CEO, Luke Bugeja, tells Joe Bates more about Ferrovial Airports’ business strategy and expansion plans that include developing a network of vertiports in the US and UK.
What is the appeal of airports to Ferrovial and do the company’s global ambitions burn as brightly today as when it first entered the market in 1998?
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Our desire to be a key player in the aviation industry remains as strong as it has ever been, although we operate a slightly different business model today and are not primarily focused on operating airports or acquiring equity investments interested in new ones. We are, for example, also increasingly looking at opportunities beyond the airport perimeter fence.
Perhaps the best way to sum things up today is to say that Ferrovial Airports integrates all airport management activities in addition to being a world-leading private investor in airports and airport operators.
We’ve been part of the aviation ecosystem for more than 20 years, during which time we have invested, developed and operated 33 airports around the world. Our deep understanding of the industry and record of building strong and productive relationships with partners and stakeholders continues to drive our ambitions to expand.
Has the global pandemic forced you to re-evaluate the company’s business strategy and ambitions for the next few years?
Not really. There is no denying that the airport industry has faced, and continues to face, one of the most significant challenges in its history. COVID-19 has changed the way we currently travel and is likely to shape the airport, travel and tourism markets for the forseeable future. These are unprecendented times, and the circumstances we face are exceptional and will be long lasting, but I remain confident in the recovery powers of aviation. This makes me confident that future opportunities will come along and will far outweigh the challenges that lie ahead.
In any case, we have to be flexible and ready to adapt to all future scenarios. So, we need to become even more agile and efficient. As I said before, I am optimistic about the future and potential new business opportunties. Aviation will continue to grow and will remain fundamental for economic development. To keep growing, of course, we have to overcome the difficult challenge of being more sustainable. And that has to be a co-ordinated effort by all stakeholders.
What airport assets does Ferrovial Airports own, operate or have equity stakes in today?
Ferrovial Airports concentrates its assets in the United Kingdom where we are the largest shareholder in Heathrow, Glasgow, Aberdeen and Southampton airports.
At Heathrow, we own 25% of Heathrow Airport Holdings (HAH). In this consortium, we also work with Qatar Holding LLC, Caisse de dépôt et placement du Québec, GIC Private Limited, Alinda Capital Partners, China Investment Corporation and Universities Superannuation Scheme (USS).
We are also part of AGS Airports Limited, which operates Aberdeen, Glasgow and Southampton airports. As Ferrovial Airports, we own a 50% stake in the company, along with Macquarie European Infrastructure Fund 4.
Although it is not an airport operator as such, we also have a 49% stake in Facilities Management & Maintenance Company, FMM, which is one of the leading multi-service providers in the State of Qatar and active at Doha’s Hamad International Airport. FMM is a joint venture with Qatar Airways, which holds the remaining 51% stake in the company.
Do you have any plans to expand or reduce your airport portfolio in the next 18 months?
We are constantly analysing the global market and searching for investment opportunities where we feel we can add value in terms of what we can bring to the table and achieve with an asset. Our extensive knowledge of the aviation industry and expertise in areas such as construction, finance, operations, boosting revenues and improving efficiency are the main areas where we can add value. The US is a key focus area for Ferrovial Airports as it is currently the world’s largest economy and aviation market.
Are PPP/P3 projects for new terminals and other facilities more appealing to Ferrovial today than actually owning an airport?
It depends on the PPP project and the airport! With our expertise we can contribute in both full airport concessions and those with a narrower perimeter, such as the design, construction, development and operation of a terminal. How these opportunities are shaped and whether we choose to pursue them depends more on the specific market dynamics rather than a change of philosophy from our part over the years.
At the moment, we have a strong focus on the North American market and the opportunities that are unfolding there are for the development, investment, construction and operation of terminals. This is something we are very qualified to deliver. However, in other parts of the world, we are also actively pursuing opportunities for leases/concessions that would involve investing in and operating full airports.
As a leading infrastructure construction and management company we participate in different public-private alliances, particularly in the airport sector. In the case of airports, we believe that infrastructure owned by a local administration is strengthened under management by a private actor, which through their experience, can innovate and offer practical solutions to increase air traffic and commercial activity.
Thanks to our experience and financial capacity, our participation in P3 projects allows the administration to maintain control and ownership of the infrastructure while increasing the profitability of the assets, improving the passenger experience, and developing and optimising specific infrastructure.
Can you tell us more about your plans to develop the US side of the business?
The US is a strategic and priority country for Ferrovial for a whole host of reasons and our determination to grow our footprint in the States ensures that we have established all of our business divisions in the country.
Most of our P3 projects are executed in the USA. In fact, in the past 17 years, Ferrovial has built and managed 14 P3 projects in North America, where we designed, financed, built, operate and maintain infrastructure. The number of projects ensure that Ferrovial is among the top P3 developers in the US, and that Ferrovial Construction is among the top P3 builders in the country.
It is worth noting that we are certainly not done in terms of P3 projects in the US and maintain a keen interest in the any future opportunities that might arise in the aviation sector.
Arguably, the most revolutionary deal Ferrovial has signed in recent years is our partnership with Lilium to develop a network of more than 10 vertiports in South Florida.
What are vertiports and why is Ferrovial so interested in their development?
Vertiports will be the bases for the electric, vertical take-off and landing (eVTOL) aircraft currently under development by companies such as Lilium and Vertical Aerospace. The media, I believe, has called them flying taxis. Vertiports will basically provide infrastructure for landing, recharging, and taking-off.
We believe that these intermodal centres, which are set to be integrated into the city and adapted to the surrounding environment, will reduce noise impact, allow zero operating emissions and improve energy efficiency through innovative design.
We have already announced that we will develop a network of more than ten vertiports across state of Florida, in the US, and a network of twenty-five vertiports across the United Kingdom. We are also looking for more markets in the United States and around the globe which will likely benefit from a more sustainable and efficient mode of urban transportation.
When will your vertiports open for business and who do you envisage will use them?
With the support of the various stakeholders, we are progressing at pace to bring the Florida project to life by 2025.
In terms of who will use them, according to the studies that we’ve undertaken, people will use eVTOLs for short journeys that typically take around one to three hours to complete today based on the current modes of transport. In addition to saving travel time, they will take traffic off the road, subsequently reducing CO2 emissions. So, in effect, we believe that eVTOL aircraft will provide a quicker, easier and greener alternative to ground transportation for distances of up to 250 kilometres.
In Florida, nearly 20 million Floridians will live within 30 minutes of our vertiports. They will also provide a new high-speed travel option for the 140 million people that visit the Sunshine State every year.
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