Fast Takeoff, Steady Flight for Jordan’s Airport


The airport expansion, inaugurated in 2013, has boosted Jordan’s tourism industry and supported the creation of thousands of jobs. © QAIA

Airports are a national runway for economic growth, jobs, and regional integration. In Jordan, this idea took flight when Queen Alia International Airport (QAIA) was rebuilt, transforming the economy.

QAIA, a vital aviation hub, opened in 1983 and soon accounted for 97 percent of the country’s air traffic. But needs quickly outpaced its capabilities. By 2000, Jordan’s population had nearly doubled to 4.8 million, and the country’s air traffic had reached an annual growth rate of 7 percent. QAIA’s poor infrastructure, diminished quality of services, and lack of capacity were actually constraining growth, especially in Jordan’s all-important tourism sector.

To improve and expand QAIA, in 2007 IFC committed $120 million in financing and helped mobilize $200 million in commercial lending to structure Jordan’s first airport public-private partnership (PPP). We also arranged swaps to eliminate interest rate risk for the whole package. Today, QAIA is not only the Middle East's first full airport concession, but also the first to use Sharia-compliant finance. It remains Jordan’s largest private sector investment to date.

The PPP helped rehabilitate the airport and improve its operations, most notably via a new 150,000-square meter terminal. Many of QAIA’s original reconstruction-related goals have already been surpassed: in 2016, the airport set a new record for annual passenger traffic, and it has been key to supporting the tourism industry, which contributes about 10 percent of Jordan’s GDP. Since the launch of the new terminal in March 2013, tourism has surged—and is expected to account for more than 25 percent of Jordan’s GDP by 2025.

Ultimately, the upgrade is expected to indirectly create 23,000 jobs in Jordan, generating more than $1 billion in foreign direct investment, and expanding Royal Jordanian Airlines. It also demonstrates the value of integrating PPPs into government policy—paving the way for future partnerships with equal promise.

 

Sky-high Goals

When Jordanian officials planned to revitalize QAIA, they were already looking beyond the benefits of a better travel gateway. This pioneering PPP was part of the government’s broader strategy to liberalize air transport policies, restructure the civil aviation sector, and position Jordan as a vital transport hub for the region. With QAIA as a regional hub, Jordan’s transport and tourism industries, regional links, and cross-border trade were all expected to grow.

These goals were proposed during a challenging time, and difficult situations around the world deepened even further as this project took shape. The global financial crisis, the European debt crisis, and the democratic uprisings known collectively as the Arab Spring were occurring as IFC facilitated the approvals needed to move QAIA forward. Even in this environment, we completed the transaction in just 21 months.

Working with the private sector, the government of Jordan awarded the concession to the Airport International Group. When the agreement was signed, it was the highest revenue-sharing arrangement ever achieved for an airport PPP anywhere in the world. As the airport operator pays an annual fee to Jordan to run the airport, Jordan receives more than 50 percent of the net revenue, which added up to over $1 billion over the last nine years.

 

Setting New Standards

Because QAIA was built with an eye to the future—especially concerning how the airport could expand capacity to handle long-term traffic and tourism growth—IFC’s experience with service-quality standards and international best practices was especially important.

Environmental standards have been another important area of focus as QAIA is reimagined for tomorrow. The airport has become Airport Carbon Accredited, streamlining its activities related to environmental protection.

The landmark project has achieved recognition in the industry since its earliest days. Jordan’s Queen Alia International Airport was named Deal of the Year by Euromoney Project Finance International in 2007, and received the Gold Award for top PPP in Europe, Central Asia, MENA from IFC/Infrastructure Journal in 2013 among several other awards.

To learn more about IFC’s work in PPPs, visit www.ifc.org/ppp

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Also available in: عربي

Published in February 2017

 

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