SUNBIZ

ANALYSIS: How Market Rental Rates Transformed Our Nadi International Airport

Airports Fiji Limited has set a new benchmark for other state-owned enterprises. Dividends paid to Government continue to increase. Same time the Nadi International Airport is being developed into a
15 Aug 2015 08:39
ANALYSIS: How Market Rental Rates Transformed Our Nadi International Airport
Airports Fiji Limited executive chairman, Faiz Khan (left), and Minister for Finance and Public Enterprises, Aiyaz Sayed-Khaiyum, on Thursday.

Airports Fiji Limited has set a new benchmark for other state-owned enterprises.

Dividends paid to Government continue to increase.

Same time the Nadi International Airport is being developed into a true international class experience for those using it.

Key fact: The transformation seen now in Airports Fiji would not have been possible had rental rates at the Nadi International Airport not been reviewed and changed.

As the Minister for Finance and Public Enterprises, Aiyaz Sayed-Khaiyum, puts it, “Rentals down Namaka were a lot more than at the Nadi Airport, which was pathetic.”

It is alleged that one tenant company was able to build its empire for decades thanks to the low rentals and high profits.

And while they continued to grow, the condition of our international airport, which is the first impression for tourists, continued to deteriorate.

No major upgrade works had led to Fiji lagging behind in comparison to other smaller airports.

There was no modernisation undertaken simply because there were no funds as the rentals were low.

Therefore, it became imperative to conduct a major restructure of its revenue.

A review of tenancy rentals was conducted which confirmed the rental prices for spaces were extremely low.

Mr Sayed-Khaiyum has also rightfully pointed out that airports generally around the world are the most expensive real estate.

So now a balance has been reached in terms of what needs to be paid for tenancy at the Airport.

The fact we still have old tenants at the airport paying the new rental pricing is indicative of the profit margins that were being made as well as the money Government was losing out on.

 

What it means now?

As a result, Airports Fiji’s performance has improved tremendously.

The testament to this was handing over  of $15 million to Government as dividends; $7.5 million for 2014 and $7.5 million as interim dividends for first half of this year.

Within just a year of the revenue restructure, the results are showing.

But this is not all. The revenue restructure carried out will be further realised in terms of increased revenues and profitability in the next couple of years, and beyond.

Airports Fiji executive chairman, Faiz Khan, confirmed that by 2017, they are forecasting Earnings Before Interest Taxation Depreciation and Amortisation (EBITDA) in the sum of $85 million.

And to think that in 2011 and earlier, AFL was declaring $1 million in dividends per year. In 2012 and 2013, it declared $5 million for each year.

This is a big turnaround especially for a state-owned enterprise.

This is particularly even more noteworthy as Airports Fiji is in the middle of major capital upgrades at Nadi International Airport in the sum of $105 million.

The additional revenue has helped in improving infrastructure to world-class standards.

As Mr Khan said: “We have spent considerable sums in equity contribution for this project. However, we have not let the upgrades be an excuse for not declaring dividends.

“Each task of carrying out upgrades to modernize our airports, declaring dividends to our shareholder etc are valuable to us in their own rights.

The project is being undertaken without taking any money from the Government and Airports Fiji is conducting the capital works through its own efforts.

The first stage of Nadi Airport’s Terminal Modernisation Project will be launched to the public and tourists in around late September or early October this year.

Mr Khan said this will be in the first floor of departures.

 

Leadership

Airports Fiji has surely demonstrated how bringing about efficiencies and through the right leadership and management, successes will surely follow.

And through Mr Khan’s leadership, this has been achieved and now Government is getting its share of returns which will ultimately benefit all Fijians.

Feedback: rachnal@fijisun.com.fj

 



Five Square


Get updates from the Fiji Sun, handpicked and delivered to your inbox.


By entering your email address you're giving us permission to send you news and offers. You can opt-out at any time.


Covid 19 - SPC
Total
Total
Fiji Sun Instagram
Subscribe-to-Newspaper