Luxembourg Airport is one of the few airports from which you can fly to 80 destinations and turn up with mere minutes to spare before catching your flight. And this is in spite of a rapid growth in passenger numbers. The airport achieved double digit growth in recent years, crossing the 4 million mark in 2018. While he doesn't recommend the “late-arrival game”, Lux Airport CEO René Steinhaus says it is his priority for passengers to have a smooth airport experience, regardless of growth. “In the last years, aviation has grown, the economy has grown, and the region has grown. That’s why we had double-digit growth,” he said, adding that forecasts put 2019’s growth closer to the European average of 4%.
Such growth is not unusual for a small airport. But what is specific to Luxembourg is the switch by low-cost operators to choose Luxembourg over hubs like Frankfurt Hahn or Charleroi. Easyjet was the first such example, operating its first flights out of Luxembourg in 2013 with Ryanair following suit in 2016. According to Steinhaus, the firms were responding to the region’s growth. International migration responding to a demand for talent boosted the country’s resident population by over 100,000 in just eight years and many more international workers will have moved to the greater region. According to Steinhaus’s figures, the airport’s catchment area, a 2-hour radius spanning Luxembourg and the greater region, today taps some 9 million potential customers. What was initially a largely business-traveller driven industry, has now become a market with a 50% segment for private travel, both by tourists but also an upwardly mobile international resident population returning “home” and receiving family visits. “We’re growing because the region is growing,” Steinhaus said.
This growth has been handled relatively well by the airport, which reactivated concourse B in 2017, giving more space for people waiting for flights, and in 2018 introduced automated border control technology. Further efforts are underway to the space they have, for example by using technological solutions for certain tasks such as screening. “You need to stay flexible because the airline world is changing, sometimes overnight,” Steinhaus said, citing the example of policy on hand luggage.
René Steinhaus, pictured, has served the role of Lux Airport CEO since March 2018. Photo: Mike Zenari/archives
Real estate and other revenues
If the airport itself will not expand, some of its facilities will. Steinhaus’ eyes light up as he talks about the Airport City, a new real estate complex designed by Danish architecture firm Bjark Ingels Group, a first phase of which is expected to open within the next five years, offering office space for airport staff, shops and parking on the existing staff car park. Real estate will form an important element of the airport’s long-term sustainability, not only in housing its rapidly growing workforce. Steinhaus explains it and the shops and services are an important revenue source for the operator, which is also constructing and will rent out the new Cargolux headquarters.
Another revenue source are the fees it charges airlines. Starting 27 October, the airport will almost double its passenger charge for airlines, from €3.87 to €7.50 per departing passenger. Steinhaus said it had to be adapted to the real cost borne by the airport. Another fee, expected in the short-term, will be the implementation of landing charges for freight and passenger flights. Steinhaus would not give the precise calculation but said it would be based on weight, aircraft type, and time of flight, with flights landing after the night curfew being charged more. This revenue will help finance a major maintenance project at the airport--runway renewal. A job that has to be carried out every 20-30 years, work is expected to begin in spring 2021 and will be done in overnight instalments for two years.
The airport runway will be resurfaced starting 2021, a job that is expected to take two years. Photo: Anthony Dehez/archives
One big challenge to aviation’s future will be environmental sustainability. According to the Air Transport Action Group, global aviation produces 2% of all human-induced CO2 emissions. Steinhaus said that while the airport cannot be responsible for the aircraft, it is committed to reducing its environmental impact. From 2018 to 2019, it reduced its CO2 emissions per passenger by 8%, thanks to a combination of introducing an electric shuttle bus to car parks, optimising energy use and insulation and replacing traditional lights with LEDs, among other changes. And for the past five years or more, the airport has subscribed to electricity generated purely from hydro power.
Steinhaus expects the airport to achieve the ACI’s level 2 carbon neutral certification before the end of 2019 and the top rating, level 4, by 2021. But even this, he admits, has its limitations since it uses carbon offsetting. “It’s unrealistic today to have airport buildings that are 100% carbon neutral,” Steinhaus said, adding the technology is not sufficiently advanced for that. But, he expects that will soon change and the airport is one of 20 that has pledged to achieve full carbon neutrality by 2050.
Jean Ries, a pilot who is one of 600 people to have bought a ticket on the first Virgin Galactic flights, is pictured at the Musée d'aviation Luxembourgeoise in Mondorf-les-Bains. Photo: Jan Hanrion
The biggest threats to the airport's future are the challenges facing its customers--the airlines, which are subject to global shocks. The US and China trade spat has already had a substantial impact on freight, Steinhaus said.
Similarly, some are impacted more than others by rising operational costs coupled with a slow-down in demand. The cost of flying fell considerably when the single aviation market was founded in 1992, as a result of increased competition. But, with fuel costs fluctuating and consumption rising, now this same ferocious competition is blamed for the collapse of around a dozen small European Airlines in recent years.
The most recent was that of Adria, the former Slovenian carrier which operated the Saarbrucken-Berlin line for Luxair until 24 September. Airlines are this year feeling the pinch, the International Air Transport Association said on 2 June when it downgraded its 2019 outlook for the global air transport industry. It wrote that overall costs were expected to grow 7.4%, net margins would be squeezed to 3.2% (from 3.7% in 2018) and profit per passenger would decline to $6.12 (from $6.85 in 2018).
Environmentally-conscious travellers, meanwhile, are increasingly turning their backs on air travel, favouring transport which is more sustainable. But, there is hope that aviation could clean up its act through long-term innovation. One example is Virgin Galactic, part of Richard Branson’s aviation empire, which is developing flight possibilities that will entail sub-orbital travel between on-Earth destination, reducing travel times and emissions. Jean Ries, who co-founded the Musée d’Aviation Luxembourgeoise, in Mondorf-les-Bains, is among 600 people to have secured a ticket on the first flights, expected to follow test flights in 2020.
If it catches on, it could be that Luxembourg’s airport will look very different in future.