TAV Airports is recovering strongly from losing its mainstay airport in 2019 with a strategy focused on Eastern Europe, Central Asia and Türkiye. Chief Executive Serkan Kaptan tells Mark Pilling how it is progressing
A series of unfortunate events best describes the luck of TAV Airports in the past few years. First, in 2019, it lost its ‘cash cow’ Atatürk International Airport, the former main hub of Türkiye’s metropolis Istanbul, which closed to scheduled traffic and was replaced by Istanbul Grand Airport.
As if preparing for life after Atatürk, which TAV had run for 19 years, was not tough enough, just months later Covid hit the world and traffic fell off a cliff. A few years previously the airport had also suffered terrorist attacks.
Although 2019 was a “golden year” for TAV as its portfolio of 14 airports achieved the landmark of 100 million passengers between them, planning to replace the Atatürk business was well underway, explained Serkan Kaptan, speaking to ARGS after a keynote presentation at Routes World in Istanbul in mid-October.
TAV Airports is a member of Groupe ADP, which owns and manages a range of airports and related businesses including its flagship Paris airports, plus GMR Airports in India and Jordan’s Airport International Group.
Antalya addition
“Just before the closure of Atatürk airport we were looking for a big asset to semi-replace Atatürk and it happened to be Antalya airport,” said Kaptan. “We got into Antalya by purchasing the shares of the Turkish partners in May 2018.”
This was a must-win deal for TAV, which runs Antalya in a 50:50 joint venture with Germany’s Fraport. “It was an important milestone,” said Kaptan. “Antalya gave TAV a boost and a moral [victory] to the group to demonstrate that our growth will continue.”
TAV followed up its move into Antalya by winning the concession in 2021 to run the airport for a further 25 years. During this period TAV Airports and Fraport will invest more than €750 million in its airside and terminal infrastructure immediately, and invest another €165 million by 2038 to further enlarge terminal capacity when the traffic reaches a certain threshold, said Kaptan. The new terminal is due to open in 2025, more than doubling the existing capacity.
With passenger numbers of 31.2 million in 2022, Antalya is easily TAV’s largest airport today. It serves Türkiye’s largest O&D market, larger than Istanbul’s hubs, he added.
Across its five Turkish airports, TAV serves over 260 destinations and has added 30 new routes this year alone, said Kaptan.
Antalya was the first of what Kaptan described as TAV Airports’ “three As” with the group also gaining control of Almaty International and extending its concession until 2050 at Türkiye’s Ankara Airport over the past two years as it sought further investment opportunities.
“At the beginning of 2021 we bought shares of Almaty airport in Kazakhstan, which is a new market because in Central Asia there are no private operators,” said Kaptan.
TAV discussed how the market would develop in partnership with flag carrier Air Astana. “You need a strong base carrier in the major airports,” said Kaptan, because they will not leave the market. “You don’t want to fully rely on low-cost carriers or charter carriers,” he noted, although they are an important part of an airport’s airline make-up.
The group began operating at Almaty in May 2021 and “immediately got into a massive investment programme because it was an old facility” with a notional capacity of 3 million passengers that was already handling over 6 million annually, said Kaptan.
Airport investment
“During the pandemic, despite the risk of falling traffic and the risk of not knowing when the pandemic would end, we saw that risk as an opportunity and we went for these three new projects,” said Kaptan.
In total, the airport developments will cost around €1.1 billion, which TAV has financed in a tough market, he noted. The money has been raised mainly from the International Finance Corporation and European Bank for Reconstruction & Development in addition to a dozen local and international banks.
From financing and project planning, TAV’s team has moved into the construction phase. New terminals and new airside facilities at Almaty will open in June 2024, with a similar opening by the end of next year at Antalya and at Ankara in mid-2025, said Kaptan.
The rapid traffic recovery in Türkiye has benefited the country and players like TAV Airports, who appear to have made the right call to continue investing. “Aviation is resilient, but the airports that we are operating are more resilient compared to the rest,” said Kaptan.
TAV’s airport portfolio spans 15 airports in eight countries, with five in Türkiye and the rest in Georgia, North Macedonia, Tunisia, Croatia, Latvia, Kazakhstan and Saudi Arabia. In combination all have fully recovered to 2019 levels in traffic terms with north of 90 million passengers in total.
The group is guiding investors with a revenue projection of up to €1.29 billion in 2023, which is also above 2019 levels, and an EBITDA target between €453 milion and €529 million by 2025/26 – which brings the group close to catching up to the EBITDA levels it enjoyed when Atatürk was part of the picture. “It is quite an achievement to replace [this airport] in just six to seven years with Covid in the middle,” said Kaptan.
Future opportunities
The major investments TAV is making today mean Kaptan is looking for new airport projects but is not under pressure to find them quickly. “In these times when money is very expensive it is good to digest [TAV’s current projects]. But we are a very agile company, and we are part of Groupe ADP, which likes TAV to be its growth arm.
“We have a lot of experience of operating airports in difficult geographies in growing markets,” said Kaptan. “Where we look [for growth] is Central Asia because we are very happy with our Kazakhstan investment. Being there is a good reference for us.”
There could be opportunities within that country, among Kazakhstan’s neighbours, in the Middle East, Eastern Europe, the Baltic states and Africa, he said. TAV Airports has a mandate from Groupe ADP to focus on these regions, leaving others to the parent company and GMR.
The TAV Airports group also features a series of service companies in food and beverage, duty free, IT, private security, ground handling, and lounge services.
