To achieve our mission of Connecting the Netherlands, we must secure the position of the Mainport. In the process, we must factor in future developments, whether or not they can be predicted. The core principle of Schiphol Group's strategy is increasing connectivity by investing in capacity and quality and offering competitive rates. Our goal is to strengthen the Mainport network. We must ensure the conditions are in place for airlines to optimise their operational efficiency at our airports. This is reflected in our 2016-2020 targets, the milestones we wish to reach during that period. More than before, we intend to use the unique strengths of the group as a whole to achieve our targets. To strengthen the Mainport, we always focus on making the necessary investments in capacity and quality and deliberately aim to control costs in all of our processes, which translates into competitive rates. At the same time, we ask the government to pursue a comprehensive policy which will strengthen the Mainport without unnecessary rules and/or costs. The government can also facilitate fair competition and, where necessary, invest in and collaborate closely with the sector at both the national and the European level. Mainport Schiphol Concurrerende regio Aantrekkelijke regio voor wonen, werken en toerisme Concurrerende luchthaven Attractive & efficient hub airport Sterk netwerk KLM/SkyTeam Driver voor Mainport Schiphol Internationaal businessklimaat Nederland als concurrerende vestigingsplaats 38
Strategic themes Our core strategy is embodied by the following five themes: Top Connectivity, Excellent Visit Value, Competitive Marketplace, Development of the Group and Sustainable & Safe Performance. Top Connectivity The best connections Mainport Schiphol's strength is its network of destinations served by the airlines. The majority of these are served by our home carrier KLM and its partners. It is this intricate network that makes Schiphol one of Europe's key hubs. We strive to expand the network, not only in Europe but intercontinentally as well, particularly by adding destinations that support the Mainport. To continue Mainport development, existing capacity will have to be used even more efficiently and new capacity will need to be created. In 2018, Lelystad Airport will begin commercial operations. We want to entice airlines to offer non-mainport-related flights from Lelystad Airport to make way for Mainport traffic at Schiphol, where we are preparing to build a Pier A and a new terminal. The new capacity will be configured in a flexible manner so that it can be adapted depending on the nature of the air transport. We must also ensure the airport can be easily accessed by road and rail. Together with sector parties such as NS and ProRail, we are developing solutions to address the current problems as well as a sustainable solution to meet the long-term capacity demand. The joint long-term plan includes the construction of a new bus and railway station and modification of the drop-off roads. At the same time, we are expanding existing parking capacity to meet the growing need for good parking facilities. Along with our stakeholders, we will work to strengthen and develop the Mainport. Excellent Visit Value An attractive airport We aspire to uphold Schiphol's position as Europe's Preferred Airport: the first choice of passengers, airlines and logistic services providers. Top quality is our aim: in our processes, facilities and commercial offering. Even more explicitly than before, our policies will be guided by the interests of clients and passengers. Using new digital technologies, wherever possible, and offering users a digitally enabled airport will play an essential part in this. As for airport operations, our focus will lie on increasing efficiency and process reliability. We offer airlines service, speed, flexibility, safety and reliability. For passengers, the focus will be on offering a pleasant and safe experience ('seamless and secure'). Schiphol wants to be an airport that surpasses passengers' expectations. The passengers' experience is to a large extent determined by the range of commercial products and services offered. Schiphol's efficient, innovative logistics chain makes it ideal for cargo. We search for and deploy innovative solutions leading to higher, more affordable quality and lower costs for ground handlers and forwarders. We continue to strive to offer an attractive product at a competitive price and seek to achieve quality and cost levels that compare favourably to our rival hubs. Competitive Marketplace A prime location We continue strengthening the Mainport through further development of the Schiphol marketplace, as a prime location for work and leisure. A key reason why international businesses establish themselves here is the proximity to the airport. We are always upgrading the working environment and offer flexible, innovative lease concepts. We call this AirportCity 3.0. Schiphol also supports the region's logistics sector and investigates opportunities for new business. Development of the Group A strong group Even more than before, we will act as a group. Our ability to do so will depend to an important degree on improving the Schiphol Group organisation. We are implementing the HPO ('high performance organisation') culture and coordinate major projects more comprehensively than before. We will also make more efficient use of the synergy within our own airport network: we want to make the most of the interplay between Schiphol airport, the regional airports and the group's international activities. We are seeking to expand our international activities, particularly with airports with strategic relevance for the Mainport. Sustainable & Safe Performance Sustainability and safety Sustainability and safety are the most important preconditions for everything we do they play a permanent, integral part in our decisions. Maintaining a healthy and safe working environment for staff and safe surroundings for passengers and nearby residents is always a top priority. To us, sustainability means we maintain our focus on long-term developments and aim to create lasting value. We could not succeed in this without dialogue with our stakeholders. We seek a careful balance between the social, environmental, commercial and financial interests of people, planet and profit. We aim to realise a reasonable return: our financial policy is solid and forward-looking. In 2016, we will continue developing our ambition to become the world's most sustainable airport, increasingly measuring value creation against the non-financial dimensions. 39
Cohesion With our renewed strategy, we are able to respond to new developments in the aviation industry, society and the world at large. It enables us to steer the best course and confront a variety of challenges and risks. The material aspects highlight the interests of both our stakeholders and Schiphol Group and indicate where we can make a difference and thereby have an impact. We feel that it is important to establish a clear link between material aspects and our strategy. At the same time, we want to mitigate the associated risks by actively managing them. An overview clarifying the relationship between the key risks facing Schiphol Group, its strategic themes and material aspects is given below. Schiphol Group faces strategic, operational, financial and compliance risks. We have identified the key risks which could stand in the way of achieving our mission and we have taken the appropriate measures to mitigate these risks. Risk management is an integral part of our business operations. The key risks are as follows: A change in demand, which could lead to either a shortage or excess capacity, directly affecting Mainport growth, the network of destinations, retail and catering outlet sales and real estate occupancy. Competition is also an important factor affecting the growth of the airports and development of commercial activities at and around airports. Real estate market development: the focus will remain on developing Schiphol as a prime location. However, supply elsewhere and shifts in demand could have a serious impact. Political context: comprehensive government policy and effective economic regulation can help strengthen the Mainport. IT infrastructure and information security: increasing dependence on IT systems makes their sustained availability and reliability crucial. Major projects: the progress, budget and quality must be monitored to ensure the required capacity is available as needed and investments achieve the desired effect. International enterprise: presents opportunities for risk diversification, but also poses other, often unknown, risks which may not be desirable. Operational risks: safety, business continuity and dependence on third parties must be properly managed in order to reliably facilitate growth. Financial risks: market, liquidity and counterparty risks related mainly to funding are mitigated to ensure long-term financial health. Compliance risks: failure to comply with legislation and regulations and other integrity violations could lead to reputational damage and loss of support. The control measures are covered in more detail in the section on 'Risk management'. 40
Cohesion Material aspect Strategic theme Risks Network of destinations Accessibility Top Connectivity A change in demand Major projects International enterprise Capacity Customer appreciation Excellent Visit Value Competition IT infrastructure & information security Major projects Operational risks Regional significance Competitive Marketplace A change in demand Competition Real estate market development Employment practices Financial solidity Development of the Group Major projects International enterprise Financial risks Compliance risks Safety Noise CO 2 emissions Circular economy Air quality Water Supply chain responsibility Sustainable & Safe Performance Operational risks Financial risks Compliance risks 41
Targets Every year our long-term strategy is translated into a four-year tactical plan, comprising the budget for the coming year and three forecast years. The tactical plan sets out in concrete terms how we plan to achieve all of Schiphol Group's strategic milestones. An important condition of the plan is that it meets the requirements of sound financial policy. The company must maintain its creditworthiness (S&P rating of A+) and be robust enough to weather any financial setbacks. Schiphol Group also aims to meet or exceed the return required by the Dutch government of 6.7% (return on equity of Schiphol Group). The tactical plan also results in a management agenda which sets out concrete actions and targets for management for the year to come. 2016 Management Agenda In addition to maintaining network quality and connectivity, increasing customer satisfaction and ensuring adequate capacity are critical aspects of the management agenda. We face tremendous infrastructure challenges. Commercial turnover must also be further optimised to respond effectively to the shortage in retail space in the coming years and to shifts in consumer behaviour. We also want to involve our stakeholders more intensively in devising our plans, and ensure a comprehensive government approach and more political support. Meanwhile, we want to translate our aspiration to become the most sustainable airport into a plan to realise that ambition. The further development of our organisation should ensure solid business management particularly with regard to large projects and management of airport infrastructure. 2016 Management Agenda Top Connectivity Excellent Visit Value Competitive Marketplace Development of the Group Sustainable & Safe Performance Maintaining network quality and connectivity High levels of quality and customer satisfaction at the airports at competitive cost levels Secure capacity for 500,000 air transport movements at Schiphol and sufficient capacity at the regional airports, including the development of Lelystad Airport Make provisions for the necessary operating capacity and quality prior to the completion of the entire Area A Implement the Master Plan such that operational performance is kept up to par and infrastructure challenges are addressed Optimise commercial turnover and use scarce square meterage wisely Improve coordination with stakeholders Apply the principles of people, planet and profit (Corporate Responsibility and financial solidity) Maintain a healthy, safe working environment Develop the organisation 42
Where will we be in 2020 Top Connectivity The network We will maintain the current network. Comfort We will have implemented Gate Process Innovation, with improvements to gate waiting comfort. Excellent Visit Value Automation Digital support for passengers, and opening of the retail omnichannel. Growth Agreements with our stakeholders will enable growth beyond five hundred thousand flight movements per year after 2020. International We will have expanded our international activities. High Performance Our continued efforts to improve our own organisation will be reflected in high scores on the High Performance Organisation (HPO) benchmark. Competitive Marketplace Lelystad Airport Lelystad Airport will be fully operational. Non-aviation We have secured our non-aviation income sources. Central Business District Activity in the Central Business District will have increased significantly to include a wider range of services, an attractive working environment and high occupancy rates. Development of the Group New pier and terminal The construction of the new pier and terminal will be on schedule, and in accordance with the set budgets. Security We will be a High Reliability Organisation with a pro-active security culture. Sustainability We will be acknowledged as a leading enterprise in the field of Corporate Responsibility. Sustainable & Safe Performance Lowest costs We will be the lowest-cost hub in Europe, and will have optimised our operational processes in collaboration with our business partners, enabling further cost reductions. Accessibility We will have prepared projects for improving Schiphol s landside accessibility, targeting the train station, access roads and parking capacity. 43