Crete’s Kasteli Airport now scheduled to open in 2025, and straight into a tourist dogfight


Another of the postponed airport construction projects in Europe raised its head again as it was confirmed that the anticipated opening date for the new Kasteli/Heraklion Airport in Crete, the Greek island that attracts most tourists, is now 2025.

If and when the airport opens, it will take over the commercial traffic handled by Heraklion Nikos Kazantzakis Airport. The project includes the construction of a 72,000sqm terminal, 3200m runway and 27 aircraft parking spaces on the apron. 

Kasteli is important but not critical to Crete, but is a new facility that will find itself in direct competition with another airport not far away that has been modernised by Fraport Greece, thus bringing two of the hardest punching heavyweight private sector operators into the same ring for the first time. 


  • The new airport for Heraklion, Crete, is now expected to open in 2025.
  • The Greek state has a major stake in it but the private sector will build and operate it.
  • The state expects a big pay-off when it takes control in 35 years, but there are no longer any such certainties.
  • Competition will arise with the other main airport on Crete at Chania, which is under the control of Fraport Greece.
  • While archaeologically related issues have so far failed to materialise, environmental ones may yet do.  

Delays to the start of the project are at last coming to an end 

It says much about how the COVID-19 pandemic influenced not only airport investment and privatisation (which withered on the vine), but also new airport construction, that in Feb-2020 the Greek Prime Minister officiated at the ground breaking for construction of the Kasteli/New Heraklion Airport on the Greek island of Crete.

Yet that at the end of Jun-2022 – 2 ½ years later – the construction company’s CEO was saying that construction was expected to begin in summer 2022 (which we are now officially in), as if no one had noticed.

That was 28 months during which not a single spade was turned.

The latest estimate has it that the airport will now be built by the end of 2025, which is at least not too much of an advancement on the earlier date of May-2024. But that is as things stand now – the world entering a very difficult financial/economic impasse with high levels of inflation and the potential for fatal stagflation, compounded by war in Europe's fringes.

If and when the airport opens, it will take over the commercial traffic handled by Heraklion Nikos Kazantzakis Airport.

The project includes the construction of a 72,000sqm terminal, 3200m runway and 27 aircraft parking spaces on the apron.

The state is a significant shareholder

The state will hold a 46% share capital in the airport with the remainder held by the concessionaire, the Ariadne Airport Group (AAG).

In May-2017 AAG was declared the winner of the 35-year BOT concession contract for the study, construction, funding, operation, maintenance and management of a new international airport, along with the construction and funding of road networks (including a new 18km motorway and 6km access road related to the project), and it was finally confirmed in Feb-2020.

Ariadne brings together a Greek constructor and an Indian operator, with EIB support

AAG is a consortium of India's GMR Infrastructure and Greece's GEK Terna, a large conglomerate which is listed on the Athens Stock Exchange. Its construction branch Terna is one of the leading enterprises in its sector in Greece.

GEK Terna is taking on 100% of the construction, while GMR Group’s contribution will be in developing, operating and managing the new international airport.

Shortly afterwards (Nov-2017) AAG said it was seeking co-financing from the European Investment Bank (EIB) to construct the airport, and in Jan-2020 the EIB signed a EUR180 million loan to support the construction process. The 28-year loan to the Hellenic Republic will finance the state contribution to the total EUR517 million project.

The state expects a fat wad 35 years on, but nothing is set in stone

Speaking in Feb-2020 the Greek Prime Minister said the state would "soon see a return of more than EUR1.2 billion" and "will exceed EUR2 billion" per annum at the end of the 35-year concession period – when the Greek state becomes the sole owner of the airport. As such, the prospect of finalising the deal must have been euphoric, since Greece is still massively in debt.

However, one month later the COVID-19 pandemic struck, and if that didn’t say with certainty that no predictions can be made with certainty then nothing ever will.

VINCI had wanted to do it

There had been considerable interest in building the facility, dating back to before the agreement with AAG.

The project arose during the Greek economic crisis, which was the worst in Europe and ultimately forced the Greek government to postpone the deadline for what was initially a EUR850 million construction tender until May-2016.

Original bidders were purported to be VINCI Airports jointly with Ellaktor. Ellaktor is a holding company with long term investments in the field of construction in Greece, and it jointly also coveted the opportunity to take over the operation of Greek regional airports (which went to Fraport instead).

Also Spain's Grupo ACS jointly with GEK-Terna in the first instance.

When the deal was finalised the winning consortium’s bid was only EUR480 million. While that wasn’t far short of the asking price, it has set the scene for an enterprise that has been scaled down somewhat from the original projections.

Should help Greece sustain critical tourism revenues

The existing airport is close to the city of Heraklion, but the extended distance of its replacement is offset by a reduction in the number of development restrictions. And for all the delays, the airport is needed if Crete, the largest and most populous of the Greek islands, is to meet post-pandemic transport needs.

Crete is typically responsible for handling 15% of all Greek’s tourist arrivals through its port and airport in Heraklion.

The archaeologists don’t dig it

There have been no reports of hold-ups caused by archaeological findings – which is surprising.

Crete features in just about every civilisation in the eastern Mediterranean region for 130,000 years and was the centre of Europe's first advanced civilisation, the Minoan.

The technical attributes of the airport are:

  • Design capacity for up to 15 million ppa (the existing airport handled between 6.1 and 8.1 mppa between 2015 and 2019)
  • 3,200 metre ICAO 4E runway
  • Parallel taxiway, equal length with eight taxiway rapid exits
  • 27 aircraft parking stands
  • A single five-level terminal building with a total surface area of 72,000sqm
  • Surrounding ‘commercial use area’ of 400,000sqm, the precise usage of which has not yet been revealed.

Heraklion Nikos Kazantzakis Airport: annual traffic, passenger numbers/growth, 2015-2022 (January to May YTD)

Commensurate with the construction activities will come an intense period of ORAT (Operational Readiness Activation and Transition) activity and one of building the business case for the new airlines that will be needed to support an airport almost twice the size of the existing one.

Heraklion has been the most resilient tourism destination in Europe

One thing in the existing airport’s favour – and in consequence the future one by projection – is that Heraklion has featured highly in tables of ‘resilience’ of European airports during the coronavirus pandemic as measured by ticket sales, actually being the best in summer 2021 (Jul-2021 to Aug-2021) when compared to 2019, and even ahead of Antalya in Turkey.

That will give some succour to its developers – but anything can happen between now and 2025.

Competition with Chania will intensify

The other factor to bear in mind here is that there is some competition inbuilt to this development right from the beginning.

Crete has three airports already. Apart from Heraklion, there are two others: at Chania on the northwest coast and Sitia, a small community airport with few commercial services.

Chania (a smaller airport with approximately 2.8 million passengers in 2019) and the new Kasteli Airport will be scrapping for much the same tourists. Breaking them down aesthetically, those with a bent for the Minoan civilisation would choose Heraklion, while those preferring the Venetian one would opt for Chania.

But the market is mainly driven by sun-worshippers. The easiest access to the beaches will be the key to success.

Fraport Greece a tough adversary

The two airports will be only 100km apart and the Chania airport has been operated by Fraport Greece since 2017, the same year the BOT deal on Kasteli was first agreed.

Location of Heraklion and Chania, Crete

Fraport Greece established itself – through some early squabbles with local officials – to become arguably that company’s best performing division during the worst of the pandemic.

In Feb-2021 Fraport Greece completed a four-year infrastructure development programme at its 14 regional Greek airports, including Chania.

The projects represented a total investment of EUR440 million and included the delivery of five new terminals, the modernisation of five existing terminals, and upgrades to four other terminals. All of the airports have also been equipped with new baggage handling and security detection systems.

The battle for pre-eminence between them will hang on which of them can attract and retain the greatest number of vacation-oriented airlines.

Leisure airlines already well established at Heraklion

Those using the existing Nikos Kazantzakis Airport are a cornucopia of Europe’s leisure airlines from Greece, Turkey, mainland Europe and the UK but with the notable absence of Ryanair, which does have a presence – as it does at Chania – but not to the same degree usually associated with that airline (i.e. it has less than 5% of capacity).

Heraklion Nikos Kazantzakis Airport: system seats for all airlines, week commencing 04-Jul-2022

The main market (by some distance) is from Germany, followed by the UK and France, and there is an excellent capacity mix between full service (25.4%); low cost (35.8%); and charter (32.3%) airlines.

The airport’s utilisation rises and falls equably between two peaks, at late morning (1000-1200) and at 2300 hours.

An almost 500% passenger traffic growth in the first five months of 2022 suggests good times ahead for the existing airport before it is phased out, and a solid start for the new one.

Environmental opposition could still arise

However, there are no longer any certainties in the air transport business – if there ever were.

There have been comparatively few environmental objections to date, but they are hardly unheard of in Greece and could begin to multiply once the ground works get under way. Environmental concerns were expressed when the Greek parliament ratified the agreement and the Communist and Golden Dawn (ultranationalist) parties did not vote for it.

The main issue seems to be with the expropriation of farms and the remuneration for it. The Infrastructure and Transport Minister has committed to introducing a fairer regulation for professional farmers whose properties need to be expropriated, and said the state will introduce a clause forbidding its share from dropping below 35%.

But even then, there are still politicians calling for “adequate studies” into “environmental repercussions” – everywhere in the world such studies seem to take forever.

Hopefully, Kasteli will not fall into that trap because construction alone will lead to over 500 permanent jobs, and the consortium companies plan now to invest at least EUR850 million in the airport's construction.

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