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NEWS Last modified on March 14, 2014

Ferrovial interested in Kansai International concession

Heathrow operator Ferrovial Aeropuertos revealed its interest in the Kansai International Airport tender at yesterday’s ACI Airport Economics and Finance Conference in London.

CEO Jorge Gil confirmed the group has been to Japan to speak with the seller, after the Japanese government decided to privatise it to raise funds and increase revenue and competitiveness.

Gil told delegates a deal for the airport, located 24 miles from Osaka, is something the largest shareholder in Heathrow Airport Holdings is interested in.

“In terms of terms of the Kansai opportunity my team has already been to Tokyo talking to the seller, possible partners, and advisers to understand the transaction, but we are interested, definitely,” Gil explained.

Keiichi Ando, president and CEO of Kansai International Airport, detailed to delegates at the conference yesterday, the tender was part of the privatisation bill that has been passed by the Japanese government.

He says the concession would be on a long-term lease and includes nearby Osaka-Itami Airport, handling domestic flights, currently at 13.8mppa.

Ando explained Japan wants revenue and passenger numbers to grow at both, and privatisation is a key part of the government’s growth strategy.

Ando says the government wants to use the expertise of a ‘world-class airport operator’ to improve ‘performance and revenue’.

“The concession features two attractive airports and is supported by Japanese government and financial institutions.

“The main objectives are to reduce the debt burden of about $12 billion accumulated during the construction, and secondly to increase the competitiveness of both airports, by bringing in experienced operators and investors,” Ando explained.

He says there would be no restrictions placed on any foreign investors taking on the tender, and an important part of any transaction is developing retail, as the government is keen to increase this, which now only accounts for 28% of revenue.

Ando says plans are underway for construction of a low-cost Terminal 3 to be built by 2016 at Kansai International, which last year handled around 17.8mppa.

And he says a renovation project of Terminal 1 is also now taking place and is expected to be completed by March 2015 and connections between Kansai International and Osaka-Itami will be improved.

Yesterday’s conference also saw the usual London Gatwick and London Heathrow difference of opinion, on where and how airport capacity in the South East of the UK should be expanded and take place.

Both of the UK’s principal gateways are seeking to get the go-ahead to build a new runway, and have been short-listed by the Airports Commission, who will make its recommendations to the government after next year’s general election.

Heathrow Airport’s director of strategy, planning and regulation, Emma Gilthorpe, and Gatwick’s strategy and regulation director, Kyran Hanks, pushed the cases for both, while taking a swipe at the other’s proposal.

Gilthorpe also criticised the UK’s Civil Aviation Authority for regulations she says ‘handicaps’ Heathrow and was unfair.

“Unfortunately the CAA has not taken the view we hoped for (on price caps) and the CAA does not understand competition and ignores the rest of Europe,” Gilthorpe says.

“The over aggressive price cap by the CAA and over 100 obligations is over kill,” she adds.

Gilthorpe explained that Heathrow competes in a competitive Europe with Amsterdam Schiphol and Paris CDG, in a different market to London Gatwick, on long haul routes.

Ferrovial Aeropuertos CEO Jorge Gil, and Michael McGhee, partner at Global Infrastructure Partners, the owner of Gatwick, also criticised the CAA  during a session on airport ownership and development.

They both explained the current economic regulation framework in place by the CAA, needs to be revised, and ‘fresh thinking’ is needed by the regulator in the future, especially if another runway is built at either.

McGhee says the CAA needs to be ‘far less beraucratic and far more to the point’ while he feels the CAA needed to ‘minimise its role'.

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