Aeroports de Paris Enters Georgian Market
22 March, 2012

 

French-based ‘Aeroports de Paris Group’ undertakes  management of Georgian international airports of Tbilisi and Batumi as a result of acquisition of 38% of Turkish ‘TAV Airports’ that operates Tbilisi and Batumi airports through its affiliated Company ‘TAV Georgia’. From the newly established partnership Georgia expects better management skills and more flights in its airports as well as lower flight costs.

On March 12, 2012 the sides announced the fact of signing the contract for the acquisition of 38% of ‘TAV Airports’  and 49% of ‘TAV Investment Holding’  by Aeroports de Paris Group for USD 874 million and USD 49 million respectively. According to the deal, the French Company will not change management at TAV and two companies will provide services for 180 million passengers at 37 airports in total.

The transaction valued TAV Airports Holding equity at USD 2.3 billion and TAV Investment Holding’s equity at USD 100 million.

The newly established partners hope to get a niche of one of the world's largest collaborations in the airport operation sector.

Aeroports de Paris (ADP) with its up to 67 years of business experience in airport operation manages  25 airports including Paris-Charles de Gaulle-the second largest air-port in Europe, Paris-Orly and Paris-Le Bourget. In 2011, ADP handled more than 88 million passengers and almost 2.5 million tons of freight and mail. In 2011, the group revenue stood at EUR 2.502 million.

TAV Airports operates 12 airports in five countries including Istanbul Ataturk, Ankara Esenboga, Izmir Adnan Menderes and Antalya Gazipasa Airports in Turkey as well as Tbilisi and Batumi Airports in Georgia and airports in Latvia, Macedonia, Saudi Arabia and Tunisia.

Both ADP and TAV Airports top officials accentuate they have sealed a great strategic partnership to be the best.

Pierre Graff, Chairman and CEO of Aeroports de Paris, called TAV to be a major strategic investment for ADP and pointed out that Turkey is one of the fastest growing countries in OECD with a favorable business environment.

“Not only the geographic proximity but also the cultural and business model proximity of both companies will ease future development plans, in particular in new airports investment opportunities. Fully in line with our international strategy, this transaction will have a strong positive impact on the Group’s performance,” he said.

“We believe TAV Holding will achieve greater success in cooperation with the leading global air-port company of Aeroports de Paris. Thanks to partnership of these two companies 180 million passengers in 37 airports globe over including Tbilisi and Batumi will enjoy the best service. We believe partnership between ADP and TAV Airports Holding will attract investments to Georgia,” K. Mete Erkal, General Manager of TAV Georgia, said.

According to TAV Georgia, it has already invested more than USD 100 million in both Tbilisi and Batumi airports. TAV Urban founder of TAV Georgia took Tbilisi international airport by 15-year management right in 2005, constructed a completely new airport building and infrastructure that opened in 2007 quite scandalously: the wind took the roof off the new airport shortly before it opened its doors; the rain leaked within the building and another roof-off incident came up again just within a month since the opening ceremony.

TAV Georgia management claimed the unusual wind force was the culprit but Georgian independent engineers questioned the company’s construction skills. The scandal did not undermine Georgian authorities’ trust toward TAV Georgia however and granted the company with a privileged right not to allow any other investor to develop an international airport within 300 kilometers of radius from Tbilisi and Batumi thus ensuring monopolist position of TAV Georgia in fact: due to this very reason government failed to divest Kopitnari airport located between Batumi and Tbilisi in about 100-150 kilometers [from each]  irrespective its symbolic divesture price of GEL1. TAV Georgia turned out the only bidder and government canceled the auction.

As a consequence TAV Georgia enjoys high tariff rates, air-companies claim and even his Excellency Mikheil Saakashvili, the President of Georgia, openly said in his speech past year that Turkish company fixes inflexible tariffs that jack ticket prices up and hamper to low-cost companies to enter Georgia.

Another problem scaring low-cost air-companies off Georgia is sluggish passenger traffic that barely exceeded million in Tbilisi International Airport past year and stands at 133 306 in Batumi airport, official statistics say.

Now Georgian side expects new air-companies to come to Georgia along with the ADP entrance that should increase passenger traffic and cut prices down.

According to United Airport of Georgia LLC (UAG), entrance of ADP, one of the biggest airport operators worldwide, that has experience not only in airport management but also in airport infrastructure planning, construction and development will improve TAV Airports’ management know-how that will reflect on skills of its affiliations including TAV Georgia.

“ADP has many-year relationships with many air-companies globe over and once it acquired a significant share at TAV Airports it will give an impetus to air-companies to start flights in all airports under Turkish company’s management including Tbilisi and Batumi ones,” UAG spokesperson commented to Georgian Journal.

Georgia has already established close partnership with ADP, UAG source accentuated, for ADP worked out a new runway project at Tbilisi airport on the base of grant disbursed by French government. Now significant investments are necessary to put the project into reality and UAG hopes to complete the project successfully through joint effort with Aeroports de Paris Group.