8 Airport management

Question 1

ZHR business model

Answer 1

2 pillars: aviation 50% non aviation 50%

aviation: passenger, landing fees. FOCA decide the fees. regulated

non-aviation: commercial activity, retail. –> ZHR decide the rent. non regulated

they pay 800 police agent

Question 2

traffic waves of a hub

Answer 2

short haul is delivering passenger to use the long haul flight at full capacity

peak capacities of the system are already met or do exceed.
passenger growth only possible during off-peaks time.

goal: use the infrastructure in a most efficient way. all hubs function with wave (only LHR not)

Problem: mid afternoon. long haul is already flying

2 trend in aviation: huge hub vs. direct flight.

4 waves

Question 3

ZHR impact on tourism

Answer 3

35% of foreign guest arrive by plain

growing rate of asian destination enforces this trend

Question 4

ZHR commercial figures

Answer 4

only 27% labor costs

15% working assets

85% fixed assed –> 34% depreciation and amortization

infrastructure company -> huge fix assets

use the same infrastructure in different ways

Question 5

Challenges of new fleet: solution

Answer 5

lease aircraft with higher capacities

use star alliance partner capacities

lower domestic rate to increase local demand

Question 6

challenge airprot operation (wave)

Answer 6

no solution

cut costs (e.g. closing shops, desks)

Question 7

Retail challenges

Answer 7

future potential for airpot shopping

people like migros and coop. they have a huge space but pay little rent in comparison.

rent on revenue

migros 2%
VS 40%

Question 8

Capacity Constrains

Answer 8

growth 3.4-4%
after grounding it took 10 year to go back to the same level

in 2020 there could be a problem in capacity

you have to focus on your second pillar. even if you can increase capacity in aviation you can growth the non aviation!

Question 9

importance of commercial activities & real estate: Revenue

Answer 9

Promotion: EBITA: 99.4%

duty free 25%

real estate 7.5

F&B 2%

you have this commercial activities to finance the investment in the infrastructure

Question 10

increase of turnover in commercial business form 2002-2008

Answer 10

more average passenger spending

we made them sport

before 99 wasn’t private. no interest in making money.

Question 11

why decrease of passenger spending 2008-11

Answer 11

EURO

crisis

duty free shops airside partially close due to construction of security control building

Question 12

why overall commercial turnover not drop in 2008-11

Answer 12

arrival duty free

increase of shopping and real estate facilities landside

Question 13

different between 2 pillars

revenue - profit

Answer 13

most costs in the regulated part

both pillar are of similar size in term of turnover.

2/3 of the profit come from the non-regulated business (less costs)

non regulated business in generating the profit to fulfill shareholder’s expectations.

Question 14

cost saving

Answer 14

police and security is extremely high compared to other operating expense.

solution could be to work with a private security firm instead of police.

Question 15

ROIC

Answer 15

Profit / (total assets - current liabilities - cash and equivalent)

very profitable

ZHR : 7.4 –> really high!

non regulated: 12%!!