After a long pandemic-induced hiatus, on Aug. 20th the Barbados government announced that a total of 13 bidders have been pre-qualified to participate in the RFP for concession of Grantley Adams International Airport (GAIA). The very long ‘short list’ includes:
According to the release, the pre-qualified parties are expected to receive the RFP and bid documents by the end of 2020, however no firm timelines have been published as yet. In 2019, GAIA handled 2,298,500 passengers, up 4.9% from 2018, however like almost all other airports across the globe, current traffic volumes are down to a trickle due the pandemic. From 2009 and 2019, GAIA’s annual growth in passenger traffic was in excess of 1.7%, registering consecutive growth for six years between 2013 and 2019. Prior to the pandemic, GAIA was forecast to reach four million passengers by 2050. Low Cost Carrier (LCC) market share has hovered around 8% from 2008 to 2011, however it has been increasing the last few years, hitting a high of 17.5% in 2016, declining to 14.5% in 2018. Given LIAT (formerly Leeward Islands Air Transport) has been the dominant carrier on short-haul intra-island traffic and the largest airline operating at GAIA, and in light of LIAT’s recent liquidation announced in late June, the future growth in LCC traffic at GAIA will most likely to come from U.S. airlines (like JetBlue) or other international carriers. Source: GAIA For more details on GAIA traffic, check out our Jan. 15, 2020 feature IR Spotlight article. The PPP Transaction Advisory Services team at the IFC are supporting the Barbados government on the GAIA deal. According to the IFC, Barbados offers an attractive tax regime “with the lowest OECD-compliant corporation taxes in the world and a regressive tax structure” and the government recently announced a COVID19-inspired program which allows visitors to enter the country visa-free for up to one year, with the aim of attracting global tele-commuters. GAIA is considered to be a well-maintained and modern airport with good potential for non-aeronautical revenue and operational improvements. Leveraging these positives, the GAIA project will include rehabilitation of airport pavements and a 27,000 sq.m. expansion and upgrade of the existing passenger terminal. In the first four years of the concession, the private operator is required to invest at least USD54m on “initial fundamentals” and a total of between USD260-300m over the concession term. Mandatory capital investment include:
The 30-year concession may also include share options for GAIA employees and the National Insurance Scheme. In early Mar. 2020, it was reported that the airport union has been provided assurances by the government that all GAIA staff will be transferred to the private operator and there will be no staff terminations. Based on a late 2020 release of the RFP documents, the GAIA concession is likely to be awarded in Q2 2021, with COVID19 looming large over the process and investor/bidder optimism.