Attendance at GAD 2021 in Zurich was hit by a new round of travel restrictions thanks to Omicron. The incident was a reminder that COVID still has the power to disrupt. Nevertheless, the airport PPP business is looking brighter next year.
The Global Airport Development forum, GAD 2021, the key event for the airport industry and airport public-private partnership (PPP) world, took place in Zurich, Switzerland from November 30 to December 2, 2021.
Invited by Modalis/AirportIR, a joint news partner of the GAD event, this gathering – usually including the most senior decision-makers among airport operators and investors – was a perfect opportunity to review the state of the airport PPP market and its evolution as we move into 2022.
Sadly this year, the appearance of the Omicron variant led to speedily instigated travel restrictions from the Swiss government that unfortunately resulted in the absence of some major market players.
Nevertheless, at the event, airports and airport groups, particularly those with private sector holdings, confirmed that they have been very active during the two years of the COVID19 crisis in organizing themselves and preserving their infrastructures, their teams, and their financial capacity. Their aim was to be ready for a sustained recovery in aviation activity when it came. Many of them, although unfortunately not all, have successfully reached satisfactory agreements with their respective governments.
Despite the latest twists and turns of the COVID crisis, a feeling of confidence in the recovery of the airline business prevails. Even if international air activity – including that of the major hub platforms – will take much longer to revive, domestic and/or regional activity should return to its 2019 levels as early as 2022, or 2023 at the latest.
In this context, most of the players in the PPP market are positive about a recovery of the airport PPP industry and agree that the COVID crisis has been a real game changer. As well as new thinking on air transport, passenger behavior has been modified, and there will also be revisions to the structuring of airport concessions whose sensitivity to traffic risk has proved to be a weakness. However, what did not emerge just yet is a clear vision of what a new model of airport development and airport PPP might look like in a world that is struggling to recover from its most severe crisis so far.
Although the award of the Medan airport concession in Indonesia to GMR and the announcement of the extension of the Antalya airport concession awarded to TAV and Fraport have been announced recently, 2021 has proved to be a relatively transaction-poor year.
But GAD highlighted some plus points in the world of airport PPPs:
Recently awarded PPP projects are progressing and have been commented on positively. They include the imminent start of the JFK Terminal 1 construction in New York (Carlyle Group, Munich Airport); the upcoming opening in 2022 of the new Central Terminal at LaGuardia Airport (Meridiam, Vantage); and the start of the works for the new Delhi Airport, Noida (Zurich Airport).
Although the extension of some concessions will delay the launch of new concessions, several tenders should be launched in 2022. The Brazilian government has confirmed the 7th round privatization of three bundles of airports around Sao Paulo Congonhas, Rio Santos Dumont and Belem airports (target June 2022), and a new tender for Viracopos airport. The government of the Bahamas has confirmed the concessioning of three bundles, totalling nine airports. The Barbados airport concession project is expected to be completed in 2022. Kyrgyzstan (Bishkek and Osh airports) and Saudi Arabia (Abha Airport) are expected to start preparation processes for the concession. Finally, the authorities of Turks & Caicos, attending GAD for the first time, may consider the concessioning of their airports.
Other projects should probably also see the light of day in 2022. We can therefore say that airport PPP activity is reviving after the crisis.
Finally, GAD gave a nod to the world of innovation with a much-appreciated session on Urban Air Mobility. UAM development in the airport environment, even if it remains dependent on important regulatory issues, should accelerate in the years to come if we take account of the huge commitment from manufacturers, airports and airlines. The market should offer the private sector an opportunity to be an essential asset in the rapid development of this new type of airport infrastructure.