Prior to COVID-19, the early part of 2020 indicated a consistent level of interest in airport PPPs around the world. However, since then, most of these were put on hold. During the second quarter of 2021, there are early signs of momentum primarily in the Latin American-Caribbean and Asian regions. It remains to be seen if new airport PPPs will reflect a new form of risk sharing, and how that may impact the timing of these transactions.
Many governments will emerge from the pandemic with reduced resources and ever-present infrastructure investment needs. Airport PPPs will become more necessary in many places to ensure the ongoing supply of investment in airport infrastructure.
In view of the difficult conditions that private investor-operators have had to face with governments and banks to properly enforce protections offered in their PPP agreements, a relaunch of the airport PPP market can be possible only if governments ensure that future airport PPP models improve. The key is the ability and willingness to enforce protections and prevent the impact of new similar crises while ensuring an appropriate risk share.
Specific areas within Latin America – Caribbean, Asia, and to a lesser extent in African regions, are geographies where private investors are likely to focus their efforts on new airport PPP opportunities within the next year or two. In Europe, there do not appear to be any major European airports to be privatized within the next year or two.
The focus of the upcoming airports to be privatized is likely from a more rapid and lasting return to growth thanks to a strong and growing tourism travel market.
In the Latin America – Caribbean region, most of the airport privatizations from 2020 were in the preliminary stages of development but were put on hold. There are only a few upcoming transactions in the works for 2021 and 2022, including regional airports in Chile, the 7th group of regional airports in Brazil as well as a number of state airports, the international airport in Barbados and a small group of airports in the Bahamas. Brazil represents the most active and largest country implementing airport privatizations.
Since 2011, it has consistently and almost annually transferred its major airports in staged concession auctions to private investment.
The Government of Brazil remains committed to transfer its remaining federal airports to the private sector. In 2022, a 7th group of airports will be broken down into three blocks, with the Santos Dumont Airport and the Sao Paulo Congonhas Airport as the remaining large airports. In 2020, there was little PPP activity in Asia-Pacific and African regions.
Highlights of potential PPP activity in the latter half of 2021 and into 2022 includes the following:
- India – the second airport in Delhi, as well as, up to 20 regional airports
- Japan -numerous airports underway including Hiroshima Airport
- Indonesia – Lombok Airport
In a number of other Asian countries there remains a desire to privatize airports, but progress is sporadic. A recent study by L&B indicates that support from multilateral institutions on transactional guidance and funding throughout Asia could improve the appetite for airport PPPs. It also appears that governments in Nigeria are starting to take airport privatization more seriously, and we may see privatizations emerge in Lagos and Abuja within the next year or two.