The approval of the new Heraklion International Airport could be good timing as several European air markets have started to slowly recover, including Greece, and will hopefully maintain some momentum into 2022 and beyond.
The updated master plan for the new Heraklion International Airport in the central Kasteli area of Crete has now been approved by the Hellenic Civil Aviation Authority allowing the project to move forwards.
The gateway is set to replace the existing Nikos Kazantzakis Airport on the doorstep of Heraklion, the largest city and administrative capital of Crete. The new airport in Kasteli is much further out, but the location has fewer development restrictions and it is an essential infrastructure project if the island is to meet its current and future transportation needs.
In February 2020, Greek infrastructure company Terna and India’s GMR Group were selected to develop, operate and manage the new airport through a joint venture. The shareholders of the airport concession include the Greek state (45.9%), Terna (32.46%), and GMR Airports (21.64%).
Under a 35-year concession – including the first phase of five years for the study and construction – the consortium, assembled by Modalis in 2016, intends to invest over €500 million in the project. This covers the design, construction, financing, operation, and maintenance of the airport, plus the design, construction and financing of connecting roads which total approximately 24km.
Preliminary works at the construction site have already been progressed and almost all of the supporting infrastructure is in place. Moreover, the archaeological findings, so far, have not been of any major concern and have not led to construction delays.
Terna is taking on 100% of the construction, and GMR Group will contribute in developing, operating and managing the new international airport.
The new gateway has all the basic ingredients for a successful investment in Greek aviation, one that will serve Crete’s international tourism and air transport demand for years to come. Among the key elements of the new airport are:
With an updated and approved master plan now in hand, the consortium is gradually shifting its focus to the main phase of construction as well as setting up the airport organization that will eventually take over and operate the new airport upon completion.
It will be an intriguing period where construction will run parallel with the setup of the airport organization. Preparations will be made not only for operational readiness but also in terms of business development.
The new airport will share a catchment area of 150km with Chania International Airport “Ioannis Daskalogiannis” (CHQ), operated by Fraport Greece since 2017. Therefore how both airports compete could be intriguing as the Greek market bounces back from the pandemic.
Greece has become increasingly important to the financial recovery of Fraport. The German group’s latest results, show that Fraport Greece generated €71 million EBITDA in the second quarter of 2021 (of an aggregate €107 million in total across its international holdings).
Greek destinations were also top performers this summer based on confirmed ticket sales data from ForwardKeys. The travel analyst put Heraklion at the top of its ‘resilience table’ for international passenger arrivals (see chart top right). Crete therefore looks like it has the potential to be a bright spot for future travel and a new airport could be a timely addition.