Bloomberg News

Turkey Calls Bids for New $9 Billion Airport to Boost Capacity

January 23, 2013

Turkey is moving ahead with plans for a new central airport in Istanbul that will be the largest in a country aspiring to create an aviation hub to rival the Middle-East bases of Emirates and Etihad Airways.

The government has initiated an auction requesting bidders to submit proposals by May 3 for rental fees they are willing to pay the airport authority for an operational period of 25 years, Turkey’s Transport Minister Binali Yildirim told a news conference in Ankara today.

Turkey’s government decided to build a third airport in the city of 15 million people as capacity at the main Ataturk hub comes under strain from increased air traffic. The Ataturk airport couldn’t be expanded because of land limitations, Yildirim said, necessitating the new project at a cost of at least 7 billion euros ($9.3 billion).

“The new airport project will be bigger than any other in Turkey and will be part of our plan to build a new city on the Black Sea coast,” Yildirim said.

Ataturk airport, run by TAV Havalimanlari Holding AS (TAVHL), Turkey’s biggest airport operator, handled almost 45 million passengers last year, 20 percent more than a year earlier. London Heathrow remains Europe’s busiest hub, with 69.9 million passengers last year.

Capacity Strain

The new Istanbul airport, located near the Black Sea coast and about 60 kilometers (37 miles) northwest of the Istanbul city center, will initially be able to handle 90 million passengers, Yildirim said. Eventually, capacity will rise to 150 million passenger a year, he predicted.

Among companies interested in the auction are TAV Havalimanlari, Haci Omer Sabanci Holding AS (SAHOL), Alarko Holding AS (ALARK) and AIC of Turkey, owner of low-cost airline company Atlasjet. TAV Havalimanlari said it stands to reap compensation from any disruptions caused by passenger traffic moving from Ataturk airport to the new field should the new airport be completed before TAV’s Ataturk operational concession ends in 2021.

TAV, operator of 10 airports in Turkey, northern Africa and eastern Europe, gets about 40 percent of its sales from Ataturk airport, according to its website. TAV rose as much as 5 percent to 11.5 liras in Istanbul trading, the highest since the shares started trading Feb. 23, 2007.

The government will offer initial guarantees of a minimum 342 million passengers over 12 years to the operator of the airport, Yildirim said. The builders will be required to start construction with equity financing without having to wait to secure any borrowings, which will not be guaranteed by the Turkish Treasury, he said.

To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net; Ali Berat Meric in Ankara at 8990 or americ@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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