Schiphol hopes to reap benefits of scrapped government tax; over 230 destinations served this summer

Image: KLM this week launched Amsterdam-Calgary services
KLM this week launched Amsterdam-Calgary services. It operates the route five-times weekly using an A330-200. “Under the present economic situation, it’s even more important to choose destinations that meet a strong demand. By introducing Calgary to our network, we further enhance our product offer to our customers, who can now reach this important region in Canada on a direct flight from Amsterdam,” said KLM President & CEO, Peter Hartman.

The decision by the Dutch government to abolish its aviation departure tax at the end of June will come as a great relief to many airlines and Dutch airports, especially Amsterdam. Introduced on 1 July 2008 the tax was applicable only to departing O&D (Origin & Destination) passengers and not transfer passengers. The impact on traffic at Amsterdam has been considerable. While transfer traffic (important for KLM) continued to grow at around 5% all the way through to the end of 2008, O&D traffic declined immediately by 5% and more recently by between 15% and 20%. By the end of 2008 transfer traffic accounted for 43% of all passengers handled by the airport.

Chart: Amsterdam airport traffic
Source: Schiphol Group

Research apparently suggested that O&D passengers were increasingly using ‘low-cost’ airports over the border in Germany (Weeze) or Belgium (Brussels Charleroi), both of which are within 200 kilometres of Amsterdam.

Five major runways and a dominant national carrier

With five runways of more than 3,000 metres Amsterdam is not short of runway capacity. However, in recent years there have been various attempts to cap the number of movements due to noise, but since the opening of the latest runway in 2003 this has become less of an issue. Aircraft movements peaked in 2007 at 435,973.

Chart: Amsterdam airport traffic 1992-2008
Source: Schiphol Group

Traffic at Schiphol doubled in just seven years between 1992 and 1999. Without the introduction of the departure tax last year the airport may have passed the 50 million passenger mark for the first time.

This summer KLM accounts for over 50% of all scheduled capacity and over 55% of all scheduled flights. When combined with the shares of Air France, Northwest and its low-cost subsidiary, KLM and its partners account for over 63% of seat capacity. However, over 70 other airlines also operate scheduled services at the airport led by easyJet which operates over 20 daily departures to 10 destinations (seven in the UK, Basel, Geneva and Milan Malpensa). easyJet has not added any routes at the airport since 2006 when it launched Basel and Milan services. In fact, compared with five years ago the airline has reduced capacity at the airport by around 25% and has dropped routes to Barcelona, Glasgow and Nice.

Predictable seasonality profile

Demand at Schiphol follows a very predictable pattern throughout the year with a peak in July and a trough in February. So far in 2009 traffic has fallen to below the levels attained in 2006.

Chart: Amsterdam seasonality
Source: Schiphol Group

For March KLM has reported that although capacity was down only 2.9%, passenger demand was down 9.4% resulting in average load factors tumbling by 5.5 percentage points to 75.5%. Some of this will be due to the re-timing of Easter this year.

Norwegian and Wind Jet new for this summer

Although the number of destinations served at the beginning of the summer season by scheduled carriers is down slightly at just under 200, new destinations such as Forli and Uralsk (served by Air Astana) are still being added. According to the airport during the summer season over 230 destinations will be served either by scheduled or charter airlines.

Airlines making their first appearance at Schiphol this summer include Norwegian (serving Copenhagen and Oslo) and Wind Jet (serving Forli). Other new services starting this summer include Air France to Basel (versus easyJet and Swiss), bmibaby to Manchester (versus KLM), Estonian Air to Tallinn (replacing KLM), KLM to Calgary and Liverpool (versus easyJet), and to Rimini.

Around a dozen services have been axed during the last year including routes operated by Alitalia (to Milan Malpensa), bmibaby (to Cardiff), Centralwings (to Krakow), KLM (to Hyderabad, Maastricht, Riga and Tallinn) as well as routes operated by flyLAL and Sterling who no longer exist.


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