Highlights:
- 2018 has seen the conclusion of several longwinded airport deals while the concession procedure in Brazil and Japan has gathered pace;
- Flop of the Year? No question - Mexico, where political expediency won the day;
- Potentially some big deals in 2019 - just like the old days
CAPA - Centre for Aviation provide us with some insights into the sector using data from its CAPA Global Airport Investors Database...
- The Brazilianairportconcessions gathered pace although the real action will be in 2019 and beyond. More bone than steak, they are now down to the far less attractive minor city airports. Three blocks of 12 will be concessioned in Mar-2019 then another 44 by 2022. They feature at #1 because there is so much interest still in a procedure that remains hazy, and which has not worked well for some existing concessionaires.
- The Japanese airport concessions have also developed a momentum of their own. Following the initial Osaka concession others include Sendai, Fukuoka, and Takamatsu; also the seven Hokkaido airports in one bundle, which should be concluded in 2019. Barely five years ago there was hardly any such thing as airport privatisation in Japan.
- Vinci Airports' conclusion of the deal to operate Belgrade's Nikola Tesla Airport, with the help of four multilateral institutions and six merchant banks to cover the high upfront fee, saw it begin the 25-year concession on 22-Dec-2018. In the 5mppa category Belgrade is towards the smaller end of the type of airport Vinci would operate in isolation (i.e. not part of a group), not ideally placed in southeast Europe and in a country where there is no certainty about EU entry. A moderate risk.
- The concession on Kingston's Norman Manley airport to Grupo Aeroportuario del Pacifico (GAP) saw that Mexican company reach the status of a major player on the global scene while putting to bed a procedure that had dragged on over two years and been abandoned once because there were no bidders. Now the company has to deal with allegations of uncompetitive behaviour owing to its large shareholding in the 'rival' Montego Bay airport.
- The extension of Athens Airport concession in Greece was a similarly long drawn out affair. The 20-year extension granted to Athens International Airport, part of the enforced privatisation programme, helps put Greece back on an even keel and offers some hope to the next round of (23) smaller island airport concessions.
- The short five-year concession granted to Incheon International Airport Corporation to operate Terminal 4 at Kuwait International Airport makes it in for two reasons: significant movement in a form of privatisation in the Middle East and the spreading of IIAC's wings.
- Moscow Sheremetyevo Airport airfield's concession agreement has just been signed (25-Dec-2018), with JSC International Airport Sheremetyevo. This little Christmas present for Russia's government will run for 49 years and is the first between it and a Moscow airport.
The flop of the year was undoubtedly the New Mexico City airport, after the incoming President pulled the plug on something which could have been saved with private sector participation. As it stands, bond holders are trying to get their money back while a military base is expanded instead. There will be plenty more of this story in The Blue Swan Daily in 2019 for sure.
What can we look forward to in 2019?
The Philippines economic development authority has, at last, approved San Miguel Corporation's proposal to develop the New Manila International Airport. Chaired by the volatile President Duterte, there is no absolute certainty about this deal yet. The same authority cleared the North Luzon Airport Consortium's bid to operate Clark International Airport.
The French government will sell its stake in Groupe ADP although the regulation has not yet been passed. Expect Vinci to play a big part in this.
Global Infrastructure Partners to offload its 42%, GBP3 billion shareholding in London Gatwick Airport. The sale couldn't drone on any longer. It looks like it will now go ahead, to Vinci, and that will also cast doubt on its 100% holding in Edinburgh Airport.
The number of public-private partnership deals to build airport terminals in the U.S. will increase and there is a 50:50 chance the lease on St Louis Lambert Airport will go through, the first on a major hub in the US mainland and six years after the Chicago Midway lease was abandoned.
Saudi Arabia's airport privatisation programme looks set to pick up the reins following a series of economic and political setbacks.
Similarly in India where six airports will be concessioned next year, the most momentous shift forward since 2006. This could include the first 'secondary' concession whereby an existing concessionaire (Cochin International Airport Ltd) takes on another concession (Thiruvananthapuram).
Australia might, just might, attract some private sector interest to the Western Sydney Airport project though that is more likely to be several years down the road.
The private sector construction and operation of the Kastelli/New Heraklion Airport in Crete (Greece) should commence in Jan-2019, subject to ratification by the Greek government.
Interest in Eastern Europe continues with the 30-year concession of Montenegro's Podgorica and Tivat airports reportedly attracting 15 companies, and the possible concession for 30-years of Bratislava's Ivanka Airport.
Macquarie Group's 36% stake in Brussels Airport is likely to go, to a multinational consortium.