Alexis Tsipras’s government has reneged on its pre-election promise to re negotiate the 14 regional airports privatisation deal.
The controversial airport concession sell-off was announced in the government gazette on Tuesday and it is the first privatization decision taken by Tsipras, who was elected in January on promises to repeal the conditions of Greece’s previous two bailouts. The decision published bears the signatures of three ministers, one of whom is Chania MP, Giorgos Stathakis who had before the election vowed to fight the inclusion of Chania airport in the deal.
The chosen company is a consortium of German state owned Fraport with Greek Copelouzos group, controlled by one of the Greek oligarchs, who were awarded a concession to run the 14 airports for 40 +10 years by the previous government.
In return the Greek state will get €1.23 billion for the whole period of lease, an annual rent of €22.9 million per year and – if they are lucky – 25% of before tax profits interest, revenues amortization and fees for Civil Aviation Authority
The consortium has also made a commitment to invest €330 million to upgrade the airports in the first four years and a total of €1.4 billion for the next four decades.
The 14 airports are:
Thessaloniki, Corfu, Chania, Kefalonia, Zakynthos, Aktion and Kavala
Rhodes, Kos, Samos, Lesvos, Mykonos, Santorini and Skiathos.
It involves the airports in Greece’s most popular tourist destinations .
The number of international tourists visiting Greece grew by 17 percent in the first half of 2014 and continued to grow in 2015.
The details of the deal will take a few more months to be finalised, while unconfirmed rumours would have Fraport having second thoughts because of ‘the political instability in Greece’.
Local groups in all areas where the regional airports are included in the deal have vowed to campaign against the privatisation and take steps to refer the deal to the EU competition commission, on the grounds of creating monopoly conditions and of receiving a subsidy in the form of EU development grants as in the case of Chania and Thessaloniki.
What’s wrong with the deal?
Investment
Two of the airports Chania and Thessaloniki have already been allocated large amounts of EU development money. (€246 million to Thessaloniki and €110 million euro to Chania ) Even though the work in both airports ids running late the contractor (Bobolas family controlled AKTOR in both airports) expects that the work will be completed by the end of the year.
€ 330 investment over four years by Fraport hardly matches the recent European taxpayers money that has been poured in. In addition, it is thought that several other of the airports included in the deal have already mature applications and feasibility studies and are eligible for EU development funds.
It is not clear if these EU development funds will count towards the amounts Fraport has committed for investment.
Revenue
Chania airport in 2014 made a profit of €10 million. Thessaloniki in the same period return profits of €14 million. It is difficult to see how the government reached the conclusion that 22.9 million a year is a fair rent.
Increases in fares for passengers.
Fraport has recently announced that there will be no passenger tax increases ‘until the work in the airports is complete’. Naturally, this is not a binding agreement, but is an indication that there will be an increase in passenger taxes.
In the case of Chania airport and before the January election, the opposition parties had put a figure of €9 euro surcharge to each departing passenger, so that Fraport could fund their investment programme.
Low cost operators, who are largely responsible for the huge increase in passenger traffic may not be able to continue operating from Chania if taxes increase.
And that would be a disaster for the local economy.
