Airport privatisation 2020 report and prospects for 2021 – Part 2

For Part 1 of this report please see: Airport privatisation 2020 report and prospects for 2021 - Part 1

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Summary

• The impetus behind the privatisation of airports in the U.S. has run out of steam and is unlikely to return under a Democrat government.
• In Latin America most activity continues to be in Brazil, but it is coming to an end.
• There is some degrees of investment opportunity in West Asia and in the Ukraine.
• Little is happening in Africa, where countries continue to vacillate over whether or not to privatise, thereby worsening existing preconceptions about the continent.

North America - in the United States, another year of snail's pace privatisation

United States

Despite the expansion of the airport privatisation programme and removal of entry barriers to it, the year 2020 witnessed hardly any privatisation activity in the sector in the U.S., including public-private partnerships to build specific industry (although most of the new central terminal at New York's La Guardia airport is operational now by way of two separate P3 schemes).

Indeed, the reverse happened, as two potential leases both hit the dust. There was no privatisation activity at all in Canada.

St. Louis gave up its airport privatisation slot for Lambert International Airport in Sep-2020, after saying in May that it might be prudent to retain its slot in the FAA pilot project for airport privatisation.

St Louis Mayor Lyda Krewson notified the FAA that it was withdrawing from the programme. Today, any airport owner may work with private investors to lease its airport while complying with the provisions of the new 2018 Airport Investment Partnership Programme.

The only explanation offered was "the rising number of COVID-19 cases and the current political climate."

For further information see: St. Louis Lambert Airport: privatisation now back in play

In western Florida, the Punta Gorda airport considered entering the FAA's Airport Investment Partnership Programme (AIPP), under which it could solicit proposals for a long term public-partnership (P3) lease of the airport.

The airport's governing body - the Charlotte County Airport Authority - was in contact with people who were involved in the successful P3 lease of Luis Muñoz Marín Airport in San Juan, Puerto Rico, in 2013. The authority was considering the "possible use of proceeds" if it decided to go forward.

However, Charlotte County Airport Authority (CCAA) commissioners voted 3-2 to oppose the privatisation proposal in Nov-2020. The proposals had been in discussion for several years, and included approximately USD200 million upfront, with an additional USD125 million to USD300 million in revenue share over a 40-year lease.

For further information see: Small single-airline Florida airport, Punta Gorda, may seek lease/P3

Central, South and Latin America - most privatisation is still in Brazil

Argentina

In Nov-2020 Corporación América Airports announced an agreement to extend the concession of Aeropuertos Argentina 2000 for 10 years until 2038.

The extension is part of an agreement entered by AA2000 and ORSNA (the regulator) with the aim of mitigating the impact of COVID-19 in its operations, and it further includes the commitment by AA2000 of incremental capital expenditures of approximately USD500 million to be undertaken between 2022 and 2027 for expansion projects.

On 17-Dec-2020 the Government of Argentina issued a presidential decree which ratified the Concession Agreement Extension.

Active airports for Corporación América Airports S.A consortium, including Aeropuertos Argentina 2000 (AA 2000)

Source: CAPA - Centre for Aviation.

Bahamas

Bahamas director of aviation Algernon Cargill stated that the government would break ground on George Town Exuma International Airport's redevelopment effective Dec-2020.

The USD65 million project will expand the passenger terminal from 2000sqft to approximately 60,000sqft. The government also plans to launch a tender in Jan-2021 for the construction of a USD15 million airport at Deadman's Cay. Construction would start in Mar-2021.

He also affirmed that the Government remains committed to a public-private partnership (PPP) model for financing and managing the construction/development of these airports, in a bid to alleviate the strain on an already cash-strapped Public Treasury.

Barbados

In Aug-2020 Bridgetown Grantley Adams International Airport prequalified 13 parties to bid on the PPP for the operation, financing, development and maintenance of the airport.

The prequalified bidders will receive the RFP and bidding documents for the PPP project when the bid process is launched. The concession will be for 30 years.

For further information (including background on the bidders, see: Investors queue up for Bridgetown Airport 30-year PPP

Bolivia

Bolivia's Deputy Minister of Transport Julio Linares rejected suggestions that the Government was planning to privatise Santa Cruz Viru Viru International Airport.

Mr Linares stated that the Government's objective was to build the airport up into an important hub through a PPP. The Deputy Minister added that "a French company" would invest USD400 million in the airport.

Groupe ADP signed an MoU in Oct-2019 which started an "exclusive negotiation" with Bolivia's Government to develop the Santa Cruz Viru Viru International Airport. The negotiations were for "a strategic alliance contract for operation and development" of the airport over a 30-year period.

Subsequently, Bolivia's interim President Jeanine Anez signed a decree launching the Santa Cruz Viru Viru International Airport PPP project, which is expected to generate USD420 million in investment at the airport over a 30-year period. The Bolivian Government emphasised that the entry of private capital in the airport does not contradict the Bolivian Constitution, which dictates that airport assets must be managed by the government.

Brazil

The sixth round of airport concessions was confirmed.

Brazil's Minister of Infrastructure manifested confidence in the Government's plan to auction 43 airports under concession in May-2020. The sixth round of concessions (22 airports) was divided as follows:

South block:

Curitiba Afonso Pena Airport, Foz do Iguaçu International Airport, Londrina Airport, Bacacheri Airport, Navegantes Airport, Joinville Lauro Carneiro de Loyola Airport, Pelotas Airport, Curitiba Afonso Pena Airport Airport and Bagé Airport. (Minimum bid: BRL133.5 million (USD25.3 million).

Central block:

Goiânia Santa Genoveva Airport, Palmas Airport, Teresina Airport, Petrolina Airport, São Luis Marechal Cunha Machado Airport and Imperatriz Airport. (Minimum bid: BRL8.2 million (USD1.6 million).

North block:

Manaus Eduardo Gomes International Airport, Tabatinga Airport, Tefé Airport, Rio Branco Placido de Castro Airport, Cruzeiro do Sul Airport, Porto Velho Airport and Boa Vista International Airport. (Minimum bid: BRL48.2 million (USD9.1 million).

The tender process in expected to begin in 1Q2021. The upfront concession fee for each block is as follows:

• North Block: BRL47.9 million (USD9.3 million);

• South Block: BRL130.2 million (USD25.4 million);

• Central Block: BRL8.1 million (USD1.6 million).

Also in May-2020, Brazil's ANAC (regulator) approved technical and legal feasibility reports for the issue of tenders to appoint new operators for Campinas Viracopos Airport and Natal Aluízio Alves International Airport. Aeroportos Brasil Viracopos and Inframerica had announced plans to return their concession contracts for the airports in early 2020.

In Jul-2020 Brazil's President Jair Bolsonaro signed a decree which allows Campinas Viracopos Airport to be retendered. The decree stated that the Ministry of Infrastructure (Brazil MoI) had 90 days to evaluate the possibility of transferring Aeroportos Brasil Viracopos' financing debt to the new concessionaire.

Campinas Viracopos Airport ownership is divided between Infraero (49%) and Aeroportos Brasil (51%), which in turn is held by UTC (48.12%), Triunfo (48.12%) and Egis (3.76%).

Subsequently, Brazil Invest Airport (BIA) offered BRL150 million (USD26.8 million) to acquire UTC Participações' shares in Campinas Viracopos Airport. BIA also intended to make an offer to acquire Infraero's 49% share in the airport.

Triunfo TPI announced that Aeroportos Brasil Viracopos (ABV) had signed an amendment to the Campinas Viracopos Airport concession contract, taking a step closer to the retendering of the airport for a new concession.

In Jun-2020, and referring to the COVID outbreak that has wreaked havoc in Brazil, the Minister of Infrastructure Tarcisio de Freitas commented on the country's concession projects, affirming: "There will not be any change in our concession projects line up". He added: "We have a robust logistics plan and a diverse and sophisticated portfolio, from ports, highways and airports which strategically interconnect the country".

Also in Jun-2020, the Infrastructure Minister transferred the administration of Belo Horizonte Pampulha Airport from Infraero to the Government of Minas Gerais. The State Government launched an RFI for proposals to develop the airport's executive aviation portfolio and a convention centre. Minas Gerais plans to open the airport for concession.

The Ministry of Infrastructure commented on the development of regional aviation in Brazil, stating that the MoI was working on a PPP programme for regional airports that would be finalised by the end of 2H2020, to stimulate investments in regional airports. He added that regional aviation has an unmet demand which can be an opportunity for aviation operators.

Invepar said it would formalise an offer to acquire Airports Company South Africa's (ACSA) 20% ownership of Aeroporto de Guarulhos Participações SA. Invepar owns the other 80%. Aeroporto de Guarulhos Participações SA owns a 51% participation in São Paulo Guarulhos International Airport.

In Oct-2020 the Ministry of Infrastructure (MoI) announced that the government had transferred the management of 17 airports to Brazil MoI, allowing improvement works to be carried out and providing legal safeguards during the process of concessioning the airports. The measure also permits precise measuring of the assets ahead of the concession process documentation.

Assets transferred are located at the following cities: Cruzeiro do Sul, Tabatinga, Tefé, São Mateus, Goiânia, Imperatriz, São Luís, Corumbá, Altamira, Santarém, Petrolina, Parnaíba, Teresina, Foz do Iguaçu, Pelotas, Uruguaiana and Joinville.

With the sixth concession round yet to be formalised, the MoI launched (08-Oct-2020) the tender process for studies on the concession of 17 airports scheduled for the seventh round of airport concessions in Brazil.

The concession process will be by blocks, with the following groups of airports:

• RJ/MG Block: Rio de Janeiro Santos Dumont Airport, Jacarepaguá Airport, Uberlandia Airport, Montes Claros Airport and Uberaba Airport;

• North Block II: Belém Val de Cans Airport, Santarém Airport, Marabá Airport, Carajás Airport, Altamira Airport and Macapá Airport;

• SP/MS Block: São Paulo Congonhas Airport, São Paulo Campo de Marte Airport, São Jose dos Campos Airport, Campo Grande Airport, Corumbá Airport and Ponta Porã Airport.

Interested parties had to register their interest within 180 days to complete the study.

The seventh round of concession is scheduled to occur in 2022 and, unlike the sixth one, it has a major 'anchor' airport attached to each group (Rio de Janeiro Santos Dumont/Belém Val de Cans/ São Paulo Congonhas airports).

In Jan-2021 Brazil's Ministry of Infrastructure (Brazil MoI) announced that three consortia had been qualified to present projects and studies for the concession of 16 airports in Brazil's seventh round of airport concessions.

Consortium I: INFRAWAY, with BACCO, CPEA, MOYSÉS & PIRES and TERRAFIRMA. Infraway is an infrastructure engineering company.

Consortium II: VALLYA, PROFICENTER PIQUET CARNEIRO, MAGALDI and GUEDES. VALLYA is a boutique investment and government relations consulting company headquartered in Brasília. It has considerable experience in the airports sector.

Consortium III: encompassing EDO ROCHA, WOODS BAGO, URBAN, AUP, CAVALCANTI, PCA, AADU, LASUS, C FLY and PETINELLI. EDO ROCHA is a firm of architects including airport-related work. This third consortium was qualified to present studies for the São Paulo/Mato Grosso do Sul block only.

In Nov-2020 Corporación América Airports announced that its subsidiary Inframerica Concessionária do Aeroporto de São Gonçalo do Amarante had executed an irrevocable amendment for the termination of the concession agreement of Natal Aluízio Alves International Airport.

Upon transfer to a new operator, an indemnification payment will be made to Inframerica, which will be determined by authorities, primarily based on non-amortised capital expenditure investments.

The process to terminate the concession agreement was initiated on 05-Mar-2020, before the pandemic broke out in Latin America, with the goal of transferring the concession of this airport to a different operator.

Several factors drove the decision of returning the concession, including the negative impact on passenger traffic as a result of the 2016 and 2017 economic crisis. In addition, passenger tariffs lag those of all other privatised airports in the country under the same tariff scheme, and air navigation tariffs charged in other airports are approximately 300% higher than in Natal Airport.

Natal Airport was the first airport in Brazil transferred to the private sector, in 2011, and the first greenfield federal airport built by the private sector, launching operations in May-2014. As of Dec-2019, the total amount of investments in Natal Airport was approximately BRL700 million (USD131.9 million).

For further information see: More Brazilian airport concession issues; first one nears termination

Smaller transactions:

In May-2020 Infraero (the state airport operator, which now has a much-reduced role) signed a contract with the government of Guarujá in which Infraero will administer Guarujá Airport over the next 12 months. Infraero will have the target of enabling the airport to handle commercial services.

In Oct-2020 Infraero announced that Minas Gerais State Government had hired Infraero to administer Ipatinga Usiminas Airport for 12 months, with a possible extension.

Infraero will be responsible for operations, while the state will offer public safety, traffic inspections, environmental licences and water, electricity and phone bills.

Active airports for Infraero - a diminishing role, but it still retains a stake in some of Brazil's largest airports

Source: CAPA - Centre for Aviation.

INFRACEA took over the administration of two airports in Santa Catarina, stating: "With the commencement of operating these two new airports, INFRACEA maintains itself as one of the largest regional airport operators in Brazil".

INFRACEA now administers Criciúma Airport and Correia Pinto Airport. Subsequently (Dec-2020), INFRACEA took over the administration of Caruaru Airport and Serra Talhada Airport. The concession agreement includes requirements to develop work plans with documentation, manuals, operational procedures, training and other areas of airport management. The concession was granted by the State of Pernambuco.

In Oct-2020 the Campos dos Goytacazes government awarded the 30-year concession of Campos dos Goytacazes Bartolomeu Lisandro Airport to Infra Construtora e Serviços. The concessionaire will invest BRL98 million (USD17.5 million) over the concession period, with BRL28 million (USD5 million) invested over the first five years of concession. Infra Construtora e Serviços presented a bid offer of BRL1.8 million (USD320,900).

São Paulo's Governor João Doria plans to open São José do Rio Preto Airport for concession by 2022. Mr Doria plans to transfer 22 regional airports to the private initiative, aiming to receive USD80 million in airport infrastructure investments.

Ecuador

In Aug-2020 Ecuador's President Lenín Moreno stated that Korea Airports Corporation would operate Manta Airport under a 30-year concession, and is expected to invest USD182 million in airport infrastructure.

The Oct-2020 signing of an 'Interinstitutional Cooperation Agreement' for the development of services and airport activity at Manta Eloy Alfaro International Airport also formalised a declaration of goodwill and cooperation between the Mayor of Manta and the mayors and president of the Parish Boards of the Galapagos Islands, in order to support air connectivity with the Galapagos Islands.

Chile

Santiago International Airport's concessionaire, Nuevo Pudahuel, opened a dialogue in Oct-2020 with Chile's Ministry of Public Works, seeking to extend the airport's concession deadline beyond 2035 due to the negative effects caused by the COVID-19 pandemic.

Colombia

In Jun-2020 Aerocivil excluded Armenia El Edén Airport from the list of airports to be transferred for concession. The airport will undergo phase four of its modernisation project, with an estimated cost of COP40 billion (USD10.7 million) and starting in 2021.

Dominica

The small Caribbean island of Dominica, which relies on nearby island airports for long-distance travel, is to get its own international/intercontinental airport. A citizen's investment programme will pay for much of it, also a cruise port and infrastructure, but some private capital might be sought.

For further information see: Dominica, undaunted by COVID, to build first long-haul airport

Dominican Republic

Dominican Republic's PPP director general Sigmund Freund has stated that the Dominican Republic's tourism development plan includes the construction of Pedernales Airport. The project will be funded through an investment fund PPP.

Honduras

In Sep-2020 Tegucigalpa Toncontín International Airport received an official visit by officials from Munich Airport International (MAI) and EMCO to evaluate the airport assets ahead of taking over full administration of the airport in 2021.

The visit is the first step in the transition process. Initial administration began in Sep-2020. As part of the concession agreement Palmerola International Airport will operate and maintain Toncontín's facilities and operations in collaboration with MAI as a strategic partner until the new airport is ready for operations in 2021.

Honduras' Airport Infrastructure Company (EHISA) signed a 12-month contract, also in Sep-2020, with HAS Development Corporation (HASDC) where HASDC will provide advisory services to EHISA on management of San Pedro Sula Ramón Villeda Morales Airport, La Ceiba Golosón International Airport and Roatan Juan Manuel Gálvez International Airport. EHISA started managing the airports effective 29-Sep-2020.

Mexico

Mexico's President Andrés López Obrador called for the concessionaire (ASUR) administering Tapachula International Airport to invest in expanding the airport.

Mr López Obrador stated that if the concessionaire does not want to invest, they can hand over the airport to the federal or state government, "respectfully" stating: "If they consider that it is not convenient for them to administer the airport because they have others with more traffic, hand the concession back". In 2018 ASUR outlined a plan to invest in the airport through to 2033.

Mexico's Government plan for Mexico City's airport infrastructure is to appoint Grupo Aeroportuario de La Ciudad de México (GACM) as the administrator for Mexico City Toluca Airport, Mexico City Juarez International Airport and the under-conversion of Santa Lucia Air Base. The plan highlights that currently each airport in the Mexican capital pursues its own independent objective, leading to missed synergy opportunities.

Under this scheme it is possible that the Toluca airport could be de-privatised.

Middle East and West Asia - Almaty Airport's sale may go ahead; in Russia, small transaction deals still predominate

Kazakhstan

On 07-May-2020 TAV Airports signed a share purchase agreement for the acquisition of 100% of Almaty Airport shares and the associated jet fuel and catering businesses for an enterprise value of USD415 million.

The acquisition was made by a consortium comprising TAV Airports and VPE Capital. TAV Airports will hold a minimum 75% share in the consortium. TAV Airports' CEO Sani Şener said TAV Airports believes the airport holds significant growth potential as a transit hub between Asia and Europe.

TAV Airports plans to invest USD150 million to USD200 million into the construction of a new terminal and upgrade of infrastructure. Airport capacity is expected to double to 14 million, and the investor plans to develop the airport as a multimodal cargo hub.

The acquisition is not yet completed.

Active airports for TAV Airports

Source: CAPA - Centre for Aviation.

Shymkent Airport's ownership tender did not go ahead as scheduled on 08-Oct-2020 as only one bid, instead of a minimum two bids, were submitted.

The airport was to be transferred into trust management for a 10-year term, with purchase rights attached. The starting price for the tender was set at KZT5.2 billion (EUR10.3 million).

Petropavl Airport will reportedly pass into state ownership. The measure will ensure the survival of the airport and allow it to increase the volume of operations.

Kyrgyzstan

In Jul-2020 JSC Manas International Airport announced its intention to consider the liquidation of Issyk-Kul and Bishkek branches at the annual general shareholders meeting.

Kyrgyzstan's Ministry of Foreign Affairs subsequently announced that Groupe ADP and TAV Airports were prepared to participate in the Bishkek Manas International Airport and Osh Airport reconstruction projects.

Russian Federation

Airport privatisation activity in Russia carried on throughout 2020 in much the same way as it had in previous years, with a number of transactions in smaller airports involving the exchange of shares between private entities, or from public to private ones, occasionally private to public.

The one noteworthy comment was from Aeroflot, which asked for the construction of more low cost airports or terminals throughout the country, which could be attractive to the private sector if the government supported the request. Otherwise the country, as in the case of China, is one which foreign investors still find difficult to access - assuming that they want to.

For an overview of how Russian aviation has responded to the pandemic, see the (Nov-2020) report: Russian aviation shows resilience; sustained by domestic travel

In Jan-2020 LLC Sheremetyevo Holding applied for approval from Russia's Federal Agency for State Property Management (Rosimushchestvo) on the exercise of a call option to acquire a 30.5% government stake in Moscow Sheremetyevo Airport. Sheremetyevo Holdings is controlled by a private investor and holds a 66.1% stake in the airport.

In Jun-2020 Moscow Vnukovo Airport's chairman Vitaliy Vantsev said the deal for the sale of a 25% stake in the airport to Qatar Airways could be closed within two years. Mr Vantsev said: "When we fulfil all the conditions for entering the deal, it will go ahead".

Sochi International Airport acquired more than 50% of Vladivostok Knevichi Airport shares in Jan-2020. The deal also included Terminal Vladivostok shares, and was valued at RUB9720 million (EUR123.8 million).

In Nov-2020 Russia's Government asked the Ministry of Defence to prepare a 49-year concession agreement with Gazpromavia for Levashovo Airport. The agreement covers airfield, air traffic management and navigation infrastructure and requires the completion of reconstruction work by 2022.

In Aug-2020 Yamalo-Nenets Autonomous Area's Governor Dmitry Artyukhov said the territory's government was interested in taking over ownership of Noyabrsk Airport from UTair Aviation. Mr Artyukhov said that work was being conducted on the ownership change.

Mr Artyukhov noted: "The only private airport in Yamal is in Noyabrsk. UTair is experiencing financial difficulties; they have a lot of debt. And there is an attempt to resolve all problems with the sale of the airport to us, but it cannot be done at tenfold the price".

Aeroflot CEO Vitaly Savelyev has said that specialised airports for LCCs need to be constructed to facilitate the establishment and development of LCCs in Russia. Mr Savelyev noted: "There everything must be minimal, starting from the security system and ending with check in and passenger boarding".

For further information see: Aeroflot chief calls for 'LCC airports' in Russia - are they needed?

Russia's Prime Minister Mikhail Mishustin signed a decree on the privatisation of more than 90 federally owned entities in the period from 2020 to 2022.

The list of entities subject to privatisation covers Magnitogorsk Airport, Elista Airport and the Grozny Airport operator Vaynahavia.

Russia's Auction House confirmed in Aug-2020 that Elista Airport and Magnitogorsk Airport were included in the plan for the privatisation of federal property from 2020 to 2022. The Auction House will be the single sales agent for the shares. Auction House director general Andrey Stepanenko said active investor interest was expected in the privatisation programme.

In Sep-2020 Novaport Invest took 100% ownership of Belgorod Airport. The airport was previously owned by LLC Kaskad.

Airports of Regions and Novaport announced in Sep-2020 that the LLC ABC joint venture company had been awarded the tender for the reconstruction and management of Blagoveshchensk Ignatyevo Airport under a 30-year concession agreement. KrasInvest and Fareastern Concession Company also participated in the tender.

LLC ABC offered to invest a minimum RUB7 billion (EUR77.9 million) into airport development. The investor is required to construct a new international terminal with capacity for a minimum 300 passengers per hour, to modernise the existing domestic terminal, to open a new cargo terminal and to expand the area near the terminal to offer up to 600 vehicle parking spaces.

In Nov-2020 Airports of Regions and Novaport Holding submitted an application to Russia's Federal Antimonopoly Service (FAS) to participate in the tender for the reconstruction of Magadan Sokol Airport.

The Corporation for the Development of Magadan Oblast had previously issued a tender for the selection of an investor to reconstruct and modernise the airport. Magadan Oblast subsequently selected Novaport and Airports of Regions' JV LLC ABS Magadan as an investor for Magadan Sokol Airport. The investor will receive a 75% minus one share stake in the airport and will be required to invest in airport modernisation and reconstruction. Modernisation work is scheduled to begin from Jan-2021.

Russia's Presidential Envoy to the Far Eastern Federal District Yury Trutnev announced in Dec-2020 that the involvement of a private investor is required to complete the construction of a new terminal complex at Yuzhno Sakhalinsk Khomutovo Airport.

Sakhalin Oblast's Governor Valery Limarenko said the work was scheduled for completion by 01-Nov-2020. Mr Limarenko expects construction could be completed within one and a half years, upon determining a source of financing. The project was initially estimated to require a RUB6.7 billion (EUR75 million) investment, provided by Sakhalin Oblast.

Construction work began in 2017, however the project required changes. Sakhalin Oblast plans to privatise 100% of JSC Yuzhno-Sakhalinsk Terminal shares to attract investor funds for the completion of construction work.

Khanty Mansiysk Autonomous Area's Governor Natalya Komarova said the area's government had received Gazprom's stake in Beloyarsky Airport, increasing Khanty Mansiysk Autonomous Area's share to 96.2%. UTair Aviation holds the remaining 3.8% stake in the airport.

Ukraine

In Jan-2020 Ukraine's Ministry of Infrastructure announced plans to lease selected parts of Kyiv Boryspil International Airport's state-owned property.

Ukraine's Minister of Infrastructure Vladyslav Kryklii said the construction of Mukachevo Airport was estimated to require a UAH4 billion (EUR121.8 million) investment. Runway construction is expected to be funded by the federal government, and terminal construction by a private investor.

In Feb-2020 Ukraine's Minister of Infrastructure Vladislav Krikliy said he expected that concession agreements for Chernivtsi International Airport, Kherson Airport, Lviv Danylo Halytskyi International Airport and Zaporizhia International Airport could be signed by the end of 2020 (there is no evidence that they have been).

Mr Krikliy also considered that concession tenders for Mariupol International Airport, Berdyansk Airport and Odessa International Airport would be issued in the near future.

In Oct-2020 Ukraine's Minister of Infrastructure Vladyslav Krykliy said the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) had completed a preliminary analysis on the possibility of signing concession agreements for selected airports.

Mr Krykliy said the airports would receive access to government financing through a special airport fund. The fund will be financed from a range of sources, including aviation fuel excise, and will allow the restoration of two regional airports annually.

Mr Krykliy noted that until the establishment of the fund, Ukraine is using public-private partnerships, where state funds are provided for runway restoration and a private investor finances terminal development work. The model is being implemented in the construction of Dnipropetrovsk International Airport and will be used in Zakarpatska Oblast.

Uzbekistan

In Feb-2020 Uzbekistan's Minister for Transport Elyor Ganiev said that tender procedures would determine the company offering the best conditions for the management of airports in the country. Mr Ganiev said that cooperation would be based on a public-private partnership or concession.

Africa - a continuing tale of missed opportunities

In Mar-2020, just as the pandemic was starting to take hold, Ethiopia's Transport Minister Dagmawit Moges described the state of airport infrastructure in the majority of African countries as "outdated", and "unable to handle the increasing volume of passengers or cargo".

She noted that "investment and expertise" would be needed to modernise African infrastructure and services, stating: "These could come through public-private partnerships or through opening doors for private capital investment". A consequence of these measurements would include "increase[d] competitiveness", "additional routes, more frequent flights, better connections and lower fares".

That statement is as true as it has ever been, but along with the inability to create any sort of 'open skies' environment, the lack of a developed non-aeronautical revenue-generating segment and the lingering threat of corruption, the aversion of the public sector to any sort of private initiative in the airport sector alone continually scuppers the prospect of concession, BOT and even PPP deals across the entire continent.

Egypt

Egypt's Minister of Aviation Mohammed Manar reported that investors from Saudi Arabia and Kuwait had made offers for expansion projects at Cairo International Airport and Cairo Sphinx International Airport. Mr Manar said the ministry would negotiate with investors to establish new logistics facilities at both airports, in addition to ongoing passenger expansion at Cairo Sphinx.

Incertitude seems to be taking hold throughout the continent

Ghana

Ghana Airports Company Limited (GACL) confirmed that Accra Kotoka International Airport was "not for sale or being considered for privatisation", refuting claims by former GACL president John Dramani Mahama.

On the other hand…

…Ghana's Aviation Minister Joseph Kofi Adda said, "The Ghana Airport Company Limited is currently distressed due to heavy debts" and is "choked with this Terminal 3 debt which it has been paying for a long time".

Mr Kofi Adda said: "The revenues that are coming in are not going to be significant for us to bring in some billions of dollars that we need to continue to expand this sector… this is where we need some interested partners to come and work with us".

Mr Kofi Adda said the airports would not be "privatised or [are] being sold" and that "will never happen under this administration. Nobody in their right mind will think of selling an airport or privatising it".

For further information on these mixed message see: Ghana: TAV and the decision on privatising Accra Airport

Nigeria's "will they, won't they?" decision impasse over privatisation continues

Nigeria

It is a case of "business as usual" in Nigeria, where the government's efforts to privatise the main airports continues to flounder in the face of trade union opposition.

Nigeria's Ministry of Aviation reported in Dec-2020 that the planned concession of Lagos, Abuja, Port Harcourt and Kano airports is "still part of the federal government's aviation strategy."

Minister of Aviation Hadi Sirika called on Nigeria's aviation stakeholders to maintain support in the strategy and confirmed plans to pursue the concession initiative, as well as establishing an MRO facility and an aviation leasing company. Nigeria's House of Representatives ordered the suspension of the concession plan in Nov-2020 and established a subcommittee to address issues surrounding it, following ongoing opposition.

The privatisation of Nigeria's airports figured in the Sep-2018 Airport Privatisation and Finance Review, in which the opening line read, "…it has become something of a saga and shows no propensity to come to fruition."

Nothing has changed.

The National Union of Air Transport Employees (NUATE), for example, argues that the concession of those four airports would be "criminal" and "against public interest", while the TUC said the move would "stifle and incapacitate" the Federal Airports Authority of Nigeria. It cited "lingering issues" around the (existing) concession of Lagos Murtala Muhammed Airport Terminal 2 as evidence against further concessions.

The union said that instead, "[the government] should adopt the Green Field and Corporatisation models which empower new investors to construct new runways, terminal buildings and thereafter operate for a specified period of time before handing over to the government".

In other words, what would be a very short BOT scheme, with no reward to the private sector operator and of no interest to anyone with the slightest understanding of economics.

Active airports for Federal Airports Authority of Nigeria

Source: CAPA - Centre for Aviation.

There is some light at the end of the tunnel.

In Jul-2020 Nigeria's Aviation Safety Round Table Initiative (ART) welcomed the decision by the Federal Government to concession some of the country's airports. ART stated that the challenges in management and funding could be addressed by a well packaged concession programme. ART noted the need for transparency in the process, and the importance of observing the law to ensure all stakeholder interests are met.

Further airport concessions are planned beyond those at Lagos, Abuja, Port Harcourt and Kano, and the government insists, "We will not be selling public assets. They belong to the people. We will concession them and get them back at a later date… It makes more sense for us to get people whose business it is to run the airports".

But Nigeria's House of Representatives Committee (HoRC) on Aviation ordered the suspension of the planned concession of the four airports in Nov-2020. The committee called on the Minister of Aviation to provide a business case and evaluation report for the proposed concessions.

The HoRC then established a subcommittee with the Ministry of Aviation, and with financial advisers, to address issues surrounding the proposed airport concession initiative. The committee is expected to deal with the federal government's pre-existing agreement and debt with China's Government to construct four new terminals for USD500 million, under which China is granted ownership and administrative rights to the airports if the debt remains unpaid.

Meanwhile, in Oct-2020 the Delta State House of Assembly approved the concession of Asaba International Airport by an FIDC-Menzies Aviation Consortium, following support from Delta's Governor Ifeanyi Okowa.

Mr Okowa said the concession sought to attract foreign commercial and cargo operators, and reflected the government's intention to diversify the economy from a reliance on oil revenue. He added: "The concessioning exercise is among other accelerated investments in new infrastructure at the airport".

In Oct-2020 the Minister of Aviation confirmed plans to construct new airports in Anambra, Benue, Ekiti, Nasarawa, Ebonyi, Damaturu and Gombe, with ten new airports planned in total.

He also reported that the federal government had taken control of Birnin Kebbi Airport, Warri Airport and Dutse Airport, and confirmed that Gombe's government had called for federal intervention for Gombe Lawanti International Airport. (Warri Airport has since resumed operations, in late Nov-2020, following the federal government's order for the airport to be taken over by Nigerian National Petroleum Corporation).

The Aviation Minister hopes to double Nigeria's airports by 2023 as part of the Government's focus on aviation as the country's second fastest growing sector. He disputed reports that a number of proposed airport developments would not be viable, and confirmed that the ministry was anticipating economic benefits from establishing an airport in every state.

Rwanda

In Feb-2020 Qatar Airways Group CEO Akbar Al Baker confirmed that Qatar Airways was "investing in an airport in Rwanda", adding: "The agreements have been signed; the airport is already under construction".

Mr Al Baker said the single runway airport would be equipped to accommodate up to 10 million passengers per annum and "will be a very efficient hub in a very stable country". He was undoubtedly referring to the new Bugesera Airport serving the capital, Kigali.

South Africa

ACSA, the state airport operator, appears slowly to be bowing out of its foreign investments.

In Oct-2020 Brazil's Invepar said it would formalise an offer to acquire Airports Company South Africa's (ACSA) 20% ownership of Aeroporto de Guarulhos Participações SA. Invepar owns the other 80%. Aeroporto de Guarulhos Participações SA owns a 51% participation in São Paulo Guarulhos International Airport.

Also in Oct-2020, ACSA received an indicative offer from India's Adani Airports for a 10% stake sale in Mumbai International Airport Ltd.

Adani received Competition Commission of India approval to acquire a 23.5% stake in MIAL from ACSA and Bidvest, along with plans to acquire the debt of GVK Airport Developers Ltd and a subsequent 50.5% stake in the airport.