Big business

Joe Bates turns the spotlight on Asia-Pacific’s global airport operators and finds out more about the regional development plans of VINCI Airports and the Zurich Airport Group.

While expansion hasn’t exactly been a top priority in 2020, all of the region’s global airport operators – those with equity stakes in airports in more than one country – remain actively involved in the worldwide market, with some even signing agreements to grow their portfolios in the near future.

GMR Airports Ltd (GAL), for example, has committed to developing a new greenfield gateway at Bhogapuram in the Indian state of Andhra Pradesh through subsidiary GMR Visakhapatnam International Airport Limited (GVIAL).

While although not based in the Asia-Pacific region, Zurich Airport Group has confirmed its intention to finance, build and operate Delhi Noida International Airport in India and France-based VINCI Airports, the world’s second biggest airport operator in terms of passengers handled across its network, has unveiled an ambitious new master plan for Sihanouk International Airport in Cambodia.

Changi Airports International (CAI)

World Headquarters: Singapore.

Airports 100% owned and operated: None.

Others: CAI, the wholly owned subsidiary of Singapore Changi operator, Changi Airport Group (CAG), has a global presence.

In Asia-Pacific, CAI has a stake in Fukuoka International Airport Co (FIAC), which operates Fukuoka Airport in Japan under a 30-year concession agreement; and a 15% interest in Luzon International Premier Airport Development (LIPAD) Corporation, the operator of Clark International Airport in the Philippines.

In Brazil, CAI has a 51% share in the consortium responsible for operating Rio de Janeiro’s Tom Jobim International Airport (Galeão).

In Russia, CAI has a 30% stake in Basel Aero, the management company trusted to develop the airports of Krasnodar, Sochi and Anapa in Krasnodar Krai, and in January 2020, Sochi International Airport became the controlling shareholder in Vladivostok International Airport.

In India, CAI has a 30.2% holding in Bengal Aerotropolis Project Ltd, which owns a greenfield airport and is developing a township in Durgapur in West Bengal. Elsewhere, in China, CAI holds a 49% stake in a commercial joint venture with Chongqing Airport Group, which develops the non-aeronautical business of Chongqing Jiangbei International Airport.

Plans to expand/reduce portfolio: CAI continues to monitor airport investment opportunities, while taking into account the global impact of COVID-19 on the aviation sector. The company is also exploring new business models but will remain focused on building its capabilities to stay ahead of the competition and ensure that it is well positioned to explore new business opportunities once the sector recovers.

GMR Airports Limited (GAL)

World Headquarters: Delhi, India.

Airports 100% owned and operated: None.

Others: GMR has a 25-year operating concession for Mactan-Cebu International Airport in The Philippines in partnership with local company, Megawide Construction Corporation.

On home turf in India, GMR Airports Limited (GAL) operates Hyderabad–Rajiv Gandhi and Delhi-Indira Gandhi airports – courtesy of 63% and 64% shareholdings respectively in operators GMR Hyderabad International Airport (GHIAL) and Delhi International Airport Ltd (DIAL) – and is currently building Goa’s new Mopa International Airport, which will be operated by subsidiary, GMR Goa International Airport Limited (GGIAL), for the next 40 years after it opens in 2022/2023.

In Europe, GMR is developing a greenfield airport at Heraklion on the Greek island of Crete in partnership with GEK Terna.

Plans to expand/reduce portfolio: GMR Airports Ltd says that it will continue its strategy of becoming a “compelling and comprehensive airport company with strengths in developing, operating and managing airports in India and across the globe”.

News: In June 2020, GAL announced that subsidiary, GMR Visakhapatnam International Airport Limited (GVIAL), had signed an agreement with the government of Andhra Pradesh to build and develop a new greenfield airport at Bhogapuram in India.

The airport, which GVIAL would potentially operate for the next 60 years, will replace the existing airport at the civil enclave at Vishakapatnam Naval Airfield, which handled 2.78 million passengers and 4,400 tons of cargo in 2019.

Speaking about the deal at the time, GMR Airport’s business chairman, GBS Raju, said: “In line with our past record of creating world class infrastructure, including the iconic Terminal 3 at Delhi International Airport, we aim to build a truly world class airport at Bhogapuram, which would be a matter of pride for the State of Andhra Pradesh and provide a further fillip to the economic potential of this region.”

In terms of the bigger picture, Groupe ADP completed the purchase of a 49% stake in GMR Airports Limited for around €1.3 billion on July 7, 2020.

Between them, GAL and Groupe ADP’s airports handled 336.5 million passengers in 2019.

GMR Group chairman, GM Rao, notes: “The partnership with Groupe ADP is in line with GMR’s business direction to become a global airport developer and operator.”

Incheon International Airport Corporation (IIAC)

World Headquarters: Incheon, South Korea. Airports 100% owned and operated: Incheon International Airport in South Korea. Others: It has a five-year concession to manage and operate Terminal 4 at Kuwait International Airport. Plans to expand/reduce portfolio: IIAC refuses to speculate on potential targets.

News: IIAC was reported to have been one of the parties competing to win the now seemingly on-hold concession to operate Podgorica and Tivat airports in Montenegro, and prior to the COVID-19 pandemic, also expressed an interest in operating Kuwait Airport’s new Terminal 2, which is due to open in 2023.

Malaysia Airports Holdings Berhad (MAHB)

World Headquarters: Kuala Lumpur, Malaysia.

Airports 100% owned and operated: Kuala Lumpur International Airport and 38 other Malaysian gateways that include the international airports of Langkawi, Kota Kinabalu, Kuching and Penang; and Istanbul-Sabiha Gökcen International Airport in Turkey.

Others: Malaysia Airports has an 11% stake in GHIAL, the GMR-led operator of Hyderabad–Rajiv Gandhi International Airport in India.

Plans to expand/reduce portfolio: No information given.

News: MAHB has a management contract for the IT operations at Hamad International Airport in Doha, Qatar.

VINCI Airports

With six gateways in Asia-Pacific and a further 40 across the world there is no doubt that VINCI Airports is one of the world’s biggest airport operators.

Its Asia-Pacific assets are in Cambodia and Japan. In the former, it has a 70% interest in Cambodia Airports – operator of the three international airports of Phnom Penh, Siem Reap and Sihanoukville – and in Japan it has a 40% stake in Kansai Airports, which is responsible for the growth and development of Kansai, Osaka Itami and Kobe airports.

Elsewhere in the world the French company has airport assets in Brazil (Salvador); Chile (Santiago); Costa Rica (Liberia); Dominican Republic (Barahona, Puerto Plata, Santo Domingo x 2, Samaná x 2); Portugal (Lisbon, Porto, Faro and Beja on the mainland; Ponta Delgada, Horta, Flores and Santa Maria in the Azores; and Funchal and Porto Santo in Madeira); Serbia (Belgrade); Sweden (Stockholm Skavsta) and the UK (Belfast International and London Gatwick).

In France – VINCI is based at Rueil- Malmaison just outside of Paris – it manages 11 airports, most notably in Lyon and Nantes. It holds a 31% stake in Aéroports de Lyon, the operator of Lyon-Saint Exupéry and Lyon Bron, and a 60% interest in Aéroports du Grand Ouest, the operator of Nantes Atlantique and Saint-Nazaire Montoir airports.

In North America, VINCI Airports has an interest in five airports which include Orlando–Sanford in Florida (long term concession), Atlantic City in New Jersey and Hollywood Burbank in California (management contract).

Despite a 68% decrease in traffic in the first nine months of the year, VINCI Airports has a sizeable portfolio of airports that normally handle more than 250 million passengers a year. It became the world’s second largest airport operator for passengers handled across its network when it completed the purchase of a majority stake in London Gatwick last year.

Nicolas Notebaert, CEO of VINCI Concessions and chairman of VINCI Airports, acknowledges that these are tough times, but points out that VINCI Airports’ model is based on the long-term and that the company has no interest in selling any of its assets to balance the books or pave the way for further investments.

“We have confidence in our business model and will keep following the strategy that has brought us our success – prudent decision-making, buying assets at the right price, and a shared vision with governments and other key stakeholders to develop the potential of airports and make territories grow," says Notebaert.

He also notes that VINCI Airports is committed to the sustainable development of its airports, assuring APA magazine that the company will keep advancing its sustainability agenda:

“Sustainability is an essential factor for airport development. In 2016, we launched the airport industry’s first integrated environmental strategy and, as a result, we start 2020 with three carbon-neutral airports in our network and a significantly reduced carbon footprint,” enthuses Notebaert.

“We are actively pursuing an ambitious strategy to further reduce the gross emissions of the airports we manage by 50% by 2030.”

Zurich Airport/Flughafen Zürich Airport AG

Zurich Airport confirmed its return to the region on October 7 when it signed the concession agreement with the Indian state of Uttar Pradesh to construct and operate Delhi Noida International Airport (DNIA).

It will build and manage the airport on a 1,334 hectare site in Jewar, Gautam Budh Nagar, a district of Uttar Pradesh. The new airport will be fundamental to accommodate the expected flight traffic growth rates in the National Capital Region.

The Swiss airport operator – through subsidiary Zurich Airport International – was selected as the preferred bidder for DNIA in November 2019, although COVID caused delays meant that the two sides couldn’t formally ratify the agreement until recently.

Now, if all goes to plan, construction of the new airport in Jewar around 70 kilometres south of Delhi in the Greater Noida Area, will begin in 2021, paving the way for a first phase opening in 2024.

According to Zurich Airport International, DNIA will merge Indian culture and hospitality with Swiss technology and efficiency.

It promises that India’s newest greenfield airport will deliver quick, efficient processes and excellent value for passengers, airlines and partners.

Indeed, it notes that DNIA will operate as a fully digital airport, providing a safe and contactless travel experience and customised commercial offerings for passengers. DNIA will also be the first net zero emissions airport in its class, setting a new standard for sustainable aviation.

Zurich Airport is expected to invest an initial €600 million on DNIA’s construction in exchange for a 40 year operating concession. When it opens, it will be equipped to handle 12 million passengers per annum.

However, an ambitious development plan includes proposals to raise its capacity to 30mppa in phase II and 70mppa by end of the concession in 2061.

In addition to the project in India, Flughafen Zürich AG currently has interests at eight airports in Latin America and the Caribbean (Belo Horizonte, Florianópolis, Macaé and Vitória in Brazil; Antofagasta and Iquique in Chile; Bogotà in Colombia; and Curaçao in the Lesser Antilles).

Zurich Airport is also no stranger to India as with other partners it helped build and develop Bengaluru’s Kempegowda International Airport before exiting the project in 2017.

“Despite the coronavirus pandemic, Flughafen Zürich AG remains convinced of the long-term growth opportunities of the Indian aviation market,” said the Swiss global airport operator.

“The signing of the concession agreement marks an important milestone in the development of the Noida International Airport,” said Daniel Bircher, CEO of Zurich Airport International (Asia).

“In partnership with the Government of Uttar Pradesh and the Government of India, Zurich Airport International looks forward to making this airport a major player in the Indian air transportation system and a benchmark for ease of use for passengers and logistic partners.

“We are a committed and trusted partner for India’s growth, and see tremendous opportunity to invest and participate in India’s aviation growth story.”