European airports: The Juncker Plan (EFSI) should encourage investment in Europe's infrastructure


This CAPA report looks at the European Commission's Investment Plan for Europe, which is also known as the European Fund for Strategic Investments (EFSI) and the 'Juncker Plan' after the EC President Jean-Claude Juncker, who instigated it in Nov-2014.

Its purpose is to unlock public and private investments into the "real economy" (which means the part[s] of the economy that are concerned with the production of goods and services, as opposed to the part that is concerned with buying and selling on financial markets.

Those investments are expected to total at least EUR315 billion (USD348 billion) over the three fiscal years Jan-2015 to Dec-2017.

  • The European Commission's Investment Plan for Europe, also known as the Juncker Plan, aims to unlock public and private investments into the "real economy" with a total investment of at least EUR315 billion over three fiscal years.
  • The plan seeks to shift the investment focus from the financial sector to manufacturing and non-financial services.
  • The aviation sector, particularly airports, could benefit from the plan's financing opportunities, although no airport projects have been authorized yet.
  • The plan aims to address the investment gap in the EU by mobilizing private financing for strategic investments that the market cannot finance alone.
  • The plan is administered by the European Investment Bank (EIB) and the European Investment Fund (EIF), with the EIB providing EUR21 billion in initial funding and the EIF managing financing for small and medium-sized enterprises (SMEs).
  • The plan covers various sectors, including infrastructure, energy, innovation, education, health, and support for SMEs.

The Juncker Plan seeks to move the investment spotlight onto manufacturing and non-financial services

In effect what Mr Juncker has done is to initiate a procedure on an EU-wide basis that is already under way in a number of individual countries in order to try to 'rebalance' economies away from a reliance on the financial sector in favour of manufacturing and non-financial services. The UK is a good example, although the mechanism has yet to produce the desired result, judging from recently announced 2Q2015 GDP results that indicate that two of the mainstays of the 'real economy'- manufacturing and construction - were either flat or fell. Indeed, manufacturing declined by the greatest amount since 1Q2013, while financial services continued to rebound.

It could be argued of course that a rebounding financial services sector is good news for the prospects of airports and especially their construction. And the cost of debt momentarily has reached historic lows, with the European base rate down to just 0.05%. Hence attractive financing conditions are available to borrowers.

But things could change. In the UK for example (where the Bank of England base rate is currently 0.5%) broad hints are being dropped that it will rise from the end of 2015 and that the new 'normal level' for rates will before long reside in the range 2-3%; below the 5% level it averaged from the late 1990s through to then financial crisis but quite an increase all the same.

So the cost of borrowing may well begin to rise again, and soon, at the same time that there is a construction hiatus in many sectors, including airports, where dire warnings have circulated for years about a (runway) 'capacity crunch' that will see millions of potential passengers 'lost' as they are unable to book onto flights. There does appear to be a modicum of hyperbole in those claims.

After all, the CAPA Airport Construction Database reveals 244 European airport projects presently, with a collective price tag of USD93.4 billion. On the other hand though, while there are 244 projects recorded, only 27 of them are new runways and 21 runway extensions, or less than 20% of the total.

It is not at all clear if concern about interest rates was one of the motivating factors behind it, but if not the Juncker Plan is a fortuitous development that could have benefits for airports across the continent, even if other sectors are likely to be targeted primarily. Motivators that are recognisable are:

- an identifiable swing in favour of a more progressive outlook generally on investments in sectors such as transportation, energy and other socially beneficial assets following seven years of low to middling growth that started with the recession in 2008; coupled with

- a renewed interest for infrastructure assets on the part of global funds at a time when returns from some of their traditional core-investments such as government bonds and listed equity proved to be lower than expected previously.

The Juncker Plan in brief: a joint Commission/European Investment Bank effort with benefits for airports across Europe

Announced by EC President Juncker in Nov-2014 it aims at unlocking public and private investments of at least EUR315 billion over a three years fiscal period to Dec. 2017.

Infrastructure investment in Europe has fallen by EUR430 billion from its 2007 peak. In 2013 EU investment was still 15% below the pre-crisis peak in real terms and the shortfall reached between 25% and 60% in some Member States.

This investment gap arises from a lack of risk bearing capacity in Europe. Although liquidity is now available, promoters are not putting their projects forward. Investors are over-cautious due to regulatory barriers and economic volatility.

Mobilisation of the EUR315 billion additional finance for investment at EU level is a joint effort between the European Commission and the European Investment Bank (EIB). Member States, National Promotional Banks, regional authorities and private investors are all being encouraged to contribute.

The EFSI's main purpose is to overcome this current market failure by:

  1. 'Addressing' market gaps by taking on some of the risk, thereby helping increase promoters' appetite to invest. The EIB will provide loans and will in turn be covered by the EU budget guarantee;
  2. Mobilising private investment and other relevant public funding. As there is abundant liquidity in the market, sound projects will be able to attract funding from private investors.

The three main strands are:

  • The avoidance of public debt;
  • The identification of viable projects;
  • The removal of sector-specific barriers to investment.

In Dec-2014 EC policy makers declared it to be the number one initiative in their new 'roadmap' for "getting Europe back to work," based on clear priorities designed to boost economies. It was immediately picked up by the Latvian government, which held the EU Council presidency from Jan-2015 to Jun-2015 (it is currently held by Luxembourg until the end of 2015), which promised to introduce the plan and get it under way.

Where infrastructure is concerned the issue is the inclination of many countries, including rich ones such as Germany and the current EU presidency holder Luxembourg, to delay necessary infrastructure investment or to reduce it where it was already in place. So there is a need for improved transport links, power/utility connections, super-fast broadband networks, as well as improvements to hospitals and schools. Realistically, the general population will seek better schools and hospitals first, followed by power, ICT and with transport trailing in last.

The importance of the transport sector in Europe and for specific airports

Transport is not an issue that typically occupies the vox populi and brings the masses out on the streets to protest. Has there ever been a public street protest for example against Air Passenger Duty in the UK, or against its equivalents in countries such as Germany, Austria, The Netherlands or Belgium?

However, transport is the one strategic factor that connects the divergent countries of Europe at a time when one or more EU members could choose voluntarily to leave as early as Jun-2016, while another continues to teeter involuntarily on the edge. That fact will not have been lost on Mr Juncker, or on the Latvian and Luxembourg governments that have been tasked with propagating the Plan.

The next four Presidency holders, in order through to the current end of the Plan in Dec-2017, are: The Netherlands; Slovakia; Malta; and the United Kingdom. Ironically, the UK's Presidency could come in the same six-month period when it leaves the European Union altogether. Support for the Plan should be taken for granted from The Netherlands, and in particular from Malta and Slovakia, both of which are in need of new infrastructure across many sectors.

Whenever there are big European projects and big sums attached, the general public in many countries is wary lest they turn out to be schemes marred by administrative inefficiencies and political preference for local or national 'pet projects' that might cause an oversupply of certain types of infrastructure projects in countries or regions that don't really need them.

Berlin's new BBI Airport may be a case in point. That project was not directly supported by EU funds as might be expected in Europe's leading country economically. But in May-2015 the EU agreed to provide state aid of EUR2.5 billion to fund continuing development of BBI; approximately EUR1.1 billion to fund the remaining construction works, with the balance used to service later extensions and interest repayments. Now, with recent rumours concerning possible part-privatisation (BBI began life, many years ago as a private sector project) the airport company there might well attract speculation that the EFSI will somehow become involved as well.

Coincidentally the Lithuanian Deputy Transport and Communications Minister Arijandas Sliupas also said at the end of Jul-2015 that his Ministry is currently intensively working on the concession project for the nation's airports, with the project to be given to entrepreneurs during 2016. That is a clear case where the EFSI might find a use, whether justified or not. But to his credit the Minister admitted that, in general, there is no need for new airports in Lithuania.

In fact, in the future, the Vilnius (capital city) airport could even be turned into a residential area, since it is not technically possible to make the airport's runway longer and the airport will not be able to meet the needs of the country. Minister Sliupas indicated that the (second city) Kaunas Airport, 100km from Vilnius, would be "sufficient" for Lithuania, as long as a high-speed train project between the two cities is implemented. That has to go down as a first in Europe, a transport minister advocating that less is more in the aviation business.

The Juncker Plan/EFSI involves EUR21 billion in funding from the EU and EUR5 billion from the EIB

Accordingly, some experts have called for a cautious, cost-conscious approach to the Plan, with EU policy makers, public lenders and development banks all needing to assess thoroughly the tangible interest of future infrastructure investments one project at a time.

The EC is keen to focus attention on how the EFSI aims to overcome the current investment gap in the EU by mobilising private financing for strategic investments which the market cannot finance alone. So the EFSI will support strategic investments in infrastructure as well as risk finance for small businesses. The fund will concentrate its financing on investments in infrastructure and innovation, as well as finance for Small- and Medium- sized Enterprises (SMEs) There are 'SMEs' in the airports business and that category frequently applies to suppliers and concessionaires.

The administration of the fund as is follows. Of the projected EUR315 billion, the EU will provide EUR21 billion in initial funding - a EUR16 billion guarantee, authorised via an EU Regulation - and the European Investment Bank's (EIB) own resources (EUR5 billion). The fund is set up within existing EIB Group structures, allowing it to start quickly and to benefit from the EIB's experience. (The EIB in particular has experience with airport funding activities in many parts of Europe as well as outside of it).

The EFSI has two main focuses: Infrastructure and Innovation (managed by the EIB), and SMEs (managed by the EIB and the European Investment Fund, or EIF).

In line with the European Council Conclusions of Dec-2014, which invited the EIB Group to "start activities by using its own funds as of Jan-2015", the EIB has already announced (May-2015) several projects to be pre-financed in the context of the Investment Plan for Europe. The projects related to energy efficiency investment to reduce heating bills of private homes in France; new renewable energy and related transmission links in northern and western Europe; reduction of industrial energy use in Finland; and improvement to gas transmission in Spain. (See table below for more detail).

That there were no transport projects in that early list is of no surprise.

They are not at the very top of the wish list, while they remain an objective.

There are several profiles defining projects which are eligible for financing

  • Must have high societal and economic value contributing to EU policy objective;
  • Must attract private capital by addressing market failures;
  • Must come on top of existing EIB and EU financing possibilities;
  • Must be economically and technically viable;
  • Must be consistent with EU state aid rules;
  • Some examples of key growth-enhancing areas being targeted by the EFSI are:
    • Infrastructure (transport, energy, digital, environment, urban and social sectors)
    • Education and training, health, R&D, ICT, innovation
    • Renewable energy and energy efficiency
    • Support to SMEs and mid-cap companies.

The bullet point about compliance with state aid rules will have a particular resonance in the aviation business. It was in Feb-2014 that the EC adopted new guidelines on how member states can support airports and airlines in line with EU state aid rules. The guidelines were aimed at ensuring good connections between regions and the mobility of European citizens, while minimising distortions of competition in the Single Market.

Included in them was the permission of operating aid to regional airports (those with less than three million passengers a year) for a transitional period of 10 years under certain conditions. Airports in this category, effectively the 'SMEs' of the business, will be expected to be at the forefront of the queue to benefit from the EFSI.

Where the Commission is concerned there always seems to be a balancing act between claiming legitimate aid and ensuring that competition principles are not disrupted.

The EC is clear on how contributions can be made as an investor

  • The participation of private sector entities as investors is a key feature of the EFSI;
  • Investors could participate in project co-financing, on a risk-sharing basis with EIB covered by EFSI;
  • Investors could also participate in Investment Platforms which may be established in the future, notably with the participation of National Promotional Banks.

As for due diligence:

  • The EIB / EIF will perform the due diligence analysis of the investment concerned;
  • The services of the EIB will seek the approval of the EFSI Investment Committee, which will be responsible for examining potential operations in line with EFSI investment policies and the investment guidelines. They will be responsible for approving the support of the EU guarantee to the EIB in line with EFSI Regulation;
  • The EIB / EIF governing bodies will decide on the approval of EIB / EIF financing, in line with EIB / EIF current practices.

Anyone, not just a Member State, can submit a request for financing to the EIB for Infrastructure and Innovation investments, and to the EIF for SMEs equity or guarantee instruments. Moreover, project promoters can contact the EIB and EIF directly - they do not need to pass via a local authority or government.

It is not clear if this applies to 'anyone' outside the EU. In the case of the EIB for sure, it would not be a surprise. As mentioned previously, the bank has been active in funding infrastructure outwith 'Europe' for many years and recent EIB-supported airport projects include Monrovia in Liberia and Maputo in Mozambique. However, as the Juncker Plan was devised specifically with Europe in mind the funding of non-EU entities might be considered highly unlikely in this instance.

Financing can flow to Overseas Territories and to non-EU countries

Actuality, EFSI financing can flow to projects in non-EU countries, but only as part of cross-border projects involving EU countries. Non-EU countries need to fall within the scope of the European Neighbourhood Policy including the Strategic Partnership, the Enlargement Policy, and the European Economic Area or the European Free Trade Association, or to an Overseas Country or Territory. While the latter are diminishing they still exist in various parts of the world, sometimes far removed from Europe.

With regard to the timeline for the initiative, it is now well under way. Entry in force was in Jun-2015, EFIS is operational and the EIB has re-directed parts of its operations to pre-finance and prepare the activities of the fund, including the establishment of an investment advisory 'hub.'

The next stage is a progress review to take place by mid-2016, up to and including at the level of Heads of State and governments. Further options could be considered at that stage.

Several projects have already been authorised; they give an indication of what is to come

It is useful to examine in detail projects authorised to date that are pre-financed or 'warehoused' by the EIB and which will receive the backing of the EFSI guarantee. They are:






Total cost (approx)

Total EIB finance (approx)



Infrastructure fund investing in large energy-related projects, with a focus on offshore wind, biomass and transmission.

The fund targets mezzanine and equity-type investments primarily in greenfield energy-related projects with a focus on offshore wind, biomass, and electricity transmission, mainly in Northern and Western Europe.


DKK 15 billion

DKK 560 million


Energy, water, industry

The project concerns selected investments of the promoter's RDI programme in the areas of biotechnology / chemical process development for advanced biorefineries, water treatment, advance power systems and renewable energy. The activities will be predominantly carried out in Spain between 2015 and 2018.

The project corresponds to the EU policy orientations to promote private sector and competitive innovation. Part of the expenditures will take place in less developed or transition regions. The project would hence be eligible for EIB financing under Article 309 of the EU Treaty, point c) "Knowledge Economy (i2)" - "Research and Development" and "Innovation" as well as a) Projects for developing less developed regions.


EUR340 million

EUR170 million


Energy, Industry

Programme-loan to support energy efficiency investments in private residential buildings in France.

The project supports an innovative approach by French regions of "tiers financement", established to provide technical and financial assistance to homeowners and homeowner associations for energy efficiency retrofit. The project will involve public and public-private entities as well as commercial banks to provide long-term funding to final beneficiaries.


EUR800 million

EUR400 million






Total cost (approx)

Total EIB finance (approx)



The project covers the promoter's research activities in the fields of plasma-derived therapies, diagnostics and medical solutions for hospitals.

The project covers all stages of development i.e. pre-clinical development as well as clinical development. The project will be managed from the company's headquarters in Barcelona, Spain.


Not disclosed

EUR100 million



Construction of a new 1.3 million tonnes per annum (tpa) bio-product mill in Äänekoski, Finland.

The new bio-product mill will replace the old pulp mill in the same location.


Not disclosed

EUR275 million



The project is part of the promoter's investment programme to extend the gas distribution networks in Spain for the period 2015-2018. The investments envisaged by the promoter include mainly the construction of new pipelines of various operating pressures to reach unserved Spanish customers who currently rely on fuel oil and propane for heating and cooking purposes. The investment schemes are located in various parts of the country.

The project will allow for the replacement of more polluting fuels by cleaner and cheaper natural gas in the residential, commercial and industrial sectors. Parts of the project will be located in EIB cohesion priority regions.


EUR250 million

EUR125 million






Total cost (approx)

Total EIB finance (approx)



Financing of part of the promoter's modernisation programme

The project comprises investment in two of Arvedi's north Italian production sites for the modernisation and downstream extension of production processes, introduction of new products and research and development (R&D) activities in steel products.


EUR227 million

EUR100 million



Development of up to 14 primary care centres including accommodation for the primary care team and general practitioner services. (PPP project)

The main benefit that is expected to arise from the project is better access to primary healthcare and social services in the regions of Ireland. The ability to introduce new models of service delivery in purpose-built facilities and additional services that are currently not available in the area is expected to increase the efficiency and effectiveness of in- and outpatient services, including a more cost-efficient service provision. The soundness and quality of the underlying project will be examined and confirmed during appraisal.


EUR142 million

EUR70 million



The project involves the construction and refurbishment of three hospitals, replacing the existing outdated facilities under a comprehensive integrated healthcare plan for the served population, "2030 Vienna Hospitals Concept (Wiener Spitalskonzept 2030)".
The Vienna Hospital Association (Wiener Krankenanstaltenverbund) is responsible for procuring four individual projects at the locations "Wilhelminenspital", "Kaiser-Franz-Josef Spital" and "Krankenhaus Hietzing". The first project will serve as a pilot project for the determination of procurement details of future projects. (PPP project)

The hospitals managed by the Vienna Hospital Association have already reached an average age of 80 years and five locations are even over a hundred years old. Within the 2030 Vienna Hospitals Concept, a bundling of medical services at seven central hospital organisations is planned. The aim of the Concept is to provide efficient, state-of-the-art medical services for the citizens of Vienna.
The new hospitals will replace some of the current aging hospital facilities. It is expected that the projects will enable a significant modernisation and economical operation of healthcare delivery as well as a balanced distribution of beds and services within the city.


Not disclosed

Not disclosed

Several broad brush observations and assumptions can be made.

  • The projects cover multiple sectors and several different countries although Spain stands out with a third of projects to date;
  • Energy projects feature highly;
  • There is a mix of public and private sector promoters and two PPP projects;
  • Where financing is disclosed the EFSI commitment typically runs to approximately 50% of the total project cost.

There are no airport projects authorised yet under the EFSI

There are no airport-related projects that are authorised or 'warehoused' yet to be financed by the EIB with the backing of the EFSI guarantee, according to the appropriate EC Directorate General. At this early stage there are not yet projects 'approved' for the backing of the EU guarantee in the airport sector, but the EIB expects to receive many proposals for co-financing of infrastructure projects in the next years and that does include the airport sector.

It is understood that some airport projects are in the pipeline, for example in Croatia (Dubrovnik and possibly Zagreb). In both cases new terminals are under construction. While proposals could come from anywhere, it is central and eastern Europe that are likely to provide the bulk of them.

There is already a historical connection between the EU and the airport sector through the long established instrument known as JASPERS (Joint Assistance to Support Projects in European Regions), which provides advice to the 13 countries that joined the European Union in 2004, 2007 and 2013 (Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovak and Slovenia) as well as to Greece, the former Yugoslav Republic of Macedonia, Montenegro and Serbia during project preparation, to help improve the quality of the major projects to be submitted for grant financing under the Structural and Cohesion Funds.

The investment advisory 'Hub' provided under the Juncker Plan will help public authorities and project promoters in Member States to identify, prioritise, prepare, structure and implement strategic projects with a European added value and to make more efficient use of EU funds. Bringing together all advisory services in a common structure, form, it will constitute a single source of expertise and be a key entry point for public authorities and project promoters in the EU. The Hub will build on successful, already available instruments such as the JASPERS programme, which will be upgraded and expanded, and the new advisory platform for the use of innovative financial instruments.

So there is every reason to anticipate a forthcoming commencement of airport projects that are promoted uniquely via the mechanisms of the Juncker Plan or which follow on naturally from the advice and support already handed out courtesy of JASPERS and similar programmes.

One sub-sector that has not been mentioned so far is that of air traffic management (ATM) and the air navigation service providers (ANSPs) that oversee it. Housed within both the public and private sectors (or both) but often cash deficient whichever way it is organised and having to face up to the prospect of vast investments to meet new operational paradigms such as the SESAR PPP for a new high performance ATM system across Europe, remote control towers and virtual centres, this critical sector should be well up the list for investment under the Juncker Plan. Indeed, Juncker might be the catalyst needed to get the Single European Sky project firmly on track.

There is an important role for multi-disciplinary coordination if the Plan is to be most effective

Governments everywhere are required to have joined-up thinking across departments and Europe is no different. The initiatives mentioned here have been introduced in the same year that traffic is at last starting to recover uniformly across Europe, despite continuing financial and political turbulence (with some exceptions, as always) and also in the year when the EU's new Aviation Package will be introduced.

The package is one of the top 23 priorities of the European Commission and is designed to boost connectivity and to showcase the value of aviation for the economy and job creation. It is something of a paradigm shift. Previous administrations appeared at times to be more concerned with stifling aviation growth.

But greater connectivity evidently requires the infrastructure to support it and that is where the joined-up thinking comes in.

The Juncker Plan has air transport as merely one small cog in the wheel and there are no airport projects signed off yet, already well into the project.

It is to be hoped that the take-up will accelerate rapidly so that these two critical initiatives to work together to a mutually beneficial end.

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