Ryanair flies to rescue of Frankfurt-Hahn airport

When the owners of the former US airforce base at Hahn in Germany sought a meeting to encourage Ryanair to fly there in the late 1990s, they didn't really believe they had a viable proposition.

The airport, 123 km from Frankfurt, had been deathly quiet since the fighter jets headed back to the US in 1990. The entire region had been plunged into the depths of depression after the US withdrew nearly 15,000 personnel, and the 1,000 locals who held civilian jobs at the base were made redundant.

The airport's managing director, Andreas Helfer, says it couldn't imagine why an airline would operate scheduled flights from this remote airport. And even if it did, it couldn't imagine that passengers would want to go there. That was until they met Michael O'Leary.

Ryanair's chief executive dismissed their concerns as "bullshit", Mr Helfer says. "He told us that people would go there just because airfares were cheap".

Mr Helfer says that Fraport, the company that owned Hahn airport, quickly realised they had a potential customer and immediately began telling Ryanair "whatever it wanted to hear".

This year, more than 3.5 million people are expected to pass through Hahn airport en route to destinations across Europe. Most will travel with Ryanair, while others will board flights to Italy and Poland with two other low-cost airlines, Italy's Volareweb and new Polish airline Air Polonia.

In less than four years, Mr Helfer says the region has been transformed. "There are 2,200 jobs at the airport, with 400 people employed by the airport and sister companies," he says. Mr Helfer says the experience has proved a valuable lesson for Fraport's other airport ventures.

Fraport had invested in Hahn in 1997, principally to use its 24-hour operating licence to develop a cargo hub there. It planned to use it as a relief airport for Frankfurt airport, which it also operates, with the bulk of the traffic expected at night. Nearly three years on it still had no traffic and was delighted when Ryanair set up two scheduled flights there in 2000.

The Irish airline quickly decided that, while Hahn was more than 100 km from Frankfurt, it would use the airport as its link into Germany's financial capital. Soon it was promoting cheap fares between London's Stansted Airport and Frankfurt (Hahn).

At the start, passengers checked in and collected luggage at the old Officer's Club, a small shed-like structure, before beginning a journey of up to two hours into Frankfurt. As their numbers swelled, a new terminal was erected and today it has the capacity to handle more than four million passengers annually.

Mr Helfer describes it as a "low-cost terminal", something that Mr O'Leary has long campaigned for at Dublin airport. Mr Helfer says it is basically a concrete structure that has no computer systems, no complicated baggage handling or conveyor systems.

The airport has still to turn a profit, but Mr Helfer says it is on course to achieve that milestone by 2008. In 2003, it reported a €17 million loss, an improvement on the €20 million it shed in the previous year. Mr Helfer says that, while Ryanair provided the basis for the airport's success, it would have been impossible to survive with this one customer.

Ryanair passengers account for more than 90 per cent of those who visit Hahn airport. The Irish airline's business and the subsidiary activities, such as car parks, generate about 60 per cent of its revenues.

The airport was trumped by Belgium's Charleroi airport in 2001 in terms of the deal and incentives offered to Ryanair to establish its first European base there. That controversial deal has since been outlawed by the European Commission, which has ruled that the airline received illegal state aid there.

The following year, Ryanair did establish a base at Hahn, launching flights to destinations across Europe. Mr Helfer says it didn't match the Charleroi deal because it couldn't afford to. He adds that there are no implications for the airport from the Brussels ruling. "We would not have been in a position to offer what Charleroi did because we had to make profits by 2008 at the latest, which didn't have to happen in Charleroi, and that is the difference."

Mr Helfer suggested that Ryanair, which had earned a reputation for squeezing the cheapest airport deals, had begun to understand that it needed some examples that these deals could also be beneficial for an airport. "Otherwise no other airport would want to do business with them."

The airports two other low-cost airline customers fly to destinations not served by Ryanair and it is hopeful that others will use its facilities in the future. "Ryanair has opened up a lot of infrastructure at the airport which can be used by other low-cost carriers," he says.

The remaining 40 per cent of the airport's revenues come from its cargo business. After Ryanair, Aeroflot and Air France, are Hahn's biggest customers and it is keen to retain this mix of business.

It's long-term growth projections are based on Ryanair remaining the airport's biggest customer, Mr Helfer says.