Airports company South Africa is taking the experience gained in its home base into the rest of Africa. And there is no shortage of interest, reports JANET SEBASTIAN
  With just four years of partial pri­vatisation under its belt, Airports Company South Africa (ACSA) has dynamically mod­ernised its 10 major airports and doubled operating profits.

In addition to this, it is taking its expertise further into the continent. This follows a strategic decision to offer its growing wealth of experience gained in developing South Africa's airports to aid other countries across the continent.

It has created a consultancy arm called Airports Management Solutions, headed by Piet de Jager, to drive the process.

"Our aim is to improve aviation networks, to provide safer and more secure airports. We also intend to assist other countries in learning from us how to commercialise and turn their airports into profitable entities," says De Jager.

ACSA, which has committed R2,7 billion ($235 million) over a five-year period for the upgrading of infrastructure and creating world-class facilities at its airports, is busy expanding its network.

ACSA was formed in 1993 to own and operate South Africa's nine principal airports which include the three international gateways of Johannesburg, Cape Town and Durban. Together the nine airports handle more than 196,000 aircraft landings and 10 million departing passengers annually.

Johannesburg International Airport, the biggest of its airports, handles 11.3 million passengers and 417,141 tonnes of cargo a year. However, there has been a decline in the number of international airlines flying into the airport in recent years since the peak in 1997). Despite this, revenue has grown by 100 percent between 1997 and 2001, and operating profit has grown by 143 percent although   aeronautical income has reduced from 74 percent of total turnover to 55 percent.

The partial privatisation of ACSA took place in 1998 when Italian company Aeroporti di Roma bought 20 percent of the company. It beat off stiff competition, including the British Airports Authority, to win the bid at a cost ofR819m ($1 = R11.5). At the time, this upped ACSA's value to R4bn. Today the company is valued at around R6bn.

The potential business in the rest of Africa is huge and ACSA has moved quickly to take advantage of this. It is already in negotiations with the airport authorities of a number of African airports, including Zambia, Ghana and Angola. ACSA also currently provides support and consultancy to the Federal     Airports Authority of Nigeria.

De Jager says: "In regard to Nigeria, the Bureau of Public Enterprises, which is actually driving the privatisation programme in Nigeria, will be visiting ACSA soon to see what we have achieved as they are about to enter into a public bid process. They are obviously learning from our document preparation process.

"The Minister of Transport from Sudan visited recently and we will also go there. Since Sudan discovered oil, there has been a huge influx of people and interest in the country. As a result, its airports need to be upgraded. That is where we can help.

He says ACSA has been asked to go to Angola again. It has also had invitations from the Democratic Republic of Congo, Algeria, Tanzania and Kenya to have a look at their operations.

ACSA says it is taking up all invitations from African countries that ask for its help and advice as a "good neighbour".

The company is also in contact with various financial aid institutions to further assist in raising funds or soft loans for airport upgrades.

"Privatising airports has become fashionable worldwide, mainly because governments believe these airports to be better managed, or they lack the finances to provide the required infrastructure and technological transfer timeously. This offers a number of opportunities to companies such as ACSA," says De Jager.

"Clearly ACSA cannot just go into Africa and try and take over or get involved in every airport so the services that we offer are threefold." 

"We are offering consultancy services, where we actually help countries."

We advise them on fixing the airport, their tariff structures, operations, and building a business model for them. We are aiming to get the airports to become selfsustainable.

Since the establishment of Airports Management Solutions in May 2001, it has been involved in several pubic tenders for concessions and the acquisition of shares in international airports.

"We believe that we understand Africa better then the Europeans for a few reasons. Firstly, we understand the culture and secondly, the size of the airports that you find in Africa."

"We've got small, medium-sized and fairly large airports. So, we can always find a benchmark. People from the UK or Germany may struggle to relate to a small airport and thus build a model that is not practical and could be very expensive."

ACSA has for many years been advising the Mozambican government on upgrading its main Maputo airport. Following   its recommendations, Mozambique has now embarked on a public bid process.

"As a company we have studied the Maputo project and made our proposal, which is affordable, practical and quick to implement. Now the next process will be to submit the formal bid and then from there there will eventually be a winner. That's the way it should always be done," says De Jager.

ACSA ACSA is one of four countries currently short-listed for a build, operate and transfer (BOT) opportunity in Mozambique for the Maputo International Airport.

It has also carried out work for the Namibia Airports Company. The first phase of the consultancy resulted in a fivefold improvement on the airport's profit forecast in 2001. Further discussions are currently under way to assist it with ground handling and fuel concessions.

ACSA attributes its success to the fact thai it pursued a different business strategy when it opted for part-privatisation in 1998. It discovered that the airports in Africa were ill advised by foreign consultants at extremely high fees with unpractical and untested proposals.

"What we have experienced is that there have been a lot of consultants floating around Africa. A lot of money was taken away from countries and not a lot of results remain."

"These consultants have take advantage of the fact that there was no formalised tendering process. But we believe strongly in a public bid process, which is more transparent and fair. At least at the end of the day, if you have won the tender you have won it fairly, and that is the line ACSA is urging our brothers on the continent to follow," says De Jager.

"In Angola at present, this is not the case. They have been talking to different countries. We would like to convince the government to change its mind and establish a bid process. We still want to assist them and try to convince them to undertake a formalised process."

Despite the wealth of prospective business in the rest of Africa, ACSA insists it has not neglected its responsibilities to its biggest client. South African Airways. It believes that by helping to upgrade infrastructure and system in Africa, SAA will benefit.

"In a number of African countries, we are seeing the desire to go the route of privatisation and they are busy overhauling their legislation to enable this to happen."

"In 99 percent of cases, the countries we have visited first have to change their legislation and that is a huge job, which can take sometimes 18 months. In the meantime we talk to the people, but things cannot move forward until that is done."

The core services ACSA is rolling out are in the areas of consultancy services, management contracts, acquisition and joint ventures. In the 1990s, ACSA started developing its own IT systems together with a local South African company called OSIAS (Open Systems Integrated Airport Systems).

In 1997, ACSA bought 51 percent of OSIAS, mainly due to the success of its "Airport in a Box system. This offers a comprehensive range of airport applications in modular applications, from finance, baggage reconciliation and the integration of air traffic navigation systems with aircraft movements. It is a powerful system ideally suited to international airports handling up to 18 million passengers a year.

De Jager says: "Most airport computer systems are very expensive and usually originate from America, the UK or Germany. So we developed our own system. We now market those systems and they are doing very well in Africa and in the US and Europe."

"It is being used in quite a few airports in Africa because the modules can be tailored to suit small and big airports. They buy what they can afford and what they believe is most important for their operations. It is very easy to understand and apply." ACSA has also entered into a service agreement with SITA, the worldwide service and maintenance provider for all the airlines' reservation systems. "We realised that if we want to sell IT systems we also need to sell support."

"Airports are firstly driven today by computer and IT systems and secondly by people. So we identified that you can get contractors in, you can upgrade the infrastructure but that is going to do nothing to the service levels and to the function. Today, when you get involved in airports you have to offer a total package," adds De Jager.

The company is committed to training and has developed many of its own courses as well as purchasing some courses from international training organisations. ACSA has also entered into an agreement with the AirTraffic and Navigation Company, which trains all air traffic controllers. Together, they have established a training academy for aviation.

ACSA also offers an airport management    training course. In the four years it has been running, it has already trained people from 18 African countries as well as from Far East countries. "It is very popular, especially as the fees are in rands. In the past the course was in Canada and African countries had to pay Canadian dollars, which is very expensive," says De Jager.

"We are proud of what we have achieved, and aim to achieve more. There are many plans in the pipeline."

"We are trying to take the recipe forward. That recipe is basically transforming airports from government-owned    entities    into commercialised and then privatised entities, thus removing the burden from the government and making airports self-sustaining."             

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