Europe's airport operators are leading the bids for three of Australia's airports scheduled for privatisation by June next year. The competition among bidders has turned the privatisation into an apparent gold mine, with projections suggesting proceeds could reach A$2.5 billion (US$2 billion), over 60 per cent higher than forecast.
The government shortlisted 12 consortia bidding to buy Melbourne, Perth and Brisbane airports - Sydney won't be sold until a later stage. Europe is represented by several bids including BAA, Manchester Airport, Vienna Airport, Amsterdam/Schiphol, Aer Rianta and National Express, the UK coach company which controls East Midlands Airport. The Port of Brisbane, which has bid for the city's airport, has lodged an appeal after failing to make the shortlist.
The qualifying bidders started due diligence work in November and are expected to submit binding offers by January. Overseas companies are limited to a 49 per cent equity stake, and while some of the offers cover more than one airport the government has indicated its preference for a diversity of ownership.
There is concern that bid prices are being artificially inflated by the equity-heavy structures of the bidding consortia. Peter Harbison, managing director of the Centre for Asia Pacific Aviation, which is advising the Schiphol/Commonwealth Bank of Australia consortium, warns that the returns required to justify these high bidding levels may not be realised.
He says the price is being pushed up partly by the heavy involvement of financial institutions looking for long-term stable investments.
Tom Ballantyne
Source: Airline Business