Zurich airport steps up commercial drive

The face of Zurich airport may soon be changing Unique

Switzerland’s largest airport has recently announced plans to increase non-aviation revenue streams with proposals for two major projects.

Zurich airport wants to be the venue for a new casino and this month chose a Japanese architect to construct an ambitious SFr1 billion ($930 million) 200,000-square-metre hotel, office and business complex.

The airport’s operator, Unique, believes the proposed new attractions would add value both for passengers and other users and generate more revenues.

“Airports these days no longer just carry out traditional airport functions. They are becoming centres of commercial enterprise offering specialist service functions,” said Unique spokeswoman Jasmin Bodmer.

“Zurich airport does not have endless capacity and we are going to reach a peak of growth at some point.”

The current capacity of the airport of 350,000 take-offs and landings – or movements – could be exceeded by 2017, according to a federal report five years ago. Since then, an economic downturn has diminished the volume of aircraft traffic, but this is expected to pick up again as general conditions improve.

Retail magnet

Faced with a limit on the amount of cash that can be generated through airline and passenger fees, airports around the world have recognised the importance of tapping into potential retail and service sector profits.

In the first half of 2009, revenues directly related to traditional aviation activities totalled SFr238.6 million at Zurich airport. Other sources, most notably retail and duty-free sales, pulled in SFr157 million.

Damian Künzi, an economist at Credit Suisse bank, told swissinfo.ch that retailing at transport hubs has been booming in recent years. Customers are attracted by longer opening hours and the availability of restaurants and other services in the same space.

The shopping facilities at Zurich airport generate the second-largest turnover of any retail centre in Switzerland, he said. In addition, a high revenue per square metre makes the airport a highly efficient money spinner.

“This gives a huge incentive for the airport to expand its sales area as it has the potential to generate further high turnover and rental income,” he said.

Gambling and massage

The latest planned projects at Zurich airport are more focused on services and entertainment than retail, but they are still aimed at inducing passengers to spend more money after they touch down in the city.

Unique has teamed up with gambling operator Swiss Casinos in the hope of winning a licence from the federal authorities. Parliament will soon debate whether to hand out more casino concessions, and the airport wants to be the beneficiary.

From the airport’s perspective, this would offer passengers another entertainment opportunity and attract people from Zurich city. Swiss Casinos is also viewing the prospect of tapping into a new customer base.

“We see this as an opportunity to focus on the tourism market,” spokesman Martin Vogel told swissinfo.ch. “Ninety-five per cent of guests at our other casinos are from the neighbourhood.”

Grounding blues

The Circle is aimed at a completely different niche market. The design of Japanese architect Riken Yamamoto beat off international competition to win the contract to design an upmarket accommodation, office and services complex at the airport.

The final design has yet to be finalised, but it is envisioned that companies would be able to market their wares in showrooms while users could also enjoy fine dining and other services, such as health clinics, massage or health and beauty.

Construction of The Circle is scheduled to begin in two years with planned completion in 2016.

Andreas Wittmer of the Center for Aviation Competence at St Gallen University is convinced that increasing non-aviation activities is the way to go for airports the world over.

“When you have an economic downturn, aviation responds very quickly and dramatically. Other businesses, such as retail, tend to react less negatively so it is a good idea for airports to diversify,” he told swissinfo.ch.

“Zurich airport may have learned the lessons of 2001 when Swissair [Switzerland’s national carrier and the precursor to Swiss International Air Lines] went bankrupt. The airport lost a lot of flight movements and revenues overnight.”

Matthew Allen, swissinfo.ch

Zurich airport in numbers

Zurich airport was used by 21.9 million passengers in 2009, a drop of 0.8% from 2008.

The number of take-offs and landings (movements) was recorded at 262,121, a downward trend of 4.7% on 2008.

However, January saw an increase in both numbers of passengers (1.6 million, up 6.5%) and movements (20,736, up 7%) from January 2008. Freight was also down 11% to 344,000 tons in 2009.

Full financial figures have yet to be released for 2009, but the half-year results showed a 41% decline in profits to SFr47.2 million. This was put down to a decline in passenger numbers and increased expenses, particularly for noise pollution reduction measures.

Revenues fell for both aviation sources (SFr238.6 million, down 8.3%) and non-aviation activities (SFr157.1 million, down 4.4%). Passengers were also spending less at the airport – on average SFr43.20 compared with SFr44.07 in 2008.

The airport is expected to see the arrival of the first commercial Airbus A380 flights next month. An Airbus landed on Zurich tarmac in January to test the airport’s capability for handling the massive aircraft.

Switzerland’s air transport authorities are expected to grant a licence for the Airbus to use Zurich by March 28 at the latest. Singapore Airlines would become the first carrier to touch down with the A380 if permission is granted.

The company that runs the airport, Unique, will change its name to Zurich Airport from mid-April this year.

Zurich was voted Europe’s leading airport in 2009 for the sixth year in a row by London-based World Travel Awards organisation. Zurich was praised for its user-friendliness and its general high-quality standards.