Risk-sharing models between airports and airlines for infrastructure expansion: Ex post evaluation of the fourth runway at Frankfurt Airport
Abstract
Expanding airport capacity through additional runways is the most effective way to ease air traffic congestion, yet such projects require high investments and long planning horizons but offer slow amortisation. Traditionally, the entire financial risk of planning, construction and operation rests with the airport operator. This paper proposes a risk-sharing model between airports and airlines that redistributes part of that risk. The model introduces a ‘fee freeze’ mechanism: the airport guarantees stable unit fees calculated on a baseline of aircraft movements, while airlines commit to meeting this baseline. If traffic falls short, unit fees rise to offset the shortfall; if traffic exceeds the baseline, fees are reduced, ensuring revenue neutrality. The model is applied retrospectively to Frankfurt Airport’s fourth runway, commissioned in 2011 after more than a decade of planning and nearly three years of construction. A comparison of actual traffic and revenue with projections under the proposed model shows that the discounted payback period could have been cut from 23 to 14 years so that a positive net present value would have been reached by 2025 rather than 2034. These improvements reflect stagnating flight numbers in the years following commissioning, with traffic volumes only surpassing their 2007 peak in 2018–2019. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.
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Author's Biography
Prof Dr Christoph Klingenberg is Professor of Airport Management at Worms University of Applied Sciences, Germany. He joined the faculty after senior positions at McKinsey & Company, Lufthansa AG and Deutsche Bahn AG. He has taught as lecturer at Darmstadt University and as professor at IU International University of Applied Sciences in Bad Honnef. Christoph’s main areas of interest are airport capacity expansion, demand management through slot assignment, throughput enhancement using depeaking and digitisation of the aviation value chain.
Prof Dr Juliane Wutzler is Professor of Controlling and Finance at Worms University of Applied Sciences, Germany. She joined the faculty after positions at Lufthansa AG and SCHOTT AG. She has taught as lecturer at a variety of universities including Frankfurt School of Finance and Management and Mainz University of Applied Sciences. Juliane’s main areas of interest are investments, capital markets, investor relations and the digitalisation of the finance function.
Dr Branko Bubalo is a transport and aviation expert with a focus on sustainable operations, benchmarking and electromobility. He earned his PhD in economics at the University of Hamburg, where he researched strategies for European air transport using simulation tools such as SIMMOD. After more than ten years of consulting experience on international airport and government projects funded, for example, by the European Union Commission and the Norwegian Ministry of Transport, Branko joined KPMG in 2022 to advise public sector clients on mobility and IT transformation. He has consulted with major airports and operators including Avinor, Oslo-Gardermoen, Seoul-Incheon and Korea Airports Corporation, and conducted benchmarking studies across Europe. Branko is a member of the German Aviation Research Society and the Association of German Engineers. He previously taught operations management and distribution management and transport at the Berlin School of Economics and Law.
