Ordinance on Airport Charges: Federal Office of Civil Aviation (FOCA) starts Stakeholder Involvement
The Federal Office of Civil Aviation (FOCA), the regulator responsible for airport charges in Switzerland, announced in June 2018 that the Ordinance on Airport Charges (OAC) was to be selectively revised. Now, FOCA has presented concrete proposals and is commencing a consultation process.
Under FOCA's proposal, instead of the current 30%, 50% of the economic added value from the commercial activities on the airside, along with 75% instead of the current 30% of parking revenues, would be skimmed off for cross-subsidisation (transfer payment) of regulated revenue. Conversely, there is to be no change to the calculation formula for reasonable capital interest for the airport operator which, in light of persistently low or even negative interest rates, would result in lower imputed capital costs in the forthcoming regulatory period.
If FOCA’s proposal is implemented and there is no adjustment to the calculation formula for reasonable capital interest, aviation revenue at Zurich Airport will fall by around 25% in the forthcoming regulatory period.
During the consultation process, Flughafen Zürich AG will emphatically oppose an increase in the transfer payment and argue in favour of a sustainable return, which enables us to continue making the investments needed to maintain quality, security, competitiveness and accessibility in the long term. Given the current situation on the capital markets in Switzerland, capital interest of at least 5% is considered adequate. If the capital interest for the next regulatory period is lower or if the transfer payment is increased compared with the current regulations, Flughafen Zürich AG will revise its current investment plan (CAPEX). In particular, aviation development projects in Zurich will have to be reconsidered and may have to be suspended.
The final decision on a revision of the airport charges ordinance will be made by the Federal Council. The new charges will take effect in 2020 at the earliest.