21 MARCH 2016

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Article from BTNews 21 MARCH 2016

COMMENT: Airport problems German style

Forget (if you can) the struggle between Heathrow and Gatwick airports.  Germany’s capital has its own aviation problems that are cramping traffic and hurting the local airline.  Readers may also recall that in December we noted French difficulties.  Airports are controversial.

Air Berlin may yet have to be rescued by the German state after four decades of successful operation.   Its financial difficulties have led to wrangling between the municipal, provincial and federal governments which are preoccupied with greater political and economic issues. 

Even worse for the beleaguered airline is that Angela Merkel’s government has a split party within its left-right coalition.  Northern conservatives (CDU) and Bavarian ones (CSU) work with Socialists (SPD).

The latest crisis was the delayed approval for 65 winter code-sharing programmes with nearly 30% shareholder Etihad, which suspended negotiations when half of these bilateral applications were ignored by the federal air office for six months.    The transport minister, Alexander Dobrindt (CSU), was accused of bias towards Munich’s Strauss airport which, come what may, looks set to remain second only to Frankfurt in Germany.

Berlin’s provincial assembly complains that there has been southern favouritism ever since Germany’s former capital was restored in 1991.  The CDU’s local leader, Florian Graf, held urgent talks with Air Berlin’s boss, Stefan Pichler, who warned that the impasse would knock €140m off its projected turnover of around €4,160m.

Dobrindt from Bavaria had already received an appeal from Berlin’s socialist mayor, Michael Müller, co-signed by the provincial leaders of North Rhine-Westphalia and Baden-Wurttemberg.   A similar plea was made by the federal economics minister, Sigmar Gabriel (SPD), who noted that Air Berlin had 2,800 employees in Berlin and 3,200 elsewhere.

The airline was founded in 1978 in Oregon to comply with Berlin’s divided and occupied status, but on German reunification, it was incorporated under local law.

This month, an appeals court in Luneburg finally forced Dobrindt to grant approval to 26 of the 31 disputed agreements.   These, however, are valid only until 31 March, and the carrier’s financial outlook remains unclear.   For one thing, destinations shrank from 171 to 147 in 2014.

And whereas it still carried almost 32m passengers, it is now offering 10m tickets at a 24% discount to win back lost business.  Air Berlin has been running at a loss for several years, including €377m in 2014, and the next three quarters put it a further €191m in the red despite the usual profitable summer.  It has now laid off 200 employees.

Meanwhile financial, constructional and logistical problems bedevil the half-finished Berlin-Brandenburg airport that lies alongside Schonefeld, built by the East Germans.  Originally due to open in 2010, the date may now be 2019 while costs are set to double from an already inflated €5.4bn.  Despite mismanagement and corruption, there is already talk of a third runway costing an additional €1bn.

Tempelhof, a city centre airport, was controversially closed in 2008, but leading airlines had long used north-central Tegel, the old base for the French air force.  Brandenburg is meant to replace both Tegel and Schonefeld.

Tegel suffers from the fact that only the minimum money has been spent on the infrastructure in recent times and should be closed by now.  But in some ways Schonefeld is even worse, much criticised for delays.   Access from the latter to Berlin is slow from the airport station on a suburban commuter line and it has been described as a “nasty little concrete box with the Stasi still hanging around”.  Train ticket machines that do not work properly and seemingly there is always a queue for easyJet boarding.  Not just the usual but 90 minutes.
 
Air Berlin is a member of the oneworld alliance, and owns the subsidiaries Niki in Austria and Belair in Switzerland. It is listed on the Frankfurt Stock Exchange.  Etihad Airways, the Abu Dhabi state airline, is the largest shareholder, having increased its shareholding to 29.21% in 2011.  www.airberlin.com   www.berlin-airport.de/en

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