Retail at Schiphol Group, the operator of Amsterdam Airport Schiphol (AMS), has been negatively affected by a big fall in individual passenger spending in the first half.

 

The Dutch group – which also runs Eindhoven, Rotterdam and The Hague airports – saw concession revenue drop by -3.1% to €77m ($101.6m) in the period (see chart below) despite passenger numbers rising by +4% to 25.7m at AMS.

 

The €2m decline was caused by a drop in average retail spends from departing passengers in stores post-security at AMS. Average spending per passenger fell from €16.23 in the first half of 2013 to €14.79 in the first half of 2014, a -12% decline.

 

“Spending is under pressure in almost all retail categories, due to refurbishment work being carried out and considerable congestion during peak times,” says Schiphol Group in a statement.

 

 

External factors include adverse exchange rate effects and increased price sensitivity as a result of a more online offerings and price comparison adds the group.

 

The total retail sales revenue of subsidiary Schiphol Airport Retail also fell by -7% to €38m in the first half. There was some comfort from parking where revenue increased by 5.4% to €51m as a result of improved utilisation and yield management.

 

Total revenue from rents and leases increased by +15.7% to €92m mainly the result of the acquisition of the remaining interest in AREB. Property occupancy rates were in line with the preceding year at 87.1% as at June 2014.

 

€5.4M FROM ASDC SALE

In its interim statement Schiphol Group also revealed that it picked up €5.4m from the sale of its 40% interest in ASDC (Arlanda Schiphol Development Company). Sweden’s state-owned airport operator, Swedavia, now owns 100% of the retail business at its most important gateway.

 

Despite the negative retail result, overall Schiphol Group generated strong growth of +9.7% to €712m in the first half thanks to its strong rents and leases gains and airport charges – its most important revenue stream by far. This produced a +6% hike in sales to €405m, primarily the result of an increase in traffic and transport in combination with a modest increase in charges according to the group.

 

AIRPORT CHARGES TO COME DOWN

Currently AMS is investing around €1.5m each day in its services and facilities. The first projects under its Master Plan have become operational with a new state-of-the-art security filter recently opened in Departure Hall 1.

 

According to Jos Nijhuis (left), Schiphol Group President & CEO, work on implementing central security is on schedule and he says he expects to propose a reduction in airport charges as from 1 April 2015 in the order of -5%.

 

OUTLOOK

Barring unforeseen circumstances, Schiphol Group says it expects growth in passenger numbers in 2014 and “the result for 2014 to exceed earlier expectations”. On 14 February the group said it expected AMS to see passenger growth of +2% to +3% and a net result for 2014 in the same order of magnitude as in 2013.