Berlin Schoenefeld Airport: dramatic passenger growth figures and it may have an extended shelf life

A two airport system has been adequate until recently

The capital city of Germany - which has the world's fourth largest economy by nominal GDP - was home to three airports. These reduced to two in 2008 when Templehof Airport was controversially closed, leaving Tegel and Schoenefeld (in the former East Germany) airports remaining. Then Berlin Brandenburg International Airport (BBI) - which was planned long before Templehof closed - preparing for construction right next to Schoenefeld; and 'under construction' is what it still is.

Around the time of Templehof's demise the closure was not too disruptive. Air passenger traffic was low for a major capital city, at 21 million in total for these two remaining airports. However, thanks mainly to the increasing presence of low cost airlines, it jumped to 32.8 million by the end of 2016. A lot of that growth came in 2014-2016, and Schoenefeld's growth rate was 36.7% in 2016 - a full 20 percentage points higher than in the previous year.

These figures are still low when compared to other capitals such as London, Paris, Madrid and Rome, but Germany is a much more geo-economically diversified country: its financial centre is located in Frankfurt (whose main airport is also the national hub), much of its manufacturing is in the rich Land (state) of Bavaria in the south, and the major ports (Hamburg, Bremerhaven) are in the north, and so on.

Tegel is scheduled to close not long after BBI belatedly opens, and that is currently scheduled for 2018, but there are moves from individuals, who include the Mayor of Schoenefeld, to keep Tegel open.

A giant economy nationally; Berlin specialises in government and hi-tech R&D

Germany, reunified since 1989, is also the world's third largest exporter of goods. Of the world's largest stock market companies by revenue, 28 are headquartered in Germany. The top 10 export categories are vehicles, machinery, chemical goods, electronic products, electrical equipment, pharmaceuticals, transport equipment, basic metals, food products and rubber and plastics.

Berlin is both the capital and largest city. Its population is sometimes underestimated. At 3.7 million it might seem quite small compared with those of cities like Paris and Rome, for example, but it is a larger city proper than both of those two (Paris proper is 2.2 million and Rome 2.8 million; it is their large metropolitan area populations that are often quoted).

Berlin is, in fact, the second largest city in the European Union, after London. Its own metropolitan population (Berlin-Brandenburg) is exactly six million. On the other hand, it is located in a relatively sparsely populated area of northeast Germany and, with equally thinly populated parts of Poland to the east, it stands almost as an island.

Berlin's economy, apart from federal government work, is led by the service sector, which has around 84% of total activity. Sucking in workers from other parts of Germany and from abroad, it has had the highest annual employment growth rate in the country for several years.

Important economic sectors are life sciences, transportation, information and communication technologies, media and music, advertising and design, biotechnology, environmental services, construction, e-commerce, retail, hotel business, and medical engineering.

Berlin has established itself as a leading entrepreneurial city, especially in the CIT sectors, and while it cannot match cities such as Munich, Nuremburg and Stuttgart for manufacturing, much research and development activity is undertaken in Berlin by companies like Volkswagen (headquartered at Wolfsburg, 170km to the west) and Pfizer. Berlin's Science and Business Park in Adlershof is the largest technology park in Germany, as measured by revenue.

While Berlin cannot compete with London and Paris (or even Frankfurt) in the international financial sphere, the city has become a centre for business relocation and international investment. It is likely that its politicians will attempt to attract both financial firms and entrepreneurs away from the UK following that nation's exit from the European Union.

The carrot, the enticement, will be the fact that the city is one of the largest generators of venture capital for startup companies in Europe and, further, its credentials as a World City in terms of culture, politics, media and science.

(From a purely economic aspect Berlin is ranked as a 'Beta' city in the 2016 edition of the Globalisation and World Cities [GaWC] study compiled by the University of Loughborough in the UK. This is the sixth highest of 10 grades, putting in company along with cities such as Karachi, Lagos, Montevideo and Beirut. That places it three grades below Frankfurt, and one below Munich and Duesseldorf).

Comparable airports tables - O&D and transfer hubs

The table below compares the airport with its peer and neighbouring airports in Germany. The airports chosen for this exercise have been selected on the following basis:

Berlin Tegel is the complementary airport to Schoenefeld, though not its rival, as both are owned and managed by the same organisation: Flughafen Berlin Brandenburg GmbH.

Hamburg Helmut Schmidt airport serves Hamburg, the second largest city in Germany and a rich city popular with visitors, as well as being a major port and financial centre. An airport that has grown steadily, to over 16 million passengers in 2016.

Frankfurt Airport is Germany's largest, is the national hub, and represents a city that is the national financial centre.

Duesseldorf Airport is the main airport of the Ruhr industrial region and also has experienced stable and steady growth, to 23.5 million passengers in 2016, making it the country's third busiest airport.

Dresden Airport is situated some 125 km south of Berlin, close to the border with the Czech Republic. Together with Leipzig Airport, which is majority jointly owned by the same organisation (Mitteldeutsche Flughafen AG), and another smaller airport at Magdeburg which has now closed, it has put pressure on the Berlin airports in recent memory as an alternative regional airport.

Map showing the location of Berlin relative to Hamburg, Duesseldorf, Frankfurt and Dresden

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Source: Google maps.

The table below uses a variety of metrics that include aviation and population statistics. The same airports/city regions are compared in other analyses in this report, below here.

Rankings of Shoenefeld and its peer airports by assorted metrics:

Note: In the first four columns a lower number means the airport is higher in the rankings.

Source: CAPA Airport Profiles.

*1 The Rhine-Ruhr Metropolitan Region.

From the data above it can be concluded that Tegel is the 'senior' of the two remaining Berlin airports in terms of passenger numbers. It ranks considerably higher in every category, and especially for cargo payload. Schoenefeld is also smaller than all other airports in the peer group with the exception of Dresden.

The table below compares Schoenefeld Airport and others in the peer group in terms of nonstop passenger and freight destinations.

Comparison of Shoenefeld and its peer airports by total airlines and nonstop destinations

Source: CAPA - Centre for Aviation and OAG.

The table shows that Schoenefeld has more destinations than Tegel, despite the latter's greater size, on account of it having a greater LCC share. Both Frankfurt and Duesseldorf have a much greater range of nonstop passenger destinations than Schoenefeld. Frankfurt actually exceeds the total of both Berlin airports by 71, while Duesseldorf comes close to matching the Berlin airports' combined total.

In terms of freight destinations - there are none at Schoenefeld. Moreover, none of the peer group airports records a single one apart from Frankfurt, which is in total control of the German air cargo business.

Connectivity - serving mainly European airports

The route map below shows destinations that can be reached by direct or connecting flights. The vast majority of services are domestic or within Europe, with only four intercontinental destinations - in the Middle East and North Africa.

Direct and indirect (connecting) routes from Berlin Schoenefeld Airport: May-2017

Source: CAPA - Centre for Aviation and OAG.
(N.b. Direct flight cities are in red, connecting flights [e.g. code shares] in blue.)

The main intercontinental airport for Berlin is Tegel, which will close when Berlin Brandenburg International opens, and there are few mid long haul services from there too - 12 only, for the capital city of the country with the fourth largest economy in the world.

The chart below goes into detail about the seat capacity split by country.

Berlin Schoenefeld Airport international capacity, seats by country: week commencing 08-May-2017

Source: CAPA - Centre for Aviation and OAG

The greatest amount of capacity (17%) is to and from the United Kingdom, which poses questions about the relations between these two historically trading nations when the UK leaves the European Union in 2019. (Though it should be noted that the UK is only the fourth largest market at Tegel Airport.)

The next largest markets are Spain and Italy respectively, where travel may be more oriented towards leisure. France has a fairly low share at 6.3%.

LCCs dominate the seat capacity share

The chart below demonstrates that Berlin Schoenefeld is predominately a 'low cost carrier' airport (90.8% of seats) and with very low presence from regional/commuter and charter services.

Berlin Schoenefeld Airport capacity, seat share by airline type (business model): week beginning 08-May-2017

Source: CAPA - Centre for Aviation and OAG.

The chart below compares Schoenefeld's position in this respect with its peer group.

Comparison of selected airports by airline type - seat availability, week beginning 08-May-2017

Airport	Percentage of seats on FSCs	Percentage of seats on LCCs	% of seats on other modes (e.g. regional, charter airlines)	Clarification of previous column
Berlin Schoenefeld	8.9	90.8	0.3	Regional/Commuter & Charter
Berlin Tegel	84.9	14.6	0.5	Regional/Commuter & Charter
Hamburg	53.3	46.1	0.6	Regional/Commuter & Charter
Frankfurt	97.0	2.3	0.7	Regional/Commuter & Charter
Duesseldorf	65.4	34.2	0.4	Regional/Commuter & Charter
Dresden	65.7	32.9	1.5	Charter

Source: CAPA - Centre for Aviation and OAG.

Schoenefeld stands out as the airport with the greatest LCC influence, not only in the Berlin area but within the peer group generally. Only one airport, Hamburg, comes within 50 percentage points of the ratio of LCC capacity at Schoenefeld, while it is not the case that Tegel Airport handles solely FSCs. With an average of 52.7% of capacity at the two Berlin airports on LCCs, that is still a greater ratio than any other airport in the peer group.

A side issue here is that, unusually, all of these airports with the exception of Dresden have a very similar ratio of capacity allocated to regional and commuter airlines and charters.

EasyJet has over half of capacity; with four others it has 96%

The distribution of that seat capacity by individual airline is detailed below.

Berlin Schoenefeld Airport capacity (seats per week), by all airlines, total system: week beginning 08-May--2017

Source: CAPA - Centre for Aviation and OAG.

Again the pre-eminence of the low cost airlines is evident, with easyJet and Ryanair accounting for 91% of capacity between them. It is unusual for an airport of Schoenefeld's importance to have only five airlines with 96% of capacity, which makes it as 'exclusive' in that respect as London Stansted Airport.

Airline alliance capacity is tiny

In a similar vein, airline alliances account, in total, for only 4.3% of seat capacity presently, led by SkyTeam. Star Alliance has minimal representation at 0.4%, and oneworld is not represented at all.

Berlin Schoenefeld Airport capacity, seat share by alliance/unaligned: week beginning 08-May-2017

Source: CAPA - Centre for Aviation and OAG.

Comparing this statistic with the peer airports group it can be observed that - as might be expected from the previous statistics -Schoenefeld is not only extremely unrepresented by alliance airlines, it actually lags the second least represented (Hamburg) by a full 39 percentage points.

Comparison of Berlin Schoenefeld Airport with selected airports by alliance penetration-seat availability: week beginning-8-May-2017

Airport	% of seats on unaligned airlines	% of seats on aligned airlines
Berlin Schoenefeld	95.3	4.7
Berlin Tegel	19	81
Hamburg	56.3	43.7
Frankfurt	11.2	88.8
Duesseldorf	46.5	53.5
Dresden	52.4	47.6

Source: CAPA - Centre for Aviation and OAG.

Again, an interesting side issue becomes apparent at Frankfurt, which now has over 11% of capacity on unaligned airlines, its previous low total having been boosted by the arrival there of Ryanair, which might well have used Berlin as its model for big city operations in Germany.

Passenger traffic growth fastest in last three years - capacity keeps pace

This chart demonstrates how passenger traffic has grown quite dramatically during the last four years, recording close to exponential growth figures of +8.4% (2014); +16.9% (2015) and +36.7% (2016), with growth in 1Q2017 (the slowest months of the year) being +15.9%, despite a series of strikes.

Further growth is anticipated as Ryanair alone will add +15% capacity in summer 2017, amounting to 46 extra services each week and anticipated 700,000 additional passengers.

Berlin Schoenefeld Airport annual passenger numbers: 2018 - 2017

Source: CAPA - Centre for Aviation and Flughafen Berlin Brandenburg.

Berlin Schoenefeld Airport traffic year ends in December.

Capacity has broadly kept pace with traffic growth, though not so much between 2014 and 2015, when it increased by 1.3 million seats (16.2%), as between 2015 and 2016 (40.3%).

Berlin Schoenefeld Airport seat capacity year-on-year, system wide: 2012-2017

* The values for this year are at least partly predictive up to 6 months into the future and may be subject to change
Source: CAPA - Centre for Aviation and OAG

Landing charges attractively low

Aircraft landing and other charges will have an impact on airline choice of airport. In 2015 the landing charges in the table below applied to Berlin Schoenefeld Airport and the peer group of airports referred to previously.

Unsurprisingly the alliance airline dominated hub that is Frankfurt Airport had the highest charges across all five aircraft types.

Otherwise, Schoenefeld's across the board charges were typically the second lowest after Hamburg's, and also lower in every case than Tegel's.

Landing Charges (USD) for Berlin Schoenefeld Airport, Berlin Tegel Airport, Hamburg Airport, Frankfurt Airport and Duesseldorf Airport: 2015

Source: CAPA - Centre for Aviation & Air Transport Research Society.
Notes: view Air Transport Research Society Airport Charges Data Methodology.

(No data available on Dresden Airport.)

Stage lengths reflect short haul low cost modus operandi

The chart below is representative of flight lengths as measured by seat capacity in each time bracket.

Berlin Schoenefeld Airport, seats by length of flight and average: week beginning 08-May-2017

Source: CAPA - Centre for Aviation and OAG.

The average is 2hrs 17mins.

The vast majority of flights are within the 0-4 hour time bracket, with only 6.8% of seat capacity on flights with a longer length.

A further perspective on the handling of capacity is represented below in the form of a bar chart of seat capacity (arriving and departing) by the time of day on a typical day; in this case, Tuesday 09-May-2017.

There is a partial curfew in place at Schoenefeld, the runway being closed for loud aircraft (Chapter 2) from 22:00 until 6:00, while it remains open 24/7 for Chapter 3 aircraft. This is clear from the chart, with very little activity between 00:00 and 06:00. The peak hours for departing aircraft are 06:00 to 08:00, and for arriving flights 2200 to 00:00. Otherwise, there is a discernible equilibrium between departures and arrivals during the bulk of the day.

Berlin Schoenefeld Airport, seats per hour, typical day: Tuesday 09-May-2017 (all airlines, total system, all terminals, all origins and destinations)

Source: CAPA - Centre for Aviation and OAG.

Cargo - Russia is the biggest market

Cargo is a fairly important element of the business mix at Schoenefeld, although there are no dedicated freighters operating there. All cargo is carried in the belly hold of passenger aircraft, with the exception of some parcel services.

Russia plays a much bigger role where cargo capacity is concerned, accounting for 34.5% of it, followed by Norway and Spain. All cargo activity at Schoenefeld is international.

Berlin Schoenefeld Airport, total international (departing) capacity, cargo payload (kg) by region: week beginning 08-May-2017

Source: CAPA - Centre for Aviation and OAG.

Freight capacity grew steadily year-on-year between 2013 and 2015 but unlike passenger capacity, which grew spectacularly, it slipped back in 2016.

Berlin Schoenefeld Airport cargo payload capacity year-on-year, system wide

Source: CAPA - Centre for Aviation and OAG

* The values for this year are at least partly predictive up to 6 months from 08-May-2017 and may be subject to change.

Annual capacity is the sum of individual weeks (Mon-Sun) for the year, and the first week of the year may exclude up to six days.

Terminals, runways and construction activities

Schoenefeld has two runways, varying from 2700m x 45m to 3600m x 45m.

There are four co-located terminals, A, B, C, and D, but they are interconnected through a common airside concourse effectively making one terminal. In the light of the still projected opening of BBI next door, it might be thought that there would be little construction activity taking place at Schoenefeld, but that is not the case.

The northern runway will be the southern runway of BBI (the other will be a new, 4000m one), and it has been lengthened and refurbished accordingly. The main runway will be closed in Jul-2017. Moreover, work has continued on the terminal(s) - which will not be part of BBI - with the expansion of Terminal B and the addition of D2 - a new 4150sqm arrivals terminal. The joint project costs ran to USD52 million.

That appears to be the end of construction work at Schoenefeld, but there are plans for an additional, low cost, terminal at BBI (costing EUR200 million/USD217.5 million). In view of the soaring cost of BBI, questions might well be asked as to why existing infrastructure - including new construction at an airport that will close - cannot be used instead.

The relationship of Schoenefeld to BBI

Source: Maximilian Dörrbecker (map), Michael F. Mehnert (English text) - Translation of Image: Karte- Flughafen Berlin-Schönefeld SXF.png created by Maximilian Dörrbecker (Chumwa), based on PDF exports from OpenStreetMap. Dec-2016.

And there may be more to come. FBB stated in 2016 that while progress was being made on BBI, it expected that Schoenefeld would have to remain open until 2025 - the two airports 'co-existing' next to each other.

Ownership and management: not exactly a case study in efficiency

Not only Schoenefeld, but also the other Berlin airports mentioned in the text (Tegel and BBI), are owned by Flughafen Berlin Brandenburg GmbH (FBB). This entity is itself a joint venture of the Länder (states) of Berlin and Brandenburg, each of which own 37%, with the Federal Republic, through its Finance and Transport departments, owning the remaining 26% of the equity.

Berlin Schoenefeld Airport ownership as at 08-May-2017

Source: CAPA - Centre for Aviation.

This is a typical local-national government ownership structure for primary German airports, allowing for a limited amount of privatisation activity that has taken place at some of them.

It could have been the case that a German company - Hochtief - became the owner of the two existing Berlin airports and the owner/developer of BBI, but the consortium that Hochtief led to develop BBI became embroiled with another led by IVG and Flughafen Wien in a legal dispute, and its contract was annulled. Since that time the privatisation plan was aborted, and the responsibility for the existing airports and the new one has been placed with FBB.

FBB has not been without its problems, though they relate more to BBI than to Schoenefeld. Firstly, there were legal objections to the construction of BBI from nearby residents, and while they didn't win, the permit was granted only on the condition that the number of people living on the approach path would be lower than for the combined case of Schoenefeld, Tegel and Templehof airports. That is why all three were mandated to close (Tegel was already scheduled to close at that time, anyway), once all the air traffic had been concentrated on BBI.

Then there is the financial consideration. The cost of building BBI, next to Schoenefeld, has continued to grow from the original (2006) estimate of EUR2.8 billion (USD3 billion) to EUR5.8 billion (USD6.4 billion) now.

The reasons for this increase are many and include:

• Construction flaws (principally but not exclusively related to the fire protection system), the rectification of which is only now nearing completion (2018) - eight years after the first ones were discovered.
• The cost of soundproofing homes. In May-2016 a court found in favour of over 25,000 plaintiffs, potentially boosting the soundproofing bill by EUR50 million. Moreover, there are continuing moves to establish a 22:00 to 06:00 curfew at BBI, the same as at Schoenefeld, though a counterproposal would enable Schoenefeld to operate at the same time, without a curfew.
• The realisation that the business plan, which perceived BBI as an alternative hub to Frankfurt or Duesseldorf was flawed, and there was a lack of any airline to operate a hub, in any case. Infrastructure had been planned to incorporate hub specific activities, but as revealed earlier there is a distinct lack of long haul flights at both airports, and much of the growth has come from short haul local airlines. Berlin is perceived as a destination, not a transit point.

There is also the lingering threat of further legal action being taken over what has become a 'ghost' unused railway station constructed beneath the new airport (see the plan, above). Schoenefeld already has its own railway station and it is not clear why that (as it is now, or extended) could not have been used in conjunction with a people mover and/or shuttle buses.

Then there was (and is) the saga of the revolving door management. FBB Chief Executive Rainer Schwarz was dismissed in Jan-2013 and succeeded by Hartmut Mehdorn, who had been CEO of Air Berlin, the only airline that could realistically have provided a hub operation at BBI - had it not been for its financial difficulties.

Herr Mehdorn left at the end of 2014, but not before he had appointed Jochen Grossmann as the technical chief. Herr Grossmann was found guilty of fraud and corruption in Jun-2014. Mehdorn's successor, Karsten Mühlenfeld had to terminate his contract as the project continued to be held up by delays.

He was replaced in Mar-2017 by Engelbert Lütke Daldrup, the Housing and Construction Secretary for Berlin State. At the time of writing, Herr Daldrup is still there.

In between, the Chairman of the FBB Supervisory Board, Klaus Wowereit, stood down, to be replaced by Matthias Paltzeck, the Minister-President of Brandenburg.

Hence the future of BBI, which is so heavily tied to that of Schoenefeld (and Tegel), now rests with two senior officials from the states with majority ownerships, who cannot claim much aeronautical experience between them; though that is not what FBB really needs, which is a fixer.

Hardly surprisingly, there are many voices which claim this would never have happened if the private sector had been in charge. Inevitably there are frequent rumours that the private sector may become involved again before BBI actually opens.

Summary and conclusions

The airport infrastructure of the capital city of the world's fourth largest economy looks set to reduce from the three airports of a decade ago to two, and ultimately to one.

• Schoenefeld airport, originally in the old East Germany, is one of the two remaining airports, while what will eventually become the only one (BBI, now known as BER) remains under construction, with a projected opening date of 2018 - six years late.
• Schoenefeld is the smaller of the two airports and caters in the main to low cost airlines, whereas Tegel hosts mainly full service/network airlines, though it has a sizeable LCC component itself. Passenger traffic has grown considerably at Berlin in the last three years, and particularly so at 'low cost' Schoenefeld.
• Berlin ranks fairly low in the World Cities Index but has re-established its credentials as a World City in terms of culture, politics, media and science, with a thriving multifaceted economy.
• In comparison with a peer group of airports, it is clear that Tegel is the 'senior' of the two remaining Berlin airports in terms of passenger numbers. Schoenefeld is also smaller than all other airports in the peer group, with the exception of Dresden.
• However, Schoenefeld has more nonstop passenger destinations than Tegel. It has no nonstop freight destinations, but out of the peer group only Frankfurt does, in fact.
• The vast majority of services are domestic or within Europe, with only four intercontinental destinations. Tegel airport fills the 'intercontinental' role but there are few of those flights there either, and there is no comparison with the European 'FLAP' airports (Frankfurt, London, Amsterdam and Paris).
• The greatest amount of passenger seat capacity at Schoenefeld is to and from the United Kingdom.
• Almost 91% of seats there are on LCCs, far more than at any of the peer airports.
• EasyJet has over half of all capacity, followed by Ryanair. Other players are much smaller.
• The seat capacity share of airline alliances comes to less than 5%, which is minuscule compared with those of the peer group.
• Seat capacity has broadly kept pace with traffic growth.
• While Hamburg Airport's landing charges are the lowest of the peer group (Dresden excepted, as data not available) Schoenefeld is in all cases the second lowest.
• The vast majority of flights at Schoenefeld are within the 0-4 hour time bracket.
• A curfew means reduced operational capability late at night and in the early hours. Otherwise, the distribution of arrivals and departures is generally in equilibrium.
• There are no dedicated cargo freighters operating at Schoenefeld (there are some parcel operators); Russia, Norway and Spain are the largest markets by capacity; cargo capacity growth kept pace with passenger capacity growth until 2016, when it declined.
• Construction continued (runway extension, terminal expansion) until fairly recently. As the airport will eventually close (one of its runways becoming one of BBI's - the new airport), no further construction is anticipated, but as Schoenefeld is now projected to remain operational until 2025 - that could change.
• Construction of BBI is now expected to be completed in 2018.

Schoenefeld and Tegel airports, along with BBI, remain under the control of FBB, a local government (state)-Central Government consortium. Operational, financial, legal and management issues remain.

There is still a remote prospect that the private sector - which was originally tasked with building BBI as an alternative to Schoenefeld, Templehof and Tegel airports - could make a return in one form or another; perhaps in the guise of a PPP.