The paper examines the operations of Flughafen Zurich AG (Zurich Airport), which is one of the leading facilities in Switzerland in terms of capacity and passengers served. The assignment is a response to a case study about Zurich Airport, and it covers various relating to the company’s operations. It explains some of the key features of the company and highlights some of the issues that emerge following its relationship with key stakeholders. The task also identifies some of the partnerships that businesses form and identify Zurich Airport as being in a general partnership. The second part of the paper provides valuable information concerning the calls to reduce or waive rent at a time when the COVID-19 was taking a toll on many businesses. The section refers to court rulings related to the problem. The case study shows the need for businesses to have effective structures in place to address constraints that could affect organizational operations.
Main Characteristics of the Company
Flughafen Zurich AG is one of the leading and most influential airports in Switzerland. The Swiss Confederation serves as the concession or operating license under which Zurich Airport operates. The concession is in accordance with the commitment to offer sound and safe operations at the facility. The firm is impacted significantly by its co-owner, Canton of Zurich that has significant impact over the group’s operations, including the capacity to veto alterations to the runway system and operating directives, two factors that both impact on the level of noise (Case Study 2). The group has continued to aim higher despite some of the issues that have threatened its operations. The group continues to emphasize on particular areas that would make it appealing to buyers, including offering the appropriate airline and passenger infrastructure, and venturing into diverse forms of generating revenue, including through real estate users and catering space (Case Study 2). Renting out real estate to brand or duty-free retailers, and also to service and service providers, has over the recent past become an imperative origin of revenue for the company.
Zurich Airport performs its activities in accordance with a wide range of legal structures that define how other carriers in the region also operate. The creation and functioning of Zurich Airport adheres to a broad range of regulations that take effect at the local, national, regional, and international levels. For instance, the group adheres to the provisions by the International Civil Aviation Organization (ICAO) as well as that of the European Union that provide key guidelines for airlines (Case Study 11). Other legal structures that define how Zurich Airport functions, include the Federal Republic of Germany, Swiss Confederation, and Canton of Zurich among other key groups. Another critical factor to mention about the airport is that functioning within the area of public transport, the group must get an operating concession from the state (Case Study 11). It must also abide by legal provisions such as the International Civil Aviation Organization (ICAO) and the Federal Aviation Act that provide key guidelines regarding how operators in this field ought to perform their duties.
Areas of Tension
Nonetheless, it is imperative to address the areas of tension that impact significantly on the company’s operations. The group’s association with key stakeholders serves as a source of tension that the airport’s management need to take seriously to save the group from experiencing further harm and depreciation. The case study informs that in any firm building unwavering externalities, working closely with stakeholders, especially those forming part of the wider public, from non-governmental organizations to neighboring firms, is of paramount significance (Case Study 10). This is particularly true for an airline, which forms diversity and externalities, from environmental aspects such as noise to economic factors such as jobs. However, even as the group pays considerable attention to nurturing its relationship with key stakeholders, it is imperative to identify the tensions that emerge in its association with partners and all groups that impact on its operations. For example, differences in ideologies, interests, and views has resulted in significant tensions that emanate from the diverse groups of stakeholders, including the board of directors, the management, shareholders, principal agents, and outside stakeholders. Each of these groups present their views on how the company should handle various issues including economic threats and consumer demands. Thus, the management must be careful to make the appropriate decisions and to avoid creating further confusion due to the contradicting views. Such conflicting ideologies are likely to occur in any firm that works together with stakeholders of diverse nature, and the success would depend on how well or effective a team’s leadership steps in to calm the tension and achieve balance. Nonetheless, failing to act could present more threat and the group may fail to realize its short and long-term objectives.
Firms consider partnerships to be a vital aspect for promoting business operations and would embrace measures that would encourage how they partner with like-minded groups and affiliates. Tsutsumi writes that forming partnerships has a wide range of benefits, encompassing increased likelihood for addressing the gap between expertise and knowledge, as well as improve the possibilities of generating more cash and exploring more business opportunities. Moreover, organizations increasingly form partnerships with like-minded groups and individuals with the purpose of sharing liabilities, improving reach to knowledge, and improving decision-making capabilities. Hence it is the reason why Zurich Airport promotes partnerships. The company pays considerable attention to this area at a time that it focuses on advancing its global reach and reaching as many international hubs as possible. For Zurich, the partnership takes the form of a general partnership (GP) where partners generally agree to come together and perform their operations (Onojaefe and Leaning 730). Zurich Airport in this case partners with Canton of Zurich, which publicly co-owns the firm. The approach allows the company’s management to share many tasks and ideas that promote organizational performance.
However, a business can embrace other forms of partnerships depending on what they find to be appropriate. For example, a business may choose to form a limited partnership, which is formed when two or more groups form a business, but the partners contribute towards the organizational affairs based on their level of investment (Johri and Kumar 2). Alternatively, a firm may choose to enter into a cooperation, where different groups meet voluntarily with the motive of achieving cultural, social, and economic aspirations (Johri and Kumar 2). Furthermore, an institution may choose to serve as a sole proprietorship, which is a form of an unincorporated firm with only a single owner who remits personal tax on generated profits. Other forms of partnerships, include simple partnership, partnership limited by shares, and limited liability company (LCC), which entails forming a contract between two or more parties, a hybrid relationship between partnership and a limited liability firm, and a business based on the directives of a state statute, respectively (Johri and Kumar 3). All these forms impact on management and operations differently, which calls for considerable attention before settling on any particular approach.
The emergence of COVID-19 in 2020 came as a threat for many firms that had no option but to find alternative ways for surviving the harsh times; otherwise an organization could easily close, especially if its operations fall under the airline or aviation sectors. In Switzerland, the Federal Council directed on March 16, 2020 that many businesses should halt their operations. Some of the worst affected firms included but not limited to bars, gyms, restaurants, airlines, and barbershops and hairdressing salons (Eversheds Sutherland). Hence, this section provides how Zurich Airport responded to the crisis, while paying considerable attention to the effects of alleviating the issue of rent for its renters who could not be able to remit the needed fee due to the reduced purchases during this period.
Issue of Waiving of Reducing Rent
As directed by the Council that many businesses should cease their operations for the time being, many firms in Switzerland had to cease their functions and the measures were relaxed progressively. So far, all businesses can function but while adhering to particular health guidelines. Nevertheless, it is difficult to conclude that in the course of the health crisis, a restriction or closure of businesses will be enforced again (Eversheds Sutherland). In light of these officially recommended closure of the businesses, the debate shifted as to what measure a tenant in a business premise can call for a reduction or waiver in the required rent. Zurich Airport faced a similar scenario when most of its tenants could not pay rent because of the forceful closures. In this case, the airport’s management was obliged to give in to the directive to reduce or waiver rent (Eversheds Sutherland). The directives by the National Council and the Council of States were clear that corporations that had to shut down their operations as per the provisions of Article 6, Paragraph 2 of the COVID-19 Ordinance 2 have the obligation to pay as much as 40% of their total rental fee for the duration of closure placed by the directing body (Eversheds Sutherland). Nevertheless, tenants would only enjoy the waiver for a period of two months if the firm had to shut down its operations in accordance with the provisions of Article 10a, Paragraph 2 (Eversheds Sutherland). Hence, the tenants were justified in demanding for the waiver. However,
District Course Ruling – April 23
Zurich (the plaintiff) brought a case against Dean Hill (the defendant) who worked for Zurich in quest for damages following a violation of employment contract. Depending on the Federal Rule of Civic Procedure, court arrived at the conclusion that depending on the evidence and facts presented before the court, the defendant was ordered to pay a sum exceeding $194,000 (Casetext). Based on the ruling of the court, it is possible to argue that Zurich Airport was in order to ask for the rent based on the provisions of rent Article 259. In this case, the tenants had no option but to offer the needed rent, especially if it were part of the agreement between the landowner and the tenant.
Rental Zurich Court Ruling – August 12
The jury in this case ruled that in a lease pact, as a general requirement, the agreed nature (quality) of the property only impacts on the property-related features and does not apply to conditions related to the business. Moreover, the jury held that the landowner only committed to offering a consideration, or a place where the tenants can conduct their business, which does not fall under the lease agreement, but operates independently (SchellenbergWittmer). Pursuant to the court’s ruling, the effects of state directives to counter the health crisis on a business managed by a tenant does not amount to a defect in the leased item (SchellenbergWittmer). Consequently, in this case the tenant lacks the right to decline paying for their premise due to particular defects other than due to the directive by the government to waive rent.
In the Rental Zurich court ruling
The paper falls into two sections – part A and part B that all provide valuable information regarding the group’s operations. Part A focuses on three critical aspects – main features of the firm, emanating tensions, organizational partnerships. Zurich Airports emerges as a company that is focused on expanding its operations with the objective of generating more revenues and appealing to more consumers. The group has to deal with emerging conflicting ideologies when relating with the various stakeholders to ensure operations continue without obstruction. The section also illustrates the general partnership with Canton of Zurich presents the firm with an opportunity to conduct most of its operations as a team rather than as a single entity. Part B also provides valuable information that helps to acquire more information about the airport. It shows how the group responded at a time when COVID-19 was threatening the existence of many firms in the airline sector and in other areas. It shows that the tenants occupying the business premises owned by the airport were justified in their advocating for a waiver in rent. The study also identifies court rulings related to the issue, while paying attention to the judgements by the District Course and the Rental Zurich Court.
Case Study. “Flughafen Zürich AG: Portrait, Development, Political Mission, Laws, and Procedures.”
“Coronavirus – Is There a Right to a Rent Reduction? – Switzerland.” Eversheds Sutherland, March 6, 2020, https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/coronavirus/Coronavirus-Is-there-a-right-to-rent_reduction-Switzerland. Accessed 11 Mar. 2022.
Johri, Amar and Shailendra Kumar. “Limited Liability Partnership: A New Gateway to Corporate India.” Innovative Journal of Business and Management, vol. 1, no. 1, 2012, pp. 1-4.
Onojaefe, Darlington and Marcus Leaning. “The Importance of Partnerships: The Relationship between Small Businesses, ICT and Local Communities.” Issues in Informing Science and Technology, vol. 4, 2007, pp. 725-737.
SchellenbergWittmer. “Rent Increases and Decreases.” Lexology, October 20, 2021, https://www.lexology.com/library/detail.aspx?g=25d47c85-d154-4d8a-ae2d-859f7114950e. Accessed 11 Mar. 2022.
Tsutsumi, Diego, Amanda Fenerich and Thiago Silva. “Towards Business Partnership Recommendation Using User Opinion on Facebook.” Journal of Internet Services and Applications, vol. 10, no. 11, 2019, https://jisajournal.springeropen.com/articles/10.1186/s13174-019-0110-2
“Update on Covid-19 and Rent Reductions: Switzerland’s First Court Rulings are in.” Reutlaw, 2021, https://www.reutlaw.com/en/insights/update-on-covid-19-and-rent-reductions-switzerlands-first-court-rulings-are-in. Accessed 11 Mar. 2022.
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