US embassy cable - 05FRANKFURT315

UNCLAS SECTION 01 OF 02 FRANKFURT 000315 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAIR, ECON, ELTN, GM 
SUBJECT: The Other Frankfurt Airport -- Frankfurt-Hahn 
 
Sensitive but unclassified; contains business-proprietary 
information.  Not for internet distribution. 
 
1. (SBU) SUMMARY: Frankfurt-Hahn Airport, a former US 
airbase, is now one of Germany's fastest growing regional 
airports and its fourth-largest air-cargo center.  A hub for 
leading low-cost carrier RyanAir, Hahn managers see limited 
future potential in the low-cost segment and are focused on 
growing the airport's cargo business.  Hahn's 24-hour cargo 
operations make it a valuable asset to majority owner 
Frankfurt Airport (where night-flights will end once a new 
runway comes into operation later this decade). END SUMMARY. 
 
--------------------------------------------- --------------- 
Ryanair Popularity Doesn't Necessarily Mean Profits for Hahn 
--------------------------------------------- --------------- 
 
2. (SBU) A former U.S. airbase and Rheinland-Pfalz's only 
international airport, Hahn Airport has recorded steady 
growth since Frankfurt Airport assumed majority ownership in 
1998.  Fraport Senior Vice President for Global Investment 
Management Andrea Pal told consulate representatives that 
she views Hahn's future with guarded optimism, emphasizing 
that the airport could not count on the continued growth of 
the low-cost carrier market (specifically Ryanair).  Unlike 
Hannover and other airports that host a variety of carriers, 
Hahn depends on Ryanair for 90% of its passenger load. 
Hahn's fee structure for Ryanair is more generous than 
comparable arrangements at other regional airports, meaning 
less revenue per passenger.  Pal noted that although Hahn 
will process more than 3 million passengers this year (a 17% 
increase over 2003), the airport needs at least five million 
travelers to turn a profit on its passenger business (versus 
three million for Hannover). 
 
3. (SBU) In April 2005, Hungarian low-cost carrier Wizz Air 
will begin flights from Hahn to Budapest and Katowicz 
(Poland), but Hahn has had difficulty retaining other low- 
cost carriers.  Italian bargain airline Volare declared 
bankruptcy in 2003, and Air Polonia announced in November 
2004 that it would leave Hahn (and folded shortly 
afterwards).  As a result, Hahn is reluctant to re-negotiate 
its fee agreement with tenant Ryanair for fear that the 
airline could move operations to another airport in Germany. 
 
----------------------------- 
Cargo Operations Show Promise 
----------------------------- 
 
4. (SBU) Pal sees cargo growth as the key to Hahn's long- 
term future.  In 2004, Hahn has doubled its through-put of 
air-to-air cargo this year, with an 11% increase in total 
cargo handling (from 159,000 to 180,000 tons).  British 
Airways announced in September that it would double its 
cargo flights to Hahn (while pulling out of Cologne).  The 
planned runway extension at Hahn will allow fully loaded 
planes to serve transatlantic destinations.  DHL considered 
Hahn for its new European cargo hub but chose Leipzig 
because of its generous subsidy package.  Hahn's 24-hour 
operations and the expected end to night flights in 
Frankfurt (once that airport's expansion is complete) will 
help make Hahn competitive as a regional cargo hub.  NOTE: 
Fraport management agreed to end nighttime flights at 
Frankfurt (as a noise-abatement measure) once the planned 
new runway comes into operation later this decade.  Local 
Green politicians have begun to lobby (so far 
unsuccessfully) for similar noise-abatement measures at 
Hahn.  END NOTE. 
 
------------------------------------- 
Successful Case of Defense Conversion 
------------------------------------- 
 
5. (SBU) COMMENT: After a decade of civilian use, Hahn 
stands as a successful case of defense conversion.  Hahn is 
now registered with the EU as part of the Frankfurt airport 
system -- making it an integral part of Fraport operations - 
- and the state of Hesse recently earmarked 20 million euros 
to support expansion at Hahn (which is actually located 
outside Hesse).  Hahn's enduring problem is its remote 
location and limited ground transportation.  Driving time is 
at least an hour from the Frankfurt area with no train 
service (the region failed to convince German Rail to 
reactivate a defunct rail connection).  Until Hahn becomes 
more convenient to the Rhein-Main/greater Frankfurt area, it 
has limited ability to attract full-fare travelers.  The 
airport's low revenue per Ryanair passenger and concerns 
about the viability of low-cost carriers have made 
management look outside the passenger business for future 
growth.  Hahn's 24-hour operations and low cost structure 
could give it a role in Frankfurt Airport's future and in 
the economic viability of the Rhein-Main region.  END 
COMMENT. 
BODDE