31 | Political Newsletter Summer 2016

ContentsEditorial

Overview of sound insulation measures undertaken by Flughafen Zürich AG

Swiss aviation policy report 2016 – prompt implementation essential

Guest column: Thomas Klühr, CEO Swiss International Air Lines

New section: airport-related terms

Flughafen Zürich AG also successful abroad

Airport glossary: Swiss aviation policy report

Traffic statistics

EditorialDear Reader,

On the basis of six test cases concerning properties directly over-flown by aircraft approaching Zurich Airport from the south, the Swiss Federal Supreme Court ruled on 18 March 2016 that also in the case of this southern approach route, noise compen-sation must be awarded if the property was acquired prior to 1  January 1961. The Federal Supreme Court thus confirmed a ruling

of the Federal Administrative Court in 2014 that noise is deemed to have been foreseea-ble from 1 January 1961 onwards. Flughafen Zürich AG welcomes this decision as it helps establish legal and planning certainty, and it also means there is a uniform ruling for all geographic directions.

Irrespective of the Supreme Court’s ruling, however, Flughafen Zürich AG takes the issue of protecting local residents from the harmful effects of aviation noise very seriously and it is putting passive sound insulation measures in place in areas where noise limit values are exceeded. See the following pages for a detailed overview of current and future measures.

It is important for me to mention another milestone that helped create legal and plan-ning certainty and provide investment security. Last year Flughafen Zürich AG agreed a reduction in airport charges with the airlines. Passengers and airlines will benefit from a decrease in airport charges amounting to approximately 40 million Swiss francs a year. Following a final legal ruling by FOCA, the lower charges are set to be introduced in the 3rd quarter of 2016.

Our most important partner company – the airline SWISS – and all other airlines serving Zurich Airport stand to benefit directly from this reduction in charges. This will increase the competitiveness of the airport system as a whole.

However, it is estimated that Zurich Airport will reach the limits of its capacity for avia-tion traffic in ten to 15 years’ time. Through airport-related activities and selective invest-ment abroad, it will nevertheless be possible for Flughafen Zürich AG to create further added value. The successful construction and operation of Bengaluru Airport in India con-firms that we are on the right track with our international strategy. Following the expiry of our operating contract, we decided to sell our remaining 5% stake in Bengaluru airport.

In a new “Airport glossary” section, we will briefly and concisely explain an airport-related term in each issue of the Political Newsletter from now on. We will begin with a key foun-dation stone of Switzerland’s aviation sector: the Swiss aviation policy report. See page 8 for more about this strategic document.

Thank you for your interest in Zurich Airport and I wish you a stimulating read!

Daniel SchmuckiChief Financial Officer

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Overview of sound insulation measures undertaken by Flughafen Zürich AGAir traffic creates noise. To shield local residents from aviation noise that exceeds the stipulated limits, as is permitted by the federal government, and prevent residents from being woken by air traffic, Flughafen Zürich AG is obliged to implement passive sound insulation measures. These measures are implemented in the current “Programme 2010”, the ongoing “South-side sound insulation concept” and in future in the “2015 sound insulation programme”. Flughafen Zürich AG is investing a total of 340 million francs from the Airport of Zurich Noise Fund in sound insulation measures.

Flughafen Zürich AG is licensed by the Swiss Confederation to operate Zurich Air-port. As the holder of the airport’s operat-ing licence and as the operator of a fixed infrastructure of national importance, the federal government permits Flughafen Zürich AG under article 25 of the Envi-ronmental Protection Act to exceed the noise limits in certain areas. In return, it is obliged to take passive sound insulation measures to protect residents in affected areas from the harmful effects of noise.

207 million francs since 1999The airport operator has been fulfilling this obligation for many years already. It has been implementing its “Programme 2010” since 1999, based on its obliga-tion to implement sound insulation meas-ures wherever they are undisputed. Begin-ning with the municipalities next to the airport, to date the airport operator has invested some 207 million francs in pas-sive sound insulation measures in areas where noise limits are exceeded. Depend-ing on whether these limits are exceeded during the day or at night, these measures

consist of installing sound-insulating win-dows or sound-absorbing ventilators, or reimbursing owners for improvements they have already made themselves.

“2015 sound insulation programme” as future frameworkWith the operating regulations proposed in the autumn of 2014 (BR2014), Flughafen Zürich AG applied for modifications to cer-tain flight paths. This will also result in changes to the sector affected by exposure to noise above the limits and consequently to the area where remedial measures are required. Based on the planned BR2014 and on a decision by Federal Office of Civil Aviation (FOCA) relating to the noise lev-els permitted under the provisional oper-ating regulations, the airport operator submitted a comprehensive sound insula-tion programme. This “2015 sound insu-lation programme” builds on the previous work, but also includes additional meas-ures and, following approval by FOCA and any legal proceedings, is intended to seamlessly continue on from the work car-ried out to date under “Programme 2010”.

Installation of sound-insulating windows in a property exposed to noise above the limit values.

Political Newsletter | Summer 2016

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Political Newsletter | Summer 2016

Areas where remediation work has already been undertaken will also be able to ben-efit from certain additional measures. The aim is to implement and complete the out-standing remediation work and reimburse-ments amounting to a total of 133 million francs within ten years of the programme commencing.

“South-side sound insulation concept” as additional protectionIn addition, with its ruling on the provi-sional operating regulations, the Fed-eral Supreme Court obliged Flughafen Zürich AG to prevent residents to the south of the airport from being awoken by aircraft approaching from the south in the early morning. The “South-side sound insulation concept” submitted by Flughafen Zürich AG in 2011 has been legally in force since November 2015 and implementation is underway. This concept provides for installing sound- absorbing ventilators or automatic window- closing mechanisms in the bedrooms of houses and flats situated within a defined perimeter in the sector most affected by flights from the south in the mornings.

Financing on basis of originator pays principleFlughafen Zürich AG is investing a total of 340 million francs in protecting local res-idents from excessive aircraft noise. For this purpose, Flughafen Zürich AG cre-ated the “Airport of Zurich Noise Fund” which is financed entirely by specific noise charges. As a consequence, it can be said that aviation is the only mode of transport where noise abatement measures required as a result of noise emissions are entirely financed by users.

Sound insulation measures of Flughafen Zürich AG

1 If limit values are exceeded during the night

Programme Measures No. of homes affected Costs (in CHF)

Programme 2010(since 1999)

• Sound-insulating windows• Sound-absorbing ventilators• Window-closing mechanisms1

Approx. 25,000 Approx. 340 m

2015 sound insulation programme(submitted 2015)

• Sound-insulating windows• Sound-absorbing ventilators• Contributions to roof renovation• Window-closing mechanisms1

South-side sound insulation concept (since 2015)

• Window-closing mechanisms• Sound-absorbing ventilators

Approx. 4000

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Political Newsletter | Summer 2016

Swiss aviation policy report 2016 – prompt implementation essentialFlughafen Zürich AG acknowledges the accurate description and analysis of the challenges facing Swiss aviation that the Federal Council has set out in its report on Switzerland’s aviation policy. However, if these challenges are to be mastered, the Confederation must do more. The next step is for the federal government to pave the way in legislation and in the Sectoral Aviation Infrastructure Plan (SAIP) to enable our national airports to continue operating successfully as Switzerland’s gateways to the world.

Following extensive stakeholder involve-ment last year, the Federal Council pub-lished its new aviation policy report on 24 February 2016 and sent it to the parlia-mentary committees for deliberation.

Accurate analysis – challenges correctly identifiedFlughafen Zürich AG acknowledges that the Federal Council has accurately ana-lysed aviation policy and clearly stated the greatest challenges facing Swiss avi-ation. In particular, Flughafen Zürich AG endorses the finding that the national air-ports, and specifically the Zurich intercon-tinental hub, constitute fundamental ele-ments of Switzerland’s basic infrastructure and form an important part of its over-all transport system. We also welcome the consequent findings that the immediate capacity bottlenecks at the two national airports in Geneva and Zurich will require resolving primarily with technical and operational optimisation measures, and that over the long term demand-led capac-ity growth through infrastructure measures must remain possible as well.

Freedom to grow and develop by implementing solutions outlinedIn order to address these identified prob-lems and challenges facing Switzerland’s national airports, however, the federal government must also quickly accept the improvements proposed in the avia-tion policy report to the legislation and in the Sectoral Aviation Infrastructure Plan (SAIP) and its associated detailed plans for each airport. One important goal is to eliminate the capacity bottlenecks at the national airports in Geneva and Zurich. Binding capacity stipulations in the form of performance targets in line with demand forecasts, and flight paths that permit a moderate expansion of peak capacity while maintaining safety levels should be specified in the detailed SAIP plans. Owing

to the length of time required for such pro-cesses, these stipulations must anticipate developments for at least the next fifteen years and make provision for their spa-tial planning. Only then will it be possible to create the urgently required room for manoeuvre for demand-led growth of avia-tion in the long term, and only then will the national airports be able to continue ful-filling their function as Switzerland’s gate-ways to the world in future in the interests of the country’s economy and its entire population.

The 2016 Swiss aviation policy report is published on the website of the Federal Office of Civil Aviation: www.bazl.admin.ch

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Political Newsletter | Summer 2016

Guest column

New aircraft – less noise?

There can hardly be any airport where there is not a – sometimes highly emo-tional – debate about aircraft noise between the operator and residents near airports. It is undisputed that aviation noise can conflict with certain residents’ need for rest. Calls for new, less noisy air-craft are then regularly voiced – and at the same time for penalising the existing fleet with noise charges if possible. At first glance this seems to be a simple equation: new aircraft = less noise. The noise foot-print in Zurich has been cut by two-thirds over the past 25 years, mainly as a result of major advances in aircraft engine tech-nology.

At second glance – and this is often ignored – the improvements are down to massive investment by the airlines. SWISS alone is investing some 5 billion francs in renewing its fleet in 2016. From 2016 it is replacing some of its A340 fleet with Boeing 777s. Bombardier CSeries jets will begin to be introduced into the fleet from the summer. Set to replace the AVRO as well as older Airbuses, this entirely new design of aircraft sets new standards as far as environmental performance is con-cerned: 25% less CO2 emissions and a halving of noise levels compared with the current short-haul fleet will lighten the burden on the region around the airport. And that’s not all: by 2019 SWISS will have

replaced most of its current aircraft in the Airbus A320 family used for short-haul flights with A320neo jets. In other words, in future SWISS will have a state-of-the-art short-haul fleet in terms of both technol-ogy and environmental performance.

SWISS cannot survive on this alone, how-ever. The money for investment has to be earned. Further restrictions to operating conditions or inappropriate noise control charges are inimical as they would jeop-ardise the medium- and long-term eco-nomic viability of SWISS.

As a result, SWISS favours the balanced approach taken by the ICAO for the long-term resolution of conflicts over noise. This imposes obligations on all parties. Airlines are required to reduce the noise produced by their aircraft – primarily by investing in advanced technology – while airports are obliged to employ noise-optimised proce-dures, and in spatial planning residential areas should be sited outside noise expo-sure zones wherever possible. However, it is precisely this latter requirement that has been ignored – the regions around air-ports are the fastest growing development zones. People still want to live close to a well-connected infrastructure. As a con-sequence, the population growth around airports is higher than average. The will-ingness to also accept the downsides, however, is waning. And so we come full circle. If policy-makers do not take the nec-essary steps in spatial planning far enough ahead, it is usually restrictions to air traf-fic that are pushed through as “solutions”. These restrictions then make it impossi-ble for the airlines to do their bit to miti-gate the problem in the long term. Namely by investing in new and noise-optimised aircraft.

Thomas KlührCEO Swiss International Air Lines

Thomas Klühr

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Political Newsletter | Summer 2016

New section: Airport-related terms explained – an airport glossary

As key infrastructure of national impor-tance, Zurich Airport is regulated by numerous laws and decrees of the Confed-eration as well as – due to its local impact – those of its home canton of Zurich. Arti-cles in our Political Newsletters regularly make reference to these rules and regula-tions.

In our new section “Airport-related terms explained – an airport glossary”, we will explain one of the terms used in this com-plex field of airport regulation in each of

the upcoming issues of the Political News-letter. We kick off on page 8 of this issue with the Federal Council’s aviation pol-icy report, the strategic foundation for Switzerland’s aviation sector.

The graphic below shows the most impor-tant regulations of relevance to Zurich Airport and how they interrelate.

Most important regulations relevant to Zurich Airport

Swiss Confederation

Federal Council• Swiss Aviation Policy Report

(LUPO)• Sectoral Aviation Infrastructure

Plan (SAIP)

Parliament• Federal Aviation Act (FAA)• Environmental Protection Act

(EPA)

DETEC1/FOCA2

• Approval of: – Operating regulations – Planning approval incl. runway

modifications

Canton of Zurich

Government Council• Operating regulations

(noise-related)• Runway modifications

Cantonal Parliament• Cantonal Development Plan• Runway modifications

Electorate of the Canton of Zurich• Zurich Cantonal Airport Act• Runway modifications

Flughafen Zürich AG

Board of Directors with state representative• Operating regulations

(noise-related)• Planning approval (noise-related)

incl. runway modifications

Management Board• Operating regulations

(not noise-related)• Planning approval

(not noise-relatet)

1 Federal Department of the Environment, Transport, Energy and Communications2 Federal Office of Civil Aviation

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Political Newsletter | Summer 2016

Flughafen Zürich AG also successful abroadWithout a fundamental shift in the aviation policy framework, it is estimated that Zurich Airport will reach the limits of its capac-ity for aviation traffic in ten to 15 years’ time. With a view to the long term, therefore, Flughafen Zürich AG is generating additional added value through airport-related activities abroad.

Zurich Airport regularly receives awards for the outstanding quality of its infra-structure and services. With its extensive expertise – among other things in optimis-ing operational processes, master plan-ning and construction management – and massive investment, Flughafen Zürich AG has made Zurich Airport the most impor-tant aviation infrastructure in Switzerland, and continues to develop it further. This created added value for the Swiss econ-omy. However, it is estimated that Zurich Airport will reach the limits of its capac-ity for aviation traffic in ten to 15 years’ time. In the long term, growth and further added value can be generated from com-plementary real estate projects such as “The Circle” and the expansion of airport- related and selective investments abroad.

Successful construction and operation of Bengaluru AirportFor many years Flughafen Zürich AG has been involved in projects in newly industri-alised countries in Latin America and Asia in which there is a great need for develop-ment and a high demand for aviation infra-structure services. The first step was taken in 2001 when it was awarded the contract to build and operate a new inter national airport in Bengaluru, the third most pop-ulous city in India. Under the leadership of Flughafen Zürich AG, the airport was completed after a 35-month construc-tion period, and within eight years of com-

mencing operation it had established itself as the third-largest hub in India handling some 19 million passengers a year. More-over, in 2015 Bengaluru airport received the prestigious Skytrax Award for “Best Regional Airport in Central Asia”. When it sold off 12% of the airport operating com-pany in 2009, Flughafen Zürich AG made a profit of 95 million francs.

On expiry of its operating contract in May 2015, the role of Flughafen Zürich AG was reduced to that of a minority share-holder, which led to the decision to sell off its remaining 5% stake in Bengaluru Air-port’s operating company. In April 2016 Flughafen Zürich AG signed an agreement to this effect which set the purchase price at USD 48.9 million. Subject to the cus-tomary contract conclusion conditions, the sale is expected to be completed in the third quarter of 2016.

16 years of experience in India shows that, with the expertise of an internationally respected airport operator and the transfer of Swiss values, it is possible to generate significant added value for the local airport infrastructure and Flughafen Zürich AG. Given this positive experience, many years of operating in the market, and close coop-eration with the Indian aviation authorities, Flughafen Zürich AG will carefully consider any further opportunities that may arise in the Indian market.

Promising airport activities in Latin AmericaFlughafen Zürich AG is involved in the operation of four airports in Latin America, and since 2014 also in the airport in Belo Horizonte which serves the third- largest metropolitan area in Brazil. Flughafen Zürich AG has a 12.75% stake in the air-port’s operating company and is driving forward improvements to the infrastruc-ture there. In cooperation with the Brazilian CCR Group and the state-owned Infraero, Flughafen Zürich AG is responsible for the construction and operation of a new ter-minal as well as for extensive renovation of the existing terminal in order to meet the highest international quality standards in future. Building a second runway is also planned for 2020. Flughafen Zürich AG has also been involved in the operation of the airport in the Columbian capital Bogotá for the past ten years.

Its activities abroad are always focused on responsibility for airport operations and close cooperation with strong local partners. To expand the portfolio, selec-tive airport projects are also undertaken in developed countries with stable reve-nues. Flughafen Zürich AG is confident that passing on its extensive know-how in the operation and management of airports can create added value for the regions in which the airports are located as well as for Flughafen Zürich AG and its home can-ton of Zurich.

Belo Horizonte airport, BrazilPhoto: BH Airport

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Political Newsletter | Summer 2016

Airport-related terms explained – an airport glossary

Swiss aviation policy reportIn the Swiss aviation policy report, the Federal Council analyses the current situation of the civil aviation sector in Switzerland and sets out how it intends to strengthen aviation for the benefit of the public and the economy as a key pillar of its transport policy, taking eco-nomic, environmental and social factors into consideration. It serves as a strate-gic guideline for government agencies, policy-makers and the public.

In the report the Federal Council anal-yses the environment and the devel-opment of Swiss civil aviation, sets out the general framework and principles of Swiss aviation policy and describes the various elements of the Swiss aviation system. The report’s conclusions lay down guidelines for the Confederation’s aviation policy for the next ten years. The report is implemented through incorporating its recommendations into legislation and into the Sectoral Avia-tion Infrastructure Plan (SAIP) and its associated SAIP drafts for each airport.

The report calls for creating the con-ditions that will enable Switzerland’s good international transport links to be maintained, ensure a high level of safety and safeguard the competitive-ness of Swiss aviation. With reference to Zurich Airport, the report states that the Zurich hub is of vital importance to Switzerland. The capacity bottlenecks already experienced during peak peri-ods should be eliminated. The federal government also speaks in favour of competitive operating hours at national airports and that consideration should be given to payment of national secu-rity costs out of the public purse.

Traffic statisticsTraffic volumes January to March 2016

2016 2015Change in %

2016 compared with 2015Local passengers 4,019,495 3,732,206 7.7

Transfer passengers 1,603,812 1,656,580 -3.2

Share of transfers 28.5% 30.7%

Total passengers 1 5,630,525 5,408,729 4.1

Flight movements 60,631 59,859 1.3

Freight (in tonnes) 100,612 100,802 -0.2

Mail (in tonnes) 7,693 7,326 5.0

1 incl. transit, general aviation and otherSource: Flughafen Zürich AG

The most recent traffic statistics are updated every month and can be found in the Internet under www.zurich-airport.com/investorrelations.

Publication details

Texts prepared by Flughafen Zürich AG

Printing: www.bmdruck.ch

© Flughafen Zürich AGP.O. Box, CH-8058 Zurich-Airport

politikbrief@zurich-airport.comwww.zurich-airport.com