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OTHER ARTICLES Last modified on November 14, 2009

International affairs

Airports outsourcing the management of key facilities or even the entire gateway to other airport operators has become commonplace across the globe, writes Joe Bates.

Few operators have taken as well to the management of airports in the international arena as Fraport, which at the last count, boasted a family of 12 gateways across the globe. Fraport’s commitments – gained either through an equity investment in a consortium or as a service provider under a management contract – currently span four continents and many of its airports serve world capitals or are located in emerging markets or growing tourist regions.

In addition to home base Frankfurt, Fraport’s gateways include Hanover in northern Germany, Bourgas and Varna on the Black Sea coast of Bulgaria, Antalya in Turkey, Lima in Peru, Cairo in Egypt, Riyadh and Jeddah in Saudi Arabia, Delhi in India and Xi’an in China.

In Senegal, West Africa, Fraport and its partners recently won the 25-year management contract for a new airport for Dakar to be completed in 2010 and it is part of the Northern Capital Gateway consortium which is the preferred bidder for St Petersburg–Pulkovo Airport.

Fraport is particularly pleased with the success of its Saudi management contract, which has resulted in 13 staff being based in the desert kingdom since June 2008. Under the terms of the six-year management contract, Fraport management teams at Jeddah and Riyadh are responsible for daily operations, leading a wide range of projects and all levels of management training. The focus is on developing both airports, improving service quality, and building sustainable traffic growth.

In September this year, Fraport IC Ictas Antalya Airport Terminal Investment and Management – a 51% owned subsidiary of Fraport and IC Holding of Turkey – took over the running of the second international passenger terminal at Antalya Airport from Celebi. The move means that it is now the sole operator for both international terminals as well as the domestic and VIP terminals.

Another milestone in its 17-year concession agreement with the Turkish airport authority is the construction of a new domestic terminal, which is expected to be inaugurated in March 2010. The concession agreement for all terminals runs until 2024.

Xi’an’s Xianyang International Airport is one of the newest additions to its expanding airport portfolio, and Fraport’s ‘Midas touch’ is such that it has become one of the world’s fastest growing airports within a year of it assuming responsibility for its operational and commercial development.

The fact is based on a 30% rise in passenger traffic at Xi’an Xianyang in the first six months of the year. Fraport, which acquired a 24.5% stake in the gateway in October 2008, admits that it has been taken aback by the size of the upturn, which it simply describes as “amazing”.

And Fraport is confident that things could get even better at Xi’an as the airport’s central China location gives it the potential to be developed into a regional air transportation hub within a fastgrowing economic power.

Fraport cites Lima–Jorge Chávez International Airport as an example of just what can be achieved by the successful outsourcing of the management of an airport.

It says that the Peruvian Government was only able to invest around $6 million per annum on renovating the gateway prior to the concession being awarded to the Fraport-led Lima Airport Partners (LAP) consortium in 2001. However, since Fraport began operating the airport investment has increased more than five-fold to $33 million annually, and in 2004, the airport received $75 million to complete a major upgrade.

Passenger traffic through the new-look airport increased by an average of 11% per annum between 2001 and 2008 and the Peruvian Government also benefited from extra income earned from new shops, restaurants and lounges in the terminal as revenue from concession fees rocketed from $11 million in 2000 to $75 million last year.

Fraport clearly knows what it’s doing when it comes to management contracts and it makes money. Sounds like the perfect business partner, doesn’t it?

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