Taif airport PPP could be revived soon

26 June 2016

Prequalification put on hold in May

The project to develop Saudi Arabia’s Taif airport as a public-private partnership (PPP) project could be revived after Ramadan.

Sources with knowledge of airport project developments in Saudi Arabia told MEED they expect the tender for the Taif airport, as well as possibly tenders for three other domestic airports that will be developed on a PPP basis, to be released in July.

MEED also recently reported that the General Authority of Civil Aviation (Gaca) has invited four to five local and Bahraini banks to bid for a privatisation advisory contract for “four small airports.”

A consultant for the aviation regulator, however, declined to confirm progress. “Many projects are being talked about as part of the National Transformation Plan (NTP), and none have occurred to date… I would wait until something is officially announced,” the consultant tells MEED.

The Taif airport PPP project reached the prequalification stage but was postponed in May, presumably in anticipation of potential changes in line with the NTP, which was approved in June.

Taif airport was planned to become the kingdom’s fifth international airport and the second to be developed using a build-transfer-operate (BTO) model, following in the footsteps of Medina’s Prince Mohammed bin Abdulaziz International airport, which entered full operations in June 2015. It was also to become the third airport catering to the hajj and umrah pilgrims in addition to Jeddah’s King Abdulaziz International (KAIA) and Medina airports.

Consultants speaking to MEED, however, had cast doubt on the feasibility of a PPP scheme for Taif unless Gaca would commit to diverting a certain percentage of passengers from the Jeddah airport into the planned new international airport.

”The [Taif PPP] scheme can only be successful under the assumption that annual passenger traffic reaches 20 million, where each passenger is charged $3-$4 as airport fee, and each luggage is charged at least 35 cents,” a consultant told MEED in May. “Without these assumptions, it will be difficult for the investors to achieve profitability even on a 25-30-year period.”

The argument on the feasibility of the project had led to a speculation that the PPP model could have been dropped. Recent developments in the kingdom, however, seem to indicate otherwise.

The existing regional airport in Taif accommodated 1.16 million passengers in 2015. In terms of passenger volume, it is smaller than four other regional airports including Abha airport (3.12 million), Jizan (1.74 million), Qassim (1.44 million) and Tabuk (1.3 million).

In January, Gaca has said it was aiming to privatise all its airports by 2020, a plan that was met with some level of scepticism especially by analysts due to very low traffic and the lack of comprehensive road infrastructure and connectivity in many of the kingdom’s domestic airports.

Phased privatisation programmes primarily in the form of appointing private companies to operate and maintain the kingdom’s international airports, however, have started.

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