A BUDding Sustainability and Growth Winner

CFG: In 2021, BUD reported the throughput of 183,000 tons. What is the 2022 result?
JK: We finished the year with 194,000 tons - an all-time record for BUD, and a particularly spectacular result if you compare it to our pre-covid volumes: in 2019, BUD handled 134,000 tons. A great long-term trend. Back in 2014, we were handling 90,000 tons.

CFG: According to Q1/2022 traffic stats, BUD operated 60 full freighters per week: 30 of them on behalf of DHL and other integrators. How has cargo traffic developed since then, and has the airport’s connectivity further improved?
JK: We strongly believe that connectivity is one of the main pillars for the successful cargo development of an airport. But we know that it is not easy to bring a new cargo route to any airport - you need adequate volumes and market demand. Our long-term volume growth and BUD’s increasing regional air freight hub role feeds the capacity increase of existing flights or new connections. In 2022, besides the integrators and scheduled flights of our long-term partners such as Cargolux, Qatar, Turkish, and Korean, we have seen new operations: China Eastern Airlines (CEA) flies from PVG three times per week, for example, and freight forwarders have operated charters - especially from China. At its peak, there were 10 weekly charter flights from CGO and HKG, according to demand. On the long-haul, wide body segments, Korean Air started regular passenger flights from Seoul to BUD, adding to LOT’s operation on the same route. During the summer season, LOT operated JFK flights, and Emirates increased its frequency to Dubai to six flights per week. In the fall, we welcomed Air China’s first passenger flights from PEK, and CEA from PVG. These provide valuable options for belly cargo customers.

CFG: Belly capacity is coming back. Is there a shift from main deck freight to lower deck freight?
JK: As mentioned above, yes, this segment is increasing, but most of our flown cargo volumes are transported by full freighters, similarly to the pre-covid era. In 2019, just up to 20% of our flown air cargo (not RFS) was belly-hold. In future, we expect more long-haul passenger flights from North America and Asia especially. Those connections began to boom before covid, but global travel circumstances first need to normalize again for this to happen. Belly capacities are expected to grow, but we also similarly plan an increase of freighters at BUD, so I think the ratio will not change in the future.

CFG: Chinese e-tailer, Alibaba, chose BUD as second European hub, after Liège. How has this project developed since mid-2022?
JK: This is going well, averaging 5-6m shipments per month and interfaced IT systems with customs. We have also heard that Cainiao’s local logistics partner is performing well regarding service quality and speed. We feel their start was successful and has great potential, as do the other e-commerce solution providers or logistics service partners that have started using BUD as their air cargo gateway to Central and Eastern Europe (CEE). E-commerce has big potential in the future, especially in this region since living standards, consumerism, power, and e-trade volumes are all growing over the long term.

CFG: At BUD’s Cargo Day in summer 2022, you claimed that primary gateways suffer from capacity issues which benefits secondary airports such as BUD. Has this prediction come true?
JK: If there is a capacity issue anywhere, somebody else benefits from it. That is always the case. But we know it is not an automatic rule. You can only develop your air cargo business if you are excellent, so I wouldn’t link this to the big gateways. There is an increasing demand for air freight solutions in our region and there are two demand drivers: one is the increasing air cargo-related consumerism - see the e-commerce topic, for example. The other is the air freight-related industrial production in automotive, electronics, pharma, aviation, machinery, food industries, etc. Central Eastern Europe (CEE) is developing on both counts. We can call it outsourcing from West or nearshoring from East - the outcome is the same. In Hungary alone, recently some 20 billion EUR was invested within 3-4 years into the e-vehicle industry, cars, batteries, parts, etc., and this is just one country in CEE. So, if we can provide great solutions for the freight forwarders here and they test and use it, we will benefit from this as BUD Cargo.

CFG: What are the consequences of the closure of Russian airspace following western sanctions for BUD Cargo?
JK: In general, it is bad for everybody. We saw some extra volumes in the first weeks after the war broke out last year, when everybody in the logistics was in panic mode and tried to find solutions for the disrupted logistics and supply chains, but it was over very quickly. I hope the whole situation will be sorted as soon as possible, since it is the interests of everybody, from private people or from a business point of view.

CFG: To attract further carriers, BUD offers favorable incentive schemes and discounts for cargo flights. Can you illustrate what you do?
JK: It is nothing special. We have everything published in our tariff manual, very transparent, very objective. For freighters, the first 3 hours of parking are free if the turnaround time is no longer than 3 hours. We also have a route-start and capacity increase incentive program with 80-60-40-20% discounts where all preconditions are fulfilled regarding frequency, operating period, etc.

CFG: Budapest has an important railway junction where companies such as Metrans or Mahart offer many rail connections and ample terminal capacity. Do rail transports play any role in the airport's cargo strategy?
JK: In Budapest, there are 3 large rail-cargo terminals. One new one has just been handed over in the North-Eastern part of Hungary, and there are others in the countryside or under development. There are also self-serving terminals, plus river ports on the Danube. We are talking about 1-2m TEU of capacity per annum. As the country is landlocked, these provide multimodality, linking air and road transports with connections to several seaports in the Black Sea, Adriatic, and Mediterranean regions or to Western Europe. There are (still) direct container trains from Asia to Hungary, too. For those planning factories or logistics or e-commerce fulfillment centers, it is good to have multimodal logistics services. However, I have not so far seen many air to rail or reverse projects, if any. I know Sea-Air is a product in Middle East or Africa, for example. Perhaps there will be reasons to establish similar combinations here, too, but not yet today.
What I should emphasize, if we talk about this and the online air cargo solutions at BUD, is sustainability. If you have now air freight from China to Hungary or Romania, for example, it is not very sustainable to fly it from China to Western Europe and then truck it back to Hungary, given the carbon footprint of 1500-2000 km road transports in Europe. We know that road transportation is blamed as the number one CO2 emissions emitter in the EU. So, putting road cargo onto trains, or having direct flights from Asia to BUD, is greener from this point of view.

CFG: As to green supply chains, just touched by you: Many airlines and airports are currently intensifying efforts to make air traffic cleaner and, above all, to significantly reduce the carbon footprint on the ground and in the sky. CFG Political decisions by the EU are also moving in this direction. What role does this issue play on BUD Cargo’s agenda?
JK: BUD is highly committed to this. In 2021, Budapest Airport once again took huge steps to maintain its carbon neutral operations and achieve its sustainability goals. Last year, the company further reduced its direct carbon dioxide emissions, which are now half the level of ten years ago, while emissions per passenger were only one third of 2011 levels. In 2021, Budapest Airport set itself the primary goal of achieving net zero emissions 15 years earlier than previously committed to. Net Zero should be reached by 2035 at the latest, through our zero-carbon roadmap. Last year, the airport operator was again part of the global elite club of just 58 airports that fulfill airport carbon accreditation 3+ and are carbon neutral, i.e. fully offsetting the carbon emissions generated by their operations. A green summary of 2021 for Ferenc Liszt International Airport can be accessed here: https://www.bud.hu/en/passengers/tips_and_offers/tips/news/the_airport_is_on_a_straight_course_towards_zero_emissions.html

CFG: On Thursday (16FEB239), BUD Cargo hosted a workshop focusing on pharmaceuticals. Any visible outcome?
JK: Results were not intended. Rather, it was about coming together, deepening the business relationships and learning from each other. From our side, Adrián Palágyi presented the results of our BUD pharma survey to the audience and service providers like Celebi Ground Handling Hungary Ltd.
Menzies Aviation and Envirotainer introduced their pharma services and capabilities. In a nutshell: Demand is there. Online and offline cargo connectivity at BUD develops quick. In a nutshell: volumes are growing, and collaboration is key to develop and provide efficient, safe and sustainable solutions for the pharma clients and the global market!

CFG: Thank you, József Kossuth!