"Terminal trouble for Zurich airport"

Monday, September 1, 2003

Terminal trouble for Zurich airport
swissinfo


Switzerland’s most expensive building opened for business on Monday, as
Zurich airport's new terminal welcomed its first arrivals.

Given the current woes facing the aviation industry, however, airport
officials admit that their expansion plans are looking somewhat ambitious.

Built at a cost of SFr332 million ($245 million), the Dock E terminal forms
part of an overall airport revamp totalling SFr2.2 billion.

The expansion, which includes an underground train link to the new terminal
along with a new central hub and new baggage handling system, was backed by
Zurich’s voters in 1995 - right in the middle of the aviation industry boom.

However, the subsequent global slowdown, coupled with threatened flight
restrictions on planes flying over southern Germany, means that Zurich
airport is likely to feel not just bigger but also emptier in the months,
and possibly years, ahead.

The opening of the terminal had already been delayed by more than a year
because of the current economic environment.

"Mixed feelings"

“Without question we have mixed feelings,” Zurich airport CEO Josef Felder
told swissinfo.

“On the one hand, we are happy to provide our guests with a brand new
infrastructure that will set new standards in the industry. But at the same
time we have decreasing passenger numbers to deal with and that makes for a
difficult situation.”

The futuristic-looking glass and concrete terminal includes environmentally
friendly features such as the use of natural underground heating and the
collection of rainwater for flushing the terminal’s toilets.

Such features are not always financially friendly though. Running costs for
the new terminal are expected to reach some SFr62 million a year. And the
increased space for potential passengers is unlikely to be of any use in the
immediate future.

Excess capacity

Following the completion of Dock E, Zurich airport can now handle between 30
and 40 million passengers a year. However, last year saw just 18 million
people using the airport, a number that’s expected to fall below 17 million
this year.

In fact, as a result of the excess capacity, the gates in terminal B are now
set to be closed. They can be reopened if passenger numbers increase
dramatically. But until then the new building project will look more like a
refurbishment than an expansion programme.

Felder is adamant though that the building costs will not be crippling to
the airport, thanks mainly to a long-term financing programme.

“The fact that we took the long-term view when it came to funding this
project is certainly helping us to sleep better at night,” the CEO insists.
“It’s very important right now that we are not facing major debts.”

Recovery expected

Felder also believes that repayments will not be a problem in the long-term,
since he fully expects the industry to recover from its current slump.

“Mobility has always played an important role for people around the world,
and the Swiss in particular are highly dependent upon foreign activities so
I’m sure we will catch up again in the long-term and see rising passenger
figures once more.”

With that in mind, the airport has stepped up its efforts to attract new
airlines or to encourage existing customers to increase the frequency of
their flights.

Air Berlin, Greek airline Hellas Jet and Austria’s Styrian Spirit have all
put Zurich on their schedules this year, while Scandinavian Airlines have
decided to resurrect their flight service between Zurich and Oslo.

But July's decision by national airline Swiss to cut 22 destinations from
its Zurich schedule has hardly helped. Even with the new business acquired,
airport officials expect to lose between five and 12 per cent of their total
destinations, when the Swiss cuts come into force in October.

Increased charges

And while it’s hoped that the new facilities will attract more passengers to
the airport, it’s also clear that the improvements will make flying from
Zurich a more expensive option.

To cover some of the costs of the new building project, the airport has been
given permission to substantially raise its charges. Once Dock E is opened,
passengers leaving Zurich will pay SFr36 in airport tax (up almost 50 per
cent on the previous charge of SFr24.50).

Although giving a much-needed boost to the airport’s finances, the tax hike
is likely to make it much harder to attract new airlines, particularly in
the booming no-frills sector.

Since the new terminal may actually drive away as many potential customers
as it attracts, it is perhaps unsurprising that no festivities are being
planned for the official September 1 opening.

Having built the terminal too late to take advantage of the previous
aviation boom, Zurich officials will now have to see if they have been
premature in their expectations for the next upswing.

 Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums

http://www.californiaaviation.org/dc/dcboard.php

*****************************************