20.01.2009
Competition squeezes prices at CPH
Stricter regulatory requirements, inflation and investments in infrastructure result in increases in costs by approximately 15% at Copenhagen Airport. Pursuant to the new schedule of charges from the Danish Civil Aviation Administration (CAA-DK), CPH can have these costs covered through increased charges from airlines. Due to the financial crisis, falling traffic and the competitive situation relative to other airports, CPH has recommended to the CAA-DK that CPH absorbs most of the cost increase in the new charges for 2009. The CAA-DK has approved the proposal.
Over the past three years, CPH’s prices have fallen overall by 1%, whilst other European airports have implemented significant price increases. For example, the London-airports have increased their charges by 25-35%, whilst other European hub airports such as Amsterdam, Brussels, Paris and Vienna have implemented price increases of between 5% and 10%.
The current situation with falling traffic and a financial crisis has intensified competition among the European airports, and CPH has therefore proposed a charges increase to the CAA-DK that is lower than the increase in costs for the aeronautical part of CPH’s business.
CPH absorbs most of the increases
“In the new regulatory provisions from the CAA-DK, the charges are cost based, and that means we would actually see an increase in charges by approximately 15%. However, we have looked at the market and have made a business-based decision of absorbing two-thirds of the increased costs ourselves,” said Brian Petersen, CEO of Copenhagen Airports.
The massive charges increase made possible under the regulatory provisions is due, not least, to a number of EU regulatory requirements such as security requirements, which all airports in the EU must comply with. This means that CPH must meet the requirements, but CPH has decided to absorb most of the related costs. This is being done through a request to the CAA-DK to disregard the regulatory provisions on charges in 2009 and just increase charges by 4.2% instead of the approximately 15% pursuant to the regulatory provisions.
Responsible operations
Due to our high level of investments and the need to develop the airport, we have to compensate for the declining earnings through efficiency improvements. We have therefore reduced the number of jobs in our organisation by 80 full-time employees, and we are constantly working to make operations more efficient for the benefit of our customers. At the end of the day, this means cheaper airline tickets for the Danes," said Brian Petersen.
The limited increase of the charges means that CPH will continue to be among the Top 10 in terms of the least expensive major airports in Europe, and next summer it will be even cheaper for airlines to operate to Copenhagen when CPH opens “CPH Swift”, a brand new facility targeting cost-effective airlines.
By making this new facility available to low-cost airlines in order to meet their requirements for efficiency, Copenhagen Airport will be able to reduce passenger charges by 50% - for the benefit of the Danes. CPH Swift will attract new and additional airlines and that will result in more flights to more destinations and at lower fares.