A hub in the Med? What strategy should Barcelona airport follow

Barcelona airport is a sort of unusual case in Europe, it is one of the continent's top ten airports by number of passengers, however it managed to get this spot without having a flag-carrier based there and with a minimal offering of long-haul flights.

So Barcelona has been mainly a feeder market for Europe's main airlines and an important short haul destination on its own right. I have already expressed my point of view of what routes would enhance considerably the reach of Barcelona's airport but this was based on the idea of BCN becoming a spoke of other hubs. But what could be the strategy to make of BCN a hub on its own? is it feasible?

It is too late for Barcelona to become a generalist hub, it does not have the sort of legacy carrier that would make this possible. In think that any small chance of Barcelona achieving hub status depends on its ability to find a market niche and  becoming incredibly good at serving it (think Finnair and its Asian strategy!). 

In my opinion Barcelona should focus on becoming the gateway of the Western Mediterranean.

If you take a close look at the map you can see how Barcelona is at the centre of a Mediterranean arch that goes from North-Western Italy to South-Western Spain, the contour of its coast clearly lit, a densely populated area. Destinations such as Marseille, Nice, Turin, Genoa, Cagliari, Algiers or Alicante can all be reached within 1-1.5h from Barcelona, that itself has a large airport with plenty of capacity and considerable Origin-Destination traffic.

The hub of the Western Mediterranean?

If you have visited the city of Barcelona and strolled down the Ramblas towards the sea, you might have noticed a large medieval building at the end of this promenade. It now hosts the maritime museum, but in its time this was one of the largest civilian buildings in the World, the Royal Drassanes (Shipyards) are a vivid reminder of an age when Barcelona managed to become the main trading port of the Western half of the Mediterranean...the example might be a bit anachronistic, but that shipyard seating at the edge of the town was the medieval equivalent of today's largest air facilities... and not too far from there, some 12km. further South, now sits the largest air terminal on the Mediterranean rim. Can we reinvent Barcelona as the hub of the Mediterranean?

Let's do some SWOT analysis!

BCN has some strengths to show for:

It has some critical mass of its own (it is capable of generating a traffic of 30 million passengers a year with virtually no transit passengers) and, despite the surge of tourist numbers in the last two decades it keeps a fair number of business traffic too (just look at the visitor figures of the Mobile World Congress that is taking place in the city as I write these lines)

It has a magnificent new terminal that has added plenty of spare capacity

It has quite a good geographical position to fulfill the role of West-Med hub, with the whole Iberian Peninsula, the Southern half of France and the coastal towns of Italy and North Africa all within 1,5h. flight time.

Plus it has reasonably good (although they need to improve in some areas to reach full potential) overland connections with its hinterland, the Mediterranean coastal corridor (the big arch going from Marseille to Alicante) and the Ebro valley (that links with the interior of Spain and the Atlantic), including high-speed railways (although at the moment these do not pass through the airport). The main passenger port in the Mediterranean (with both cruise and regular shipping lines) is also next door.

Now the weaknesses:

And the first and most obvious one is...there is no local airline currently able to run the mix of long-haul, short-haul services that would make it possible to develop BCN as a hub. True, Vueling is coordinating with its part-owner Iberia in order to provide connection flights and to start feeding some long-haul flights, but there are reasons to doubt the scale of Iberia's commitment to operating long-haul flights at BCN, not least because its main hub is so close!

And Spanair has also expressed interest in the hub option (this is actually its "raison-d'etre" and the only reason the airline has managed to survive through public support) but it needs to sort out its finances first.

We will get back to the airlines later, because there are other weaknesses that I must mention and these are more structural.

One of them is the peripheral nature of the Mediterranean market and the fact that a large share of the traffic this area generates is related to tourism, and this is a segment where any hub-and-spoke airline would have a hard time competing with low cost carriers and charters focusing on origin/destination traffic.

And let's not forget that all European hubs, including the most consolidated ones are currently under pressure, as the center of gravity of aviation is moving East (to the Gulf, to Turkey) and this will certainly have an effect on traffic patterns.

Moreover, whereas emerging markets in Eastern Europe are making steady economic progress, the Med remains plagued with political unstability and sluggish economic performance...

Are there opportunities? Of course!

First of all, there is currently no strong hub on the Mediterranean rim, Madrid is not far, but it has a rather transatlantic orientation, Alitalia's chronic problems and underinvestment at Italian airports have prevented Rome and Milan from taking this role and Paris is a long way up North.

I said previously that the lack of long-haul airlines is a weakness, but the fact that there are not one, but two airlines, is, actually, a great opportunity. And both have links to strong alliances, in the case of Spanair, it looks as if a Mediterranean hub would fit really well in its current network, that is strongest in Northern, Central and Eastern Europe.

And then we have the aircraft industry producing models that seem well suited for the sort of niche positioning that Barcelona should pursue. The Boeing 787 will improve the economics of long-haul thin routes and the next generation of regional jets, such as the Bombardier CSeries or Embraer E-Series could do the same for the short haul sectors.

There would be threats of course, as competitors would not seat idle. Iberia, Alitalia and Air France would not be happy with an hypothetic Star Alliance hub in their backyard and Vueling is already facing a tough fight with Easyjet and Ryanair in its own main base.

The high degree of political control over the Spanish air travel and airport industry (even after an eventual partial privatization), including commercial and pricing policy, slot allocation and bilateral agreements with non-EU countries, is something to be accounted for. Infrastructure management and politics often mix in Spain...

Finally, the increasing share of low cost carrier traffic, although not necessarily bad news, might have some long-term implications for BCN's aspiration to become a hub. The perception that BCN is becoming a mostly tourism-oriented low cost airport could become a reality if low cost carriers take enough market share to make routes operated by full-service network airlines unprofitable, this could result in a self-reinforcing process, whereas BCN ends up being a limited choice of carriers, limited connectivity to other major airports and an almost exclusively low cost traffic.

In any case, I admit there was a lot of wishful thinking involved in this exercise...as the goal here was just to summarize the multiple factors that can play a role in the development of a hub at Barcelona airport. But most of these are secondary factors, and whether Barcelona will become a hub or not is something that ultimately depends on the airlines that choose to operate there. And this is something I am going to write about soon...