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New charges agreement strengthens CPH’s position as Scandinavian hub

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14-Sep-2009 Copenhagen Airports has signed a long-term agreement on the charges paid by airlines to use the airport.

The agreement strengthens CPH’s position as a Scandinavian hub. The majority of the approximately 60 airlines using CPH have approved the agreement, under which the structure of charges will be changed as of 01-Oct-2009 and the charges subsequently locked for the following 18 months. Moreover, CPH undertakes to invest more than DKK 2.6 billion in infrastructure expansion and improvements over the contract period.

“It is absolutely essential to the airport, to the Capital Region and to Denmark in general that CPH is able to maintain and expand its position as a Scandinavian hub by remaining an attractive partner to airlines with many transfer passengers, including SAS. The new charges agreement, which will be in force for the coming five and a half years, provides for this.

With a changed price structure, a reduction of the take-off charge for the largest aircraft and locked charges for 18 months, the agreement will serve to consolidate CPH’s position as the region’s key hub in the coming years,” says Brian Petersen, CEO of Copenhagen Airports. This means that the agreement will strengthen one part of CPH’s strategy; to continually expand the hub and promote the development of intercontinental routes. The other part of the strategy, to ensure continual growth in the low-cost segment, will be provided for 2010 with the opening of the low-cost pier CPH Swift, where charges will be negotiated separately.

Charges lockedThe existing charges agreement is due to be renewed by the end of the year, and under the new agreement charges will be locked from October 2009 until April 2011 in order to help airlines as well as the airport to overcome the current crisis. For the remainder of the contract period, charges will be subject to annual increases equivalent to Statistic Denmark's consumer price index plus one per cent. This means that the airlines know the level of expenditure well into the future.

In addition, CPH undertakes to invest more than DKK 2.6 billion in the aeronautical part of the business, i.e. in the expansion and improvement of infrastructure. “Over the coming five years we will invest some DKK 500 million a year in baggage handling, jet bridges, gates and check-in facilities for the benefit of both airlines and passengers. These investments will serve to strengthen CPH in the mounting competition with other northern European airports,” explains Brian Petersen.

New price structureThe agreement includes a restructuring of the relationship between take-off and passenger charges. The take-off charge will generally be reduced by 25% and the passenger charge will be increased by 18.6%. Consequently, the airport charge will constitute a larger part of the price of tickets in future, but this will be set off by the reduction of the take-off charge paid by airlines.

As the higher passenger charge is offset by the lower take-off charge and the transfer discount, the new agreement will not affect CPH’s revenue. Environmentally friendly agreementA NOx-based emissions charge to be introduced as of 01-Apr-2010 is aimed at encouraging airlines to use more environmentally friendly aircraft. The details of the emissions charge have not yet been finalised.

The new charges agreement takes effect on 01-Oct-2009 and has been approved by CPH on one side and on the other by SAS, Cimber Sterling and IATA – together representing 86% of all traffic at Copenhagen Airport. “We are pleased to have reached an agreement with the majority of the airlines. This agreement accommodates the needs of an industry currently under pressure, and we believe it to be the best possible agreement in the circumstances,” says Brian Petersen.