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By Suren Naidoo

Moneyweb: Deputy Editor & Host of the Property Pod

Acsa’s R21.7bn investment plan approved for SA’s airports

Chikunga said the priority at Cape Town International will be the domestic arrivals terminal reconfiguration to meet growing capacity needs.

The delayed and much-needed multi-billion-rand expansion plans for Cape Town International and OR Tambo International airports are back on the radar of the Airports Company South Africa (Acsa) after being forced to be put on ice when the Covid pandemic hit in 2020.

Transport Minister Sindisiwe Chikunga confirmed on Tuesday that Acsa has been given the green light for an ambitious R21.7 billion capex plan over the next five years. She was speaking at a broader civil aviation industry briefing, which included announcing Acsa tariff increases for the period.

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South Africa’s two busiest aviation hubs, in Johannesburg and Cape Town, are expected to get the lion’s share of the planned investments.

Cape Town International’s domestic terminal is set to be overhauled and around R3 billion will be spent on its runway realignment project, while at OR Tambo International the major investment will go into a new R5 billion cargo terminal development. Both these infrastructure developments were on the cards before Covid hit.

“As per the five-year permission [around tariffs] recently granted by the Economic Regulating Committee, Acsa has earmarked R21.7 billion for airport infrastructure development,” said Chikunga.

She noted that the overall capex plans also include upgrades and developments at Gqeberha’s Chief Dawid Stuurman International Airport, George Airport, Durban’s King Shaka International Airport and East London’s King Phalo Airport.

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“The R21.7 billion investment primarily targets refurbishments, efficiency improvements, and statutory compliance measures, with the aim to enhance asset availability, airport safety, and passenger experiences across our airports,” she said.

Chikunga added that this will be the largest capital investment programme by Acsa since South Africa’s preparations ahead of the Fifa World Cup in 2010.

“This investment will see our already world-class airports increasing the airport facilities to continue leading as Africa’s best airports and increasing our position globally.

“Acsa is set to embark on the development of a new cargo terminal, known as the Mid-field Cargo Terminal, at OR Tambo International Airport on a prioritised basis given the demand and later the development of a mid-field passenger terminal.

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“Other significant projects at the airport will include extension of the bussing gates, which will entail adding six new bussing gates to the existing Terminal A bussing terminal, along with augmenting retail, seating, and holding lounge areas.”

She added that as part of Phase 2 of this project “a new mezzanine level will be constructed to enhance circulation and optimise seating and holding space”.

The upgrades are likely to be welcomed by passengers as well as the aviation and tourism sectors as OR Tambo International is in need of a much-needed makeover, with facilities that have deteriorated over the years.

In December, on one of its busiest days, there was a failure in the domestic baggage handling system caused by an oversized bag that resulted in baggage chaos and delayed flights.

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Chikunga said the priority at Cape Town International will be the domestic arrivals terminal reconfiguration to meet growing capacity needs.

“This encompasses enlarging the meet-and-greet area, expansion of the baggage claim area, an additional baggage carousel, expansion of the domestic departures lounge, retail spaces, and ablution facilities, as well as the addition of three new contact gates and fixed boarding bridges.

“Secondly, the initiation and development of the realigned runway development project is anticipated within the permission period,” she added.

Acsa's R21.7bn investment plan approved for SA's airports
An impression showing the plan for the realigned runway and masterplan for the terminal buildings at Cape Town International Airport. Image: Acsa

While Chikunga did not mention specific investment values for the different major airport infrastructure and upgrade projects, Acsa CEO Mpumi Mpofu confirmed in response to a Moneyweb question that the Cape Town International runway realignment project alone will be around R3 billion. She did not give a ballpark figure for the oval expansion and upgrades at the airport.

Acsa’s planned investments in the Mother City’s main airport come as private investors are punting the development of a new international airport – Cape Winelands Airport – near Durbanville, on the north-eastern outskirts of the metro.

During the briefing on Tuesday, neither Chikunga nor Mpofu made any reference to the new airport and possible competition for Cape Town International. However, it is clear that Acsa is now advancing its expansion plans ahead of the development of the new airport in the winelands.

Prior to the Covid-19 fallout, Acsa stated that the capex for the overall expansion plans for Cape Town International (including investment into its international terminal) would be well over R7 billion, while the new Mid-Field Cargo Terminal at OR Tambo International would come in at around R5 billion (according to a 2023 stakeholder presentation).

Acsa had to reevaluate and significantly cut back its capex plans during Covid, but presented updated plans to the Economic Regulating Committee at the Department of Transport last year.

With no mention of the international terminal expansion in Cape Town, Acsa may well be planning on spending less than the R7 billion-plus overall investment in Cape Town International that it cited back in 2019. However, with significant growth in international passenger traffic to the airport, it will be under pressure to expand the international terminal too.

Chikunga said King Shaka International will see the development of a hotel but, given that it is a relatively new airport, terminal expansion at SA’s third busiest air hub is only expected during the final year of the permission period (2026/27).

Before Covid hit, King Shaka International was SA’s fastest-growing international airport. In 2018, Acsa invested around R420 million in airside and other upgrades at the airport. Acsa said recently that the airport is yet to fully recover from the Covid fallout, with international airlines like British Airways (Durban-London route) yet to be reintroduced.

This article was republished from Moneyweb. Read the original here