Zurich Airport's shares ticked down on Tuesday after the company and airline users settled on new airport charges that will come into force on Oct. 1, 2026 and run for a four-year period.
Under the agreement, total airport charges are set to fall by around 10% on average. Passenger-related fees will decline more steeply, with charges for departing local passengers reduced by approximately 13% to 30.40 Swiss francs and transfer passenger charges set at 14.00 francs. At the same time, landing fees will be increased, leaving the weighted average change in charges roughly -10%.
The regulator-approved allowed weighted average cost of capital (WACC) will be raised by 50 basis points to 5.5% for the review period. The charge framework and associated parameters are expected to remain in place for four years from October 2026.
Barclays analyst Andrew Lobbenberg characterised the settlement as "more challenging than expected," noting that tariffs are declining more than the market had priced in. He observed that consensus estimates had been anticipating a 7-8% step-down in tariffs, making the roughly 10% outcome worse than that consensus. "Today’s outcome is worse than market expectations on tariffs," Lobbenberg wrote, and while the WACC has been increased he added that "it is not generous."
Lobbenberg also highlighted mechanics within the regulatory framework designed to address deviations in performance. If passenger traffic or operating costs undershoot forecasts such that returns fall below the allowed WACC during the review period, Zurich Airport's roll-over mechanism should permit a value adjustment at the next review in about four years. Conversely, any over-earning in the current review window would be returned to airline users in the subsequent period.
The analyst flagged capital expenditure as another factor for investors to watch. Capex is scheduled to rise around the turn of the decade as construction on Dock A reaches its peak, but the four-year review window limits the extent to which higher investment can be reflected in the regulated base during this period.
Barclays has recently downgraded the stock from Overweight to Equal Weight and reduced its price target. Despite the downgrade, Lobbenberg said he still regards the asset and management positively, pointing to decent traffic trends and improving retail momentum, while cautioning that valuation is not cheap relative to peers and that confidence in key catalysts has weakened.
Impacted sectors:
- Aviation and airports - direct effect on airport charges and operator revenues.
- Airlines - changes in charges influence costs and contract terms.
- Capital markets - investor valuation and analyst ratings affected by regulatory outcomes and capex timing.