Amazon buying an airport might not be so outrageous


The rumour that Amazon is thinking about buying Frankfurt Hahn Airport appears to have mediocre veracity. The German newspaper Sueddeutsche Zeitung mentioned that the Rhineland-Palatinate Government may have had discussions with Amazon about the sale of the airport, which is around 60miles/100km west of Frankfurt, but other sources suggest all of the interested parties are Chinese.

Certainly the asset is not universally attractive. Originally owned by Fraport AG, the airport was sold to the local Lander Government which marketed it to low-cost airlines as an alternative to Frankfurt Airport.

This has not been not been a total failure, with RyanAir becoming a notable customer. However, passenger volumes have fallen steadily since 2007, from 4m to 2.6m in 2015. The cargo business has also suffered, with the departure of Etihad leading to a sharp fall in cargo volume from 2011’s 286,000 tonnes to 2015’s 79,660 tonnes.

Yet, such an airport going cheap could be useful to someone with the volumes to support it. Roughly equidistant between Luxembourg and Frankfurt, the location is reasonable for servicing fulfilment centres across much of western Europe. The location also has the room for large logistics facilities. What it does not have is passenger airlines belly-freight capacity. Any user would really have to have access to its own aircraft operation.

Amazon has already moved to create its own fleet for operation in the US, although here the ground operations are provided by Air Transport Services Group. Why it should feel the need to create an in-house airfreight hub operation for volumes in and out of Germany when it has subcontracted a much larger operation in the US would be slightly hard to understand, not least as there are other options in Germany, France, Luxembourg and the Netherlands. Also unclear is why it might want to buy an entire airport, although ownership might offer the level of control that Amazon appears to like.

What is certain is that Amazon has substantial airfreight operations across the continent of Europe and, bearing in-mind Amazon is creating both a forwarding and airfreight capability, such a physical asset would not be illogical. In light of the scale of its worldwide fulfilment network it would hardly be a big investment decision and the Express providers own much larger capabilities. Therefore, even if Amazon does not by Frankfurt Hahn it would not be too surprising if developed or bought something similar in the not distant future.

Source: Transport Intelligence, 20th April 2016

Author: Thomas Cullen