there are some intercontinental carriers which may now chose to switch to Milan.

Mazzesi argues, however, that on present trends there should be enough growth for all. He points out that in Italy, air transport is underused. Italians now take some 65 million trips a year, only a little over one trip per head of population. The multiple in markets such as Germany or France is two or three times that number. "We haven't had the infrastructure," he says, adding that Malpensa may help to raise everyone's game.

The northern Italian regional airports ringing Milan are ready-made to feed into the new airport. Nice, Cannes and Monaco too are just across the French border, while SEA believes there could be options to open connections to the underdeveloped south.

There is another business in SEA's sights, which looks an even safer bet - cargo. The Milan catchment area produces accounts for some $300 billion of import-export business and produces some 600,000t of freight a year. Nearly 70% of that is now travelling out of Italy by road and rail, bound for the major cargo centres such as Frankfurt, Paris and Zurich for onward shipment to North America and Asia.

SEA is so convinced of the opportunities that it has put its own money into the Cargo City project - an integrated air/road/rail logistics centre due to go fully operational by the end of next year. "We're not simply building a cargo terminal but a logistics platform," says Mazzesi. By the time that the project is complete, there will be capacity for 1 million tonnes of freight, putting Milan in touch with the big league of cargo centres.

SEA can take added confidence from the presence of air cargo giant KLM as Alitalia's new partner. There is talk of a cargo shuttle up to the Dutch carrier's Amsterdam base and there is even the prospect of using KLM capacity to fly direct from Malpensa.

Milan will not have the market to itself. Neighbouring hubs such as Munich and Zurich are looking at ways of maintaining the flow of passengers out of northern Italy's regional airports, while the revitalised Aeroporti di Roma, now on the way to privatisation, has set up its own hub development unit. For the meantime, however, it may be that Milan can afford a little celebration or two.

Milan's airport system
	1997	2002	2008
Passengers (million)	18.2	30.2	41.1
Freight (000t)	184.2	559.4	865
ATM (000)	204.2	364.8	424

 

 

 

Europe's leading cities first half – passengers
Rank	City	Airports	Jan-Jun 1998 million change		Year 1997
1	London	LHR/LGW/STN	44.8	6.4%	90
2	Paris	CDG/ORY	30.2	4.9%	60
3	Frankfurt	FRA	20.0	6.1%	40
4	Amsterdam	AMS	16.0	10.5%	32
5	Rome	FCO/CIA	12.5	3.8%	26
6	Madrid	MAD	12.1	6.9%	24
7	Milan	LIN/MXP	9.3	7.1%	18
		Linate	7.4	7.7%	14
		Malpensa	1.9	4.7%	4
8	Munich	MUN	9.0	8.3%	18
9	Zurich	ZRH	9.0	6.1%	18
10	Brussels	BRU	8.5	17.4%	16

Note: Preliminary figures from ACI Europe. Stockholm unavailable. London was at 46.5 million pax up 7%, including Luton.

Europe's leading cities first half - Freight
Rank	City	Airports	Jan-Jun 1998* 000t change		Year 1997
1	London	LHR/LGW/STN	810	7.9%	1,698
2	Frankfurt	FRA	658	-2.4%	1,514
3	Amsterdam	AMS	587	3.7%	1,207
4	Paris	CDG/ORY	530	-4.0%	1,266
5	Brussels	BRU	281	17.1%	531
6	Copenhagen	CPH	183	-1.0%	387
7	Cologne	CGN	176	0.7%	399
8	Zurich	ZRH	164	0.2%	355
9	Madrid	MAD	133	0.1%	266
10	Rome	FCO/CIA	119	-4.0%	297
11	Milan	LIN/MXP	105	18.5%	184
		Linate	28	-11.2%	123
		Malpensa	77	34.8%	61

Note: Preliminary figures from ACI Europe. Stockholm not available. *Half year excludes mail. London was at 824 million tonnes up 8.2%, including Luton.

Source: Airline Business