EIB financing of airport projects
- Jul 28, 2008
The European Investment Bank is a key player in financing the European transport sector, including Airports and Air Traffic Management projects.
The European Investment Bank is a key player in financing the European transport sector, including Airports and Air Traffic Management projects. Effective transportation systems are essential to Europe’s prosperity, having significant impact on economic growth, social development and the environment. Transport is an important industry in its own right and makes a major contribution to the functioning of the European economy as a whole. Mobility of goods and persons is an essential component of the competitiveness of European industry and services. Accordingly, the long-term perspective and the truly European dimension of major transport projects have made the Bank a natural financier of investments in the sector.
A number of EU policies provide the basis for the Bank’s transport lending: the development of the trans-European transport networks (TENs), cohesion policy, sustainable transport development as well as support to Research Development and Innovation (RDI). In all cases the Bank’s lending policy for this sector is multi-dimensional and integrates environmental concerns in all stages of the Bank’s due diligence.
EIB transport lending policy
EIB Airport and Air Traffic Management projects must be in conformity with the Bank’s new transport lending policy. The policy was renewed on 27 September 2007 and sets the guiding principles and selection criteria that reinforce the Bank’s contribution to this sector, in particular taking into account climate change concerns.
The EIB supports airport projects when they demonstrate high economic value and contribute to improved safety and reduced congestion as well as time savings for travellers. Appraisal of these projects therefore takes into account potential future adjustments to demand including those occurring when the emission burden is carried over to consumer prices (e.g. through inclusion of airlines in the EU Emission Trading System). Furthermore, the economic life of airport investments is measured in decades, encouraging a long-term view of technological developments.
Air Traffic Control (ATC) investments may also provide opportunities to improve traffic management with positive side-effects on greenhouse gas (GHG) emissions, an area which the Bank follows closely due to the important developments based on the EU SES (Single European Sky) legislation and the recently agreed European ATM (Air Traffic Management) master plan.
Indeed, the recent report of the High Level Group for the Future European Aviation Regulatory Framework has noted the need to improve performance and the environmental benefits this could bring. According to the Commission proposal for an amended SES II regulation issued in June 2008 improvements in air traffic management and airport operations could reduce emissions by some 7 to 12% for the average flight, or 16 m tonnes of CO2 per year.
In line with these criteria, the EIB supports projects that, among other things:
- are TENs
- are located in Convergence regions and contribute to regional development
- are supporting a local economy, highly dependent on air transport services
- demonstrate high economic value
- contribute to improved safety
- contribute to reduced congestion or result in time savings for travellers
- contribute to airport operating efficiency and innovation
Moreover, as all other EIB projects, those developed in the aviation sector also have to comply with the EIB’s financial, environmental, social and further relevant criteria in order to be considered eligible for financing.
The consequence of the EIB transport lending policy is that projects which may be only marginally worthwhile are discarded. Such situations might arise through poor demand projections, because there are alternative airports nearby, or because costs are excessively high. Likewise, projects that do not have a sound Environmental Impact Assessment at planning stage will also be rejected. Outside the EU, where planning and approval procedures may be less demanding, the Bank will apply to projects the same evaluation standards as projects within the Union.
The Bank has financed more than 220 airport related projects since the 70s. Since the adoption of the transport lending policy in September 2007, and on the basis of the above mentioned criteria, three projects have been approved to date by the Bank in this sector, aiming at:
- developing new pier and associated works at Dublin Airport
- expanding and upgrading Berlin Schönefeld airport, which is to become Berlin Brandenburg International Airport (BBI), in combination with a shutdown of two existing airports
- building a second runway in Malaga Airport.