Zurich Airport News Flash No. 18 / Federal Office of Civil Aviation (FOCA) approves operational charges
In May 2012, the Swiss Federal Council issued an Ordinance on Airport Charges (Verordnung über die Flughafengebühren FGV) with an implementation period for operational charges until January 1, 2014 and until June 1, 2015 for user and access fees. The negotiations over operational charges, conducted after the premises of the ordinance, did not lead to an agreement between the users by the end of August 2013. In that case, the ordinance provides for the airport operator to submit an airport charges proposal for examination and approval by FOCA. The Federal Office has now issued the corresponding decision.
Taken into consideration the suspension of the noise charge (5 Swiss francs per departing passenger), the passenger related operational charges at Zurich Airport overall will see a fall, further strengthening Zurich Airport’s competitiveness. The following chart shows the development of the operational charges for the regulating period approved by FOCA:
| Local passenger in CHF | today | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|
| Passenger charge | 21.00 | 23.20 | 23.70 | 24.20 | 24.70 |
| Securtiy charge | 14.50 | 12.80 | 12.80 | 12.80 | 12.80 |
| Noise charge | 5.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| PRM charge | 0.90 | 1.00 | 1.00 | 1.00 | 1.00 |
| Total | 41.40 | 37.00 | 37.50 | 38.00 | 38.50 |
| Transfer passenger in CHF | today | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|
| Passenger charge | 8.00 | 8.00 | 8.30 | 8.60 | 8.90 |
| Security charge | 10.00 | 10.00 | 10.00 | 10.00 | 10.00 |
| Noise charge | 5.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| PRM charge | 0.90 | 1.00 | 1.00 | 1.00 | 1.00 |
| Total | 23.90 | 19.00 | 19.30 | 19.60 | 19.90 |
The most relevant elements of the decision are:
• Additionally to above passenger related operational charges, FOCA approved on tariffs for landing, freight, emission and parking charges as well as on aircraft noise. For landing and parking charges, all plane types will be assigned into one of 9 plane type categories. Whereas the landing charge will be applied for each landing, the parking charge is charged by a tariff per minute.
• The compound annual growth rate (CAGR) of passenger related charges as well as the other operational charges issued by FOCA – without taking into consideration the noise charge – amounts to around 1 percent per year until 2017. The underlying data for passenger growth over the regulating period accumulates to around 10 percent.
• The costs of the segments air traffic, security, PRM and noise should not in principle exceed their expenses. FOCA has issued the base to assess the cost coverage of above segments to be a maximal return on invested capital of 5.8 to 6.8 percent (WACCs) and a cross subsidisation (transfer payment) of 30 percent of the economic profit of all airside commercial activities and the car park, in favour of the regulated segment.
• The now approved tariffs cover around 85 percent of the total regulated revenues. All other remaining charges, the so called user and access fees have not been applied for to FOCA. According to the ordinance on airport charges, FOCA only has to review user and access fees published by airports at request of users. The user and access fees have to be implemented by June 1, 2015 latest. Flughafen Zürich AG is planning the implementation of its user and access fees in the next few months.
• Concurrent with this decision, FOCA issued the implementation of the Federal Administrative Court’s recent decision regarding aircraft noise charges. The airport operator, together with its partners, will have to come up with a proposal of aircraft noise charges for day fringe and night hours. The proposal has to be submitted to FOCA by the end of year 2014, accommodating the Federal Administrative Courts decision for an increased steering effect on today’s day fringe and night hours.
Subject to legal measures, the charges system and tariffs for operational charges issued by FOCA is anticipated to enter into force during the first quarter of year 2014.
The aim of improving the cost coverage of airport operations (including return on capital employed within the range of the maximal return accepted by FOCA) as well as ensuring the funding of daily operations and upcoming capital expenditure can be achieved with presented ruling of FOCA - provided that all underlying assumptions, particularly assumptions regarding traffic and cost development, occur as planned.
In the case of unforeseeable substantial events occurring during the regulating period from 2014 until 2017 which have a substantial negative effect on the ordinances underlying planning assumption and therefore on the cost and revenue situation, Flughafen Zürich AG has the option to submit a corresponding airport charges proposal to FOCA as of February 2016.