Privatization and Public Private Partnership Models at Airports Around the World

Kenneth CurrieSenior Vice President

InterVISTAS Consulting Group

AeroinvestSão Paulo, Brazil

August 30, 2011

The Role of Privatization…and Public/Private Partnerships (PPP)

• Enhanced competitiveness and growth

• Economic development benefits

In order to achieve…

• Capital investment for infrastructure development• Air service development for business growth• Commercial development for optimal sustainability• Customer service improvement for competitiveness

What is the most suitable PPP model?

Example: Full privatization…

LondonSale or IPO

Full Government DivestiturePublic StockLimited Economic Regulation

Example: Concession to operate airport…

Argentina

ConcessionLong-term Rights to Operate“Ownership” of Revenues and

ExpensesFinancial and Investment

Commitments to Government

Facility PrivatizationLong-term Rights to Develop

and Operate“Ownership” of Revenues and

ExpensesFinancial and Investment

Commitments to Government

JFKT4

Example: Facility concession…

JFKT4

The most suitable PPP model should be chosen from among many alternatives

Argentina

London

?

?

?

?

?

BAA

BeijingViennaRomeMexico

Management Outsource Corporatization IPO Full GovernmentDivestiture

Service Concession

ManagementConcession

FacilityPrivatization

LimitedConcession

(MOO, BOT, BOOT)

EquityIncludingVery Long

Term Lease

OutrightSale

Low

Deg

ree

ofPr

ivat

izat

ion

High D

egree ofPrivatization

Pittsburgh

IndianapolisColombia

JFK IATBoliviaCosta RicaArgentinaSantiago (Chile)Amman

South AfricaFarnboroughAustraliaPeruStewart NYSydneyChicagoQuitoSan Jose C.R.

Belfast

OWNERSHIP / GOVERNANCE

OPERATION

More examples of airport PPP models

Canada

The Role of Privatization…and Public/Private Partnerships (PPP)

• Understanding your markets, the airline industry and related risk

• Comprehensive business planning, programming and implementation

• Holistic business relationships with airlines and the aviation community

Requires…

• Capital investment for infrastructure development• Air service development for business growth• Commercial development for optimal sustainability• Customer service improvement for competitiveness

Understanding your markets, the airline industry and related risk

• Macro-economic influences

• Air travel demand generators

• Traveler origins and destinations

• Traveler preferences

• Quantity and quality of air service

• Competitive climate

• Aviation industry trends

• Growth opportunities

Comprehensive business planning, programming and implementation

Plan andprovide

facilities

Operate & maintain

the airport

Deliver thecustomer

experience

Monitorcustomer

experience

Establishcustomer

relationships

Understandcustomer

expectations

Focus on understanding and planning for customer needs and expectations.

Focus on delivering customer service and pursuing service improvement.

Business Planning

Result: sustainable business plan based on market conditions and customer expectations.

PPP embraces the “market model” rather than the “infrastructure model”

Successful PPP’s are structured to align the interests of all stakeholders

GovernmentRegulatory

Suppliers

Airlines FinancialInst.Developers

Stakeholders

Concessionaires

Airports

Integrated Business Planning

12

A systematic approach to PPP planning

4. Infrastructure Scope and Financial Feasibility

3. Business Planning

2. Business Strategy

1. Market Analysis

5. SustainableCommercial Development and Operation

Privatization and Public Private Partnership Models at Airports Around the World

Kenneth CurrieSenior Vice President

InterVISTAS Consulting Group

AeroinvestSão Paulo, Brazil

August 30, 2011