In 2014, the Greek authorities awarded, in an international tender process, two almost identical concession agreements for the modernisation of 14 regional airports to Fraport Greece (73.4% owned by the Frankfurt based airport operator Fraport AG and 26.6% by Copelouzos Group).
The Greek State, who retained the ownership of the airports, proceeded to these concessions to strengthen the integration of the Greek economy and to develop the country’s tourism industry. They form part of the government’s privatisation plan to which it committed in the context of the stability support programme for Greece.
The concerned airports are Aktio, Chania (Crete), Kavala, Kefalonia, Kerkyra (Corfu), Kos, Mitilini, Mykonos, Rhodes, Samos, Santorini, Skiathos, Thessaloniki and Zakynthos. Together, they served a total of 25,3 million passengers in 2016.
In exchange for the 40-year operating concession, Fraport Greece will pay an upfront concession fee of 1.234 billion € to the state-owned Hellenic Republic Asset Development Fund (HRADF) as well as an annual fixed concession fee of 22,9 million € to the Greek State and a variable annual fee based on 28,5% of Fraport Greece’s yearly operational profit (EBITDA - earnings before interest, tax, depreciation and amortization).
The concession agreements were signed at the end of 2015 and notified to the European Commission in October 2016. The Commission considered they did not involve State aid as they were granted at market conditions that a private operator also would have accepted under the same circumstances (Market Economy Operator Principle). According to the Commission, Fraport Greece was chosen after a competitive, non-discriminatory and transparent tender and submitted the best offer as it would generate the highest revenues for the Greek State.
Also the procurement of certain public services by the Greek State, such as air traffic, police and customs controls at the airports, was cleared by the Commission as this did not confer any economic advantage to the airport operators.
After the approval of the Commission, the Greek State took the necessary final steps to complete the transfer and Fraport Greece started the 40-year concession on 11 April 2017.
Hanne Baeyens, Associate, hanne.baeyens@cms-db.com
