When you look at airports across Europe
, many have had major transformations in the last few decades, with infrastructure providers investing in developing them into corporate businesses.

A liberal European aviation market

In Europe, 80% of airport operators are corporate businesses, and this number is growing with private sector participation. Public funding has become more limited at national and EU levels, and while European airports are seen as important economic contributors to the economy, they play a central role in providing connectivity for the regions they serve.

Private investors have interests in several European airports, with over 41% now having private shareholders; this has increased from 22% when compared to 2010. Of these, 79 airports (39%) have full private ownership, when compared to 126 airports (61%) are public-private partnerships.

According to ACI, the trend towards privatization of airports is summarized that regional European airports are financially unprofitable when managed in the public sector with private investment; however, these airports can be adapted to private operational models that can be more successful than their larger counterparts.

3 in 4 European travelers pass through private airports

European airports with private shareholders are quickly on the rise. ACI Europe estimates that three in four passengers in Europe will now pass through an airport with private shareholders. Fully publicly owned airports, however, are now moving, or have already moved into corporatized models, to be managed commercially.

These models allow airports to focus on air connectivity and development, operational efficiency, improve service quality and research diversification, and provide sustainable long-term investments.

While private investment can see funds easily injected into airports, a regulatory framework must enable this business transformation and protect the public from enjoying healthy and competitive airport markets. Olivier Jankovec, Director General ACI EUROPE, shared his insight with the International Airport Review:

“In just 6 years, private investors have gotten involved in an additional circa 100 airports in Europe. This means that the number of European airports with private shareholders has more than doubled – and that 3 in 4 passengers are now travelling through an airport with private shareholders.

Meanwhile, almost all fully publicly-owned airports are now corporatized and managed on a purely commercial basis. These are not anecdotal changes to our industry – they are truly transformative changes. They underline the fact that airports are now run as businesses focused on air connectivity development, operational efficiency, service quality, revenue diversification and sustainable investments.

He added: “The challenge now is to ensure that we have in place a regulatory framework which fully mirrors and promotes this continued business transformation – and helps ensure that the travelling public continues to enjoy the fruits of a healthy and competitive airport market.”

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A summary of why airports are being privatized

Trends continue to show that airport privatization is becoming more attractive for financially challenged airports. Given the deregulation of the aviation industry in Europe and the emergence of low-cost carriers, in 2018, IATA forecasted that over 7.8 billion passengers would pass through airports by 2036. This is almost double the number that traveled in 2017.

Photo: Edinburgh Airport

With this explosion in traffic, airports are under pressure to expand and provide adequate services to meet this demand, but where could the money come from? Around the world, publicly funded investments have seen budgets cut, which results in increasingly unattainable investments. This has seen cash-strapped governments looking to privatize to improve infrastructure with private investors instead of emptying public reserves. Key benefits of airport privatization include:

• Improvements in overall efficiency
• More available investment sources
• Less fiscal pressures
• Airport costs
• External revenue factors
• Airport revenue

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A spotlight on privately owned airports in Europe

Let’s look at several private airports currently operating in Europe:

London Gatwick (LGW)

Formerly owned by BAA Limited (the owners of Heathrow Airport – Heathrow Airport Holdings), and before that, the BAA Plc and British Airports Authority, the airport is now operated by Gatwick Airport Limited. This is a wholly owned subsidiary of Ivy Holdco Limited, whose parent company is Global Infrastructure Partners.

Through this consortium, the airport has two main investors: the Abu Dhabi Investment Authority, Australia’s sovereign wealth fund, and two other public pension providers in South Korea and California.

London Gatwick is the busiest single-runway airport in the world, with two terminals supporting its operations. The airport is a hub for British Airways and an operating base for BA EuroFlyer, easyJet UK, Norse Atlantic UK, TUI Airways, Vueling, and Wizz Air UK.

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Rome Fiumicino Airport (FCO)

Serving the city of Rome and also the Vatican City, one of the busiest airports in Italy is currently held in a holding company with several private and public investors. FCO has multiple shareholders, including:

• Mundys (95.9%)
• Lazio region (1.3%)
• Rome (1.3%)
• Rome Chamber of Commerce (0.8%)
• Province of Rome (0.3%)
• Fiumicino (0.1%)
• Others (0.3%)

Its main shareholder, Mundys, is an infrastructure operator with investments in motorways, airports, and mobility-related services. The company operates tolling services across 24 countries, both in Europe and further afield, including Poland, the United Kingdom, Spain, Argentina, Colombia, India, and Puerto Rico.

The airport is a hub for ITA Airways and Poste Air Cargo, while an operating base for AeroItalia, Neos, Ryanair, Vueling, and Wizz Air.

London Heathrow Airport (LHR)

Led by the then Prime Minister Margaret Thatcher, LHR was one of the subjects of the privatization of several government-owned assets. Today, Heathrow, the busiest airport in the United Kingdom and one of the busiest in Europe, is the hub for British Airways
and Virgin Atlantic
.

Photo: Heathrow Airport

When operating under BAA plc, Heathrow Airport Holdings owned a range of British airports, which led to fears of a monopoly in the British aviation market. This led to several airports being sold off to other private organizations. These airports included:

• Aberdeen Airport (ABZ)
• Edinburgh Airport (EDI)
• Gatwick Airport (LGW)
• Glasgow Airport (GLA)
• Glasgow Prestwick Airport (PIK)
• Naples Airport (NAP)
• Southampton Airport (SOU)
• Stansted Airport (STN)

Today, Heathrow Airport Holdings is owned by these investors:

London Heathrow is one of six airports in the Greater London region (including Gatwick, Stansted, Luton, London City, and Southend), and the airport remains one of the busiest in the world for international traffic.

Heathrow, which has been the source of great debate on its potential expansion, continues to run at full capacity, restricted to the operations from its two runways. Read more about the proposed third runway for LHR here.

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Britain led the way in Europe for privately owned airports

Privatizing airports in the 1980s in Britain inspired other countries to reconsider the ownership of publically funded assets. While in the United States, privately owned airports are limited, this has not stopped privately funded or public-private investments into terminal redesign and development.

Competition for aviation in Europe is fierce. The emergence of low-cost carriers and the fact that more travelers are looking for the best bang for their buck have seen airlines and airports take notice. While low-cost carriers will avoid larger airports to ensure lower landing charges, this has put pressure on smaller regional airports that may not have historically been designed to withstand higher frequencies of operations.

An example of this is Stockholm, where Ryanair and Wizz Air prefer to operate out of Stockholm Skavsta Airport (NKO) rather than the city’s main airport, Stockholm Arlanda (ARN). The airport has been operating for 40 years and has been reborn from its original use for military operations. Skavsta airport today is owned in a public-private partnership:

• Arlandastad Group AB (90.1%)
• Nyköping Municipality (9.9%)

While Ryanair has now realigned its operations to Arlanda Airport, two operators remain at Skavsta, including Norwegian Air Shuttle, with services to Alicante and Málaga (year-round), with seasonal services to Palma de Mallorca. Wizz Air
, Europe’s second-largest low-cost carrier, also operates in Belgrade, Bucharest–Otopeni, and Warsaw–Chopin.

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