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Cablegate: Frankfurt Airport Expansion: 2006 Completion Too

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 FRANKFURT 001549

SIPDIS

DEPARTMENT FOR EB/TRA BYERLY, PARSONS, FINSTON, WALKLET
DEPARTMENT FOR EUR/AGS, AND EUR/ERA
FAA FOR API-1, AEE-1, AIA-300 AND ASC

SENSITIVE

E.O. 12958: N/A
TAGS: EAIR ECON EFIN PGOV SENV GM
SUBJECT: FRANKFURT AIRPORT EXPANSION: 2006 COMPLETION TOO
OPTIMISTIC

REF: A) 2002 FRANKFURT 5496; B) 2002 MANILA 6579; C) STATE
29193

1. (U) Summary and Comment: The expansion of Frankfurt
airport, Europe's second largest, is moving forward, though
several obstacles may delay the new runway planned for 2006.
Legal complaints, a chemical factory in the flight path of
the planned northwest runway, a controversial night flight
ban and the uncertain cost of expansion may all slow the
timeline. Frankfurt airport may not see its fourth runway
constructed until 2007 or 2008. The Hesse government is
examining various noise abatement measures and studies, but
has not yet integrated the EU directive on noise management
in its plans. The decisive election victory in February
2003 of Hesse Minister-President Koch and the Christian
Democratic Union ensures continued political support for
expansion plans. End Summary and Comment.

Chronology of Expansion Plans
-----------------------------

2. (U) Frankfurt airport is one of the world's leading
international air transportation hubs. It is Europe's
largest cargo airport and ranks second in passenger traffic
(50 million passengers in 2001) to London's Heathrow.
Directly and indirectly, the airport supports 142,000 jobs
in Hesse and 170,000 throughout Germany. In 1997-98,
Lufthansa CEO Juergen Weber proposed a new runway to meet
growing demand. Fraport, the Frankfurt airport's managing
authority, agreed.

3. (U) In what is referred to as the "mediation process"
initiated by the previous state government, a panel of
interested parties analyzed the expansion proposal for
several years and made formal recommendations in January
2000. These included variations for a new, fourth runway
(northwest, northeast and south). The Hesse state
parliament then proposed the northwest variant; only the
Green Party caucus completely rejected the expansion
proposal. Following a regional planning review, the
northwest runway option was selected in June 2002. Volker
Zintel, Fraport's Senior Vice President for Traffic and
Retail, said that new runway construction will come first,
followed by a new "Terminal 3" six-to-twelve months later.
The expansion will increase the airport's capacity by 50
percent to 75 million passengers per year.

4. (U) The next stage of the approval process, the "project
planning and certification procedure," includes feasibility
studies, noise and environmental impact studies, public
comments, evaluation of a proposed 11 p.m. to 5 p.m. night
flight ban, formal certification of expansion plans and
amendment of the airport license. A final decision,
expected in 2005, will certainly face legal challenges.
Numerous complaints have already been filed by expansion
opponents (see below paragraphs 7-9).

5. (SBU) Fraport had originally hoped for a 2006 completion
date for the fourth runway to maintain Frankfurt's position
in the face of strong competition from Paris and Amsterdam.
In light of various obstacles outlined below, however,
Zintel described 2006 as "optimistic" for runway completion
and 2008 as more "realistic." Gerold Diecke, the
commissioner for South Hesse (Regierungspraesident) who
supervises the regional planning procedure, also says he
expects at least a one year delay.

CDU Election Victory Means Continued Support for Expansion
--------------------------------------------- -------------

6. (SBU) The February 2, 2003 election gave the ruling
Christian Democratic Union (CDU) an absolute majority in the
Hesse state parliament, ensuring continued political support
for expansion. Incumbent CDU Minister-President Koch, who
also sits on Fraport's supervisory board, strongly supports
expansion plans as beneficial to the overall future economic
growth of his state.

Obstacle to Expansion: Lawsuits and Complaints
--------------------------------------------- -

7. (SBU) Fraport and Hesse Economics Ministry officials are
braced for strong opposition to the airport's expansion, but
hope the battles can be confined to the courts. The
building of the airport's third runway in the 1980s inspired
numerous protest actions including a bomb attack on a
Fraport official's home (he was unharmed) and several
violent demonstrations including one in 1986 in which two
police officers were killed. Dr. Manfred Schoelch, Deputy
Chairman of the Fraport Executive Board, said that even if
the planning process is free of violent protest, "Once trees
start being cut, things could change." Fraport's major
opponents this time, however, are not mainly environmental
groups but the cities, counties and citizen groups that will
be affected by expansion. They have filed lawsuits on
issues ranging from noise to administrative matters. Three
dozen communities have gathered 500 million Euros for court
battles. "The lawyers will be busy," a Hesse Economics
Ministry contact told us.

8. (SBU) The city of Offenbach, southeast of Frankfurt, has
been leading the fight against expansion. The 116,000-
inhabitant city has already devoted considerable resources
to making its case in court. Several lawsuits will run
simultaneously with the certification process, while others,
such as those related to compensation, cannot be filed until
the process is completed in 2005 and its results made
public.

9. (SBU) Lothar Klemm (Social Democratic Party), former
Hesse Economics Minister under a previous Social Democratic
Party government and member of the Fraport supervisory
board, said he views the legal battles as the most serious
challenge to airport expansion. "If lawsuits make expansion
timelines unreliable, then market forces may make the
project obsolete. Carriers will move their business
elsewhere." Fraport External Liaison Officer for the
Executive Board Herbert Becker was more optimistic. "Most
court decisions in the last three years have been friendly
to airports," he said. Due to a change in German
legislation, Becker said, construction can start immediately
after the Hesse Economics Minister approves expansion. In
the case the courts rule in favor of expansion opponents,
compensation will be awarded and/or plans modified.

Another Obstacle to Expansion: Ticona Chemical Plant
--------------------------------------------- -------

10. (U) Fraport's planned northwest runway will end less
than two kilometers from the tall smokestacks of the Ticona
chemical plant, considered obstacles under ICAO Annex 14.
The plant, which employs 1,000 people, is home to the Ticona
company's just completed 20 million Euro administrative
building. Relocation, estimated to cost around USD 1
billion, is no longer under consideration. Instead,
according to Fraport External Relations Representative
Christine Huppert, the approach altitude for landing flights
will be raised. Officials at Deutsche Flugsichering, the
German air navigation services provider, said that a waiver
would be required from the Federal Transportation Ministry
to routinely overfly the smokestacks, and "the issue is far
from resolved."

11. (SBU) In addition, Ticona also uses and produces harmful
chemicals, posing the twin risks of harmful release of
chemicals should a plane crash into the plant and damage to
aircraft if an explosion occurs at the plant. The matter
may finally end up in the courts. Former Economics Minister
Klemm blamed the Koch government for not taking
environmental problems such as Ticona seriously enough,
running the risk of additional environmental studies and
further legal challenges. According to media reports, the
Federal Ministry of Transportation has asked the Disaster
Management Commission of the Federal Environment Ministry to
investigate the Ticona issue.

The Controversial Night Flight Ban
----------------------------------

12. (SBU) Among the compromises resulting from the initial
2000 review was a proposal for a 11 p.m. to 5 a.m. night
flight ban on all traffic at Frankfurt once the runway is
operational in order to win political and popular support
for construction of the fourth runway. Minister-President
Koch has stated frequently in public that there will be an
absolute night flight ban. Fraport understands that the
compromise is crucial to ensure the airport's growth and
address local residents' concerns.

13. (SBU) Several cargo carriers, including Lufthansa Cargo,
oppose the ban. Lufthansa wants a "practical ban" that
allows exceptions. Becker said Lufthansa cargo flights with
destinations in North America, Hong Kong and South Africa
will be most affected. He felt processing of point-to-point
cargo traffic (60 percent of total) could be relocated to
Hahn airport, 110 kilometers to the west, but transit cargo,
which has to be reloaded onto other planes would be a
problem. About 150 flights in total would be affected by a
ban, although Fraport official Schoelch maintains that all
but a handful could be moved to daytime operations without
too much trouble.

14. (SBU) FedEx is also "not happy" with Koch's insistence
on the ban, but acknowledges there are "political realities"
involved with expansion. FedEx has ten flights per week
landing between 11 p.m. and 1 a.m. that would be affected by
the ban. Fedex's Senior Manager for Operations Axel Hoock,
when asked whether his flights could be moved forward, said
he imagines the competition for slots shortly before 11 p.m.
would become very intense. The larger problem, Hoock said,
is that the night flight ban would "take away the
possibility for FedEx to expand its express cargo operations
in Frankfurt in the future." DHL Airport Affairs Manager
for Germany and Eastern Europe Markus Otto, said that the
night flight ban also "represents a clear competitive
disadvantage for Frankfurt airport, for business in and
around Frankfurt and for Germany in general. It also
constitutes a dangerous precedent for airports in Europe."

Frankfurt-Hahn Airport System?
------------------------------

15. (SBU) In 1998, Fraport purchased a 64 percent majority
share of Hahn airport, a former U.S. military airbase
located in neighboring Rhineland-Palatinate (R-P), 110
kilometers from Frankfurt airport. Hahn is useful for
charter flights and point-to-point traffic, according to
Fraport, and is one of the continental European bases of the
low-cost Irish carrier RyanAir. The Hesse government hopes
that some charter and cargo flights that need to operate
during future night flight ban hours will move from
Frankfurt to Hahn Airport. In anticipation of Hahn's new
importance, the state government of R-P is investing almost
one billion Euros in improvements, including expanding its
runway to accommodate intercontinental flights. It can
already handle Boeing 747 cargo flights. Improved road
connections should be completed in two years and a rail link
in 5-10 years. The Hesse state government is also
contributing 20 million Euros for the expansion of Hahn, a
move criticized by Hesse taxpayers.

16. (SBU) Anticipating Frankfurt's expansion and the night
flight ban, the governments of Hesse and R-P have applied to
the Federal Ministry of Transport to link Frankfurt and Hahn
as an airport system under EU law, similar to
London/Heathrow/Gatwick/Stanstead and Paris-De Gaulle/Orly.
Such a designation would allow Fraport to transfer all night
flights from Frankfurt to Hahn. As the next step, the
Federal Ministry must now forward the application to the
Commission for its review as well as that of the member
states. The great distance between the airports will be a
significant hurdle to overcome to secure the designation.
Additionally, Fraport and Hesse officials have indicated
that charter, cargo, and express-package flights would be
shifted to Hahn. This plan may be inconsistent with EU
market access requirements.

17. (SBU) Most cargo carriers find Hahn very problematic.
Deutsche Post (German Mail) threatens to move its hub to
another location. FedEx complains that its distance from
Frankfurt and other large cities would make overnight
express service from Hahn impractical. FedEx's Axel Hoock
says Hahn is "not an option." Lufthansa rejects the
Frankfurt-Hahn system idea, because the distance is too
great to maintain a maximum passenger transfer time of 45
minutes.

Costs: Lots of Uncertainty
--------------------------

18. (SBU) By current estimates, expansion may cost up to 3.3
billion Euros and could increase due to compensation claims.
Some claims, such as for loss of property value, cannot even
be filed until the certification process is completed.
Thomas Norgall, a spokesman for environmental NGOs opposing
the new runway, said candidly that their strategy is to
"make expansion unaffordable." Fraport's financial
situation has already been hurt recently by problems with
its 400 million Euro investment in Manila airport (Reftel
B). Fraport officials say the investment has already lost
at least 200 million Euros.

EU Directive on Noise Management
--------------------------------

19. (SBU) The EU Directive on Noise Management must be
transposed into national legislation by September 2003
(Reftel C). Germany has made little progress thus far.
Draft legislation has yet to be finalized by the Federal
Transport Ministry. Hesse Economics Ministry officials
admitted they had not really taken the EU directive into
consideration in their review of noise management issues
related to expansion. The Ministry is implementing -- from
summer 2002 to winter 2005/6 -- a noise quota system, with
points assigned to seven different categories of aircraft.
When a carrier has used up its quota, it can no longer land
its aircraft in Frankfurt. Looking to the future runway,
monitoring stations are measuring noise, and various studies
on noise impact are underway as part of the certification
process. Noise barriers and passive noise protection
measures are being considered for the 13,000 homes that will
be most affected by airport noise.

20. (U) This message has been coordinated with Embassy
Berlin.

DAVIS

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