Introduction

On June 10 2016 the Ministry of Infrastructure, Transport and Networks approved and made available to interested bidders the final version of the draft concession agreement for the design, construction, operation, maintenance and exploitation of the new international airport in Kasteli, Crete. The final draft of the concession agreement was produced following consultation with interested bidders and potential financial investors. As determined by the relevant ministerial decision, interested bidders must submit their binding offers by September 30 2016 based on the final tender documents.

Project highlights

The project refers to the development of the New Heraklion International Airport in Crete under a public-private partnership structure. Once complete, the new airport will replace the existing Heraklion International Airport, which will cease all commercial aviation operations. The importance of the project is highlighted by the fact that the existing Heraklion airport, currently operated by the Hellenic Civil Aviation Authority, is one of the busiest airports in Greece, second only to Athens International Airport. Situated approximately 30 kilometres (km) from the existing severely congested airport at the outskirts of Heraklion, the new airport will:

  • provide upgraded airport services to users;
  • expand the air traffic capacity of Crete; and
  • reduce the constraints to the development of Crete tourism caused by the operational limitations of the existing Heraklion airport.

The new airport's infrastructure will:

  • be developed according to minimum technical and operational requirements set by the tender documents;
  • reflect existing traffic needs and future prospects; and
  • take into account the latest International Civil Aviation Organisation standards and recent technological and environmental innovations (eg, bio-climatic buildings).

Once selected, the successful bidder will incorporate a special purpose vehicle (the concessionaire) which will design, construct, operate, maintain and exploit the new international airport and construct the 20km off-trail access roads to the airport. The Greek state will hold part of the share capital (no less than 45% and no more than 55%) of the airport company, to be defined by the investor's financial offer.

In return, the concessionaire will have the right to levy and collect all airport charges from airport users along with the proceeds from all commercial activities. In addition, during the design and construction phase, the state must make available to the concessionaire a construction capital grant of no more than €220 million and a share not exceeding 65% of the departing passenger tax (DPT) collected at the existing Heraklion airport. Both the amount of the capital grant and the share of DPT to be granted to the concessionaire are bidding elements and will be determined by the preferred bidder's offer. The concession period is 35 years, including the construction phase, which cannot exceed 60 months. Once the concession has expired, the operation and exploitation right to the airport will be returned to the state.

Tender process

The preferred bidder will be selected through an international public tender in accordance with EU public procurement rules, following an open procedure under which all interested bidders have the opportunity to submit their offers (technical and financial). The offers of all bidders found to have the required technical ability, financial fitness and operational experience will be evaluated based on specific technical and financial selection criteria.

Comment

The year 2016 appears to be a transitional year for the aviation sector in Greece. Following the execution of concession agreements (at the end of December 2015) between the Hellenic Republic Asset Development Fund and the consortium Fraport AG - Slentel Ltd for the upgrade, maintenance, management and operation of the 14 Greek regional airports and their ratification by the Hellenic Parliament in May 2016 (which was a critical milestone for the handover of the airports), as well as the expected transfer of a second batch of 23 state and municipal airports still under public control to the Hellenic Corporation of Assets and Participations SA, the upcoming bidding phase for the Kasteli airport highlights that the Greek aviation sector is undergoing a significant transformation, one which will result in a major shift in the operation of Greek airports from the public sector to the private sector.

For further information on this topic please contact Panagiotis Petroulias at Zemberis, Markezinis, Lambrou & Associates by telephone (+30 210 363 6016) or email (ppetroulias@zmlaw.gr). The Zemberis, Markezinis, Lambrou & Associates website can be accessed at www.zmlaw.gr.

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