On October 31, 2024, Amsterdam Airport Schiphol (the Airport), the third largest European airport by passenger volume in 2023, announced it will raise its airport charges by 41% in 2025. The new charges will penalize older, noisier aircrafts and make it significantly more expensive to fly at night. Under this new pricing system, night flights will become approximately three to six times more expensive than a daytime flight, depending on the aircraft type. Here are our key insights:
— We view this rate hike as the culmination of a series of events centered around governmental effort to reduce noise pollution. It also illustrates how tightened environmental regulation could affect the industry and potentially increase the operational rigidity of an airport.
— After some turmoil in setting regulations, it appears that the runway for future growth of the Airport has finally cleared, accompanied with a credible action plan to address environmental issues. Therefore, we are not surprised that the Airport’s need to accommodate future growth- by catching up on any deferred capital program and investing in facility renewal/expansion – has taken center stage once again.
— While demand risks remain important in credit analysis for the Airport sector, the risks of regulation-induced operational rigidity should not be overlooked. The environmental policies can clearly drive cost up and/or create a capacity shortage problem.
“Potentially benefitting from its superior connectivity and high concentration in the lucrative international segment, we believe the Airport is relatively well-positioned to pass costs along to airlines without worrying too much about losing its competitiveness,” said Kevin Li, Senior Vice President, Morningstar DBRS. “However, for airports that do not have these competitive characteristics, a tightened environmental regulation could significantly increase operational rigidity, limiting the Airport’s ability to optimize utilization of its existing facilities and having a material financial impact.”
Be the first to comment on "A Quieter Place: Schiphol Airport’s Significant Rate Hike for Noisy Aircrafts to Fuel Future Growth and Promote Sustainability"