Saudi Arabia’s three main inter-national airports are to be floated on the Saudi stock exchange (Tadawul) within three years, as part of a scheme to bring in foreign operators to co-manage the facilities.
News of the listings follows confirmation from Riyadh of the allocation of contracts to two international operators to manage the three airports.
The kingdom’s aviation regulator has confirmed that German airport operator Fraport has won the contracts to run the country’s two main airports: King Khalid International in Riyadh, and King Abdulaziz International in Jeddah.
Fraport has been handed six-year deals to improve the management of the airports, focusing on sustainable traffic growth and introducing commercial opportunities to establish them as independent companies ahead of an initial public offering (IPO) on the Tadawul by 2011.
“Its [Fraport’s] task is to improve processes so the airports operate on a commercial basis, running on their own revenues,” says one General Authority of Civil Aviation (Gaca) official. “They will be transferred back to Gaca as independent units so they can be part-privatised, with an IPO for each airport within three years.”
In exchange, Fraport will receive an undisclosed flat fee from Gaca for the six-year duration of the contract, plus performance-related bonuses. Having each airport ready for its IPO within the three-year timeframe will be key to this pay structure.
Gaca also confirms that Changi Airports International from Singapore is still the front runner to manage King Fahd International Airport in Dammam, with an official announcement expected soon. As revealed in MEED, Fraport and Changi were selected as preferred bidders in January (MEED 17:1:08).
Fraport will also oversee the rapid expansion of the two airports, particularly in Jeddah, where Gaca hopes to increase capacity to about 80 million passengers a year by 2035. The first phase of this development – raising capacity to 30 million by 2012 – will fall within the lifetime of the contract (MEED 3:12:07).
“They will oversee the designs for the new terminals and the practicalities of moving operations, and produce plans for the transfer to the new terminal when it opens in 2011 or 2012,” says the official.
To ensure that the airports can ultimately run themselves and sustain the service improvements introduced, training will be a critical element of the work undertaken by the foreign operators.
Fraport reveals it already has 13 staff at work in Riyadh and Jeddah to make a full evaluation of the situation in the two cities, and to establish priorities for the first year of its contracts. These managers will work alongside existing staff, while some senior Saudi directors from the two airports are expected to spend time in Germany for further on-site training at Frankfurt airport.
“We are almost halfway through a similar eight-year contract at Cairo airport and have had people here from Egypt for training during that time,” says a Fraport spokesman. “I imagine there will be a similar arrangement [with Saudi Arabia] but we are only just getting under way.”