PPP PROJECTS AND AIRPORTS:

EXPERIENCE AND STATE IN WORLD REGIONS

Anna Tomová
Department of Air Transport
University of Žilina
The Slovak Republic
anna.tomova@uniza.sk

This paper has been originated as a part of the National Grant Scheme of the Ministry of
Education of the Slovak Republic - VEGA 1/0341/09 as well as within GAB research project
works framework.

Motives for private participation in airports are different. Similar diversity can be found in
ways through which private sector participates in airport business. This paper is aimed at
public-private partnerships in the world regions, providing regional quantitative data as well
as the most interesting examples of airport public private partnership schemes.
Private Sector in Airport Business
Thirty years ago all major airports were public entities. They were considered to be a strategic
part of infrastructure without any reason for transfer of ownership or management to private
sector. Nowadays, airports became commercialized and devoluted from public sphere using
different modes of airport ownerships and management with private sector participation.
Neufville and Odoni (2002) describe eight combinations including those without private
presence that still exists in some countries. Different types of public-private partnerships
(PPP) according to the site´ s responsibility can be found in European Commission Guidelines
for successful PPP (2003). Another public private partnership typology is used in Hammani
(2006) showing four main types of PPP: contracts (lease contract etc.), concessions (ROT
etc.), greenfields (BOT etc.) and divestures (partial or complete assets sale). This typology is
followed also in the World Bank Private Participation Infrastructure database. Generally, PPP
typology is rather vague all over the world as any concrete PPP scheme is unique relationship
between public and private.
Air transport business belongs to infrastructure business having its own particularities.
Current airports are complex entities providing a wide range of business activities, core
(aeronautical) as well as non-core (commercial) ones. When comparing within air transport
industry, airports have significantly better results in the operating margin ratio than airlines
(Graham, 2008). Long-term perspectives of growth in air transport industry (STATFOR 2008)
create another reason for private sector interest to be present in airport business. There are
also other - country specific - needs that attract private investors (non sufficient public funds
for airports modernization or new airports construction, public dissatisfaction with ineffective
airport management, governmental economic policy following privatization wave etc.).
Moreover, PPP schemes can be considered to be specific channels through which
transnationalisation of airport business is being realized by global airport players.
Summarizing, airports assets are alluring for private sector from various reasons and – on the
other hand – public sector inclines to airport PPP also from variety of reasons. In the
following text, we provide description of the current state in airport public-private
partnerships in the world regions. Some data difficulties have appeared during this work as
the WB PPI database contains only developing countries (and the list is changing due to
economic and social growth in some countries (i.e. the Czech Republic listed as developing
country last years is now excluded from the database). The data for developed countries have
been obtained mainly through national PPP databases.
Public Private Partnership and Airports in North America

Canada has developed considerable expertise in the PPP field especially in cultural facilities
and sports. Each state in Canada has its own authority to promote effective use of partnership.
In 1994, National Airports Policy was published. It started divestiture process of main airports
in the country. Some airports were completely sold but the airports of the highest importance
were leased for operations, management and maintenance purposes. Another act that is very
unique in the world separated in 1996 ANS duties from Transport Canada to newly created
company NAV CANADA. This is fully private non-share and non-profit company that has
purchased the system from $1.5 billion. As far as it has the monopoly on provided services it
is subject to regulations and charges has even dropped for 30%. According to National
Airport Policy, Transport Canada1 owns, operates or subsidizes 150 from 726 certified
airports. About 94% of all passengers and cargo are handled by 26 airports that create the core
of National Airports System. Federal government retains their ownership but operations,
management and maintenance duties are transferred to currently twenty-one Canadian airport
authorities. Those authorities are created by local municipalities, cities, local chambers of
commerce, etc2. They are non-share, non-profit corporations. Smaller airports were offered to
municipalities and cities as well as to private sector in the named order. Even before long-
term leasing where private sector has only a minority (or even none) shares, private
investments were used for building new terminal at the Toronto Pearson International Airport
in 1991. Lokheed Air Terminal, Inc. – private operator and equity partner was in that time
biggest airport operator in the USA3.

Despite that private sector has been involved in social-service agencies since ‘60s in the USA,
usage of PPP schemes is relatively small here. In 2006 it covered only 14% of all closed
projects for that year. They were non-profit private companies that were met with higher
popularity as country has been ‘historically loathe to rely solely on centralized government
structures for the provision of public goods’ (Osborne, 2000). Nowadays, National Council
for Public Private Partnership collects information about projects, describes PPP projects as
such and provides helpful information for further investors. Projects are involved in various
segments of PPP market – public safety, public works, infrastructure, water/waste, military
sector, e-government etc. (there are for example 150 privately run prisons in the US – largest
number in the world4). Up to 2008 over thirty states have passed the laws to implement PPP

1
Transport Canada – Ministry of transportation in Canada
2
Vancouver International Airport Authority is an example where members of Board of Directors are nominated
by Institute of Chartered Accountants of Ontario, Regional Municipality of Peel, Government of Canada,
Regional Municipality of York, Chambers of Commerce, Province of Ontario, Regional Municipality of Halton,
City of Toronto, Regional Municipality of Durham
3
In 1993 Lockheed Air Terminal, Inc. operated 6 airports and provided services at 22 airfields worldwide.
Company doesn’t exist any more.
4
KARPOVA, K.: Public-Private Partnerships (PPP) in the United States: A Snapshot of Recent Developments
and New Directions; 2002; IP3.org [http://www.ip3.org/pub/publication2002_010.htm]
projects. Study of McKenna Long & Aldridge LLP (law company) describes several mistakes
that emerged during processing of different projects. Besides all this mistakes that were taken
into consideration for further projects, most of them are very successful that is proved by
ascending interest of public sector for this type of projects. Although airport’s ownership is
mostly public in the USA, several terminals at some airports were built by private airline
companies that were also responsible for their management and operations. TWA Flight
Center or Worldport at the New York JFK Airport or United Terminal at the Chicago O’Hare
Airport are some of the well known examples. Anyway most of the services like ticketing,
clearing, baggage handling are now provided by private companies. According to some
estimates ‘as many as 90 percent of the people working on the nation’s largest airports are
employed by private firms’ (Wells, 2003).
Airports Council International (ACI) defines six entities that are responsible for airport
operations in USA. They are shown on Figure 1.

6%
7%
9% 33%
City
Airport Authority
County
Port Authority
State
15% Other

30%

Figure 1: Providers of airport operations and management in USA

In 1997 started pilot program initiated by FAA for airport privatization called Airport
Privatization Pilot Program. Applications were posted by six airports of which only one,
Stewart International Airport, was finally accomplished. In 2000 it was leased for period o 99
years to British-owned company, National Express Group, but in 2007 remaining 93 years of
lease were acquired by public Port Authority of New York and New Jersey. Last privatization
attempt started in 2006 for Chicago Midway Airport. As in case of Canadian privatization
airport was in October 2008 leased for 99 wears to Midway Investment and Development
Corporation consortium consisting inter alia of Vancouver Airport Services. One of the most
popular PPP projects presented usually as an example of the USA public-private tandem in
airport business is reconstruction of Terminal 4 at New York JFK Airport. In 1997 Port
Authority of New York and New Jersey, an operator of JFK Airport, entered into 20-years
partnership with a private consortium, consisting inter alia of Amsterdam Airport Schiphol, to
rebuild and operate Terminal 4 for $1.4 billion making it biggest airport PPP project at that
time.
Public Private Partnership and Airports in Developed Europe 5

United Kingdom is the pioneer in partnerships with private sector In Europe, introducing a
PFI (Private Finance Initiative) concept in 1992. Nowadays it is still the leader in setting up
successful projects, but most of the projects are from health and education sphere and only
one project has been assigned to the airport development yet.

Sector distribution of PPP in UK

73
202 63
Local Government
57
Transport
Defence
Health
Others
Education
156
240

Figure 2: Sector distribution of PPP in UK

Inverness Airport6 is operated by government owned company Highlands and Islands Airports
Ltd (HIAL). In 1998 PFI contract was granted to Inverness Airport Terminal Ltd (IATL) to
build and operate new terminal. But in 2006 HIAL made a deal for buy-out of terminal back
to the Airport for a price £27.5 million. Other airports in the UK are mainly privately owned.
Many other developed EU countries have their own institutes, public or private, running web
portals and offering consultancy services in the field of PPP. In Spain, it is Foro PPP, in
France it is covered by Ministry of Finance, in Germany almost each Bundes state has its own
portal for PPP projects (for example Brandenburg portal for PPP). International Financial
Service London has made a research for PPP projects in EU and UK. According to data form
their report collected from Public Private Finance and DLA Piper, Germany has the largest
number of partnership with forty projects, Spain is the second one and France is following
with thirty-eight and thirty-four projects. From financial point of view, Spain is the leading
country followed by France and Italy. Highest number of projects is connected with transport
infrastructure with domination of road sub-sector, while rail and other infrastructure (bridges
and tunnels) are also in large numbers.
PPP projects in EU

40
Germany
97
38 Spain
France
Italy
Ireland
Others
34
19 20

Figure 3: Distribution of PPP projects (number based) in European Union

5
In this part of the text new member countries are not included. They are analysed separately as in the WB PPI
database they are considered to be developing countries.
6
Refer to PartershipUK database from March 2009. [http://www.partnershipsuk.org.uk/PUK-Projects-
Database.aspx]. The only airport is the Inverness Airport in Highlands’s area, with private participation in
terminal reconstruction.
Several airports in continental developed Europe have already experienced partnership
between private and public sector on management and operations basis as well as with
primary developing types of PPP like BOT in Europe as well as out of the region. Generally,
continental Europe follows various mixes in airport assets ownership, realizing PPP schemes
abroad. Fraport AG that is involved in many projects over the world is a company where
about 52% of shares owned by public sector represented by City of Frankfurt and Sate of
Hesse while rest is in the private hands of several companies. Amsterdam’s Schiphol Group
has been until 2007 fully in public hands. State of the Netherlands, City of Amsterdam and
City of Rotterdam owned together 100%, but on December 1, 2008 agreement was signed
with Aeroports de Paris and 8% of shares were transferred to new owner. Schiphol acquired
8% of Aeroports de Paris in turn. Federal Government in Germany announced privatization
program for airports in 1982. Since then five of 18 international airports in the country have
been partially privatized. First privatization attempt started in 1996 namely for Berlin airports
but was canceled in 2003 due to private investor withdrawal. Therefore Düsseldorf Airport
became the first one to be partial privatized in the country. Hochtief AirPort GmbH is a
shareholder in Düsseldorf and Hamburg Airport, which has benefited by getting a new
terminal partially built from private investments as well. In 2002 was signed leasing contract
for 99 years period with consortium named Berlin-Brandenburg International Partner led by
IVG Holding and Hochtief AirPort. Agreement contains clause about investments of €1.7bn,
while the government agreed to invest for a rail and road infrastructure. Latest PPP airport
project listed in the developed EU but realized abroad is BOT agreement for Riga Airport,
Latvia. Three consortiums participated in bidding process among them Hochtief AirPort, but
finally on March 3, 2009 winner was announced. Consortium of Latvian construction
company and Turkish TAV were awarded a concession for building a new terminal and
operation of entire airport. Main purpose is ‘Development of RIGA International airport
infrastructure to provide attendance of 20 million people per year.’7 TAV has informed that is
planning to invest about €250 million - €300 million. Another example of Hochtief AirPort
involvement is well known greenfield project of Athens International Airport, Greece.
Consortium entered into the agreement for 30-years with Hellenic government in 1995. Greek
State holds 55% and private investor, with majority of shares held by Hochtief, owns the rest.
Project is often presented as the success of using the institute of public-private partnership due
to three months advance of the project development.

Public Private Partnership and Airports of Australia and New Zealand

Australia followed the UK PPP example in improving infrastructure, school and health
system and other public services. In database administered by National PPP Forum thirty-nine
PPP projects are listed. Majority (one fourth) of the projects are from transportation sphere,
mostly covering road transport. Australia has also many projects covering housing, state
services like court houses or prisons as well as one project from defense area (Defense
Headquarters Joint Operation Command Facility).

7
Portal for PPP projects in Latvia: Development project of RIGA International airport;
[http://www.ppp.gov.lv/en/view_1843.html]
 5% 3%
5%
25% Transport
8%
Water&Waste
Other
Health
Education
13% Housing
Prisons
20%
Energy
21%

Figure 4: Sector distribution of PPP in Australia

According to Airport Act from 1996 preparation phase of privatization of main airports of
Australia was launched. The first phase covered the sale of leases on three major international
gateway airports, at Brisbane, Melbourne and Perth, and the second phase the sale of leases
on a further fifteen airports. Privatization was in the form of long-term leasing for 50 years
with an option to extent for another 49 years. Westralia Airports Corporation (WAC) is an
example that operates Perth Airport, third largest airport in Australia. Most of the
shareholders are created by different kind of funds like Officers Superannuation Fund. After
private partner entered the company the process of airport improvement started. An
announcement of A$ 1 billion vision was made to deliver a new airport in three phases. New
terminal, hotel, parking facilities and other facilities are in this master plan.
In New Zealand different ownership structure is observed for three major airports.
Christchurch airport is owned by government, Auckland is a listed public company and
Wellington was privatized in 1998 with 66% of private capital.

Public Private Partnerships and Airports of Latin America

According to World Bank statistics, Latin America is the most progressive region from
developing countries in PPP projects application. In more than twenty years since 1987 it
accommodated 1,252 projects. Most of the countries of this region have experienced
dictatorship government that slowed down development of almost all infrastructure areas as
well as in sphere of health or education. With often low and unstable state budgets countries
searched for another source of financing of new projects as well as for experienced partners
for better effectiveness of operations and management. Public private partnership in different
ways was therefore accommodated in policy of most of them. The highest number of projects
(about one fourth) is held in Brasilia, the largest country of region. 326 projects had been
agreed until 2007. It is followed by Argentina (193), Mexico (176) and Columbia (132). Chile
with 107 projects was the spearhead with development six of its first partnership in 1987.
 PPP in South America

Others; 262
Brazil; 326

Peru; 56

Chile; 107
Argentina; 193
Colombia; 132
Mexico; 176

Figure 5: Distribution of PPP projects in South America

When discussing airport sector with regard to PPP, paradoxical situation can be observed in
this region. Country with highest number of PPP projects does not have any one concerning
airport infrastructure. But in 2008 has Brazilian government started consideration for using
private public partnership for several airports in the form of concession or BOT type. Chile
experienced the highest interest from public and private sector for co-operation in airport
sector in the region.

PPP airports in South America

Others; 10 Chile; 8

Peru; 3 Colombia; 6

Ecuador; 3
Mexico; 6
Dominican Argentina; 4
Republic; 3

Figure 6: Distribution of airport PPP projects in South America

All airport projects in Chile are of concession type. Concession for the main airport of the
country, Santiago International Airport, in Santiago de Chile was in 1997 granted to
consortium SCL Terminal Aéreo Santiago S.A.8 for 15 years. Under this concession, that has
some features of BOT type, more than $300 million has been invested and new terminal was
inaugurated in 2001. After this several other developments like control tower, cargo terminals
or sewage treatment plants have been developed and nowadays is Santiago International

8
One of the shareholders is already mentioned Vancouver International Airport Authority.
Airport considered the safest airport and the airport with the best service in the Latin
America9.
Third busiest airport in Latin America is El Dorado International Airport, Bogotá, Colombia,
that has experienced advantages of public private partnership as well. In 1995 concession for
building second runway was granted to a special-purpose corporation. As in USA one airport
terminal was built in 1998 and operated privately by Colombia’s national carrier Avianica.
Since 2006 is airport operated under the concession by Colombian’s company Opain with
participation of Swiss Flughafen Zürich AG. Concession is granted for 20 years with condition
of investment of at least $650 million that should include construction of new terminal.
Mexico followed privatization path sketched by Australian and Canadian cases. In 1998 three
regional corporations were created with an aim to operate a group of airports in specific
geographical region. They are government-owned corporations with its own capital and legal
identity listing 85% of shares on national stock exchange as well as on NYSE.
Table 1: PPP airports statistics in Latin America
Total number of projects 43
Country with highest no. Chile
Total investments $9,285 million
Country with highest investments Mexico
Most expensive project Concession for 33 airports for
Aeropuertos Argentinos 2000;
Argentina
Concession (BOT, RBOT, etc.) 32
Divestiture 1
Greenfield project 6
Management and lease contract 4
Source: WB PPI database.

PPP schemes in the region cover all PPP varieties, divesture including. However, the share of
divesture projects is only 2,3 % on overall projects number.
Public Private Partnership and Airports in East Asia and Pacific Region
East Asia and Pacific belong to the regions with the remarkable economic growth over the
world. The region is also very advanced in developing PPP projects for different spheres of
public interest. In the beginning of 2009, 1,228 partnership projects are listed in the World
Bank database with more than 60 % of them developed in China.
China has experienced public private partnership since 1980s with highest interest in energy
sector, following by water and sewage and transport sector. Total investments of $99,626
have been brought by private sector for within these partnerships. Largest number of projects
and also share investments are of greenfield type. Only 36 projects that carried 5% of
investments have been canceled or distressed.
In other countries energy sector is also prevailing, followed by transportation sector mostly.
As well as in China, most of the investments have been used for brand new, greenfield
projects.

9
Foreign investment committee: Invest in Chile, an Opportunity; 2007 (propagation material of Geverment of
Chile)
 PPP in East Asia and Pacific

Others; 81
Indonesia; 87

Philippines; 88

Thailand; 94

Malaysia; 96 China; 782

Figure 7: Distribution of PPP projects in East Asia and Pacific

Majority of projects in airport segment is holding China. With its seventeen airport projects is
covering the majority (62%) of the projects in region also when talking about the financial
investments (more than 50%). Partial divestiture of the airport is the most common type of
private participation with the highest number of projects from the developing regions.
Greenfield projects are also in the highest number within this region.

PPP airports in East Asia and Pacific

Vietnam; 1
Philippines; 1
Lao PDR; 1
Thailand; 2
Malaysia; 2

Cambodia; 3 China; 17

Figure 8: Distribution of airport PPP projects in East Asia and Pacific

As it was mentioned, most of the airport projects are divestiture one in China. In 1998 Civil
Aviation Administration of China released the investment guidelines for foreign companies to
take up to a 49% in the airports. Wuhan Airport was the first one where private company from
Honk Kong obtained its 30% share. Before that four large airports were transformed into the
join-stock companies with shares publicly listed on the stock exchange. Xiamen Gaoqui
International Airport under the governance of Xiamen Airport Development Co. Ltd. since
1996 has 25% of shares listed on the Shanghai Stock Exchange. In shares of 1998 Shenzhen
International Airport, currently 5th busiest airport in country, were put in the stock exchange.
Airport operates the area of Honk Kong and is the favorite alternative especially for the low-
cost carriers. Construction of Terminal 3 that is considered to be the architectural masterpiece
is taking a place since the beginning 2008. Financing is provided by the company’s own
resources as well as by the public investments from government or the city. Stock listed
shares have also two airports in Shanghai that are the 3rd and 4th busiest airports in China. In
1999 new cargo terminal was built at the Shanghai-Pudong Airport by the newly established
company Shanghai Pudong Airport Cargo Terminal Co., Ltd. This company is a joint venture
company with 51% of airport’s shares and 49% of private shares. One of the investor is the
Lufthansa Cargo AG that owns 29% of shares. Together $57.9 million were invested. Later on
more airports followed this trend and were transferred to the joint-stock companies with
limited number of public shares. Private investments were then used for development of these
rapid-growth airports.
In 1991 Malaysian Parliament passed a bill to separate the Department of Civil Aviation
(DCA). DCA remained the regulatory body and Malaysia Airports Berhad, newly created
entity became responsible for airport operations. In 1999 this entity became the first airport
company to be listed in Asia. It covers the operations of 39 airports including Kuala Lumpur
International Airport, 7th busiest airport in Asia.
Cambodia has chosen different way and did not offered airports for privatization or just for
stock listing. Ownership of the airports included in the PPP projects remains in the public
hands and concession for 35 – 40 years was granted for one private company. Societe
Concessionaire de L'Aeroport (SCA) operates three international airports there. Concession
for first, Pochentong International Airport, was granted in 1995 for 45 years and other two
were granted in 2001 and 2006. Company has only foreign shareholders, Muhibbah
Engineering from Malaysia and Vinci from France. Total investments amounts $432 million.
Another example of using private experience and investments is Lao-Japan Airport Terminal
Services Co., Ltd that has built and operated a new terminal in Vientiane
International Airport, Laos. European capital can be found in new terminal at Ninoy Aquino
International Airport, Philippines, where BOT contract was signed with German Fraport AG.

Table 2: PPP airports statistics in East Asia and Pacific

Total number of projects 27
Country with highest no. China
Total investments $8,099 million
Country with highest
investments China
Most expensive project Partial divestiture of
Hangzhou Xiaoshan
International Airport; China
Concession (BOT, RBOT, etc.) 5
Divestiture 11
Greenfield project 9
Management and lease contract 2
Source: WB PPI database.

Public private Partnerships and Airports in Sub-Saharan Africa

Sub-Saharan Africa is the sharpest example of developing countries. Reason for fragile social
and economic position of the region can be found going deeply in history as well as the high
number of civil or other wars that destroy these countries and avert them from further
development nowadays. Governments are very unstable and financial situation is very poor
with high rates of inflation and low incomes. In Sub-Saharan region World Bank is listing
about 380 projects. Nigeria is a leading country with only 13% of all projects. There are 45
other countries in this region using Private-Public Partnership that makes it a region with
largest spread. Most of them list in average six to eight projects. Other active countries in
regions are South Africa, Tanzania, Ghana or Kenya that together with leading Nigeria covers
36% of all partnerships. Most of the projects are new greenfield structures from
telecommunication sector that is still in shortage within this region. According to the 12th
meeting of the Conference of the African Ministers of Transport and Communications Africa
needs:
“The Transport in Africa Platform of Action recognizes that there is a need to develop
integrated transport systems to provide the continent with safe, reliable, efficient and
affordable infrastructure and services so as to promote regional integration, address the needs
of the poor, reduce the impact of HIV/AIDS, empower women, underpin economic growth
and enhance Africa’s position in global markets.” (UNECA, 2002)
NEPAD (The New Partnership For Africa’s Development) in its document Communique of
the African Ministerial Forum on Integrated Transport supports the idea of exploiting the
PPP institute when stating that ‘Given the capital-intensive nature of transport infrastructure, a
public private sector partnership (PPP) should be adopted, which should focus on
concessioning to allow the transport system to fund itself for sustainability’. (NEPAD, 2003)

PPP in Sub-Saharan Africa

Nigeria; 50

South Africa; 33

Tanzania; 21
Ghana; 16
Others; 238
Kenya; 16

Figure 9: Distribution of PPP projects in Sub-Saharan Africa

Aviation in Africa is generally on the same low level as other industries. Most developed
country is South Africa. Rest of the region still needs further development to achieve high
standards of developed world. Most of the airlines on the European black list10 are from this
area. Although only one airline is a member of international airline alliance there is one more
with a status of associate member airline and one more is being considered for a
membership.11

10
European black list – list of airlines that are not allowed to fly to EU because of safety reasons.
11
South African Airways is a member of Star Alliance, Kenya Airways is an associated member of Sky Team
and Ethiopian Airlines is being considered for a membership in Star Alliance.
 PPP airports in Sub-Saharan Africa

Togo; 1
Tanzania; 1
South Africa; 4
Nigeria; 1

Mauritius; 1
Cameroon; 1
Madagascar; 1
Gabon; 1 Côte d'Ivoire; 1
Kenya; 1

Figure 10: Distribution of airport PPP projects in Sub-Saharan Africa

Despite all those negative facts investment process is raising especially in transport and
telecommunication infrastructure. Private interest in airports is growing as well and
governments are seeking for opportunities to use its experience and financial investments as
well. South Africa is the country with the highest number of projects - three partial divestiture
and one greenfield project. In 1993, the Airports Company South Africa Ltd. was created.In
1998 it was partially sold to private sector. 20% share was sold to European Aeroporto di
Roma for $165.7 million and 4.2% acquired five South African companies. But in 2005
Aeroporto di Roma sent its share back to public sector strictly speaking to The Public
Investment Corporation Ltd. Aeroports de Paris is another European airport company that has
interests in African region. With another French company, SUEZ, participates in concession
contracts for two airport projects. Since 1991 in Aeroports de Madagascar and since 1993
with Ascena from Madagascar in Aeroports de Cameroon that hold the concessions for airport
system in Madagascar and Cameroon. Another French interest in the region can be observed
in Liberville International Airport, Gabon where lease contract was granted to Marseille’s
Chambre of Commerce and private company Sofreavia that is currently part of Egis Avia.
Egis Avia is also involved in the latest contract for refurbishment of Brazzaville Maya-Maya
Airport in the Republic of Congo. Same companies (Marseille’s Chambre of Commerce and
Sofreavia) create AERIA that owns ROT concession for Felix Houphouet-Boigny Airport in
Côte d’Ivoire. British BAA was in 1999 awarded management contract for five years for Sir
Seewoosagur Ramgoolam International Airport, Port Louis, Mauritius. ‘The project aimed to
upgrade all facilities including: new departure and arrival lounges; new conveyor belts to
improve efficiency of baggage delivery; new restaurants; improved immigration, customs and
police facilities and new duty free shops at departures and arrivals.’12 In 2007 started
construction of greenfield project, Aéroport International de Blaise Diagne, Dakar, Senegal. It
is PPP project of BOOT type, for period of 25 years, with private investors from France (BNP
Paribas Bank) and Morocco and management partner, Fraport, from Germany.

12
Airport-technology.com: Sir Seewoosagur Ramgoolam International Airport (MRU/FIMP), Port Louis,
Mauritius ; [http://www.airport-technology.com/projects/mauritius/]
Table 3: PPP airports statistics in Sub-Saharan Africa
Total number of projects 13
Country with highest no. South Africa
Total investments $505 million
Country with highest
investments South Africa
Most expensive project BOT greenfield project for
Murtala Muhammed Terminal
One;
Nigeria
Concession (BOT, RBOT, etc.) 5
Divestiture 3
Greenfield project 3
Management and lease contract 2
Source: WB PPI database.

Public Private Partnership and Airports of Middle East and North Africa

North Africa and Middle East region has the lowest experience with PPP projects, with only
127 projects since 1987. It is also one of the smallest explored regions together with South
Asia. Leading country is Egypt with twenty-two projects mostly of greenfield type (68%).
Egypt has majority of its partnership within transport sector although generally in region is
telecom sector prevailing. It has made good steps towards implementation of PPP projects in
law sphere and practice with involvement of World Bank that in 2007 granted Cairo a
technical reward of $600,000. Following three countries has attracted private participants
mostly for energy sector. When talking about financial investments, Morocco has the leading
position with $18,513 million. Telecom is the highest invested sector here with twice so much
investments as second energy sector and almost eight-times more that third transport sector.

PPP in Middle East and North Africa

Egypt, Arab
Rep.; 22

Others; 47
Algeria; 19

Oman; 14
Jordan; 12
Morocco; 13

Figure 11: Distribution of PPP projects in North Africa and Middle East

As the most frequent tourist place in the region Egypt has also the highest number of PPP
projects in airport sector, but in financial expression Tunisia with only one concession project
has the biggest value share in the region.
 PPP airports in Middle East and North Africa

Tunisia; 1
Oman; 1

Jordan; 1

Egypt, Arab
Djibouti; 1
Rep.; 7
Algeria; 1

Figure 12: Distribution of airport PPP projects in Middle East and North Africa

Egypt has decided to involve private sector to finance and also manage the new or existing
airports. The first airport PPP project in the country was brand new greenfield BOT project
of building the Marsa Alam International Airport in 1998. Private Egyptian corporation owns
and operates the airport while Aeroports de Paris, that used to have an involvement also in
southern parts of Africa, manages it. In 2000 a BOT contract for building a new terminal with
big Egyptian company Artoc Suez. was signed There are two other greenfield airports where
BOT concession was granted for 50 years to American company Kato. Aeroports de Paris
was in 2005 awarded the concession to operate another five Egyptians airports - Sharm El
Sheikh, Hurghada, Luxor, Aswan and Abu Simbel. Main airport and also the second busiest
airport in whole Africa, Cairo International Airport is under eight years management contract
with German Fraport AG.
No other greenfield airport project can be observed in this region. BROT concession contract
can be found in Jordan, Oman and Tunisia while management contracts are in Algeria and
Djibouti. Again Aeroports de Paris is involved in francophone Algeria where it provides
management services for public company Aeroport d'Alger for four years until 2010.
According to official portal of company, ‘Aéroports de Paris Management has focused on
developing non-aviation revenues, upgrading operating procedures to international standards
through the transfer of know-how and the training of airport employees’.13 British BAA was
part of the consortium that in 2001 obtained the BROT concession contract for Seeb and
Salalah Airports. Condition for building new terminal, runway and control tower was not met
reasoned by terrorist attack in 09/2001 and the lowered demand for air transport especially in
Arabic countries. Therefore in 2004, government of Oman decided to take over the shares of
foreign partners and management and operations were taken back by government’s Oman
Airports Management Company S.A.O.C. Turkish TAV company that operates all major
Turkish airports, Macedonian airport and Riga International Airport, Latvia, operates by its
subsidiary TAV Tunisie two international airports in Tunisia under the BROT concession.
Concession was granted for building a new airport in Enfidha and for upgrade of Monastir
airport with following operations.

13
From official portal of Aeroports de Paris Management; [http://adp-m.com/pg_portfolio.html#r4]
Table 4: PPP airports statistics in North Africa and Middle East
Total number of projects 12
Country with highest no. Egypt, Arab Rep.
Total investments $2,103 million
Country with highest
investments Tunisia
Most expensive project BROT Concession for Enfidha
and Monastir International
Airports; Tunisia
Concession (BOT, RBOT, etc.) 4
Divestiture 0
Greenfield project 4
Management and lease contract 4
Source: WB PPI database.

Public Private Partnership and Airports in South Asia

South Asia region is mixed region with countries with remarkable economic growth but also
with economic problems. India is the most developed country in the region, being the second
most populated country in the world. With an average GDP growth of 7.5%14 for last two
decades it is one of the fastest growing economies in the world, but with population below
poverty line rate of 27.5% it is also one of the poorest countries. Nevertheless its economical
growth is mainly a reason of cheap labor force used by foreign private investors. Cities like
Mumbai, Chennai, Delhi or Bangalore has been changing their face for last fifteen years to
new look of IT, science or hi-tech centers. With this fast growth a need for a better
infrastructure, energy sources or water sources rose up. India is therefore the largest country
in this region using PPP projects covering 73%. Most of the projects are greenfield (BOT or
BOOT) projects from energy sector and concession agreements for transport sector, mostly
for road systems. Even though, telecom it the sector with highest investments (in India and the
rest of the region), followed by energy sector. Pakistan as the second most initiative country
in public private partnership with forty-seven projects follows the same pattern of investments
mostly in telecom followed by energy and transport sector.

14
OECD: Economic Survey of India published in Policy Brief, October 2007 available at
[http://www.oecd.org/dataoecd/17/52/39452196.pdf]
 PPP in South Asia

Sri Lanka; 23 Others; 17

Bangladesh; 23
Pakistan; 47

India; 307

Figure 13: Distribution of PPP projects in South Asia

World Bank lists only eight airport projects within this region. Again majority of them (6) is
on the Indian land and Bangladesh and Pakistan are listing for one airport. Half of the projects
are new greenfield airports and two airports are on concession and two on management
contracts. Bangladesh is another example of an unsuccessful airport project. In 2005 Thai
Airways signed Management contract for second largest airport in the country Shah Amanat
International Airport for ten years. After two years project was canceled due to delays in
transferring the airport management15. In Pakistan new airport was built under the BOO
agreement between Pakistan Civil Aviation Authority and Sialkot Chamber of Commerce &
Industry.

PPP airports in South Asia

Pakistan; 1

Bangladesh; 1

India; 6

Figure 14: Distribution of airport PPP projects in South Asia

15
THE WORLD BANK GROUP: PPI data update note 10, July 2008
India is counting six PPP projects concerning airports. Three of them are greenfield, two
concession and one management projects. First airport PPP project in country was new
international airport in Cochin signed in 1996. Airport was built using investments from more
than 10,000 Non Resident Indians in total investments of $125 million. In 2005 followed two
projects of new airports in very similar cities of Bangalore and Hyderabad. Both cities
experienced rapid growth and current airports were not sufficient to deal with the increasing
number of passengers. Bangalore International Airport has two European shareholders namely
Siemens AG and Unique Flughafen Zurich AG, that is also responsible for airport
management and third partner is Indian company. Indian government set the requirements for
airport PPP projects that one of the shareholders of private consortiums must be an airport
operator. In Hyderabad International Airport Ltd it is Malaysia Airport Group. Hyderabad
airport has been built for $400 million and has the longest runway and tallest control tower in
the country. Fraport AG is involved in the Indira Gandhi International Airport in Delhi where
it is part of Delhi International Airport Limited, consortium that was awarded BROT
concession in the value of $2,150 million. Concession has been granted for 30 years with
requirements for renovation of Terminals 1A, 1B, 1C and Terminal 2, construction of 4.43km
CAT IIIB and Code F compliant runway, construction of new domestic terminal and
construction of an integrated passenger terminal (Terminal 3)16.

Table 5: PPP airports statistics in South Asia

Total number of projects 8
Country with highest no. India
Total investments $4,554 million
Country with highest
investments India
Most expensive project BROT Concession for Indira
Gandhi International Airport;
India
Concession (BOT, RBOT, etc.) 2
Divestiture 0
Greenfield project 4
Management and lease contract 2
Source: WB PPI database.

Public Private Partnerships and Airports in Developing Europe and Central Asia

In this region the Russian Federation is a country with the highest number in the PPP
database. Although more than half (183) of all (310) listed partnerships are divestiture
projects, other PPP types are used as well. Hungary, Poland or Turkey are next on the list
counting from 39 to 59 projects. Most of the projects in this region are divestiture projects that
are not always considered a PPP projects while the second are greenfield projects that has
almost the same value of investments as divestiture projects. The most valued sector in terms
of financial investments as well as in term of number of projects is telecom closely followed
by energy sector.

16
From PPP India Database available at
[http://www.pppindiadatabase.com/Screens/frmView.aspx?PROJECTID=MPfNkEUZr4g=&AUTHORISEDUS
ER=N]
 PPP in Europe and Central Asia

Others; 225
Russian Federation;
310

Kazakhstan; 33
Turkey; 39
Hungary; 59
Poland; 49

Figure 15: Distribution of PPP projects in Europe and Central Asia

Highest number of PPP projects in this region is within Turkey. TAV Airports holding that
was established in 1997 as a joint venture of two Turkish companies. One of the first BOT
airport contracts in Europe was awarded to this group in the same year for building and
operating a new terminal at the Istanbul Ataturk Airport. TAV has later won a concession for
management of another two main airports in Turkey - İzmir Adnan Menderes Airport and
Ankara Esenboğa Airport. It has also interests in Tunisia in already mentioned Monastir
Airport as well as in Georgia in Tbilisi Airport and Batumi Airport. Latest success (spring
2009) was awarded BROT concession for Riga Airport, Latvia. Second busiest airport in
Turkey, Antalya International Airport, is leased to the joint venture company with majority
share of German Fraport AG. Private investments were used for building a new international
terminal and further operations.

PPP airport in Europe and Central Asia

Others; 5
Turkey; 7

Poland; 2

Georgia; 2

Armenia; 2 Russian Federation;

Hungary; 3 6

Figure 16: Distribution of airport PPP projects in Europe and Central Asia

In Russia, most of the PPP projects that are listed in database are of divestiture form. But
there are also some of more traditional BOT, concession or management types. Sheremetyevo
International Airport, Moscow that is split into the two separated terminals is operated by
joint venture with participation of Singapore’s Changi Airport. Russian operator has decided
for this choice because of outstanding results of the management and operations of the
selected airport. Another Moscow’s airport, Domodedovo, is leased to Russian group East
Line under the 75 years lease contract. The airport has experienced rapid growth of handled
passengers after many significant airlines have switched their base from Sheremetyevo
airport. East Line has been heavily investing into the airport and has matched the demanded
capacity as well as emerged new control tower or reconstructed original terminal. Plans are to
build extension called as Terminal 2 and by 2012 another Terminal 3. Experience from PPP
airport projects from South America has encouraged Argentinean company Corporacion
America (CASA) to take a part in the biding process for the concession for main airport in
Armenia, Zvartnots International Airport, Yerevan in 2001 and later in 2007 also in Shirak
Airport, Shirak. In both cases CASA is not only responsible for management but is also the
investing company for current or further development of both airports.
Budapest Airport in Hungary is very good example of using private participant for public
airport. In 1997 started BOT Greenfield project for expansion of Terminal 2 with price of
$120 million from Canadian consortium. One year later British consortium built another
greenfield project for $15 million – Malev Air Cargo Terminal. After a good experience with
private operations and investments Hungarian government decided in 2005 to award a ROT
concession for 75 years to consortium of Canadian, Singaporean and German companies.
Same German company, Hochtief AG, is also involved in consortium that was awarded a
BROT concession for Tirana International Airport, Albania for twenty years with investments
of $308 million. ROT concession for Varna and Bourgas Airports are hold by German
Fraport AG and also already mentioned Malaysia Airports Holding Berhad has management
contract for ten years for operations of Astana International Airport, Kazakhstan. Romania
has also decided to solve the need for a new international airport by using a Public-Private
Partnership. Brasov Airport is to be built and operated by Canadian company for forty years.
Total costs of the project are supposed to be about $116.8 million.

Table 6: PPP airports statistics in (developing) Europe and Central Asia

Total number of projects 27
Country with highest no. Turkey
Total investments $9,543 million
Country with highest investments Turkey
Most expensive project ROT concession for Budapest
International Airport, Hungary
Concession (BOT, RBOT, etc.) 8
Divestiture 6
Greenfield project 7
Management and lease contract 6
Source: WB PPI database.

Further Research Questions

Public private partnerships in airport business generate various perspective research
questions: How can global strategy of key airport business players be defined with regard to
foreign market penetration? Are there any inter-regional differences within this strategy?
What part of world airport business is kept by key airport business players through assets
ownership and/or public private partnerships? What is performance index and
competitiveness index of key world airport business players taking into account their presence
in airport divestures and/or airport public private schemes? Which of the key airport
business players is the most transnationalized one? What will evolution of airport
transationalisation be within the world regions and among them? We assume to contribute in
answering these questions in future.

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