WITH Hewanorra International Airport (HIA) set to become a public-private partnership (PPP) entity soon, the Saint Lucia Air and sea Ports Authority (SLASPA) is busy doing its research to ensure that that process is as seamless as possible.
Earlier this month, two SLASPA representatives – Senior Director –Strategic Initiatives, Ben Emmanuel and Research and Statistical Officer, Grace Herman – along with five local media practitioners travelled to Jamaica where the public-private partnership seems to have worked for Sangster International Airport in Montego Bay for the past 12 years. The aim of the trip was to gather information about how the arrangement has worked for that airport and how challenges were dealt with.
MBJ Airports Limited is basically a consortium formed by Mexican and Canadian companies as main shareholders. MBJ Airports Limited has a 30-year concession to operate and build the airport on behalf of the Jamaican government. The company also pays a concession fee to the government while it earns revenues from all flights and passenger movement in the commercial market.
MBJ Airports Limited’s concession began in April 2003 and ends in April 2033. The private limited liability company won the bid when the Jamaican government put the airport out to tender.
MBJ Airports Limited’s Acting Chief Commercial Officer, Sitara English-Byfield, said the airport has undergone a massive transformation since the public-private partnership came into effect.
“Before 2003, the airport was operated by the Airports Authority of Jamaica (AAJ) which is a government agency,” MBJ Airports Limited’s Sitara English-Byfield said. “Their system was very different and it was also a different time. With the development in technology, things have to evolve. So who knows if they were still here how different it would be.”
Major infrastructural development, which was a requirement under the concession agreement, she said, came at a price tag of US$122 million which was the agreed amount for the expansion of the terminal building.
The agreement also covers such areas as performance targets, passenger satisfaction, baggage handling, and so on. However, the airport remains under the ownership of the Jamaican government, which has the option of either renewing or discontinuing the agreement after 30 years.
There were no jet bridges when MBJ Airports Limited took over in 2003. Today, all gates have jet bridges. The infrastructural development resulted in the airport gaining an additional 6000 square metres of retail space and an additional 12 gates to the six gates that previously existed.
As per the agreement MBJ Airports Limited has with the Jamaican government, the latter are essentially MBJ Airports Limited’s landlord and oversees the concession to ensure that MBJ Airports Limited adheres to the terms spelled out in the agreement signed 12 years ago. The Jamaica government, however, is not responsible for any debt incurred by MBJ Airports Limited. Quarterly meetings between MBJ Airports Limited and the AAJ are held to discuss key matters.
The Jamaican government is expected to receive US$10 million in concession fees this year from MBJ Airports Limited’s operations of Sangster International Airport, English-Byfield said. That figure excludes income tax and statutory deductions.
English-Byfield said business has been booming at Sangster International Airport over the past 12 years. At the beginning, she said, the government was receiving between US$4 million and US$5 million in concession fees.
While MBJ Airports Limited has 170 employees, over 5,300 people work at the airport, offering different services. With the airport going into the public-private partnership agreement, English-Byfield said job creation and business in Montego Bay have both increased. Tourism has benefitted immensely since the airport’s development with many new businesses opening up their doors.
While in Montego Bay, the Saint Lucian team also spoke to AAJ representatives as well as members from the airport’s vendors’ association, taxi association and red cap association, all of whom said that despite the rigid standards set out in the public-private partnership, professionalism has increased and so, too, has business activity at the airport.
Sangster International Airport is one of the largest, busiest and most ultra-modern airports in the Caribbean, handling 9 million passengers annually. It generates more business than Jamaica’s two other international airports: Norman Manley in Kingston and Fleming in Boscobel.
Emmanuel told The VOICE that SLASPA chose the Sangster International Airport model as its case study based on its successes and its scale of operations. He said that while the terms of the concession agreement have not been made public, every endeavour will be made to ensure that Saint Lucia does not lose out on the important public-private partnership deal for the development of the island’s only international airport.
Meanwhile, SLASPA recently began running full-page newspaper ads seeking invitations for pre-qualification from “private sector operators with proven experience in the aviation sector to operate, finance, develop, and maintain the Hewanorra International Airport (HIA) under a long-term concession agreement (the “Project”).” A concession contract with the winning bidder is expected to be signed by next year.
SLASPA has appointed the International Finance Corporation (IFC), a member of the World Bank Group, as lead advisor on the structuring and implementation of the project.