28-Jul-2010 4:51 PM

Zurich continues strong performance in Europe

The Euro-zone economic recovery is looking increasingly fractured, but Zurich Airport continues to achieve solid traffic results.

The Swiss airport reports traffic in 1H2010 increased by approximately 3% year-on-year, despite the affect of a 15% traffic dive during Apr-2010 due to the effects of the volcanic eruption in Iceland. Shares in Zurich were up 3.3% yesterday, in leading other airports such as Venice (+1.3%), Copenhagen (+0.6%) and Vienna (-0.5%).

Scheduled traffic rose 4.5% with average load factors at the airport up 2.1% this year. The strongest increase in traffic has been from North American destinations, up 9.6% for the year to the end of Jun-2010. Asia Pacific traffic has also grown strongly, up 4.9%. Traffic to/from European destinations remains weak, up 2.1% in 1H2010 and just 0.9% in Jun-2010. Given that European traffic accounts for over 75% of all passengers at the airport, this weakness is a point of concern for the airport.

Revenue growth is stronger than passenger traffic. Total turnover increased to CHF232 million in 1H2010, up 5.4% year-on-year. Jun-2010 revenue was up 7.8%. Landside revenue growth (+6.9% year-to-date) continues to outstrip airside revenue (+4%), but the difference is not as marked as in previous years. Average revenue per passenger was up 2.3% in 1H2010, to CHF44.2.

Passenger traffic on low cost carriers is returning to the airport more strongly than from traditional carriers. LCCs have increased their market share at Zurich from 7.1% in 2006 to 10.4% in 1H2010. LCC traffic actually declined in 2009 (-0.4%) compared to a 0.4% increase in traffic from traditional carriers.

The airport is heavily involved in the Zurich 2010 project, restructuring the airport to implement the Schengen Agreement by providing the required passenger infrastructure. This will centralise security checks will enhance the quality and user-friendliness of the airport. Demolition work at Dock B started in Jul-2009, with the dock to be split into two handling levels for Schengen and non-Schengen passengers. The building work is scheduled for completion at the end of 2011.

Outside of Europe, Chinese airports continue to gain altitude. Guangzhou Baiyun and Hainan Meilan airports were up strongly, gaining 2.3% and 2.2% respectively. Beijing and Shanghai airports also reported share gains.

Selected airports daily share price movements (% change): 27-Jul-2010