Privatization and Financing of Airport Development and Expansion Projects

Abstract

Because of the tremendous growth forecasted in global passenger and air cargo volumes in coming decades, demand for new and expanded air transportation facilities will exceed the capacity of governments to finance such developments with tax revenues and user fees. Therefore, airports around the world increasingly will be financed with private capital.3A strong concession supporting a solid business plan is the first requirement for any privatized airport project. The strength of an airport project financing will be measured by the creditability of its pro forma cash flows and the underlying assumptions concerning growth patterns for passenger and cargo revenues and associated costs. The legal and commercial structure should allocate country, commercial, currency, and other project risks to the parties best able to manage them and mitigate other risks however possible. Sound application of these project financing techniques will enable governments to develop and expand airports more quickly and efficiently than would be otherwise the case.