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Competitive airport charges

In order to sustain the Mainport's position, it is essential that Amsterdam Airport Schiphol maintains competitive charges for use of the airport. The aggregate amount of airport charges that it is allowed to charge is fully regulated, is set each year following extensive consultations with the airlines and is subject to supervision by the Dutch Authority for Consumers and Markets (ACM). This economic regulation is provided for in the Aviation Act. Schiphol's decision-making on infrastructure investments, airport charges and operating costs is based on the principle that the airport's competitive position must be strengthened. To that end the quality of our airport and the added value of the services we provide to the airlines, ground handlers and passengers alike take centre stage. Schiphol consequently chose to moderate the development of the airport charges in the past few years and hence did not apply the level of airport charges allowed under the Aviation Act. This is reflected in the airport charges set for 2013 and 2014 accordingly.

2013 Airport charges

The airport charges were increased by an average of 0.5% with effect from 1 April 2013. Following extensive consultations and after the 2013 airport charges had been set at the end of October 2012, several airlines lodged a complaint with the ACM requesting that it examine whether the airport charges and conditions contravened the laws and regulations. One of KLM's objections concerned a set-off amount relating to the year 2011. As a consequence of the decision rendered by the ACM, Schiphol lowered its charges for security activities by 0.6 million euros. This resulted in the adjustment of the average increase from 0.6% to 0.5% effective 1 April 2013. Following the ACM's decision on an objection lodged by KLM concerning the liability arrangement in the standard terms and conditions, the arrangement was incorporated in the conditions that are subject to consultation.

Another objection submitted to the ACM for examination in 2013 was raised by and related to the allocation of Pier H aircraft stands. The take-off and landing fees applicable to this 'no-frills' pier are 20% lower than those of the other piers which provide more facilities. As a consequence of the ACM's decision Schiphol modified its allocation rules, such that in principle all airlines are now eligible to use Pier H. If there is a shortage of aircraft stands on Pier H, however, Schiphol will continue to prioritise flights with the shortest turnaround time.

The ACM rejected the other objections raised by the airlines against the airport charges and conditions applicable from 1 April 2013.

Various areas of Schiphol are monitored by the ACM. In July, the ACM started an investigation related to the Shared Vision Committee and the relationship with KLM.

Constructive 2014 airport charges consultation

At the start of the 2014 airport charges consultation process in early 2013, Schiphol expressed its intention to raise airport charges by 1% plus the effect - which had yet to be determined - of the temporary, additional security measures for screening liquids, aerosols and gels (LAGs), and the possible effect of adjusting the traffic and transport forecast.

In consultation with the airlines it was agreed that the cost increase for the LAG security measures could be reduced. Moreover, additional cost savings were agreed with the airlines. Schiphol also defined substantial cost targets to minimise the overall rise in costs. Combined with the expected favourable development of air traffic and transport in 2014, this resulted in an average airport charges increase of 0.4% effective 1 April 2014.

With the limited increase in airport charges, which is significantly lower than the rate of inflation, Schiphol is confident that it will further improve its competitive position in 2014. According to Schiphol, therefore, the consultation process with the airlines has been extremely constructive. The airlines have expressed their appreciation for the consultation process, which now incorporates an extensive pre-consultation round and a multi-year forecast in anticipation of the expected Aviation Act amendments.

Air passenger tax cancelled

During the 2014 government budget negotiations, in autumn 2013 it became clear that the introduction of an air passenger tax was under consideration by the government. The aviation sector fiercely opposes such a measure due to its negative effects on the sector and the Dutch economy at large.

The air passenger tax had been introduced once before on 1 July 2008 but was abolished a year later. Independent reports, including those commissioned by the government, showed that the introduction of the air passenger tax brings about a substantial economic loss including job losses, and damage to Schiphol's network of destinations. Ten thousand jobs are expected to vanish if the air passenger tax were to be reintroduced.

The KLM,, Martinair and Schiphol Group Works Councils organised a protest in The Hague. Thanks in part to the protests initiated by the sector, the air passenger tax has now been removed from the agenda.

Cost development

The costs of the existing infrastructure account for almost 50% of the costs of Aviation. We fix the cost level for several years at the time we make investments. The choices we make substantially influence maintenance costs, the costs of daily use and the corresponding energy costs. This has now led us to take an even more critical look at the total cost of ownership of the airport infrastructure in the design phase. The effect of this policy on cost efficiency will become visible over time.

In 2013 cost efficiency remained almost on a par with the 2012 level. Cost efficiency is expressed as the cost per Work Load Unit (WLU). One WLU is equal to one passenger or 100 kilogrammes of cargo. The costs per WLU for Amsterdam Airport Schiphol in 2013 amounted to 10.87 euros (2012: 10.77 euros).

Security costs continue to rise

The costs of security continue to rise, and account for a large share of total aviation costs and the associated airport charges. The increase in 2013 is due to passenger volume growth and the substantial numbers of passengers handled at peak periods during the day. Added to that was the effect of new security measures, and the measures we were obliged to put in place in the course of 2012, such as the 100% screening of goods and cargo required for airport operations. As a result of previous investments in security equipment and other related facilities, depreciation and amortisation costs are rising too. The increase over the past 13 years can only be partly explained by the growth of the business, and is due for the most part to new and more stringent security requirements. Schiphol makes every effort to control security costs, but it strongly depends on external factors which tend to push costs up. The implementation of central security in the non-Schengen area is expected to enable us to curb the rising costs of security over time, however we cannot guarantee this.

Price-quality ratio and competitors

Schiphol is aware that it is always in direct competition with other hubs. A large number of passengers can also choose to travel via an airport in a neighbouring country. Schiphol Group's price-quality ratio compares favourably with that of its major European competitors. In recent years, however, rival airports have undergone expansion and gained new facilities, enhancing their quality. We are also facing growing competition from the airports of Istanbul and Dubai; the market conditions in this region differ from those in Europe, which means airlines there are able to operate at lower costs while the airports offer a high-quality experience.

Each year, the ministry of Infrastructure and the Environment commissions SEO Economic Research Foundation to perform a benchmark study which looks at both the airport charges and government levies applicable to Schiphol and its key competitors. The results reveal that Schiphol Group has seven more expensive competitors. However, the study has also shown that the gap between Schiphol and the airports of Istanbul and Dubai is considerable.