IFC loans will support the expansion and upgrade of 14 Greek airports, including the one on Skiathos island (pictured).
When it comes to dreamy tourist destinations, few places can top the islands of southern Greece. With white sand beaches and a rich history, they are a magnet for visitors from around the world. The islands are also the backbone of a tourism industry that generates thousands of jobs and 16 percent of the country’s GDP.
However, the airports on many of these islands dotting the Aegean Sea are often a turnoff for visitors. Decades-old terminals are dated and cramped. Because runways are short, only small planes can land—which limits the number of passengers the islands can serve. Areas surrounding terminals can handle only a limited number of planes, further restricting possibilities.
This will change soon, thanks in part to IFC. We are providing a total of €154 million in loans to Fraport Greece, a joint venture of Fraport AG Frankfurt Airport Services Worldwide and Copelouzos Group. The group was recently awarded a 40-year concession to modernize and operate 14 regional airports. IFC financing—in the form of two-long term loans—will support the effort. The lending is part of a nearly €1 billion long-term debt package put together by five financial institutions.
Fraport Greece will be managing, operating, upgrading, and maintaining the 14 airports, which are on the Greek mainland as well as on several islands. For the first four years of the concession, until 2021, the company will implement a massive investment program. The first IFC loan, worth $92 million, will be used to upgrade infrastructure and services at Thessaloniki, Kerkyra (Corfu), Chania (Crete), Kefalonia, Zakynthos, Aktion, and Kavala airports. The second €63 million loan will fund the modernization and expansion of Rhodes, Kos, Samos, Mytilene, Mykonos, Santorini, and Skiathos island airports.
Once completed, the work is expected to almost double the combined terminal area of the airports. It will also boost passenger capacity by 20 percent, allowing the airports to serve 27.5 million flyers within four years. Thanks to more check-in counters, security-check lanes, and departure gates, the capacity and service quality at the airports are expected to increase drastically, providing visitors a much more pleasant travel experience—helping boost Greece's tourism industry.
Well-managed airports around the world are engines of economic growth, boosting a host of industries, from tourism to logistics. This landmark concession sets the standard for private sector involvement, demonstrating how this approach can support the Greek economy by generating revenues for the government, creating jobs, and increasing confidence in vital sectors.
The private sector’s involvement is key to addressing Greece’s economic challenges, which are considered too big for the government to overcome alone. Working together, the public and the private sectors can help the country get back onto a path of economic recovery and create much-needed jobs. IFC and Fraport have a long-standing partnership that includes our joint work on the expansion of St. Petersburg’s Pulkovo airport in 2010. We also invested in Lima’s airport in 2007.
IFC’s involvement in tourism and infrastructure is designed to attract more investments and encourage new development projects. Over the past 10 years we committed over $1.6 billion for the construction, expansion, and modernization of airport infrastructure in more than 10 countries. In 2015 alone, this resulted in 15.4 million passengers being served, 2,605 jobs supported, and $341 million in concessions fees and taxes paid to governments.
To learn more about IFC’s work in infrastructure, visit www.ifc.org/infrastructure.
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Published in March 2017