The power of the network

An aggregating network including several airports will allow for a stronger business strategy with airlines – interview with F2i’s CEO Renato Ravanelli. Do expect a further aggregation? I hope so.

by Manuel Follis

F2i’s latest transaction in the airport sector was the acquisition of a majority share (72.5%) of Sogeaal, the company managing the Alghero airport in Sardinia, thus becoming the fifth airport in the portfolio of 2i Aeroporti – the infrastructure fund’s company that also controls 54% of Sagat (Turin), 70% of Gesac (Naples) and holds a 44% minority share in Sea (Linate and Malpensa) and a 10% share in Bologna’s airport. F2i was the first pioneering player that grew its company portfolio in this sector by one transaction a year (starting with Naples’s airport in December 2010) thus creating a solid network «representing today the Italian hub with the largest number of passengers», highlighted Renato Ravanelli, F2i’s CEO.
«Looking at the airport sector today, I see strengths as well as weaknesses», the manager commented. «On the one hand, traffic data are positive and show a steady growth for all airports, a trend that can be now confirmed as structural. Historically, the increase in traffic has always been considered proportional to a country’s GDP; this however was not true in the past few years». Ravanelli added that «middle-size airports are structurally weak when facing the huge negotiating power recently acquired by few airlines». Rebalancing this imbalance is crucial in order to create airport networks, which was also the underlying strategy of the airport plan presented in 2014 by the then Minister Maurizio Lupi: aggregating airports will grant more negotiating power towards airlines.
«This should not be interpreted as a strategy of using a network’s negotiating power against the airlines », Ravanelli explained. «All players in the airline sector continue to be crucial allies, however a network is certainly more capable to attract a higher number of airlines and to differentiate its business offer more widely».
F2i’s experience in managing airports corroborates this approach: in the cases where the fund could manage autonomously the airports (e.g. Naples and Turin), outcomes were very positive and F2i could achieve a wider diversification of carriers. F2i’s management of Milan and Bologna’s airports was instead mainly financial and, despite certainly proving good results – also thanks to the overall traffic growth – it is likely (and some may say «evident») that the fund’s choices in terms of business or infrastructural transactions may have differed from the strategy of the current administrators.
More generally, apart from Ravanelli’s group, some believe that sooner or later the system will need to face the issue of controlling local entities within the companies that manage the airports, companies that – by nature – need investments that public shareholders will be more and more unlikely to grant in the future and which require more and more specific know-how, which only the airport sector players will be able to provide. This is the underlying reason why some airports – for instance Florence and Pisa’s airports – decided to come under the control of the airport giant operator Corporacion America. It is anyway clear that F2i aims to grow within the Italian airport sector. The recent Alghero acquisition – an airport that cannot compare by size to the other airports in 2i Aeroporti’s portfolio – is a further proof that expansion plans are on-going.
In September MF-Milano Finanza announced a due diligence process aimed at a potential merger of Naples and Bari’s airports (first though they will need to make sure what the contributions granted by the Apulia Region are). Someone also believes that the Alghero transaction may be the first step towards the creation of a Sardinian network including Olbia and/or Cagliari’s airports, on which Ravanelli preferred not to comment in detail. «It is obvious that the airport segment is key for us, as well as the network expansion is», the CEO commented. He then added: «our strategy aims to foster consolidating transactions. F2i is obviously committed to grow its own companies and this translates into alliances». Do you therefore expect the airport sector to further aggregate within the next three years? «I hope so. This is our job». (Right of reproduction reserved).

Milano Finanza – February 18th, 2017

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