LANGKAWI: Private investors want certainty and incentives before investing in airport development, said senior industry executives.
Airports Council International (ACI) director-general Angela Gittens said the government should be transparent on the rules.
“The current (Malaysian) government wants the airport operator to invest in capital, which changes the financial situation for the operator.
“Hence, the government should set up proper regulation with good management to ensure return on invested capital for the private sector,” she told NST business during the ACI Asia-Pacific (APAC) Small and Emerging Airports Seminar (SEAS) 2018, recently.
She said the government must allow airport operators or investors to find the best ways to implement the right approaches in meeting their goals.
“It is possible to get private capital for airport if the government has the right incentives for investors.
“The private sector prefers airports with stable and sustainable long term returns,” she added.
Gittens said private investors should make right choices on the airport infrastructure inline with the market forecast, while working with the government to understand tourism and the market growth.
“Private investors also need to understand the plans and interest of the government as well as the contract need to be set up under the right management to deliver returns,” she said.
Gittens said more countries were now looking for the private investments due to abundance of financial resources.
She said the need for infrastructure was pressing much faster as the APAC region was growing rapidly
“Sometimes the private sector can move quickly than the public sector in making infrastructure investments,” she said.
Gittens added that airport operators aimed to increase their non-aeronautical revenue due to fiercer competitions as airlines decide to serve the market that can make the most money for their aircraft.
Meanwhile, smaller airports were at the mercy of the airlines because they need to find ways to offer the airlines incentives and not necessarily impose high charges.
“Smaller airport operators need non-aeronautical to meet their debt service and pay their employees,” she said, adding that typically larger airports rely less on aeronautical but smaller airports rely more.
ACI’s World Airport Traffic Report published last month highlighted that passenger traffic in advanced economies reported 5.2 per cent growth in 2017, while emerging economies grew by 10.3 per cent.
ACI Asia-Pacific secretary treasurer, Sheikh Aimen Ahmed Al Hosni said the airports association continues to see tremendous growth in many facets, especially in emerging markets.
“The growth potential continues to be in the emerging markets because this is where over 85 per cent of the world’s population reside.
“We have the privilege of witnessing the growth and anticipating the growth potential in APAC and the Middle East first hand,” he said, adding that the growth in emerging and developing Asia, particularly China and India, remain solid.
Sheikh Aimen pointed out that the overall economic growth in Southeast Asia was expected to remain solid due in part to demand from China and Europe.
Among the top 10 fastest growing countries, nine will be from the APAC and Middle East regions comprising China, India, Indonesia, Iran, Saudi Arabia, United Arab Emirates, Malaysia, Vietnam and the Philippines.
“These fast-growing markets are all emerging and developing economies, expected to account for over 60 per cent of the world’s passenger traffic by 2040,” he said.
Sheikh Aimen said the way people travel was drastically changing and airports, noting that ACI needs to be able to honestly discuss and deliberate on issues that are relevant and important to small and emerging airports.
“We need to have a good understanding of new trends, and be even smarter, more innovative and more efficient than larger airports in their ways to address them,” he said.
Sheikh Aimen said small and emerging airports also seek to provide quality facilities for serving its passengers and be sustainable in its business operations.
“With these in mind, we have put together a rich program with topics on capturing non-aeronautical opportunities amid changing passenger profiles in the region, to airport operational compliance issues such as safety, security, cybersecurity, capacity building and climate change,” he said.