ACI Europe: Airports discuss best ways to establish grounds for private investment in Brussels

posted on 21st June 2018 by yumna
ACI Europe: Airports discuss best ways to establish grounds for private investment in Brussels

Although private investment in airports is continuing to grow, a recent IATA quote states that there is not one single positive example of airport privatisation. Some said airports disagree.

A panel discussion  at Airports Council International’s (ACI) European general assembly in Brussels discussed how successful private investment in airports can be achieved and how ‘fertile grounds for investment’ were created.

The panel included Holger Linkweiler, managing director of Avialliance, Stephen O’Driscoll, head of division for air, maritime and innovative transport from European Investment Bank, Henrik Hololei, director general for mobility and transport for the European Commission, Sidharath Kapur, president of airport sector at GMR Group, Nicolas Notebaert, chairman of VINCI Airports and Andrew Carlisle, airports business planning director of Ferrovial Airports.

The session was moderated by Mike Tretheway, executive vice-president and chief economist at Intervistas.

It is clear that privatisation at airports is euro-centric with Europe seeing 57% of passengers held by airports within private sector while the US stands at 1%: 99% of airports in the US are state-owned and backed.

The panel noted several advantages to increasing privatization within airports. Capital expenditure (capex) increase was a notable one. The panel discussed that capex injection normally follows privatisation with private airports receiving more investment overall.

A key finding in many reports on airports finds that airport infrastructure is in need of investment. Privatisation and a subsequent capex injection would arguably allow this, according to the panel.

Privatisation also transfers risk from taxpayer to investor, lessening the pressure in investing in infrastructure. Andrew Carlisle from Ferrovia Airports noted that “one of the dynamisms that the private sector has brought in at airports is how risk is managed and changes are responded to”.

However, the public vs. private debate is not as clear-cut as it seems as the panel debated. VINCI Airports chairman, Nicolas Notebaert stated that the question is not debating on binary issues but rather what ways airports can serve the benefit of people using them and contribute to the national, and ultimately, global GDP.

Hololei from the European Commission seemed to agree and stated that “whether airports are private and public is of lesser importance, more focus needs to be on if airports are efficient and well-managed”.

On the other hand, in a later session at the conference, As Justin Burns reported,  Alexandra De Juniac, director general of IATA, stated that privitisation of airports is not a “magical solution”. The director stated that airlines believe that the costs have become sky high at some privatised airports and they do not offer an added-value of service.

Conclusive remarks were summarised by the panel noting that an airport “is not a dead body of concrete” but a dynamic space that provides real value to customers.

The considerations for the day regarding privatisation, as put forth by moderator, Mike Tretheway, were “[a] proper framework articulated in advance; transparent regulatory framework and motivation for private sector to invest”. These were, for now, the fertile grounds for private investment, according to the panel.