Aéroports de Paris - 2019 Universal registration document
BUSINESS OVERVIEW 05
DESCRIPTION OF ACTIVITIES BY SEGMENT
Preparation of the 2021-2025 Economic Regulation Agreement Having committed to an in-depth consultation in 2018 with air carriers and listened to their expectations and priorities, during March 2019, Aéroports de Paris presented to them and to their member representatives of the Economic Consultative Commission (Cocoéco), the details of its proposal on the main focuses of the next Economic Regulation Agreement (ERA) for which the five related tariff periods cover the period from 1 April 2021 to 31 March 2026. On 2 April, Aéroports de Paris published the public consultation document on the Economic Regulation Agreement for the 2021-2025 period, available at www.aeroportsdeparis.fr, which presents the detailed proposal for the 2021-2025 ERA. Based on an assumption of an average increase of 2.6% in passenger traffic per year, Aéroports de Paris’ proposal for the 2021-2025 ERA focuses on: ◆ an ambitious investment programme for the regulated scope of around €6 billion, meeting short- and medium-term needs, with priority given to accessibility and fluidity, as well as long-term needs thanks to the start of work on the future terminal 4 at Paris–Charles de Gaulle; ◆ traffic growth in all areas and, in particular, international, reflecting the attractiveness of the Paris platforms in terms of infrastructures, quality of service and tariff positioning; ◆ reinforced competitiveness thanks to a policy of controlling current expenses 1 in the regulated scope (growth limited to +2.4%, including inflation, on average per year, despite the numerous infrastructure deliveries), ensuring a moderate pricing strategy with a proposed annual tariff change limited to the CPI 2 +1.35%; and ◆ an objective of convergence for the return on capital employed for the regulated scope to the level of the WACC 3 assessed at the limits of the regulation agreement (estimated at 5.6%) on average over the duration of the agreement. In order to continue the discussions with air carriers on this Economic Regulation Agreement proposal, Aéroports de Paris, on its own initiative, heldmeetings with the economic advisory committee on several occasions in April, May and June 2019. Other meetings led by IATA were also held. In accordance with the regulatory procedure, Aéroports de Paris, with the publication of the public consultation document, entered a period of public consultation on its proposal for the 2021-2025 Economic Regulation Agreement. This public consultation took place between 2 April and 17 May 2019. As part of the preparation of the draft agreement, The Transport Regulatory Authority (ART) published on 27 February 2020 a reasoned opinion on the weighted average cost of capital 4 . This opinion uses a WACC range for the regulated scope of between 2.0% and 4.1%, below the WACC assumption of 5.6% presented in the ERA public consultation document published on 2 April 2019. Aéroports de Paris does not agree with either themethod, the assumptions or the conclusions reached by the ART in its assessment of the WACC, since the model and assumptions used by Aéroports de Paris in the public consultation document are based on comparable available financial and market data, as required by the regulations. This is a simple opinion, and the ART itself has stated that it “is merely an opinion of the Authority formulated on the basis of the data existing at this stage of the procedure and which cannot prejudge the WACC
In addition, Aéroports de Paris decided to renew all the pricing discounts as well as the calculation processes and the 2018 allocation conditions for the incentive measures for traffic growth and better infrastructure use. The 2019 cap on each of the three incentive measures was set at €5.21 million by applying a 1.00% index to the 2018 cap. For the 2020 pricing period The basic cap rate corresponds to a 2.139% increase in the 2020 baseline tariffs (change in inflation between August 2018 and August 2019) with an uplift of 1.25 points, to which the adjustment factors are applied: ◆ traffic (TRAF factor): determined at -0.5%, the traffic generated being above the upper limit of the buffer zone of ERA’s reference traffic; ◆ quality of service (QDS factor): corresponding to a +0.085% bonus; ◆ investments (INV1 factor) determined at -0.033%, related to the progress of the core and shell of the nodal building of the terminal 1 satellite connection being insufficient to launch the technical and sub-trade work packages. The change in operating expenses (OPEX) and the second investment factor (INV2) did not result in adjustments since these elements complied with the levels required by the Economic Regulation Agreement. The maximum change in 2020 tariffs is therefore +1.681% compared to the 2019 baseline tariffs, i.e. +4.50% compared with the 2019 effective tariffs. Aéroports de Paris submitted the following average annual fee changes for an opinion from the Consultative Economic Commissions: ◆ 1.595% at Paris-Charles de Gaulle airports and Paris-Orly; ◆ 2.02% at Paris-Le Bourget airport. For the 2020 pricing period, Aéroports de Paris retained a uniform change in percentage of passenger, landing and parking fees for Paris-Charles de Gaulle and Paris-Orly airports. For Paris-Le Bourget airport, Aéroports de Paris proposed a 1.681% increase in the landing fee and a 20% increase in the parking fee. It had also submitted the following to the Paris-Charles de Gaulle and Paris-Orly economic advisory committee: ◆ renewal, under the same terms, of the price discount on the passenger fee for the portion based on connecting passengers and of the discount on the parking fee for parking next to the terminal for less than 45 minutes. The 2020 cap for each of these two measures was set at €5.29 million by applying indexing of 1.595% to the 2019 cap; ◆ a reduction in the payment cap of the discount on the passenger fee for the portion based on origin/destination passengers. A €2 million reduction was proposed compared with what the cap would have been if the discount had been renewed under the same terms as previous years, i.e. €3.29 million. By decision no. 2020-001 of 9 January 2020, the ART approved the airport fees applicable to Paris-Charles de Gaulle, Paris-Orly and Paris- Le Bourget airports as of 1 April 2020 subject to a change in the cap on the price discount on the passenger fee for the portion based on origin/ destination passengers from €3.29 million to €5.29 million. The cap on the discount was raised to €5.29 million to comply with the above ART decision.
1 Regulated internal and external expenses, excluding provisions for amortisation, depreciation and taxes. 2 Consumer price index. 3 Weighted Average Cost of Capital. 4 Pursuant to Article 16 of Decree No. 2019-1016 of 3 October 2019 relating to airport fees and amending the French Civil Aviation Code.
62
AÉROPORTS DE PARIS ® UNIVERSAL REGISTRATION DOCUMENT 2019
Made with FlippingBook Publishing Software