My Top Four Unserved Airports in Europe

Using macroeconomic data rather than industry insights to find new opportunities for airlines

In days of old when knights were bold and data was not host-ed. The GDS to airlines sold and all info was post-ed. I never claimed to be a poet.

It is true though, airlines used to get their data in the post. The “Market Information Data Tape”, commonly known as MIDT, was sent out as an actual tape by selling platforms like Amadeus and Galileo, and airlines would run it through their mainframes to see what was going on.

They say that data is the new oil, and in this case they, whoever they are, might just be right. Oil is used to power machines like our aircraft and many of the tools that produce and maintain them. Meanwhile data is used to power decisions.

Airlines are hungry for as much data as possible. These days, MIDT is just one of many data sources that airlines use to decide what to offer, what the right price should be and where to send their planes.

Unfortunately, sometimes there is no data. Or if there is it is either inaccessible or outside the standard management reports and so overlooked.

When airlines consider flying to a new airport they like to the existing patterns of demand and the competitive landscape to figure out whether the new route is likely to be successful.

But what if an airport has NO flights? There is then no data, at least not in the network planner’s ready-reference guide. Airlines might be overlooking some interesting opportunities.

In today’s article I wanted to find some of those opportunities.

I looked for airports in eastern Europe that are not currently served by commercial or charter airlines and identified my “top four” that might just be on the cusp of commercial success, if only someone could be persuaded to fly there.

So, which airports are in my top four?

Cue “At the sign of the swinging cymbal” by Brian Fahey…

In fourth place we have Tulcea (TCE) in Romania …

…more swinging cymbal…

With Croatian island airport Losinj (LSZ) in third and at second place it is Pecs-Pogany Airport (PEV) in Hungary …

…brass and drums crescendo…

“and in the number one slot is Gyor-Per International Airport (QGY) in Hungary – great job Gyor-Per!” (pictured above: Gyor town hall)

[CHEERS, APPLAUSE]

[END MUSIC]

Read on to find out how I figured that out…

Why eastern Europe?

Europe is a near-saturated air market, but airlines like easyJet, Ryanair and Wizz have shown time and time again that people will fly to places if fares are affordable.

There has to be something for arriving passengers to do there (the “pull factor”). Since Europe is full of market towns, little churches, interesting museums, lush forests and flowing rivers, there should be plenty of things to see and do almost anywhere.

But good routes do not just rely on arriving tourists. There should also be outgoing demand fuelled by good jobs and a prosperous middle class with money to spend on discretionary travel (the “push factor”). Ideally, incomes will be growing fast so market entrants will see growing demand for travel.

Since western Europe has been a prosperous sort of place for many years, most viable markets should already be served. Look further east however, and we see emerging prosperity in nice places that could have both a push and a pull factor.

How do I measure prosperity using GDP per capita data and GINI coefficients?

The GINI coefficient tells us how rich or poor people in a country are compared to each other. It measures how evenly or unevenly wealth is spread. We need not concern ourselves with the underlying maths as I doubt you opened this article hoping to read about the convexity of sets. Suffice to say that the higher the GINI coefficient is, the more inequality there is. In countries with low GINI coefficients, everyone is equal.

Comparing the GINI coefficient with GDP per capita tells us a lot about a country and it’s demand for air travel, summarised in the table below:

Air travel demand is highly correlated with GDP per capita and only weakly correlated with population. Consider Yemen and Qatar for example. Yemen has around 35 million people living there but the air travel market is tiny. Gas-rich Qatar on the other hand has less than three million people, but lots of Qatari nationals fly longhaul first and business class multiple times a year.

High income countries are already well-served by airlines, even if they are high growth. So I am looking for unserved airports in countries with a low GINI coefficient and a medium and growing GDP per capita.

Eastern European countries by GINI coefficient & GDP per capita

The table below shows Eastern European countries by their economic growth and GINI coefficient.

Source: GINI = CIA World Fact Book, growth = real GDP per capita, IMF

The top seven countries by growth are North Macedonia, Montenegro, Albania, Croatia, Hungary, Poland and Romania. Now let’s look at GDP per capita. I have chosen to look at nominal GDP in US Dollars, not adjusted for Purchasing Power Parity (PPP). I did not want to adjust for PPP because local price and affordability levels are not particularly relevant for airlines, who can deploy their aircraft across borders.

Source: IMF World Economic Outlook Database, statistics for 2022

Clearly Croatia, Hungary, Poland and Romania are on the shortlist – nice big economies and growing GDP per capita.

Finding airports

I looked at Apple Maps on satellite view. It is quite easy to see the airstrips and zoom in to see what their name is.

I then eliminated all the ones which I know are well-served and checked the websites of national carriers and well-known European airlines to eliminate the airports that are already served. To be honest, it was tough to find airports that are completely unserved by scheduled and charter airlines.

The table below summarises the push and pull factors associated with the four unserved airports in my top list.

Tulcea looks like it has some great scenery that will attract nature lovers and some good jobs. Overall though I thought it looked a bit weak compared to the other three.

Losinj looks like a real missed opportunity, but demand could well be highly seasonal so I put it in third place.

The two Hungarian airports though look like top opportunities. Both cities look like they have something to offer visitors – they both have history, interesting city centres, a pleasant climate & a national park close by.

Gyor probably has more outbound demand due to good jobs at the Audi factory, which Pecs despite inward investment probably cannot match yet. So Gyor goes in first place.

Here is a map, produced by the excellent Great Circle Mapper:

Wizzair apparently considered Gyor in 2014, but a lot of growth has happened since then – maybe somebody else can get what they missed!

Do you agree with my top four? Are there any others you would suggest? Let me know!

oliver AT ransonpricing DOT com

[IMAGE CREDIT]