Virtually every KLM flight begins or ends at Schiphol.
Last week, the operator of Amsterdam’s Schiphol Airport announced airport charges will increase by a total of 37% over the next three years. The airport estimated that airlines would, on average, pay the airport operator around €15 more per departing local passenger than they do today. The airport cited high inflation and interest rates, and the need to invest further in facilities for both passengers and workers at the airport.
The response from KLM, the flag carrier of The Netherlands and by far the airport’s largest tenant, was swift, with CEO Marjan Rintel making a statement, calling the updated charges “unreasonable and unwise.”
“Schiphol shifts additional costs of setbacks and budget overruns largely to the traveler. More expensive tickets are inevitable if you increase airport charges so drastically. Unreasonable, because Schiphol is placing the costs of all setbacks and Covid-19 entirely on the airlines. Unwise, because in doing so, the airport undermines its competitive position as an international hub. This poses risks for the hub function, the connectivity of the Netherlands, and our economy.”
Virtually every KLM flight begins or ends at Schiphol, meaning the impact on KLM is outsized, although the airline has concentrated operations at the airport throughout its 105-year history, and this is hardly a new revelation.
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Airport charges are fees that airports levy on airlines for using their facilities. Airlines are charged landing fees, facility fees, and rent for terminal space and other administrative spaces and buildings. The fees, in turn, fund the operation and upkeep of the airport.
KLM also said in a statement that it “agrees with Schiphol that improving the airport and better service for travelers are urgently needed. The state of maintenance of buildings and workplaces does not meet the needs of travelers and employees at Schiphol,” but does not elaborate on how the airport might otherwise fund these initiatives absent a significant fee increase.
The airport’s operator, Royal Schiphol Group, which is majority owned by the Dutch State and the City of Amsterdam, says it has already taken a €100 million charge to help reduce the amount of the fee increase charged to airlines, and further points out it’s not allowed to make a profit on airport charges—monies collected must be spent on running or improving the airport. KLM’s corporate parent Air France-KLM is minority-owned by the Dutch State, which holds 9.1% of the shares.
Schiphol Airport made headlines in 2022 for labor shortages in the post-pandemic return of flight activity that caused passengers to wait hours to get through security checkpoints, only to miss their flights. The airport then asked all airlines, including KLM, to reduce flight activity to help it cope. KLM estimated the airport’s woes that year cost it €100M in damages and did lasting damage to the carrier’s reputation.
KLM’s claim that the increased airport charges could raise fares may not pan out, however. Air tickets sold in the Netherlands include Passenger Service Charge and Security Service Charge fees imposed by the government that aren’t specific to Schiphol Airport. Those fees aren’t changing. The airport charges levied by the airport air charged to the airline, which it considers an operating expense to be covered by fare revenue.
Operating expenses don’t typically dictate how much an airline charges for a ticket—passenger demand does—but they can drive airlines to make other changes. Two flights on smaller aircraft may not be profitable at higher departure costs, so airlines can preserve profitability by sending a larger aircraft and reducing the number of flight options. Other flights that operate daily could no longer be profitable each day, driving airlines to cut the least profitable days from the schedule, leaving a route served only a few times a week instead of every day.
Reducing flights to preserve profitability, however, could compromise KLM’s market position against competitors who operate their own hubs at airports with lower operating costs. KLM pointed to airport charges at Paris Charles de Gaulle, a major hub for sister carrier Air France, or Copenhagen International Airport, a major hub for SkyTeam partner SAS, as having lower airport charges than Schiphol, and smaller annual increases.
Large international airports typically derive revenues for improvements and operation from a mix of airport charges (paid by airlines) and public funds (paid by local taxpayers), because airports benefit not only airline passengers but also broader economies and commercial spheres, to substantial public benefit.
If fares substantially increase at Schiphol, there are few readily available alternatives for passengers traveling on intercontinental flights to or from the city. The closest airport operating intercontinental flights is Brussels Airport, a two-hour train ride from Amsterdam.
Schiphol is the second busiest airport in the European Union, behind Paris Charles de Gaulle Airport, handling 61 million passengers in 2023.
