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