Fraport puts emphasis on retail revenue

While Fraport, owner and operator of Frankfurt airport, mainland Europe’s biggest hub, has just announced preliminary plans to raise its aeronautical fees (see eTN December 1), the company is also pushing forward with extra retail facilities to drive up revenues from its passengers, 43 percent of whom come from households with incomes of greater than €4,000 per month.

Fraport CEO Stefan Schulte told eTN: “Retail is core to our business model. We derive more than 50 percent of our profits from retail and real estate and we intend to increase spending per passenger in the next four to five years.”

The company has been generating around €2-3 on average from each of its 53.47 million passengers in the past three years but the company wants to move this figure up to at least €4 by 2014 when passenger numbers are forecast by Schulte to reach around 60-65m.

Last month (December), Frankfurt’s biggest retail partner, Gebr Heinemann opened a large 750sq m duty-free concept store in Terminal 1B airside that will be a blueprint for similar shops at the hub, as well as other German airports and beyond. This month, Fraport also opened its first landside shopping plaza in Terminal 2.

Meanwhile, its City Mall development that links its rail facility continues to be filled with more retail stores including a new car rental center.

Extensive infrastructure development, which will sink a huge €7bn into the airport by 2015, is intrinsically tied to squeezing extra spending out of passengers. For example, the new €500m Pier A-Plus at Terminal 1, which is set to be finished in April 2012 when it will accommodate seven wide-bodied jets including the A380, is set to have another two walk-through stores. With a total area of 185,000sq m spread over four levels, the pier’s 23 open-concept gate lounges will be exclusively used by Lufthansa, and will have a capacity of up to six million passengers per year.

In 2008, the Fraport Group generated € 2.1bn revenue and EBITDA of €600.7m, of which retail and property contributed the biggest slice by far at €367.9m (61.2 percent), well ahead of aviation’s share of 20.8 percent.