Economic Sustainability of European Business Aviation Airports

Supervisor: Prof. Dr. Matthias Finger Manager IGLUS Program: Umut Alkim Tuncer Executive Student: Dr. Yves Corrodi

Year 2017/18 Master Thesis

Acknowledgments

First of all, I would like to thank Prof. Matthias Finger, who is the IGLUS founder and supervisor of this thesis. I was introduced to the IGLUS Executive Master and financially supported by IWB. Without the support from IWB, I could not join the program and attend the inspiring modules. Further, I would like to thank representatives from the Zurich Airport, Cat Aviation, Swiss and ETH – based on a preliminary discussion of the results on senior management level, the analytical part and the conclusion of the thesis could be sharpened. Special thank goes to Helge Dilger, who provided the title illustration and to Ms. Evelyne Corrodi backing me up during the busy time of writing a master thesis besides a full‐time job.

Abstract

IATA publishes above‐trend air passenger growths and a record load factors. The UN expects the population living in urban areas to increase from 55% to 68% by 2050, which could add another 2.5 billion people to urban areas. Considering these trends, the demand for air transport is expected to increase within large, complex and dynamic urban systems, while spaces remain limited. Airports play an important role for urban systems, but they also exploit a comparably wide area. Due to capacity limits, major European cities built new airports slightly outside the city center (in example Paris, Frankfurt, London, Milan or Munich) focusing on the line and charter business. Existing city airports and smaller airfields, then concentrate on general and business aviation. But is this a sustainable use of land – are these airports economically sustainable, who owns and operates them and what are the related success factors? This thesis will answer these questions based on quantitative analyses of nine European airports with a significant amount of general and business aviation aircraft movements.

Contents

1 List of Figures 1 2 List of Tables 2 3 List of Abbreviations 3 4 IGLUS Context and Motivation 4 5 Research Question 6 6 Literature and Conceptualization 7 6.1 Existing Literature 7 6.2 Development of an Airport Ownership Structure 10 6.3 Specifying a Value Chain for GA/BA Airports 12 6.4 Selection of Europe’s Major GA/BA Airports 15 7 Empirical Study 18 7.1 Paris Le‐Bourget Airport (LBG) 20 7.2 Geneva Airport (GVA) 23 7.3 Nice Airport (NCE) 26 7.4 Luton Airport (LTN) 29 7.5 Zurich Airport (ZRH) 32 7.6 Milan Linate Airport (LIN) 35 7.7 Düsseldorf Airport (DUS) 38 7.8 London Biggin Hill Airport (BQH) 41 7.9 St.Gallen‐Altenrhein Airport (ACH) 44 8 Data Analysis 47 8.1 Evident Traffic Trends 48 8.2 Balance between Shareholders and Governmental Owners 50 8.3 Strongly Varying GA/BA Charges 52 8.4 Sustainable Financial Performance 55 8.5 Typical Value Chain Shares 58 9 Summary and Conclusion 61 10 Further Research 63 A References 64

iii

1 List of Figures

Figure 1: Conceptualization of the Thesis ...... 6 Figure 2: Airport Charges Structure of German Line and Charter Airports ...... 9 Figure 3: Industry‐Wide RPK vs. Global GDP ...... 9 Figure 4: Ownership Structure of Europe’s 25 Busiest Airports ...... 11 Figure 5: Commercial Perspective of the Aviation Value Chain ...... 12 Figure 6: Economic Profits in the Aviation Value Chain ...... 13 Figure 7: Airport Value Chain Proposition ...... 14 Figure 8: Selected BA Airports ...... 17 Figure 9: Europe’s most run BA Aircrafts ...... 19 Figure 10: LBG Air Picture ...... 20 Figure 11: LBG Breakdown of Capital as of the 31.12.2017 ...... 21 Figure 12: LBG Value Chain Coverage ...... 22 Figure 13: GVA Air Picture ...... 23 Figure 14: GVA Value Chain Coverage ...... 25 Figure 15: NCE Air Picture ...... 26 Figure 16: NCE Value Chain Cover ...... 28 Figure 17: LTN Air Picture ...... 29 Figure 18: LTN Value Chain Coverage ...... 31 Figure 19: ZRH Air Picture ...... 32 Figure 20: ZRH Value Chain Coverage ...... 34 Figure 21: LIN Air Picture ...... 35 Figure 22: LIN Value Chain Coverage ...... 37 Figure 23: DUS Air Picture ...... 38 Figure 24: DUS Value Chain Coverage ...... 40 Figure 25: BQH Air Picture ...... 41 Figure 26: BQH Value Chain Coverage ...... 42 Figure 27: ACH Air Picture ...... 44 Figure 28: ACH Value Chain Coverage ...... 46 Figure 30: ‐Annual Amount of PAX 2013‐17 ...... 49 Figure 31: ‐Annual Increase of PAX 2013‐17 ...... 49 Figure 32: Ø‐Annual Aircraft MOV 2013‐17 ...... 49 Figure 33: Ø‐Annual Development of MOV 2013‐17 ...... 49 Figure 34: Ownership Structure of the GA/BA Airport Operators .Ø ...... 51 Figure 35: Cumulated Charges Pilatus 12 ...... Ø ...... 53 Figure 36: Cumulated Charges Falcon 2000 ...... 53 Figure 37: Cumulated Charges Gulfstream 500 ...... 53 Figure 38: Total Charges for the Exemplary Turnaround Flights ...... 54 Figure 39: Aviation Revenues 2013‐2017 ...... 56 Figure 40: Non‐Aviation Revenues 2013‐2017 ...... 56 Figure 41: Ratio Aviation Revenues per PAX 2013‐2017 ...... 56 Figure 42: Profits 2013‐2017 ...... 56 Figure 43: Fixed Assets 2013‐2017 ...... 57 Figure 44: Equity Share 2013‐2017 ...... 57 Figure 45: Comparison Average Aviation Revenues and exemplary BA flight ...... 57 Figure 46: Airport Value Chain Coverage Type I – Airport Operator in Charge ...... 59 Figure 47: Airport Value Chain Coverage Type II – Shared Value Chain ...... 59 Figure 48: Airport Value Chain Coverage Type III – FBO as a Tenant ...... 59

1 2 List of Tables

Table 1: Eurocontrol: The 15 most Frequented European BA airports ...... 16 Table 2: The German Handelsblatt: The 10 most Frequented BA airports ...... 16 Table 3: The Aviation Week Network’s Top 50 BA Airports Worldwide ...... 16 Table 4: LBG Runway System and GA/BA Operational Hours ...... 20 Table 5: LBG Traffic Characteristic ...... 21 Table 6: ADP Financial KPI ...... 21 Table 7: LBG GA/BA Charges ...... 22 Table 8: GVA Runway System and GA/BA Operational Hours ...... 23 Table 9: GVA Traffic Characteristic ...... 24 Table 10: GVA Financial KPI ...... 24 Table 11: GVA GA/BA Charges ...... 25 Table 12: NCE Runway System and GA/BA Operational Hours ...... 26 Table 13: NCE Traffic Characteristic ...... 27 Table 14: NCE Financial KPI ...... 27 Table 15: ACA GA/BA Charges ...... 28 Table 16: LTN Runway System and GA/BA Operational Hours ...... 29 Table 17: LTN Traffic Characteristic ...... 30 Table 18: LTN Financial KPI ...... 30 Table 19: LTN GA/BA Charges ...... 31 Table 20: ZRH Runway System and GA/BA Operational Hours ...... 32 Table 21: ZRH Traffic Characteristic ...... 33 Table 22: ZRH Financial KPI ...... 33 Table 23: ZRH GA/BA Charges ...... 34 Table 24: LIN Runway System and GA/BA Operational Hours ...... 35 Table 25: LIN Traffic Characteristic ...... 36 Table 26: SEA Financial KPI ...... 36 Table 27: SEA GA/BA Charges ...... 37 Table 28: DUS Runway System and GA/BA Operational Hours ...... 38 Table 29: DUS Traffic Characteristic ...... 39 Table 30: DUS Financial KPI ...... 39 Table 31: DUS GA/BA Charges ...... 40 Table 32: BQH Runway System and GA/BA Operational Hours ...... 41 Table 33: BQH Traffic Characteristic ...... 42 Table 34: BQH GA/BA Charges ...... 43 Table 35: ACH Runway System and GA/BA Operational Hours ...... 44 Table 36: ACH Traffic Characteristic ...... 45 Table 37: ACH GA/BA Charges ...... 46

2 3 List of Abbreviations

ACI Airports Council International ADP Aéroports de Paris APRON Approach Runway Own Navigation ATC Air Traffic Control B2B Business to Business B2C Business to Customer BA Business Aviation EASA European Aviation Safety Agency EBAA European Business Aviation Association EBIT Earnings before Interests and Taxes ENAC Ente Nazionale per l’Aviazione Civile EUR Euro FBO Fixed Base Operator FOCA Federal Office of Civil Aviation FTK Freight Ton Kilometers GA General Aviation GAC General Aviation Center GDP Gross Domestic Product IATA International Air Transport Association ICAO International Civil Aviation Organization IFR Instrument Flight Rules IGO Intergovernmental Organization LCC Low Cost Carrier MOV Aircraft Movements MTOW Maximum Take Off Weight OCC Operative Control Center OPEX Operational Expenditures Pax Passenger PRM Persons with Reduced Mobility REV Revenues RPK Revenue Passenger Kilometer SEA Società Esercizi Aeroportuali SIL Sachplan Infrastruktur der Luftfahrt TORA Take Off Run Available VFR Visual Flight Rules

3 4 IGLUS Context and Motivation

IGLUS is a non‐profit initiative of EPFL and selected partners, seeking to help cities better understand the strengths and weaknesses of the governance of their infrastructures with respect to the dimensions Efficiency, Sustainability, and Resilience. [1]

An airport is one of the core infrastructures of an urban area and its economic impact is substantial – either on metropolitan or regional level [2] [3]. This becomes evident, regarding the mega airports, which are currently being constructed in Istanbul, Dubai and Shanghai. Each of them claims to develop the largest airport in the world connecting a metropolitan. Besides being a major international gateway of an existing catchment area, new cities will develop around airports [4] – airport operators are actively investing into airport cities and innovation hubs close to their existing infrastructures. Orthographic pictures of major cities reveal that airport areas can easily cover an urban center. The development of an airport is therefore also a question spatial exploitation.

Today, 55% of the world’s population lives in urban areas, a proportion that is expected to increase to 68% by 2050. Projections show that urbanization, the gradual shift in residence of the human population from rural to urban areas, combined with the overall growth of the world’s population could add another 2.5 billion people to urban areas by 2050 [5]. Based on these UN projections, the demand for air transport will further increase within these larger, more complex and dynamic urban systems, while spaces remain limited.

Europe’s metropolitan areas are historically grown urban systems with limited space for the spatial exploitation of existing airports close to city centers. Operation constraints and noise restrictions will further limit the efficiency of an airport. In order to manage the increasing demand of major European cities such as Paris, London, Frankfurt, Milan or Munich, new airports located outside the city center have been developed. The remaining city airports are still being operated, some of them are focusing on GA/BA. Obviously, the amount of GA/BA aircraft movements is not comparable with the amount of line and charter aircraft movements, but executives using BA aircrafts might have an important impact to a region and the national economy. Considering that airport infrastructures are asset heavy, it is important to understand, whether these airports and the corresponding land use can be operated in an economically sustainable way.

4 This research question, is motivated based on a current political discussion in Zurich. The Zurich Airport experienced a significant passenger growth during the past years – the amount of passenger increased from 20.7 million Pax per year in 2007 to 29.3 million Pax per year in 2017. Although depending on multiple factors, the passenger growth can mainly be explained by Switzerland’s economic growth [6] and population growth [7]. Media recently discussed numbers of up to 50 million Pax per year in 2050 [8]. While the amount of passenger increased, the amount of air movements remained more or less stable due to increased airplane load factors and the introduction of airplanes with passenger higher capacity – i.e. Swiss International Airlines introduced the new C‐Series for short distance flights [9].

During the WEF in 2018, a large number of well‐known people from business and political communities have been expected and delegations from almost 100 countries arrived. Many of these guests will use their private aircraft. During five days, there will be numerous additional take‐offs and landings beyond regular operations, on a par with recent years. The expected peak during the WEF will exceed the daily average of around 130 aircraft movements. Depending on the size of the aircraft, there will be 62 stands available for WEF aircrafts, which are already reserved for the registered delegations. Due to space restrictions, other WEF visitors’ aircraft have been given time slots of maximally three hours for landing and departure. They have been required to leave the Zurich Airport. [10]

The situation during the WEF shall illustrate that GA/BA is important to the Swiss national economy. In 2017, there have been approximately 34’000 GA/BA flights at the Zurich Airport – about 13% of the overall flight activities [11]. The vast majority of the GA/BA flights take place for business or diplomatic reasons and only a minor part of all GA/BA flights are for either leisure or educational purposes. Since efficiency is one of the most important challenge for existing European airports [12], GA/BA implies some drawbacks. Drawbacks are for example longer starting intervals between wide‐bodied aircrafts and smaller GA/BA aircrafts due to air turbulences, longer use of stands or simply financial drawbacks due to the existing charge regulations that focus on passenger fees. Further, the global passenger growth has to be taken into account; it will pressure the existing infrastructure even further. In that reason, recent political developments intend to relocate GA/BA to the nearby Airfield Dübendorf leaving more space for commercial scheduled and charter traffic at the Zurich Airport. [13]

5 5 Research Question

This thesis will evaluate whether European airports focusing on GA/BA can operate in an economically sustainable way or if they are more considered as a general service for the economy. In order to elaborate this research question, the thesis does not develop a specific business case, but will analyze frequented European airports with significant share of GA/BA aircraft movements. It is the goal to provide a quantitative analysis covering the following items, which are systematically evaluated in the empirical part: General Airport Information, Airport Operator Ownership Structure, Airport Traffic Characteristic, Financial KPI, Airport Value Chain Coverage and Airport GA/BA Charges. The obtained data are then consolidated, compared and discussed in the analytical part of the thesis. A conclusion and proposition of further research questions summarizes the result.

Urban Challenges Social Environmental Cultural Technological Economic Metropolitan Energy Efficiency Transport Sustainability Resilience Water/ Waste Economic Sustainability of Green European GA/BA Airports

Urban Infrastructures Buildings ICT Figure 1: Conceptualization of the Master thesis

6 6 Literature and Conceptualization

The aviation industry has an important impact on the European economy, strict safety rules apply and it is widely accepted to be a price sensitive industry. The result is a high attention on industry standards, associated by publications on safety, technical and economic items. Interestingly, only few publications on the GA/BA business can be found and even less data on GA/BA airports are available. The economic importance of the GA/BA compared to the line and charter business as well as the private nature of the BA business might be an explanation. In that reason, the comparably short section 6.1 on existing literature is followed be a conceptual part, developing a typical airport ownership structure, specifying a value chain for GA/BA airports and selecting the major GA/BA airports within Europe. This conceptualization will then be used for the empirical study (Chapter 7) in order to obtain and evaluate fundamental data.

6.1 Existing Literature

Since the first Business Aviation aircraft took off in 1927, Business Aviation has grown to be a substantial contributor to the European economy. This contribution has often been little understood and few organizations have been able to determine the exact economic value and business benefit that the sector truly makes. A recent study from EBAA1 analyzes, based on desktop research, expert interviews and industry data sets, the economic impact of the BA sector on the European economy. Aircraft operators and ground handlers have been examined, whether BA enables economic growth, increase business efficiency and if it enables connectivity. Some of the key findings are listed below: [14]

 374’000 European jobs are either directly or indirectly dependent on the BA industry  The industry creates 87 BEUR and generates a Gross Value Added of 32 BEUR  France, Switzerland, Germany and the UK are the main players in the sector  BA saves in average of 127 minutes of the overall traveling time  Productive work time for each employee increase by about 153 minutes per BA trip  European BA serves 25’280 city or area pairs not connected by direct flights (~31%)  Out of three, only one point to point connection is provided by commercial flights

1 EBAA, is a non‐profit association based in Belgium that has existed since 1977. It represents corporate operators, commercial operators, manufacturers, airports, FBO and BA service providers. Currently there are 715 members.

7 The study from EBAA demonstrates the benefits of BA for the European economy, highlights its efficiency and quantifies the connectivity across the European region. However, it focuses on aircraft operators and ground handlers (FBO), but not on airports.

Nowadays, airports typically rely on two main revenue streams: Regulated revenues based on infrastructure provisions and airport operations as well as commercial revenues such as space utilization and services. According to a 2015 study by InterVISTAS evaluating the economic impact of European airports, airports contribute 12.3 million employees earning 365 BEUR per year. Overall, they generate 675 BEUR, which corresponds to 4.1% of the European GDP [15]. The ACI2 published the following items [2]:

 47% of Europe's airports are loss making – with 76% of airports with less than 1 million passengers per year, in the red.  Airport charges paid by airlines are well below the cost of the infrastructure they use. Revenues from these charges make up just 48% of airports' overall revenues.  Europe's airports are investing more than 55 BEUR during 2015‐2018 with capital cost accounting for 28% of total cost.  An average 20% of airport operating costs are security‐related. Europe is the only region in the world, where aviation security receives little or no state funding.

The ACI describes a rather critical state of many European airports depending on their passenger amount and related line and charter movements. In Germany, the ADV3 publishes the structure of its members’ airport charges, which is illustrated in Figure 2. Obviously, the most important airport charge category are the passenger charges. Passenger development depend on multiple factors such as air ticket pricing, GDP, growth of population, accessibility of infrastructures, price of complementary products, frequencies of services or the international framework and safety issues [16]. Considering IATA4 market analysis, the RPK grew during 2017 by 7.6%, which was another year above the ten‐year average trend of 5.5%. The passenger growth in 2017 is based

2 The ACI is a European industry trade association, which advances the collective interests of Europe's airports and promotes professional excellence in airport management and operations. The members are over 600 airport operators of all sizes in 58 European countries, over 90% of commercial air traffic in Europe. ACI Europe member airports welcomed over 2.3 billion passengers and handled 17 million metric tons of cargo and nearly 45 million aircraft movements each year. 3 ADV is the oldest aviation society in Germany and representing 38 airports. 4 IATA is the trade association for the world’s airlines, representing about 280 airlines (83% of total air traffic). IATA support aviation activities and help to formulate policy and critical aviation issues. [121]

8 on improved global economic conditions as well as a stimulus from lower airfares (mainly earlier in the year). Figure 3 illustrates corresponding multiplier between the RPK and the GDP, which is around the value of two. European airlines flew 8.2% more international RPKs in 2017 than they did in the previous year [17]. Similarly, the industry‐wide FTKs grew by 9.0%, which is the strongest growth since 2010 [18]. There, are limited figures on GA/BA and therefore the following sections will conceptualize relevant research items for the empirical part on GA/BA airports. It will be interesting to understand differences to the line and charter business.

Figure 2: Airport charges structure of German line and charter airports [19]

Figure 3: Industry‐wide RPK vs. global GDP [17]

9 6.2 Development of an Airport Ownership Structure

According EASA 5 , the term Aerodrome means a defined area (including any buildings, installations and equipment) on land or water or on a fixed offshore or floating structure intended to be used either wholly or in part for the arrival, departure and surface movement of aircraft [20]. An airport is an aerodrome with extended facilities, mostly for commercial air transport. There are multiple ways to categorize airports. In example, ICAO6 provides technical specifications categorizing airports such as aerodrome reference codes, approach categories, airport categories for fire and rescue or pavement strength ratings. In contrast, the United States Federal Aviation Administration categorizes airports mainly based on the number of passengers [21]. During the IGLUS Istanbul module in 2017, we learned of a categorization considering its economic impact: International Gateway Airports, National Hub Airport, Regional Airport, Tourist Generator Airport, Tourist Receiver Airport as well as Transit & Interline Airport [22]. Other frequently used terms are Hub Airport, Origin & Destination Airport as wells as Low‐Cost Airport [23].

For this thesis, the amount of GA/BA aircraft movements is the relevant figure – the more GA/BA aircraft movements, the more important is an airport for this thesis.

Country, State and Cities, Financial Investors, Utilities as well as Employee can own an airport operator and share a concession agreement. In case of the Domodedovo International Airport, even an individual holds all shares of the airport [24]. Conventional wisdom claims that the airport authorities can improve the integration of airports into a metropolitan, while private operators can optimize the overall airport performance. According to a report from 2016 ACI Europe report The Ownership of Europe’s Airports, over 40% of Europe's airports have at least some private shareholders ‐ and these airports handle close to 75% of passenger traffic each year. Now only around a quarter of European airport passengers travel via an airport which has no private shareholder [25]. A major study on airport governance and their ownership (evaluating 150 US airports) pointed out that it is challenging to find typical governance and

5 The EASA is an agency of the European Union based in Cologne with regulatory and executive tasks in the field of civilian aviation safety. It supports its member states in implementing the ICAO standards. [122] 6 ICAO is a UN specialized agency, established in 1944 to manage the administration and governance of the Convention on International Civil Aviation (in example for airport designs such as direction of runways). ICAO works with the Convention’s 192 Member States and industry groups to reach consensus on international civil aviation standards and recommended practices and policies.

10 ownership structures – some airports may share similarities, but there are no airports sharing all attributes [26]. However, focusing on airport ownership it is possible to define typical airport owners by analyzing the 25 most frequented European airports. Ownership shares from these major airports are accessible by a web research. Figure 4 show the consolidated result of eight typical ownerships – these ownership types will be used for the empirical studies. For the line and charter business, the two most dominating ownership types are Country and Institutional Investors.

1% 1% Country

14% State City 35% Aviation/Infrastructure Groups

Institutional Investors 29% Stock/Individuals

7% Utilities 6% 6% Employee

Figure 4: Ownership structure of Europe’s 25 busiest airports weighted by their annual number of passengers: 1st LHR [27], 2nd CDG [28], 3rd AMS [29], 4th FRA [30], 5th IST [31], 6th MAD [32], 7th BCN [32], 8th LGW [33], 9th MUC [34], 10th FCO [35] 11th SVO [36], 12th ORY [28], 13th DME [24], 14th DUB [37], 15th ZRH [38] 16th CPH [39], 17th PMI [32], 18th MAN [40], 19th OSL [41], 20th LIS [42] 21st ARN [43], 22nd STN [44], 23rd BRU [45], 24th DUS [46], 25th VIE [47]

11 6.3 Specifying a Value Chain for GA/BA Airports

The aviation business is often described by three mayor players: Competing airlines, strongly regulated civil aviation authorities as well as airports. Figure 5 shows a commercial perspective of the aviation value chain including manufacturers, service providers and distributors. It illustrates an interlinked system with airlines in the center of the aviation value chain. The arrows describe the value flow from the airline supplier to the end customers expressing the regulation swung during 1970 to 1990 into the direction of the aviation market liberalization [48]. The main goal was to encourage the competition among airlines, which can be considered as fruitful regarding the enhancement of air travel options such as low cost airlines. On the regulatory level, there have been significant facilitation in terms of creating standards and operating procedures across the airport value chain (in example ICAO standards for airports or IATA standards for airlines and airport partners). This lowered industry costs and increased customer service levels.

Figure 5: Commercial perspective of the aviation value chain [48]

12 Figure 6 was presented by IATA based on an analysis from McKinsey & Company. It characterizes the economic profit of actors within the aviation value chain. A significant variation between revenues and invested capital is distinguishable. Airports are an extremely capital‐intensive business due to the need to keep investing, ensuring that facilities are up to date and able to meet the future passenger and freight demand.

Figure 6: Economic profits in the aviation value chain (excluding fuel and labor) [49]

Since the last century, European airports evolved from infrastructure providers into self‐ contained businesses. The Boston Consulting Group forecasted in 2004 a big shake‐up of the airport industry, which was based on a highly diverse airport value chain differentiating between Infrastructure Provision, B2B Services and B2C Services [50]. In Figure 7 a slightly adapted version of this airport value chain is illustrated. Obviously, only a few airports will have the specialist skills and scale to optimize each value chain element. Responsibilities tend to be shared between the airports, airlines, handling agents (FBO) and service providers. This value chain share will be discussed the following chapter.

13 Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, Apron Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services Security, Custm Services

Cargo Services

Regulated Non‐Regulated

Figure 7: Airport value chain based on [50] differentiating between Infrastructure Provision, B2B and B2C Services

14 6.4 Selection of Europe’s Major GA/BA Airports

Aviation is generally grouped into military and non‐military aviation. The term civil aviation includes all non‐military flying activities, both scheduled air transport as well as GA/BA aviation. The user segment GA/BA comprises non‐commercial private (GA) and commercial private (BA) air traffic. As a definition for this thesis, all non‐military flights that are not assigned to commercial scheduled or charter traffic are listed under the term GA/BA. The differentiation between GA and BA is more challenging, because an aircraft movement could be classified both depending on regulations (i.e. diplomatic or rescue flights). Since the term, GA also includes educational and leisure flights, it is more promising to evaluate airports with a significant share of BA movements. Typically, these airports will provide higher technical standards (in example IFR) as well as better aviation facilities and therefore their value chain is more comparable among them.

Eurocontrol7 published in 2015 a report on market segments in European air transport [51]. The report evaluated the amount of aircraft movements of specific BA aircrafts. Table 1 shows the corresponding result of Europe’s 15 most frequented BA airports. In 2017, the German newspaper Handelsblatt published the ten most frequented BA airports within Europe based on WINGX analysis evaluating data from January 2015 to Mai 2017 [52]. The results are illustrated in Table 2. The Aviation Week Network also published in 2017 an analysis based on the most searched BA airports for users of the AC‐U‐KWIK airport and FBO directory [53]. Among these worldwide Top 50 BA airports, 15 European airports are listed (Table 3).

Out of the three rankings twenty central European airports result, which cover approximately 20% of Europe’s BA aircraft movements. Although, there are some variations over the years and between the rankings, seven airports resulted in each list (Figure 8): Paris Le Bourget (LBG), Nice (NCE), Geneva (GVA), London Luton (LTN), Zurich (ZRH), Milan Linate (LIN) and London Farnborough (FAB). Three among the twenty airports provide aviation services exclusively to GA/BA: Paris Le Bourget (LBG), London Farnborough (FAB) and London Biggin Hill (BQH). The London Northolt airport is also listed as an airport without any scheduled air transport, however military aircraft movements are prioritized.

7 Eurocontrol is an IGO with 41 Member and 2 Comprehensive Agreement States. It is committed to build a Single European Sky that will deliver the air traffic management performance required for the twenty‐ first century and beyond [120].

15 Table 1: Eurocontrol: The 15 most frequented European BA airports [51] Rank 2015 Share Growth Airport IATA Code 1 3.4% ‐0.046% Paris Le Bourget (France) LBG 2 2.3% ‐0.109% Geneva (Switzerland) GVA 3 2.1% ‐0.047% Nice (France) NCE 4 2.0% +0.015% London Luton (United Kingdom) LTN 5 1.6% ‐0.004% Zurich (Switzerland) ZRH 6 1.5% ‐0.021% London Farnborough (United Kingdom) FAB 7 1.5% ‐0.015% Milano Linate (Italy) LIN 8 1.3% ‐0.199% Moscow Vnukovo (Russia) VKO 9 1.2% ‐0.067% Rom Ciampino (Italy) CIA 10 1.0% ‐0.064% Wien Schwechat (Austria) VIE 11 1.0% ‐0.002% Munich (Germany) MUC 12 0.9% ‐0.077% Stuttgart (Germany) STR 13 0.9% +0.040% Biggin Hill (United Kingdom) BQH 14 0.8% ‐0.043% Madrid Barajas (Spain) MAD 15 0.8% +0.001% Cannes (France) CEQ Others 78.0% ‐ ‐ ‐

Table 2: The German Handelsblatt: The 10 most frequented BA airports [52] Jan‐Mai 17 Airport IATA Code 8’585 Paris Le Bourget (France) LBG 5’916 Geneva Cointrin (Switzerland) GVA 5’574 London Luton (United Kingdom) LTN 5’135 Nice (France) NCE 4’170 London Farnborough (United Kingdom) FAB 4’106 Zurich (Switzerland) ZRH 3’555 Moscow Vnukovo (Russia) VKO 3’379 Milan Linate (Italy) LIN 2’754 Vienna (Austria) VIE 2’556 Munich (Germany) MUC

Table 3: The Aviation Week Network’s Top 50 BA airports worldwide [53] Rank 2017 Rank 2016 Trend Airport IATA Code 3 2 ↓ Paris Le Bourget (France) LBG 4 8 ↑ London Luton (United Kingdom) LTN 16 36 ↑ Keflavik (Island) KEF 20 56 ↑ Zurich (Switzerland) ZRH 26 54 ↑ London Farnborough (United Kingdom) FAB 27 162 ↑ London Heathrow (United Kingdom) LHR 29 29 ↔ London Stansted (United Kingdom) STN 33 69 ↑ Nice (France) NCE 35 42 ↑ Geneva (Switzerland) GVA 36 96 ↑ Amsterdam Schiphol (Netherland) AMS 37 90 ↑ Milan Linate (Italy) LIN 39 182 ↑ London Northolt (United Kingdom) NHT 40 152 ↑ Shannon (Ireland) SNN 43 170 ↑ Frankfurt Hahn (Germany) FRA 44 64 ↑ Madrid (Spain) MAD

16 The Aviation Week Network also published the Top 50 European BA airports, which lists none additional airport only supplying GA/BA. This illustrates a difference between Europe and North America – the already referred study [26] consists of a significant number of airports focusing on GA/BA. Larger distances and less competition with other transport modes might lead to this result. Within Europe, major GA/BA airports are found close to European cities such as Paris, London, Milan or Frankfurt, where a certain degree of specialization is necessary – in order to consider a German airport, the Farnborough Airport (with limited available data) is exchanged against the Düsseldorf Airport. The Düsseldorf Airport is comparable in size to the Zurich Airport and recently invested into GA/BA infrastructures. Additionally two smaller sized airports are selected: BQH and the St.Gallen‐Altenrhein Airport [54]. Figure 8 summarizes this analysis and illustrates the selected airports by their IATA code. At the same time, these airports represent European regions with a strong GDP per person.

Figure 8: Selected BA airports for chapter 7 based on Table 1 to Table 3: ● Airport is listed in one of the rankings ● Airport is listed in one of the rankings and GA/BA only airports ● Additional airports ● Selected airports for the empirical study (IATA Code)

17 7 Empirical Study

Section 6.2 and 6.3 showed a remarkable diversity of the airport business. Although there many information on airports and the aviation industry in general, data and analyses on GA/BA airports are rather rare. For the empirical study, it is therefore crucial to select accessible data, which can be combined to a holistic picture on the financial sustainability of GA/BA airports. The following items are systematically evaluated for each airport that was selected in section 6.4:

1. General Airport Information will give a brief overview focusing on the following items:  When and by whom the airport was established  Corresponding airport operator  The remaining concession period  Runway capacity 2. The Airport Operator Ownership Structure analyzing the ownership types as evaluated in Figure 4 and considering direct and indirect ownerships. 3. Available Airport Traffic Characteristic of the past five years:  Total number of passengers (size of the specified airport)  Total amount of aircraft movements (size of the specified airport)  Amount of GA/BA aircraft movements (importance of GA/BA) 4. Airport Financial KPI of the past five years describing the aviation core business. Due to different country regulations, a variety of available KPI are expected:  Total and aviation business revenues (for comparison with GA/BA revenues)  Profits (in order to understand the airport operator’s financial performance)  Invested capital (development of the fixed assets)  Equity shares (sustainable share of equities)  If available, KPI on GA/BA (otherwise revenues are estimated based on charges) 5. Evaluation of the Airport Value Chain Coverage based on the developed value chain diagram in Figure 7. The following key stakeholders are considered: Airport Operator, Country/State, Airlines and GA/BA FBO.

18 6. The evaluation of GA/BA Airport Charges is essential for this thesis. Based on the charges, the selected nine airports can be benchmarked and the financial KPI as well as the airport value chain coverage can be set in relation to the charges. Typically, there are six different categories of airport charges that apply on GA/BA: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges8. Each charges category will be evaluated accordingly:  Existence of specific regulation document on GA/BA Airport Charges  Coverage of the above specified airport charges categories  Diversity of the applied charges (except Handling Charges and Emission Charges)  Minimal amounts (<4 tons) for Landing and Parking Charges  Charges regulation of the nine selected airports will look rather individual and the corresponding charges definitions are hardly comparable. In order to benchmark the nine airports, the charges of a frequent turnaround flight are calculated (arrival Weekday 22:15, departure the next Weekday 19:15). In 2015, Eurocontrol published Europe’s most run BA aircrafts. Their MTOW varies from 4 to 37 tons. In order achieve a wide spread, the following three aircrafts are selected: The Pilatus 12 (PC12, 5 tons, Propeller, ICAO 5D), the Falcon 2000 (F2TH, 19 tons, Jet, ICAO 4) and the Gulfstream 5 (GLF5, 37 tons, Jet, ICAO 4). For the routing, Munich to the destination and back is assumed. As an average value, three passengers are on every flight. [55].

Figure 9: Eurocontrol lists Europe’s most run BA aircrafts [51]  Defining exchange rates: 1 EUR = 1.13 CHF and 1 EUR = 0.89 GBP

8 Additional Airport Charges are often charges for PRM or security charges.

19 7.1 Paris Le‐Bourget Airport (LBG)

From: Wikipedia

Figure 10: Air picture from the Paris‐Le Bourget Airport

7.1.1 General Airport Information

Paris‐Le Bourget Airport celebrated its centenary in 2014. On the 9th October 1914, Captain Lucca landed for the first time on Le Bourget soil when he was looking for a suitable place for defending the city of Paris. The Le Bourget Airport was officially opened 5 years later in 1919 and in 1927 Charles Lindbergh landed there in the airplane Spirit of Saint Louis, after having flown across the Atlantic.

In 1981, Paris‐Le Bourget Airport based its activity primarily on BA to tackle the rapid rise of the Paris Orly and Paris Charles de Gaulle Airports. The Airport is unique in that it also offers two additional aerodromes for BA (Toussus‐le‐Noble and Pontoise‐Cormeilles) as well as eight further GA aerodromes. [56]

The Paris‐Le Bourget Airport is operated by the Groupe ADP, which can operate according the Economic Regulation Agreement 2016‐2020 with the French government. [57]

Table 4: Runway system and GA/BA operational hours of the Paris‐Le Bourget Airport [58] [59] Runway Nr. TORA Width IFR Crossings GA/BA Landing GA/BA Starting Hours Hours 07/25 Paved 2991m 45m Yes Yes 24h, seven days 05:00‐22:15 03/21 Paved 2665m 60m a week 09/27 Paved 1853m 45m

20 7.1.2 Airport Operator Ownership Structure

The operator of the Paris‐Le Bourget Airport (Groupe ADP) has the following shareholder structure as it is illustrated in Figure 11. The French government went public in 2006.

Figure 11: Breakdown of LBG Capital as of the 31. December 2017 [28]

7.1.3 Airport Traffic Characteristic

There is rather limited information on the traffic characteristic of the Paris‐Le Bourget Airport – available data are either consolidated or on the Paris‐Charle de Gaulle Airport and the Paris‐Orly Airport. As indicated in section 6.4 and 7.1.1 Paris‐Le Bourget is a GA/BA only airport. All three airports together service approximately 752 TMOV per year (average of the last five years).

Table 5: Traffic Characteristic of the Paris Le Bourget Airport [56] [58] [60] [61] [51] [62] KPI 2013 2014 2015 2016 2017 Pax CDG+ORY ~90’300’000 ~92’700’000 95’400’000 ~97’200’00 ~101’500’000 Pax LBG ~100’000 ~100’000 ~100’000 ~100’000 ~100’000 MOV CDG+ORY 701’860 693’294 700’452 707’403 704’681 MOV GA/BA N/A ~51’000 N/A N/A 54’177 MOV BA N/A ~46’574 N/A N/A ~45’151

7.1.4 Financial KPI

Financial KPI are published for the Groupe ADP, however not specifically for the Paris Le Bourget Airport. Table 1 lists the selected KPI: Aviation revenues containing airport fees, ancillary fees, revenue from airport safety and security services as well as other income. Property, plant and equipment assets are considered as fixed assets. The increase of the ordinary operating income in 2017 is mainly due to extraordinary effects from TAV (full consolidation).

Table 6: Financial KPI of the Groupe ADP [57] KPI 2013 2014 2015 2016 2017 REV Total 2’754 MEUR 2’791 MEUR 2’916 MEUR 2’947 MEUR 3’617 MEUR REV Aviation 1’645 MEUR 1’671 MEUR 1’735 MEUR 1’743 MEUR 1’813 MEUR Op. Income AV 83 MEUR 83 MEUR 139 MEUR 186 MEUR 272 MEUR Assets Fixed 5’987 MEUR 5’928 MEUR 5’953 MEUR 6’271 MEUR 6’793 MEUR Assets Total 9’639 MEUR 9’792 MEUR 10’435 MEUR 10’592 MEUR 14’276 MEUR Equity 3’825 MEUR 3’980 MEUR 4’126 MEUR 4’291 MEUR 5’434 MEUR

21 7.1.5 Airport Value Chain Coverage

Six GA/BA FBO are available at the Paris‐Le Bourget Airport: Advanced Air Support, Dassault Falcon Service, Jetex, Sky Valet, Signature Flight Support, Universal Aviation France. The practical guide shows a wide range of services as well as research and development areas. The analysis from Section 7.1.6 only indicates Landing Charges, Parking Charges and Noise Charges. [58] [63]

Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, APRON Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services  Airport Operator Security, Custm. Services  Country/State  Airline Cargo Services  GA/BA FBO

Regulated Non‐Regulated

Figure 12: Value Chain Coverage of the Paris‐Le Bourget Airport

7.1.6 Airport GA/BA Charges

The document «Groupe ADP Airport Fees and Charges» [63] specifies the airport charges of three airports in Paris, including the airport GA/BA charges from Paris‐Orly:

 It is a specific regulation document also focusing on GA/BA charges for Paris‐Orly only  It covers the green categories: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges  Four different charges apply (except Handling Charges and Emission Charges)  Application of minimal amounts: Landing Charges and Parking Charges  Charges for the three exemplary turnarounds inclusive 20% VAT: 1’684 EUR

Table 7: GA/BA charges for three exemplary turnarounds at the Paris‐Le Bourget Airport [63] GA/BA Pilatus 12 Falcon 2000 Gulfstream 500 Charges Category (Light Weight Prop) (Medium Weight Jet) (Heavy Weight Jet) Landing Charges 174 EUR 219 EUR 280 EUR Parking Charges 39 EUR 147 EUR 287 EUR Passenger Charges 0 EUR 0 EUR 0 EUR A. Airport Charges 0 EUR 0 EUR 0 EUR Noise Charges 9 EUR 109 EUR 140 EUR

22 7.2 Geneva Airport (GVA)

From: Airlines.net (Copyright Christopher Schneiders)

Figure 13: Air picture from the Geneva Airport

7.2.1 General Airport Information

The government of the canton Geneva decided in 1920 to acquire a field in Cointrin. Until 1922 a runway and some wooden hangar buildings have been created. First commercial flights took place in 1922 and a first connection to New York was established in 1947. Since then the airport was continuously developed. [64]

The existing SIL is currently under revision by the Swiss FOCA for the period until 2030. The objective is to handle the forecasted increase of passengers (191’000 line and charter movements and 45’000 GA/BA movements in 2030). [65] The airport is operated by the Aéroport International de Genève.

In 2017, the grass runway was closed and one concrete runway is remaining. [64]

Table 8: Runway system and GA/BA operational hours of the Geneva Airport [65] Runway Nr. TORA Width IFR Crossings GA/BA Landing & Departing Hours 05/23 Concrete 3900m 50m Yes No Daily, 06:00 – 22:00

7.2.2 Airport Operator Ownership Structure

The airport of Geneva is fully public corporatized (Aéroport International de Genève) and 100% owned by the canton of Geneva. [25]

23 7.2.3 Airport Traffic Characteristic

The airport traffic characteristic is published in the Airport Geneva’s annual reports 2013 to 2017. Between the years 2014 and 2015, there have been a small change in the specification of BA aircraft movements. The documents list them as other commercial aircraft movements, while the report from 2013 specifies them as taxi, medical aircraft movements. Considering figure itself it is assumed that both describes BA aircraft movements. The Geneva Airport serves a significant amount of diplomatic flights.

Table 9: Traffic Characteristic of the Geneva Airport [66] KPI 2013 2014 2015 2016 2017 Pax Total 14’436’149 15’152’915 15’711’271 16’532’690 17’144’257 MOV Total 188’768 187’596 188’829 189’840 190’778 MOV BA 25’105 23’927 25’596 25’676 27’256 MOV GA 23’924 19’183 18’468 17’631 17’519

7.2.4 Financial KPI

KPI are published in detail within the Annual Reports 2013‐2017 of the Geneva Airport. [66]

Table 10: Financial KPI of the Geneva Airport [66] KPI 2013 2014 2015 2016 2017 REV Total 376.3 MCHF 403.8 MCHF 423.7 MCHF 445.3 MCHF 466.4 MCHF REV Airport Fee 194.7 MCHF 217.2 MCHF 234.1 MCHF 248.9 MCHF 260.4 MCHF Net Profits 91.6 MCHF 88.3 MCHF 74.6 MCHF 80.8 MCHF 78.9 MCHF Assets Fixed 718.4 MCHF 767.1 MCHF 811.7 MCHF 893.1 MCHF 940.8 MCHF Total Equity 238.3 MCHF 191.4 MCHF 177.7 MCHF 183.1 MCHF 251.0 MCHF Total Assets 775.7 MCHF 844.9 MCHF 902.6 MCHF 960.5 MCHF 1’031.1 MCHF

7.2.5 Airport Value Chain Coverage

Four GA/BA FBO are available at the Geneva Airport: Jet Aviation, Tag Aviation, Privatport and RUAG Aerospace AG. Based on the field trip and contact with the Jet Aviation manager [67], the airport value chain as shown in Figure 14 could be evaluated. As illustrated, the airport operator is mainly responsible for the infrastructure provisions, while the GA/BA FBO cover B2B and B2C services of the airport. [67] [68]

24 Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Regulated Non‐Regulated

Figure 14: Value Chain Coverage of the Geneva Airport

7.2.6 Airport GA/BA Charges

The document «Genève Aéroport Airport Charges and Services» [69] specifies the corresponding airport GA/BA charges, which can be characterized as follows:

 It is not a specific regulation document focusing only on GA/BA charges  It covers the green categories: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges  Six different charges apply (except Handling Charges and Emission Charges)  Application of minimal amounts: Landing Charges and Parking Charges  Charges for the three exemplary turnarounds inclusive 7.7% VAT: 1’180 EUR

Table 11: GA/BA charges for three exemplary turnarounds at the Geneva Airport [69] GA/BA Pilatus 12 Falcon 2000 Gulfstream 500 Charges Category (Light Weight Prop) (Medium Weight Jet) (Heavy Weight Jet) Landing Charges 49 EUR 164 EUR 262 EUR Parking Charges 22 EUR 84 EUR 246 EUR Passenger Charges 33 EUR 33 EUR 33 EUR A. Airport Charges 33 EUR 33 EUR 33 EUR Noise Charges 0 EUR 35 EUR 35 EUR

25 7.3 Nice Airport (NCE)

From: Motion2Emotion

Figure 15: Air picture from the Nice Airport

7.3.1 General Airport Information

The airport of Nice hosted aviation meetings in the years 1922, 1930 and 1932. However, the creation of an aerodrome only gradually developed. After some air traffic was established, the Ministère de l’Air initiated and leaded the development of an aerodrome. It was officially recognized in the year 1929. [70]

The French government ranked Atlantia/EDF as the best bidder in the sale tender process for the French state’s 60% interest in the airports until 31 December 2044. The airport is operated by Aéroports de la Côte d’Azur. [71]

Table 12: Runway system and GA/BA operational hours of the Nice Airport [72] Runway Nr. TORA Width IFR Crossings GA/BA Landing GA/BA Departing Hours (Daily) Hours (Daily) 04R/22L 2963m 45m Yes No 06:15‐23:30 06:00‐23:15 Asphalt 04L/22R 2628m Asphalt

7.3.2 Airport Operator Ownership Structure

2016 marked a turning point in the history of Aéroports de la Côte d’Azur, the French government sold its share to the Atlantia/EDF consortium – Atlantia is global financial investor focusing on infrastructures [71]. The consortium Azzurra now holds 64% of the capital in Aéroports de la Côte d'Azur. The consortium is made up of the following companies: Atlantia

26 (65.01% of company shares), Aéroports di Roma (10%) and Electricity de France via EDF Invest (24.99%). [73] The remaining shares can be evaluated based on [25]: 22.5% Chamber of Commerce & Industry of Nice Côte d’Azur, 4.5% Regional Council of Provence Alpes Côte d’Azur, 4.5%, Departmental Council of Alpes Maritimes and 4.5% Métropôle Nice Côte d’Azur. Therefore, the airport operator is owned: 9% by state, 27% by city, 6.4% by aviation group, 41.6% by institutional investors and 16% by a utility.

7.3.3 Airport Traffic Characteristic

The Nice Airport has a significant amount of helicopter movements, which is listened separately in the following table and can added to the total aircraft movements.

Table 13: Traffic Characteristic of the Aéroports de la Côte d’Azur [74] KPI 2013 2014 2015 2016 2017 Pax Total 11’554’251 ~11’700’000 ~12’017’000 12’427’427 13’304’782 MOV Total 159’737 157’380 169’934 176’931 176’522 (incl. Helicopter) MOV BA 32’496 32’141 31’827 33’493 35’657 MOV Helicopter 31’274 31’794 33’908 37’197 33’738

7.3.4 Financial KPI

After the French government sold its shares, the Nice Airport’s financial KPI are not anymore publicly available as well as data on the aviation core business. [74]

Table 14: Financial KPI of the Nice Airport [74] KPI 2013 2014 2015 2016 2017 Turnovers 223 MEUR 232 MEUR 243 MEUR N/A N/A Net Profits 17 MEUR 22 MEUR 25 MEUR N/A N/A Assets Fixed 454 MEUR N/A N/A N/A N/A Capital (Equity) 238 MEUR N/A N/A N/A N/A Assets Total 1’034 MEUR N/A N/A N/A N/A

7.3.5 Airport Value Chain Coverage

Four FBO are available at the Nice Airport: Signature Flight Support, Avia Partner Executive, Landmark Aviation and Swissport Executive. Each has a 300m² area of the terminal containing operations rooms, VIP lounges, crew lounges and offices. The terminal also a base for three helicopter operators and shops. Considering also the publicly available airport charges, the following value chain coverage can be drawn. [75] [76] [77]

27 Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, APRON Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services  Airport Operator Security, Custm Services  Country/State  Airline Cargo Services  GA/BA FBO

Regulated Non‐Regulated

Figure 16: Value Chain Coverage of the Nice Airport

7.3.6 Airport GA/BA Charges

The document «Aéroports de la Cote d’Azur Airport Public Services Charges» [77] (packages [77]) specifies the corresponding airport GA/BA charges, which can be characterized as follows:

 It is not a specific regulation document also focusing only on GA/BA charges, but an additional GA/BA document provide set prices for transiting GA/BA aircrafts  It covers the green categories: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges  Nine different charges apply (except Handling Charges and Emission Charges)  Application of minimal amounts: Landing Charges and Parking Charges  Helicopter movements are estimated with 100 EUR per turnaround  Charges for the three exemplary turnarounds inclusive 20% VAT: 989 EUR

Table 15: GA/BA charges for three exemplary turnarounds at the Nice Airport [76] [77] GA/BA Pilatus 12 Falcon 2000 Gulfstream 500 Charges Category (Light Weight Prop) (Medium Weight Jet) (Heavy Weight Jet) Landing Charges 101 EUR 54 EUR 346 EUR 58 EUR 141 EUR Parking Charges Package 95 EUR Package 101 EUR 199 EUR Passenger Charges 37 EUR 37 EUR 37 EUR A. Airport Charges 8 EUR 8 EUR 8 EUR Noise Charges 11 EUR 40 EUR 96 EUR

28 7.4 Luton Airport (LTN)

Figure 17: Air picture from the London Luton Airport

7.4.1 General Airport Information

The airport was opened in 1938 by the Secretary of State for Air (Kingsley Wood) and based during the World War II Royal Air Force fighters. Although the concession considers responsibilities for the regional support (i.e. the Community Funding Policy), the concession does not cover any specific GA/BA conditions and requirements. GA/BA is treated as a self‐ running business supporting the airport in its role as a major employer and economic driver of the region. The operator is London Luton Airport Ltd., which holds a concession until 2031. [78]

The London Luton Airport has one runway that can be operated in both directions, 24 hours a day. It applies IFR. [79]

Table 16: Runway system and GA/BA operational hours of the London Luton Airport [79] [80] Runway Nr. TORA Width IFR Crossings GA/BA Landing & Departing Hours 08/26 2152m 46m Yes No It is operating 24 hours and 7 days a week, Grooved however there is a noise violation penalty Asphalt going into a community trust fund

7.4.2 Airport Operator Ownership Structure

In 1987, the London Luton Airport Ltd. was set up, in response to the Airports Act 1986 that required any local authority that owned and operated an airport to transfer it into a private

29 limited company. The Luton Borough Council is the main shareholder. In 1998, a 30‐year concession agreement with London Luton Airport Operations Ltd. was established, which is responsible for the management, operation and development of the airport in return for a concession fee (set at an amount per passenger). [81]

Ardian is a 49% shareholder of the London Luton Airport Operation Ltd., which agreed to sell its stakes in the airport to the AMP Capital (an Australian specialist global investment manager). This change does not affect Aena´s 51% majority shareholding and controlling stake. Aena is the world's largest airport operator by passenger volume, 51% owned by the Spanish state government and 49% owned by free float shares. [82] [32]

7.4.3 Airport Traffic Characteristic

Table 17: Traffic Characteristic of the London Luton Airport [83] [61] [51] KPI 2013 2014 2015 2016 2017 Pax Total 9’709’149 10’500’132 12’279’176 14’551’774 15’799’219 MOV Total 97’596 103’928 116’412 131’536 135’538 MOV GA/BA 27’257 28’941 30’136 29’651 30’086 MOV BA 24’309 N/A 25’952 N/A N/A

7.4.4 Financial KPI

The KPI’s are annually published as the London Luton Airport Operations Ltd. Financial statements. Turnover and traffic income show a significant increase, while profits and invested capital remain stable except the year 2017 – due to significant investments into runways, taxiways and assets under construction.

Table 18: Financial KPI of the London Luton Airport [84] KPI 2013 2014 2015 2016 2017 Turnovers 122’289 TGBP 128’994 TGBP 146’956 TGBP 162’855 TGBP 180’221 TGBP Traffic Income 57’303 TGBP 60’473 TGBP 69’498 TGBP 76’957 TGBP 82’804 TGBP Profits 23’274 TGBP 25’716 TGBP 32’761 TGBP 36’836 TGBP 31’638 TGBP Invest. Capital 90’336 TGBP 90’069 TGBP 84’977 TGBP 91’103 TGBP 187’728 TGBP Total Assets 121’523 TGBP 114’887 TGBP 122’825 TGBP 155’581 TGBP 225’953 TGBP Equity 55’202 TGBP 43’631 TGBP 51’516 TGBP 44’108 TGBP 39’336 TGBP

7.4.5 Airport Value Chain Coverage

Two GA/BA FBO are operating at the London Luton Airport: Harrods Aviation and Signature Flight Support. Based on an interview with managers from Harrods and the head of flight operations, the value chain coverage in Figure 18 was evaluated. FBO play a rather important

30 role for the GA/BA at the London Luton Airport. They receive an airport site with full responsibilities for Aircraft and B2C Services as well as partial responsibilities for airport operations. FBO will also develop and control their sites on their own responsibility. They are also responsible to collect all fees and charges for the Luton Airport in addition to a 6% charges from their revenues such as parking fees, handling fees and B2C Services. [67]

Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Regulated Non‐Regulated

Figure 18: Value Chain Coverage of the London Luton Airport

7.4.6 Airport GA/BA Charges

The document «London Luton Airport Charges and Condition of Use 2018/19» [85] specifies the corresponding airport GA/BA charges, which can be characterized as follows:

 It is not a specific regulation document focusing only on GA/BA charges  It covers the green categories: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges  Twelve different charges apply (except Handling Charges and Emission Charges)  Application of minimal amounts: Landing Charges and Parking Charges  Charges for the three exemplary turnarounds inclusive 20% VAT: 4’791 EUR

Table 19: GA/BA charges for three exemplary turnarounds at the London Luton Airport [85]. Based on the noise violation limit of 82 dB(A) no noise penalty is assumed. GA/BA Pilatus 12 Falcon 2000 Gulfstream 500 Charges Category (Light Weight Prop) (Medium Weight Jet) (Heavy Weight Jet) Landing Charges 284 EUR 284 EUR 284 EUR Parking Charges (FBO lower) 245 EUR (FBO lower) 930 EUR (FBO lower) 1’812 EUR Passenger Charges 43 EUR 43 EUR 43 EUR A. Airport Charges 8 EUR 8 EUR 8 EUR Noise Charges 0 EUR 0 EUR 0 EUR

31 7.5 Zurich Airport (ZRH)

From: Von Rama (CC BY‐SA 2.0 FR)

Figure 19: Air picture from the Zurich Airport

7.5.1 General Airport Information

The first commercial flight from Switzerland to a destination abroad took place in 1921. 1943 the Zurich Government Council evaluated potential sites for a major airport – in the early days the Dübendorf Air Base was also used for civil flight activities. The federal government declares in 1945 that Zurich Kloten will be the main location as a Swiss intercontinental airport. Geneva, Basel and Bern remained smaller continental airports.

The operating license awarded by the federal government authorizes and commits the airport operator (Flughafen Zürich AG) to operate Zurich Airport until 2051. The airport's flight operations are governed by the Swiss Federal Aviation Act, the airport's operating license and the airport's operating regulations. Flights over southern German airspace are subject to German legislation. [86]

Table 20: Runway system and GA/BA operational hours of the Zurich Airport [86] [87] Runway Nr. TORA Width IFR Crossing GA/BA Landing GA/BA Departing s Hours (Daily) Hours (Daily) 10/28 Asphalt 2500m 60m Yes Yes 06:00‐23:30 06:00‐23:00 14/32 Asphalt 3300m 16/34 Asphalt 3700m

32 7.5.2 Airport Operator Ownership Structure

The operator Flughafen Zürich AG is on the Swiss Stock exchange. The shares can be grouped into three types of shareholders: 33.3% the canton of Zurich, 5.1% the city of Zurich and 61.6% are free floating shares. In addition, the canton Zurich has been granted special minority rights, giving it a blocking minority on the Board of Directors in the case of noise‐related decisions or runway extensions. [86]

7.5.3 Airport Traffic Characteristic

Data on the number of passengers and aircraft movements are very accessible.

Table 21: Traffic Characteristic of the Zurich Airport [88] [61] [51] KPI 2013 2014 2015 2016 2017 Pax Total 24’816’552 25’426’884 26’229’641 27’614’849 29’345’133 Pax GA/BA 48’586 50’738 51’587 51’579 50’960 MOV Total 228’270 230’684 231’094 235’927 236’453 MOV GA/BA 33’957 34’286 34’001 33’233 34’000 MOV BA ~21’280 N/A ~20’769 N/A N/A

7.5.4 Financial KPI

Table 22: Financial KPI of the Zurich Airport [11] KPI 2013 2014 2015 2016 2017 REV Total 975 MCHF 963 MCHF 988 MCHF 1’012 MCHF 1’037 MCHF REV Aviation 601 MCHF 574 MCHF 597 MCHF 620 MCHF 624 MCHF Profit 137 MCHF 206 MCHF 180 MCHF 248 MCHF 286 MCHF Invested Capital 3’413 MCHF 3’200 MCHF 3’186 MCHF 3’215 MCHF 3’470 MCHF Equity Return 7.0 % 9.8 % 8.3 % 11.1 % 12.3 % Equity Share 50.5 % 53.6 % 54.7 % 55.6 % 55.9 % Assets Total 4’066 MCHF 3’990 MCHF 4’043 MCHF 4’065 MCHF 4’299 MCHF Equity 2’052 MCHF 2’141 MCHF 2’212 MCHF 2’260 MCHF 2’401 MCHF

7.5.5 Airport Value Chain Coverage

Five GA/BA FBO are available at the Geneva Airport: Jet Aviation AG, ExecuJet Switzerland AG, DC Aviation Switzerland AG, Cat Air Service AG, PrivatPort S.A. Based on an interview with the head of the GAC at the Zurich Airport, the value chain coverage in Figure 20 could be evaluated. The majority of the value chain elements are covered by the airport itself. [55]

33 Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, APRON Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services  Airport Operator Security, Custom. Services  Country/State  Airline Cargo Services  GA/BA FBO

Regulated Non‐Regulated

Figure 20: Value Chain Coverage of the Zurich Airport

7.5.6 Airport GA/BA Charges

The document «Gebührenreglement für den Flughafen Zürich» [89] specifies the corresponding airport GA/BA charges, which can be characterized as follows:

 It is not a specific regulation document focusing only on GA/BA charges  It covers the green categories: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges  Eleven different charges apply (except Handling Charges and Emission Charges)  Application of minimal amounts: Landing Charges and Parking Charges  Charges for the three exemplary turnarounds inclusive 7.7% VAT: 968 EUR

Table 23: GA/BA charges for three exemplary turnarounds at the Zurich Airport [89] GA/BA Pilatus 12 Falcon 2000 Gulfstream 500 Charges Category (Light Weight Prop) (Medium Weight Jet) (Heavy Weight Jet) Landing Charges 33 EUR 162 EUR 273 EUR Parking Charges 15 EUR 55 EUR 109 EUR Passenger Charges 11 EUR 11 EUR 11 EUR A. Airport Charges 37 EUR 37 EUR 37 EUR Noise Charges 0 EUR 53 EUR 53 EUR

34 7.6 Milan Linate Airport (LIN)

From: Eurohotel

Figure 21: Air picture from the Milan Linate Airport

7.6.1 General Airport Information

The airport was built next to Idroscalo of Milan in the 1930s when Taliedo Airport (located 1 km from the southern border of Milan), and one of the world's first aerodromes and airports, became too small for commercial traffic. Linate was completely rebuilt in the 1950s and again in the 1980s. [90]

SEA Group, based on the 40‐year Agreement signed between SEA and ENAC in 2001, manages the Malpensa and Linate airports which are ranked among the first ten airport systems in Europe for volume of traffic, in both the passenger and cargo segments. [91]

Table 24: Runway system and GA/BA operational hours of the Milan Linate Airport [92] [93] Runway Nr. TORA Width IFR Crossings GA/BA Landing & Departing Hours 18/36 Asphalt 2442m 60m Yes No 24 hours and seven days, 17/35 Asphalt 601m 22m no noise restrictions

7.6.2 Airport Operator Ownership Structure

The SEA Group’s share capital is 27.5 MEUR divided into 250 million shares. 55.59% are public shareholders: City of Milan 54.81%, Province of Varese 0.64%, City of Busto Arsizio 0.06% and 0.08% other public shareholders. 44.41% are private shareholders: 2i Aeroporti SpA 35.75%, F2i

35 Sgr SpA (2) 8.62% and 0.04% other private shareholders. 2i Aeroporti Spa is a joint venture of Primo Fondo Italiano per le Infrastrutture, Ardian and Crédit Agricole Assurances. [91]

7.6.3 Airport Traffic Characteristic

Data on the number of passengers and aircraft movements are very accessible. The two airports seem to influence each other, regarding the number of passengers and aircraft movements.

Table 25: Traffic Characteristic of the Milan Linate Airport [94] [61] [51] KPI 2013 2014 2015 2016 2017 Pax Total LIN 8’983’694 8’984’285 9’638’800 9’636’200 9’503’100 Pax Total MXP 17’781’144 18’669’740 18’444’800 19’311’600 22’037’200 MOV Total LIN 91’128 90’833 96’049 97’828 96’467 MOV Total MXP 160’700 162’953 156’642 162’683 174’754 MOV GA/BA LIN 22’193 22’416 22’601 20’704 21’263 MOV GA/BA MXP 4’045 3’796 9’255 8’868 4’174 MOV BA LIN ~19’236 N/A ~19’126 N/A N/A

7.6.4 Financial KPI

The results of the GA/BA business are not comparable due to the fact that on 1. April 2016 the Group lost control over the handling business and refueling activity, with the transfer on that date of 60% of the shares of Signature Flight Support Italy to the Signature Group.

Table 26: Financial KPI of the SEA GROUP [95] KPI 2013 2014 2015 2016 2017 REV Total 724 MEUR 685 MEUR 695 MEUR 700 MEUR 725 MEUR REV Aviation 49.7 % 57.5% 396 MEUR 409 MEUR 444 MEUR Net Profits 34 MEUR 55 MEUR 84 MEUR 93 MEUR 84 MEUR Assets Fixed 1’123 MEUR 1’287 MEUR 1’307 MEUR 1’317 MEUR 1’319 MEUR Net Capital 775 MEUR 881 MEUR 883 MEUR 905 MEUR 900 MEUR Equity 287 MEUR 309 MEUR 345 MEUR 375 MEUR 391 MEUR REV GA/BA N/A 16 MEUR 16 MEUR 12 MEUR 12 MEUR EBITDA GA/BA N/A 4.4 MEUR 5.4 MEUR 6.7 MEUR 7.9 MEUR EBIT GA/BA N/A 2.5 MEUR 3.5 MEUR 4.9 MEUR 5.5 MEUR

7.6.5 Airport Value Chain Coverage

In 2013, the SEA Group acquired the 98.34% majority and controlling share held by Società Acqua Pia Antica Marcia SpA (SAPAM) in Ali Trasporti Aerei ATA SpA. The SEA Group manage therefore also the western section of Linate airport. [94]

Based on an interview with the operation manager from Sea Prime, the value chain coverage in Figure 22 could be evaluated. At Linate, there are two Aprons: The GA/BA Apron is managed by

36 Sea Prime (stand allocation, hangar, Apron management system and follow me) and the commercial Apron is managed by SEA with an Airport OCC. Ground handling services are supplied by handlers. There are four GA/BA FBO: Signature Flight Support Italy, Universal Aviation, Sky Services and Argos. Firefighting and Rescue are done by local entities. [93]

Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, APRON Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services  Airport Operator Security, Custm Services  Country/State  Airline Cargo Services  GA/BA FBO

Regulated Non‐Regulated

Figure 22: Value Chain Coverage of the Milan Linate Airport

7.6.6 Airport GA/BA Charges

The document «SEA Regulated Charges 2018» [96] specifies the corresponding airport GA/BA charges, which can be characterized as follows:

 It is not a specific regulation document focusing only on GA/BA charges  It covers the green categories: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges  Seven different charges apply (except Handling Charges and Emission Charges)  Application of minimal amounts: Landing Charges and Parking Charges  Charges for the three exemplary turnarounds inclusive 22% VAT: 1’176 EUR

Table 27: GA/BA charges for three exemplary turnarounds at the Milan Linate Airport [96] GA/BA Pilatus 12 Falcon 2000 Gulfstream 500 Charges Category (Light Weight Prop) (Medium Weight Jet) (Heavy Weight Jet) Landing Charges 56 EUR 211 EUR 398 EUR Parking Charges 10 EUR 40 EUR 77 EUR Passenger Charges 45 EUR 45 EUR 45 EUR A. Airport Charges 12 EUR 12 EUR 12 EUR Noise Charges 0 EUR 0 EUR 0 EUR

37 7.7 Düsseldorf Airport (DUS)

From: Aero International

Figure 23: Air picture from the Düsseldorf Airport

7.7.1 General Airport Information

On 21.01.1927 the airport received the first aviation permit as an aerodrome. On 7 September of the same year, the city of Dusseldorf together with the Rheinische Bahngesellschaft founded the Dusseldorf Airport Operating company, which was registered on 27.09.1927 in the commercial register. [97]

The Flughafen Dusseldorf GmbH operates the Düsseldorf Airport. Technical operation conditions (capacity limits) are regulated by the so called Angerlandvergleich [98], which is still valid today. The operator is the Flughafen Düsseldorf GmbH.

Table 28: Runway system and GA/BA operational hours of the Düsseldorf Airport [99] [98] Runway Nr. TORA Width IFR Crossings GA/BA GA/BA OP Hours (>9t) OP Hours (<9t) 05R/23L Concrete 2700m 45m Yes No 06:00‐23:00 24 Hours 05L/23R Concrete 2400m

7.7.2 Airport Operator Ownership Structure

The Landeshauptstadt Düsseldorf (City) and the Airport Partners GmbH hold equal shares at the Düsseldorf Airport (50%). The Airports Partners GmbH itself is an aviation group consortium: 40% Avi Allicance GmbH, 20% AviC GmbH & Co and 40% Aer Rianta International. [97]

38 7.7.3 Airport Traffic Characteristic

Table 29: Traffic Characteristic of the Düsseldorf Airport [100] [101] KPI 2014 2015 2016 2017 2018 Pax Total 21’228’149 21’850’430 22’476’500 23’521’769 24’640’665 MOV Total 210’829 210’732 210’205 217’574 221’635 MOV GA/BA ~12’000 ~12’000 ~12’000 ~12’000 ~12’000

7.7.4 Financial KPI

Regarding the assets, the Flughafen Düsseldorf GmbH (FDG) is considered.

Table 30: Financial KPI of the Düsseldorf Airport [95] KPI 2013 2014 2015 2016 2017 REV Total Group 429 MEUR 426 MEUR 449 MEUR 465 MEUR 483 MEUR REV Aviation Group 272 MEUR 266 MEUR 275 MEUR 281 MEUR 294 MEUR Profits Group 35 MEUR 43 MEUR 54 MEUR 60 MEUR 60 MEUR Rights Concession FDG 24 MEUR 20 MEUR 17 MEUR 14 MEUR 14 MEUR Invested Capital FDG 852 MEUR 852 MEUR 843 MEUR 827 MEUR 830 MEUR Assets Total FDG 972 MEUR 987 MEUR 959 MEUR 911 MEUR 926 MEUR Equity FDG 144 MEUR 152 MEUR 162 MEUR 169 MEUR 168 MEUR

7.7.5 Airport Value Chain Coverage

Jet Aviation is the only GA/BA FBO. Operating details are specified in the Flughafenbenutzungs‐ ordnung [102].

The Executive Terminal for handling private and business aircraft on the west side of the airport was opened in June of 2006. The 800m² terminal, also known as the General Aviation Terminal (GAT), includes a security and passport control, an executive lounge, and a small conference centre. A separate pilot's lounge and a briefing room are also part of the facility. Current weather data can be retrieved here, and the flight plan can be submitted. The reception in the bright central hall is manned at all times. [101]

Based on an interview with the Jet Aviation manager of the Düsseldorf Airport, the following value chain coverage could be developed. [67]

39 Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Regulated Non‐Regulated

Figure 24: Value Chain Coverage of the Düsseldorf Airport

7.7.6 Airport GA/BA Charges

The document «SEA Regulated Charges 2018» [103] specifies the corresponding airport GA/BA charges, which can be characterized as follows:

 It is not a specific regulation document focusing only on GA/BA charges  It covers the green categories: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges  Nine different charges apply (except Handling Charges and Emission Charges)  Application of minimal amounts: Landing Charges and Parking Charges  Charges for the three exemplary turnarounds inclusive 19% VAT: 1’836 EUR

Table 31: GA/BA charges for three exemplary turnarounds at the Düsseldorf Airport [103] GA/BA Pilatus 12 Falcon 2000 Gulfstream 500 Charges Category (Light Weight Prop) (Medium Weight Jet) (Heavy Weight Jet) Landing Charges 72 EUR 338 EUR 342 EUR Parking Charges 20 EUR 80 EUR 100 EUR Passenger Charges 45 EUR 45 EUR 45 EUR A. Airport Charges 5 EUR 5 EUR 5 EUR Noise Charges 0 EUR 220 EUR 220 EUR

40 7.8 London Biggin Hill Airport (BQH)

From: Biggin Hill Airport

Figure 25: Air picture from the London Biggin Hill Airport

7.8.1 General Airport Information

Around 1920 the airfield started to operate – the airfield was originally opened by the Royal Flying Corps (RFC) during the First World War. In the 1930s the existing north‐east south‐west runway opened. Biggin Hill became important as Battle of Britain air station with Spitfires and Hurricanes during the Second World War.

In 1959, due to the closure of the nearby Croydon airfield, most of its civil aviation traffic moved to the Biggin Hill Airport and military flights took place only occasionally. Unfortunately, the measures to increase regular public transport flights did not resolve the financial difficulties of the Airport quickly. In 1974, the airfield was acquired by the council Bromley Council, which could not manage the airport in financial sustainable way. In 1994, the Council was prevented by government policy from spending more taxes on repairs, equipment and running costs, which leaded to the transfer of the Airport business to the Biggin Hill Airport Limited. The Airfield was leased for 125 years, on condition that all future costs and repairs would be borne by London Biggin Hill Airport Limited, with rent and a share of the profits going to the Council each year. [104]

Table 32: Runway system and GA/BA operational hours of the London Biggin Hill Airport [105] Runway Nr. TORA Width IFR Crossings GA/BA GA/BA Weekdays Weekdays 03/21 Tarmac 1778m 45m Yes No 06:30‐23:00 08:00‐22:00

41 7.8.2 Airport Operator Ownership Structure

The operator Biggin Hill Airport is owned by the Regional Airports Limited, which was founded as a privately‐owned company in 1990 by its Chief Executive, Andrew Walters, and acquired the business and assets of both Biggin Hill Airport and Southend Airport from their respective Local Authorities in April and May 1994. The Southend Airport was sold to the Stobart Group Limited in December 2008. [106]

7.8.3 Airport Traffic Characteristic

The Biggin Hill Airport did not publish any absolute values on their number of passengers and aircraft movements. Data are based on the Civil Aviation Authority and Eurocontrol.

Table 33: Traffic Characteristic of the London Biggin Hill Airport [51] [61] [107] [108] KPI 2013 2014 2015 2016 2017 Pax Total N/A N/A N/A N/A N/A MOV GA/BA ~41’500 ~45’000 ~50’000 ~53’000 ~61’480 MOV BA ~11’914 N/A ~11’242 N/A N/A

7.8.4 Financial KPI

Neither the Biggin Hill Airport, nor the Regional Airports Limited does publish any financial KPI.

7.8.5 Airport Value Chain Coverage

There two GA/BA FBO operating at the London Biggin Hill Airport: Its own Biggin Hill Executive Handling and Signature Flight Support. Both FBO compete each other and provide a wide range of services (i.e. on‐site customs and immigration), however they are not going into infrastructure provisions – compare Figure 26. [104] [109]

Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, APRON Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services  Airport Operator Security, Custm Services  Country/State  Airline Cargo Services  GA/BA FBO

Regulated Non‐Regulated

Figure 26: Value Chain Coverage of the London Biggin Hill Airport

42 7.8.6 Airport GA/BA Charges

The document «London Biggin Hill Airport Aircraft Charges List 2018/19» [110] specifies the corresponding airport GA/BA charges, which can be characterized as follows:

 It is a specific regulation document focusing only on GA/BA charges  It covers the green categories: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges  Seven different charges apply (except Handling Charges and Emission Charges)  Application of minimal amounts: Landing Charges and Parking Charges  Charges for the three exemplary turnarounds inclusive VAT: 3’860 EUR

Table 34: GA/BA charges for three exemplary turnarounds at the London Biggin Hill Airport [110]. It is assumed that there are no noise violations addressed by the Safety and Noise Abatement Review Board. GA/BA Pilatus 12 Falcon 2000 Gulfstream 500 Charges Category (Light Weight Prop) (Medium Weight Jet) (Heavy Weight Jet) Landing Charges 182 EUR 717 EUR 1’417 EUR Parking Charges 65 EUR 207 EUR 404 EUR Passenger Charges 75 EUR 75 EUR 75 EUR A. Airport Charges 0 EUR 0 EUR 0 EUR Noise Charges 0 EUR 0 EUR 0 EUR

43 7.9 St.Gallen‐Altenrhein Airport (ACH)

From: Travelnews

Figure 27: Air picture from the St.Gallen‐Altenrhein Airport

7.9.1 General Airport Information

Prof. Claude Dornier decided to build a flying boat in the Old Rhine and founded the St.Gallen‐ Altenrhein Airport in 1926. Nowadays, it is the only Swiss regional airport with scheduled air traffic in private ownership [111].

According to the SIL, a concession would be required in order to operate an aerodrome with scheduled air traffic. The SIL conceptual part states that in case of the Altenrhein Airport a concession is necessary if the scheduled air traffic service is significantly expanded and that the maximal amount of aircraft movements per year is limited to 36’500. The SIL is based on a bi‐ lateral interstate agreement between Switzerland and Austria from 1991. Its purpose is to connect eastern Switzerland with the neighboring countries and priority is given to scheduled flights and business aviation. [112]

The St.Gallen‐Altenrhein airport operates two runways, which are specified in Table 35.

Table 35: Runway system and GA/BA operational hours of the St.Gallen‐Altenrhein Airport [113] Runway Nr. TORA Width IFR Crossings OP Hours OP Hours OP Hours Weekdays Saturday Sunday 10/28 1455m 30m Yes No 05:30‐11:00 06:30‐11:00 09:00‐11:00 Concrete 12:30‐20:00 12:30‐19:00 12:30‐19:00 10/28 810m 20m No No 06:00‐11:00 07:00‐11:00 09:00‐11:00 Grass 12:30‐19:00 12:30‐19:00 12:30‐19:00

44 7.9.2 Airport Operator Ownership Structure

In 2008, the St.Gallen‐Altenrhein Airport has been acquired by the Zurich‐based Swiss industrialist Dieter Bührle selling again his shares in 2009 and 2010 to Markus Kopf, who now possess 100% of the shares. In 2010, Markus Kopf also founded the People’s Airline operating from Altenrhein to Vienna and other European destinations. [111]

7.9.3 Airport Traffic Characteristic

Table 36: Traffic Characteristic of the St.Gallen‐Altenrhein Airport [114] [115] [116] [117] KPI 2013 2014 2015 2016 2017 PAX Total N/A ~83’341 91’584 108’521 124‘588 MOV Total 29’304 ~28’260 ~27’173 26‘382 N/A MOV GA/BA N/A N/A ‐9% ~5626 5’800

7.9.4 Financial KPI

The St.Gallen‐Altenrhein Airport does not publish any financial KPI’s. However, in media the People’s Air Group informs that each of its three enterprises generate positive earnings – Altenrhein Realco AG (Property), Altenrhein Luftfahrt GmbH (People's Airline) and the Airport Altenrhein AG. [118]

A recent press release announced that during the WEF week in Davos approximately 10% of the annual revenue is generated corresponding to 377 aircraft movements (starting and landing counted separately) which is about 4 times higher than during a normal operation week. Two reasons for that are: During the WEF typically larger and heavier Business Jets are landing in St.Gallen‐Altenrhein and the cooperation with ExecuJet (Luxaviation Group) was fruitful. [119]

7.9.5 Airport Value Chain Coverage

Except the cooperation with ExecuJet during the WEF Davos, there are no FBO are indicated in publically available data. [119]

Since officially available documents do not indicate any FBO, all value chain elements must be controlled by the airport itself except Nation/State responsibilities. Also, the People’s Airline can be considered as part of the value chain.

45 Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, APRON Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services  Airport Operator Security, Custm Services  Country/State  Airline Cargo Services  GA/BA FBO

Regulated Non‐Regulated

Figure 28: Value Chain Coverage of the St.Gallen‐Altenrhein Airport

7.9.6 GA/BA Charges

The document «People’s Airport Tariff Regulations» [113] specifies the corresponding airport GA/BA charges, which can be characterized as follows:

 It is not a specific regulation document focusing only on GA/BA charges  It covers the green categories: Landing Charges, Parking Charges, Handling Charges, Passenger Charges, Noise Charges, Emission Charges and Additional Airport Charges  Seven different charges apply (except Handling Charges and Emission Charges)  Application of minimal amounts: Landing Charges and Parking Charges  Charges for the three exemplary turnarounds inclusive VAT: 4’374 EUR

Table 37: GA/BA charges for three exemplary turnarounds at the St.Gallen‐Altenrhein Airport» [113] GA/BA Pilatus 12 Falcon 2000 Gulfstream 500 Charges Category (Light Weight Prop) (Medium Weight Jet) (Heavy Weight Jet) Landing Charges 218 EUR 707 EUR 1’612 EUR Parking Charges 87 EUR 261 EUR 435 EUR Passenger Charges 78 EUR 78 EUR 78 EUR A. Airport Charges 21 EUR 21 EUR 21 EUR Noise Charges 0 EUR 304 EUR 304 EUR

46 8 Data Analysis

Each of the discussed airports will have an impact on their regions [3] [4] [14]. In order to determine the economic sustainability of a GA/BA airport operator, the interactions between stakeholders are specifically considered. Based on the governance structure in Figure 29 the data from the empirical study are compared and analyzed.

 While society and economy will have an increasing demand on air travelling, only a limited noise level is accepted. Government entities will have to balance these two conflicting interests. Section 8.1 discuss the resulting demand on passengers and aircrafts movements, which can be considered as the most important KPI for any airport.  Section 8.2 will have a closer look on the ownership structure of the discussed airports and compare them with section 6.2 – shares between institutional investors and government entities are specifically discussed.  The strongly varying GA/BA charges of each airport are compared in section 8.3  The financial KPI revenues, profits, fixed assets and equity share of the GA/BA operators (respectively their groups) are compared in section 8.4. Especially a comparison with the GA/BA charges from section 8.3 section is of interest.  Section 8.5 will focus on the value chain share between GA/BA airport operators and FBO in order to evaluate some representative distributions.

Authorization

Society Country Demand↑ Aviation Financial State Emission↓ Authority Investors Economy City Structural Plans Concession/Fee Investments/ROI Investments/ROI Op. Agreement Strategic Interests Shares Slot Coordination

rd GA/BA Airport Operator and its Subsidies Task/Supply 3 Parties FBO (Assets and Spaces) FBO(i.e. ATC)

Value Chain Share Airport Charges Licenses/Fee ROI/Shares Investments/ROI Strategic Interests

Services GA/BA FBOFBO FBO Airlines and Customers

Figure 29: Typical governance structure of a GA/BA Airport

47 8.1 Evident Traffic Trends

Every airport operator needs to distribute its costs for long‐term infrastructure investments among passenger and aircraft charges – a highly frequented airport is more competitive than a lower frequented airport. Figure 30 shows the average annual number of passengers during the years 2013 to 2017 and Figure 31 illustrates the average annual increase of passengers during the same period of time. At first the GA/BA only airports Paris‐Le Bourget and London Biggin Hill as well as the airport St.Gallen‐Altenrhein stand out, with a comparably low amount of passengers, which does not surprise considering that GA/BA aircrafts carry only a limited amount of passengers. The other airports also handle line and charter flights and therefore also reflect their catchment area. Among these airports, only the Zurich Airport and the Düsseldorf Airport are under Europe’s busiest airports – Zurich being 15th and Düsseldorf being 24th (compare Figure 4). The assumption that Europe’s major GA/BA airport are not Europe’s most frequented airports (considering the number of passengers) is therefore valid. The average increase of passenger shows a rather diverse trend for each airport. Typically, the value is around 4% which is slightly below the worldwide IATA statistics in Figure 3. Luton is an exception, which can be explained by the influence of EasyJet at this particular airport. The airport St.Gallen‐ Altenrhein also show a remarkable increase of passenger. However, it has to be considered that with a low number of passengers, the introduction of a new destination will have a strong impact. Nice Airport and Milan Linate Airport remain more or less stable – Milan Malpensa showed a higher increase.

Figure 32 and Figure 33 compare the corresponding aircraft movements. Due to amount of passenger seated in a line or charter aircraft, the variation between the airports become less significant than in Figure 30. Beside the GA/BA only airports, typical GA/BA shares of aircraft movements compared to the overall amount of movements are between 6% (Düsseldorf Airport) to 40% (Nice Airport). In Figure 33 the average annual development of aircraft movements during 2013 to 2017 is illustrated. London Biggin Hill show the most remarkable increase, while the Geneva Airport and the Milan Linate Airport show even a decline of GA/BA aircraft movements. Regarding the airports which also handle line and charter flights, the global increase of aircraft movements is not reflected in the amount of GA/BA aircraft movements. Since the Paris‐Le Bourget Airport operates three runways, a shortage of GA/BA infrastructure seems to be unlikely and the market tend to be saturated. As a conclusion, there are no indications for any airport to assume a significant increase of GA/BA aircraft movements.

48 [MPax]30.0

20.0

10.0

0.1 15.8 12.2 12.6 26.7 9.3 22.7N/A 0.1 0.0 LBG GVA NCE LTN ZRH LIN DUS BQH ACH Figure 30: ‐Annual amount of passenger during 2013‐17 [MPax]:  Total

15% Ø

10%

~0% 4% 4% 12% 4% 1% 4%N/A 14% 0% LBG GVA NCE LTN ZRH LIN DUS BQH ACH Figure 31: ‐Annual increase of passenger during 2013‐17 [%]:  Total

Ø 232 [T250 Mov] 214 189 200 168

150 117 94 100 101 53 50 144 199 50 33 88 73 12 28 46 26 202 34 25 21 39 22 0 7 19 4 13 193 12 6 LBG GVA NCE LTN ZRH LIN DUS BQH ACH Figure 32: ‐Annual aircraft MOV during 2013‐17 [TMOV]:  GA/BA,  BA,  GA,  Line/Charter,  Helicopter and Total Ø 15% 10% 10% 10%

5% 3% 2% 3% 2% 1% 2% 1% 2% 1% No 0% 0% No 0% -1% -5% -2% -5% -10% LBG GVA NCE LTN ZRH LIN DUS BQH ACH Figure 33: ‐Annual development of MOV during 2013‐17 [TMOV]:  GA/BA and  Line/Charter

49 8.2 Balance between Shareholders and Governmental Owners

The discussed airports (as many other airports) officially opened around the two world wars. These airports can be considered as successors, while smaller airports remain often only partly used – in example for GA or military activities. The discussed airport operators have a remaining concession period of at least 13 years (London Luton Airport) and more typically of 23 to 33 years. Therefore, a reasonable timeframe remains for infrastructure investments. The airports operate one to three runways. Except the Milan Linate Airport, all airports apply night time restrictions and noise penalties. The two smaller airports London Biggin Hill and St.Gallen‐ Altenrhein also differentiate between weekdays and weekends.

Considering Figure 34 a similar airport operator ownership structure is not observable. Each airport has it is individual conditions: The airport operators of Paris Le‐Bourget Airport, the Nice Airport and the Milan Linate airport are aviation groups (ADP, Aéroports de la Côte d’Azur respectively SEA), which are mainly owned by governmental entities and institutional investors with minimal cross‐investments by other Aviation/Infrastructure Groups. In contrast, the airport operators of the two smaller airports London Biggin Hill and St.Gallen‐Altenrhein are owned by individuals (typically without slot coordination). The other airports have again a different situation – in example the Flughafen Zürich AG is on the Swiss Stock exchange, but the state Zurich still holds a blocking minority in the case of noise‐related decisions or runway extensions.

The ownership structures of all airport operators can be weighted by either the amount of passenger or the amount of aircraft movements from section 8.1. The results are illustrated in the pie diagram from Figure 34 and lead more or less to the same result. Regarding the inner circle, it can be concluded that shareholders as Aviation/Infrastructure Groups, Institutional Investors as well as Stock/Individuals share 49% of the ownership, while governmental owners (Country, State and City) holding equally 49% of the airport operators. Both groups will focus on the return on investment, however governmental entities will also take responsibility for the national economy. This is a rather different development compared to the privatization of the airline industry since the 1970s (compare section 6.3) and might be an explanation for the strongly varying GA/BA charges that are analyzed in the next section.

50 100% 1.7% 4% 90% 16% 25% 80% 27% 44% 50% 70% 62% 42% 60% 16% 50% 100% 49% 100% 100% 40% 6% 5% 30% 55% 51% 50% 20% 27% 33% 10% 26% 9% 0% LBG GVA NCE LTN ZRH LIN DUS BQH ACH

2% 3% Country 2% 5% State 25% 24% 23% City 25% Outer Circle: Pax Weighted Aviation/Infrastructure Groups

Inner Circle: Institutional Investors MOV Weighted 15% Stock/Individuals 14% 19% Utilities 11% 20% Employee 11%

Figure 34: Ownership structure of the GA/BA airport operators from section 7: The above bar diagram show the ownership structure of each airport; the below pie chart weight these ownerships by the average amount of Pax (outer loop) and the average amount of aircraft movements (inner loop). An equal share for governmental entities and financial investors result.

51 8.3 Strongly Varying GA/BA Charges

Excluding the two GA/BA only airports Paris‐Le Bourget and London Biggin Hill, it can be observed that none of the airports have a specific document on GA/BA charges – an exemption might be the Nice airport providing additional set tariffs for aircrafts with a MTOW smaller or equal to 25 tons. Not considering handling charges and emission charges, the complexity of the documents varies from four to twelve different charges. Further, it can be observed that beside the three airports from Switzerland all other airports apply minimal amounts for aircrafts with a MTOW of less than four tons – typically aircrafts for educational and leisure purpose.

Figure 35, Figure 36 and Figure 37 compare the airport charges by cumulating all charge categories. In average (of all nine airports) the turnaround flight from chapter 7 costs about:

 315 EUR for a Pilatus 12  800 EUR for a Falcon 2000  1’300 EUR for a Gulfstream 500

Considering the variation of the total charges, price sensitivity does not seem to be high. Comparing the total charges of the St.Gallen‐Altenrhein Airport with the total charges from the Zurich Airport, the variation in case of a Gulfstream 500 is around a factor of 5x – this although the access time between two airports is only about an hour by car.

At every airport, the Aircraft Landing Charge is the most expensive charge category, followed by the Aircraft Parking Charge – the high aircraft parking charges at Luton should be considered as a steering function in order to provide aircraft parking services by FBO. Further, noise penalties would significantly increase the Noise Charges of the two British airports (London Luton 1’000 GBP and London Biggin Hill 500 GBP).

The Passenger Charge is more relevant to a Pilatus 12 than to a Falcon 2000 or a Gulfstream 500. Comparing these charges with the ADV airport charges structure in Figure 2 (it consists of a 63% portion of Passenger Charges), its importance for airports become clear. Therefore, it is surprising that not more specific GA/BA charges are being applied. At the Zurich Airport, GA/BA Passenger Charges are even lower than in case of line and charter aircrafts.

Although an airport’s runway and taxiway/taxilane system are typically dimensioned for much heavier aircrafts, the GA/BA Aircraft Landing Charges are weight dependent – an exception is the London Luton Airport. Since the availability and use of a runway system is typically the limiting factor, a time depending charge structure would be more appropriate.

52 [EUR]700 696 626 116 600 104 43 500 34 74 425 15 400 245 21 65 80 300 266 255 88 44 42 169 200 39 151 147 37 348 284 104 27 33 27 100 95 7 12 45 221 174 33 37 45 20 22 10 49 54 15 56 72 0 33 LBG GVA NCE LTN ZRH LIN DUS BQH ACH Figure 35: Cumulated charges Pilatus 12:  Aircraft Landing Charges,  Aircraft Parking Charges,  Passenger Charges,  Additional Airport Charges,  Noise Charges,  VAT, Total

[EUR]2'000 1'800 1'519 1'600 1'457 1'448 1'400 253 52 243 1'200 43 310 74 1'000 205 80 819 800 265 930 131 570 600 220 95 376 376 109 343 878 400 300 80 720 147 53 68 200 84 40 284 55 338 219 164 101 162 211 0 58 LBG GVA NCE LTN ZRH LIN DUS BQH ACH Figure 36: Cumulated charges Falcon 2000:  Aircraft Landing Charges,  Aircraft Parking Charges,  Passenger Charges,  Additional Airport Charges,  Noise Charges,  VAT, Total

[EUR]3'000

2'700 2'576 2'520 2'559 66 2'400 429 420 310 2'100 80 74 442 1'800 399 1'500

1'200 1'812 848 847 900 141 656 586 649 135 1'569 1'640 140 521 600 98 117 220 287 96 77 246 109 100 300 199 280 262 284 273 398 342 0 141 LBG GVA NCE LTN ZRH LIN DUS BQH ACH Figure 37: Cumulated charges Gulfstream 500:  Aircraft Landing Charges,  Aircraft Parking Charges,  Passenger Charges,  Additional Airport Charges,  Noise Charges,  VAT, Total

53 3'000[EUR]

2'500

2'000

1'500

1'000

500

0 LBG GVA NCE LTN ZRH LIN DUS BQH ACH Pilatus 12 266 147 255 451 104 151 169 626 425 Falcon 2000 570 376 300 588 343 376 819 1'457 1'448 Gulfstream 500 848 656 586 765 521 649 847 2'520 2'559 Average 561 393 380 601 323 392 612 1'534 1'477

Figure 38: Total charges for the exemplary turnaround flights as described in chapter 7. In case of the LTN the dotted line reflects the amount of parking charges, which should be considered as a steering function for FBO parking services.

Figure 38 summarizes the total charges. The yellow color represents the average cost of the exemplary turnaround flight, evaluating the most frequently used BA aircrafts with varying MTOW. Excluding the parking charges at the London Luton Airport, the two airports London Biggin Hill and St.Gallen‐Altenrhein have significantly higher average costs. These are also the only airports owned by individuals with none, respectively limited line and charter movements – they will need to finance their infrastructure based on these GA/BA charges.

54 8.4 Sustainable Financial Performance

There is very limited financial transparency within the GA/BA business. The empirical study showed that the SEA Group (compare section 7.6.4) including the Milan Linate Airport and Milan Malpensa Airport published some figures, which present a positive trend: During 2014 until 2017 the GA/BA EBIT increased from 2.5 MEUR to 5.5 MEUR. All other airport operators did not publish any specific figures on their GA/BA business. Further, it has to be noted that the SEA Group, the ADP Group as well as the Aéroports de la Côte d’Azur provide consolidated values on their airports. Figure 39 until Figure 44 compare these KPI.

Section 6.3 explained that it can be differentiated between aviation and non‐aviation revenues. This differentiation is also found in the financial statements and publications. Both revenues showed a positive development since 2013 until 2017: In average the aviation revenues increased by +21% and the non‐aviation revenues increased by +22%. The aviation revenues reflect 58% of the total revenues, respectively the non‐aviation revenues correspond to 42%. These figures are a result of the annual passenger growth, which also increased during the same period of time even by +24%. This again leads to a decrease of the aviation revenue per passenger as it is illustrated in Figure 41 – the high value of the St.Gallen‐Altenrhein airport is based on approximation in section 7.9.4. Besides some tariff changes, also an increased seat‐ load factor and larger airplanes can explain this trend.

The most significant growth can be seen with profit developments (Figure 42). They indicate a more efficient use of infrastructures and resources as well as some successful financial transactions (i.e. extraordinary effects from the full consolidation of TAV within the ADP Group). Fixed assets (Figure 43) remained stable or slightly increased, except the Luton Airport, which more than doubled its fixed assets. This comes with a price and its equity share (Figure 44) significantly dropped (‐62%). The other airports show as stable or slightly increased equity share. Overall, the financial performance is sustainable.

A comparison between average aviation revenues per aircraft movement during 2013‐2017 with the average BA charges for the exemplary turnaround flight from chapter 7 is illustrated in Figure 45. The result is a significant difference between these two values. Especially the Zurich Airport has a remarkable variation by factor of 9x. It is a rather political and strategical discussion of how to distribute infrastructure costs between a GA/BA and a line/charter aircraft movements. Line and charter airports might optimize their marginal costs, while GA/BA only airports have to finance their infrastructure based on these charges.

55 [MEUR]1'800 1'600 58% of Total 1'400 1'200 1'000 800 600 400 200 N/A N/A 0 ADP GVA ACA LTN ZRH SEA DUS BQH ACH

Figure 39: Aviation Revenues 2013‐2017 (left to right, 58% of the Total Revenues)

[MEUR]1'800 1'600 42% of Total 1'400 1'200 1'000 800 600 400 200 N/A N/A N/A 0 ADP GVA ACA LTN ZRH SEA DUS BQH ACH

Figure 40: Non‐Aviation Revenues 2013‐2017 (left to right, 42% of the Total Revenues)

[EUR]45 40 35 30 25 20 15 10 5 0 N/A N/A ADP GVA ACA LTN ZRH SEA DUS BQH ACH

Figure 41: Ratio Aviation Revenues per Passenger 2013‐2017 (left to right)

[MEUR]300

250

200

150

100

0 N/A >0 ADP GVA ACA LTN ZRH SEA DUS BQH ACH

Figure 42: Profits 2013‐2017 (left to right)

56 [MEUR]7'000 6'000 5'000 4'000 3'000 2'000 1'000 N/A N/A 0 ADP GVA ACA LTN ZRH SEA DUS BQH ACH

Figure 43: Fixed Assets 2013‐2017 (left to right)

60%

50%

40%

30%

20%

10% N/A N/A 0% ADP GVA ACA LTN ZRH SEA DUS BQH ACH

Figure 44: Equity Share 2013‐2017 (left to right)

[EUR]3'000 2'932

2'500 2'290

2'000 1'597 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 1'552 601 1'534 1'477 1'500 1'380 1'296

1'000 789 601 612 561 528 393 392 500 380 323

N/A N/A 0 ADP LBG GVA ACA NCE LTN ZRH SEA LIN DUS BQH ACH

Figure 45: Comparison:  Average Aviation Revenues per aircraft movement 2013‐2017,  Average BA charges for the exemplary turnaround flight in chapter 7 (Figure 38, LTN dotted line reflect a steering function for FBO services)

57 8.5 Typical Value Chain Shares

The analyses in chapter 7 showed that the value chain coverage of each airport can be considered as an individual solution within its governance structure and conditions. Nevertheless, three typical value chain coverages might be concluded based on the given data. A similarity of all three value chain types is that the airport operator is responsible for the property and utilization rights including invitations to bid, contract negotiations and takeovers. Also the infrastructure masterplanning is a fundamental task of an airport operator. Another general conclusion is that a cargo and consulting services might be available, but do not play a major role in the GA/BA business – due to limited cargo spaces and human resources. Further, the airlines will be in charge of the in‐flight services. The coverage of the remaining value chain elements can be differentiated by the following three types.

Type I (Figure 46) describes the situation, when an airport operator is in charge of every element in the value chain. This is the case at the St.Gallen‐Altenrhein Airport, where even the airline is owned by the same individual as the airport. The advantage of covering the entire value chain is to profit on every element within the value chain and cost control. The disadvantage is a lack of competition and efficiency, which might be especially challenging for smaller airports.

Considering the results in section 8.3, most of the evaluated airports will have a governance structure with limited decision making competences, otherwise the difference between the average aviation revenue per aircraft movement and the costs for the exemplary GA/BA turnaround flight would not differ as in Figure 45. In correlation, most of the analyzed airports distribute responsibilities between airport operators and FBO, which leads to Type II in Figure 47. Typically, the airport operator is responsible for Planning & Construction, Facility Management and Space Utilization and the FBO is responsible for Aircraft and Commercial Services.

Type III (Figure 48) describes another extreme case, whereby the FBO act as tenant with high responsibilities. This constellation could be observed at the Luton Airport and partly at the Düsseldorf Airport, where the FBO receives an airport site with full responsibilities for Aircraft and B2C Services as well as partial responsibilities for airport operations. FBO will also develop and control their sites on their own accountability. At Luton, FBO are responsible to collect all fees and charges for the Luton Airport in addition to a 6% charges from their revenues such as parking fees, handling fees and B2C Services.

58 Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, APRON Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services  Airport Operator Security, Custm Services  Country/State  Airline Cargo Services  GA/BA FBO

Regulated Non‐Regulated

Figure 46: Airport Value Chain Coverage Type I – Airport Operator in Charge

Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, APRON Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services  Airport Operator Security, Custm Services  Country/State  Airline Cargo Services  GA/BA FBO

Regulated Non‐Regulated

Figure 47: Airport Value Chain Coverage Type II – Shared Value Chain between Airport Operator and FBO

Aviation Business Non‐Aviation Business

Infrastructure Provisions B2B Services B2C Services

Property and Planning & Facility Airport Aircraft Space Commercial Utilization Rights Construction Management Operations Services Utilization Services

Infrastructure Limousine Invitations to Bid Buildings ATC, APRON Ground Services Renting Masterplanning Services Contract Real‐Estate Terminal Apron Facilities Luggage Services Advertising Parking Services Negotiations Development Operations Rescue and Takeovers Construction Hangar Services Retailing Conferencing Fire Fighting Border Control, Consulting In‐Flight Services  Airport Operator Security, Custm Services  Country/State  Airline Cargo Services  GA/BA FBO

Regulated Non‐Regulated

Figure 48: Airport Value Chain Coverage Type III – FBO as a Tenant

59 Considering the analyzed airports from chapter 4, the amount of GA/BA aircraft movements is reflected in the amount of FBO at a sight. The smallest airport St.Gallen‐Altenrhein Airport has no FBO at sight – only a cooperation during the WEF Davos is notable. The other slightly larger airports (in terms of GA/BA aircraft movements) operate in average with three, but up to six FBO as it is the case with the Paris Le‐Bourget Airport. In Average, there are about 8’000 BA aircraft movements per FBO.

Based on the above analysis, a competitive market and profitable FBO services can be concluded, otherwise FBO wouldn’t operate at the evaluated airports. Depending on their efficiency and expertize, FBO can support the economic sustainability of GA/BA airports. However, it is crucial for an airport operator to control value chain elements, either by directly covering them or being able set terms and conditions in its interests. Smaller airports might tend to a value chain coverage of Type I, since they have not enough BA movements.

60 9 Summary and Conclusion

This thesis analyzed nine European airports, which cover 15% of the BA aircraft movements within the European airspace. Each of these airports has its individual historic development and corresponding governance structure. Noise constraints can express these developments, while one airport has no noise constraints, most of them apply nighttime restrictions and some even have special operating hours during weekends – longer opening hours and availability of airport slots are an advantage for airport operators. Different to the line and charter business, airport operator provide only limited information on their GA/BA businesses and therefore, a significant part of this thesis focuses on data acquisition and data analyses. As a result, fundamental conclusions on the economic sustainability of BA airports are presented.

Since the financial crisis in 2008, the overall air traffic (including the line and charter traffic) substantially increased year by year. Focusing only on BA aircraft movements this trend could not be observed and the impression of a saturated market results. Taking this into account, the evaluated airport operators showed a robust financial performance. Especially a stable equity ratio as wells as increasing profits can be noted. The corresponding airport operators are owned in equal parts by governmental entities as well as financial investors. This ensures country, state and city interests in the ownership structure, which is a rather different development compared to the airline industry that has been privatized since the 1970s.

Airport charges for GA/BA strongly vary among the evaluated airports and does not seem to be price sensitive – in one example the access time between two airports by car is only an hour, but their charges differ by a factor of 4‐5x. An airport operator with few line and charter movements has to finance its infrastructures based on GA/BA aircraft landing and parking charges as well as on revenues from FBO. In contrary, larger airports tend to optimize their marginal costs and limit the amount of airport slots for GA/BA. Comparing the airport’s average aviation revenues per aircraft movement with its charges for a frequent BA aircraft turnaround flight showed remarkable differences – in average 3‐4 times different, but up 9 times different. This variation can be explained by a lack of specific GA/BA charges and the importance of passenger charges.

The evaluated figures indicate a reference value of about 1’500 EUR per aircraft movement in order to achieve a stable financial performance. Revenues on B2B and B2C must be profitable, since up to six FBO focusing on BA could be found at a single airport. In average, an FBO handles annually about 8’000 BA aircraft movements.

61 Although the ACI publishes that 47% of Europe's airports are loss making, the evaluated cases show that the operation of a BA airport can be sustainable and justify the use of space. Beside the general terms of a concession agreement (such as the concession period or the maximal traffic capacity) two items have been found to be of particular importance in order to ensure economic sustainability of BA airports:

 FBO License Conditions: An airport value chain is usually shared between an airport operator and an FBO – the airport operator gives licenses and related conditions to an FBO. Due to the complexity of the B2B and B2C services as well as potential synergies with other airports, it seems to be challenging to cover the full value chain by an airport operator. Further, competition among FBO would be prevented. It is therefore essential that an airport operator can control the terms and conditions of FBO licenses in its interest.  GA/BA Charges: Several of the evaluated airports optimized their marginal costs with the GA/BA business, but based on their actual charges they might not be able to run the GA/BA business on its own. A conflicting governance structure and lack of importance compared to the line and charter business might be the main reason for this situation. An airport operator focusing on GA/BA must be able to set its charges in order to sustainably finance its infrastructure. Since the airport infrastructure is dimensioned for the heaviest landing aircraft, it was apparent that the evaluated landing and departure charges (the most important GA/BA charges) depend on the MTOW. A runway use time would catch the effective use of infrastructure much better, because the availability of a runway limits the efficiency of an airport. Further, a parking charge depending on the aircraft width would also be more appropriate than a dependency on the MTOW. The governance structure of an airport is the key to realize fundamental changes and apply more innovative pricing elements such as set tariffs.

Reflecting these conclusions and the motivation of the thesis, an operation of a GA/BA Airport Dübendorf seems to be feasible. The existing concession agreement does not make the above conditions impossible, but they will have to be assured. Further, the success will depend on future developments of the Zurich Airport. Personally, I would not exclude a solution whereby one airport operator (focusing on GA/BA) operates on both airports (Zurich and Dübendorf).

62 10 Further Research

This thesis presents a holistic view on the economic sustainability of BA airports and concluded that depending on the degree of freedom it is possible to economically operate a BA airport. The result can be further developed into different fields:

 The EBAA study on Economic Value & Business Benefits emphasized the importance of point to point connections provided by BA – European BA serves 25’280 city or area pairs not connected by direct flights [14]. Further, the ACI mentions that 47% of Europe's airports are loss making, especially the smaller airports [2]. With more resources, it would be interesting to widen the empirical study on smaller airports (in example airports with less than 12’000 BA aircraft movements per year). Research items might be charges, concession agreements and the role of an FBO. As a main research item the necessary amount of BA aircraft movements at an airport would be of interest.  From an urban planning perspective, it could be analyzed how the total European airport spatially exploited over time. More specifically, which of the airports are closed, which are still being operated and are there any regional trends? Two KPI are of specials interest: The land use over time as well as the corresponding ownership structure of airports, which are still in operation.  Focusing on international finance, new worldwide airport projects could be evaluated in order to screen the corresponding global investors? Beside the analysis of financial KPI, the investor’s governance structure, strategic and political interests should be evaluated.

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