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International Internet Magazine. Baltic States news & analytics Tuesday, 21.05.2019, 04:29

ACI Europe chief in Vilnius: 25 years too short for airport concession

BC, Vilnius, 16.05.2016.Print version
Future concession holder of Lithuania's three airports of Vilnius, Kaunas and Palanga will have to slightly raise the prices for services to have money for investing in the infrastructure, however, this will allow developing airports without political intervention, says Olivier Jankovec, the director general of the Airports Council International Europe (ACI Europe), cites LETA/BNS.

"I think it's difficult to say what's the best solution (for airport management) because it really depends on the specific condition you have in a given country and, of course, you would have some political considerations that come into play. Concessions are a very valuable model that has been very popular, I think it is a model when you see when states don't want to totally lose control over the airport," the ACI Europe chief told BNS Lithuania.


In his words, the projected airport concession time of 25 years is too short and should be up to 45 years.


"Where I am a bit concerned personally is the duration of the concession because 25 years is not very long. I think ideally you need to give private investors a possibility to go for longer term. We would see usually 40-45 years. We have extreme cases of 80 years in the Budapest Airport but I think 25 years, in my own opinion, is a bit short. At 25 years, you potentially restrict the interest from some private investors because they want to commit their money and take over for a longer period of time," said Jankovec.


In his words, accession of a private investor of the management of Lithuanian airports will probably result in somewhat higher tariffs, however, this should not cause airports to become less competitive.


"I think the tariffs are a reflection of how much you need to invest. If you give a concession to a private operator and you give him a mandate to develop the airport. to rebuild and modernize the terminal, build an additional runway. These are major investments. Airport business is very capital-intensive. You can't expect that the airport will be developed in terms of capacity and will be modernized with the tariffs remaining where they are," said the ACI Europe chief.


Currently, the plan to transfer the management of Lithuania's three airports to a concession holder is being discussed at the parliament. Under the concession bill, the concession contract should not be concluded for more than 25 years or extended.


The concession tender should be called later this year. The concession holder would develop all three of Lithuania's airports in Vilnius, Kaunas and Palanga, with management and development of each of the airports regulated separately.

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