New strings to Budapest’s bow

posted on 6th June 2018

Budapest Airport (BUD) has ambitious plans for cargo. The old cargo facility is being relegated to the annals of history and a brand new sparkling facility is replacing it. Dubbed Cargo City, BUD is preparing itself for what it sees as its future role as a cargo hub for central-eastern Europe. Jo Murray reports

The new ownership of Budapest Airport by the German airports group Hoctief, following its sale by BAA in 2007, has brought tremendous changes at BUD, but perhaps the most strategically important project is the investment planned for its BUD Cargo City project. The first of the new warehouse facilities are already pre-leased, with Çelebi Cargo and Malév  securing lease agreements to operate these facilities, and now talks are underway for the occupancy of the second building.

Construction of the first two new cargo terminals, to be built next to the Passenger Terminal 2, is expected to begin shortly, with completion expected in late spring 2012. Phase one will mainly serve to integrate all existing cargo services and enable BUD to deliver state-of-the-art cargo handling services. But this is only the start.

The airport’s chief executive officer, Jost Lammers, says that, until now, the potential for cargo operations at the airport has never really been broadcast. BUD – with all its land and and promise – has sat quietly by while millions of tonnes of freight were flown overhead to Amsterdam, Vienna or Frankfurt, for example.

All that is set to change. BUD’s proposition to the airline and third-party services community is that it offers an abundance of capacity at a very strategic location between east and west. It is simply a question of when it will be tapped, not if, he believes. From the ground logistics perspective, there is also plenty of potential. BUD Cargo City is situated very close to the Budapest ring road. It is also located within a trucking radius of numerous eastern, central and western European cities, with more than 13 million people living within a three-hour radius, and millions more beyond, thereby forming a natural hub.

While this first phase will provide around 22,000 square metres of new cargo and logistics warehouses and 8,000 square metres of offices, a total of 12 cargo terminals are planned to run along the length of Runway 2, with a total floor space of 140,000 square metres. These will be built as demand develops.

Kam Jandu, director of aviation at BUD, points out that BUD already plays host to 55 cargo airlines on a scheduled and ad hoc basis, with 13 regular scheduled freighter operators – including Europe’s largest all-cargo airline Cargolux. All four integrators – UPS, DHL, TNT and Fedex – are present. Current annual cargo volumes stand at 83,000 tonnes, which the airport is keen to double or triple in the very near future. In the final stage, a total cargo capacity is 2.5 million tonnes per annum is expected.

BUD may still be a long way from this today, but the winds of change are already being felt. Turkish Cargo, Turkish Airlines’ freight division, has chosen Budapest Airport as a new freighter destination and commenced operations on 16 July. Turkish Cargo now operates a scheduled weekly A310 freighter service between Istanbul and Budapest, with a cargo capacity of around 40 tonnes in each direction. The freighter service will complement the belly-hold cargo capacity of Turkish Airlines’ passenger flights between the two cities, which has just increased from a daily service to 10 flights per week.

Christa Soltau, vice president of cargo and logistics at BUD, says that the freighter service provides an important additional link between the two emerging economic centres that will help enhance the logistics infrastructure of the two cities and their respective surrounding regions. “Our airport is playing an increasingly important role as a cargo hub for the central eastern Europe and beyond, and the addition of this new scheduled freighter service marks another significant step in the airport’s expansion plan,” comments Soltau.

Levend Arisoy, general manager for Hungary at Turkish Cargo, expects to increase capacity to BUD in the not-too-distant future.  “We consider this only as a test – a foot on the doorstep,” he says. “Should the business develop the way we project, we’re ready to increase our frequency the same way we’re constantly increasing our passenger network. July is a milestone in our presence in Hungary. Should the bilateral air service agreement allow us, we would be pleased to increase our presence in the Hungarian market even more.”

Even before Turkish Cargo arrived on the scene, BUD was already seeing strong growth in its cargo volumes, as more and more airlines and logistics companies recognised the value of its position as a hub for central, eastern and south-eastern Europe. In the first four months of this year, cargo tonnage increased by 30%, and the number of freighter movements grew by 7%.

So what are the advantages of bringing freight into BUD rather than neighbouring airports that have already built up and developed their cargo operations? Lammers lists the benefits as: affordability; high-quality facilities; reliable partners; good relationship-building; an open ground handling market (Menzies, Çelebi, Malév and Farnair are present); high security; and the general ease of operating at a smaller location in terms of volumes – as well as the existing and developing industries in Hungary and the region.

Jandu adds: “We are just smaller and more agile. And we are very hungry for the business.” Previously, lack of infrastructure was a barrier to entry but that handicap no longer exists.

Of course BUD is located in a relatively low-labour-cost economy, and yet it is a highly skilled workforce, with pharma, electronics, automotive and telecoms companies fuelling a demand for air-freighted commodities. And Hungary itself is located at the centre of Europe, at the gateway to the east and to Russia – which Hungary continues to have strong ties with. There are also a number of countries surrounding Hungary that are knocking at the EU’s door, and it is only a question of time before some of them will enter, something expected to accelerate trade in the region. Moreover, it is not difficult to envisage BUD Cargo City also becoming a European sub-hub for one or more integrators.

Lammers and Jandu are also keen to point out that the airport is willing to listen to its airline customers and accommodate their changing needs. For example, the apron has already been prepared for Cargolux’s soon-to-be delivered B747-8F aircraft, so when the aircraft is ready to fly, Budapest Airport is ready to receive it.

Essentially, BUD’s proposition is that it has an abundance of capacity on both the cargo and the passenger fronts. In fact, the airport boasts two parallel runways (Runway 1 (13R-31L) is 3,010m; and Runway 2 (13L-31R) is 3,707m) with the terminal buildings located roughly between them. Even at the airport’s busiest periods, less than 25% of the runways’ full capacities are employed. The runways can also accommodate any category of aircraft.

BUD’s investors, owners and management have set the scene and are working hard to ensure that BUD Cargo City takes up what they consider to be its rightful place in the cargo market: a gateway between east and west, and a natural stopping off point from Asia to Europe. With the airport changing its name in March from Budapest Ferihegy International Airport to Budapest Franz Liszt International Airport, in honour of the great Hungarian composer, its cargo section is also tuning up for the new beginning, and appears to be ‘on song’.