ROUTES AMERICAS STRATEGY SUMMIT: Airport Privatisation – The Price is Right?

Have the latest airport sales been overpriced? Have all the best prospects been privatised? Will there be a change of pace in USA airport privatisation? Are airport operators improving services and investing enough to bring airports to the next level. These were the main discussion points in the third group session at this year’s Routes Americas Strategy Summit in San Salvador, El Salvador.

The session, moderated by Santiago Saltos, senior manager, industry affairs, ALTA, included three senior airport delegates: Daniel Ketchibachian, Commercial Director, Corporacion America; Aluizio Margarido, Commercial Director Viracopos International Airport; Jorge Roberts, Director of Corporate Development, ADC & HAS Airports Worldwide and Matt Cornelius, Managing Director Air Policy, ACI North America.

Airport privatisation has been a key topic over the past few years but how does it differ between North and South America? Well, Matt Cornelius from ACI North America believed that privatisation in the US has not “gained any traction,” perhaps because of the regulatory framework that US airports must operate within. He noted that of ten airports that were due to be privatised only San Juan has completed the process. “Chicago Midway took a couple of stabs at it but that doesn’t look like happening now,” he added.

In Brazil the situation has been very different and our panellists from the South American country highlighted how under private ownership airports are now looking more closely at commercial opportunities to enhance profitability. “Are we building shopping malls or airports?” questioned ALTA’s Santiago Saltos, but both Aluizio Margarido and Daniel Ketchibachian highlighted how important non-aeronautical revenues are for their respective airports.

Margarido from the fast-growing Viracopos-Campinas International Airport near Sao Paulo, talked about the importance of the real estate in the surrounding area of the airport. “Airports are under increasing pressure to maximise their profits and bring in additional revenue by alternative means - shopping revenue, parking etc,” he said. Meanwhile, Ketchibachian, whose airport portfolio includes both Brasilia and Natal airports, noted “commercial services are important” and added that at Brasilia, the main hub for domestic travel, “we don’t actually have any.”

Jorge Roberts from ADC & HAS Airports Worldwide acknowledged that non-aviation revenues “provide opportunity for airport to develop” and highlighted the rise of the low-cost carrier business as a good example of how airlines and airports are now partnering to develop sustainable solutions for both sectors. “It is clear that LCCs want to partner more with commercially minded airports as what they are getting from ticket prices can sometimes no longer cover the cost of their operation,” he said. Looking at the US market, Roberts highlighted that “most US airports in terms of commercial development are under-developed,” and on average make just $10 per passenger.

With two Brazilian airport representatives on the panel it was no surprise that discussions turned to the forthcoming football World Cup which will be hosted in the South American country from June 12, 2014 to July 13, 2014. The big question is “will Brazil be ready?” said moderator Saltos. Both Margarido and Ketchibachian were understandably positive about their home market. “Yes, of course, we are waiting for you all to visit,” said Margarido, while Ketchibachian added: “We will be delivering airports Brazil deserves in time for the World Cup.”