Customers to shoulder rising cost of airport expansion, IATA chief warns

Singapore’s plans for its hub airport include a new development due to open next year featuring a 40-meter high indoor waterfall, and a fifth terminal slated for 2030. Above, the newly-opened Terminal 4 of Changi Airport. (AFP)
Updated 05 February 2018

Customers to shoulder rising cost of airport expansion, IATA chief warns

SINGAPORE: The “skyrocketing” costs of expanding airport infrastructure must be controlled to keep flight tickets affordable, the boss of airline industry group IATA warned Monday.
Alexandre de Juniac called for more modest developments to keep construction costs down and avoid landing customers with higher prices, which would hit demand.
De Juniac cited the proposed £14 billion cost of a third runway at London’s Heathrow Airport and the construction of a fifth terminal at Changi Airport in Singapore as prime examples of vastly expensive projects.
“The cost of infrastructure is skyrocketing,” he told reporters ahead of the Singapore Airshow this week.
“When we look at the numbers of Heathrow for the third runway, we are very, very, very worried. Even the numbers for T5 in Singapore are very high,” he added, without disclosing a figure for Changi Airport’s expansion.
The city-state’s plans for its hub airport include a new development due to open next year featuring a 40-meter high indoor waterfall, and a fifth terminal slated for 2030.
“We would like for instance to avoid big projects in which we see overruns because the architecture is fantastic, wonderful but it’s very costly... we have to be more modest,” De Juniac said without naming any airport.
Airport construction costs are rising to levels, which are too much for airlines to bear, he added.
“Someone will have to pay for that... They will have to put that on the tickets, and then if it’s too high it could harm the level of demand,” he said.
IATA is working with authorities at Heathrow and Changi to manage costs and called on governments to involve airlines from the beginning of projects.
Heathrow has proposed trimming expansion costs by £2.5 billion with measures such as building a sloping runway and staging construction.
De Juniac said 7.8 billion people are forecast to fly worldwide by 2036 — with nearly half of passengers flying to, from, or within Asia Pacific — up from an expected four billion in 2018.
Passenger growth will far outpace development of infrastructure like airports and air traffic control systems, he said.
“I believe that... we are headed for a crisis. Infrastructure in general is not being built fast enough to meet growing demand,” he said.
“All the great plane deals that will be done at this air show will mean nothing if we don’t have the capacity to manage the traffic in the air and the airports at each end of the journey.”


Saudi Aramco shares soar at maximum 10% on market debut

Updated 11 December 2019

Saudi Aramco shares soar at maximum 10% on market debut

  • Company is now world’s largest publicly traded company, bigger than Apple

RIYADH: Saudi Aramco shares opened at 35.2 riyals ($9.39) on Wednesday at the Kingdom’s stock exchange, 10 percent above their IPO price of 32 riyals, in their first day of trading following a record $26.5 billion initial public offering.
Aramco has earlier priced its IPO at 32 riyals ($8.53) per share, the high end of the target range, surpassing the $25 billion raised by Chinese retail giant Alibaba in its 2014 Wall Street debut.
Aramco’s earlier indicative debut price was seen at 35.2 riyals, 10 per cent above IPO price, raising the company’s valuation to $1.88 trillion, Refintiv data showed.
At that price, Aramco is world’s most valuable listed company. That’s more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.
“Today Aramco will become the largest listed company in the world and (Tadawul) among the top ten global financial markets,” Sarah Al-Suhaimi, chairwoman of the Saudi Arabian stock exchange, said during a ceremony marking the oil giant’s first day of trading.
“Aramco today is the largest integrated oil and gas company in the world. Before Saudi Arabia was the only shareholder of the company, now there are 5 million shareholders including citizens, residents and investors,” said Yasir Al-Rumayyan, the managing director and chief executive of the Saudi Public Investment Fund.
“Aramco’s IPO will enhance the company’s governance and strengthen its standards.”
Amin Nasser, the president and CEO of Saudi Aramco, meanwhile thanked the new shareholders for their confidence and trust of the oil company.
The sale of 1.5 percent of the firm, or three billion shares, is the bedrock of Crown Prince Mohammed bin Salman’s ambitious strategy to overhaul the oil-reliant economy.
Riyadh’s Tadawul stock exchange earlier said it will hold an opening auction for Aramco shares for an hour from 9:30 a.m. followed by continuous trading, with price changes limited to plus or minus 10 percent.

The company said Friday it could exercise a “greenshoe” option, selling additional shares to bring the total raised up to $29.4 billion.
The market launch puts the oil behemoth’s value at $1.7 trillion, far ahead of other firms in the trillion-dollar club, including Apple and Microsoft.
Two-thirds of the shares were offered to institutional investors. Saudi government bodies accounted for 13.2 percent of the institutional tranche, investing around $2.3 billion, according to lead IPO manager Samba Capital.
The IPO is a crucial part of Prince Mohammed’s plan to wean the economy away from oil by pumping funds into megaprojects and non-energy industries such as tourism and entertainment.
Watch the video marking Aramco’s opening trading: