TB Lettsome Airport will be placed in hands of private investors- Premier Smith
Premier and Minister of Finance Dr The Honourable D. Orlando Smith (AL) told journalists at a ‘One on One Meeting with the Premier’ yesterday, January 18, 2018 that the phase of negotiating with China Communications Construction Company (CCCC) and IDL Group, who merged with Sir Robert McAlpine Holdings and local partner ADC of the Virgin Islands, has ended and his government is now looking at what he called a Private Public Partnership (PPP) arrangement for the development of the airport.
"Where someone may build and design for a certain time and then hand it back over to government after they would have recouped their investment, so that is the model we expect to follow," Premier Smith said.
20 years
The leader of Government business also said the airport is likely to remain in private investors' hands for about 20 years. “That’s the way many airports around the world operate – London, New York. Many operate in that way.”
Premier Smith said Government took another look at the proposed project and found that the PPP was the best direction to go, rather than have Government invest in it.
He further clarified that with the initial arrangement, where they had the Chinese company CCCC as a preferred bidder, it was only for the expansion of the airport runway but there has been an addition to the project. "What we are envisioning now is the expansion of the airstrip and also improvement in the terminal building."
This was given as the reason why the proposed cost of the airport project rose from $153M to $250M.
In this new quest, Premier Smith said previous bidders, including CCCC, would be free to submit proposals. He; however, said they have had no talks yet with possible companies for the concession model.
Premier Smith and his ministers are expected to have public meetings across the territory, starting next week and this is expected to run for possibly two weeks at the end of which the NDP government is expecting to have a finalised recovery and development plan for the territory.
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44 Responses to “TB Lettsome Airport will be placed in hands of private investors- Premier Smith”
Good Lord, I may have to run for office. I cant do any worse than these fools.
Why are the locals considered vipers and the UK/Foreign ones considered something else? Why can't business people locally partner with outsiders with access to more capital and make things happen? Why is it that we always hating on the locals? Was it locals who took our $7 mil and haven't made one trip to Miami in OUR PLANES? God bless OUR OWN LOCAL VI AIRLINK after Irma. If they gave the Brathwaites $7mil I'm sure we would be better off now. It seems that any local person or business trying to step out of the 'let me work a 9-5 all my life' box and do something for themselves they're considered greedy, because they dare to reach for the moon instead of the coconut branch. You all are some sick #$%&@ people!
The are not to compere; we have to look at islands within our bracket like Turks, Cayman,Bermuda and Barbados etc. These countries has state owned airport and they are doing well.
Why suddenly you decide to privatise our assets?
It is not true to say most enveloping islands have their airport privatise.
Just take a look at the Caribbean instead of talking about develop countries.
You are a lazy man and so are your parliament representative.
This sounds like a win-win for both residents and investor with the investor recouping its investment and making a profit and BVI residents getting improve air transportation services. But not so fast. The challenge will be finding an investor to invest $250M on a small airport in a small territory with a small population.
Investors normally shop around for relatively safe investment opportunities. Typically, they gravitate towards investments that are generally relatively safe and that can hurdle its minimum hurdle rate, minimum rate of return on investment, ie, 15%, 20%, 25%………..etc. $250M is large sum of money and any investor must have a high level of confidence that it is an investment opportunity that satisfies and meet its investment target. Given the VI small size, and limited revenue streams this could be a challenge.
Potential revenue streams include departure taxes, space rental to airlines, parking fees, landing fees, retail shops, fuel sales…….etc. Proceeds from these revenue streams must be adequate to interest an investor. The primary revenue stream may come from putting paying butts in seats.
Moreover, an extended runway and an improved terminal building is no guarantee that airlines will fly into TBLIA. A key airline economics metric is the passenger load factor, ratio of passengers to seat capacity. For example, if an airline has 160 seats and a 120 passenger load, this equivates to a 75% passenger load factor; passenger load factor will be different for each airline. The International Air Transport Association (IATA) mean overall passenger load factor is about 79%.
Further, the airline business is a labour and capital intensive, and razor-thin profit margin business. There is a fix cost with every take off and landing. Airlines operations have to at least break even but breaking even is not good enough, for the airline business is a service business and needs to turn a profit.
Consequently, no airline will start or continue a route if it cannot consistently meet its minimum passenger load factor with paying passengers. Finally, the PPV is a build-operate-turnover agreement. As such, the agreement should specify that at the end of the term that both the land and air sides are turned over in a certain/specific condition. Further, during the period of investor operational control of airport operations, taxpayers should be held harmless from any liabilities.
NDP look like them really ready to let these Chinese's take over our country