Strategy

Thinking sustainably – acting responsibly

As one of the most powerful air traffic hubs in Europe, Munich Airport combines sustainable economic value creation with ecological and social responsibility. The business activities of Flughafen München GmbH (FMG) have a major impact on many different areas and stakeholders: on Munich, Bavaria, and Germany as business locations, on the region and its population, the airport staff and passengers, as well as on other companies in and around the second-largest German hub, plus other stakeholder groups.

Against the backdrop of discussions on climate change taking place globally, FMG is facing the challenge to play its part. For example, Munich Airport is aiming to be carbon-neutral by the year 2030 at the latest. To ensure the future viability of the company, the business model therefore complies with economic, ecological, and social requirements. FMG is also aware of the negative effects that operating an airport may have and is making every effort, through suitable initiatives and measures, to avoid these, keep them to a minimum, and, where required, compensate for them.

Strategy 2025

Strategic field of action: Landside access and traffic development

Planning the future today

For the future, the company has primarily identified three key challenges:

• Expansion of the infrastructure
• Demographic challenge and culture change
• Digital transformation

Guidelines for the medium-term development of the airport are defined in Strategy 2025. This describes five key fields of action for the successful operation of Munich Airport:

1. Airside traffic development
2. Landside access and traffic development
3. Seamless travel
4. Expansion of non-aviation business
5. Off-campus growth

The fields of action are the result of scenario analyses on the future of aviation and stem from talks with company stakeholders. The initiatives and measures from the sustainability program play a major role in implementing the strategy and thus in bringing about the further development of the airport. FMG measures the success of implementation using defined key performance indicators.

Aviation as a strategic cornerstone

The Covid-19 pandemic represents the greatest crisis in the history of commercial aviation and beyond. Whereas Munich Airport had operated for most of the day at its capacity limits up to the beginning of 2020, traffic figures collapsed to a fraction of the previously recorded volume in April 2020. As a result, the focus of traffic development in the short term now lies on recovering a large portion of the lost connectivity so that Munich Airport can continue to play its role as Bavaria’s gateway to the world after the crisis too.

Safeguarding connectivity into the future is also important for the people who live in the area as well as the companies based here. Because of its economic power and year-round attractiveness as an incoming destination, it is to be expected that Bavaria and Southern Germany will continue to develop at an above-average rate. Munich Airport is crucial as a gateway for this region. Long-haul will therefore be an essential cornerstone of the aviation strategy in the medium to long term too. Alongside safeguarding its role lastingly as one of the most important air traffic hubs in Europe, the service portfolio should be rounded off where possible and meaningful with point-to-point connections. To meet these requirements, the quality of the infrastructure must be maintained at a high level and improved successively.

Passenger structure in 2019

Business trip 36%

Private trip 64%

Transfer passengers 38%

Originating passengers 62%

Non-aviation as a strategic cornerstone

Business related directly to air traffic is only one aspect that contributes to the success of the Group. Non-aviation business is equally important for the economic development of the airport. The relevant strategies are aimed at enhancing customer orientation and progressively developing the airport as a shopping and travel experience and real estate location.

Commercial Activities

The Commercial Activities business division developed a new 2025 target vision in 2019 and defined a number of different fields of action in this regard with corresponding measures and work packages.

Retail trade and catering at the airport are gearing up for the future.

Optimization of service portfolio

The airport uses new store concepts such as pop-up, concept, or flagship stores to offer an innovative, modern, and emotionally appealing shopping experience. The mix of goods and products in the stores plays an important role in this context. Well-known brands continue to be in high demand. Regional products from Bavaria are also becoming an increasingly important element of the retail trade and catering portfolio in the interests of a sustainable corporate philosophy.

Experience drive

The customer experience at Munich Airport takes center stage. Customers are sure to be inspired by the enthralling stagings in the terminal areas, live presentations of strong brands, and attractive events in the München Airport Center (MAC) forum. The gastronomic experience at Munich Airport is also expanding.

Digitalization, customer management and sales

Munich Airport’s different customer groups are increasingly utilizing digital channels, with further growth predicted in the online retail segment at the expense of the brick-and-mortar retail trade. This also affects the stores at the airport. Retailers have to adjust to new customer demands as well as to changes in customer behavior. In the area of parking too, the percentage of online bookings continues to grow. Munich Airport therefore intends to consistently expand digital platforms within its commercial services portfolio so that it can benefit from these developments. This likewise includes expanding systematic trend and market research so that marketing and communication measures aimed at specific target groups can be developed. The aim is to address customers with specific offers and individual marketing messages in a variety of channels. This is essential if the company is to respond to the demand for a personalized approach. The development will be supported internally by an optimized modern sales organization and by enhancing the flexibility of rental models.

IN BRIEF

#stayconnected

The travel restrictions imposed in conjunction with the COVID-19 pandemic and the dramatically reduced range of flights on offer have resulted in a massive decrease in traffic at Munich Airport in 2020. What is important now is to maintain the economic stability of the company, for example through strict reduction of personnel expenses and the cost of materials, or postponement of investment projects. The top priority of all measures is always the health of passengers and staff at Munich Airport. It is not possible to realistically forecast at present when aviation will return to its growth trajectory.

Real Estate

Development of the real estate location is also extremely important for the further expansion of non-aviation business at Munich Airport. The 2025 real estate strategy of the Real Estate business division has four material objectives.

Using real estate as a means of securing the core business of aviation

Aviation is the engine that drives the site’s development and ensures stable and sustained growth in customer traffic through the hub structure. The passenger figures at Munich Airport have been increasing for years, and the airport’s aim is to continue to offer passengers the best possible quality of stay. In line with the aviation strategy, Munich Airport is therefore investing significantly in new aviation infrastructure. Examples of this are the extension of Terminal 1 or the planned «T-Stiel» building extension for the satellite building. The cost of maintaining the value of real estate assets is rising at the same time, since many buildings date back to the early days of the airport.

Making optimal use of space already used for commercial purposes

At the heart of this strategic objective is the München Airport Center (MAC) as the most important commercially used space. Investment is planned in the coming years in the development of the MAC in order to meet the strict requirements for quality of stay in the future also.

Generating substantial contributions to profits by developing real estate

To fulfill this objective, FMG is focusing especially on the LabCampus project, which involves the development and construction of an innovation center in the west of the airport premises. The plan is to relocate, among others, the Airport Academy here in the coming years and to develop a number of new office buildings as well as FMG’s future administration building. With the LabCampus and other new revenue streams, FMG wants to further diversify its business interests outside of the existing portfolio.

Taking account of regional interests

Considering the dynamic development of Munich Airport and the numerous construction projects, the Real Estate strategy takes account of the interests of the airport region in the best possible way. In addition to intensive dialog with the region, FMG is focusing its real estate strategy on target groups and companies that view proximity to the airport and an international environment as an essential criterion for potentially locating here.

Expansion of international business

Munich Airport International GmbH (MAI) coordinates all international activities of Munich Airport for management, consultancy, and training services. Over and above operating airports, MAI’s portfolio includes consultancy services throughout the entire life cycle of an airport, as well as training for airport managers and staff. MAI bundles its activities in the North American market in its fully owned subsidiary Munich Airport US Holding LLC (US Holding), which has two of its own subsidiaries at present: EWR Terminal One LLC and the joint venture Reach Airports LLC.

Management contracts are an important element for the successful growth of MAI and strengthen the international presence of Munich Airport.

• EWR Terminal One LLC has been operating Terminal A at Newark Liberty International Airport (EWR) since September 2019. The operation also includes maintenance and franchise management for lessees and users of the terminal building. The US Holding subsidiary will operate the terminal building in the long term following the opening of the new Terminal 1 in 2021.
• Reach Airports LLC, a joint venture of the US Holding and Carlyle Airport Group Holdings (CAG) based in Washington, D. C., combines the strengths of both partners – the experience of CAG in the area of airport investment and the operational management expertise of MAI. The cooperation has jointly taken over what is currently the largest airport infrastructure project in the United States: the development and operation of the new Terminal One at John F. Kennedy Airport in New York City.

In addition to further activities in the US, MAI is planning to increase its presence in promising growth markets. Not only are new sales locations, the acquisition of companies, and additional management contracts planned for 2020, but also potential takeovers of airport-related consultancy firms and new strategic partnerships.