30-Second Interview – Ulrich Heppe, CEO of Fraport Bulgaria
Last week anna.aero’s Assistant Editor Jonathan Ford travelled to Bulgaria for Ryanair’s base opening at Bourgas Airport. While visiting, Ford managed to pay a visit to Varna Airport, with both Black Sea gateways being run by Fraport Bulgaria. As part of his trip, Ford sat down with the company’s CEO Ulrich Heppe to learn more about the strategy, aims and future of the company. Heppe took on the role of CEO at Fraport Bulgaria just over two and half years ago, and during his tenure so far he has oversaw the opening of a Wizz Air base in Varna, a Ryanair base in Bourgas, plus the arrival of easyJet, new routes with Norwegian and other leading European operators.
anna.aero: What have been the biggest challenges for you since joining Fraport Bulgaria?
Ulrich Heppe: “The biggest challenge is that you have an organisation that needs to triple its staff count every year. We are 650 people during the winter and then we are 1,800 people during the peak summer period. To find these seasonal employees in a market where it is very competitive in the summer, to then train and license them, that is a big challenge.”
aa: Going forward in the next 12-18 months, is the main challenge fighting that seasonality?
UH: “That is one of our big strategic objectives, to increase traffic year-round and grow on the shoulders of spring and autumn, but also during the winter period.”
aa: “How is the company planning to do that? Are airlines being offered more incentives to operate throughout the year?”
UH: “We are open to discuss with airlines about marketing support to share the risks of operating in the off-peak times, but there is no need to do this in the summer as during this time we are very busy and attractive. That is why we focus on off-season incentives.”
aa: If your seasonality profile reduces to a more sustainable level, what will the main capacity limits for passenger numbers at both Bourgas and Varna be?
UH: “At the moment we have two million passengers in Varna and three million in Bourgas, with both airports handling these numbers very easily. Nevertheless we are currently designing the expansion of Bourgas. We will start right now with a design to go into construction during 2019-20, with an enlarged airport ready for the 2021 summer season. That will include 12 additional check-in desks, two new gates, as well as a bigger security and commercial area. That is the big expansion that we are planning. In Varna we are fine at the moment. What we have done at both airports is to redesign the apron to increase capacity and efficiency, plus enlarge the apron a little bit in Bourgas. What we do during summer times, where we have really strong peaks, is try to de-peak and negotiate with airlines to convince them to use slots which are less peaky. If nevertheless peak capacity is too high, then we open the arrival area of the old terminal for a couple of hours to de-peak. We can do this until the expansion and construction of the new terminal developments are ready.”
aa: Two new customers for you last year were Ryanair and easyJet. Are you able to discuss how long the airports were working with the airlines to establish these new services?
UH: “It is usually a lengthy process, for instance we negotiated with Wizz Air for over two years and we talked with Ryanair for a good year. As a company, and for the airlines, we are very happy with the results that have come from these launches. Wizz Air is now operating to eight destinations in seven countries and they’re very satisfied with the seat load factor. Ryanair have started 11 routes from Bourgas to seven countries, plus they already have a year-round service to Varna from Brussels Charleroi. They are both satisfied with the seat load factors that they’re achieving, especially Wizz Air in the winter. In the summer nobody has an issue with seat load factors, the challenge is the winter. I must say that I am very impressed that they’re doing well.”
aa: Have the start of operations by these carriers generated interest from other airlines that would consider coming into the market?
UH: “Ryanair and Wizz Air have huge marketing machines behind their brands, including social media and websites. They have both done exceptionally well to put Bourgas and Varna on the international map, helping to promote the area to people that are not so familiar with the Black Sea Coast. We are in negotiations with new carriers who may come for the first time, but I will tell you immediately about them once we’re ready to announce.”
aa: There is certainly a more exaggerated seasonality profile at Bourgas than Varna, with this being the more popular of the two Black Sea gateways during the summer. Have carriers operating into Bourgas seen the potential of coming to Varna and exploring the resorts further up the coast?
UH: “When we started 10 years ago on the expansion plans, we thought Varna would be the more booming city, that is why we put the headquarters in Varna. Now we see that Bourgas grew much faster, with it now being one and a half times bigger than Varna. It is mainly Sunny Beach and the Bourgas coastal area where hotel capacity is much greater, so prices can be lower for the hoteliers. That is why they are more attractive to mass tourism than Varna. However Varna is picking up. Traditionally Varna was very big with German and Russian tourists, while Bourgas was popular with UK visitors. Now though we are seeing that Germans are starting to go down towards Bourgas, and UK citizens are exploring more of Varna and what it has to offer. So it is becoming more diverse and it certainly looks as though that trend is continuing into the future.”
On a side note, the news that Thomas Cook Airlines and TUI Airways will be launching flights to Varna this summer from UK airports including Birmingham, Manchester and London Gatwick shows that UK tourism demand towards Varna and the local area is certainly growing.
aa: From an external point of view, what investments are being made in the hotel and tourism industry in Varna and Bourgas that could further persuade airlines to fly to this region?
UH: “We are working closely with the hoteliers to get an idea of what is going on. That connection is crucial. A couple of weeks ago I went to ITB in Berlin and met with several tour operators, but also hotel companies, with the operators confirming that they were happy with the hoteliers in Varna. They have invested a lot to upgrade the hotel infrastructure in the region during recent years. Even new, large-scale hotels are about to be built. TUI just opened a wonderful hotel complex at the beginning of Sunny Beach, with other operators doing the same. They are taking down the old infrastructure and replacing it with new, big and modern facilities. This is not just happening in the key resorts, but also neighbouring ones which are starting to see the fruits of growing tourism numbers. These developments are also helping to attract higher paying tourists to the region.”
aa: Apart from those that are coming for the sun and the sea, what other aspects does the Black Sea Coast have to entice tourists? Not just seasonally, but year-round as well?
UH: “There is certainly an interesting year-round potential. It’s not just the sea and the beaches in summer, but there are other reasons to visit the region. One key example are the mineral springs. Bulgaria is renowned for being one of the biggest countries in Europe for having the largest number of mineral springs – there are thousands. There are 600 large-scale mineral springs, which particularly in winter times, when it is the right time to go to the spa, are popular. The region has a good standard of spas, just talk to somebody from the European Spa Association (ESPA). When they visited, they were certainly impressed with the quality of spa and medical tourism in Bulgaria. Along with this, the region has really good wine and cuisine, good quality and organic food. A good reason to not just come in summer, but year-round. The area has loads of events, convention infrastructure, historic venues including monasteries, churches, mountains and caves, hunting, golf and more. So if you’re into culture, history and sport, there is certainly something to cater for your needs throughout the year, not just the summer. It’s also an outbound market. Varna has 340,000 inhabitants and Bourgas 200,000, so not only is there city life for tourists to explore, but also a market for people wanting to travel.”
aa: Finally, what would you say puts this region above the rest of Europe’s leading leisure destinations?
UH: “From an airline perspective, it is our charges that are low compared to our peers, charges that we have not increased for the last 10 years even with the major improvements to infrastructure at both airports, including brand new terminals. However, it is the whole package that makes us stand out. It’s a safe destination, you’re not afraid of any threat. It is well located for countries east and west. Germany, UK and Middle East are all within a two- to three-hour flying time. It is a beautiful destination, and it has everything that you wish to have in a small area. So you can get in a car or on a bus and go from some of the best beaches in Europe to breathtaking mountains. Finally, it is good value for money, especially in a European environment.”
After meeting with Ulrich Heppe, CEO of Fraport Bulgaria, anna.aero’s Jonathan Ford then met with Dimitar Bikov, Head of Aviation Marketing Department, Fraport Bulgaria. Among the many topics of discussion was the impressive growth encountered at both Varna and Bourgas airports last year. “Last year passenger traffic at Varna grew by 17%, and Bourgas’ went up 4%,” commented Bikov. “This represents an average across both airports of around 8%.” In terms of targets for 2018, Bikov stated that a growth rate of around 10% should be achieved in 2018.
Presently the top four markets for both Varna and Bourgas are Russia, Germany, the UK and Poland. “Traffic to Germany has certainly performed well in recent years, with this being exemplified by Wizz Air which is now flying year-round to Dortmund and Memmingen from Varna.” Along with the developments of Wizz Air, Ryanair’s new Bourgas base also brought three new services to the Central European nation, with the ULCC serving Frankfurt Hahn, Memmingen and Weeze. “Along with Germany, this year traffic from the UK should increase significantly with the return of easyJet from London Gatwick, plus TUI Airways and Thomas Cook flying to Varna.” One interesting remark to anna.aero was the development of the Polish market from Bulgaria. “Poland saw 70% growth last year, with another 30%-40% growth forecast for 2018,” informs Bikov. “With this, it is great to see that Ryanair Sun will operate charters from a number of Polish cities to both Bourgas and Varna this summer.”
Seeing strong leakage to other airports; new markets desired
Given its geographical location, both Bourgas and Varna are accessible by road to Sofia and Bucharest, with Bikov highlighting to Ford that the catchment, which sits at two million inhabitants, sees strong leakage to the airports in the capitals. In terms of unserved and underserved destinations that see a strong demand from the region, Bikov is keen for capacity to cities including Berlin, Paris, Nice, Rome, while services to Spain are certainly desired. “There are a large number of Bulgarians that live in Spain, so this is a key target market for us.”
Along with new European potential, Bikov informed Ford about the possibilities of growing services to the Middle East and beyond. “At the moment Turkish Airlines serves Varna from Istanbul Atatürk, and presently they are seeing 95% of traffic on the route connecting to further destinations in the Middle East, Asia and further. One area where we are hoping to develop service to is the Middle East. We are easily accessible on narrow-body aircraft, and the likes of Qatar Airways are increasing their presence in Sofia and expanding to destinations such as Thessaloniki, a fellow Fraport-operated airport. Hopefully these factors will increase the case for a potential service to our region.”