Public Disclosure Authorized Public Disclosure Authorized Air Transport Annual Report 2010 Public Disclosure Authorized Public Disclosure Authorized
The World Bank Group IBRD, IDA, IFC & MIGA Abbreviations ACIP AFI Cooperative Implementation Plan (ICAO program) ADS-B /-C Automatic Dependent Surveillance – Broadcast /– Contract AFI Africa and Indian Ocean Region (ICAO definition) AFTTR Transport Unit of the Africa Region (WBG) ATC Air Traffic Control ATM Air Traffic Management CAA Civil Aviation Authority CASDR IFC Advisory Services Department (WBG) CES Charles E. Schlumberger, Lead Air Transport Specialist (WBG) CINTS IFC Infrastructure Department, Transport Division (WBG) CNS Communication Navigation Surveillance Services/Systems GNSS Global Navigation Satellite System GPS Global Positioning System DPL Development Policy Loan EASA European Aviation Safety Agency (agency of the European Union) ESW Economic Sector Work TWITR Transport Unit of the Energy Transport Water Department (WBG) FAA Federal Aviation Administration of the United States of America IATA International Air Transport Association IASA International Aviation Safety Assessment (FAA) IBRD International Bank for Reconstruction and Development (WBG) ICAO International Civil Aviation Organization (UN Agency) ICR Implementation and Completion Report (WBG) IDA International Development Association (WBG) IFC International Finance Corporation (WBG) IOSA IATA Operational Safety Audit LCSTR Transport Unit of the Latin America Region (WBG) MIGA Multilateral Investment Guarantee Agency (WBG) MSSR Monopulse Secondary Surveillance Radar NTSB National Transportation Safety Board (USA) PPIAF Public Private Infrastructure Advisory Facility PPP Public-Private Partnership RWY Runway SAR Search and Rescue (defined by ICAO) SASDT Transport Unit of the South Asia Region (WBG) T/A Technical Assistance TBD To Be Determined TCB Technical Cooperation Bureau (ICAO) TTL Task Team Leader USOAP Universal Safety and Security Oversight Audits Program (ICAO) VOR VHF Omni-directional Radio Range WBG World Bank Group
Cover Page: Air transportation was the key link in the global response following the devastating earthquake on 12 January 2010 in Port-au-Prince, Haiti. The World Bank immediately announced support of US$100 million. OFV11APR11
World Bank Air Transport Annual Report - i - Fiscal Year 2010 Table of Contents Foreword ...... 1 Executive Summary ...... 2 The World Bank Group FY10 Air Transport Portfolio ...... 3 The World Bank Group Fiscal 2010 Air Transport Project Locations...... 12 IBRD & IDA Projects...... 13 Africa Region (AFR)...... 13 West & Central Africa Air Transport Projects (P083751, P100785, and P108583) ...... 13 Kenya - Northern Corridor Transport Improvement Project (P082615 & P106200) ...... 14 Sierra Leone – Infrastructure Development Project (P078389) – ICR pending ...... 14 Cape Verde – Airline Privatization (P074055) – ICR pending ...... 15 Democratic Republic of Congo - Multimodal Transport Project (P092537) ...... 15 Tanzania – Airport and Air Traffic Control Infrastructure (P055120 & P103633) ...... 16 Eastern Africa Regional Aviation Project (P112210) ...... 16 Latin America & the Caribbean Region (LAC)...... 17 Haiti - Infrastructure and Institutions Emergency Recovery (P120895) ...... 17 South Asia Region (SAR) ...... 18 Pakistan – Second Trade and Transport Facilitation Project (P101648)...... 18 Middle East & North Africa (MNA) ...... 19 Egypt – Cairo Airport Development Project - TB2 (P101201) ...... 19 Yemen- Air Transport Sector Work (P107026)...... 20 East Asia and Pacific (EAP) ...... 21 Tonga – Transport Sector Consolidation Project (P096931) ...... 21 China- Civil Aviation Development (P119218)...... 22 Eastern Europe and Central Asia (ECA) ...... 23 Tajikistan-Programmatic Development Policy Grant IV (P117692)...... 23 Russia - Technical Assistance to Pulkovo Airport (P111493) ...... 24 International Finance Corporation Projects ...... 25 IFC Air Transport Infrastructure Financing (CINTS)...... 25 Pulkovo Airport – Russia (P28218)...... 25 Dominican Republic – Punta Cana Airport (P27883) ...... 25 Africa – AKFED Aviation (P27048) ...... 26 Colombia – Avianca Airline Fleet Renewal (P25899)...... 26 Jamaica – Montego Bay Airport Common Use Terminal Equipment (P26202) ...... 27 Tunisia – TAV SA (P26913) ...... 27 Cambodia - Phnom Penh International Airport (P25332)...... 28 Nepal – Buddha Air Private Ltd (27247) ...... 28 Jordan – Queen Alia International Airport (P26182) ...... 28 Georgia – Tbilisi International Airport (P24628) ...... 29 Kenya- DAC Aviation (P27688)...... 29 Mexico- Compañía de Aviación (P24672) ...... 30 IFC Advisory Services (CASDR) ...... 31 Air Transport Advisory Mandates ...... 31 Multilateral Investment Guarantee Agency ...... 34 Peru - Jorge Chavez International Airport (JCIA) ...... 34 Ecuador – New Airport at Quito ...... 34 External Relations ...... 35 International Civil Aviation Organization (ICAO) ...... 35 ICAO- World Bank- Routes Global Strategy Summit ...... 36 West Africa Workshop of Air Transport Services held in Marrakesh, Morocco...... 37 Community Service ...... 37 Internal Dissemination ...... 38 Research and Internal Services...... 39 Open Skies for Africa: Implementation of the Yamoussoukro Decision ...... 39 Air Carrier Advisory System for World Bank Staff Air Travel ...... 40 Outlook for Fiscal Year 2011 ...... 41
World Bank Air Transport Annual Report - ii - Fiscal Year 2010
In Memoriam
Michel J. Iches (1947 – 2010)
Senior Air Transport Specialist
World Bank Air Transport Annual Report - iii - Fiscal Year 2010
Foreword
The global economic recession of 2009 hit the air transport industry hard. Globally, airlines lost US$ 9.9 billion, passenger traffic fell by 2.1 percent, cargo dropped by 9.8 percent, and industry revenue fell by 15 percent, to US$479 billion. Operational volatility caused by the spike in oil prices in 2008, remains a major challenge for aviation worldwide.
During Fiscal Year 2010, aviation began to recover. By March 2010, passenger and cargo traffic was back to within one percent of pre-crisis levels. The oil price fell from its 2008 peak of US$147 a barrel to an average of US$62 in 2009, as the global economy showed signs of recovery. But the recovery remains sluggish in the U.S. and Europe, and this still affects economies of developing countries that were relatively unscathed during the first phase of the crisis. In most emerging markets, however, air transportation has rebounded, with the strongest growth in traffic in Asia and the Middle East. Latin America and Africa were much less affected by the crisis, and continue to experience steady development.
In addition to economic shocks, the air transport sector faces multiple global challenges. Safety and security have improved, especially in emerging markets. But diminishing tolerance, worldwide, for poor operational safety and lax security standards results in the isolation of countries that fail to meet international standards. Mounting concern about climate change has prompted demands that aviation, as a sector, must develop and implement credible measures to reduce GHG emissions. Finally, the vulnerability of sector and its impact on the global economy was demonstrated in April 2010 when volcanic ash grounded most of Europe‟s fleets for over a week.
Behind this reality, the World Bank Group will continue to assist and support its client countries, which have become the major drivers of global economic development. Their success depends on a sustainable air transport network that provides affordable services, which offer access to new opportunities essential for the creation and expansion of global markets.
Dr. Charles E. Schlumberger Lead Air Transport Specialist March 2011
World Bank Air Transport Annual Report - 1 - Fiscal Year 2010
Executive Summary
The WBG FY10 Air Transport Portfolio includes over 30 projects or project components in all six regions of the IBRD/IDA, as well as 28 active IFC investments and several advisory mandates. The total volume of IBRD and IDA active project commitments decreased slightly due to completion of several major projects in Africa during FY09. Nevertheless, approved new projects in FY10 have increased to US$ 368 million, up from US$ 58 million in FY09. IFC‟s air transport investment portfolio increased slightly to US$ 678.5 million from FY09‟s US$ 649.7 million. Overall, the active air transport portfolio volume of the WBG decreased by about 7 %, to US$ 1.25 billion. A strong focus of the IDA and IBRD air transport portfolio continues to be on Africa, where several air transport safety and security projects were developed and implemented. The projects finance primarily regulatory reform, capacity building, and some infrastructure investments. IBRD also responded to growing traffic in the Middle East by financing airport infrastructure, and by conducting sector reviews. In Latin America, IDA responded swiftly to natural disasters with an emergency grant to repair operational airport infrastructure. In Asia, IBRD and IDA supported air transport-related infrastructure projects to facilitate trade and foster tourism, which is supporting economic growth. The IFC air transport portfolio continued to develop in FY10. New airport finance deals in Russia and the Dominican Republic, as well as the provision of several aircraft finance facilities in Africa and Latin America, have helped increase IFC‟s active air transport portfolio by over 4 percent. Finally, IFC provided key advisory services on airport-related concession projects. The focus of External Relations remains to be on the collaboration with ICAO in the field of promoting safety and security, as well as on environmental issues. The WBG, ICAO, and ROUTES representing the airline industry, held their fifth Global Strategy Summit on air transport in Beijing, China. Finally, industry relevant research by the WBG focused on liberalization of air services in Africa, and on technical efficiency of airports in Latin America.
World Bank Air Transport Annual Report - 2 - Fiscal Year 2010
THE WORLD BANK GROUP FY10 AIR TRANSPORT PORTFOLIO
The WBG FY10 air transport portfolio is composed of various lending and technical assistance (ESW) projects in the six regions as defined by the World Bank Group (IDA, IBRD). In addition, the IFC has a current portfolio of proposed and active lending or investment financing throughout the aviation sector.
The overview above summarizes the WBG‟s most important projects WBG. Several smaller-scale projects, project components or projects in early stages of development are not included.
World Bank Air Transport Annual Report - 3 - Fiscal Year 2010
Africa Region (AFR)
WBG Commitment Status as Project Description (Million US$) Product Country Project Full Name of end- ID Code (Aviation Component) Aviation Line Project Total June 2010 Component Rehabilitation and Transport Sector IDA Tanzania P055120 extension of regional 250 55 preparation Support Project credit airports Second Central Zanzibar Airport IDA Tanzania P103633 190 17.1 active Transport Corridor improvement credit Transport Sector Inst. Airport Master Plan, IDA Mauritania P089672 Dev. and Technical institution capacity 5.5 2 active credit Assistance Project building Institution capacity Burkina West and Central Africa building, safety and Faso, IDA P083751 Air Transport Safety & security Improvements 31.6 31.6 active Cameroon, credit Security Project at main international Guinea, Mali airport Burkina Feasibility study of a TA(Non- P114911 Donsin Airport 0.126 0.126 active Faso new airport lending) West and Central Africa Inst. Strengthening, Air Transport Safety & Safety and Security IDA Nigeria P100785 46.65 46.65 active Security Project Improvements at Main credit (Phase II) Airports West and Central Africa Benin, Air Transport Safety & Aviation Safety and IDA Mauritania, P108583 7 7 active Security Project Security Improvements credit Senegal (Phase II B) Consultancy Services for Growth and IDA Cape Verde P074055 Restruct. and Privatizing 11.5 1 closed Competitiveness Project credit the Nat. Carrier
World Bank Air Transport Annual Report - 4 - Fiscal Year 2010
Status as Project Description WBG Commitment Product Country Project Full Name of end- ID Code (Aviation Component) (Million US$) Line June 2010 Aviation Project Total Component Infrastructure Infrastructure IDA Sierra Leone P078389 Rehabilitation at 44 13.8 active Development Project credit Freetown Airport Assessment of Infrastructure IDA Liberia P101456 Emergency Repairs at 8.5 0.6 active Rehabilitation Project credit Robertsfield Airport Technical Assistance, IDA Mali P080935 Growth Support Project Improvements to 55 7.2 active credit Bamako Airport Airport Infrastructure Northern Corridor Improvements, CAA IDA Kenya P082615 Transport Improvement 207 69 active Capacity Building, GNSS credit Project Survey Northern Corridor Cargo Handling at Transport Improvement IDA Kenya P106200 Nairobi Airport, Kenya 253 48.1 active Project (Additional Credit Airways Privatization Financing) Airport Safety and Security Improvements, Transport Infrastructure IDA Madagascar P082806 TA to the Establishment 150 8.3 active Investment Project credit of PPPs in the Airport Sector Overview and AICD Air Transport Africa P117313 assessment of air 0.016 0.016 ESW active Sector Review transport sector in Africa Diagnostic Review of Review and strategic Ethiopian Road Sector Ethiopia P111428 planning of aviation 200 20 ESW active Policy and Bank institutional framework Financing Options
World Bank Air Transport Annual Report - 5 - Fiscal Year 2010
Status as Project Description WBG Commitment Product Country Project Full Name of end- ID Code (Aviation Component) (Million US$) Line June 2010 Aviation Project Total Component Transport Sector TA(Non- Zimbabwe P120156 Investment Program Aviation sector review 0.02 0.002 active lending) Review Transport connectivity Congo, DRC Multi-modal improvement and IDA Democratic P092537 255 25.5 pipeline Transport national economic grant Republic of integration Aviation safety and Eastern Africa Regional IDA Africa P112210 security improvement 123 123 pipeline Aviation Project credit and regional integration
Latin America & The Caribbean Region (LAC)
WBG Commitment Status as Project Description (Million US$) Product of end- Country Project Full Name ID Code (Aviation Component) Aviation Line June Project Total Component 2010 Infrastructure and Repair of Port-au-Prince IDA Haiti P120895 Institutions Emergency airport‟s departure 78.5 TBD active grant Recovery Project terminal National Roads and Regional integration IDA Bolivia P122007 Airport Infrastructure strengthening and airport 80.6 5 pipeline fund Project infrastructure development
World Bank Air Transport Annual Report - 6 - Fiscal Year 2010
South Asia Region (SAR)
WBG Commitment Status as Project Description (Million US$) Product Country Project Full Name of end- ID Code (Aviation Component) Project Aviation Line June 2010 Total Component Economic Reform Nepal P093294 TA to Airline Privatization 3 0.2 TA closed Technical Assistance Trade and Transport Restructuring and IDA Pakistan P101684 25 2 active Facilitation II modernization credit National Trade Corridor IDA Pakistan P101683 To Be Defined 200 20 preparation Improvement Program credit
Middle East & North Africa (MNA)
WBG Commitment Status as Project Description (Million US$) Product of end- Country Project Full Name ID Code (Aviation Component) Project Aviation Line June Total Component 2010 Rehabilitation and Cairo Airport IBRD Egypt P101201 expansion of Terminal 280 280 active Development Project TB-2 loan Building 2 Mukalla International Second Port Cities IDA Yemen P088435 Airport expansion and 35 6.45 active Development Project grant efficiency improvement
World Bank Air Transport Annual Report - 7 - Fiscal Year 2010
East Asia & Pacific (EAP)
WBG Commitment Status as Project Description (Million US$) Product Country Project Full name of end- ID Code (Aviation Component) Project Aviation Line June 2010 Total component Second Eastern Indonesia Improvements to Local IBRD Indonesia P074290 200 4 active Region Transport Project Airports loan
ESW - Measurement of Malaysia P108571 Consultancy 0.02 0.004 TA closed Level of Service Provision
Transport Sector Technical Assistance to IDA Tonga P096931 5.4 2.4 active Consolidation Project CAA grant Transport Sector Airport safety and security Trust Tonga P120908 Consolidation Project 1.47 0.66 active improvement Fund (Additional Financing) Construction of a fire Transport Sector station and passenger IDA Tonga P118646 Consolidation Project screening facilities at 8.60 1.06 active grant (Additional Financing) Fua‟amotu international airport Civil Aviation TA(non- China P119218 Aviation sector review 0.05 0.05 closed Development in China lending)
World Bank Air Transport Annual Report - 8 - Fiscal Year 2010
Europe & Central Asia (ECA)
WBG Commitment Status as Project Description (Million US$) Product Country Project Full Name of end- ID Code (Aviation Component) Project Aviation Line June 2010 Total Component Programmatic Support to a Strategic Set IDA Tajikistan P106963 Development Policy 10 2.8 closed of Policy Reforms grant Grant 3 Programmatic Support to a Strategic Set IDA Tajikistan P117692 Development Policy 25.4 6.1 active of Policy Reforms grant Grant 4 FFS Transport Pulkovo Concession of the TA(Non- Russia P111493 Airport Expansion PPP ST 0.251 0.251 active Pulkovo Airport lending) Petersburg Part 2 FFS Transport Pulkovo Concession of the TA(Non- Russia P122190 Airport Expansion PPP ST TBD TBD active Pulkovo Airport lending) Petersburg Part 3
World Bank Air Transport Annual Report - 9 - Fiscal Year 2010
International Finance Corporation (IFC)
The IFC, which provides financing to private sector companies, has traditionally financed air carriers and airport infrastructure projects. It has several projects at the proposal stage, or in active status.
IFC’s Country Project Exposure Description Amount Type No. as of June 30 2010. 1 AKFED Aviation; General purpose loan to a US$ 25 US$ 25 Africa 27048 A Loan regional alliance of million million African Airlines TAM Airlines: pre- delivery payments for the purchase of Airbus A-320 US$ 50 US$ 5.7 Rev. Credit and Brazil 24384 family aircraft; corporate million million Corp. Loan loan to support ongoing operations GOL airline: financing for US$ 50 US$ 25 Brazil 24609 Corp. Loan spare parts million million Cambodia Airports II: privatization of Phnom IFC A Loan up to Up to Penh International Airport US$6.4 US$ 7.5 million, Cambodia 25332 US$ 17.5 – required capital and million IFC standby up million investments for to US$ 10 million expansion Cambodia Airports: US$ 10 US$5.7 Cambodia 21363 privatization of Phnom A Loan million million Penh International Airport Avianca: Financing of US$ 50 US$ 50 Colombia 25899 A & C Loans fleet renewal program million million Dominican US$ 20 US$ 20 27883 Punta Cana Airport A Loan Republic million million Tbilisi Airport: US$ 27 US$ 18.4 Georgia 24628 A Loan privatization million million US$ 42 MBJ Phase II - million; US$ 18.8 Expansion and US$ 20 million for Jamaica 24306 redevelopment of A & B loans million for IFC‟s own Sangster International IFC‟s own account Airport account US$ 45 MBJ Phase I – New million ; US$ 13.9 landside terminal and US$ 20 million for Jamaica 11353 renovation of existing A & B Loans million for IFC‟s own terminal for Sangster IFC‟s own account International Airport account MBJ (CUTE)- financing for new Common Use US$ 5 US$ 2.8 Jamaica 26202 Terminal Equipment A Loan million million (CUTE) and Baggage Handling and Screening
1 Exposure is defined as outstanding balance plus committed but undisbursed amounts if any. World Bank Air Transport Annual Report - 10 - Fiscal Year 2010
IFC’s Country Project Exposure Description Amount Type No. as of June 30 2010. 1 (BHS) systems for Sangster Intl Airport A, B, C Loans and risk management US$ 295 products. IFC A Rehabilitation both million; Loan US$ 80 airside and landside of US$ 127 US$ 127 million, Jordan 26182 Queen Alia International million for million Syndicated B Airport IFC‟s own loan US$ 175 account million, IFC C US$ 40 million; IFC Swaps US$7 million DAC Aviation: purchase US$ 7 Kenya 27688 of small aircraft for US$7 million A loan million humanitarian relief efforts Vuela: Pre-delivery financing of up to 20 A- US$ 40 US$ 40 Mexico 24672 Rev. Credit 319 aircraft for Volaris million million airline Buddha Air: purchase of small aircraft and long US$ 10 US$ 9.7 Nepal 27247 A loan term working capital million million requirements Lima Airports Partnership: Financial US$ 20 US$ 20 Peru 24489 Restructuring and Equity million million assistance in conjunction with Fraport. Air Transport Systems: Russian US$ 15 US$ 2.1 24127 Purchase of small aircraft C Loan Federation million million for air taxi operation US$ 236 million; Russian US$ 97 US$ 97 28218 Pulkovo airport A & B Loans Federation million for million IFC‟s own account TAV Tunisia: US$ 253 construction of a new IFC A Loan, million; airport in Enfidha, with an Subordinated US$ 184 US$ 184 Tunisia 26913 initial capacity of 7 million Loan, million for million passengers a year, and Syndicated B IFC‟s own rehabilitation of the Loan, Equity account airport in Monastir
World Bank Air Transport Annual Report - 11 - Fiscal Year 2010
The World Bank Group Fiscal 2010 Air Transport Project Locations
World Bank Air Transport Annual Report - 12 - Fiscal Year 2010
WBG Air Transport Activities at a Glance IBRD & IDA Projects Africa Region (AFR) West & Central Africa Air Transport Projects (P083751, P100785, and P108583)
Implementation of the Air Transport Safety and Security Project in West and Central Africa continued in FY10.The project‟s prime objective is to create a safe and secure environment for air transport services in West and Central Africa, which is an essential precondition for African carriers to gain competitive access to regional and worldwide markets. West and Central African states can apply to join the program, which is structured in several tranches, thereby gaining access to financing drawn from its total allocation of US$ 151.50 million. The main outcome targeted for participating countries is reaching full compliance with ICAO safety and security standards, enforced by its civil aviation oversight agency, and complied with by its major international airports and operators. The activities and investments in each country range from capacity building to procurement of safety and security equipment. However, given the small size of the air transport industry and the limited resources in each country, these goals can only be achieved through regional cooperation, with the establishment of Regional IDA has financed the repair of the security Aviation Safety Oversight Agencies (RASOAs). fencing at Ouagadougou International Airport. To this end, the Bank team is monitoring progress under the ICAO‟s Cooperative Development of Operational Safety and Continued Airworthiness Program (COSCAP) with sub-regional organizations (the UEMOA countries, the Banjul Accord countries, that is, Non- UEMOA countries within ECOWAS, and the CEMAC countries). The Bank‟s project is structured as a horizontal Adaptable Program Loan (APL) enabling any West or Central African country not included in the initial phase to join during subsequent phases, under the same eligibility criteria. Included in phase I are Burkina Faso, Cameroon, Guinea and Mali, with an overall allocation of US$35.24million. Phase II-A of the Program was initiated in FY08, with Nigeria‟s participation in the program for an amount of US$ 46.65 million. In FY09 and FY10, Benin and Senegal joined the Program under Phase II-B, and were allocated a total amount of US$16.57 million. The pace of project implementation has further improved in FY10, with many infrastructure components being implemented and significant institutional reforms now well under way. The most noticeable progress is Nigeria obtaining US Federal Aviation Administration (FAA) International Aviation Safety Assessment category 1 safety rating, meaning that the US FAA considers Nigeria compliant with Standards and Recommended Practices (SARP) of the ICAO concerning its regulatory oversight obligations of the Nigerian aviation sector. Nevertheless, progress in CAA capacity-building, especially through regional cooperation by establishing RASOAs based on the sub-regional economic communities, remains slow. Additional countries of West and Central Africa are planning to join Phase III of the APL. Contact person is Pierre A. Pozzo di Borgo at [email protected]
World Bank Air Transport Annual Report - 13 - Fiscal Year 2010
Kenya - Northern Corridor Transport Improvement Project (P082615 & P106200)
This Bank project in Kenya, which began in 2003, represents the first major air transport infrastructure and regulatory capacity building project in Africa. So far, solid progress was achieved in implementing the various components of the project, which is divided into two main parts: (i) support to the Kenya Airports Authority (KAA) for airport infrastructure improvements and enhancing security at Kenyan airports, and (ii) support to the Kenya Civil Aviation Authority (KCAA) for regulatory capacity building and specific investments in navigation aids and training equipment. In FY 2009, the original Project Development Objectives were revised to adjust to major changes in the aviation sector since the project‟s appraisal in early 2004. Notable changes included a high growth in passenger flows due to the sudden upturn in the economy and the strong performance of Kenya Airways especially in the segment of long-haul traffic connecting at Nairobi between African countries and Asia. This situation required an expansion of terminal facilities at Jomo Kenyatta International Airport (JKIA) to handle international and domestic traffic to the year 2021. One component of the restructured project will help finance construction of a new passenger terminal at JKIA, thereby increasing the airport‟s capacity from 2.5 million to about 10 million passengers a year, with part of the financing from the European Investment Bank and the Agence française de Développement. The Bank‟s support has contributed to some positive changes. For instance, both to KAA and KCAA have financial autonomy. The Government of Kenya allows them to retain the revenues they collect instead of remitting them to the Exchequer as was the case in the past. Responsibility for screening baggage, mail and passengers has been transferred to KAA from Kenya Police. The US Transportation Security Administration (TSA) has cleared JKIA for direct flights to US in 2009 and the size of the parking space for aircrafts at JKIA has been doubled. The Bank‟s support for KCAA has helped it achieve progress towards achieving International Aviation Safety Assessment (IASA) Category 1 certification, with enactment of the
Kenya Civil Aviation‟s regulations being a key Good progress made in regulatory oversight by milestone. In December 2008, ICAO conducted Kenyan authorities may soon lead to being an audit and no major adverse findings were certified FAA IASA category 1. noted. It was concluded that KCAA is, to a large extent, complying with ICAO Standards and Recommended Practices (SARP). Nevertheless, although remarkable improvements have been made in recruiting key professional staff, staffing levels remain inadequate and a number of the inspectors in place still lack the requisite skills to provide safety surveillance required by ICAO. On 2 April 2009, an additional credit of US$253 million was approved by the Bank‟s Board for Kenya‟s Northern Corridor Transport Improvement Project. One component of this project will help finance construction of a new passenger terminal at Kenyatta International Airport. Contact person is Josphat O. Sasia at [email protected]
Sierra Leone – Infrastructure Development Project (P078389) – ICR pending
The Infrastructure Development Project in Sierra Leone was completed in FY 2010. The project seeks to rehabilitate selected priority roads, port, and airport facilities in Sierra Leone,
World Bank Air Transport Annual Report - 14 - Fiscal Year 2010 while also supporting regulatory and institutional reforms to ensure effective management of the country's road, port, and airport sectors. The project‟s third component is the Freetown International Airport infrastructure and its management. This includes rehabilitation and strengthening of the runway, with upgrading of turning loops and taxiway entrances to safely accommodate modern aircraft-works. In addition, installation and upgrading of water and electricity facilities, required for security, sanitation, firefighting and rescue operations, are now being financed by the government. This arose as the bids were much higher than budgeted, prompting the government‟s decision to fund both the water and power provision. The navigation installation and tower equipment need to be replaced and are being procured. Operational training for airport employees is also part of the project and is ongoing. Finally, the project also aims at increasing efficiency and competitiveness of the Sierra Leone Airports Authority (SLAA). In a step towards improving services at the airport, SLAA has outsourced baggage handling to an international firm. TWITR provided technical advice in the preparation of design and bidding documents for the airport infrastructure rehabilitation. Civil works are under way and goods are now being procured. As of the end of FY 2009, overall disbursement rate on the project was at 46%. Contact person is Kavita Sethi at [email protected]
Cape Verde – Airline Privatization (P074055) – ICR pending
At the end of FY 2010, the Bank (AFTTR & TWITR) completed the Privatization and Regulatory Capacity Building Project in Cape Verde, which includes the consultancy for the restructuring and privatization of the national airline TACV. The Bank supported the objective of the Government of Cape Verde to privatize TACV with technical assistance. It was understood that the carrier could develop a much more dynamic role if owned and managed by the private sector. However, the privatization of air carriers remains a challenging task. This is especially true in the case of TACV, as the carrier must also preserve its role of assuring a public service linking the various islands. During a mission of the Bank in mid-2009, the project review showed that credit proceeds are no longer available to support privatization activities of this state-owned airline. Nevertheless, the carrier has recently modernized its fleet with two ATR 72-500 turboprop aircraft, and is considering further additions to its fleet. The Bank has initiated an aviation sector study to review and update knowledge of the financial and operational health of TACV and to develop options to introduce management and operational efficiencies. Contact person is Kavita Sethi at [email protected]
Democratic Republic of Congo - Multimodal Transport Project (P092537)
The Multimodal Transport Project of the Democratic Republic of Congo (DRC) includes components for railways, ports, and aviation. It is financed by an IDA grant of US$255 million. The overall objective of the project is to improve transport connectivity in DRC, and to support national economic integration. In addition, it seeks to restore and develop the national railway system, supporting state owned enterprises in the transport sector, and implementing a sector wide governance plan. The aviation sector is supported by a grant of US$10 million. The funds finance (i) the procurement and installation of ADS-B surveillance equipment by the National Airways Management Agency (RVA), (ii) a new category II ILS/VOR/DME system for the capital‟s international airport Kinshasa/N‟Djili (FIH), (iii) two studies on the development of airports in World Bank Air Transport Annual Report - 15 - Fiscal Year 2010 the country (one on freight development at FIH, and one on secondary airports), and (iv) training for RVA personnel in air traffic control, and airport rescue and fire fighting services. The Bank‟s Board approved the project on 29 June 2010. Based on the Bank‟s aviation component in DRC which includes a SOE reform component, the African Development Bank prepared an airport/air transport project of US$180 million, which provides complementary investment to the RVA modernization plan.
Tanzania – Airport and Air Traffic Control Infrastructure (P055120 & P103633)
The US$270 million Transport Sector Support Project (TSSP) was approved by the Bank on 27 May 2010. Of 13 high-priority commercial airports indentified under the Transport Sector Investment Plan (TSIP) for immediate improvement, design and bidding documents have been prepared for seven. Among them, Kigoma airport, Tabora airport, and Bukoba airport have been selected due to their high economic returns and the low likelihood to get other financing. TSSP includes IDA financing of US$57.5 million to pave and rehabilitate the Kigoma airport, and rehabilitate the main runway at Tabora airport. It Bukoba Airport is has become an important also provides for extension, rehabilitation, and gateway to link the developing region with its resurfacing of the runway at Bukoba airport, as capital. However, the runway and tarmac need well as replacement of the current apron, terminal, concrete pavement for the improvement safety, car parking, and other facilities. reliability, and capacity of air services. At the end of FY 2010, the rehabilitation and extension of the Zanzibar airport runway financed under the Second Central Transport Project was nearly concluded. The works costing US$33 million were done within budget, within the time allotted and achieving good quality. The official opening of the new runway took place in August 2010. Contact person is Negede Lewi at [email protected]
Eastern Africa Regional Aviation Project (P112210)
The Bank suspended the preparation of a Regional Air Transport Safety and Security Project for the East Africa Community (“EAC” members are Tanzania, Uganda, Kenya, Rwanda, and Burundi), as it focused primarily on the implementation of the national air transport projects in East Africa. Nevertheless, project preparation is scheduled to resume at a future date. The components of the EAC regional aviation project may include funding for (i) institutional development and capacity building; (ii) enhancing airworthiness inspection; (iii) upgrading of aviation infrastructure (ADS-B system in Tanzania, and GNSS-based procedures in the EAC, and support the harmonization of the upper flight information region); (iv) supporting the liberalization of air transport; and (v) aviation security enhancements at key airports. The overall objective of the project will be the deepening of regional integration within the EAC, by fostering the development of air services within the community, and strengthen the East African Community Civil Aviation Safety and Security Oversight Agency (CASSOA). Contact person is Solomon Muhuthu Waithaka at [email protected]
World Bank Air Transport Annual Report - 16 - Fiscal Year 2010
Latin America & the Caribbean Region (LAC)
Haiti - Infrastructure and Institutions Emergency Recovery (P120895)
As one of the poorest countries in the Western Hemisphere, Haiti has demonstrated high vulnerability to a significant number of economic and social crises, as well as to several exogenous shocks over the past decades. The country‟s situation changed dramatically on 12 January 2010, when Haiti was struck by a catastrophic earthquake. The epicenter was located 25 km west the capital and over 52 aftershocks followed. Over 200,000 lives have been lost, and about three million people directly affected. Over 250,000 buildings collapsed or were severely damaged, crippling the country‟s fragile, but slowing emerging economy, as well as severely damaging most of its key infrastructure. Immediate relief efforts following the earthquake were mounted by the international community. The World Bank announced support of US$100 million on 13 January 2010, and sent two missions to Haiti in the following weeks. In April 2010, TWITR (CES) participated in an identification missions to review Haiti‟s air transport sector. The country‟s air transport sector has proven to be a key element for conducting the humanitarian relief efforts. The capital‟s airport, Port-au-Prince (PAP), was the only operational entry point to deploy relief personnel, equipment and materials. While the runway and apron were not affected during the quake, preexisting cracks and damages of the pavement represent a danger to aircraft. Major structural damage occurred to the terminal building, which needs reconstruction, and to the control tower, which needs to be replaced. In addition, the lighting systems and power The major part of the country’s main airport supply are insufficient for night operations, and terminal was damaged beyond repair. Only a small navigational aids (ILS/VOR) do not have a area can be used for passenger handling. backup system. Nevertheless, airline operations were able to resume on 19 February 2010, and passengers are handled in a temporary arrival and departure hall, both of which need to be replaced with a more serviceable facility. ICAO and the Haitian authorities estimated the overall cost to rehabilitate the country's air transport infrastructure at US$255 million, which includes US$25 million of air navigation services, and US$ 230 million for the airport reconstruction. The airport component is composed of a new terminal building (estimated at US$80 million), land acquisition (estimated at US$50 million), and airport infrastructure, such as runway resurfacing, power, fencing, lighting system, crash and rescue equipment, and operational maintenance equipment (estimated at aboutUS$100 million). The Bank‟s board approved the Haiti Infrastructure and Institutions Emergency Recovery Project on 09 March 2010, consisting of a US$65 million grant. The project‟s objective is to support Haiti in its early recovery efforts, through selected interventions aiming at helping to rebuild key institutions and infrastructure. The project will finance the rehabilitation of key aviation infrastructure by an initial grant of US$3 million, which includes (i) reconstruction of ground - air communications tower, (ii) repair and/or replacement of two VOR (PAP, OBN), and verification of ILS (IMG), (iii) repair of runway lights at PAP, (iv) financing of associated cost for air traffic controllers training, and (v) construction of a runway end safety area on RWY10 at PAP. Contact person is Charles E. Schlumberger at [email protected] World Bank Air Transport Annual Report - 17 - Fiscal Year 2010
South Asia Region (SAR)
Pakistan – Second Trade and Transport Facilitation Project (P101648)
The Second Trade and Transport Facilitation Project (TTFP-2) is among the components of a World Bank package supporting a National Trade Corridor Improvement Program (NTCIP) designed by the Pakistani government to address the country‟s transport and logistics issues. The package includes targeted investment lending for key reforms, and to respond to needs for improvement of infrastructure and its operation. The NTCIP‟s development objectives are to reduce the cost of trade and transport logistics, and to raise service quality to international standards. This will reduce the cost of doing business in Pakistan, enhance export competitiveness and accelerate industrialization. The TTFP-2 will help by providing the analytical underpinning necessary to implement the reform The national carrier PIA operates modern aircraft and agenda, and by preparing investments dominates the country’s air transport sector. that are an integral component of the NTCIP. To address the identified development issues, a civil aviation component for the National Trade and Transport Facilitation Project was prepared, which will include development of Air Transport Master Plan for Pakistan and an air safety improvement component. The component aims to improve operational safety by financing several GNSS-based instrument approaches, and by assessing the regulatory oversight by the CAA in view of the upcoming ICAO audit, now scheduled for 2011. The Bank project preparation will continue in FY 2011. Overall project implementation was complicated by obstacles that are now being overcome, but the initial aviation component, focused on preparations for the upcoming ICAO audit of Pakistan, has reached a successful intermediate stage. An audit review conducted by the firm Integra, after two sets of thorough examinations, has found the overall level of non- implementation of ICAO's standards and recommended practices to have reduced from approx. 40% to 25%. With additional recommendations, this level could be brought well below 20%. However, since key personnel of the safety oversight improvement process have recently retired, additional efforts are needed to sustain progress. This is especially important in light of the recent crash outside Islamabad of a domestic Airbus 321, claiming 152 lives. Given the quick implementation of air transport project components versus components of other sectors in the project, additional measures for the development air transport services may be prepared and financed under the TTFP-2. Contact person is Amer Zafar Durrani at [email protected]
World Bank Air Transport Annual Report - 18 - Fiscal Year 2010
Middle East & North Africa (MNA)
Egypt – Cairo Airport Development Project - TB2 (P101201)
The objectives of the Cairo Airport Development Project - Terminal Building 2 (TB2) are to support the Government of Egypt‟s effort to (i) enhance the quality of air transport services in Egypt by increasing traffic-handling capacities at Cairo International Airport (CAI), and (ii) strengthening Egypt‟s air transport in the context of international competition. CAI is the largest airport in Egypt and the second-largest in Africa, after Johannesburg in South Africa. It is used by 58 passenger airlines, including various charter operators, and 10 cargo operators. It has a total capacity of 21 million passengers per annum (mppa) divided into three terminal buildings. Air traffic has grown in recent years, and this is expected to continue. CAI is a geospatially well-defined facility, and is recognized as having a significant local impact, with an important role in the country‟s economic development. Nevertheless, like any major airport that acts as a regional hub, it is also exposed to international competition. CAI is a critical link in the chain of services required and developed by tourism-related businesses, manufacturing industries and export-oriented specialty agriculture, contributing to their international competitiveness. As competition among alternative routings intensifies, efficiency, that is, quality of service vs. connection costs, of connecting airports is critical to the competitiveness of carriers based at or serving such airports. The project, approved by the Bank‟s Board in February 2010, comprises two components for an estimated total cost of US$436 million, of which US$280 million is financed by IBRD, and US$156 million is financed by direct funding from the Cairo Airport Company, and a domestic loan. The first component is the rehabilitation and expansion of the TB2 at CAI. The new TB2 and the recently completed TB3 (also financed by the Bank) will be operated jointly as one integrated terminal, which will be mostly dedicated to Egypt Air (domestic and international flights), its Star Alliance partners and Gulf airlines, thus fostering the integration of Egypt within the Middle East and with Europe, and reinforcing the role of CAI as a regional hub. The capacity of TB2 will increase from 3.5 mppa today to 7.5 mppa in 2015, the expected year of opening, thereby bringing the overall capacity of CAI to 25 mppa. At the end of FY2010, the prequalification of bidders for the works contract was underway. The second component includes technical assistance, which aims to strengthen capacity of Egyptian institutions regulating the air transport sector, given the sector‟s increased complexity. The component, financed by the Bank, is divided into five studies: 1. Review of the Air Transport Policy of Egypt and Strategic Options 2. Development Strategy of Air Traffic Control and Air Traffic Management 3. Review of Civil Aviation Authority‟s Compliance with ICAO Standards and Recommended Practices Concerning Regulatory Oversight of Safety and Security 4. Analysis of the Fee and Tax Structure of the Air Transport Sector 5. Spatial Planning of Cairo Airport‟s Area. At the end of FY2010, procurement of consulting firms for the studies was launched. Contact person is Vincent Vesin at [email protected]
World Bank Air Transport Annual Report - 19 - Fiscal Year 2010
Yemen- Air Transport Sector Work (P107026)
Jean-Charles Crochet (MNSTR) and Charles E. Schlumberger of the World Bank visited Yemen in October 2008 to conduct, at the request of the Government of Yemen, a sector review of the country‟s air transportation. The review‟s primary objective was to identify and deepen understanding of the main air transport issues in Yemen, and share it among the government, the Bank and the donor community. The exercise sought to identify practical measures that should be implemented as a priority, possibly funded by donors, to improve the efficiency of the sector. Preliminary findings were presented at an initial 2008 workshop in Yemen, after which the study‟s authors discussed them with stakeholders including the airlines, airport authorities, and the country‟s air navigation service provider. The Government of Yemen recognized that its air transport sector plays an important role in the country‟s development. It had therefore supported its flag carrier Yemenia to become a respected international operator. At the same time, it introduced competition by allowing a new operator to serve domestic and some regional routes. It also created an effective civil aviation authority which, to a large extent, meets international standards for regulatory oversight. Finally, the air transport infrastructure was well developed during recent years, and can generally be considered adequate for existing and near future air traffic. The major developmental issue revealed in the review is that neither the long-term infrastructure development strategy nor the financing aspects of the aviation sector are based on comprehensive air transport sector planning. This lack of planning and absence of financial transparency raise the risk that certain infrastructure projects are far beyond required dimensions. These risks apply to the new special design and terminal building of Sana‟a International Airport. In addition, the national carrier continues to enjoy certain advantages that distort competition. Further, certain financial or technological alternatives are not addressed, such as developing private participation in infrastructure, and introducing GNSS-based navigation and surveillance systems. The review, which included detailed recommendations, was discussed with the Ministry of Transport during a concluding The national carrier, Yemenia, remains the workshop in Sana'a in November 2009. The dominant market force in the air transport sector of Bank mission proposed a rigorous and Yemen. However, GoY granted an air operators certificate to the new domestic operator Felix detailed analysis, followed by planning Airways, which serve operates regional jets. exercise for the air transport sector. Such an assessment, for which the Bank could assist the Government of Yemen, should review and evaluate the existing infrastructure, outline the financial needs for development, and assess future financial income based on realistic passenger and cargo forecast. Contact person is Charles E. Schlumberger at [email protected]
World Bank Air Transport Annual Report - 20 - Fiscal Year 2010
East Asia and Pacific (EAP)
Tonga – Transport Sector Consolidation Project (P096931)
The objective of the Tonga Transport Sector Consolidation Project is to consolidate the policy, planning, regulatory capacity and operations of the Pacific island nation‟s newly created Ministry of Transport. The project will also improve compliance with international safety and security standards in the civil aviation and maritime subsectors. With technical assistance from the Bank, the Government of Tonga (GoT) has successfully restructured its Ministry of Civil Aviation. Among other measures, the regulatory functions were separated from operational ones with the creation of a separate corporation, Tonga Airways Limited (TAL). During the early phase of TAL, technical assistance was needed in several operational, administrative and related areas. The Bank worked with the government and other donors to identify these needs, and to coordinate assistance to consolidate TAL‟s operations, and make it a strong, self-sustaining entity. While the technical assistance component was later dropped, the planned Transport Sector Consolidation Project went ahead. The Bank‟s recent mid-term implementation review found that the project has made steady progress. The Tonga Air Transport Sector Strategic Plan was signed on 14 June 2010; it will help the MOT prepare an air transport sector strategy, and make policy recommendations on key issues. Meantime, a study to guide development of a sustainable investment plan for Tonga‟s two international airports, operated by TAL, was being prepared. Aviation sector regulatory surveillance and compliance obligations had been reviewed; the ICAO audit of Tonga revealed 78 deficiencies. New fire tender complying with international Contracts of support to address these standards are financed by the Bank project. They are required for international air services to Tonga. issues were signed in November 2009. Implementation of infrastructure improvements has progressed well. The Precision Approach Path Indicator (PAPI) system, which is part of the navigational aids, was installed at Fua„amotu airport in November 2009. Security equipment for passenger and baggage screening, as well as emergency power equipment were installed at Fua„amotu airport by the end of FY 2010. The new DVOR/DME navigational aid facility is due to be delivered and installed by November 2010, and a new fire tender at Fua„amotu airport is also expected for delivery before the end of 2010. Following a request from the Government of Tonga, additional funds for an aviation component of US$1.06 million were approved by the Bank‟s Board in February 2010, which will address further urgent aviation safety and security needs. Contact person is Charles E. Schlumberger at [email protected]
World Bank Air Transport Annual Report - 21 - Fiscal Year 2010
China- Civil Aviation Development (P119218)
Over the past decade, air transport in China has experienced rapid growth in traffic volume as well as infrastructure development. Despite the global recession in 2009, China‟s passenger traffic reached 486 million (arrivals and departures), a 19.79% increase over 2008. By the end of 2009, there were 166 civil airports in mainland China, with higher density in the eastern part of the country, and lower density in the west. Rapid growth in traffic notwithstanding, future development of China‟s air transport sector faces barriers including low or insufficient capacity, an overall imbalanced airport network, and poor The Civil Aviation Authority of China’s National Civil Airport integration of other modes Development Plan 2020 foresees the construction of several new airports. of transport. During FY 2010, two air transport workshops were held in Beijing by the World Bank, IFC, and the National Development and Reform Commission (NDRC) of China. The objective was to identify and discuss constraints faced by China‟s air transport sector, in order to consider the possible financing of future airport infrastructure projects by the WBG. In addition, potential technical assistance on airport operations and environmental performance was outlined. Several representatives of airport operator and economic development agencies from 14 central and western provinces attended the workshops. The Bank‟s presentations outlined the WBG air transport portfolio, its development focus when financing infrastructure projects, and IFC‟s models on how to involve the private sector in air transport infrastructure projects. Invited speakers from IATA and SNC-Lavalin shared their knowledge and insights on enhancement of air travel competitiveness, marketing and business development, as well as environmentally-friendly and energy-efficient airport design and management. Participants expressed appreciation for the workshops. Several provinces‟ representatives outlined their plans to expand airport infrastructure, while others described their needs and interest in WBG financial and technical support. The workshops concluded with preliminary agreement on one World Bank financed project in Jiangxi Province, and on a follow-up mission to further discuss potential airport project in Heilongjiang Province. The Bank has initiated preparation of an Airport Development Project for China, which may include an IBRD loan of US$50 million to provide financial support for airport infrastructure and air traffic control facilities in Shangrao, Jiangxi Province. Contact person is John C. Scales at [email protected]
World Bank Air Transport Annual Report - 22 - Fiscal Year 2010
Eastern Europe and Central Asia (ECA)
Tajikistan-Programmatic Development Policy Grant IV (P117692)
Significant progress has been made on aviation sector reforms in Tajikistan since the Programmatic Development Policy Grant (PDPG) project was launched in 2006. The reforms were initiated after the Bank‟s 2005 policy note on the country‟s air transportation system, produced with Charles E. Schlumberger‟s participation (P074889). The government recognized the need to reform the aviation sector to reduce costs, while increasing the efficiency and convenience of air travel. Under an earlier development program, the government had separated the functions of policy-making, technical regulations, and accident investigation, with the objective of improving governance, transparency and operational performance. It also unbundled Tajik State Airlines by creating six new companies. One operates the state-owned airline, another provides air traffic control services, and the remaining four manage different aspects of the nation‟s airports. In addition, the government allowed several foreign airlines and a new private Tajik carrier to operate scheduled flights, expanding the country‟s air transport network. These reforms enabled an increase in passenger traffic (both domestic and international) of nearly 100% between 2006 and 2008. Upcoming projects, namely PDPG 4, 5 and 6, include earlier actions to further promote the objectives for the aviation sector, and were prepared for WBG Board approval in FY 2011. PDPG 4 includes the adoption of an aviation sector policy, while PDPG 5 and 6 are to include reforms specified in an action plan, which is still being discussed with the government. The proposed operation is the first of a new programmatic series of three development policy operations consistent with the Country Partnership Strategy (CPS) approved by the Bank‟s Board on 25 May 2010. The development objectives of the PDPG series 4 to 6 are to protect basic services within a sustainable fiscal framework, and to lay the foundation for post-crisis recovery and growth. The series combines actions to mitigate the impact of the economic crisis by protecting core spending on health, education, and social safety nets, as well as to continue with structural reforms. PDPG 4 focuses on protecting the improvements made under PDPG 1–3. It also includes budget allocations for the social sectors. Table: Access to Tajikistan by air Indicator Baseline Original Target Actual Value Achieved at (2004) Values Completion March 2009
Number of passengers per 557,200 666,000 1,350,000 year (Tajik Air records)
The next step in Tajikistan‟s aviation sector reform is to adopt a national aviation policy that ensures a maximum contribution by aviation services to the nation‟s economic development. In mid-2009, the government, assisted by a Policy and Human Resources Development grant, drafted a policy addressing aviation safety (including funding of air traffic control and the safety regulator), and aviation security to ensure that flights and facilities are secure from acts of terrorism. Aviation taxation will be reformed, within parameters defined by Open Skies agreements, and private sector participation in provision of aviation services will be a declared objective. Airport infrastructure planning, both medium- and long-term is included, as are consumer protection regulations, and a new environmental policy. The government approved the national aviation policy in March 2010.
World Bank Air Transport Annual Report - 23 - Fiscal Year 2010
The Government of France and the European Bank for Reconstruction and Development, which are also financing improvements in airport infrastructure and facilities, are coordinating their support with the Bank in order to maximize the effectiveness of the policy dialogue in encouraging reform. The IFC is also considering investing in the airport facilities, and welcomes the new policy as conducive for fostering private investments. The proposed PDPG 4 will support adoption of the national aviation policy. The policy explicitly (i) allows for progressively increased access to international airlines in terms of routes and frequency capacity; (ii) removes restrictions on air cargo in terms of aircraft types, size, frequency, uplift or discharge (as long as technically feasible); (iii) ensures equal treatment at the airports for all carriers in terms of pricing, fueling, and other services; and (iv) improves air safety through adequate funding and strengthened regulatory oversight, specifically licensing and certification, monitoring compliance, and inspections. The upcoming PDPG 5–6 will support measures to implement the new aviation policy. At the end of the programmatic series, Tajikistan is expected to be better connected to regional and international markets, which will be measured by the number of flights (from 175 in 2009 to 250 in 2012), the number of passengers (from 1.35 million in 2008 to 1.8 million in 2012). Contact person is Roy Sudharshan Canagarajah at [email protected]
Russia - Technical Assistance to Pulkovo Airport (P111493)
With six million residents, St. Petersburg is Russia‟s second largest city, and it has an economic, political and cultural importance to match. But its Pulkovo International Airport is the country‟s fourth-largest, and it shows. The City of St Petersburg has recognized that Pulkovo needs to grow. The problem is that it is constrained by the positioning of its two terminals and airside facilities. An airport master plan was commissioned in 2005 and completed in 2007; it outlined the expansion and development required to keep pace with traffic forecasts. The municipal government decided that the development of the airport, including a new combined international and domestic terminal, should be undertaken via a Public Private Partnership (PPP).
The World Bank (a joint effort of ECA Sustainable Development Sector Unit – ECSSD, and the Finance Economics and Urban Department - FEU) was designated to act as strategic adviser to the City of St. Petersburg on the concession of the Pulkovo Airport. A concession agreement was signed in October 2009, and operational responsibility transferred to a private operator in April 2010 with financial effectiveness in July. During the first phase of the concession, the concessionaire committed to Euro 1.2 billion of investments over four years for rehabilitation and expansion of the airport. Contact person is Vickram Cuttaree (ECSSD) The proposed new terminal design of Pulkovo at [email protected] and Jeff Delmon Airport prepared by the UK Grimshaw Architects. (FEU) at [email protected]
World Bank Air Transport Annual Report - 24 - Fiscal Year 2010
International Finance Corporation Projects IFC Air Transport Infrastructure Financing (CINTS)
Pulkovo Airport – Russia (P28218)
The project consists in expanding, developing, operating and maintaining Pulkovo airport in St. Petersburg (“City”), Russian Federation. Pulkovo, the city‟s only civil airport, served 6.8 million passengers in 2009. To modernize the airport and address its capacity constraints, the City issued a call for tenders for a 30-year concession to operate the existing airport facilities and to construct a new terminal to significantly expand current facilities. Investments in new airside and landside infrastructure will help to achieve an airport capacity of 17 million passengers per year (the “Project”). The Project is Phase I of a master plan for the development of Pulkovo airport with future phases to be developed and funded at a later stage in accordance with the concession agreement. The concession has been awarded to Northern Capital Gateway (the “Project Company”), based on a competitive and transparent procurement process, under the terms of a Public Private Partnership Agreement (“PPPA”) signed on 30 October 2009. The proposed Euro 170 million IFC financing (Euro 70 million of IFC‟s own account) will be used for construction of the new terminal and associated facilities, as well as refurbishment of existing infrastructure and buildings at the airport.
Dominican Republic – Punta Cana Airport (P27883)
Punta Cana, on the east coast of the Dominican Republic, is one of the country‟s key tourist areas along with Puerto Plata, La Romana, and the developing Samaná area. Passenger arrivals have increased with the growing popularity of tourist resorts in Punta Cana and Bavaro. The Punta Cana International Airport, which serves the region, has become the country‟s busiest and fastest growing airport. During 2008 and 2009, it handled about four million passengers, accounted for 42% and 38% of total air passengers in the Dominican Republic in 2008 and 2009 respectively. As a result, further investments have been required for US$61.9 million over 2009-2010 by its private owner and operator, Corporación Aeroportuaria del Este, S.A. (“CAE”) in new infrastructure and facilities to expand its capacity and manage increasing demand. These encompass: (i) construction of a new runway and taxiway suitable for larger aircraft, (ii) expansion of the existing passenger terminal, (iii) installation of additional safety equipment and (iv) repair of the existing runway. IFC with a US$20 million senior loan, together with Banco BHD with a US$10 million parallel senior loan, are supporting CAE 2009-2010 capital expansion program. The financing of IFC is expected to benefit the Dominican economy and help develop its tourism industry, a key earner of foreign exchange for the country. It supports a high priority for the Dominican government, that is to increase passenger throughput and increase fiscal revenues from tourism. When completed, the capital expansion program will allow the airport to increase passenger handling capacity, raise service levels, and expand its ability to grow and diversify destination markets, while maintaining international performance and security standards to ensure the highest levels of service to all stakeholders (carriers, tenants and users).
World Bank Air Transport Annual Report - 25 - Fiscal Year 2010
Africa – AKFED Aviation (P27048) This project consists of implementing the turnaround and growth strategy of the Aga Khan Fund for Economic Development's ("AKFED" or the "Company") three airlines in Africa: Air Burkina, Air Mali, and Air Uganda (together, the "Celestair Airlines"). Air Burkina and Air Mali, which came under AKFED's control in 2001 and 2005 respectively, have focused on building their customer base following their privatization, and establishing their reputation as safe and reliable airlines operating under an umbrella brand called "Celestair Group". Operating from relatively small land-locked home markets, they currently link 16 capital cities in West and Central Africa and offer 103 weekly flights to 19 destinations in the region. The project has three components: i) a US$62 million investment program including acquisition of aircraft and spare parts, refurbishment cost, a hangar in Ouagadougou and crew training costs; ii) consolidation of various overhead and common functions of the airlines; and iii) funding of start-up and expansion expenses until the airlines' turnaround. The airline‟s turnaround strategy involves an overhaul of their route network, a new fleet and consolidation of their commercial, Air Burkina is one of the three African carriers, which are consolidated in Celestair and owned by AKFED. procurement, administrative, and financial functions, to achieve two objectives: 1) stimulate demand through improved frequencies in the most important markets and thereby increase market shares and revenue growth and 2) implement cost reduction initiatives to lower high operating costs, become the low cost provider and improve their overall competitive position to secure a leading role in air transport services in West and Central Africa. IFC‟s investment is an A Loan for US$25 million. By supporting this project, IFC aims to help fill a serious void in regional air transport services in West and Central Africa and reinforce these services in East Africa, while catalyzing further progress with the much needed consolidation and co-operation in the region's air transport industry.
Colombia – Avianca Airline Fleet Renewal (P25899)
Avianca, the oldest existing airline of the Americas, has a fleet of 62 aircraft and operates 49 domestic and international routes. Within Colombia, it provides services to regions to which land connections are complicated by difficult topography and large distances. Air transport is therefore an essential tool providing both domestic and international transport services, which have become a key factor in the development of industry and tourism in Colombia. Avianca transports about 10 million passengers per year. The airline has undertaken an investment plan to replace its older MD-83 and B757/767 aircraft with new and more fuel-efficient aircraft types, such as A319/320/330 and B787, able to better compete on the market and deliver better service to customers. The company has also negotiated the purchase of 42 new aircraft over the next five years. The investment plan also comprises the procurement of spare engines and spare parts, as well as training costs related to the fleet renewal program. During FY 2009, IFC responded to the carrier‟s request to support Avianca‟s fleet renewal program with a US$ 50 million financing facility.
World Bank Air Transport Annual Report - 26 - Fiscal Year 2010
Jamaica – Montego Bay Airport Common Use Terminal Equipment (P26202)
Montego Bay‟s Sangster International Airport serves the North-West coast of Jamaica, where most resorts are located. It is the island‟s main gateway for tourism traffic. The airport is operated by MBJ Airports Limited under a 30- year build-operate-transfer concession granted by the Airports Authority of Jamaica in 2003. The IFC had already provided financing to MBJ Airports Ltd for the expansion and upgrading of the terminal building, bringing its capacity to five million passengers per annum. The current project, which was considered in FY 2008, provided the airport with new Common Use Terminal Equipment, a concept which increases the flexibility of the check-in system, and improves the interface between ground handling services, airline passenger handling, and the The modern terminal of Sangster International airport operator. The project also comprises a Airport hosts several private businesses. new baggage handling and screening system. The combination of the two components offers a significant improvement of the airport‟s systemic operational efficiency, thus enabling the facilities to absorb higher traffic volumes with a better quality of service. The annual capacity is expected to rise to seven million passengers, thus eliminating capacity constraints. The IFC‟s financing consists of an A-loan of US$ 5 million, approved in December 2007.
Tunisia – TAV SA (P26913)
Tunisia‟s existing airports have recorded strong traffic growth in recent years, and some face severe congestion. More growth is expected as a result of planned tourism and manufacturing developments, and of the outcome of the current negotiations for an open skies agreement with the European Union. In 2007, the Government of Tunisia granted a concession to TAV, a Turkish company specializing in airport operation and management, to operate the existing Monastir Airport, and to build, finance, and operate a new airport at Enfidha, with an initial annual capacity of seven million, and ample space for future expansion. The site is halfway between Hammamet and Sousse, thereby serving both the Hammamet-Nabeul tourist complex and the Sousse-Monastir area, which combines manufacturing industries and tourism resorts. The existing Monastir airport cannot be expanded at its current site, whereas Hammamet is currently served through Tunis-Carthage airport, i.e. a land access route of nearly 90 km and requiring crossing the congested Tunis metropolitan area. The future Enfidha airport will thus help relieve congestion at Tunis-Carthage. In addition, Enfidha is located in a region of intensive agricultural production, and the new airport will provide opportunities to airfreight agricultural exports. Finally, the airport will be in the immediate vicinity of Enfidha‟s industrial zone, a two-million-square-meter area earmarked for development of an industrial zone that seeks to attract investors and companies of the automotive sector. The total project cost is estimated at 565 million EUR (about US$ 700 million, which makes it one of the largest private sector investments in Tunisia), financed through a 30% equity contribution from the sponsor, and 70% through debt. IFC‟s investment, approved in FY08, was for a financing package of €398 million, including direct long-term senior and
World Bank Air Transport Annual Report - 27 - Fiscal Year 2010 subordinated loans of €135 million and a €263 million syndicated loan, underwritten by ABN, Société Générale, and Standard Bank. In FY 09, IFC provided €30 million in equity as substitution for part of the original IFC A loan exposure.
Cambodia - Phnom Penh International Airport (P25332)
Phnom Penh Pochentong International Airport (PPIA) is the main gateway to Cambodia, while Siem Reap International Airport (SRIA) caters mainly to tourist traffic visiting the various Angkor temples located in the nearby Angkor Archeological Park. Sihanoukville was established in the 1950s and forms, together with Phnom Penh and Siem Reap, one of the destinations that has been identified by the Royal Government of Cambodia (RGC) as cornerstones for the country‟s short-term tourism development. The Sihanoukville airport, located 15 km from the city center, was built in the 1960's and remains a small airport with limited facilities. The concession for the development and operation of Sihanoukville Airport was awarded by the RGC in March 2006 to Société Concessionnaire de l‟Aéroport (SCA), which is 70% controlled by France‟s Vinci Group and 30% by a Malaysian investment holding company, and a Cambodian engineering company. In 2004, the IFC had already provided a US$ 10 million loan to SCA to support capital expenditures at PPIA and SRIA. A new project was initiated in 2006, consisting of a terminal extension at Phnom Penh, and infrastructure upgrading at Sihanoukville and Siem Reap, for a total cost of US$ 40 million. During FY 2007, the IFC provided a US$ 7.5 million A-loan, and US$ 10 million in a standby loan. During FY 2008, the IFC investment programme was being implemented.
Nepal – Buddha Air Private Ltd (27247)
Buddha Air Private Limited (BAPL) started operations in Nepal in 1997. The company currently owns and operates five 1900D Beech aircraft and two 1900C Beech aircraft, each with capacity to seat 18 passengers. The company focuses on scheduled passenger flights between the capital, Kathmandu and the regional airports as well as mountain flights (flights over the Himalayan range for tourists, see picture).
The company plans to purchase ATR42-300s, and Buddha Air is operating a fleet of modern also to construct an aircraft hangar. The purchase Beechcraft 1900D turboprop aircraft, which of the aircraft will help BAPL meet the anticipated comply with international safety standards. increase in passenger demand and provide the company with an alternative in the absence of leased planes from the aircraft company. In FY 2009, IFC approved a US$ 10 million corporate loan to the project.
Jordan – Queen Alia International Airport (P26182)
In FY 2007, the Government of Jordan (GoJ) tasked the IFC with an advisory mandate for the concession of Queen Alia International Airport (QAIA) of Amman. The contract was subsequently awarded in May 2007 to a consortium including the international airport operator Aéroport de Paris Management, and the international construction firm J&P Overseas. The 25-year concession includes the expansion, rehabilitation, and operation of the airport. The consortium constituted Airport International Group P.S.C (AIG), a special purpose company which will act as the concessionaire.
World Bank Air Transport Annual Report - 28 - Fiscal Year 2010
The concession agreement grants AIG the exclusive right and obligation to provide airport services at QAIA, and charge tariffs for these services. Such services include the obligation for AIG to operate, maintain, and rehabilitate the existing Airport‟s landside and airside facilities; complete the design for, engineer, procure, finance, and build a new passenger terminal; and submit and implement a plan to demolish the existing terminal at QAIA once the new terminal is fully operational. AIG has sought financing from the IFC and the Islamic Development Bank (IDB) for the project, which is expected to cost US$ 680 million and includes rehabilitation of the existing terminal, construction of the new terminal including related aprons and external works, and demolition of the existing building. Construction of the new terminal is expected to be completed in July 2011. The project is being financed by a combination of internal cash flow generation (US$ 134 million), equity (US$ 161 million), senior debt (US$ 347 million), and a subordinated loan (US$ 40 million). The senior debt would be provided by both the IFC and the IDB, while the subordinated loan would only be financed by IFC. The proposed investment by the IFC was approved in FY08.
Georgia – Tbilisi International Airport (P24628)
TAV Urban Georgia LLC (TAV Georgia) holds an 11.5-year concession (starting in January 2006) from the Tbilisi International Airport Joint Stock Company to design, finance, construct, maintain, and operate the Tbilisi International Airport (TIA). TAV Georgia has the option to extend the concession by an additional five years by designing, constructing and financing, but not operating, the upgrade of the Batumi International Airport for US$ 15 million. Anticipated continued growth in traffic at TIA has created the need for substantial upgrading and expansion of the airport facilities, to allow the airports to operate at international standards of safety and efficiency, and to support Georgia‟s continued economic progress. The project is expected to cost US$ 76.5 million. This includes US$ 51.5 million for the construction of a new international terminal and car park, widening of the runway, extension of the apron and taxiways, and upgrade of emergency response services at TIA. It also includes US$ 4 million for acquisition of ground handling equipment at Tbilisi Airport, and US$ 15 million for the construction works and modernization of equipment and systems at Batumi International Airport, which will be invested, in addition to working capital requirements, insurance, and financing costs. The IFC signed a loan in May 2006 for a proposed investment consisting in an A loan of up to US$ 27 million for IFC‟s own account. The European Bank for Reconstruction and Development will provide a parallel loan of the same amount along with the IFC. During FY 2008, the investment programme continued to be implemented.
Kenya- DAC Aviation (P27688)
The DAC Group (“DAC” or the “Group”) provides air charter services for the World Food Program (“WFP”) in Sudan and for the European Commission Humanitarian Aid Office (“ECHO”) in the Democratic Republic of Congo (“DRC”) in support of the humanitarian relief operations of these organizations. Trident Enterprises Ltd. (“TEL”), a subsidiary of DAC, is the asset holding company of the Group. TEL leases aircraft to a sister company of the Group, CMC Aviation (“CMC”) which has hangars and facilities at Nairobi‟s Wilson Airport. Increased demand for passenger capacity by WFP has created an opportunity to purchase one 76-seater Bombardier Dash 8 Q400 aircraft to the Nairobi-based fleet.
World Bank Air Transport Annual Report - 29 - Fiscal Year 2010
Extraordinarily poor and unsafe road networks and highly inadequate rail transport systems have made it difficult for humanitarian aid organizations to get aid effectively to those who need it. In conflict-ridden regions such as Eastern DRC and DRC/Southern Sudan, organizations like WFP and ECHO have resorted to using air transportation for the movement of people and sometimes cargo in the region. Even though roads may exist in some areas, air transportation provides safety and efficiency, as well as quick response capabilities to these organizations in emergency situations. The project has a high development impact as it supports a private airline company in Kenya, an IDA country which services humanitarian relief organizations in other IDA countries where they are critically needed. The greatest impact of the project is that it allows some of the world‟s leading humanitarian organizations deliver aid where it is most needed.
Mexico- Compañía de Aviación (P24672)
Volaris is part of the commercial brand of the Mexican group Concesionaria Vuela Compañía de Aviación S.A. de C.V., a low-cost airline. It is the third-largest and the fastest-growing Mexican airline. The IFC investment in this airline includes an US$ 30 million IFC revolving credit line for the financing of pre-delivery payments of 16 Airbus A319 aircraft and a US$ 10 million loan to Controladora Vuela Compañia de Aviación, S.A de C.V. (Controladora). Concesionaria Vuela Compañia de Aviación, S.A de C.V. acted as the guarantor. In 2006, the newly established low cost airline, branded as Volaris, received its certification. The company‟s main line of business will be passenger air transportation mainly within Mexico. Volaris commenced operations on 13 March 2006. It initially operated five routes with four aircraft throughout Mexico from its base at Aeropuerto Internacional de Toluca. The company expanded rapidly, and in 2010 it operated 21 aircraft of the Airbus A20 family. Volaris currently operates on 40 domestic routes connecting 23 cities around the country and three international destinations in California. Volaris provides discounted fares in a market historically marked by limited competition and high fares. This stimulates demand and makes air transportation accessible for a larger Volaris has Mexico’s youngest fleet, made up of aircrafts share of the Mexican population, while from the Airbus A320 family, averaging 3 years. promoting connectivity and economic growth. Volaris also established an alliance with Southwest Airlines. The alliance began in April 2009 with Southwest Airlines distributing Volaris flights through the southwest.com website. However, beginning in the fourth quarter of 2010 an even more integrated connecting product between the two carriers was initiated, which enables Volaris Customers to travel to a wide range of destinations in the United States and Mexico.
Contact person for all IFC air transport investment projects is Ravinder Bugga at [email protected], and Giancarlo Ortega at [email protected]
World Bank Air Transport Annual Report - 30 - Fiscal Year 2010
IFC Advisory Services (CASDR)
Air Transport Advisory Mandates
The Infrastructure Advisory Services Department of the IFC provides advisory assistance to governments on structuring and implementing (tendering) Public-Private-Partnerships (PPPs) in infrastructure. IFC has undertaken more than 100 advisory transactions in over 67 countries over the last 20 years. IFC/World Bank's reputation for competence, transparency, and fairness allows it to play the role of neutral partner to balance each party's interest, thus reassuring foreign investors, local partners, other creditors, and government authorities The two main domains in air transportation advisory services are private sector participation in airports and air carriers.
1) IFC Public-Private Partnerships (PPP) Advisory Mandates in Airports Only 2% of the world‟s 10,000 commercial airports are managed or owned by private sector entities. However, as passengers carried by air transport has exceeded two billion since 2005, and that same year, 40% of all merchandise and goods (in value) were air freighted – Public-Private-Partnerships (PPPs) in airport infrastructure will grow to meet investment and required service standards. Airport PPPs are useful approaches to meet both private and public sector objectives.
Of the various airport PPP models available, experience shows that concessions and full divestiture are most effective: . Concession Contracts (BOT, BOO, BOOT, BTO, etc.): State retains ownership of airport but transfers investment as well as operations and management responsibilities to the private sector . Full Divestiture: Ownership, operations, and investment responsibilities are fully transferred to the private sector . In certain cases, a blend of first-phase BOT followed by public offering can maximize benefits
2) IFC Public-Private Partnerships (PPP) Advisory Mandates in Airlines As the airline industry has proceeded along this privatization path over the last 20 years, IFC has participated in nearly a dozen airline transactions. Unfortunately, many have proved to be difficult projects due to important sector-specific structural reasons: . Fixed-cost structure: Airlines tend to build up a legacy-costs base (staff and fleet) that is difficult for a new owner to manage. In addition, fuel costs are beyond management‟s control. During the recent oil price spike, they accounted for as much as 30% of the cost base. . Price-sensitive product: Demand for travel is highly elastic, especially in tourist markets. In recessions, people forgo vacations for other consumer goods. Conversely, price reductions increase passenger numbers dramatically. . Complicated demand chain: Customers often purchase tickets through travel agents, frequently in a package with hotel accommodations. Since airlines rely on these other actors for their sales, if there are bottlenecks elsewhere the aviation sector suffers.
World Bank Air Transport Annual Report - 31 - Fiscal Year 2010
. Overregulation: Bilateral agreements between governments, still prevalent in many parts of the world, prevent competition from functioning normally. Open skies are being adopted, but not in all countries.
Selected IFC Advisory Mandates in Airports
Project Name Country Year Mandate / Result
Madinah Airport Saudi Arabia 2009 Ongoing mandate
Successfully awarded to Maldives Airports Maldives 2009 GMR-MAHB Successfully awarded to Queen Alia Airport Jordan 2007 Aéroports de Paris consortium Successfully awarded to Hajj Terminal Saudi Arabia 2007 Saudi Bin Laden Group Awarded to Abuja Gateway Nigeria Airports Nigeria 2006 Consortium (Airport Authority + equity partners)
Selected IFC Advisory Mandates in Airlines
Project Name Country Year Mandate / Result
Awarded to Caribbean Air Jamaica Jamaica 2009 Airlines
Drukair Buthan 2008 Strategic analysis
JAT Yugoslavia 2006 Strategic analysis
Polynesian Airlines Samoa 2005 49% sold to Virgin Blue
Awarded but Cancelled by Cameroon Airlines Cameroon 2005 Government
Air Tanzania Tanzania 2002 49% sold to SAA
76% sold to KLM, financial Kenya Airways Kenya 1996 investors
World Bank Air Transport Annual Report - 32 - Fiscal Year 2010
3) IFC Air Transportation Experience When undertaking a transaction advisory mandate, IFC provides a one-stop solution to governments covering all aspects of the proposed transaction. One of the distinguishing features of IFC‟s value addition is its ability to balance private and public sector interests and take into account sustainable long term economic and social effects.
IFC Advisory Projects: Example of Maldives – Concession of Malé Airport
Malé International Airport (MIA) services nearly 80% of the traffic to the Maldives. The airport has a unique inter-modal process with inter-change between conventional aircraft to domestic conventional aircraft, seaplanes (that ensure connections with island-resorts scattered throughout the Maldivian archipelago) or boats. Growth at MIA is directly pegged to Maldivian tourism growth and was simultaneously constrained by the lack of availability of land, limited international best management practice of the airport and available financing for necessary improvements to terminal capacity as well as international safety standard compliance.
Consequently, the Government of Maldives (GoM) invited private sector participation to expand and rehabilitate the airport, and build a new terminal. This decision was part of a broader strategy by the government to liberalize air transport policies, improve the competitiveness of Maldives‟ airports and boost an economy that is heavily dependent on tourism-related activities.
In August 2009, the government recruited IFC as the Lead Transaction Advisor to assist with the implementation of the PPP. In June 2010, IFC completed its mandate and, following a competitive bidding process, Malé Airport was successfully awarded as a 25-year concession. The project included rehabilitating existing facilities, constructing a new terminal with a capacity of five million passengers per year, and operating the airport.
The project was implemented in a record nine months, and the concession was awarded to a consortium of GMR Infrastructure Limited (GMR) from India and Malaysia Airports Holdings Berhad (MAHB) from Malaysia. The winning bid comprised a US$78 million upfront fees component and a revenue percentage share that represents nearly US$1 billion (calculated on NPV basis) of fiscal benefits for the government over the length of the concession. The proposed investment of US$ 400 million by GMR-MAHB in MIA represents nearly a third of Maldives‟ US$ 1.3 billion GDP (2009 figures).
This is the first successful public-private partnership project in the Maldives and marks a flagship deal for the new democratically-elected Government of Maldives privatization program. It is already serving the Maldives as a model for launching a full-scale public private partnership in infrastructure.
Contact people for all IFC air transport advisory services are Moazzam Mekan at [email protected] and Ramatou Magagi at [email protected]
World Bank Air Transport Annual Report - 33 - Fiscal Year 2010
Multilateral Investment Guarantee Agency
The Multilateral Investment Guarantee Agency (MIGA) guarantees cover projects in a broad range of sectors, with projects in infrastructure accounting for the largest share (41%) of the agency‟s outstanding portfolio. Infrastructure development is an important priority for MIGA, given the estimated need for US$ 230 billion a year solely for new investment (maintenance needs are of a similar magnitude), to deal with the rapidly-growing urban centers and underserved rural populations in developing countries. Two recent example projects of MIGA guarantees are Jorge Chavez International Airport project at Peru, and New Airport project at Quito, Ecuador.
Peru - Jorge Chavez International Airport (JCIA) MIGA provided Fraport AG, of Germany with a guarantee for US$11.5 million, to cover its US$12.8 million counter guarantee for a performance bond posted for the privatization of Lima's airport, Jorge Chavez International Airport (JCIA). The coverage is against the risk of expropriation (the wrongful call of the performance bond), and extends for eight years.
The Peruvian government sees airport privatization as a key factor in its effort to expand employment opportunities, and create a modern transportation facility to serve as the country's gateway to the world. It will also enhance and expand tourism, another government goal. During the first four years of the concession, the consortium is expected to invest over US$130 million in new infrastructure, including upgrades to the current terminal, construction of a new passenger concourse, expansion and addition of new aircraft aprons and taxiways, and creation of a hotel and world-class retail center within the existing airport perimeter.
Ecuador – New Airport at Quito MIGA issued three guarantees of US$ 32.8 million, US$ 16.4 million, and US$ 16.4 million to the Aecon Group INC. of Canada, the HAS Development Corporation of the United States, and ADC Management Ltd. of the United Kingdom for their respective shareholder loans to Corporacion Quiport of Ecuador. In addition, MIGA also issued guarantees of US$450,000, US$225,000, and US$225,000 for the investors' respective equity investments in the project enterprise. The Aecon Group and HAS Development Corporation have coverage for a period of fourteen years for their shareholder loans while the remaining four guarantees are for a period for fifteen years. Each guarantee provides coverage against the risks of Transfer Restriction, War and Civil Disturbance, and Breach of Contract.
The project involves the construction of a new airport near Puembo, 24 km. outside the capital city of Quito. The project will be a key economic driver for sustainable economic development of the metropolitan region of Quito. The airport is expected to be operational by early 2008 to replace the existing airport in the city of Quito, which suffers from safety deficiencies as well as capacity constraints.
Contact person for all MIGA guarantees is Margaret A. Walsh at [email protected]
World Bank Air Transport Annual Report - 34 - Fiscal Year 2010
External Relations
International Civil Aviation Organization (ICAO)
The International Civil Aviation Organization is the specialized air transport agency of the United Nations. The WBG and ICAO enjoy a long and strong cooperative relationship on various air transport issues. ICAO has provided safety and security audits and supervision services for the Bank‟s projects in West and Central Africa. In addition, ICAO assisted the Bank in identifying needs and priorities of air transport projects in various countries. The relationship has continued to flourish during FY 2010. On environment and climate change issues, the Bank participated in the ICAO High-level Meeting on International Aviation and Climate Change October 6-8, 2009, as well as the Third ICAO Environmental Colloquium during May 11-14, 2010 in Montreal, Canada. With the aviation industry seeking effective ways to cut GHG emissions to address climate change challenges, ICAO is preparing guidelines on how states report on aviation fuel consumption including the share of biofuels. A key financing issue is the need to identify resources to scale up development, deployment, production and use of biofuels in a sustainable manner. Bank staff including Holly Krambeck, Carbon Finance Specialist, Ari Huhtala, Senior Environmental Specialist, and Charles E. Schlumberger made presentations describing the financing needed to support proposed market-based measures. They also outlined the Bank Group‟s strategic framework to deal with climate change, and the Bank's position on alternative fuels. The Clean Technology Fund, the Strategic Climate Fund, and World Bank Green Bonds, as well as indirect taxes on aviation fuels were also outlined and discussed. The Bank later provided input for ICAO‟s Environmental Report 2010 for the mentioned above topics. On safety issues, the Bank continued to participate in the ICAO High-level Safety Conference and in the Africa Comprehensive Implementation Programme (ACIP) Steering Committee meetings during FY 2010. As several of the Bank‟s client countries (in Africa, Eastern Europe and South America) still fall short on safety oversight resulting in high accident rates, international pressure to improve their oversight capacity continues to increase. Examples include the EU Blacklist and ICAO Safety Audits, which result in certain countries‟ carriers facing increased resistance as they try to develop their networks. The Bank remains the most important donor institution to finance improvement in air transport safety. However, given poor governance, combined with an absence of political will to enforce adequate safety oversight, the Bank must remain selective and demanding when financing safety-related projects. The meetings at ICAO also aimed at fostering regional cooperation in oversight and capacity building. The main challenge identified concerned the sustainability of an adequate financing mechanism. In addition, the Bank maintained regular contact and meetings with ICAO officials including Secretary General during FY 2010. The meeting with the Secretary General recognized the ICAO WB collaboration in safety and security projects, and expected the Bank research on air transport and energy to include the environmental department of ICAO for their work on alternative fuels. The Bank also had discussions with the acting Director of the Technical Cooperation Bureau (TCB) about possible increased cooperation. The involvement of TCB as Project Implementation Unit in Bank projects was recognized as the most promising model. However, this requires that the client suggests the involvement of TCB during project preparation. Finally, numerous meetings were held with ICAO‟s Air Transport Bureau for the preparation of the 2010 Global Aviation Strategy Summit in Vancouver. Contact person is Charles Schlumberger at [email protected]
World Bank Air Transport Annual Report - 35 - Fiscal Year 2010
ICAO- World Bank- Routes Global Strategy Summit
On 14 and 15 September 2009, the World Bank co-organized the annual ICAO, World Bank, and ROUTES Global Strategy Summit (GSS) in Beijing. The Summit was the fifth annual air transport event, which the Bank held jointly with ICAO and the industry. It was hosted by Beijing Capital International Airport, and took place at New China International Exhibition Centre. The event was moderated by the BBC‟s Aaron Heslehurst and JLS‟s John Strickland. The Bank was represented by Jamal Saghir, Director of Energy Transport and Water Department (ETW), who delivered the opening keynote speech, and Charles E. Schlumberger, who presented as part of the Safety and Security Challenges panel, and Air Transport and Tourism - Catalyst for the World's Economic Development panel. The objective of the GSS was to provide vibrant and stimulating interchanges among industry leaders, which should lead to some guiding conclusions. The aim was not to dwell on the past but to try and explore the way forward in eight given topics, which included (i) Civil Aviation Today, (ii) Can Global Air Transport Resume Growth?, (iii) Technology to Transform the Industry, (iv) The Safety and Security Challenges, (v) Environmental Challenges for the Civil Aviation Industry, (vi) The Airline and Airport Partnership: Future Trends - Towards a Common Goal, (vii) Air Transport and Tourism - Catalyst for the World's Economic Development, and (vii) The Developing Markets of the Future. All the summit sessions featured lively Jamal Saghir, Director ETW addressing the participants of discussions, and the conclusions of the the 2009 GSS during the opening session of the event, sessions are helpful for all 352 which was attended by over 350 representatives from the participants. ICAO and the World Bank industry, the public sector, and academia. were pleased with the strengthened partnership implied by co-hosting this event, with the Routes Development Group (RDG) representing the air transport industry. However, Airport Council International (ACI) may join as a partner in future events, as they represent a core part of the industry. Another potential partner is CANSO, the global air traffic control organization. The Bank, ICAO and RDG agreed to hold the next joint GSS during the 16th World Route Development Forum, which took place in Vancouver, Canada, from 19 to 21 September 2010. During FY10, the Bank‟s TWITR staff was active in the preparation of the Vancouver event. Contact person is Charles E. Schlumberger at [email protected]
World Bank Air Transport Annual Report - 36 - Fiscal Year 2010
West Africa Workshop of Air Transport Services held in Marrakesh, Morocco
On invitation of the Ministry of Transport of Morocco (MoT) and of the national airline Royal Air Maroc (RAM) Charles E. Schlumberger spoke at the January 27-29, 2010 Colloque des Ministres Africains de Transport, at which air transport issues in North and Sub-Sahara Africa were discussed. The workshop was held under the patronage and presence of the Moroccan Minister of Transport Karim Ghellab, and Ministers of Transport of various African States (e.g. Guinea, Senegal). Schlumberger presented his research on the implementation of the Yamoussoukro Decision, and outlined opportunities for developing air service markets by enhancing liberalization of intra-African aviation. RAM announced to continue this series of workshops coming years (this was the third event). Contact person is Charles E. Schlumberger at [email protected]
Community Service
Several World Bank staff members at the Bank are licensed and active pilots, certified by the US FAA and / or European Aviation Authorities EASA. To remain current on their pilot‟s qualifications, they regularly fly and undergo required refresher training. The most rewarding way of maintaining currency is to provide community service by providing free air transportation to people of all ages whose medical needs – evaluation, diagnosis, and treatment – can only be met by health care facilities far from their homes. In the US, the not-for-profit organization Angel Flight provides timely travel to patients who can't withstand traveling long distances by automobile, rail, or bus, and who do not have the financial means to purchase suitable alternative transportation. In addition, transport in smaller private aircraft can better accommodate those patients whose condition could worsen if exposed to the re-circulated air on commercial flights, and who need efficient point-to-point transport. One example of such an Angel Flight Mission was a flight from Louisville, KY to Baltimore, MD, in April 2010 to transport the Crum family. Their one year old daughter Jordyn suffered of congestive heart failure and needed treatment at Johns Hopkins Hospital. A flight by a commercial carrier was considered too stressful for the young patient and a private charter too costly One year old Jordyn Crum arrived well with her parents at for the young family. Baltimore International Airport to undergo urgent treatment. The flight was conducted by Charles E. Schlumberger and Dr. Brian Turrisi. They both bore all cost for the mission. The Bank‟s contribution, in accordance to Staff Manual 9.10, consisted of one day administrative leave to carry out this rewarding community service.
For more information visit www.angelflighteast.org
World Bank Air Transport Annual Report - 37 - Fiscal Year 2010
Internal Dissemination
Air Transport Intranet Site
The World Bank air transport intranet site has been the prime tool for continued internal dissemination of the Bank‟s air transport relevant information. Developed in FY 2005, and continuously enhanced with new reports, studies, and aviation news, the site contains eleven directories with numerous subdirectories, links to internal and external sites, as well as a frequently asked question and feedback section. The Bank‟s air transport intranet site continues to be regularly updated with new documents. In addition, an informative external website, which contains the public information of the intranet site, was overhauled in FY 2010. Following the Bank's new web layout, the website focuses on (i) projects and results (Financing), (ii) provision of knowledge (Data), (iii) research, and (iv) regional aspects, as well as on continuously providing relevant information about the sector (News & Views). Visitors can gain access to the Bank‟s air transport public documents as well as to information on specific air transport projects. The external website (www.worldbank.org/airtransport) continues to be an important reference for external development partners for air transport related projects. Contact person is Diyun Wang at [email protected]
Air Transport Brown Bag Luncheon
An Air Transport BBL was organized by TWITR on the topic of carbon neutral airport design on March 4, 2010 at the Bank. Mr. Ian Matheson, Vice-President of Airport Development, and Vicky Brown, Technical Services Manager, of SNC-LAVALIN Inc. outlined and discussed with Bank staff and invited guests the concept of carbon and energy neutral airport design. The presentation was based on the example of a concept and master plan for Nantes Notre- Dame-des-Landes Airport, for which SNC-LAVALIN was retained as a principal bidder. The airport project in Nantes represents a new design to operate a sustainable carbon neutral airport capable of handling four million passengers, with expansion capabilities to nine million passengers per year. The project would also be pilot project in France for High Quality Environment (HQE) certification, in compliance with the Grenelle Treaty that will help defining international standards for sustainability in airport and airport design. Elements for a carbon and energy neutral airport design were discussed in the BBL, including: on-site power generation, air treatment (heating and cooling), low energy water strategy, selection of materials, energy efficiency, runway orientation, operational strategies and concepts, building design and passive techniques, earthworks and drainage, site layout with retention of the natural landscape, etc. From Bank operations' perspective, the example of this airport design represents an interesting opportunity to help developing countries addressing environmental challenges in air transportation. For more information, please visit our website www.worldbank.org/airtransport
World Bank Air Transport Annual Report - 38 - Fiscal Year 2010
Research and Internal Services
Open Skies for Africa: Implementation of the Yamoussoukro Decision
In Africa, where poor roads, ports, and railways often constrain efficient transportation, air transport holds great potential as a lever for economic growth and development. Yet Africa has suffered several decades of inefficient air services. Uncompetitive flag carriers, set up by newly independent African states, offered primarily intercontinental flights, while the domestic air service market remained underdeveloped and underserved. The 1999 pan-African treaty on liberalization of access to air transport markets, the Yamoussoukro Decision, attempted to address these shortcomings. Yet a decade later, only partial liberalization has been achieved. Open Skies for Africa: Implementing the Yamoussoukro Decision, a World Bank publication released in June 2010, reviews progress made in carrying out the treaty and suggests ways in which the liberalization process can be encouraged. The book analyzes the completed and still-pending steps toward implementation of the Yamoussoukro Decision, both on a pan-African level and within various regions. Special focus is given to the challenges posed by the poor aviation safety and security standards that exist in most African countries. Finally, the book measures the impact that certain policy steps of the Yamoussoukro Decision have had and evaluates the economic significance of air transportation and its full liberalization in Africa. The book concludes that the process of liberalizing African air services must continue, and provides policy The publication is available at recommendations for the way forward. the World Bank Infoshop, or online as pdf-file at no charge. Contact person is Charles E. Schlumberger at [email protected]
Measuring the Technical Efficiency of Airports in Latin America A World Bank Policy Research Working Paper published in FY2010 reviews the technical efficiency of airports in Latin America. This paper is a product of the Sustainable Development Department, Latin America and the Caribbean Region. It is part of a larger effort in the department to understand the determinants of performance in the infrastructure sectors. The evolution of productive efficiency in the region has seldom been studied, mainly due to lack of publicly available data. Relying on a unique dataset that was obtained through questionnaires distributed to airport operators, the authors use Data Envelopment Analysis methods to compute an efficient production frontier and compare the technical efficiency of Latin American airports relative to airports around the world. In a second stage, they estimate a truncated regression to study the drivers of observed differences in airport efficiency. According to the results, institutional variables (private/public operation), the socioeconomic environment (level of gross domestic product), and airport characteristics (hub airport, share of commercial revenues) matter in explaining airport productive efficiency. Finally, the authors compute total factor productivity changes for Latin American airports for 1995–2007. The region has implemented a wide variety of private sector participation schemes for the operation of airports since the mid-1990s. The results show that private operators have not had higher rates of total factor productivity change. Contact person is Tomás Serebrisky at [email protected]
World Bank Air Transport Annual Report - 39 - Fiscal Year 2010
Air Carrier Advisory System for World Bank Staff Air Travel
The Bank has been developing an evaluation tool for assessment of the risks associated with air travel by Bank staff since FY 2008. The air carrier advisory system developed by the Bank‟s General Service Department and TWITR was tested during FY10, and is ready for launch in FY11. The advisory service is based on the following criteria with three categories of airlines:
Category Description Recommendation 1 All airlines that are industry Good to fly. The Bank has no objection to using certified by having passed these airlines.
an IATA IOSA audit, unless subsequent safety experience indicates a safety problem. 2 All airlines that though they Good to fly. The Bank has no objection to using are not industry certified these airlines.
are either licensed by a country with an FAA IASA rating of Category 1, or are known to the Bank as safe carriers. 3 All airlines that are not in 3a. Airlines that do not qualify for category 1 or 2, (1) or (2) above, or are on but there is no information known about them that any blacklists, or are would increase the risk factor. deemed to be unsafe for 3b. Airlines that have 1 of the 4 risk criteria listed other reasons. below, or some other safety factor that has been raised by the Bank's air transport specialist. Check to see if there are any viable and safer transport alternatives before selecting this airline for mission travel. 3c. Airlines with significantly elevated risk and 2 or more of the 4 risk criteria listed below, or some other safety factor that has been raised by the Bank's air transport specialist. Use only for essential missions and only if no viable and safer transport alternatives are available. Risk Criteria: Serious accident in the last 3 years (defined as any incident that results in injury or death of a passenger or substantial damage to the aircraft) Registered in a country with poor oversight (based solely on ICAO safety audit) A flag of convenience airline (an airline that is registered and maintained in a country other than where it operates) Use of aircraft over 20 years old Overall there were 181,847 flights booked by American Express for Bank Staff in FY 2010. Most of the flights booked by Bank staff are with airlines that considered to be Good to fly. Less than one percent (1,677 flights) of the flights were on airlines considered Category 3, (There may have been many more, as the data did not capture trip arranged in the regions.) Travelers should be aware that surface transportation may be impossible or may represent more risk than air travel in some client countries. TWITR will continue to provide ongoing assessments and safety advice for air travel of Bank staff. Contact person is Diyun Wang at [email protected]
World Bank Air Transport Annual Report - 40 - Fiscal Year 2010
Outlook for Fiscal Year 2011 Financing of Air Transport related Projects The global recovery from the worst economic crisis in decades has begun. The strongest growth is expected to come from emerging markets, with large cohorts of young people striving for economic opportunities. This represents a challenge that must be met by expanding existing local and regional markets to reach a global platform where trade and commerce flourishes. Air transport services are the key mode of transportation to achieve this ambitious and necessary objective. However, air transportation in emerging markets needs to meet international standards in terms of safety, security, and remain reliable and affordable for its developing population. Maintaining operational efficiency, which includes access to finance of modern aircraft, is one of the prime guarantors of economic sustainability of air transport services. The public sector should not step in to finance private operators. Access to finance for infrastructure and aircraft has grown more challenging due to the global economic situation. Private sector investors in developed countries are increasingly risk- averse with respect to infrastructure projects in emerging markets. Financing of newer, more fuel-efficient aircraft in these countries is also more difficult. However, carriers of emerging countries need to modernize their fleet, given that raising energy cost, and environmental concerns are rendering their aging aircraft uncompetitive. The WBG will continue addressing these developmental issues by providing financing for sustainable air transport projects. Next to financing infrastructure, technical and policy improvements will be further implemented. New technologies, such as satellite-based surveillance systems (e.g. ADS-B) and navigation aids (e.g. GNSS approaches) promise to become standard infrastructure components in Bank projects. In terms of policy, the Bank will continue to foster liberalization and regional integration of air transport services, especially in countries that do not have a sufficiently large market to operate a national carrier. Finally, regulatory oversight to enforce compliance with international safety and security standards remains a key objective in many client countries. IFC will continue to fund the private sector of the air transport industry, as long as projects meet commercial criteria. Given that emerging markets are on the forefront of the current economic recovery, a few new IFC air transport projects are expected in FY11. Research and Publications The Bank, as a leading development institution, will continue to maintain high standards in its specialized technical sectors by maintaining research, conducting high-level technical exchanges, and fostering specific industry contacts. One of the most challenging realities is the growing concern over the effects of air transportation on the environment, especially on climate change, as well as increasing concerns about the long-term availability of fossil fuel based energy. The Bank will research air transportation, environmental challenges, and issues about energy during FY11 in a research project called Air Transport and Energy. In addition, several economic and policy research topics concerning air transport services and trade development will be carried-out and published in FY11.
World Bank Air Transport Annual Report - 41 - Fiscal Year 2010
This page intentionally left blank
About The World Bank Group
The World Bank is a vital source of financial and technical assistance to developing countries around the world. Our mission is to fight poverty with passion and professionalism for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and pri vate sectors. We are not a bank in the common sense; we are made up of two unique development institutions owned by 187 member countries: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Each institution plays a different but collaborative role in advancing the vision of inclusive and sustainable globalization. The IBRD aims to reduce poverty in middle-income and creditworthy poorer countries, while IDA focuses on the world's poorest countries. Their work is complemented by that of the International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA) and the International Centre for the Settlement of Investment Disputes (ICSID). Together, we provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture and environmental and natural resource management. The World Bank, established in 1944, is headquartered in Washington, D.C. We have more than 10,000 employees in more than 100 offices worldwide.
Transport, Water and Information & Communication Technologies Department The World Bank Group 1818 H Street, NW Washington, DC 20433 USA www.worldbank.org/transport