Published on 16/12/2015 in Privatisations
Greek Regional Airport Privatisation Approved
The Hellenic Republic Asset Development Fund (TAIPED) has signed the concession contract for the privatisation of 14 regional airports with German Fraport group and Slentel, a unit of Copelouzos Group on Monday.
Three of the airports are located on the Greek mainland in Thessaloniki, Aktio and Kavala. The remaining eleven are on Corfu, Crete, Kos, Kefalonia, Lesvos, Mykonos, Rhodes, Santorini, Skiathos, Zakynthos and Samos.
The deal followed an international open tender selected by the previous government and amounted to €1.234 billion with an additional €22.9 million annual concession fee.
According to TAIPED’s press release, the government expects total revenues of €1.4 billion along with additional cumulative fiscal, social and other benefits of €4.6 billion from the deal with duration of 40 years.
The agreement is one of the most significant steps of Greece’s privatisation agenda, aiming at strengthening the economy’s position in international markets, including the creation of 1,500 new jobs in and around the airports
While the newly-elected SYRIZA government initially was against the concession, it has agreed to the deal as part of the commitments of the third Greek bailout.
Following the consortiums’ corporate press announcements, the investors are confident that the airports’ development will benefit from an extensive know-how transfer and boost the country’s tourism sector growth in coming decades.
According to TAIPED’s press release, the Fraport consortium has agreed to following conditions:
- Fraport-Copelouzos will invest a total of €1.4 billion in infrastructural, maintenance and traffic-driven capacity investments with €330 million infrastructural investments during the first four years, upgrading the facilities to IATA Level C standards.
- The Greek State retains 28% of earnings before interest, taxes, depreciation and amortisation (EBITDA)
- The total maximum charge is set at €13 per departing passenger, whereas annual adjustments based on consumer price index changes from the beginning of the concession up to completion of the direct investments are possible.
- Once direct investments will have improved the airports’ infrastructure to the quantified IATA standards (Level C), aeronautical fees per passenger can be increased by up to €5.5, reaching a maximum of € 18.5 per departing passenger, annually adjustable with 90% of each years’ consumer price index.
- For airports with a high military activity in Chania and Aktio, tramways and landing corridors remain at the Greek Air Force. Only the terminals and aviation aircraft parking space are included in the concession, while the concessionaire will pay the State for the use of common infrastructures.
Fraport ranks among the world's leading companies in the global airport industry with € 2.4 billion generated sales and € 252 million profit in 2014. Over 108.5 million passengers used airports operated by Fraport last year alone, including its home base Frankfurt International Airport.
With the 14 Greek airports, Fraport will serve an additional 23 million passengers yearly (2015) with 77% comprising international travellers.
Copelouzos Group is a leading Greek energy distributor, including renewable energy (hydroelectric plants, wind and solar parks). The Group is active in the construction and project management of large-scale infrastructural projects and concessions. Copelouzos is also a partner in the Saint Petersburg Airport (Pulkovo) operating group.
Fraport will have a majority share with Copelouzos holding the remaining stake of the concession agreement. Actual ownership of the airports will still be retained by the Greek government throughout the term.
Final conditions remaining to be fulfilled include the contracts’ ratification by the Greek Parliament and its approval by the European Commission. The deal is expected to be finalised by autumn 2016, after the issue of a presidential decree confirming the airports’ zoning plans, the delivery of the airports by the Civil Aviation Authority to the bidder, guarantee letters to the state, and the payment of the €1.23 billion upfront concession fee.
The privatisation of Greece’s airports was among the bailout terms demanded by the country’s European creditors. According to recent announcements, TAIPED aims to earn between 2 and 3 billion from various projects during 2016, including the privatisation of railway transport operator TRAINOSE, Hellenic Railways Organization (OSE) and Piraeus Port Authority (OLP) while the concession of Athens International Airport is planned to be extended until 2046.