Dutch Authority for Consumers and Markets rules twice in favour of Amsterdam Airport Schiphol about recent price hikes

The Netherlands Authority for Consumers and Markets (ACM) has ruled twice in favour of Amsterdam Airport Schiphol in cases brought up by frustrated airlines.

1. ACM rejects objections about offsetting Corona losses in Schiphol rates

The Netherlands Authority for Consumers and Markets (ACM) has rejected the complaints about the increased rates for airlines that Schiphol has set for the next three years. ACM received complaints from ten airlines and three trade associations, who found it particularly objectionable how Amsterdam Airport Schiphol settled the Corona losses. According to ACM, the rate increases are not unreasonable and Schiphol has set the rates in accordance with the law. The first rate increase took effect on April 1, 2022.

According to ACM, Schiphol should not have used a different distribution of Corona losses. The method used by Schiphol is in line with the starting point of cost orientation in the Aviation Act.

Two sides

The settlement of costs incurred by Schiphol with airlines can work both ways. For example, Schiphol must settle any excess profits with companies if, for example, traffic and transport numbers are higher than budgeted, but the reverse can also happen in the event of setbacks. This two-way settlement option is also taken into account when determining the cost of capital (the WACC) that Schiphol may include in the charges. This reduces the rates that airlines pay for the use of airport services. On the other hand, they also have to bear the financial risks of fluctuations in traffic and transport numbers.

“Schiphol must pass on windfall profits in the rates, but may also offset setbacks. Actual costs have been settled in the new rates, which also follow the legal framework. That is why the resulting tariff increases are not unreasonable,” says Manon Leijten, board member of ACM.

The Corona losses have actually been incurred, so if Schiphol were to bear those costs themselves, they would ultimately be borne by the taxpayer because the Dutch State and the municipality of Amsterdam are Schiphol’s largest shareholders. Due to the way in which Schiphol has now set the rates, the setbacks are passed on to the users of the airport.

Settlements €45 million lower

ACM has tested various elements of the tariff structure and ruled that each element complies with the law. The rates are based on costs incurred, and the amount that Schiphol has settled in the rates is in accordance with the law. Also when comparing the charges of other airports, ACM sees no indication that Schiphol’s charges are unreasonably high, partly in view of the quality of the service. In response to ACM’s provisional findings before the tariffs were set, Schiphol has also reduced the amount to be settled by €45 million.

One complaint well founded

In addition to the level of the rates, the complaints related to seven other subjects. One of these was the introduction of a NOx tariff to reduce nitrogen emissions. ACM has approved this nitrogen levy. ACM also considers the other complaints to be unfounded, with the exception of one complaint: there are two initiatives about which Schiphol should have provided more information during the consultation of the five-year investment programme. ACM assumes that Schiphol will provide this information as quickly as possible and does not attach any further consequences to this.

2. ACM rejects complaints about adjusted Schiphol charges

The Netherlands Authority for Consumers and Markets (ACM) has rejected complaints from airlines about the adjusted rates at Amsterdam Airport Schiphol that will apply from 1 April 2023. The complaints are based, among other things, on the long queues at the security check in 2022, which mainly arose due to staff shortages. ACM has requested access to the measures taken by Schiphol to restore the quality of its services. Schiphol expects that these measures, which mainly concern personnel policy, will sufficiently restore quality. Based on this, ACM has ruled that Schiphol’s adjusted rates are not unreasonable.

At the beginning of last year, ACM ruled that Schiphol had set the rates for the period 2022-2024 in accordance with the statutory standards. Airlines have appealed against this, so the court has yet to rule on it. Schiphol has adjusted the rates in the meantime to offset revenue and cost differences, but the airlines that have complaints do not consider the adjusted rates reasonable. This is mainly due to the deteriorating quality of service.

According to Schiphol, personnel planning is now in such a way that 95 percent of passengers no longer have to wait long at the security check, although the airport still expects queues there due to crowds during the May holiday. Queues can also arise at, for example, passport control and baggage handling, but other parties are responsible for the quality of that service.