Model for adjustment of traffic charges at Copenhagen Airports A/S (15 May 2000)
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The statutory framework for the adjustment of traffic charges at Copenhagen Airports A/S (CPH) is set out in section 71 of the Danish Air Traffic Act. The provisions cover take-off charges, passenger charges and parking charges.
The adjustment principles described below will be applied as from 1 January 2003. The principles will be reviewed in 2008 with a view to a possible amendment by the end of 2008.
Under the model, a ceiling is fixed in advance for changes to the traffic charges level for three years at a time. The first adjustment period runs from 1 January 2003 through 31 December 2005. The second period runs from 1 January 2006 through 31 December 2008. The model does not preclude increased differentiation of traffic charges. CPH may apply to the Ministry of Transport for changes to the traffic charges below the ceiling established.
The ceiling is basically fixed through negotiations between CPH and the airlines operating at Copenhagen Airport or with organisations representing them. The procedure is described under section A below. If the parties do not reach an agreement by 1 October of the year preceding the next three-year adjustment period, the Ministry of Transport shall fix a ceiling for changes to the traffic charges level for the next adjustment period by 31 December of the same year after hearing CPH and the airlines. The procedure is described under section B below.
In addition to the above mentioned adjustment, the Ministry of Transport shall, upon specific assessment, and only after prior application from CPH, be in a position to approve a separate increase in traffic charges beyond the ceiling established, in the event that CPH incurs substantial cost increases as a result of specific new requirements imposed on the airport by the authorities.
The Ministry of Transport may change the principles if there are extraordinary circumstances which decisively change the assumptions on which the present adjustment principles are based.
A. Negotiated determination of the ceiling on traffic charge changes
Establishing the agreement
The ceiling is determined through negotiations between CPH and the airlines operating at Copenhagen Airport or with organisations representing them.
Well in advance of the commencement of the next adjustment period, CPH is obligated to negotiate with the airlines for the purpose of entering into an agreement for the next period.
The negotiations allow a more flexible adjustment of charges and may include negotiations on issues such as the supply and quality of services and differentiation of charges.
Approval of changes in traffic charges
If an agreement is entered into by the parties, the Ministry of Transport shall base its consideration of CPH's application for changes to the charges on such agreement, unless it is contrary to important interests in society or general traffic considerations.
B. Regulatory determination of the ceiling on traffic charge changes
Determining the ceiling on charges
For each year during the adjustment period, the ceiling on charges, i.e. the maximum change allowed of the level of traffic charges, shall be equivalent to the change in the net consumer price index for the previous calendar year less a factor X.
Changes that have been approved but that were not implemented immediately can be included in changes made later in the same adjustment period. Charge increases that have not been implemented cannot be carried over to later adjustment periods.
The calculation of the traffic charges level is based on actual traffic volumes during the year immediately preceding the three-year adjustment period.
Model for determining X
X is determined on the basis of the following factors:
More specifically, X (as a percentage) is fixed for the year using the following formula:
X =A +1/3 *(B -3%)
- where A is any additional productivity required - i.e. productivity required over and above the general improvements in the economy as reflected in the net consumer price index. A is determined before the beginning of the period for the entire adjustment period. In the determination of A, special consideration shall be given to Copenhagen Airports maintaining a favourable competitive position vis-à-vis comparable northern European airports.
- where B is the growth (as a percentage) in the number of passengers during the past calendar year (t-1) relative to the preceding year (t-2).
Approval of changes in traffic charges
Upon application from CPH, the Ministry of Transport shall approve traffic charge increases below the ceiling, unless this would be contrary to material interests in society or general traffic considerations.
In the event that CPH does not exercise or only partially exercises its option to increase charges in a given year, such increases may be carried forward to the following year of the adjustment period, whereas they cannot be transferred between adjustment periods. At the beginning of a new adjustment period, the actual traffic charges level in force at the end of the previous adjustment period shall consequently be used as a base. At the beginning of the new adjustment period 2003-2005, the base for the charges ceiling shall therefore be the actual traffic charges level in force at 31 December 2002.