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Aero Telegraph: Interview of Dr Constantin von Alvensleben, CEO of TIA

 

Tirana Airport held up very well against its competitors last year, with a passenger drop of only 60 percent. To what do you attribute the low passenger losses during the Covid-19 crisis?

2020 was one of our most difficult years we ever had but in retrospect I think we can say that we managed it relatively well together with our partners, in particular with our airlines. After the 3,3 million passengers we made in 2019, our traffic in 2020 was reduced by 60%, and we ended up with 1,3 million passengers. This is how much TIA serviced in the year 2009, but TIA did its best to cope with such loss of traffic and revenues which is very much due to the loss because of the family travelers to Italy, which is our main market with most frequent destination.

 

What was for you the hardest period?

The hardest time was the period between 12th March and 15th June, when TIA was closed for any commercial traffic and only serviced repatriation, humanitarian, ambulance and cargo flights. The summer months then provided some relief as the charter and holiday traffic supplemented our scheduled services and the increased traffic between July and September brought some optimism back. Throughout the year we continued to be the gateway of Albania and kept up our good service. For the next months the traffic will remain curbed as long as Albanians face the travel ban of the European Union member states.

 

What is needed for recovery?

The recovery process of TIA certainly requires progress for the vaccination of the Albanians. My prediction is that the current travel ban of EU member states for Albanians will only be relaxed once Albania has achieved significant progress on the vaccinations. In addition, a digital vaccination passport, as it is currently discussed in the EU and by the Albanian Government may help for relaxing the travel restrictions.

Tirana Airport may be able to recover a bit faster than other airports because of the widespread Albanian diaspora which provides for a very resilient traffic base.

 

Across Europe, airports suffered financially last year, how many losses do you expect?

As mentioned, our revenues were hit approximately to the same extent as our traffic, so minus 60%. As many costs at an airport are fixed costs, the management needs to be fast and innovative to avoid a liquidity shortage. This worked relatively well, but at the price of a reduction of our workforce and a short work scheme. Obviously, also maintenance cost was reduced to the extent possible and construction and procurement expenses reduced. Despite all these measures, secure and safe operations remained the absolute priority, while at the same time communicating intensively with our passengers and the Albanian public through social media, web site and the Albanian press and television channels.

 

There was a change of ownership just before the end of the year. The Albanian Kastrati Group took over the operating concession from the former Chinese owner for 70 million euros. Why did the change of ownership occur?

Since December, TIA has a new sole owner, Kastrati Group Sha. This group is very experienced in a number of infrastructure fields and above all Kastrati Group an experienced Albanian corporate and as the Management of TIA feel very well supported by our new shareholder. I think the new shareholder has a detailed and ambitious investment plan, which will have an extremely positive impact in all aspects. The investment plan envisages the expansion of the capacity of the airport and the terminal, the expansion of the runway, the complete improvement of the airport infrastructure and the significant improvement of the quality of services. With significant investment growth we will expand and improve infrastructure and quality of services. The extension of the Concession Project is just approved by the parliament until 2040 and this period will be a great potential to transform the airport into a great regional infrastructure and to offer direct flights to all of Europe's major political and economic capitals and cities.

 

Why did the former Chinese owner sell its stake to Kastrati?

As regards the former Chinese owner I can say that they have been intensively involved and supported TIA in any respect. On the reasons for the sale I cannot comment.

 

Your expansion program started already in 2019, what investment projects are next on the agenda?

In the field of construction development and investments, TIA will continue its projects, in particular regarding the airfield works which started in 2019, to ensure state of the art facilities. We receive full support from our new shareholder for these projects.

As part of the changes to the Concession Agreement, TIA has announced that a full package of investments totaling approximately € 100 million will be in the focus of management with a focus on expanding the airport's accommodation capacity to 6 million passengers per year, runway extension, complete improvement of airport infrastructure and significant improvement of service quality.

 

Will this lead to higher changes for airlines?

Along with the reduction of the passenger fare, part of the package of amendments to the Concession Contract is the liberalization of Ground Handling Services and the liberalization of the aircraft fuel market which will bring lower costs in the price of this fuel. All of these significant changes will have an immediate effect to attract other "low cost" airlines and consequently will have the effect of lowering the ticket price paid by TIA passengers. Further, with the easing of travel conditions after the pandemic, these decisions will affect the increase of the number of flights and destinations.

 

The Kastrati Group, as the new owner, has announced that it will reduce passenger handling costs from Euro 12.50 to 10. A concession to the low cost airlines?

I can confirm that TIA will reduce its passenger charge from 12,50 EUR per passenger to 10 EUR per passenger very soon. We see this very much as our contribution towards the recovery of the air traffic. We also think that this will contribute to lower travel cost for the passengers, in particular if we are able to ensure more competition among airlines on the important routes.

 

Last year, Wizz Air announced the stationing of three A320s in Tirana. Did this happen and how do you see the further development of Wizz Air at the location? 

Wizz Air definitely has made a good start here at TIA, with three aircraft based on our apron. Due to the pandemic, the traffic growth was not as good as expected, but with 24% of the traffic, Wizz Air was the strongest carrier in 2020. This shows how successful the low cost segment can be. We also have EasyJet here. Further to that our two local based airlines Air Albania and Albawings are offering cheap tickets to Italian destinations and more. Wizz Air will place its 4th airplane this summer as Tirana is chosen as their aircraft base. This is a new and very positive development.

 

More than 4 million Albanians live abroad, do you see a potential for future long-haul flights from Tirana?

The long haul destinations are very well served from TIA via powerfull international hubs. Of course there is potential to develop in the future at least summer charter traffic from TIA to US.

 

How satisfied are you with the hub connections of the major network airlines, do you see any potential?

TIA is the most connected airport in the region, we are very proud of that. We offer flights, some of them double daily to the most internationaly connected hubs such as: Vienna, Frankfurt, Istanbul, Rome, Belgrade, Athens, London providing our passengers with a wide choice related to time of travel, price and destination. The conncted traffic accounts for approximately 27% of our total traffic.

Further to that the start of flydubai direct flight to Dubai from TIA will increase the connectivity of our passengers through the hub of Dubai codesharing with Emirates to 161 worldwide destinations, mainly serving Indian Ocean, Africa, Australia, India and Asia. 

 

The Albanian government announced a few days ago that it will build a second international airport on Albania's southern coast near Vlora. Do you expect at TIA a drastic drop in tourist flights once the airport opens?

Vlora Airport will be a tourist destination and most of the passengers who visit Albania during the summer season, especially those who choose the South, will go to this airport. This for us is direct competition, as during the summer season we have the largest passengers flow. However, we estimate that Albania still has unused potentials in the civil aviation sector.

 

With Albawings and Air Albania, Tirana Airport has two "home carriers". How important are both airlines for the long-term development of the location?

Although Air Albania started operations in mid-2019 only, it resulted to be successful not only to carry out the first leg connection traffic to Istanbul codesharing with Turkish Airlines, but also developing three more routes to Italian Market, which continued also during the difficult year of 2020. Albawings is a very consolidated airline, contributing to TIA with a huge number of Italian destinations served. Since Italy is our main market we are very happy to have the contribution of Albawings codesharing with Blu Panorama, providing a very reliable incoming sales network.

Although there are still many travel restrictions TIA will have a positive summer season, starting with the launch of Fly Dubai’s flights from March 29th and the return of the Israeli tourist with Israir Airlines. With pleasure we can confirm the tourists coming from Ukraine and also Eurowings with three routes from Germany. For this season is expected a significant recovery in the charter traffic as by summer in most of the incoming tourism countries the vaccination process will have advanced and allow passengers a safer travel.