Airport operator Fraport says costs at its flagship airport in Frankfurt are hindering growth and preventing the facility from returning to its pre-Covid-19 passenger figures.
Speaking on the company’s third-quarter earnings call on 5 November, Fraport chief executive Stefan Schulte called on politicians to “take action” to lower fees, and eliminate what he calls Germany’s “competitive disadvantage” versus its European neighbours.
He said the company’s passenger count estimate for Frankfurt in 2024 remains unchanged at 61-65 million, but that the final figure will likely come in the “lower half” of that range.
“The location costs set by regulators are too high in Germany,” Schulte says. “They are a major reason why our home market lags behind others in Europe in terms of the recovery of passenger numbers.”
That, in turn, is having a financial impact on the company.
“We’re also feeling the effects of Germany’s limited capacity growth at Frankfurt Airport. Over the past nine months, we’ve continued to remain around 14% below the passenger numbers we experienced in pre-pandemic 2019.”
In the first nine months of the year, Frankfurt counted 46.7 million passengers, up almost 5% from the same period last year. But the increase in the number of passengers has consistently fallen off since the beginning of 2024.
“A major factor behind the weakness are high regulatory costs for operations in Germany. Aviation taxes, security levies, and air traffic control fees rank among the highest when compared to the competition,” Fraport says.
It cites as an example, operational costs for a long-haul flight using a Boeing 787 Dreamliner from Frankfurt to New York of over €18,000 ($19,600), while the same flight from Paris costs just over one-third of that.
“Given these trends in costs, airlines are continuing to expand their offerings in other markets, where they pay lower fees to governments,” Schulte says. “Politicians in Berlin need to finally take action on this point.”
Lufthansa Group chief executive Christian Spohr, speaking during the carrier’s third quarter earnings call a week ago, also complained about the high costs of doing business at Frankfurt.
“It is no secret that Frankfurt airport is our most expensive hub, and it’s the one that has increased charges the most in 2024,” he said. With costs expected to rise yet again in the future, the Spohr flags its ability to shift growth to other hubs within the group where the fees are lower.
“With being able to steer traffic via more than one hub, we can now leverage our negotiating power at our airports,” Spohr said.
Fraport, which operates airports on five continents, says its international business, however, is booming, and setting passenger records.
“We’ve done particularly well at our 14 Greek airports, as well as in Antalya and Lima,” Schulte adds. “We’re benefiting from this performance financially, as seen by the solid improvement in our result over the past nine months.”
Fraport also operates the Porto Alegre airport, in southern Brazil, where floods in early May forced the facility to close completely for several months. The airport partially reopened on 21 October, but the damage to Fraport’s bottom line this year will be about €10 million, Schulte says.
He called the clean-up progress at the facility “remarkable”. After 170 days of closure, the airport has resumed operations with a 50% shortened runway. About 128 flights – or 60% of the pre-flooding capacity – are currently operating from the field and it should be fully operational in December.
For the third quarter the company reports revenue of 1.35 billion, up 11% from the same period in 2023, while it posted a profit of €273 million, almost unchanged from last year.
With additional reporting by Graham Dunn.
