Russia wants more privately funded airports

Prime Minister Vladimir Putin has announced the government wants ‘to turn aviation infrastructure into a prospective and attractive platform for investment’ following the success of the public-private partnership to modernise Pulkovo Airport.

Russia is gearing up to launch more public-private partnerships (PPPs) to modernise its ageing airports, Prime Minister Vladimir Putin announced yesterday.

Putin: wants to involve
private sector in airports
more actively

“We must involve businesses in the development of airports more actively,” Putin said, pointing to the successful PPP to modernise St. Petersburg’s Pulkovo Airport as an example of how the private sector can help fund the $10 billion Russia is said to need to develop ground and air transportation over the next five years.

“We need to make aviation infrastructure a promising and attractive investment and establish clear-cut and comprehensible regulations in this sphere,” Putin said, adding that Russia “clearly needs a law on airports and the airport business.”

While Putin did not specify which airport PPPs might be next he did hint that 14 regional airports – including Nizhny Novgorod, Samara, Ekaterinburg Koltsovo and Novosibirsk Tolmachevo – could be next. The ownership of those 14 airports was transferred to the Russian regions under a 2007 law.

“Ownership of 14 airports has been transferred to Russia’s regions so far. However, a regional government that assumes control of an airport is obligated to renovate it – which is the real purpose of the ownership transfer – and to do so with the funds of their regional budgets or contributions from investors. We will closely monitor the execution of these obligations,” he warned.

St. Petersburg’s $1.1 billion Pulkovo Airport became Russia’s first PPP to reach financial close in late April without any form of government support. The project was awarded to a consortium led by Russian bank VTB, Frankfurt Airport operator Fraport and Horizon Air Investments. A club of multilaterals and international banks lent $715 million to the project with the remaining coming from the consortium in equity.