NEW TERMINAL PLAN FOR AIRPORT
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.”
Cardiff Airport hopes to attract three million passengers a year during the next decade