EVENTS NEWS: ECONOMICS
Money talks
Joe Bates looks back at some of the highlights of the recent ACI Airport Economics and Finance Conference in Singapore.
After four years in London it was Asia’ s turn to shine with Singapore hosting ACI’ s annual Economic & Finance Conference.
However, if the surroundings were a little different – the Gala Dinner was held on a Chinese style river boat cruising around the calm waters of Singapore – the key issues of discussion about privatisation, government regulation, investment opportunities and good financial practice were very familiar.
The event also featured two firsts: a Pre-Conference Seminar, and one speaker presenting two opposing presentations! The latter task being performed by The World Bank’ s lead air transport specialist, Dr Charles Schlumberger, who during his keynote address about the state of the global economy, literally put on different jackets for the different viewpoints from characters he called‘ Dr Good’ and‘ Dr Bad’.
For the record, 74 % of the 92 people to vote in a poll at the end of his presentations about whether the plane was‘ half full or half empty’, unanimously opted for the more positive scenario.
During her welcome address, ACI World director general, Angela Gittens, commented:“ According to the World Bank’ s January 2013 global economic prospects, although the major risks to the global economy are similar to those of a year ago, the likelihood that they will materialise has diminished, as has the magnitude of estimated impacts, should these events occur.”
She listed the risks as the loss of access to capital markets by vulnerable euro area countries; lack of agreement on US fiscal policy and the debt ceiling, and the potential for commodity price shocks.
Gittens pointed out that Asia-Pacific continues to record strong growth, although the Middle East(+ 12 %) led the way in 2012, followed by Asia( 7 %), Africa(+ 7 %) and Latin America & Caribbean( 6 %) compared to just 2 % growth in Europe and North America.
“ We forecast that, by 2030, the world’ s largest aviation markets will be China, the USA, India and Brazil, in that order,” said Gittens, who noted that“ access to air transport continues to be absolutely fundamental for social and economic development”.
ACI Asia-Pacific’ s regional director, Patti Chau, was equally upbeat and talked about dynamic growth across the region, although ACI Europe’ s director general, Olivier Jankovec, was more subdued
in his presentation, revealing that“ the new Europe” of Russia and Turkey continues to outperform“ the old Europe”.
On the subjects of different economic regulation and the US’ s reluctance to embrace airport privatisation, the FAA’ s deputy associate administrator, Catherine( Kate) Lang insisted that“ the best business model is the one that works as long as it’ s not illegal, anti-competitive or discriminatory”.
Arguably, one of the liveliest sessions of the event occurred during the Pre-Conference Seminar when a host of speakers gave their views on the lessons learned from airport privatisations to date and the way forward for the industry.
They included ANA administrator, Luís Ribeiro, who remarked that the € 3 billion sale of the Portuguese airport operator to Vinci Airports happened“ remarkably quickly”, while Cosette Canilao, executive director of the Public-Private Partnership Center talked about the Philippine government’ s new strategy for PPP projects.
She told Airport World:“ We are aware that mistakes were made before with the T3 concession at Ninoy Aquino [ Milan ], which without doubt, damaged the reputation of the Philippines for international investors. However, we have learned from the experience, which is why we have set up the Public-Private Partnership Center to assist in the preparation of projects. This includes negotiating the terms of the concessions with the government and overseeing the bidding process.
“ We now have a clear strategy. We know what the government wants and the obligations it expects from the private sector. We are also developing clear exit strategies so that the mistakes of the past cannot be repeated.”
Also on the podium were TAV’ s chief strategy officer, Waleed Youssef, who talked about his company’ s ventures in Saudi Arabia and Islamic financing, and ACI Europe’ s economics manager, Donagh Cagney, who stated that“ size is a key factor in determining whether an airport can be profitable”. Cagney, who revealed that 48 % of Europe’ s airports lose money, said:“ History tells us that, as a general rule, airports handling passengers below certain passenger thresholds are not viable. Current events also suggest that larger airport projects may not be suitable for the private sector alone.”
Clearly, when it comes to airport economics and finance, one size definitely does not fit all.
AW
AIRPORT WORLD / APRIL-MAY 2013 11