What was 2017 like?

Jost Lammers: Our passenger numbers have once again grown very dynamically. With just over 13 million passengers our growth last year was around 14.5 percent, and this means that for the past three years we have been growing at double-digit rates. In 2017 a number of new destinations and airlines were added, including classic network airlines. For example, the Portuguese airline TAP has re-opened the route to Lisbon, and Ukraine International Airlines offers attractive connections via its hub in Kiev. Several long-haul carriers have continued to increase their frequencies, including Qatar Airways and Emirates. Qatar Airways has announced it will deploy a wide-bodied aircraft on the Doha-Budapest route later this year, which is particularly positive for business-class passengers because the product and service will simply be even better. Emirates has already taken this step and flies the Dubai-Budapest route on a Boeing 777 every day.


What other developments can passengers expect this year?

J.L.: The most important news is certainly that Budapest and the US will be directly connected again. After years of hard work, the time is almost here. From May, LOT Polish Airlines will be flying four times a week to New York/JFK and twice to Chicago, while American Airlines will fly every day to Philadelphia. From the summer Air Canada Rouge will launch additional flights on its Budapest-Toronto route. So in 2018 we will be able to offer as many North American connections as never before in the history of our airport.


Is North America covered for now with those flights?

J.L.: In the short term we do not expect any other destinations to be launched. Of course it would be great if cities on the US West Coast, such as Los Angeles or San Francisco, were also served by Budapest, but that is unlikely to happen this or next year. Rather, I expect new destinations to the Far East. Bangkok, Singapore, Seoul or a second connection to China, for example to Shanghai, are certainly possibilities. I think that our next long-haul connection will be a Far Eastern one. We are working hard to make this happen in 2019.


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The new terminal expansion will almost simultaneously be completed with the launch of the new North American destinations. Good timing?

J.L. (laughs): The two events happening at the same time make it look like it was perfectly planned. The two, however, were two independent decisions but they do support each other in the end. LOT and American Airlines would have come without the new pier. An airline always decides on launching a new route based on the expected demand and the ticket prices it can charge. Only when this decision has been made, comes the second step, which is the operational implementation. The latter is about specific details such as the parking positions for the aircraft, safety aspects and comfort issues. The two airlines were, of course, pleased that – albeit not immediately after the start of the new destinations but probably from August – their passengers will be able to access their aircraft much more comfortably than in the early months. By the way, LOT's representatives were impressed with how fast our pier project is progressing and that it will be available to passengers three months ahead of schedule.


But still, there will be a three-month gap.

J.L.: True, but this will not be a problem as we can easily bridge that gap with our existing options in the terminal building and on the tarmac. A simultaneous launch would have been a great coincidence. After all, we made the decision for the pier three years ago when North American connections were still futuristic. We just assumed that our dynamic development will continue and that there will be more long-haul connections soon. Based on these assumptions we already realised in 2015 that from 2018 there will be a certain capacity bottleneck, especially for our non-Schengen providers. We were right. At present our non-Schengen traffic is growing more dynamically than traffic from the Schengen area. Incidentally, the fastest growing market for us last year was Israel with our Tel Aviv connection. Our connections with Russia, Turkey and the Far East are also developing very dynamically.

René Droese: Also Pier B, as the terminal expansion is officially called, is not a completely new project. It was – together with SkyCourt – already part of the development plan BUDFuture, which we presented in 2011. However, only a year later the Malév bankruptcy [the former Hungarian airline with a significant number of overseas flights] meant that this project had to be postponed until we could prove that demand was back. In the middle of 2014 the time had come to reach into the drawer and launch the project. Since we had always firmly believed that we would make up for the passenger drop after Malév’s bankruptcy and grow beyond that, we had extended the building permit for the project as a precautionary measure year after year.


Why will the new pier be called B and not A?

J.L.: Initially, we saw a need for action in the non-Schengen area. This will be taken care of soon. Right after that we also have to deal with the Schengen area. We have already set up a project team working on the issue. The bottom line is that as long as we continue to see continuous passenger growth, we will not only need another pier at Terminal 2 but we also see the need for a completely new building, Terminal 3. As part of this project though we may have to re-examine the original plans for Pier A.


Where will the new terminal be located?

J.L.: Right next to Terminal 2A where we have a large open space. But this will not only be a new building but also sufficient parking area for the aircraft. Together with Terminal 2 the new terminal will form one functional unit and also significantly expand and make our capacities for check-in and security more flexible.


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Would it not have been more logical to call it 2C?

J.L.: By calling it "3" we want to make it clear that this is a completely new terminal, a terminal of the new generation. In terms of digitisation, technology and service it will be a top product of our industry. Terminal 3 will meet the latest standards. While contemporary, responsive and functional design is obviously important, we do not want to create a shiny but empty glass cathedral. We value content above all. It has to become a "smart terminal", something really clever and forward-thinking. All this we want to express with the name "3".


Are these functionalities already being used at other airports?

J.L.: Our Terminal 3 team started its work at the beginning of the year. Its tasks include examining modern European airports and their solutions. The project team also includes the airlines and our IT partners. We want to bring together best practice and know-how from all partners.


What does the future hold for Terminals 2A and 2B?

J.L.: We will continue to do a great deal to keep it at a modern level, which our passengers have come to expect. At the moment we are gradually replacing the tiles in Terminal 2A’s departure area. In the SkyCourt we are expanding the seating and toilet capacities. In addition we are constantly improving the shopping and dining options. Just last year we increased the number of check-in counters by about 20 percent. The subject of digitisation will also be given greater consideration in the existing terminals. For example, we will set up automatic check-in counters and install printers for stand-alone baggage handling. Recently we have also significantly increased the Wi-Fi capacity in the terminal to meet the growing demand.

R.D.: In addition we will renovate all existing lounges by upgrading furniture and décor. But also the catering and the service should be improved. Our lounge products already embody a good standard but we can do more. Our most modern lounge, the bud:vip lounge, where we are conducting this interview, was opened at the beginning of the year. It is the centrepiece of our new bud:vip product [read more about this in the March edition of The Budapest Times, or at www.budapesttimes.hu].


When will the construction of Terminal 3 begin?

J.L.: Assuming that our strong double-digit growth continues, at the end of this year we want to make the decision about the right terminal concept for the future. It is likely to be an investment in the high double-digit to triple-digit million euro range over several years. After the decision we will tender the construction project. If everything goes to plan, actual construction work could begin in the third quarter of 2019. With a construction time of about two years, Terminal 3 could be finished in 2021, whereby individual modules may even be ready for use earlier. Perhaps everything will be even faster. So far we have always had positive experiences with our construction projects. Building permits are granted promptly and on time. We can count on the support of local governments around us and, of course, on the government.


Wasn’t it the plan that the plot north of the terminal will be used to develop Cargo City?

R.D.: Yes, but there is plenty of space between Cargo City and Terminal 2. We have deliberately kept these areas free. We have a master plan with a planning horizon of about 20 years. In it, the area for a possible extension of the terminal complex has been reserved. Although the long-term master plan was not visible in the BUDFuture expansion program, which also integrates the Cargo City project, it already existed in the background. In this master plan it was already planned that at some point the need for an additional terminal building will arise. That's why we've always avoided building something there that could stand in the way. When planning Cargo City we have ensured that there is enough space between this project and Terminal 2 for an expansion. All these plans are coordinated carefully.


How are the other cargo projects coming along?

R.D.: A major milestone last summer was the timely handover of the logistics halls of DHL Express and TNT Express. Both buildings are now fully occupied and the tenants are very satisfied. A total of 600 jobs have been created there. Both companies have signed long-term leases with us and I am sure that we will continue to experience dynamic growth in the cargo segment as well. Decisive for both tenants were the long-term capacities at Budapest Airport. Now, however, the Cargo City project is at the top of our cargo agenda, especially because its first building is already completely rented out.


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When can the construction begin?

R.D.: The application for the permit was submitted on December 31 last year. At the beginning of March the licence was already available and we have already started the tendering process for the construction work. A total of 15 national and international construction companies have applied for it. We expect that we will be able to sign with a contractor in the summer and start construction immediately afterwards. From there on I calculate with 12 months of work, so in the summer of 2019 the building could be ready to be handed over. It will have a total usable area of around 16,000 square metres. In the meantime the planning of a second building had already begun and we are already in quite advanced negotiations concerning the rental agreements. I expect that we can start construction of the second building in the autumn, which means that construction could be completed by autumn of 2019. In other words, by the end of next year there will already be a visible Cargo City, initially consisting of two buildings.


How is the cargo volume developing?

R.D.: Last year we had just over 127,000 tons. This corresponds to a year-on-year growth rate of over 14 percent. At the same time cargo only grew by 3 to 4 percent in the EU. In the last two years we have achieved growth of almost 40 percent. If exports and imports continue to develop so dynamically, the growth rate for 2018 could once again be in the double digits, meaning a volume of around 140,000 tons. This is mainly because many companies here in Hungary are increasingly handling air freight via Budapest and not via airports such as Vienna or Frankfurt. Of course, many air connections are important for this. On the new long-haul routes to New York, Chicago and Philadelphia, the air freight capacity – the so-called belly cargo – will certainly be well utilised. But basically all three cargo segments (belly cargo, freighter and express) are developing well and contributing to overall growth. Our main focus now is on getting the Cargo City buildings up and running as soon as possible. These buildings will give a huge boost to the growth of our cargo volume.


To what extent will the airport's passenger capacity increase by handing over Pier B?

J.L.: The capacity number is something that includes parking space available for cars and extends all the way to parking for airplanes. Capacity is thus determined by many factors and can only be increased if all factors are systematically developed. That's why we are now building a large parking garage.


What kind of timetable are we looking at here?

R.D.: The ground-breaking ceremony will take place this year. The building permit has already been granted and the preparations for the construction tender are in full swing. The parking garage will be built on about half the area of the previous terminal parking. So far we were able to very quickly accommodate the increasing demand. In the past two years we have developed around 2300 long-term or holiday parking spaces beyond the terminal parking lot. But there is also a great demand for a parking garage near the terminal. This is also part of the standard of an international European capital airport like a hotel near the terminal, which we finally have now. The hotel – opened at the beginning of January – is also something that we managed to finish on schedule, with a construction time of a little less than 18 months. The first numbers we hear from operator Ibis Styles are very positive. It seems that with the hotel category, the range of conference areas, the well-frequented restaurant and of course the walking distance to the terminal, we created the right product. The utilisation is well above expectations, so a car park between the terminal and the hotel is the next logical step.


How big will the parking lot be?

J.L.: It will consist of six stories and provide parking space for around 2460 vehicles. From the 1st and 2nd level covered bridges will lead to the terminal. The ground floor is completely planned as a rental car centre. There will be disabled parking at every level, but the width of all parking spaces with about 2.5 metres will be about 10 centimetres above the Hungarian parking garage average. On an XXL level we will also offer extra-wide parking spaces with a width of 3 metres. At every level there will be charging stations for electric vehicles. Before summer begins, the tender will be released and I expect the construction to begin in October. The handover is scheduled for the first quarter of 2020. In other words, by the beginning of 2020 the package of our airport will finally be complete.


How is the cooperation with the state and the administration developing?

J.L.: Very good. We can count on support in all areas. Sometimes even in areas where we would expect less. Just one example: I've just been to Bangkok and Singapore. We visited airlines in their corporate headquarters, which may soon be adding Budapest to their network. At both locations we had the full support of the Hungarian embassies. The state’s system – according to which foreign trade and foreign policy work hand in hand and are interlinked in organisational terms – works excellently from our point of view. Representatives of the embassy had picked us up from the airport and on the eve of each meeting there was an internal preliminary meeting and the ambassadors or business attachés accompanied us to the appointments. Everything was very professional and well prepared, and the embassy staff were very helpful, open-minded and business-oriented. During the talks there was a good division of labour between them and us: they presented the country-specific features and the political and macroeconomic environment of Hungary, while we focused on transport and commercial issues.


What arguments do you use to promote Budapest and Hungary in these meetings?

J.L.: The obvious facts. Budapest and Hungary offer an incredibly interesting and diverse destination with plenty of growth and dynamism for both business and leisure travellers. There is plenty to say: the architecture, the culture and history, the gastronomy, the bathing, leisure and wellness options, the great nature, the ever-growing Danube river trips and the Hungarian hospitality. There is also a very good price-to-performance ratio. Of course it is also positively received that Hungary is an EU member and offers very high safety standards for guests and visitors from all over the world. The increasingly close network of direct connections also speaks for Budapest. At present over 130 cities are available directly from here, which means that you can reach virtually all of Europe via Budapest.

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