ACM rejects complaints about Amsterdam Airport Schiphol incorporating pandemic-related losses into its charges
The Netherlands Authority for Consumers and Markets (ACM) has rejected the complaints regarding the increased charges for airlines that Amsterdam Airport Schiphol had set for the next three years. ACM received complaints from ten airlines and three trade associations, which objected particularly to the way Schiphol wanted to settle the losses incurred in 2020 as a result of the COVID-19 pandemic. ACM concludes that the charge increases are not unreasonable, and that Schiphol has set the charges in accordance with the law. The first increase went into effect on April 1, 2022.
According to ACM, Schiphol did not have to distribute the pandemic-related losses differently. The distribution that Schiphol used is in line with the cost-oriented pricing principle laid down in the Dutch Aviation Act.
Settling the costs incurred by Schiphol with the airlines can work both ways. Namely, Schiphol will have to settle any excess profits with the airlines, for example if traffic and passenger volumes are higher than projected. However, the opposite can also happen if volumes are lower than projected. That possibility of cost settlement working both ways is taken into account in the determination of the cost of capital (WACC) that Schiphol incorporates in its charges. That puts downward pressure on the charges that airlines pay for the use of aviation-related services. On the other hand, they will have to bear the financial risks of any fluctuations in traffic and passenger volumes.
“Schiphol must pass on any windfalls to airlines through its charges, but, at the same time, it is also allowed to settle any setbacks through the charges. Actual costs have been incorporated into the new charges, which follows from the regulatory framework. That is why the charge increases that are the result of that process are not unreasonable”, says Manon Leijten, Member of the Board of ACM.
The pandemic-related losses have indeed been incurred, so if Schiphol were to bear those costs itself, taxpayers would end up paying for those costs as the Dutch State and the municipality of Amsterdam are the main shareholders of Amsterdam Airport Schiphol. Instead, the setbacks are now borne by the airport’s users as a result of the way in which Schiphol has set its charges.
Settlements are 45 million euros lower
ACM has assessed various elements of the charge structure, and has ruled that each element complies with the law. The charges are based on actual costs, and the amount that Schiphol has incorporated into the charges is in compliance with the law. Additionally, when comparing Schiphol’s charges with those of other airports, ACM has not found any indication that Schiphol’s charges are unreasonably high, also considering the quality of Schiphol’s services. Following ACM’s preliminary findings prior to the setting of the charges, Schiphol did lower the amount to be settled by 45 million euros.
One complaint was sustained
The complaints also concerned seven other subjects, besides the level of the charges. One such complaint concerned the introduction of an NOx charge in order to reduce nitrogen emissions. ACM has approved this nitrogen charge. ACM rejected the other complaints too, except for one: there are two initiatives about which Schiphol should have provided more information during the consultation of the five-year investment program. ACM trusts that Schiphol will provide this information as soon as possible, and ACM did not take any measures related to this matter.
More in this case
- 21-04-2022 Decision on the charges and conditions of Amsterdam Airport Schiphol for 2022-2024 (in Dutch)