In 2015, Amsterdam's Schiphol Airport, one of Europe's busiest, teamed up with Philips Lighting. They created a unique agreement under which Schiphol paid for lighting rather than buying fixtures. Philips kept ownership, handled maintenance, upgraded technology, and recycled fixtures at the end of their life. Schiphol paid a regular fee for reliable lighting.
This was more than a maintenance contract; it introduced a new business model that merged financial goals with environmental needs. It showcased a circular economy model focused on using materials wisely, cutting waste, and renewing natural systems.
The Schiphol case became a prime example of product-as-a-service thinking. It proved that circular economy principles can benefit both the environment and business.
What Changed: From Products to Performance
The traditional lighting model is straightforward. A manufacturer sells fixtures, and the customer owns, maintains, and disposes of them. The manufacturer profits from selling more fixtures, while the customer incurs costs for purchase, maintenance, energy use, and disposal.
This model misaligns incentives. Manufacturers want to sell as many fixtures as possible, often designing them for planned obsolescence. Customers prefer durable, energy-efficient fixtures that are low-maintenance. Neither party considers the fixture's end of life. Manufacturers have sold their products, and customers must handle disposal.
The Light-as-a-Service model changes this. Philips keeps ownership of the fixtures and manages installation, maintenance, energy efficiency, and end-of-life recovery. Schiphol pays a fixed fee per light point, similar to a lighting subscription. If a fixture fails, Philips replaces it at no extra charge. If better technology emerges, Philips upgrades it, reducing energy costs for both parties.
Now, incentives align. Philips earns more by creating long-lasting, energy-efficient fixtures that need less maintenance. Schiphol benefits from predictable costs and avoids capital expenses for fixtures. The environmental impact also decreases as the focus shifts from sales volume to material efficiency.
The Schiphol Implementation: What Actually Happened
Schiphol's agreement with Philips covered lighting in car parks, offices, and operational areas - about 11,000 light points. The ten-year contract guaranteed lighting levels, maintenance response times, and energy efficiency targets.
The installed fixtures were designed for end-of-life recovery. Components were modular and easily separable, with materials chosen for recyclability. The design avoided adhesives, making disassembly easier. This focus on circularity is rare in the lighting industry, where products are typically designed for installation rather than recovery.
Philips adopted a proactive maintenance approach. They installed sensors to monitor performance, enabling predictive maintenance and the replacement of parts before they failed. This reduced downtime and extended the system's life.
Energy savings were significant. Schiphol's energy use for lighting dropped by about 50% compared to the previous system, thanks to LED technology and Philips's focus on energy optimisation. Carbon emissions also fell considerably.
At the end of the contract, Philips would reclaim the fixtures, disassemble them, and reuse or recycle materials. They reported that about 75% of the materials in the lighting systems could be recovered—a high rate for complex commercial lighting systems.
The Business Model Innovation
The importance of the Schiphol case lies not in technology - LED lighting and smart controls were already available. The real innovation was the business model, which focused on performance rather than ownership, and the system was designed to support that model.
This shift required Philips to develop new skills. They needed expertise in long-term service contracts, predictive maintenance, and material recovery. These skills differ from those needed for product sales and demand significant investment.
It also meant managing risk differently. In a product sales model, the manufacturer's financial risk ends at the point of sale. In a service model, they bear the risk of product failure and maintenance costs throughout the contract. This risk can be managed through better design and materials, but it cannot be eliminated.
The financial case for Schiphol was strong. The total cost of ownership - capital, energy, maintenance, disposal - was lower than under a conventional purchase model. Predictable costs were also valuable—the arrangement's environmental benefits aligned with Schiphol's sustainability goals.
For Philips (which rebranded as Signify in 2016), this model generated recurring revenue rather than one-off sales, fostering stronger customer relationships. A customer paying for light-as-a-service is less likely to switch providers based on price, as the value is tied to performance and reliability.
The Circular Economy Principles in Practice
The Schiphol case illustrates key circular economy principles in action.
Design for longevity and upgradability. With Philips retaining ownership, they aimed for long-lasting fixtures. But longevity isn't enough; technology improves. Fixtures allowed component upgrades without complete replacement, capturing advancements without waste.
Designed for disassembly. At the end of life, fixtures could be easily disassembled. Valuable materials were separated, and components were either refurbished or recycled. This approach is rare, as many products are designed to hinder disassembly.
Service over ownership. Shifting from selling products to services enables circular economy models. Customers buy the service (light), not the product (fixtures). This allows providers to control materials and maximise efficiency throughout their lifecycle.
Value retention. In a linear economy, value is lost over time. In a circular economy, value is maintained through maintenance, refurbishment, and recycling. Philips's model retains this value economically, as recovered materials reduce the cost of new fixture production.
The Challenges and What Made It Work
The Light-as-a-Service model isn't universally applicable, and its adoption has been slower than expected. Understanding why is as important as grasping the model.
It works best where customers value predictable costs and guaranteed performance over ownership. It thrives where the asset's capital cost is high enough to make service models appealing and where providers can effectively manage long-term service contracts. These factors suit commercial customers but are less applicable to residential markets, where ownership is often preferred.
The Bigger Picture
The Schiphol-Philips partnership is more than a clever contract. It's a template for rethinking how businesses and their customers relate to physical goods. By shifting ownership, aligning incentives, and designing products with their entire lifecycle in mind, both parties came out ahead: financially, operationally, and environmentally.
The model won't work everywhere. It demands trust, long-term thinking, and a willingness from manufacturers to take on risk they'd normally offload to customers. But where those conditions exist, it demonstrates something important: sustainability and profitability don't have to pull in opposite directions. Sometimes, the most environmentally responsible choice is also the most sensible business decision.
As pressure mounts on companies to reduce waste and carbon emissions, the light-as-a-service model offers a practical answer to a question more industries will have to face: what if you never sold the product at all?