While most of the attention that is directed towards airport operators in Italy is focused on Rome and Milan, the two biggest cities, the Venice-based S.A.V.E., which operates both the Marco Polo and Treviso airports in addition to others in Italy and beyond, quietly gets on with the job of turning its small- to medium-sized airports into success stories.
Gruppo S.A.V.E. S.p.A., to give it the correct name, delivered a strong performance in 2011, ahead of the uneven economic trend in Italy and Europe. The Venetian company, listed on the Italian Stock Exchange since 2005, reported turnover growth up by 2.9% to EUR347.2 million for the year ended 31-Dec-2011. EBIT was EUR46.2 million (+13.3%), EBITDA EUR73.6 million (+10.2%) and profit before taxes EUR48.0 million (+14.3%). Net profit increased by 42.7% to EUR41.9 million (2010 figure: EUR29.3 million).
Of the group’s three business units, Airport Management performed best with an increase of +7.1% to EUR126.6 million, due to an increase in aeronautical revenue (+8.7%) that was primarily driven by an increase in passengers (+7.1%), with 9.7 million travellers using the Venice Airport System (Venice and Treviso), and an increase in non-aviation activities (+5.6%), led by parking (+9.1%) and commercial activities (+6.7%).
The group's food and beverage and retail revenues are up also, by +0.7% to EUR200.5 million. S.A.V.E., through its subsidiary, Airest S.p.A., manages all the catering and duty-free activities in the main Venice Airport terminal building as well as food and beverages and retail outlets at three other airports, three railway stations and one port terminal.
S.A.V.E. was incorporated in 1987 and has been managing Venice Marco Polo Airport ever since. In recent years, the company has become a modern group run on a managerial basis, operating horizontally in the sector of services to travellers, its activity falling under three business areas: airport management; management of mobility infrastructures and associated services; and public catering management activities, through Archimede 1 S.p.A., in which it has a 60% holding.
The largest airport operator with interests in rail
It diversified its business away from airports by acquiring 40% of Centostazioni S.p.A., the company that handles the integrated management of the 103 medium-sized Italian railway stations making it possibly the largest airport operator with a sizeable interest, and investment, in the rail sector.
But S.A.V.E. is better known for its airport operations. Apart from Venice Marco Polo it operates the Treviso Sant'Angelo Airport, through Aer Tre S.p.A. and Padua Gino Allegri airports in the same country. Treviso is located just 20km from Venice while Padua is 40km distant. It also manages Venice Lido Airport, through Nicelli S.p.A. and Pantelleria Airport, through GAP S.p.A., which manages the handling services.
S.A.V.E. has been active within Gemina, the holding company that ultimately owns Aeroporti di Roma, but sold down part of its stake there before emerging as the preferred bidder to take a 27.65% minority stake (through a consortium with Holding Communal of which S.A.V.E. has 65%), plus another possible 20.68%, in Brussels South Charleroi Airport (BSCA), Belgium.
That bid was successful. But S.A.V.E. has not always been successful in non-Italian affairs. In 2005, in what was its first known foray into international airport management, it bid within a consortium that included the large Hungarian property developer Trigranit in the first privatisation exercise concerning Budapest Airport (75% +1 share), one which was won by BAA before it was sold on several years later to Hochtief as BAA exited its foreign investment portfolio.
An eye for the main chance
S.A.V.E. is an aggressive company that retains an eye for the main chance in airport privatisation in Italy and throughout Europe and especially since a recent change of executive management. Because of its experience, through holding companies, of operating rail stations throughout Italy it might be considered a prime candidate for projects that have or intend to construct an air/rail interchange. Thus far though, it has limited itself purely to an interest in small-medium size secondary level airports such as Trieste and Sardinia's Cagliari-Elmas Airport, possibly also the Verona and Brescia airports. At the same time, and no doubt buoyed by growth at Charleroi Airport where it maintains a minority share, it is believed to be taking a renewed interest in airport investment throughout Europe, notably in Germany.
The main project, though, is still Venice Marco Polo Airport, which is now the country’s fourth largest by passenger numbers; 8,563,000 (+25%) in 2011, just ahead of Milan/Bergamo. Venice itself is a fairly small city of 270,000 but the surrounding Padua-Treviso-Venice Metropolitan Area (PATREVE) counts 1.6 million.
There are some similarities between Venice and Rome in that S.A.V.E. is building up one airport (Marco Polo) as a base for network carriers, while the other, Treviso, is regarded as the LCC base. The difference here is that the network carrier’s airport is closer to the downtown (down water?) airport, the reverse of the scenario in the capital.
There is no single dominant airline, and Alitalia has a small domestic network of seven regular and two seasonal cities (but see Air One below). There is a mix of network and budget airlines, all operating within one terminal. Newcomers in 2012 include the UK’s hybrid Monarch Airlines (three routes), Volotea, the airline founded by ex-Vueling (Spain) executives and which chose Venice as its first base (16 regular and eight seasonal routes, mainly international); and Air One Smart Carrier, Alitalia’s LCC, with 10 regular and two seasonal routes, all of them international. When British Airways adds London City airport to the network in Sep-2012, Venice will be able to offer three London gateways, which is three times more than most British airports can offer.
Venice Marco Polo Airport capacity share by carrier (seats per week): 23-Apr-2012 to 29-Apr-2012
With a 3.3km runway, Marco Polo has been able to add selected long-haul scheduled and charter routes. Presently they are: Delta Airlines (New York year-round and Atlanta seasonal), Emirates (Dubai), Qatar Airways (Doha), US Airways (seasonal, Philadelphia) and Air Transat (seasonal, Montreal and Toronto).
10 million passengers p/a within 2-3 years?
With a scheduled base like this and 2012's projected growth, Marco Polo should hit the 10 million mark within two to three years. In addition, there are seven cargo airlines including three of the main parcel integrators. One problem that the airport does have is that the terminal building, which opened in 2002, is operating at capacity.
Treviso Airport is dominated by Ryanair with 23 regular and eight seasonal routes though there is a sufficient number of airlines in total (eight) including Wizz Air, Gemanwings and Air Arabia Maroc, to underwrite the airport’s operations in the event that Ryanair decided to quit or reduce its services, which it has been inclined to do at a number of Italian airports over the years and for a variety of reasons. Treviso benefits from a terminal building that opened in 2007. Passenger traffic in 2011 was 1,075,000, less than half that of 2010 but the airport was closed throughout the summer of 2011 for exactly six months due to runway repairs.
Venice Treviso Airport capacity by carrier (seats per week): 16-Apr-2012 to 22-Apr-2012
Despite having a working full service/budget airline system in place in Venice, and new airlines coming online in 2012 it is probably the growth at the minority investment airport, Brussels South Charleroi, which excites the management. S.A.V.E. took a small 27% stake only three years ago but saw passenger numbers leap from 5.19 million to 5.9 million (+13.7%) in 2011. That growth continued into 1Q2012 though a little muted at +2%. During the early growth period from 2001 when Ryanair set up its first European base at Charleroi, traffic growth was close to exponential at one stage.
Large population base
The reason was that once scheduled air services were in place BSCA began to benefit from the large population base both in Belgium (15 million people within two hours drive time) and in neighbouring countries as Charleroi is situated on a crossroads between Belgium, France, the Netherlands, Germany and Luxembourg with direct motorway access.
This traffic increase is in line with the strategy of Brussels South Charleroi Airport to focus on manageable growth but, as with Venice Marco Polo airport an important issue is capacity: the airport has outgrown a terminal that only opened in Jan-2008 and which was surely considered to be the ‘answer’ to the conundrum set by having as the principal carrier Ryanair, an airline that few airports make any money out of.
Brussels South Charleroi Airport capacity by carrier (seats per week): 16-Apr-2012 to 22-Apr-2012
BSCA has undeniably benefitted from inertia at Brussels Zaventem (National) Airport, where a planned low-cost pier was aborted in the face of stiff opposition from network airlines. On the other hand, it has never come anywhere near its stated strategic goal of becoming the alternative airport for the Brussels city-region (i.e. appealing to all airline modes) and is still highly dependent on Ryanair, which currently has over 85% of capacity. Wizz Air and the Belgian Jetairfly have achieved small market shares (presently 6.1% and 8.7% respectively) but the feeling remains that if Brussels Airport Company was able to gain across the board airline acceptance for the low-cost pier, Ryanair, in its current mode of considering primary airports for its operations, might shift at least some of them to Zaventem as it did at Barcelona.
The other issue facing BSCA right now is a re-emergence of European Commission investigations into financial arrangements between public authorities and a number of airports in France, Germany and Belgium that includes Charleroi. The first EC investigation at BSCA began in 2002 and ended with a hefty set of fines that were rescinded on appeal but the scope of the investigations is now to be extended.
Despite these developments, S.A.V.E. will consider this investment to have been worthwhile so far. It is understood that BSCA is looking at ways to maximise its commercial/retail offer. With the experience it has gained at both a medium-sized sub-primary airport like Marco Polo and at smaller secondary airports where Europe’s most aggressive LCC calls the shots, S.A.V.E. will be confident it can apply its management prowess successfully elsewhere in Europe.