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Finance has been a major issue since the onset of the global financial crisis in 2008-2009, up until when airports were notably attractive to private finance. “However since the global crisis it’s become much more difficult and far more expensive. The capital markets are not willing to lend to airports, and with capital expenditure now 31 percent of our costs it’s a major issue. And since 2010, while airports have cut their investments by 19 percent because of the economic environment, their capital costs rose by 23 percent.” Here again Jankovec notes Europe’s disadvantage compared with airports elsewhere. “Firstly there’s no sovereign debt crisis in Asia or Latin America, and secondly with growth prospects nearly double ours they are far more attractive to financiers and private capital.” There is a new and further complication: European policy and regulatory frameworks no longer give investors the duration of legal certainty experienced hitherto. “The UK is a very good example. Here is a country where there was an established airport policy that said there would be a third runway at Heathrow. Then all of a sudden the rules of the game are changed and it emerges that there will be no third runway.” “And you do this after you have privatised Heathrow and attracted capital. In terms of presenting airports as an attractive and secure place for investment, this kind of thing is sending a dreadful message to private investors. “Contrast this with the greater legal and policy certainty in emerged countries where airport development is regarded as a national strategy issue and you can see that the competitive 36

“As these challenges stack up in the skies, European airports are responding with a drive for greater efficiencies and passenger care. “Efficiency, especially of ground operations, is becoming increasingly relevance, especially for congested airports”

position of European airports as an attractive place for investment is now at risk.” While air traffic has recovered since 2010 it has not been matched by a proportionate revival in aeronautical revenues, as airports shoulder an increasing volume of industry risk. As a result airports are looking at diversification, with commercial activities now key. “Commercialisation is a reality and here to stay. First and foremost airports face increasing pressure from airlines in respect of airport charges. And what we are seeing as a result of airline consolidation is a complete shift in the balance of the airport/ airline relationship. Airlines are now exercising increasing dominance over airports and dictating the terms on which they are prepared to use the infrastructure and pay for it. “You can see this already in numbers. The charges paid directly by airlines to the airport

European Outlook / Issue 2  

European Outlook / Issue 2