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Asian airports may get private backing

Update: September, 07/2012 - 10:06

by Hoang Nam

 

Airport security staff check luggage with an X-ray security machine at the Noi Bai International Airport in Ha Noi. — VNA/VNS Photo Pham Hau
HCM CITY — The public-private shared airport ownership model should be encouraged in the Asia-Pacific region to prepare for an expected aviation boom, experts say.

Speaking at the two-day "Southeast Asia Airport Expansion Summit 2012" that opened in HCM City yesterday, Jeff Scheferman, CEO of the U.S-based ADC & HAS Airports Worldwide predicted that the Asia-Pacific region would record the highest growth in the world for the next two decades at around 6.8 per cent each year.

This will present stiff challenges for Southeast Asia as airport demand outstrips supply, there is a lack of airport expertise and governments are cash strapped.

Therefore, private sector involvement should be seen a solution for the government's development needs, he said.

Public-private ownership has become common in many developed countries over the past 25 years, but it is still new for this region, Scheferman said.

He said the private sector would be able to provide financing, operational expertise and efficient airports (in design and operation). This would help meet growing traffic demand, facilitate technology transfer and boost economic development, he added. According to Schef-erman, transfer of ownership takes place under three categories.

For publicly listed firms and IPOs, ownership will be widely distributed with the participation of domestic retail investors.

Under trade or freehold sales, full ownership will be transferred to corporate investors of joint ventures.

In the third type, where joint ventures are established or strategic partners selected, the government retains an interest in the airport with the remainder owned by private sector.

When no ownership is transferred, two types of transactions are involved.

Under lease/concession, build-operate-transfer (BOT)/build-own-operate-transfer (BOOT)/build-to-order (BTO) deals, the concessionaire operates the airport, owns and operates facilities for a time to recover investments plus a return or the government retains ownership of some or all of infrastructure.

When management contracts are awarded, the government approves concessionaire's operating budget and the operator receives fees based on performance of services, he said, adding that in some cases, the contractor takes an equity stake.

"Shared ownership with private sector would keep airports competitive and attract the most number of airlines, enable technology transfer and the adoption of international best practices," Scheferman said.

In addition, private investors can often raise capital more effectively, streamline decision-making and procurement processes, according to Scheferman.

"Private interests are better placed to negotiate with airport users, employees incentives are directly tied to airport performance and the public sector can focus more on regulation and supervision," he added.

Seventy delegates including government officials, airport operators, airport developers, architects, designers, investment firms, solution providers and consultants attended the meeting.

Viet Nam now has 94 planes (42 of which have been bought) and 21 airports. By 2020, the country will increase the number of planes to 140-150 (with 70-80 bought and others leased) and have five more airports. Ten of the 26 will be international airports.

In the 2006-2011 period, passenger throughput had an annual growth rate of 17 per cent while cargo throughput grew by 33 per cent.

By 2014, Viet Nam is projected to be the world's 3rd fastest growing market for international passengers and freight, and the 2nd fastest for domestic passengers. — VNS

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