Presentation on theme: "Dr. Ünal Battal Anadolu University Turkey"— Presentation transcript:
1Dr. Ünal Battal Anadolu University Turkey BUILD-OPERATE-TRANSFER MODEL AS AN AIRPORT PRIVATIZATION STRATEGY: APPLICATION OF BOT MODEL AT AIRPORT TERMINALS IN TURKEYDr. Ünal BattalAnadolu UniversityTurkey
2Air transportation sector requires large capital investments to modernize aircraft fleets,improve airport infrastructure andintroduce more sophisticated air navigation systems.These large investments, together with a redefined role for the state, are transforming the air transportation sector.Private sector participation in airports, through ownership, management, or new investment programs, can take many forms, including sale, concessions and build-operate-transfer (BOT). Developing countries trying to promote private sector participation in airports could choose a combination of the two options, beginning with a BOT model that gives way to corporatization with full or partial divestiture.
3OUTLINEIn the first part of this presentation, airport privatization strategies are generally defined.AIRPORT PRIVATIZATION STRATEGIESIntroductionPrivatization StrategiesIn the second part, BOT model is explained in details such as legal issues in TurkeyAPPLICATION OF BOT MODEL AT AIRPORT TEMINALS IN TURKEYThe Legal Frame and Basis of the BOT ModelThe Features and Contracts of the BOT ModelSupervising in the Model of BOTThe Schedule in the BOT Modelin the last part, Airport BOT model applications in Turkey are discussed.APPLICATIONS OF TERMINAL OPERATING WITH BOT MODELCONCLUSION
4AIRPORT PRIVATIZATION STRATEGIES Introduction:Several motivations are driving the increasing interest in privatization of airports:General constraints in public budgetsCapacity bottlenecks on the ground and in the airChanges in airport markets, such as commercialization and globalizationEscalating investment requirementsInterest in airports as catalysts for regional economic developmentA growing need, in the economic downturn, for airports to do more with less
5From the perspective of the private sector, airports are an attractive investment: Airports operate as part of the dynamic growth industry of transportation.Airports are an essential element stimulating and benefiting from both commerce and tourism.Airports generate substantial revenues in hard currencies.Airports represent an essential infrastructure with a near monopoly on the services provided.Most airports enjoy good credit ratings.All these elements combine to make privatization an attractive investment.
6Privatization Strategies There are a variety of airport privatization strategies:Concessions (long-term): – One airport – System of airportsSale: – Complete privatization – Phased or partial privatizationAcquisition of strategic investor generally followed by sale of remaining shares in the open market and/or to selected national groupsBuild-operate-transfer (BOT)
7Privatization Strategies Approach to Airport Privatization: Options
8Privatization Strategies The BOT approach is widely used for several reasons:It taps into a different pool of capital than is normally available for public infrastructure projects, thereby expanding the range of potential funding sources.Private consortium are often able to design and build large facilities in significantly less time than is possible via traditional government procurement methods.Both the up-front cost and the operating costs may be lower in a facility that is designed, built and operated by a single team interested in long-term profitability.BOT is a way of shifting many of the risks of project development from the public sector to the private sector.
9APPLICATION OF BOT MODEL AT AIRPORT TEMINALS IN TURKEY The Legal Frame and Basis of the BOT Model:3996 numbered “The Law about Having Investments and Services done in the Frame of BOT Model”BOT model is known as the private financing model upon its specified definition in the law numbered 3996Potential revenue rights giving by the government in the frame of an administrative contract for a specific period to a private law capital company
10The Features and Contracts of the BOT Model: The model structurally acquires entity on the pivot of privilegeServices are given in the frame of public service The Concession Agreement for a specific period of timeInvestments transfer to the public administration at the end of the period of the concession agreementThe model’s being successful is affiliated to the feasibility and profitability of the investmentThe investors undertakes all the financial risks of investment in the model
11The BOT model under the roof of The Concession Agreement consist of sub agreements: Financing agreement,Construction agreement,Operating agreement,Security agreement,Insurance agreement andGuarantee agreement of the services to be bought by the public administration
12Supervising in the Model of BOT: Public administration is responsible for auditing frame of public service principles such asprice,Quality,Continuity,Regularity,Equality,Objectivity andGeneral benefits
13The Schedule in the BOT Model: The agreements related to the application of the BOT model are at most 49 years.The investment amount,the repayment periods of the loans provided for the investment,the concept of the project,the amount of the capital andoperation principlesare taken into consideration for determining the agreement period
14APPLICATIONS OF TERMINAL OPERATING WITH BOT MODEL State Airports Authority Directorate General (DHMİ) is responsible forlicensing,tendering,building and operating of airports,air traffic control,airport management,ground services,airlines and air safety in Turkey.
15APPLICATIONS OF TERMINAL OPERATING WITH BOT MODEL Three passenger terminals consist ofİstanbul Atatürk Airport International Terminal,Antalya Airport First International Terminal andAntalya Airport Second International Terminalwere given to private sector for operation by using BOT model.The same BOT model is to be used for the three new passenger terminals includingAnkara,İzmir andDalaman Airports.
16First and Second International Terminal of Antalya Airport First Terminal:Operation start on54,000 m2 terminal buildingCapacity 5 million passengers/year12 passenger gates60 check-in desks725 capacity multi-story car parkCost of project is 65 million USDOperation period 9 yearsSecond Terminal:Operation start on91,454 m2 terminal buildingCapacity 5 million passengers/year12 passenger gates45 check-in desks750 capacity multi-story car parkCost of project is 85.5 million USDOperate period 3 years, 5 months and 26 days
17Domestic and International Terminals of İstanbul Atatürk Airport Private company operated the terminal from 10 January, 2000 to 2 July, 2005264,000 m2 terminal buildingCapacity 20 million passengers/year23 passenger gates, 224 check-in desks7076 car capacity multi-story car parkCost of project is 600 million USDIn 2005 same private company has won the concession agreement to operate the Atatürk Airport for 15.5 years at amount of 3 Billion USD
18Domestic and International Terminals of Ankara Esenboğa Airport Operation start on167,000 m2 terminal buildingCapacity of 10 million passengers/year18 passenger gates,105 check-in desks4000 capacity multi-story car parkCost of project is million USDOperation period 15 years and 8 months
19International Terminal of Dalaman Airport Operation start on95,587m2 terminal buildingCapacity 5 million passengers/year7 passenger gates60 check-in desks1000 capacity multi-story car parkCost of project is 72.4 million USDOperation period is 6 years, 5 months and 20 days
20International Terminal of İzmir Adnan Menderes Airport Operation start on 107,899 m2 terminal buildingCapacity 5 million passengers/year9 passenger gates60 check-in desks2200 capacity car parkCost of project is 125 million USDOperation period is 6 years, 7 months and 29 days
21CONCLUSIONEspecially, because of DHMİ’s philosophy of selling the citizens’ property to the companies who quoted the highest and fill up its box, architectural projects being told of are prepared costly and flamboyantPrequalification conditions are hold very high or detailed and applicant numbers and varieties are restricted, and a big sum is requested thus the costs of terminal operating are increasing.Airline companies are squashed with increasing airport costs, and tourism agents try to dissolve these cost in hotel and voyage packetsWhile privatizing the terminal the opinions of airline sector, carriers and tourism agents are not asked
22CONCLUSIONMonopolistic terminal operating system, which will be created in near future, will affect airline and tourism associations in a negative way. Contracts done for years are chaining the sector like a collar.It is a subject of critique to welcome tourists who have 20,000-30,000 $ national income to a country with luxurious and magnificent terminals whose citizens have 6,000-7,000 $ national income, after comparing other countries’ examples of terminals.Terminal constructions are finished before the required period to extend the operating duration without paying attention to its quality of construction. However, after the start of using the terminal, because of lack of the quality, malfunctions are encountered. In addition to this, terminal’s being completed than the required time limit creates no profit for the government.