Fraport seeks funding for 14 regional airports (with notes on Fraport’s plan)

The process for the concession of 14 regional airports, including Macedonia Airport at Thessaloniki and Chania International, is resuming after the elections.

The selected bidder, a consortium headed by Fraport, is continuing its contacts with international banks aimed at securing funding for the payment of the 1.2 billion euros due. The German company’s partner in this consortium is Slentel, a unit of the Greek Copelouzos Group.

Fraport holds a 65 percent stake in the consortium, with Slentel accounting for the remaining 35 percent. That means that Fraport intends to secure 800 million euros and Slentel just over 400 million from the same lenders.

Some notes on the Fraport business plan:

Fraport estimates 22 million passengers pa

The payment to the Greek state on gross earnings [ before interest, taxes, depreciation, and amortization] is inflation linked – [negative inflation in Greece?] – full payments of 28.5% to start in 2019.

Capital expenditure – 330 million (310 already invested at Chania and Thessaloniki) – Capital expenditure for expansion depending on traffic growth. Growth assumption not disclosed in the deal. [an oversight  on the part of the Greek government???] Fraport “assumes moderate growth at around 2%pa” [ it could operate only at peak times while Greece needs all year round tourism]

!!! Regulation – Dual till !!! Single till recognises the demand and revenue complementarities between aeronautical and non-aeronautical services.

According to IATA, single till reflects the pricing mechanism airports would apply if they were under real competition: it is therefore the fairest mechanism of charging.

Dual till focuses only on the regulated business to avoid distorting the commercial, non-aeronautical airport service provisions.

“IATA strongly supports the single till principle under which airport commercial revenues are taken into account to offset the charges cost base. The single till is justified because there is an interdependency between the passengers airlines transport to airports and the non-aeronautical revenues (e.g. retail,car parks) they generate for airports.

As dual till may result in higher aeronautical charges and may not only negatively impact  the development of air traffic, but additionally create the need for difficult and detailed cost and asset allocation between aeronautical and commercial tills”.

“A dual till approach to charging is possible only because airports do not operate in a competitive environment. Economic regulation should strive for a single till approach that will  enable lower charges, generating lower fares and increased traffic volumes, while delivering appropriate returns across the whole airport business”.
!!! Airport Charges !!! – € 16 per departing passenger [ around 1/2 of estimated  present volumes of total traffic,  that is  11 million = approx €176 million pa until 2018 ]  —  from 2018 the levy goes up to €18.5  – inflation and capital expenditure linked (?).  [how much over 40 years?]
Retail development — see single till /dual till aproach