Azerbaijan airport privatisation - opportunities at Baku and a small number of tourist airports

The old post-Soviet era Commonwealth of Independent States (CIS) has been slow to jump on any air transport bandwagon and certainly not any that relates either to developing managed hub and spoke operations or privatising airport facilities.

But changes are now taking place with airports like Tashkent (Uzbekistan) envisioning a central hub role and extensive privatisation in place already at Almaty (Kazakhstan).

In Azerbaijan, one of the CIS states closest to Europe, the President called in 2025 for an increase in privately managed airport infrastructure to help drive tourism growth beyond three million annual tourists and to disperse visitors more widely.

Now the government has formally granted permission for state owned civil airports to be managed by private partners, while not surrendering ownership.

Organisations from Asia Pacific and the Middle East are already sniffing around Azerbaijan and other CIS countries, where substantial deals have already been cut.

But no one invests in an airport that remains owned by the state, for a multi-year concession contract or a PPP on a terminal building unless the cost/benefit analysis works in their favour. Passenger numbers are not high at these airports and in many cases in the country's regions they are very low. Opportunities to develop non-aeronautical revenues may be slim.

It is often the case that tourist numbers drive the bargain and they are increasing rapidly in Azerbaijan.

That will probably mean that a good deal will have to be struck on a new terminal at the airport serving the capital, Baku first, before investors give any consideration to regional airports.