Danes developing cutting-edge gateway to northern Europe
After just a few minutes in the company of Thomas Woldbye, his passion for the airport industry shines through. The Copenhagen Airports CEO presides over one of Europe’s most progressive airports, with a passenger-focused strategy that has seen it pioneer many innovative technologies. Woldbye joined the airport as CEO in May 2011, after a 27-year career with A.P. Møller-Maersk, the world’s largest container shipping company. He may be a newcomer to the world of aviation, but his transport and logistics experience runs deep.
Denmark is a centre of state-of the-art design, combining simplicity with functionality, and Copenhagen Airport (CPH) mirrors this perfectly. Anyone who has travelled through the airport, particularly after the recent expansion of Terminal 2, will have been struck by the smoothness and simplicity of the passenger experience. Coupled with the airport’s eye-catching design, this creates a real sense of place.
Privatised in 1990, the Danish government remains a major shareholder in CPH with 39.2%. Ontario Teachers’ Pension Plan (OTPP) and Macquarie European Infrastructure Fund III (MEIF3) hold the majority shareholding via Copenhagen Airports Denmark (CAD). CPH positions itself as the ‘Gateway of Northern Europe’ and is developing a ‘World Class Hub’ strategy. Its achievements in the past year alone are myriad: a new baggage system, a remodelled and expanded Terminal 2, a rebuilt Pier C for intercontinental traffic, more space at passport control, more CUSS kiosks hosting nearly 40 airlines, an improved security area, new e-gates, automated bag drop and automated border control to be rolled-out by year-end, new routes… and the list goes on.
By far the biggest challenge for CPH has been the perception that the economic crisis is equally severe throughout Europe. Scandinavia has a strong and healthy economy, and an undefeated desire to travel. It can, understandably, be a challenge to convince the Americans or Chinese of this for example, as their perception is of Europe as one consistent market. The reality, of course, is more nuanced. The economies of Northern Europe are thriving and CPH is working hard to get this message out there. Copenhagen is, of course, the cultural, economic and governmental centre of Denmark, and one of Northern Europe’s major financial centres. Many major international companies have chosen the city as their regional headquarters, including Microsoft and Maersk.
Dynamic traffic recovery
Impressively, CPH set a passenger record of 23.3 million in 2012, despite the bankruptcy last May of Cimber Sterling, which operated 19 routes from its main base at the airport. Woldbye explained that the recovery was fast, with SAS, Norwegian and Danish Air Transport stepping in to fill routes including Bornholm, Sønderborg and Karup. Domestic traffic suffered most, falling -19.4% last year, whereas international traffic grew +5.3%, resulting in an overall increase of +2.7%. “We already had a strong focus on growth in all areas, particularly the international segment. We also have a robust contingency plan for literally every route, so we know who we’re going to call if a route stops,” commented Woldbye. “Traffic fell away momentarily, but the recovery was actually quite fast. We are still not back at the same level of domestic traffic, but that is more to do with the market and the fact that Cimber Sterling was probably offering a price level that encouraged more domestic travel, but that turned out to be unsustainable.”
This summer was CPH’s busiest ever; seven million passengers travelled through the airport between June and August. The latest figures for August show a +6.4% rise year-on-year, and year-to-date growth totals +3.2%. These are undoubtedly impressive figures, especially for an airport of CPH’s size and given the moderate growth being experienced across Europe – ACI EUROPE figures show a +1.6% increase in overall passenger traffic at European airports in July. The pace of recovery at EU airports in particular is fragile and CPH, under Woldbye’s dynamic leadership, is clearly outperforming the average.
CPH’s growth incentives are the result of it operating in a growing market. Its start-up discounts are world-class – a 100% discount on take-off and passenger charges in year one, 90% in year two, 80% in year three, 40% in year four, and 20% in year five. Public co-financing by the route development fund Global Connected has also been secured, highlighting the fundamental backing of route development by the private sector, public authorities and the political scene. The public-private partnership focuses on strengthening the marketing of Denmark as a destination, and the collaborative approach sends out a united message to airlines considering opening new services. It has produced tangible results; Woldbye highlighted SAS’ service to Shanghai and San Francisco, Singapore Airlines’ increased frequency to five times per week, and Norwegian’s routes to Fort Lauderdale, Los Angeles and New York as notable examples. Interestingly, with Emirates’ service to Copenhagen, Woldbye explained that much of the destination marketing was performed in Australia rather than Dubai: “The amount of Australian hotel nights in Denmark tripled within 12 months; that’s simply by creating awareness of the route. It’s a key part of our strategy, because just living off our traditional catchment area (four million people within two hours of CPH) won’t enable us to achieve our growth ambitions. We need to generate more business – both inbound traffic and transfer traffic.”
Focus on competitiveness
CPH is maintaining an edge with a three-pronged strategy – unique customer experiences, efficiency of operation, and competitiveness. Its response to the fierce competition between airports is to identify those that can take traffic away from CPH. Woldbye highlights four: Amsterdam Schiphol – KLM operates 11 routes from Nordic countries to AMS, bypassing Copenhagen; Berlin, which is building a large new airport and has pledged to take over the CPH position as the ‘Gateway of Northern Europe’; Helsinki, which is trying to corner the market for Asian services, taking advantage of its location, which means it can rotate an aircraft to China in one day; and Zürich which, supported by Lufthansa/Swiss, is aiming for the same long-haul traffic as CPH.
Responding to the intense international competition for air services, a new CPH Growth Committee was established in early 2013. Woldbye sits on the committee, which is tasked with identifying ideas and concrete initiatives to ensure the continued growth and improved international accessibility of CPH. This committee of influential players is chaired by Jens Kramer Mikkelsen, CEO of CPH City & Port Development, with members including industrial bodies such as the Confederation of Danish Industry, regional politicians including the Mayor of Copenhagen, and major organisations – for example Microsoft, MAN Diesel and PensionDanmark. “The idea is to identify how we can leverage the value of CPH as an asset to the national economy and to society. It’s a two-way dialogue between ourselves and the relevant stakeholders,” commented Woldbye. CPH is a clear driver of jobs and growth throughout Denmark, and even in southern Sweden. The figures are impressive, with some 23,000 jobs in 700 companies supported directly or indirectly by the airport.
The preliminary action plan for the committee includes opening the Russian market for more air services to Denmark. “We feel that we should improve our route development to Russia, not for the sake of the airport or airlines as such, but as much for the sake of the country and its exports and tourism,” Woldbye added. Efforts to do this are complicated by the restrictive bilateral agreement that exists between Russia and Scandinavia. The strategy here is to raise the topic on the political agenda, and Woldbye is fully supportive of efforts to form an air transport agreement with Russia at EU level.
The CPH Growth Committee will also visit Istanbul in November to witness first-hand the growth being experienced in the vibrant Turkish market. “We’d like to show the committee another climate, where things are moving at a much higher speed than in the EU,” said Woldbye. “Turkey is growing as a country, Istanbul-Atatürk is growing, and Turkish Airlines is expanding rapidly, so we’re going down there to get a different perspective.”
Woldbye speaks eloquently about the passenger experience – a subject clearly close to his heart. The airport interviews 110,000 passengers each year and turns its findings into concrete actions to enhance the travel experience. It is a strategy that has placed CPH way ahead of the curve, as evidenced by its pioneering introduction of augmented reality. It is the first airport in the world to utilise augmented reality with its groundbreaking 360-degree wayfinding app, which uses panoramas of all areas to allow passengers to visualise their journey through the airport on their computer or smartphone. Passengers can select their starting point and where they want to get to from a drop down menu of airport locations. A metre-by-metre visualisation of their route then enables them to work out their journey. The entire airport was photographed in acute detail with a special camera that photographs from 360 degrees. The photos were then stitched together using special software, resulting in an exact photographic representation of the entire airport, similar to the ‘street view’ function of Google Maps. “Augmented reality is leading edge and has been very well received. It’s an investment that’s visible to the passenger, so you get the promotional aspect, and it’s not hugely costly,” explained Woldbye.
The airport has a very strong brand and a prominent social media presence on Facebook. Like many capital city airports in Europe CPH is the most popular place in the country to ‘check-in’ on Facebook or Foursquare, which just shows the aspirational nature of airports and the sense of excitement and theatre that they generate. There are also plans to join Twitter before the end of the year. “We find that more than 90% of posts on Facebook are positive. We’ve ended up with a lot of ambassadors for the airport,” added Woldbye. “If you look at social media, e-commerce and m-commerce, they are taking off dramatically. Today only 2-3% of our tax free turnover is pre-ordered on the web, but interestingly, people ordering online spend more than those shopping in-store, which shows how airport retail is competing with the high street and also with the internet. We’ve seen an interesting trend whereby retail sales in downtown Copenhagen are down -10%, while we experienced a +10% increase in retail sales in 2012, so we see that people are researching online and doing their shopping at the airport.” Currently, 45% of the airport’s revenues come from non-aeronautical activities.
CPH has also been a pioneer of self-service technologies, with more than 50% of passengers using self-service check-in kiosks, self-service boarding pass scanners were introduced earlier this year, and automated bag drop and automated border control will be rolled-out before the end of the year. These innovations are central to the ‘World Class Hub’ strategy and the airport’s desire to empower the passenger. “Travellers who have the highest level of self-service feel more in control and are the most satisfied,” stated Woldbye.
CPH at a glance
Annual passengers: 23.3 million (2012)
Key airline customers: SAS (45%), Norwegian (18%), easyJet (6%)
Number of destinations served: 140
Ratio of full-service v LCC carriers: 73.5% full-service / 26.5% LCC
Passenger traffic growth during 2012: +2.7%
Passenger traffic growth within S1 2013: +2.2%
An additional quality enhancement is the implementation of alliance check-in for both SkyTeam and oneworld carriers, which streamlines the check-in process for member airlines and reduces the cost of the check-in operation. It is believed to be the first of its kind in the world and has been very well received by both SkyTeam and oneworld. A similar offer is being developed for the Star Alliance carriers, excluding SAS. Woldbye explained that CPH holds regular consultations with the airlines, creating a real two-way dialogue, to determine what adjustments can be made to suit individual airlines and their business models.
Meanwhile, the CPH Advantage programme has grown to more than 400,000 members, and the range of benefits is being expanded by bundling together products such as parking and lounge access. Members earn points when shopping online, or booking services including parking or lounge access.
Corporate Social Responsibility is firmly embedded into the CPH culture, and Woldbye speaks fluently about the airport’s environmental objectives. He believes that CSR must make sense for the business and for society. Scandinavians are renowned for living in harmony with nature and this is reflected in CPH’s ambitious environmental agenda. A key target is to reduce CO2 emissions by 20% per passenger by 2020, and these efforts involve working in cooperation with the airlines and concessionaires. “Green takeoffs are a major contributor to CO2 reduction. We’re fortunate that a high proportion of our takeoffs are over water, meaning we can let aircraft turn much faster in the right direction – this saves 32,000 tonnes of CO2 per year,” explained Woldbye.
A geothermal plant currently produces 80% of the energy required to run the airport’s air conditioning system, and that will soon be increased to 100%. The recent renovation of the tax free shops saw the installation of energy-efficient LED lighting. CPH was able to generate a saving of DKK1 million (€134,000) per year for Heinemann – operator of the main tax free shop – simply by switching to LED lighting. Woldbye added that all taxiway lighting is to be converted to LED too, while an impressive 58% of passengers arrive at the airport via public transport. So, CPH is doing a tremendous amount in this regard, something it plans to communicate more to the general public. It also plans to apply to become Airport Carbon Accredited under the global, institutionally-endorsed carbon management certification programme.
Investing for growth
CPH invests more than DKK1 billion (€134m) per year – mainly in increased capacity. A highlight of the airport’s infrastructure investment was the dedicated low-cost pier, CPH Go, which has performed very well since opening in 2010. LCC traffic accounts for 26.5% of the total, and the development of CPH Go is a tangible result of the airport’s efforts to satisfy the requirements of different airline business models. easyJet’s traffic has grown significantly since the opening of CPH Go, and in 2013 will exceed 1.4 million.
The expanded Terminal 2 was opened in June, alongside an expanded baggage system. DKK540 million (€72m) was invested in the two projects, which provided additional capacity to meet future growth. CPH operates an under-one-roof concept, with its three terminals adjoined, creating a smoother process for passengers transferring between terminals. The Terminal 2 refurbishment added 1,400sqm, 12 new check-in desks, and 16 new check-in kiosks. Meanwhile, the new baggage system can handle bags from 30 million passengers annually. The F&B offer was also enhanced – highlights include a new Danish bakery and an American steakhouse, MASH.
The CPH master plan makes provision for several future projects to be undertaken in line with demand, including further terminal expansion, Pier C extension, baggage enhancement, airside expansion, new aircraft stands, new bus gates and new deicing facilities.
Our time with Woldbye is coming to a close, but he has left us in no doubt that he is a leader with a clearly defined vision and the conviction to achieve it. He speaks with impressive detail and authority on all aspects of the CPH business: “That’s one of the great things about this business – the diversity. You’re dealing with everything from the hot dog concession, the challenges in our logistics centre, our new route openings or our moves on social media – it’s always interesting.”