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ECONOMICS Last modified on November 15, 2009

What next for TAV?

Joe Bates talks to TAV CEO, Dr Sani Şener, about his company’s expanding airport portfolio and ambitions for the future.

How would you describe TAV?
TAV is a very dynamic and fast growing company. We have a highly dedicated and qualified human resources base and a unique organisational structure. Our integrated structure, which brings airport companies and service providers such as ground handling, duty free, security, information technology (IT), food and beverage, and operations and maintenance (O&M) together, offers a ‘one-stop-shopping’ solution to airports and is one of our most important innovations. And, as you know, other than TAV Airports, TAV Construction is one of the region’s biggest airport construction companies.

Is TAV truly a global company?
We are definitely a major force in our region. Right now we are in Turkey, Georgia, Tunisia and Macedonia. I am glad to say that we are an important regional company operationally and a global company financially.

We gained valuable experience of the aviation industry by successfully constructing and operating airports in emerging markets, and this is no simple task. We believe that we are able to adapt to local conditions while maintaining the highest standards and quality, and the host of international awards we have won so far are testament to the fact that we are very good at what we do. Our skill set and high quality standards position us very well for operating airports anywhere in the world.

What is the appeal of airports and the aviation industry?
We find the social and economic importance of airports very appealing. Airports are the melting pots of the world where trade, commerce and cultures meet. They fuel economic growth and often form the first impressions visitors have of a country. In that sense they represent the architecture and culture of countries.

The Tunisian Government’s recent decision to have a picture of the new Enfidha Airport, which we are building, on the country’s 50 dinar bills, honours TAV and demonstrates the importance of airports to countries.

When and where did the company make its first airport investment?
Istanbul Atatürk Airport was our first airport investment. We won the Build-Operate-Transfer bid for the international terminal in 1997, started work on it in early 1998 and completed its construction in a record-breaking 22 months, eight months ahead of schedule. We have operated it since January 2000.

What criteria/investment potential does an airport need to demonstrate to appeal to TAV?
The most important criterion is growth potential in terms of the country’s economy and the catchment area. We see huge growth potential in Macedonia and Tunisia. We are also interested in developing ‘boutique’ airports such as Antalya Gazipasa and Batumi in Georgia. Obviously market conjuncture is also very important for timing.

What is your investment strategy?
Our strategy is to invest in airports with high growth potential and improve their operational efficiency. We increase passenger volume in our airports and hence increase our aeronautical and non-aeronautical revenues. We are planning to increase our passenger volume to 100 million passengers per annum by 2017. Some of the increase will come from organic growth and the rest will come from new tenders and the acquisition of new airports. 

We now have substantial experience of participating in airport privatisation projects and, from a business perspective, feel that this puts us in an advantageous position over many rival bidders. Our aim is simply to use our expertise to improve airport operations on a global scale.

Does TAV favour PPP projects?
Of course. We see PPPs as the solution to fill the worldwide gap between the demand and airport capacity. We are very enthusiastic about PPPs as this is the route we have taken to win important contracts in Turkey, Tunisia and Georgia.

TAV Tunisia is not only the first PPP in North Africa and Tunisia’s major private sector investment, but it is also of great importance to us owing to its innovative and sophisticated finance structure. The finance model of TAV Tunisia received the ‘Deal of the Year 2008 Project Finance Award’ from Euromoney’s internationally respected Project Finance magazine.

Who are your investment partners?
We are mostly responsible for funding investments, however, there are some exceptions.

Gebr Heinemann is our partner in our duty free operations, for example. We count reputable institutions such as The World Bank’s International Finance Corporation (IFC), Kuwait’s Gulf Investment House (GIH) and EMP Bahrain as our financial partners.

Is the airport city concept something you might look to develop at your gateways?
Possibly as our view is that airports are commercial businesses and not just operators of infrastructure. Compensation for falling aeronautical revenue can only come from non-aeronautical related activites, so developing new ways of boosting our income would be of interest to TAV. In Istanbul, approximately, 65% of our revenue comes from non-aeronautical sources such as duty free, food and beverage, car parking, advertisement and rental areas.

Would TAV ever consider buying an airline?
It is not in our plans right now! At the moment, and for the forseeable future at least, we prefer co-operating with airlines to increase passenger traffic at our airports. Indeed, we have an excellent relationship with Turkish Airlines, a major European carrier that is growing at an impressive pace.

It increased its passenger numbers by 9.1% in the first half of 2009 compared with 2008 and this had a positive impact on throughput at our airports.

Under what circumstances would TAV sell/dispose of an airport facility?
We are open to all options as long as it is the right opportunity at the right time. We sold a 15% stake in TAV Tunisie SA to IFC, for example. We are also in negotiations to sell up to 40% of the shares in Havaş, our ground handling company. We will maintain our operational control in these two cases. Leveraging and de-leveraging is an important part of business life as long as it is done well.

Are you looking to add to the company’s airport portfolio in 2009/2010?
Yes, we are growing even in this economic environment. We just opened Antalya Gazipasa in July 2009. Enfidha Airport in Tunisia will follow shortly. We have the operating rights in Macedonia. We are pursuing other opportunities within our target region.

How would you describe the health of the aviation market in Turkey?
It is very healthy. Due to the Turkish Government’s interest in encouraging private sector participation in the civil aviation industry, Turkey became one of the global pioneers of airport privatisation. Also, after the deregulation of the domestic aviation market, we saw a boost in the aviation sector. As a result, the number of passengers in Turkey’s aviation sector more than doubled in the five years from 2003 to 2008. The young population in Turkey and the Middle East will always contribute to increasing passenger numbers.

What is your ultimate ambition for TAV?
Our ultimate ambition is to be the best integrated airport company in the world.



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