Presentation Overview

1. DELIVERING GROWTH BY PARTNERSHIPDeveloping Sustainable PPP Opportunities for Jamaica - AirportsMr. Earl Richards, President Airports Authority of Jamaica February 2014

2. Presentation Overview • International Civil Aviation Structure • Jamaica’s Airport Governance Structure • Airport Ownership Models • Jamaica’s Airports PPP – • Sangster International Airport – PPP • Norman Manley International Airport – Shadow PPP • Airports Revenue Streams • NMIA Opportunities

3. International Civil Aviation Structure

4. CABINET Ministry of Transport, Works and Housing (MTWH) AIRPORTS AUTHORITY OF JAMAICA (AAJ) Jamaica Civil Aviation Authority (JCAA) Airports Governance

5. AIRPORTS AUTHORITY OF JAMAICA (AAJ) NMIA AIRPORTS LIMITED (NMIAL) MBJ AIRPORTS LIMITED (MBJ) Norman Manley International Airport (NMIA) Sangster International Airport (SIA) • Aerodromes • Ken Jones • Negril • Tinson Pen Ian Fleming International Airport (Boscobel) AAJ organizational chart

6. Jamaica Civil Aviation Authority (JCAA) - Established under JCAA Act and responsible for both technical regulation of aviation sector and economic regulation of airports. • Both JCAA and AAJ operate under Ministry of Transport, Works and Housing but under separate Legislation and with separate Boards. • Airports (Economic Regulations) Act of 2002 mandated the JCAA to provide for the economic regulation of air transport. • The Act establishes the legal framework, criteria and methodology for the economic regulation of Scheduled Airports (currently SIA and NMIA)

7. Airports Authority of Jamaica (AAJ) • Established under Airports Authority Act of 1974 • Independent statutory body to own, manage, and operate both Norman Manley International Airport (NMIA) in Kingston and Sangster International Airport (SIA) in Montego Bay • AAJ given additional responsibility for four domestic airports in 1990 • Tinson Pen (Kingston) • Ken Jones (Portland) • Boscobel (St. Mary) • Negril (Westmorland)

8. Airport Ownership Models • Government Ownership • Owned and Operated • Owned and Management outsourced to private sector • Private Ownership • Sale of government assets to private operator (Note UK) • PPP – Master Concession & Lease • Long Term Agreement; ownership resides with the government Jamaica has opted for the PPP model

9. Airport Privatization “ Since 1987, when Margaret Thatcher’s government privatized (via a 100% public share offering) the former British Airports Authority (now BAA), airport privatization has become a global phenomenon. Governments in Europe, Asia, Australia and New Zealand, Latin America and the Caribbean have privatized major airports. Some of these privatized entities have subsequently acquired full or partial ownership interests in other airports (in their own country and elsewhere), as have some government-owned airports. Today’s global airport industry is often characterized by airport groups, rather than just individual airports.” Extract from Annual Privatization Report (April 2012)

10. Jamaican Airports Public Private Partnerships (PPP)

11. Sangster/SIA (Montego Bay) and Norman Manley/NMIA (Kingston) Airports SIA NMIA

12. Jamaica Airports PPP: Government Action • Government declared its policy on airports PPP (1990s) • Established Legal Framework • Airports Authority (Amendment) Act of 1996 permitted administration, control, and management of designated airports to be undertaken by companies or entities other than the AAJ (enables airports PPP) • Airports Economic Regulations Act (2002) • Approved and published PPP Policy (November 2012)

13. Sangster International Airport (SIA)

14. Sangster International Airport Layout

15. SIA is Jamaica’s principal tourism gateway • SIA made priority airport for first PPP as it had the better prospects for a successful outcome • PPP model: Master Concession and Lease • Concession Agreement became effective in April 2003 • Then had twice the passenger throughput of Kingston’s airport

16. SIA PPP Implementation • Government established Enterprise Team to manage process • International bidding process followed two stages: Stage 1: • Prepare Information Memorandum • Invite expressions of interest • Prequalify and short-list prospective bidders Stage 2: • RFP issued to short-listed prospective bidders • Following the bid evaluation and approval, the preferred bidder and a stand-by bidder were selected and notified. • Following extensive negotiations, a 30-year concession and lease agreement was signed with MBJ Airports Limited

17. Airport Improvement Fee • Airport improvement fee (AIF) approved by Government under Airports Economic Regulation Act • AIF for use exclusively by the concessionaire for approved capital projects – construction and debt service • Fee is levied on departing passengers and was the result of negotiations between the Government and MBJ as part of the Concession deal

18. Economic Regulation of SIA airport charges follows Price Cap Incentive Model (CPI-X) • The regulated airport charges were set prior to the commencement of the MBJ concession and were ‘grand-fathered’ as the year-one rate • Regulated airport charges are adjusted annually using a USA Consumer Price Index formula. Note that all regulated charges are denominated in USD. • Preparations for full rate review in progress; a new rate regime will become effective on January 01, 2015

19. April 2013 marked 10 years of the 30-year Concession Agreement between AAJ and MBJ.. SIA PPP deemed to be a successful model.

20. Norman Manley International Airport NMIA Terminal

21. Shadow PPP at Norman Manley Airport • AAJ incorporated NMIA Airports Limited as wholly owned subsidiary to manage and operate NMIA as authorized airport operator • AAJ and NMIAL signed Concession and Agreement and Lease, modelled on the MBJ format • Airport Improvement Fee (AIF) made available to NMIAL to fund capex and debt service. • Commercial, “private sector” business model adopted

22. NMIA terminal needed significant improvements • Much of the terminal infrastructure had served its economic life and could not be sustained by routine maintenance • Passenger growth led to overcrowding with unsatisfactory service levels • New equipment / technology needed to be implemented for efficiency and cost effective operations management • CUTE/CUPPS, CUSS, and Access Control • X-Ray screening equipment, CCTV, FIDS, and BIDS • Undertook Master Plan study

23. Norman Manley International Airport PPP

24. NMIA currently in PPP Preparation phase • Enterprise Team appointed and at work • Development Bank of Jamaica, PPP Secretariat managing process • International Finance Corporation appointed as Lead Advisor • Initial Due Diligence completed • Transaction Structure Report completed • Report and recommendations to be submitted presently to Government for Cabinet decision

25. Aeronautical & Non-aeronautical Revenue Opportunities

26. NMIA Revenue Structure/Streams

27. Aeronautical Revenue Streams • Landing Fees • Passenger processing Fees • Aviation Security Fees • Common Use passenger Processing System Fees • Aircraft Parking Fees • Runway Lighting Fees (not presently in place)

28. Non-aeronautical Revenue Streams • Space Rental Revenues • Concession Revenues • Duty Free (Liquor, Perfumes & Tobacco) • Food & Beverage • Retail • Specialty Items • Aviation Fuel sales • Car park Good potential for private sector initiatives

29. Non-aeronautical Revenue Streams - Trends • The following services are offered at different airports globally: • Airport Hotel • Auto Detailing • Museum • Saunna & Spa • Baggage Storage • Kid zones • Dog Hotel • Venue for events (Concerts, music shows, etc.)

30. Potential Future Revenue Sources for NMIA • Port Royal Development • Home Port for Cruise Shipping • Airport Hotel • Palisadoes Commercial Centre • Increased passenger traffic from new markets after runway extension

31. Thank You!