Message from the CEO
The year 2014 was an eventful year for Schiphol Group. The event that made the deepest impression was the crash of flight MH17 in Ukraine, on its way from Schiphol to Kuala Lumpur, in which all 298 passengers and crew members were killed. Numerous families and relatives suffered an unbearable loss. A large number of employees at Amsterdam Airport Schiphol were directly or indirectly affected by the consequences of the tragedy, either because they played a role in handling the flight or provided assistance to next-of-kin, or because they tended the impressive sea of flowers placed in front of Departure Hall 3 in tribute to those who had lost their lives. A great deal of good work was carried out under significant emotional stress. I am deeply grateful to everyone for their efforts.
The year was also marked by positive events, such as the Nuclear Security Summit in March. Preparations for the event were lengthy and intensive, not least on account of the considerable number of public and private parties involved and the significant interests at stake. Operationally everything went smoothly and that certainly merits a compliment to all.
Even though Schiphol Group recorded growth in revenues and in passenger and cargo volumes in 2014, vigilance is nonetheless called for. The aviation sector is experiencing uncertain times, characterised by persistent geopolitical concerns in the Middle East and Ukraine, as well as in the West stemming from the threat of terrorism. The pace of economic recovery is sluggish, especially in Europe. And if we look at the aviation sector, the rapid inroads being made by the airports in the Gulf Region and in Istanbul stand out in particular. But Schiphol's competitors in Western Europe – London Heathrow and the airports in Munich and Frankfurt – are also making substantial investments in capacity and quality. Competition is clearly increasing. Times are equally challenging for the European network carriers. Our largest business partner, KLM, is facing considerable challenges. Other airlines are also feeling the pressure; low-cost airlines are capturing market share, as are network carriers from the Gulf Region and Turkey. Although the global passenger market is expected to grow by 3-5% annually in the next 15 years, the degree to which Amsterdam Airport Schiphol will be able to benefit from this development remains to be seen. Passenger flows are changing and shifting, and consequently the hubs in Western Europe – including Schiphol – will become less self-evident options.
How should we respond to these developments? How can we guarantee our success in the long term? The answer is to remain Europe’s Preferred Airport. This is the focus of all our activities, each and every day. Take, for example, the large-scale airport renovation programme we commenced in 2013 under the heading 'Schiphol constructs, converts and connects' with the aim of increasing capacity and enhancing quality. In 2015 the first results of our efforts will emerge with the completion of our innovative central security concept, the stylish Departure Lounge 2 and the new Hilton Hotel. The presentation of the Lelystad Airport Business Plan in April 2014 should be viewed in the same vein. The call for tenders has meanwhile been issued. The transfer of flights that are not vital to Schiphol's Mainport function to Lelystad Airport serves to free up capacity required for Mainport-related traffic so as to maintain Schiphol's competitiveness. As not everyone agrees on the benefits, necessity and timing of the development of Lelystad Airport, we will continue to engage in dialogue on this issue with all stakeholders concerned. The reduction of airport charges by approximately 7% with effect from 1 April 2015 at the Schiphol location similarly aims to boost the competitive position of both the airlines and the airport. The interests of the Mainport and all our partners who operate within it are central to the investment choices that we make.
Schiphol connects the Netherlands. Schiphol's connections facilitate international trade and enhance the appeal of the Netherlands as a business location for foreign companies. Connections augment prosperity; the added value of the Schiphol hub for the Netherlands is in the region of 30 billion euros. Yet connectivity is not merely a matter of euros, economic growth and profit. Connectivity similarly embraces a social component. Schiphol enables people to meet and to create social networks – not only from distant corners of the globe but also from close by. Connectivity equally means respecting people, the environment and the local community. Amsterdam Airport Schiphol must remain a hub airport if it is to maintain its connective power. Without a hub function for Schiphol, our domestic market is simply too small to be able to maintain a position of relevance on the global stage.
Two aspects are fundamental to achieving and facilitating sustainable growth. First, Mainport Schiphol must distinguish itself from its competitors by offering direct connections to the regions where passenger growth is concentrated. This means that there must be room to grow. Lower growth will inevitably encroach on our unique competitive position and undermine our strength as a driver of employment. Second, Schiphol must remain an attractive choice for both passengers and cargo on the basis of passenger comfort, sufficient operating capacity, a competitive cost level and efficient handling. Taking all of these aspects into consideration, we must ensure that we retain the support of local residents and all other relevant stakeholders. We will continue to engage in dialogue with our neighbours and stand by our agreements. Should those agreements prove unworkable, however, we hope that we can jointly seek realistic alternatives beneficial to all parties, based on flexibility and mutual understanding.
The benefits and drawbacks of the airport are not always evenly distributed. Economic growth and employment benefit the whole of the Netherlands whereas only local residents are affected by noise disturbance. Society is attaching greater importance to sustainability and the social contribution made by organisations. As a bulk consumer of fossil fuels, the aviation sector is regarded as a polluter. These aspects are all dilemmas that require effort, transparency and continuous dialogue. Schiphol takes that task seriously. We believe that it is our responsibility to not only create value by generating economic growth and employment, but also to contribute to the well-being of individuals by connecting people and respecting our environment. Mainport Schiphol is both an economic and social unity.
To cement that unity further and ensure that it is future-proof, we have already made substantial investments. Yet we believe that it is crucial to go the extra mile. Taking all the developments into the equation, growth is anything but self-evident. We will more than ever need to fight for our share of the market, and will therefore intensify our efforts in a number of areas. First and foremost, we aim to further enhance the efficiency of operational and other processes. On the one hand, we plan to tighten control of the costs of our own processes. On the other hand, we will also work with our partners to further improve supply chain efficiency. Heightened efficiency will greatly benefit all parties at Schiphol, particularly our home carrier. We expect that this will further increase our competitive strength.
Finally, we aim to enhance the accessibility of Schiphol. In 2015, completion of the Schiphol-North High-Quality Public Transport Link (HOV Noord) will mark a step in the right direction. This is a bus junction where passengers can transfer comfortably and quickly onto bus services to Schiphol Plaza, Haarlem, Amsterdam, Amstelveen and Amsterdam-Zuidoost. However, we are also looking further ahead. Our desire to have the North-South metro line extended to Schiphol may be a topic with a long-term perspective, but now is the right time to undertake efforts in that direction. And that is exactly what we plan to do.
Schiphol is nearing its centenary. We take pride in this achievement. At the same we feel it is our duty to ensure that Schiphol remains a significant economic and social factor in connecting the Netherlands with the rest of the world for the next 100 years. The aviation industry must continue to prosper in the Netherlands. We will dedicate efforts to the steadfast pursuit of this aim.
President & CEO of Schiphol Group