An effort to build a third runway at Munich Airport, Lufthansa’s second hub after Frankfurt Airport, has failed after a regional referendum blocked the project.

The referendum was initiated by local residents who argued the third runway should not be built because it would mean further environmental destruction and more noise. While the city of Munich, which is located about 25 miles south of the airport, would not have been affected by the noise pollution, local communities were fiercely opposed to it and found support from city residents. The city is a major shareholder in the airport, along with the state of Bavaria and the federal government. All three stakeholders must approve major projects, such as a new runway.

The vote is legally binding for one year, but Munich’s mayor has signaled that this opposition will remain. Some in the airline industry have discussed the notion that Lufthansa might purchase the state’s or city’s holding in Munich Airport, but that also would need the city council’s blessing.

According to the latest schedule, the runway was to open around 2015, but this vote defers the project at least five years, say industry sources.

Munich, which opened in 1992, has developed into a strong secondary hub for Lufthansa, and while initially intended as a European hub, it now has a sizable long-haul operation.

Lufthansa currently is undergoing a restructuring and cost-cutting effort, dubbed Score, that postpones adding capacity until 2014. However, concerns exist that the expected revival of Europe’s air transport sector will leave Munich wanting.

The airline on Monday said it may have to base aircraft elsewhere if Munich cannot accommodate them, although the predominant use of regional feeder service at the airport gives Lufthansa some growth options within the airport’s current structure.

The airline also has more runway capacity in Frankfurt now that its primary hub has opened a fourth runway that allows hourly capacity to be increased to more than 120 movements from about 80.

Lufthansa has a relatively limited presence in Berlin, the hub of its primary competitor, Air Berlin, although it has boosted capacity by 40% for this summer’s schedule. That increase has been kept, despite the delayed opening of the capital city’s new airport, which is now planned for March 17, 2013.