2016 Responsibility report

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Responsibility at Finavia A part of society Safety Staff wellbeing Environmental responsibility GRI Regional airports unprofitable regardless of growth in domestic traffic. Finavia’s pricing among least expensive in Europe In a price comparison of European main airports, Helsinki Airport’s air traffic charges were the fourth least expensive among 23 main airports in 2016. In addition to low traffic charges, we support the expansion of air travel connections by offering reductions for new routes. By continuously increasing the efficiency of its operations, Finavia has managed to keep its prices at reasonable levels. The prices of Finavia’s services have decreased in the long term. The prices decreased by 11.7 per cent between 2004 and 2016, or one per cent each year. Airport charges remained at moderate levels Finavia applied uniform pricing at all its airports during 2016. Airport charges increased by 1.9 per cent from 2015. The increases were prompted by higher costs arising from the need to invest more in safety technology, as a result of official requirements. Despite changes made in the pricing structure, only about 90 per cent of the costs of airport services and air navigation services (excluding return on equity requirements) have been covered with income from those functions. However, we have successfully improved cost recovery through pricing changes and higher operational efficiency. The rest of the costs are mainly covered with income from the commercial services of Helsinki Airport. The aim of the European Commission is to standardise air traffic charges collected by airports with regard to domestic and international flights. As a result, changes were made to passenger charges on 1 January 2017, which increase the prices in domestic traffic and reduce the prices in international traffic. Passenger charges in domestic and international traffic will be balanced in 2017–2018 in accordance with the standardised pricing scheme. Finavia increased the 2017 prices by 1.2 per cent, i.e. by the estimated rate of inflation. Transfer traffic charges, 2016–2017 EUR 40 30 20 10 0 HEL AMS ARN VIE CPH MUC FRA CDG LHR PRM=assistance service charge TAX=government supervision fee Infra=infrastructure fee SEC=security charge PAX=passenger charge Please note that HEL does not charge for security for INTINT PAX originating from EU, Norway, US, Iceland, and Switzerland. Responsibility report 2016 18
Responsibility at Finavia A part of society Safety Staff wellbeing Environmental responsibility GRI Performance of network airports In 2016, tourism boosted domestic traffic, especially at airports in Lapland, which also increased the overall passenger volumes at network airports. In relation to the extent and service capacity of our network, the passenger volumes at many of the airports remain fairly low, and the network posted negative results. Airport operations are a highly capital-intensive business, and a significant share of the costs are fixed and determined by regulations. The share of personnel costs is considerable, and on average about 40 per cent. The financial results of individual airports are mainly affected by the following factors: • Passenger volumes • Structure of air traffic • Structure of customer base • Service hours of airports The profit level of some network airports has improved considerably in recent years as a result of higher operational efficiency and passenger volumes. Airport network loss is covered with the commercial revenues of Helsinki Airport. Finavia does not report the financial results of individual airports. Profitability of medium-sized airports The financial results of the medium-sized airports were substantially in the red. The formation of the financial result of a fairly large airport in 2016 is shown below as an example: The airport served several hundred thousand passengers. Despite the growth, the loss amounted to EUR 1.8 million (-1.7). Traffic revenues from services paid by airlines AIRPORT EUR 2.4 million Traffic Area Services EUR 1.8 million TOTAL REVENUES EUR 3.2 million Terminal Services EUR 0.6 million Revenues from services paid by passengers EUR 0.7 million Security Services EUR 0.5 million Air Navigation EUR 1.2 million TOTAL EXPENCES EUR 5.1 million Other revenues (e.g. rental income): EUR 0.2 million Others EUR 1.0 million Uniform pricing In Finland, the same service level-based charge is payable for the same service at all airports, irrespective of the profitability of individual airports. This is the network principle. Uniform pricing at different airports would not be possible without the network principle. According to EU regulations, each individual airport should be profitable, but the network principle allows loss-making airports to be supported using the commercial income of Helsinki Airport. Without the network principle and the subsidies from the income of Helsinki Airport, Finavia would have to substantially increase the price level of its network airports to make their operations economically viable. Due to the low traffic volumes, the possibilities for increasing commercial income elsewhere, other than at Helsinki Airport and the larger airports in the network, are limited. The decrease in domestic air traffic is likely to continue at several airports in the long term. This is caused by demographic structure changes and improved service level of other modes of transport. Finavia estimates that the need to internally subsidise the airport network, including investment expenditure, will increase to EUR 35–40 million by the end of the decade. THE LOSS COVERED WITH COMMERCIAL REVENUES FROM HELSINKI AIRPORT IN 2016 EUR -1.8 million Responsibility report 2016 19
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2016 Responsibility report

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