Amazon Reported In Talks To Purchase Hahn Airport

LAXintl · Sat Apr 16, 2016 10:54 pm

Reports out that Amazon is one of 3 parties in talks acquire loss making Hahn airport which was put up for sale.

The Rheinland-Pfalz regional authorities received three purchase bids. Although the names of bidders are not named, it said the contract would be signed soon.

Its believed Amazon is looking to expand its European distribution network and reduce reliance on the big parcel carriers.
It was reported Amazon recently trialed an air express operation in Europe using chartered 737 freighter between its fulfillment centers in Poland, the UK and Germany.

Amazon ‘in talks over Hahn Airport base’
http://www.lloydsloadinglist.com/fre...se%E2%80%99/66141.htm#.VxLA93ErKM_

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Interesting if true. Seems Amazon really wants to take ever greater control of its logistics chain.

flyby519 · Sat Apr 16, 2016 11:44 pm

Quoting LAXintl (Thread starter):
Seems Amazon really wants to take ever greater control of its logistics chain.

You sure they only want to control their own logistic chain? Look out FedEx and UPS!

atypical · Sun Apr 17, 2016 12:34 am

Seems a bit strange. Hann very much occupied with several cargo operators, large maintenance hanger, and Ryanair. This would be a sale geared more for an airport operator rather a user. I can't see what Amazon gets from buying the airport over leasing except a lot extra work attempting to service current users.

C010T3 · Sun Apr 17, 2016 12:49 am

Well, I believe that would allow them to have a distribution center directly at the airport, not having to transport anything out if not really needed. The rail access is also about to be reactivated.

threeifbyair · Sun Apr 17, 2016 1:12 am

Quoting atypical (Reply 2):
Seems a bit strange. Hann very much occupied with several cargo operators, large maintenance hanger, and Ryanair. This would be a sale geared more for an airport operator rather a user. I can't see what Amazon gets from buying the airport over leasing except a lot extra work attempting to service current users.

Agreed. Amazon seems content to use ILN for its US contractor air network without owning it.

However, this strikes me as a play to build a larger air cargo business. For ~20 flights a day it would seem like a poor allocation of capital to own the airport. But for 100s it would start to make more sense. There aren't too many suitable airports to do this and perhaps Amazon wants to take the leap now, knowing it could be a while before another airport was available.

Okie · Sun Apr 17, 2016 1:28 am

Quoting LAXintl (Thread starter):
Interesting if true. Seems Amazon really wants to take ever greater control of its logistics chain.

Interesting in the realm of why would you want to buy the whole airport for freight operations.

Must be bargain basement pricing.

Okie

blueflyer · Sun Apr 17, 2016 1:59 am

Quoting Okie (Reply 5):
Interesting in the realm of why would you want to buy the whole airport for freight operations. Must be bargain basement pricing.

To use profit from tenant rents to pay for Amazon's logistics operations? If the airport losses are lower than the anticipated costs of their operations, why pay rent to the airport when you can buy the airport? Obviously, it's a very simplified explanation that doesn't include a ton of other factors such as cost of capital. The point is, it may not be as far fetched an idea as it seems.

atypical · Sun Apr 17, 2016 5:34 am

Quoting blueflyer (Reply 6):
To use profit from tenant rents to pay for Amazon's logistics operations? If the airport losses are lower than the anticipated costs of their operations, why pay rent to the airport when you can buy the airport? Obviously, it's a very simplified explanation that doesn't include a ton of other factors such as cost of capital. The point is, it may not be as far fetched an idea as it seems.

First airport that comes along and flashes a little tarmac and Amazon's ready to commit? Think about it. She's flighty (but aren't they all). She has a lot of baggage. Amazon is obviously not the only one she needs to please. Everyone knows she can't even keep her hanger doors shut and there are pictures of her servicing some jumbos. Oh, don't forget, she's German and I bet she does it differently that the ones in the US.

atcsundevil · Sun Apr 17, 2016 6:32 am

Quoting Okie (Reply 5):
Must be bargain basement pricing.

I suspect it's partially competitive pricing, coupled with a great opportunity to expand their business model at a facility with existing infrastructure located very centrally in Europe. Hahn in a lot of ways would be "plug and play" with infrastructure, aided by it being located reasonably close to a large financial hub. A number of state-owned (full or partial) airports in Germany have suffered in recent years, but many simply lack the necessary infrastructure and would require time and a lot of money. Hahn serves its niche on the commercial airline side, but has plenty of growth opportunity on the cargo side.

Besides, NetJets owns Egelsbach, so Amazon isn't the first corporate operator with the idea of capitalizing on Frankfurt's location and infrastructure to further their own business models.

eurowings · Sun Apr 17, 2016 8:13 am

I wonder how Ryanair and Amazon will get along.

SCQ83 · Sun Apr 17, 2016 8:44 am

Quoting atcsundevil (Reply 8):
I suspect it's partially competitive pricing, coupled with a great opportunity to expand their business model at a facility with existing infrastructure located very centrally in Europe. Hahn in a lot of ways would be "plug and play" with infrastructure, aided by it being located reasonably close to a large financial hub

HHN is also about 100 km. from Luxembourg, Amazon's HQ in Europe.

seahawk · Sun Apr 17, 2016 8:53 am

And you get lots of land with air, road and train connection.

atcsundevil · Sun Apr 17, 2016 9:26 am

Quoting SCQ83 (Reply 10):
HHN is also about 100 km. from Luxembourg, Amazon's HQ in Europe.

That's right! I wasn't even thinking about that, but that's some more logic behind the move. I recall the Saarbrücken airport also being in somewhat dire financial straits of late (which is obviously closer to Luxembourg), but I'm sure that HHN has more/better opportunities in location and infrastructure. Either way, it opens up some exciting possibilities for their future. It's amazing to think that what's largely perceived as "just an online retailer" is potentially capable of growing their own international logistical network.

SCQ83 · Sun Apr 17, 2016 9:52 am

Quoting atcsundevil (Reply 12):
That's right! I wasn't even thinking about that, but that's some more logic behind the move. I recall the Saarbrücken airport also being in somewhat dire financial straits of late (which is obviously closer to Luxembourg), but I'm sure that HHN has more/better opportunities in location and infrastructure.

Probably at a macro level HHN is better located than Saarbrucken.

Hahn is in an sparsely populated region (specially for Central Europe) and if Ryanair sets shop in LUX and eventually FRA, HHN is totally doomed (HHN has already lost much service after Ryanair started flights in CGN). Also, other than military stuff, the immediate surroundings to HHN are really a greenfield, so there is a lot of capacity for expansion there (i.e. Amazon building warehouses).

However for cargo, it seems like a good compromise. In a 500 km. radio you have pretty much the most populated areas in Germany, France, all the Benelux, Switzerland... it is really at the heart of Europe. And while distances for cargo are important, an Amazon delivery will not complain about landing 100 km. further.

whisperjet · Sun Apr 17, 2016 10:52 am

What makes Hahn valuable to amazon is the fact that it is one of the very few airports without night curfew in Germany.
Not many airports are up for sale in Germany without that restriction...

And I don't think that the proximity to Luxemburg matters that much. It is the place where the headquarters are located. The distribution centers that rely on cheap work force are certainly not in Luxemburg where the labour costs are extraordinarily high.

Stefan

[Edited 2016-04-17 03:56:48]

vfw614 · Sun Apr 17, 2016 11:05 am

For the important German market, the location is not really ideal as the biggest distribution centre is in the heart of Germany somewhere half between KSF and ERF airport (next to massive highway and railroad infrastructure). Amazon already has dedicated flights into KSF to feed its main distribution centre. Near HHN, there is a smaller Amazon distribution centre, but I could think of quite a few more suitable locations.

spacecookie · Sun Apr 17, 2016 11:09 am

Quoting SCQ83 (Reply 10):

The hq is quite useless, they are in Luxembourg because of the taxes...

SCQ83 · Sun Apr 17, 2016 11:17 am

Quoting Whisperjet (Reply 14):
The distribution centers that rely on cheap work force are certainly not in Luxemburg where the labour costs are extraordinarily high.

Labour costs in Luxembourg are comparable to nearby countries. Hourly labour cost is lower than in Belgium and not much higher than Germany, France or Netherlands. Also Luxembourg has a very "liberal" approach to employment (no redundancy pay, for instance) which is something companies like Amazon love.

http://ec.europa.eu/eurostat/statist...ture_and_public_administration.png

Quoting spacecookie (Reply 16):
The hq is quite useless, they are in Luxembourg because of the taxes...

??? Amazon Europe is HQed in Luxembourg, and that is where their European corporate structure is based. If you go to https://www.amazon.jobs there are 370 open positions for Amazon Luxembourg. So I wouldn't call it "useless".

MD11Engineer · Sun Apr 17, 2016 11:20 am

Quoting atcsundevil (Reply 12):
That's right! I wasn't even thinking about that, but that's some more logic behind the move. I recall the Saarbrücken airport also being in somewhat dire financial straits of late (which is obviously closer to Luxembourg), but I'm sure that HHN has more/better opportunities in location and infrastructure. Either way, it opens up some exciting possibilities for their future. It's amazing to think that what's largely perceived as "just an online retailer" is potentially capable of growing their own international logistical network.

Saarbrücken is restricted by it's location. The airport is located on top of a hill, with steep drops at either end of the runway, so that the rather short runway can't be extended.

The property where the HAITEC maintenance hangars stand belongs to HAITEC, except for the ramp area in front of them, which are airport property and leased. AFAIK all other facilities are leased out to tennants, including the Ryanair hangar.
HAITEC operates one hangar big enough for a 747-400 and is now building a second one big enough for an A380.
There is plenty of land reserved for an airport expansion, including a second runway. No construction activing, which might ostruct an airport expansion is permitted there.

As for traffic access, the B50 highway from the Rhein Main region has been upgraded to quasi Autobahn status about 5 years ago and currently they are building a huge autobahn bridge across the upper Moselle River valley to connect the westward extension of the B50 to the autobahn network to Luxembourg and Belgium (and in turn southern Netherlands and France).
There exists a railway line (used in the old days to bring fuel and freight to the then USAF air base), but it is in bad condition and would ned to be overhauled.

Jan

vfw614 · Sun Apr 17, 2016 1:34 pm

Quoting SCQ83 (Reply 17):
??? Amazon Europe is HQed in Luxembourg, and that is where their European corporate structure is based. If you go to https://www.amazon.jobs there are 370 open positions for Amazon Luxembourg. So I wouldn't call it "useless".

I suppose Luxembourg is purely admin and thus irrelevant for lfight hauling freight. What matters is the proximity to distribution centres (of which in Germany alone 9 exist).

caetravlr · Sun Apr 17, 2016 4:11 pm

When Amazon first started, who thought they would be building massive data centers and leasing out computing time on their servers in a flexible manner? This just seems like one more piece of infrastructure where they can bring it in house, and if they can't turn it into a profit center on top of meeting their own needs, they can at least mitigate their own costs by leasing out the parts of it that they aren't using themselves.

Next thing they will want is their own oil refinery for fueling their fleet.

atypical · Sun Apr 17, 2016 5:33 pm

Two Questions

1. What is the distribution of Amazon warehouses in relation to this airport.

2. How does Amazon integrate an air operation? For example, is air used to maintain warehouse balance and some deliveries? Maybe certain warehouses the only ones that stock a particular item so Amazon will air freight the item to the warehouse closest to the customer for final shipping.

Maybe Hann is really wanted for the interconnects funnel shipments into the Amazon system. It has very good truck access with rail service nearby including a closed, but not demolished, rail spur up to the airport.

readytotaxi · Sun Apr 17, 2016 5:38 pm

Quoting atypical (Reply 21):

Good, now every int airport should have a rail freight depot to get the stuff off the roads.

lightsaber · Sun Apr 17, 2016 5:45 pm

Quoting SCQ83 (Reply 10):
wonder how Ryanair and Amazon will get along.

FR will learn there is a tougher negotiator.

Quoting Whisperjet (Reply 14):
What makes Hahn valuable to amazon is the fact that it is one of the very few airports without night curfew in Germany.

Oh... That and a 3,800m runway has value.

Could a 2nd runway be built?

Lightsaber

thekorean · Sun Apr 17, 2016 6:43 pm

Quoting atypical (Reply 21):

Any chance passenger rail service can use that?

B777LRF · Sun Apr 17, 2016 6:53 pm

Quoting flyby519 (Reply 1):
You sure they only want to control their own logistic chain? Look out FedEx and UPS!

This is not for final destination deliveries, it's to balance stock between warehouses. Deliveries to final destination require quite a bit more than a fleet of freighters and an airport to call home.

Besides, the integrator with the biggest Amazon account is FedEx. Amazon is also one of FedEx's biggest customers. Still they only account for around 3% of their revenue. In other words, the integrators (DHL, FedEx and UPS) will survive just fine, even if Amazon replaces them with drones for final delivery.

MD11Engineer · Sun Apr 17, 2016 6:59 pm

Quoting lightsaber (Reply 23):
Quoting SCQ83 (Reply 10):
wonder how Ryanair and Amazon will get along.

FR will learn there is a tougher negotiator.

They are learning this already, since the old corrupt clique of airport administration got sacked (both major political parties were involved in the dodgy business, the conservative CDU on county level and the Socialdemocrat SPD on state level).
Since then the airport is actively looking for new customers and airlines.

Quoting lightsaber (Reply 23):

Could a 2nd runway be built?

Yes, land has been reserved for future airport expansions, meaning that in the vicinity nothing will get a building permit if it might obstruct further airport expansion. I have seen plans where e.g. a second runway might be built. At the moment, together with the construction of the new HAITEC maintenance hangar, taxiway M is being rerouted and might be extended as extension of taxiway A to the eastern end of the runway, so that larger airraft won't ned to backtaxi, though I haven't seen any drawings what it should look lik. But construction is going on in full swing, see here:

www.haitec.aero

Check under "Facilities" and 2Construction progress". They have two webcams wtching the construction site.
Jan

[Edited 2016-04-17 12:01:21]

WaywardMemphian · Sun Apr 17, 2016 7:10 pm

I have said for some time that to expand same day delivery in the states was a system of using passenger service as a way to subsidize the shipping. I 've theorized that FedEx could do this out of Memphis with it's major hub there and the local mass of DCs and use the bellies of a new LCC passenger service planes to do it.

Ex. I'm sitting in Fayetteville Arkansas on a Sat morning and I order a toy off of Target that's not in the store here locally for my Nephew's Birthday Party that evening. I checkout online, product is pulled at the new Online fulfillment dc in Memphis and is whisked away to FedEx at MEM and put on the LCC flight to XNA while it would be picked up and then delivered by 5pm. The fact that the LCC is owned by FedEx allows them to create a Hub where the flight times are tailored for utilization for same day and next day delivery. As it stands now, toy would go to the hub sort, flown to Tulsa and then trucked over and get here on Monday at the soonest. They could backIfil with Walmart same day parcels from their DCs close to XNA.

I envision that flown on a Q400 or ATR combi maybe even a small jet with good cargo space like the C100, passengers would then connect at Memphis. Amazon is thinking outside the box and may envision this as well, FedEx and UPS should as well. And it just doesn't go for consumers. Let's take Nike and it's massive Memphis operation, they can fulfill their customers whether it's direct to customers or retailers. If a Champs runs out of a hot selling shoe during the Christmas season or at the beginning of little league season, boom it's ireplenished by closing time.

gdg9 · Sun Apr 17, 2016 8:55 pm

I'm sure Amazon could get a good deal on landing fees if they owned the airport!

atypical · Mon Apr 18, 2016 1:52 am

Quoting thekorean (Reply 24):
Any chance passenger rail service can use that?

Good question. From my observations Germany's railroads are mostly, if not completely, electric. I think the only time I saw a diesel was in a switch yard. Even how the railraods are ulilized are are a mystery to me. I think comparing the North American and the European rail systems is no more valid than comparing the North American rail system and North American highway system. I hope someone who understands European railroads can shed some light here.

threeifbyair · Mon Apr 18, 2016 2:17 am

Quoting atypical (Reply 29):
From my observations Germany's railroads are mostly, if not completely, electric. I think the only time I saw a diesel was in a switch yard.

Most passenger lines are electric but there are branch lines that are not electrified. I'd say the majority of rail lines are optimized for passenger use, with freight considerations secondary. The freight trains I saw in Germany were much shorter than I was accustomed to seeing in the US.

I don't think rail freight access matters too much for Amazon as it relates to HHN though. The distances just aren't long enough for rail freight to outperform road freight, and HHN doesn't necessarily need to be close to a distribution center to function as a hub.

seahawk · Mon Apr 18, 2016 5:03 am

Quoting atypical (Reply 29):
Good question. From my observations Germany's railroads are mostly, if not completely, electric. I think the only time I saw a diesel was in a switch yard. Even how the railraods are ulilized are are a mystery to me. I think comparing the North American and the European rail systems is no more valid than comparing the North American rail system and North American highway system. I hope someone who understands European railroads can shed some light here.

Afaik they are close to achieve final planing approval for modernising the existing rail road track and it would then be available for cargo and passenger traffic. So far a lack of money and questionable return of investment has seen the project being pushed back, but in case Amazon should take over and expand the airport as a logistics base, I am sure this would change.

spacecookie · Mon Apr 18, 2016 8:37 am

Quoting SCQ83 (Reply 17):

It is useless, you can read a lot about it
http://www.dailymail.co.uk/money/new...-2624400/Amazons-0-1-tax-bill.html

No one is working In the hq of Luxembourg.
They will buy an airport (if they do finally) with the tax they don't pay in Europe .... Nice.

PanHAM · Mon Apr 18, 2016 9:17 am

Quoting SCQ83 (Reply 10):

HHN is also about 100 km. from Luxembourg, Amazon's HQ in Europe.

The HQ cxould be on the Bahamas as well, ooos, sorry, not that popular anymore. But a LUX HQ serves the same purpose.

Quoting atypical (Reply 21):
What is the distribution of Amazon warehouses in relation to this airport.

There is a fulfillment centre with 110.000 square metres at Koblenz, not too far away. The other big Location is Bad Hersfeld with 2 centres, one with 110 K m2 as well and another one with about 40K m2
Bad ersfeld is Close to KSF, which has already 6x weekly 737F Service connecting KSF with Doincaster and an Airport in poland.
But while the runway is OK for 737, it would be marginal for 767 and there is no night flights as well.

HHN is 24/7/365 with unrestricted 3800 meter runway and ample space available for a fulfillment cnetre Close by.

But they would hjave to share the place with other tennants. The Airport loses in the Region of 18 Million € p.a.which they would have to absorb and reduce.

Quoting readytotaxi (Reply 22):
Good, now every int airport should have a rail freight depot to get the stuff off the roads.

Rail Connections are sometimes OK for passenger Airports but not for cargo. Rail Feeder for air freight might work for northern Italy to FRA, for HHN trucking is the only realistic way. 3 Mio Pax pp.a. who come from all directions do not justify a Train service either

In General, Amazon is the best available buyer for the Airport, far better than the Chinese.

MD11Engineer · Mon Apr 18, 2016 10:32 am

Quoting PanHAM (Reply 33):
But they would hjave to share the place with other tennants. The Airport loses in the Region of 18 Million € p.a.which they would have to absorb and reduce.

I don't think that Amazon would have too much trouble with e.g. Ryanair or Haitec, as they don't compete. Haitec would probably make an offer for a maintenance contract for the fleet of aircrat and can offer both line and base maintenance, plus full AOG support for most common commercial aircraft.

Quoting PanHAM (Reply 33):

Rail Connections are sometimes OK for passenger Airports but not for cargo. Rail Feeder for air freight might work for northern Italy to FRA, for HHN trucking is the only realistic way. 3 Mio Pax pp.a. who come from all directions do not justify a Train service either

From what I understand, the tracks would not just be used for aiport traffic. It would essentialy be a reopening of the old Hunsrück railway, which would also connect local smalltowns with the Rhein-Main region. I can imagine that there would be e.g. an airport express from Frankfurt main railway station via FRA, Wiesbaden, Mainz, Bingen and Simmern to HHN every hour, and inbetween a slow local train stopping at every stop.

an

SCQ83 · Mon Apr 18, 2016 11:00 am

Quoting spacecookie (Reply 32):
It is useless, you can read a lot about it
http://www.dailymail.co.uk/money/new...-2624400/Amazons-0-1-tax-bill.html

No one is working In the hq of Luxembourg.
They will buy an airport (if they do finally) with the tax they don't pay in Europe .... Nice.

Quoting PanHAM (Reply 33):
The HQ cxould be on the Bahamas as well, ooos, sorry, not that popular anymore. But a LUX HQ serves the same purpose.

As it has stated, Europe operations are led from Luxembourg, so this is not two accountants or a name in a door, but hundreds of employees. Of course I can agree that having "Amazon Airport Europe" (logistics) 100 km. away is quite circumstantial to a corporate HQ (Amazon warehouses in the US are not obviously all located around Seattle).

I personally know a few people who have worked or currently work at Amazon Luxembourg. Or you might check LinkedIn if the Amazon Jobs website is not enough for you.

This quite a stupid conversation to be honest, it is like arguing dunno... that no one works for Google in London.

[Edited 2016-04-18 04:03:26]

MPadhi · Mon Apr 18, 2016 11:16 am

Quoting B777LRF (Reply 25):
This is not for final destination deliveries, it's to balance stock between warehouses. Deliveries to final destination require quite a bit more than a fleet of freighters and an airport to call home.

Not sure about other countries, but in the UK, 'Amazon Logistics' has been operating for a while now. They're fully owned by Amazon and they provide final delivery. I believe they're looking to expand their network, or maybe they've stopped expansion and instead used it as leverage to get a better price from UPs, RM and FedEx etc.

Amazon Reported In Talks To Purchase Hahn Airport

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