Struggling Frankfurt Hahn Airport Bought Out By Chinese Construction Company
- Posted by Christopher Ledsham
- On 13th June 2016
- airport, aviation, germany, investment, One Belt One Road
The state of Rhineland-Palatinate announced on Monday 6th June that it would be selling its 82.5% stake in Frankfurt’s secondary airport, Frankfurt Hahn, to Chinese construction firm Shanghai Yigian Trading Company (SYT) for a sum believed to be in the “low double-digit million euro range”, while the state of Hesse is also expected to sell the outstanding 17.5% stake to the Chinese company.
The airport, located 120 kilometres from Frankfurt, is used predominantly by budget airlines and has been struggling financially in recent years amidst falling passenger numbers as Irish carrier Ryanair has looked to fly to more central destinations. 2015 saw 2.7 million passengers come through the airport, down from close to four million 10 years ago.
SYT Chairman Yu Tao Chou revealed that his company planned to not only use the airport to increase the numbers of tourists travelling between Europe and Asia, but would also take advantage of its 24-hour operating permit to increase freight services from Germany to help meet the rapidly growing demand for Western food products in China. SYT declared that it had already held talks with Chinese airline Yangtze River Express regarding the return of the carrier’s flights to the airport, following its suspension of cargo services to Frankfurt Hahn last year.
The federal state of Rhineland-Palatinate will continue to contribute EUR 70 million (USD 78.9 million) in government subsidies for the airport during the coming decade, yet it is anticipated that SYT will shoulder 50% of investment costs.
The widespread privatisation of European airports in recent decades, in combination with a weak Euro, has made the aviation sector a particularly desirable market for Chinese investors. Such high-profile acquisitions are typical of the types of investments being made in the context of the Chinese government’s One Belt, One Road development strategy and prove clear examples of the positive effects that infrastructure investment can have on tourism and trade.
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Sources: Deutsche Welle, Reuters, Nikkei Asian Review