NEW TER­MI­NAL PLAN FOR AIR­PORT

South Wales Echo - - FRONT PAGE - SION BARRY Busi­ness Ed­i­tor sion.barry@waleson­line.co.uk

CARDIFF Air­port has a new ter­mi­nal build­ing on its radar as it re­mains con­fi­dent of driv­ing pas­sen­ger num­bers to three mil­lion dur­ing the next decade.

Work will soon start on a new 10 to 15-year mas­ter­plan for the air­port, which is owned by the Welsh Gov­ern­ment but is run at arm’s length by a pri­vately con­sti­tuted com­pany.

The plan will also cover the St Athan aviation fa­cil­ity.

A new ter­mi­nal, which could be de­vel­oped in phases as pas­sen­ger num­bers grow over the next 30 years, will be needed as the ex­ist­ing age­ing ter­mi­nal only has ca­pac­ity to ac­com­mo­date three mil­lion pas­sen­gers a year with­out the need for sig­nif­i­cant in­vest­ment.

The air­port is con­fi­dent it can reach that num­ber, which is cur­rently at 1.3 mil­lion, hav­ing achieved a 16% lift last year, by 2026 – with it con­tin­u­ing to grow be­yond that.

In­for­mal dis­cus­sions have been held with a num­ber of po­ten­tial pri­vate sec­tor back­ers, in­clud­ing in­sti­tu­tional in­vestors such as pen­sion funds and sov­er­eign wealth funds, look­ing for a long-term and se­cure fi­nan­cial re­turn.

How­ever, with a 10-year lead in time to fund, se­cure plan­ning and build a new ter­mi­nal – which could cost hun­dreds of mil­lion of pounds – the for­mal process will need to start this year.

The mas­ter­plan will also look at how the air­port, as a strate­gic trans­port as­set for Wales, fits into lo­cal, re­gional and na­tional in­fra­struc­ture plans.

This will in­clude the de­vel­op­ment of the South Wales Metro and the next Wales and Bor­ders rail fran­chise, as well as how the air­port can de­velop a more di­ver­si­fied busi­ness model by build­ing on aviation main­te­nance re­pair and over­haul (MRO) fa­cil­i­ties.

The air­port is cur­rently home to the Bri­tish Air­ways Main­te­nance Cardiff fa­cil­ity.

Key to at­tract­ing pri­vate sec­tor in­vest­ment for a new ter­mi­nal will be for the busi­ness to be­come sus­tain­able over the long-term, with a profit mar­gin giv­ing it the abil­ity to fi­nance the cost of rais­ing pri­vate sec­tor in­vest­ment.

It has yet to ap­point any cor­po­rate ad­vi­sory firm to as­sess fundrais­ing op­tions.

Sub­ject to ap­proval as a ma­jor cap­i­tal in­vest­ment in the mas­ter­plan, there are a num­ber of po­ten­tial fund­ing op­tions.

The air­port cur­rently just about washes its face on profit on a turnover of around £15m. But with growth in freight and MRO ac­tiv­i­ties, as well as at­tract­ing more air­lines and routes – in­clud­ing di­rect flights to North Amer­ica and a ser­vice to a hub air­port in the Mid­dle East – the busi­ness has the po­ten­tial to more into sus­tained prof­itabil­ity.

And if a pri­vate in­vestor takes an eq­uity po­si­tion, the Welsh Gov­ern­ment would likely look to main­tain a sig­nif­i­cant eq­uity stake, and most likely a ma­jor­ity one.

Cardiff Air­port chair­man Roger Lewis said: “The in­for­mal dis­cus­sions we have had so far on in­vest­ment have proven to be very pos­i­tive, not least based on the fact that the sole share­holder is the Welsh Gov­ern­ment.

“If you look at other ma­jor in­fra­struc­ture projects in the UK what in­vestors want is long-term se­cu­rity and fi­nan­cial re­turn, and the role of gov­ern­ment in this is fun­da­men­tal to un­lock­ing this type of fi­nance.

“We are be­com­ing warmer and warmer and more in­ter­est­ing [to po­ten­tial in­vestors].

“We want to wel­come two mil­lion pas­sen­gers a year to Cardiff Air­port in the next five years and three mil­lion pas­sen­gers a year in the next 10 years.

“So we will need to sig­nif­i­cantly en­hance all of our fa­cil­i­ties at Cardiff Air­port, and the build­ing of a new ter­mi­nal must be part of our vi­sion. To de­liver this we will need pri­vate eq­uity part­ners, and I will be­gin this dis­cus­sion with the Welsh Gov­ern­ment for­mally this year.”

ROB BROWNE

Cardiff Air­port hopes to at­tract three mil­lion pas­sen­gers a year dur­ing the next decade

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