Course of business

• Market entry in the USA
• Further milestones reached in the «LabCampus» project
• Further progress regarding infrastructure measures
• Extension of Terminal 1
• Contract awarded for ground handling services at Hamburg airport
• New passenger record and increase in aircraft movements
• Ground handling services in a difficult economic environment
• Retail trade – growth in revenue not in line with passenger figures
• Catering and hotel on the path to success
• Parking – demand increases with passenger volume
• Advertising – a challenging market environment
• Impetus for further location and real estate development

Key events in the past fiscal year

At the start of 2019, the subsidiary Munich Airport International GmbH (MAI) founded three companies in the USA as a further extension of its international business activities. In the USA, MAI now offers consultancy and other services in Terminal A at Newark Liberty Airport, New Jersey/USA. At the end of November 2019, MAI furthermore acquired shares in the consultancy service provider amd.sigma strategic airport development GmbH, Berlin, thus extending the portfolio of the MAI Group.

All companies with the exception of Reach will be included in the scope of consolidation as fully consolidated subsidiaries. Reach is recognized using the equity method.

The «LabCampus» project was launched the previous year. With this, Munich Airport plans to create a unique location for innovation and cross-sector cooperation. On the AirSite West area, a future-oriented infrastructure will be created, which will bring together companies and research institutes, start-ups and global players, creatives and investors, in order to drive forward the development of new ideas and products. A general contractor agreement was concluded in this respect in April 2019, covering the planning and construction of the first office building with some 30,000 square meters of space. Completion and start-up of the new building are planned for the start of 2022. In fiscal year 2019, T€ 9,323 was capitalized for this purpose as assets under construction.

A further milestone for the «LabCampus» innovation hub was reached at the end of 2019 with the inking of the general contractor agreement for construction of the new Airport Academy building on an area of around 14,400 square meters. The new building will tie in with a conceptual extension of the training program, and will benefit other LabCampus users also. The building is set to open in the first quarter of 2022.

In terms of improving Munich Airport’s railway connection, the official start of the expansion of the railway tunnel on September 5, 2018 was an important event. With this building project, the realization of the Erdinger Ringschluss (Erding ring closure), i.e., the extension of the railway line from Freising via Munich Airport to Erding, is being driven forward.

The costs for the shell of the tunnel extension are being borne by Munich Airport and pre-financed in the form of an interest-bearing repayable subsidy from the Free State of Bavaria. Payment of the investment costs will fall due for Munich Airport when the tunnel extension is commissioned. In fiscal year 2019, T€ 54,433 was capitalized in relation to this construction measure as property under construction. The total investment up to December 31, 2019 amounted to T€ 68,067.

Works to improve Munich Airport’s eastern road link have been under way since the previous year, involving the construction of the multi-lane extension of the south ring and its eastward extension in the direction of the airport east expressway (FTO). Up to December 31, 2019, a total of T€ 5,190 was invested and capitalized as assets under construction.

The eastern apron in Terminal 2 is currently being extended by a total area of 180,000 square meters. This will add 23 new and urgently needed aircraft stands. In 2019, T€ 30,944 was capitalized for this purpose as assets under construction.

The government of Upper Bavaria issued the planning approval in November 2018 to expand Terminal 1 and add a new gate. The key objectives of this expansion project are to make the non-Schengen area fit for purpose and to enhance the quality of services and quality of stay in Terminal 1. Commissioning of the gate is planned for 2023. The total costs estimated for the expansion project are expected to be paid by Munich Airport from its own funds. Up to the end of 2019, T€ 50,193 was capitalized in relation to this construction measure as assets under construction.

In December 2019, AeroGround Flughafen München GmbH awarded the contract for the license to provide ground handling services at Hamburg airport. The license covers the apron-side aviation ground services (BVD) such as aircraft and baggage handling, baggage hall handling, baggage and freight transport, water and toilet services, as well as push-back and bus transport on the apron. The license is set to commence on August 1, 2020 and has a seven-year term.

There were no other events that had a material impact or will have a material impact on the business development of Munich Airport in the fiscal year.

Aviation business

With an absolute increase of around 1.7 million passengers, Munich Airport again achieved positive growth and reached a new record result in fiscal year 2019 with a total of 48.0 million passengers (+3.6 percent). An increase was also posted in terms of aircraft movements (+0.9 percent). With a total of 417,138 aircraft movements (take-offs and landings), Munich Airport approached its historic peak in relation to movements and the limits of its capacity. In contrast, the cargo tonnage (result of airfreight and airmail including transit) fell by approximately 4.9 percent year on year to around 356,970 tonnes due to the decline in airfreight.

Traffic growth at Munich Airport in 2019 was characterized by a number of insolvencies in the airline sector. Germania and BMI Regional were impacted in February and Adria Airways in September. The effects of these insolvencies were offset by the growth in demand and associated broadening of the service offering on the part of airlines in the 2019 summer timetable. A trimmed-down 2019/2020 winter timetable led to a decline in aircraft movements during the further course of the year, however, which was exacerbated by the strikes at Deutsche Lufthansa. Alongside the global economic slowdown, the decision by the German government not to abolish the German air traffic tax, rather to even increase it from April 2020, had a dampening effect.

Growth in passenger numbers was driven by the extension of the summer timetable offering; aircraft capacity fell slightly as a result by 0.3 percentage points to 77.2 percent. Following just a slight increase in the previous year, the average number of seats offered in 2019 increased significantly by four to 158 seats per flight. The average maximum take-off mass of the aircraft (MTOM) likewise increased by 3.1 tonnes to 87.5 tonnes. This development was triggered mainly by the withdrawal of BMI Regional, which operated small and light regional aircraft with the Embraer 135/145.

Customers in the premium travel classes represent an important target group in the long-haul sector. Here too, Munich Airport is a world leader, particularly due to the high number of business travelers.

Aircraft movements at Munich Airport

In thousands

Primary growth drivers included the percentage of transfer passengers, which increased by one percentage point to 38 percent. The number of originating passengers (passengers who do not transfer) remained stable at a high level.

Demand for German domestic flights was at 9.6 million passengers. This meant a reduction of around 85,000 passengers. In terms of cumulated result, the segment was thus just under the previous year’s figure (-0.9 percent). The route to Berlin-Tegel was largely at the previous year’s level with a slight decrease of 52,000 passengers; significant negative impacts as a result of the new ICE link between Berlin and Munich were not observed. In contrast, the number of German domestic aircraft movements increased by 4.6 percent to around 95,000 takeoffs and landings. The different development of aircraft movements and passengers in German domestic air traffic is due to the start-up difficulties with the marketing of new flights and very mixed development of services over the course of the year, primarily in the low-cost segment on the Berlin-Tegel connection owing to the competitive situation on this route.

Continental traffic posted additional growth: Approximately one million additional passengers (29.9 million in total) were transported compared with the previous year. This equates to an increase of around 3.7 percent. Aircraft movements in this segment fell slightly by about 2,300 (-0.9 percent) to around 263,000 flights. The figures for aircraft movements came under pressure from the insolvencies of Germania, BMI Regional, and Adria Airways, while the high passenger demand was absorbed to an extent by other airlines.

Measured by the number of passengers, the long-haul traffic segment posted the highest growth rates. Just under 8.5 million passengers took intercontinental flights, around 690,000 more than in the previous year (+8.9 percent). The long-haul movements also rose by 6.4 percent to around 34,000 long-haul flights.

Passenger numbers at Munich Airport

In millions

In fiscal year 2019, airfreight could not continue the success of the previous years and declined by approximately 5.6 percent to around 338,517 tonnes. Various special effects impacted the growth in freight at Munich Airport: There was a general slump in demand resulting from the economic downturn. In addition, the major provider of all-cargo services, Air Bridge Cargo, ceased its flight operations at Munich completely owing to economic difficulties at its parent company. Moreover, freight capacities declined as in the previous year due to changed aircraft types and load restrictions on the Boeing B787. Even the strong intercontinental growth at Munich Airport could not fully cancel out the effects.

Airfreight and airmail (including transit) at Munich Airport

In tonnes

With a share of over 80 percent, the quantity of freight loaded onto and unloaded from passenger aircraft, known as belly-hold cargo, was the most important traffic segment. The belly-hold cargo declined year on year by approximately 2.7 percent to around 286,000 tonnes. The quantity transported on purely freight flights decreased considerably by around 20.5 percent to approximately 46,000 tonnes due to the shutdown of Air Bridge Cargo.

The airmail throughput increased to approximately 18,400 tonnes (+9.6 percent).

Compared with the traffic results of the airports represented in the German Airports Association (ADV), Munich Airport developed extremely positively. Munich Airport performed well above average in terms of comparable airports when it came to aircraft movements and passengers. Cargo throughput fell ADV-wide, though the decline in Munich is slightly above the ADV average owing to different special effects. In a comparison of all ADV locations (with combined growth for Berlin-Tegel and Berlin-Schönefeld), Munich Airport recorded the strongest passenger growth in absolute terms with an increase of around 1.7 million passengers.

Despite above-average growth, Munich dropped back to ninth place in the ranking of the busiest European airports by passenger numbers, according to the Airports Council International (ACI) during 2019. In terms of aircraft movements, it was able to claim seventh place.¹⁸

There are two ground handling licenses at Munich Airport. One of these is permanently assigned to the subsidiary AeroGround Flughafen München GmbH (AE Munich). AE Munich reported an increase in handling volume of 1.7 percent in 2019. The market share increased by 0.4 percentage points to an annual average of 54.9 percent in 2019. This positive change is largely the result of the sustained growth of Deutsche Lufthansa.

AE Munich lost market share in Terminal 1, due among other reasons to the insolvencies of Germania, Sky Work, and Small Planet, which were borne exclusively by AE Munich. The relocation of Eurowings to Terminal 1 in the second quarter of 2019 likewise played a role.

AeroGround Berlin GmbH (AE Berlin) holds ground handling licenses at both Berlin airports. In fiscal year 2019, the market shares at both locations fell owing to the insolvency of Germania. A market share of 23.0 percent was achieved at Berlin-Tegel (previous year: 24.0 percent) and 14.0 percent at Berlin-Schönefeld (previous year: 17.0 percent). AE Berlin had a share of 20.0 percent for the Berlin market as a whole. Despite the insolvency of Germania, business operations at AE Berlin continued to stabilize in 2019.

Commercial Activities business

Compared with the previous year, revenue in the Commercial Activities business unit put in a positive performance overall. In this regard, the relocation of passengers from Terminal 2 to Terminal 1 and the resultant commercial effects led to partly heterogeneous developments.

Despite rising passenger figures, the retail trade at Munich Airport reported stagnant revenue in fiscal year 2019, with the result that the revenue per passenger did not reach the previous year’s level. The relocation of passenger flows from Terminal 2 to Terminal 1 had a huge impact here, as the variety and scope of the retail offer are not as extensive in Terminal 1. Other factors included longer processing times at the security checks and thus a shorter amount of time being spent by potential customers in the non-public area.

As in the previous year, revenue for Russia a sa destination fell significantly despite the increased passenger volume. In contrast, revenue from passenger volumes for the more strongly demanded destinations of China and Hong Kong remained positive, though disproportionately lower with respect to the number of passengers.

Since Great Britain voted to leave the EU in 2016, the British pound sterling has lost considerable value, which has impacted directly on the consumer behavior of passengers from Great Britain. Despite rising passenger figures, revenue from this customer group increased disproportionately less.

The passenger volumes flying to Turkey increased significantly compared with the previous year, however retail revenue for this customer group developed more slowly than average.

In fiscal year 2019, the restaurants and bars were able to profit from the vibrant growth in passenger figures and revenue increased again, both in absolute terms and per passenger. The trend among airlines to offer less food on board continued and meant that passengers availed more of the offering at Munich Airport, both as eat-in and take-away options. Newly opened or extended units also contributed to the growth of catering-related revenue at Munich Airport.

In the hotel sector, there was strong demand from guests and conference participants for rooms and the conference center. At the Skytrax Awards 2019, the five-star hotel in the central area of Munich Airport was named second best airport hotel in Europe.¹⁹

The growth in passenger figures in originating traffic had only a limited impact on the parking business. Against the backdrop of a slight growth in demand for parking spaces, it was possible to increase revenue overall from the heavily used parking capacities in the face of changed parking behavior, for example through a further development of product categories, continually optimized yield and capacity management, and the pickup in growth in the «shared mobility» segment (rental cars and car sharing).

Revenue from the «out-of-home» advertising category increased again for the first time in fiscal year 2019. Advertising revenue overall was below the previous year’s level, among other reasons this was because of special and/or one-off effects from the previous year. In the two terminals, advertising revenue continued to develop heterogeneously. In Terminal 2 and the satellite building, significant growth was recorded due to the greater appeal of the advertising spaces. In Terminal 1, in particular, the marketing situation remains challenging, however, due to the largely analog advertising options there and divergent customer structures and frequencies.

Real Estate business

Munich Airport’s real estate business continued to develop marginally at the existing high level. The difficult competitive situation facing airlines, in particular, meant that the Group was unable to increase rental income on existing properties over and above indexing.

The development of the LabCampus future project on the AirSite West area continues to take shape. Following construction approval for the first two buildings, construction of the modern buildings at the innovation center can now commence in 2020.

Extensive development measures are required to improve connections to AirSite West. A bridge structure is being constructed from the western end of Nordallee over Zentralallee (traffic node, West 0) and railway line to connect up with the airport maintenance area. In addition, Munich Airport is continuing to develop the telecommunications link in this area as well as the water supply.

In the eastern area of the airport, Munich Airport continued the tunnel works related to the Erdinger Ringschluss (Erding ring closure) to improve rail access to the airport. The existing tunnel, which currently ends at the level of the satellite building of Terminal 2, will be extended eastwards. The tunnel extension is around 1.5 kilometers long and will be supplemented by a 300 meter long access ramp, via which the trains will return to the surface. Munich Airport plans to have the tunnel shell completed by 2021, after which it will be fitted out by DB Netz AG with the technical equipment required for railway traffic.

Furthermore, works to improve Munich Airport’s eastern road link have been under way since the previous year, involving the construction of the multi-lane extension of the south ring and its eastward extension in the direction of the airport feeder road (FTO). These works are expected to be completed by the end of 2020.

Munich Airport is currently at the implementation stage of the major project to construct a new gate in Terminal 1 in order to modernize the terminal and increase capacity. The extension will help to improve the handling of wide-bodied aircraft and non-Schengen passengers, which was urgently needed owing to the changing traffic structure. In addition, because the requirements for security checks have increased constantly since Terminal 1 was opened in 1992, checks on persons and luggage have to be extended. The addition of this new gate is the only way that Munich Airport can restore the former handling quality in Terminal 1 to meet the needs of passengers, airlines, and authorities.

The overall concept for the extension includes a structure on three levels, comprising a core building adjacent to Terminal 1 and a gate. This will be connected with the existing Modules A and B and extend more than 320 meters into the western apron of Munich Airport. Up to twelve aircraft will then be able to dock at the gate. The total area of the extension, including renovations in the existing arrivals area B, is around 95,000 square meters. In fiscal year 2019, Munich Airport was able to carry out the demolition of the apron, the West hall, and the ramp equipment station 1, and announce planning permission. Construction works started at the end of 2019 with the excavation of the foundation pit.

A variety of different residential properties were rented in the past year to provide suitable accommodation both for existing and new Munich Airport employees. For example, a residential facility is available in München-Bogenhausen, comprising high-quality furnished apartments, which will be sublet on fixed-term contracts. A number of properties have also been available since the beginning of 2019 in the region surrounding the airport, including terrace houses and apartment blocks where employees with families can also make a permanent home. Apartment buildings owned by the airport have also been renovated and converted into residential facilities. Meanwhile, a modern employee hotel was opened in Hallbergmoos at the end of 2019. The 196-bed facility, where rooms can be rented on a six-month basis, should make it easier for new employees to gain a foothold in the airport region.

The demand for office and logistics space within the Group is continuing to increase. For this reason, a central logistics center has been under construction since the beginning of fiscal year 2019 at AirSite West, which will be operated by the subsidiary eurotrade. A tradesman building is likewise being developed at present to the north of the office building used by the Real Estate business unit, which is earmarked for use by different FMG divisions until the planned completion of the FMG headquarters. Both the logistics center and the tradesman building should be ready to open by 2021.