COMPLEX TRANSPORT INFRASTRUCTURE SYSTEMS

TRANSPORT TECHNOLOGIES AND OPERATIONS MANAGEMENT

“Flughafen Zürich”

Professor: Richard de Neufville

Student: MINAS VAVAKOS

LISBON 2012

ContentsOBJECTIVE.................................................................................................................... 2

1. HISTORY OF DEVELOPMENT..................................................................................3

1.1. The first years.................................................................................................3

1.2. Growth in traffic over time.............................................................................4

1.3 Major changes in patterns of use – Development History.............................6

2 FUTURE AND UNCERTAINTY: TRAFFIC DATA AND FORECASTS..............................6

2.1 Kind of Traffic.................................................................................................6

2.2 Historic Data and Forecasts............................................................................8

3 PLANS FOR THE FUTURE........................................................................................9

3.1 “The Circle” - Innovative mix of uses..............................................................9

3.2 Exporting expertise in emerging markets......................................................9

4 GUIDELINES OF THE STRATEGY...........................................................................10

5 REFERENCES........................................................................................................11

6 ANNEX.................................................................................................................12

OBJECTIVE

The purpose of the current document is to present a brief history of the

development of the International Airport of Zurich and how the evolution of the

aviation sector over the recent years has affected the operations of the facility. In

the second part of this report the forecasts for the future -as well as major aspects

regarding airport’s development context- will be presented. Finally, the last part is

about the strategic guidelines the CEO of the airport should follow in order to adapt

to and take advantage of the expected changes in the market.

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1. HISTORY OF DEVELOPMENT

1.1. The first years

Zurich International Airport (IATA: ZRH, ICAO: LSZH) is the largest airport in

Switzerland and it is located -in a complex terrain but without buildings- 13

kilometers northern to the center of the city of Zurich in the municipality of Klotenin,

although its’ area also extends to the communities Opfikon, Rümlang and Oberglatt.

It started operating on June 14th 1948, initially with the 1,900-meter long West

Runway 10/28. Six months later, because of the applicable crosswind-oriented

standards of those days, another runway was planned against the north wind to

ensure all-weather capability of the airport: on November 17th 1948 the 2,600-meter

runway Blind 16/34 (runway with instrument landing system) was delivered. At that

time, the airport owner was the Canton of Zurich. The official opening of the Airport

took place on August 4th 1953, when the new passenger terminal was handed over

for operation (replacing the temporary character of the support buildings which

lacked planning).

Shortly after the reorganization of the airport, the project for the planned second

phase of construction had been submitted. The plans called for -in addition to the

mandatory runway extensions- the start of "jet age": it was decided that a two finger

terminals layout could defuse the situation, even before the expansion1 of the

overused public facilities that had already been ruled by various restorations which

took place. On November 1st 1975, Terminal B, a multi-storey car parking and Airport

Plaza, a shopping and service center, started operating, after a five-year construction

period. In addition, runway 14/32 was handed over in January 1976, when runway

16/34 was renovated. Zurich Airport was directly connected by rail to the line of the

SBB Zurich-Winterthur on June 1st 1980, via a four-track underground station.

Moreover, a new control tower was inaugurated in 1986, as well as terminals A and

E, which were delivered in 1985 and in 2003 respectively. Finally, there was a fifth

1 In 1961 the West Runway 10/28 was extended around 600 meters to the west, the blind landing runway 16/34 was extended to a new operating length of 3,700 meters (400 meters to the south and 700 meters to the north), the apron area was increased and the pier was extended from 16 to 28 aircraft parking spaces

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stage of construction in 2004, in which eight new projects, among which Skymetro,

the underground rail system that connects the Airside Center with Terminal E, was

implemented.

Since 2000 the airport has been privatized, and the private airport operator is called

“Unique” (formerly Flughafen Zürich AG). The operation of the airport was seriously

disrupted by the bankruptcy of Swissair (on which it heavily relied) on October 2nd

2001, which resulted to the temporary shutdown of Terminal B in response to falling

passenger numbers2. Nowadays, the airport has three runways (16/34, 14/32 and

10/28) along with three passenger terminals (A, B and E) and it serves as a hub for

the airline Swiss, Lufthansa and Air Berlin, and is also home to airlines Belair,

Edelweiss Air and Helvetic Airways. At the same time it is a hub that connects civil

aviation with other forms of public and private transport3 in a comprehensive

international network. In 2010 it received the World Travel Award for the seventh

year in a row, the Business Traveler Award and 4 stars in the Skytrax survey.

1.2. Growth in traffic over time

Graph 1: The number of passengers per year in three Swiss airports between 1990 and 2010

Source: Zurich Airport Facts and Figures, 2010

2 From August 2005 until the summer of 2008, it served as an event dock. In autumn 2008, the existing dock was completely dismantled and by 2011 replaced by a new building which allows flexible handling of Schengen and non-Schengen flights at two levels.3 The transport is being done by regional bus, tram and railway lines and private taxis.

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The traffic in Zurich Airport was steadily growing in the 90’s until it reached a peak in

2000 (22.7 million passengers), when Swissair bankrupted. Then, and for 4 years the

annual number of passengers was moderately declining until 2003, when it was 17

million. From 2003 to 2008 the number of passengers transferred through Zurich

Airport was increasing slightly, and after 2008 (and until 2010) it reached a plateau.

In 2011 it rose to about 24.3 million passengers (about 1.4 million more than in

2010) and 279'001 aircraft movements (about 10,200 more than in 2010). On the

other hand, the number of passengers transferred through the airport of Geneva

during these two decades was growing slowly and it was not affected that much

from the bankruptcy of Swissair (apart from a small plateau between 2000 and

2002). Finally, in the case of Basel there were some fluctuations and three peaks

(2000, 2007 and 2011).

Graph 2: Freight and mail volumes between 1990 and 2010

Source: Zurich Airport Facts and Figures, 2010

The variance of the freight volumes - weights (tones) transferred through the Zurich

Airport is more or less similar to the number of passengers for this time period:

steady increase between 1990 and 2000, moderate decline from 2000 to 2003 and

then it leveled off. The case of mail volumes is much more complicated in terms of

fluctuation, showing a gradual rise from 1990 to 2000 and wave dispersion every 2

years since 2000.

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1.3 Major changes in patterns of use – Development History

During the first 25 years of the airport’s operation there were two changes that

affected significantly the annual number of passengers: the introduction of precision

approach radar (PAR) on long-haul economy class in 1953 and the night flying

restriction in 1972. Also the introduction of noise charge in 1980 had a negative

impact on the popularity of the Zurich Airport: there is a noise dispute between

Switzerland and Germany, regarding aircraft noise on regions in southern Germany,

caused by the aircrafts that land at the Zurich Airport. It is a decades-long dispute,

which is being discussed at the highest political level since 2000. After some failed

negotiations in 2003, the German side had unilaterally limited the number of over

flights and also banned all arrivals and departures for the night hours (21:00 – 7:00

o’clock weekdays and 20:00 – 9:00 o’clock weekends). In 2008 the negotiations

between the two countries improved, and since then a Swiss-German working group

tries to provide an objective basis for comparison of aircraft noise.

Switzerland implemented the Schengen Agreement in 2008 and this resulted to

some changes in the facilities provided in the buildings: construction of a central

security control building and rebuilding of the terminals. Also, since March 2010,

there are regular flights operated by Singapore Airlines from and to Zurich with

Airbus A380, the largest passenger plane in the world. This implies significant

increases in the number of passengers using the airport and amplifies the hub role of

the airport.

2 FUTURE AND UNCERTAINTY: TRAFFIC DATA AND FORECASTS

2.1 Kind of Traffic

In order to forecast the future demand for the Zurich Airport, apart from the

financial conditions of the E.U. etc., some characteristics of the passengers have to

be taken into account.

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Graph 3: National and Domestic comparison with other European airports

Source: Zurich Airport Facts and Figures, 2010

Zurich Airport strongly depends on the international market: the overwhelming

majority (97.3%) of the passengers flying to or from Zurich Airport fly on

international flights which ranks it at the third position compared to similar

European airports, after Brussels and Vienna’ s airport.

Graph 4: Passengers of the airport by origin and destination

Source: Zurich Airport Facts and Figures, 2010

Three quarters out of these flights are inside Europe, while the second most popular

origin destination is North America and then Far East.

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Graph 5: Passengers of the airport by kind of traffic

Source: Zurich Airport Facts and Figures, 2010

Finally, the overwhelming majority (87.4%) of the passengers that went to Zurich

Airport used a traditional airline, and only 10.9% used a Low Cost Carrier.

2.2 Historic Data and Forecasts

Graph 6: Projection of the number of passengers in year 2014

Source: Eurocontrol, 2010

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According to this research which was conducted by Eurocontrol in 2010 there are 3

scenarios regarding the Zurich Airport, all of which show increase in the annual

number of flight movements: in the base scenario a 2.2% (on average) annual

increase in the number of passengers is assumed, while this growth rate is 3.3% and

1.2% in the high and low scenario respectively. This results to 280,000, 320,000 and

260,000 departures/arrivals respectively in 2014.

3 PLANS FOR THE FUTURE

3.1 “The Circle” - Innovative mix of uses

The largest construction project in Switzerland and one of the world’s most

ambitious airport real estate projects, an investment of around US$860 million, will

take place in Zurich Airport, and will start operating in 2017: the complex will be

known as "The Circle" and it will combine a small-town ambience with the synergies

of a big city. It offers visitors an ideal mix of services, comprising seven autonomous

modules4. It will be located at the foot of Butzenbüel hill, within walking distance

from the terminals, and because of it Zurich Airport will develop from a

transportation hub and commercial center into a destination in its own right.

3.2 Exporting expertise in emerging markets

Flughafen Zürich AG also operates airports abroad in collaboration with local

partners: its’ focus lies on the successful development and operation of medium-

sized airports in emerging markets with a strong demand for development of

aviation infrastructure, especially in Latin America, Eastern Europe, Middle East and

Asia5 through management and operation agreements and by applying its’ proven

know-how in airport development. Flughafen Zürich AG holds a stake of 15% and

62% in A-port S.A. and A-port Operaciones S.A. joint ventures respectively. A-port

S.A. is based in São Paulo, Brazil and invests in the construction and development of

airports as well as airport-related infrastructure in Latin America and the Caribbean,

while A-port Operaciones S.A. is based in Santiago de Chile and assumes operational 4 Excellent hotels, conference and event facilities, restaurants, and a health and beauty center complete with outpatient clinic.5 In the airports of the followin cities: Bengaluru, Curaçao, Tegucigalpa, San Pedro Sula, La Ceiba, Roatan, Puerto Montt, La Florida, Cerro Moreno, Isla de Margarita.

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responsibility based on management contracts. A-port S.A. has currently assets in

Chile, Columbia, Honduras and Curaçao, and all shareholdings and management

contracts in Latin America were incorporated into the joint venture in 2008.

4 GUIDELINES OF THE STRATEGY

If I were the Airport Director I would maintain the strategic context already applied

by the current administration of Zürich Flughafen AG, trying to take advantage of

some additional opportunities: participating in the emerging hot spot markets is, for

many reasons, a very profitable process. Therefore, and given the fact that according

to the recently implemented EU Emissions Trading System6 (EU ETS) every plane that

lands and takes off in the ground of an E.U. country pays a fee, I would try to

approach and invest in airports in countries which have strongly expressed their

opposition to this policy, like China. I would do so in order to attract their airline

companies in my airport instead of any other European hub.

Another axis I would focus on is diversification of services provided to my customers.

“The Circle” is a very big step in this direction because it ensures some fixed

revenues no matter the variation in number of passengers. In addition, I would adapt

the design of the new facilities that will be constructed in the following years to the

new type of aircrafts -like Airbus A380- in a flexible way. Furthermore, it is important

to perform benchmarking in terms of efficiency and operation, targeting some

competitive hub airports, such as Frankfurt. Finally, I would avoid contacting and

cooperating with any other Low Cost Carriers (like Ryanair), because they focus on a

different market segment than the airport’s customers.

6 Switzerland is not included in the EU ETS.

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5 REFERENCES

Zurich Airport, (2012) Zurich Airport Facts and Figures, <URL: http://www.zurich-

airport.com/desktopdefault.aspx/tabid-612> [accessed March 15th, 2012]

Zurich Airport, (2012) History of Zurich Airport, <URL: http://www.zurich-

airport.com/desktopdefault.aspx/tabid-426> [accessed March 15th, 2012]

Eurocontrol, (2012) European ATM Network Operations Performance Plan

Assessment 2011 – 2014, <URL: http://www.eurocontrol.int/> [accessed March 15th,

2012]

De Neufville R., (2008) Transport Technologies and Operations Management Course

Materials – Airport Section

Zurich Airport, (2012) ‘The Circle’, <URL: http://www.thecircle.ch/#home-en>

[accessed March 15th, 2012]

Moodie M., (2012) Japanese architect wins Zürich Airport’s ‘The Circle’ contest, The

Moodie Report, <URL: http://www.moodiereport.com/document.php?

c_id=6&doc_id=23198> [accessed March 15th, 2012]

6 ANNEX

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Picture 1: Layout plan of Zurich Airport

Source: World Travel Guide, 2012

Picture 2: Layout plan of Zurich Airport

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Source: Zurich Airport Facts and Figures, 2010

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