Kjeld Binger interview: Terminal impact
By Claire Valdini
Endless queues, fraught passengers and general chaos. Anyone who has ever travelled into Jordan’s Queen Alia International Airport (QAIA) will know that it can be a more stressful experience than most. And no-one knows that more than Kjeld Binger, chief executive of Airport International Group (AIG).
“Our existing terminal has a capacity of three to 3.5 million passengers but we’re operating more than 6 million passengers a year now so you can imagine how old and cramped the old terminal is and how exposed we are for all sorts of issues [such as] queuing, bad quality, timing etc,” he tells Arabian Business.
Lucky for regional travellers, long delays at QAIA are likely to become far less frequent when AIG officially opens its new terminal in February. Phase one of the extension, part of a $850m upgrade for a consortium of investors, will boost passenger capacity to 7 million annually, eliminating the queues and marking a new era in Jordan’s tourism plans.
AIG, an Amman-based consortium comprising six companies including Abu Dhabi-based Invest AD, Kuwaiti investment firm Noor Financial Investments Company and Greek construction company J&O-Avax SA, was awarded the 25-year build-operate-transfer agreement in 2007. Under the terms of the agreement, the Jordanian government will retain ownership of the airport and receives 54.4 percent of gross revenues for the first six years and 54.6 percent for the remainder of the agreement.
While phase one — which includes seven free-boarding bridges and seven remote-boarding gates — is slated for completion early next year, phase two will add a further seven fixed-boarding bridges to the terminal, boosting total capacity to nine million annually. AIG expects the additional capacity to be met through both Jordan’s traditional tourism markets, such as Europe and new geographical territories in China and Eastern Europe. The firm, he adds, is already in talks with Europe’s second-largest low-cost carrier, easyJet, which launched its three-times-a-week Gatwick-Amman service last year.
“For the time being, Europe is a bit depressed [but] I truly believe that there are great opportunities for us to develop new routes from Europe to Amman especially in the low-cost segment. EasyJet is now serving Amman from Gatwick and we have a constant relationship and developing relationship with easyJet and we are discussing certain possibilities from other destinations in the network,” he says.
“I do believe that we have a region towards the east, which is quite interesting also. The former Soviet countries in my opinion [are] fast-growing areas with fast-growing demand for travel, we have China — I see China as a potential in the near future and of course the rest of Asia is a potential,” he adds.
In addition to easing the flow of transport for passengers through Jordan, the new airport is expected to act as a catalyst to other foreign investors as the country moves to boost its revenues from tourism. The country boasts a wealth of historical tourist attractions such as the Dead Sea, Wadi Rum and Petra and is hoping to boost visitor numbers significantly. The latest data show that it is succeeding in that aim; in the first eight months of this year, Jordan’s tourism revenues rose by 19 percent against the same period last year, with the figure for August jumping by 39 percent year-on-year.
The country’s industry and trade minister, Shabib Ammari, said last month he expects FDI to drop next year before rebounding. “The last figure that I have in mind today with respect to FDI during 2011 was a bit below $2bn,” he told Reuters. “I would expect 2013 to be maybe $1.5bn, anywhere between $1bn to $1.5bn, 2014 may double this figure,” he added.
Foreign investors’ financial commitment to the airport will likely encourage other foreign investment, says Binger. “I am absolutely convinced that the sheer image will have a positive impact on tourism,” he says.
“You don’t create a tourism sector based on airport terminals, it takes more than that. If you don’t have hotel rooms and all of the other facilities then you will be in trouble. I think what this is really all about is because the Jordanian government decided to enter into this partnership and enter into an agreement whereby we as investors invest almost $1bn in this terminal is sort of encouraging the industry in the country, the hoteliers and the tourism industry to actually follow up and invest into the industry.
“It is really a matter of creating a positive effect, a positive spiral and infrastructure is always a very important component so there will be a positive effect,” he adds.
Regional political tensions in neighbouring Syria and Egypt has helped boost the number of tourists to Jordan from the Middle East during the last year but economic woes in the Eurozone have led to a decline in European passengers. In June, Jordan reported a three percent growth year-on-year in first quarter GDP while passenger traffic through the airport has increased 22 percent year-to-date.
The rise in passengers has been driven from two sources; passengers in transit travelling into countries hit by the political unrest and Jordan’s rising status as a safe haven holiday destination, says Binger. “Jordan for many years has had certain benefits of the unrest in the region, it is seen as a safe haven and it is well-known that the security apparatus in this country is efficient and very strong,” he explains.
“Amman is the gateway to so many destinations. For example in Libya many European carriers simply stopped flying to Tripoli [during the 2011 demonstrations] and have not taken up new flights again so a lot of people are entering into Libya via Amman and it’s the same with Egypt and Iraq,” he adds.