European Business: What made the deal of taking over operations at 14 Greek airports interesting for Fraport?
Robert Payne: Fraport AG’s strategy is to continue growing and diversifying its international business beyond its home base at Frankfurt Airport. The portfolio of airports that we manage worldwide jumped from ten to 24 when we took over operations at 14 Greek regional airports on April 11, 2017. This privatization project was a milestone achievement for Greece, for Fraport, as well as for the global airport industry.
"We see Greece developing into one of the world’s great travel destinations, especially once the 14 regional airports are enhanced with modern infrastructure and efficient operations." Robert PayneCorporate Communications Manager and International Spokesman
European Business: Why did you choose Greece?
Robert Payne: We believe in Greece. We see tremendous potential for Greek tourism and the regional airports serve as gateways to Greece. We see Greece developing into one of the world’s great travel destinations, especially once the 14 regional airports are enhanced with modern infrastructure and efficient operations. Greece is a very attractive country, famous for its Mediterranean climate, culture, lifestyle and the hospitality of its people. One of the cradles of civilization, Greece offers amazing historical and archaeological treasures – including many UNESCO World Heritage Sites and other historical and natural wonders.
"Our task is to operate, manage and develop the 14 airports over the next 40 years, while ownership of the airports remains with the Greek state." Robert PayneCorporate Communications Manager and International Spokesman
European Business: Why did Fraport win the deal and not another airport group?
Robert Payne: For many years, Fraport has been interested in the planned privatization of Greece’s regional airports. We formed a consortium with Greece’s Copelouzos Group even before the tender for the 14 Greek Regional Airports was launched by Greece’s HRADF (Hellenic Republic Asset Development Fund) back in 2013. We delivered by far the best bid – concerning financial as well as technical aspects. Specifically, we offered the highest upfront concession payment of 1.234 billion EUR, plus an annual fixed concession fee of 22.9 million EUR and an annual variable concession fee. Our task is to operate, manage and develop the 14 airports over the next 40 years, while ownership of the airports remains with the Greek state. Moreover, during the first four years, the Fraport consortium will be spending about 400 million EUR on the investment-hungry airports to enhance infrastructure and capacity. Our goal is to improve operational procedures, service quality and the overall passenger experience – while meeting the growing need for additional capacity. We have a proven track record in managing all types and sizes of airports, which we will bring to bear at the 14 Greek airports.
European Business: Since you started operating the Greek airports: What have been or still are the biggest challenges?
Robert Payne: We are managing a group of 14 different airports, not just one airport. From the outset, it has been a mammoth and complex project. We created a completely new company from the ground up – Fraport Greece – to run these airports, which are geographically spread across Greece, three on the mainland and eleven on popular island destinations. A significant challenge was the operational takeover of 14 airports in a single day! Such a huge logistical undertaking had never been attempted before in our industry. Instead of installing the headquarters at one of the airports, the management team decided to locate the headquarters in Athens. This made it possible for the organisation to develop completely new and tailor-made processes and to realize significant synergies between the 14 airports. Today, these achievements are influencing other airports in the Fraport Group. Using our extensive experience and the full resources of Fraport, we successfully implemented the transfer of the 14 airports from one day to the next – effective April 11, 2017 – only a few days before the Easter travel period and only weeks away from the high season when a huge influx of international tourists was received at the airports. In those first days, some quick improvements to the terminals were implemented. However, it was agreed that Fraport Greece should not launch its major construction/development program until the off-peak autumn and winter months when traffic would not be impacted.
European Business: What major projects are planned for the near future?
Robert Payne: Over the next four years, major construction work will be carried out at all of the airports. Fraport Greece has prepared and received approval for developments which will transform the airports. These plans take into consideration the specific needs of each location. In total, Fraport Greece will invest around 400 million EUR in the development of the infrastructure at the 14 airports by 2021. One of the first projects is the runway reconstruction at Mykonos, which requires closing the airport for a couple of weeks in November. Similarly, construction projects have now started at all its other airports – however, without causing any disruption to operations. Fraport Greece is committed to enhancing the airport experience for travelers from Greece and around the world. This includes improving the range and number of shops and restaurants in the terminals. By introducing state-of-the-art retail concepts and shop designs we will also increase the visibility of Greek products and provide a distinctive sense of place thus promoting Greek culture to visitors from around the world. One of the major development projects is the building of five new passenger terminals – at the airports in Thessaloniki, Kefalonia, Kerkira (Corfu), Kos, and Mytilene (Lesvos) – and modifications at other airports. This will result in an increase of 100,000 m2 in terminal size at the 14 airports, reaching a combined total of 300,000 m2. Other important improvements for increasing the total capacity of the airports and the quality of services also include increasing the number of check-in counters, security-check lanes, departure gates, and aircraft parking stands. Refurbishment projects will be done for a total of 15 runways in operation at the airports, as well as the existing terminals, sanitary facilities, fire stations, airport apron areas, and 100 diesel generators at the airports. We are convinced that our focus on enhanced facilities and capacity, high-quality services to customers, qualified and trained employees and compliance with safety and security regulations will make the operation of the 14 Greek regional airports a great long-term success.
European Business: Are you communicating with the other stakeholders and parties?
Robert Payne: Even before we commenced operations, we were engaged in active and open dialogue with the airport regions and their stakeholders – including the key tourism players and other business leaders. It is essential for us that Fraport Greece develops and maintains close contacts between the 14 airports and their stakeholders. This level of stakeholder engagement is exemplary in the industry and is a top priority for Fraport Greece. Indeed, it highlights the strategy of transparent and close relations with a wide range of airport stakeholders ranging from representatives of local authorities and regional governments, to the tourism and hospitality trade, as well as other airport partners.
"Greece continues to gain tourists, not only from northern Europe but also other regions of the world." Robert PayneCorporate Communications Manager and International Spokesman
European Business: What about traffic growth?
Robert Payne: Our 14 gateways are vital for meeting the growth in demand – now and in the years to come. The 14 Greek regional airports (which joined the Fraport Group in April 2017) reported a combined total of 27.6 million passengers last year – representing a rise of 10.3 percent year-on-year and a new all-time annual record. The busiest airports were Kavala (KVA), where traffic surged by 22.8 percent to 337,963 passengers; Kos (KGS), posting a gain of 20.7 percent to some 2.3 million passengers; and Mykonos (JMK) which advanced by 18.6 percent to about 1.2 million passengers. In 2016, total traffic for the 14 airports reached 25.3 million passengers. Fraport is confident about future traffic growth next year and beyond. In common with many countries, Greece’s tourism industry is seasonal and focused on the peak summer months. Greece continues to gain tourists, not only from northern Europe (Germany, the UK, the rest of Northern Europe, Russia and Poland) but also other regions of the world. Even the Chinese are starting to discover the amazing attractions of Greece and its islands. And Greece’s tourism organizations are now actively pursuing the potential of Asian markets.
European Business: What are your long-term goals?
Robert Payne: Our long-term goal is to have sustainable growth and to attract more traffic beyond the traditional high-season months – during the so-called fringe months. Our infrastructure investment program will help make this possible. The tourism sector is also moving ahead with new investment in hotels and other projects that will further drive growth in the tourism sector. For example, TUI recently announced that it will expand in Greece by opening ten new five-star and four-star hotels to serve upscale markets and by increasing the number of cruise ships visiting Greek ports. The Greek tourism industry, and business in general, has eagerly awaited the start-up of Fraport Greece. Our operational takeover of the 14 airports not only serves the interests of the international visitors and airlines coming to Greece, but also helps to drive future investment and business activities.
Fraport took over the following airports:
On the mainland:
Thessaloniki, Aktion and Kavala
On the islands:
Chania on Crete, Kerkyra on Corfu, Kefalonia, Kos, Mykonos, Mytilene, Rhodes, Samos, Santorini, Skiathos, Zakynthos