DO WE REALLY MEAN BUSINESS? A Direct Investors Perspective on the - - PowerPoint PPT Presentation

DO WE REALLY MEAN BUSINESS?

A Direct Investor’s Perspective

• n the Public Private Partnership Experience On Curacao

Curacao Airport Partners (CAP)

Agenda

• Who we are; What we do; How we do it.
• Airport programs over past 5 years
• How we see our role as a

Direct Investor & Government Partner

• Past Challenges
• Future Challenges --- More Critical
• Moving Forward

Calculated Risks

Let’s start with a fundamental premise: If If Cur uracao do does no not “win”, CAP cannot “win” Essentially goes for all of us here…not just CAP To win, you have to be willing to take calculated risks, but risks never the less Swing the bat, you can get a hit, or even a home run… BUT, you can also strike out! A quick personal “calculated risk” story

A Bold & Vis isionary ry Str trategy

Decision to privatize: bold and visionary Would optimize airport productivity and economic potential Create a platform for success – Curacao & CAP IF the Partnership attitude, mindset and agreement is

• bserved by both

parties

Fundamentals of f th the CAP PPP

CAP is the Private Airport Operator Extension? Has CAP been a good partner? Has CAP demonstrated the right “attitude”, “mindset”… TBD 30 30 yea year r DO DOMA – 15 to go - CRI RITICAL POINT Government (CAH) owns the airport and provides oversight of the DOMA

Not Note: CAH is an objective, responsible and success-focused government partner

Curaçao Airport Partners (CAP) is a consortium of private international investors: CCR (Br (Brazil) l) controls 80% of shares (Infrastructure management company) A-Port (a.o. Zurich Airport) controls 10%

• f shares (Global airport operational

experts) Janssen De Jong controls 10% of shares (Infrastructure construction company)

Concession Ownership

Financial Managerial Operational standards are re hig igh Airport under CAP: Fro rom fin financial los losses to fin financia ial gain ins Curacao (CAH) receives 15 15%-30% annual income from total re reve venues*

*Generated by airport – based on passenger traffic

A successful partnership that could be a model for other government assets

Im Important Characteristics

$$$

CAP’s Vision for CUR

• Optimal com
• mpetitiv

iveness

• Encouraging de

development an and d gro growth

• Fai

air r an and d equ equal l tr treatment of all users

• Res

especting the the in inves estments of the shareholders and the Government

• Enforcing industry bes

best prac practic ices

Critical Success Factors

Operatio ional l Excell llence – Best Ops Platform Fin inancia ial l St Strength – Best Business Platform Contin inuous im improvement of the passenger experience Encouragin ing growth among existing users Promotin ing CUR and Curacao to new users

Our Business Environment 1

Very hi high gh priv private In Investment Airport is a fix fixed na nati tional l as asse set – cannot be relocated – CAP is is bo bound to Cur uracao CAP’s private investors assume al all l fina final l risk risks Airli irlines can an rel relocate as asse sets – Airports are ‘fixed’ in place

Our Business Environment 2

Ext xtensiv ive reg regula lation &

• vers

rsig ight from international and local Reg egula latory ry or Adv dvis isory ry entities Req equire rements for r sp spec ecific ic CAP in inves estments stipulated in the DOMA Sa Safety, Oper perational l an and d Nav avig igational l in infra fra- stru tructure required by international regulators are al all l pa paid id by y CAP

Our Business Environment 3

CAP controls very little In In consu sultation with ith ai airlin rline us users rs

(who believe that a $1.00 increase in PFC will destroy the competitive position of Curacao, but a $50 baggage , or $200 change fee” fee

• n the same passenger has no impact) …

(When was the last time that an airline consulted with you, the user, regarding their proposed fare increases? )

Non-Aeronautical fees are not regulated Aeronautical fees (PFC) pro proposed by CAP App ppro roved by a Government Regulator (BTP)

Our Business Environment 4

Two critical factors that drive success:

• Passenger Levels
• Rates & Charges

Over which CAP has very little or no control

• Airlines:

Passenger Capacity

• Government:

Rates & Charges A true Par artnersh ship between the Government and CAP is critical to ensure success… for CAP and and for Curacao

BUT…. . DOES CAP REALLY MEAN BUSINESS FOR CURACAO?

Let’s take a Quick Look At Some Numbers

Fin inancial l & In Investment Overview

August 2003 – De December 2018 Direct investment 2016 Payments to CAH Investments CAP in 2015 Investments CAP in 2016

USD 100M USD 70M USD 9M USD 9M

Other investments to 2018 Terminal Expansion Per DOMA Right attitude/ mindset? Actually Invested CAPEX Other

USD 36M USD 10M USD 25M USD 11M

Air irport Economic Im Impact

KP KPMG EIS IS Stu Study 2016

220

CA CAP FTE TEs De Dec. . 2016 2016

1,870

Employees by Airp irport Ba Based Companie ies

5,760

Total l Airp irport rt Rela elated Employment

9%

Of f tot

• tal

l Cu Cura racao Empl ployment In Income to Govern rnment

6.5%

Of f total l Govern rnment Inc Income

USD 58.3M

PROJECTS CAP HAS COMPLETED OVER THE PAST 5 YEARS?

Let’s take a Quick Look

CAP continuously improves the airport infrastructure

2015 improvements

One of the first airports in the region to have automated passport control! Passport control made easy use

• ur our new

gates.

2016 improvements: Immigration e-gates

2016 improvements: new arrivals hall

2016 improvements: new car rentals counters

2016 improvements: new F&B options

2017 Projects: Parking System

Project is on track - planned to be completed in 4th Qrt of 2018.

Update Terminal Expansion

Do Doubli ling th the e dep epar arture e ar area: : 2.5 million passenger p.a. Adding a gate for the la largest t pla lanes es in the world Investment

• f NAF 65 milli

illion

A3 A380

Adding a foo

• od cour
• urt to

the departure area Faster proces esses: more capacity & automated Adding the coolest Mir irador in the region

Terminal Expansion

• The Key Facts

Update Terminal Expansion

Update Terminal Expansion

Air-Conditioned & Expanded Check-in Hall

• COMPLETED JULY 2014

Closed & air-conditioned Expanded & check- in machines added Investment of NAF 3.2 million

Improved Look & Feel Check-in Hall

Project defines new design standards

Improved Look & Feel Check-in Hall

• COMPLETED DECEMBER 2014

New floor and color scheme

A fresh & modern look for the toilets

• COMPLETED MARCH 2015

Existing capacity doubled Investment of NAF 3.5 million

Preparation of the baggage system for the future

• COMPLETED

Je Jet Centre Curacao for pri rivate je jets

• COMPLETED DECEMBER 2014

Separate terminal for private jets High convenience & privacy Investment of NAF 2.25 million

Separate high- end terminal for private jets Same services as normal terminal:

• immigration
• customs
• security check
• waiting hall
• shower
• duty free

Jet Centre Curacao for private jets

Jet Centre Curacao for private jets

Investment of NAF 10.5 million so far....

Refurbishment of Runway & Taxiway

• COMPLETED

Mirador for public use (Rooseveltweg)

• COMPLETED

Upgrade Departure Screening Point Previous setup: no air- conditioning for queuing passengers concrete floor

Recent Improvements

• BEFORE

Recent Improvements

• AFTER

new floor 3rd line (business pax) air-conditioned waiting area steel tables

Upgrade Departure Screening Point

Commercial Plaza

Commercial Plaza

Commercial Plaza / Boulevard

Commercial Plaza / Boulevard

Improved Look & Feel Departure Hall

Improved Look & Feel Departure Hall

Goals:

• provide a closed

arrivals hall

• refurbish the

rental car counters

New Arrivals Hall & Rental Car Counters

• BEFORE

New Arrivals Hall & Rental Car Counters

New Arrivals Hall & Rental Car Counters

Airport Expansion (NAF 45 Million) Curacao Airport 2018

1a) expanded check-in hall 1b) shopping plaza 2b) additional gate 2c) mirador on roof 1c) new arrivals hall 3) center expansion 2d) arrival corridor 2a) west expansion 1.preparation projects 2.west expansion 3.center expansion

The Terminal Expansion consists of 3 phases:

Curacao Airport 2025?

New Parking & Central Building

Curacao Airport 2025?

It’s up to us!

WHY DOES TH THE CAP PPP WORK?

Critical Ele lements in in a PPP

A Calc lcula lated Risk isk – on both sides A lon long-term contract A publi lic client A priv ivate company/consortium operator A critical nati tional l infrastructure ass sset Requires a balance of exp xpertis ise, cr creativ ivit ity, , money…& political realities

DOMA: Mor

• re Th

Than an An n Agr greement

• PPP is also a

rela relationship ip

• An at

atti titude –

• n both sides
• A state of
• f min

ind d

• Pred

redis isposed to op

• ptim

imization & su success

• So

Solu lutions oriented

• No eas

easy way ay ou

• ut… and can be expe

pensiv ive

Dif ifferent Objectives?

Publi lic Se Sector partner focused on:  National im image  National good  Polit litic ical l phil ilosophy and vision  Sa Safety & convenie ience of the Public  Credibility of its in internatio ional l rep eputatio ion As it should be…

Dif ifferent Objectives?

Priv ivate Se Sector partner focused on  Optimizing shareholder valu lue  Enhancing busin iness rep eputatio ion  International operational cr credib ibil ilit ity  New business opportunit itie ies As it should be…

Mutually Exclusive? Not at all ll

Partners obje jectiv ives optim imiz ized IF IF each does their job reasonably Agreement must be structured as a fr framework for mutual l su success Rea eali lity always ch chall llenges the framework Th Thin ings wil ill l ch change Attit itude and min indset are critical So Solu lutio ions… or diss issolu lutio ion

Public: Know What You Want

• Asset to be fun

functional and com

• mpetitiv

ive

• Fortify

fy the island’s ec economic ic in interest

• Suc

Success-dri riven at attit itude for both partners

• Investment risk

risks ag aggr gressiv ive, bu but t real realis istic ic, for private investors

• Facility operated to highest international

standards

Know What You Don’t Want

• A Taj Mahal - an asset that looks fantastic

but makes no economic sense

• A win

inner/ r/loser formula or attitude

• Unqualified or disengaged

public regulator or private operators

• International standards that are an

af aftert rthought

So So… Caveat Emptor

Very carefully vet th the priv ivate partners Quali lifi fied, capable le, and wil illi ling to perform No agreement signed until satisfied with

• perator and general rea

easonable leness of the ter erms and condit itio ions Partners confi fident in each other’s attitude, and success/solutions-oriented mindset Government puts a lot lot of f fait ith & tr trust in in CAP as its partner for critical national asset

For th the Private Operator

• Welc

lcome appropriate oversi sight

• Appropriately qu

question man anageri rial l in intru trusion

• Acknowledge pr

proble lems and differences

• Fin

Find and present so solu lutions to differences

• Seek to op
• ptim

imize the the val alue ue of the asset

• Agreement is a fr

framework rk for success

Don’t Complain Unnecessarily

 Agreement is interpreted “one-sided”  Government does not think “out of the box”  The “system” is wrong  Things don’t work…or “takes too long”  Too much politics…  This get’s you nowhere... Look for solutions

Don’t jump Back into “The Box”

 Private investors say we are “creative”, “innovative”, “cost effective”, “efficient”…  But oft ften run to th the government for solutions at the first sign of challenge…  Don’t go to the government with problems  Go with so solu lutio ions  Solutions that make sen sense for both sid sides

An Example: Tourism

• CAP depends primarily on Pas

assengers rs

• Extremely high “fixed operating costs”

that must be met

• Fewer passengers = less revenue
• Less revenue = value to the shareholders,

and the government, is reduced

• Not a good scenario

Mindset & Attitude 1

CAP can an sa say: y: Government’s job to promote travel and commerce to the island Sit back and in increa rease PFCs according to the DOMA. Curacao “perceived” as being less competitive Airlines reduce services… Long-term traffic declines… Every rybody los loses lon longer term rm CAP get’s its return… in the short-term

Mindset & Attitude 2

Helping ourselves Tou

• uris

ism Man anager employed by CAP Try to eng engage ot

• ther priv

private com

• mpanies & Go

Govern rnment in the effort… Look at a pro pro-activ ive ro route… initiate action! Initiate PP Tourism initiative Trea reasure re Hun unt to di differentiate Cura uracao & stimulate travel CAP ha has s $1 $150 50,000,000 invested… can’t simply wait for r the the Go Govern rnment to so solv lve pr proble lem

OUR CHALLENGES? COALITION OF THE…

UNWILLING?

• –

CAP Challenges Have Changed

Past challenges were fundamentally

• Political dissatisfaction
• Difficulties obtaining critical permits
• Mis-perceptions of intent and

attitudes

• Essentially… interpretive

challenges

• Public concerns or mistrust
• Employee concerns or mistrust
• The FAA Category 2 downgrade
• 5 years

• Today’s challenges are different, global, and

– – – –

CAP Challenges Have Changed

Today’s challenges are different, global, and economically much more serious

• Social and public media mis-

information

• Obsessive focus on what is wrong
• n Curacao
• Globally broadcasting all that is

wrong on Curacao

• Constant de-valuing the Curacao

image globally… Branding Curacao negatively

Are We “Willing” To Be Successful? Are We Willing To Be Successful?

te in the effort… … initiate action! invested… can’t simply

✓Presentation by (then) Steven Martin ina to VBC ✓“Coalition of the Willing”… ✓Provocative and visionary…got me thinking about

• ur rea

eal l ch chall llenges ✓Two (2) VERY critical words ✓Coali litio ion – that’s the easy part ✓Wil illi ling - This is the tricky part

“Willing”?

• This is another story; “Willing” takes:

Swinging for the fences… and maybe striking Easy to go to the ball game… hard to be a “player”

Willing?

This is another story; Willing takes:  Commitment  Discipline  Exposure to

• failure

 Money  A new way of doing things  Stepping out of the box  Swinging for the fences… and maybe striking out  Easy to go to the ball game… hard to

• be

e a pla layer

Willing is Fundamental To Success

• We cannot “talk” our way to success
• Willing to do those things that are

difficult, uncertain, unique…

• Willing to fail from time to time…

and learn and try again

• But better to fail trying to steal

second base, than to languishing on first base

Are We Really Willing?

✓CTB Director unfilled for over 4 years? ✓Inadequate or sub sub-optimized Tourism Budget ✓No new & creative hotel capacity

• East End of Curacao is a “blank sheet of paper”

with potential to create an entirely new tourism product and stimulate economic growth ✓No unique & stim timulating tourism pro roducts that could create fundamental demand for Curacao?

Are We Willing?

✓To Send better and more positive messages to the world about Curacao? ✓To DO what we are “willing” to “talk” about ✓To facilitate business and act as partners instead adversaries ✓To find solutions instead of obstacles ✓To focus on fu fundamentals… buy more air ir service… or create fundamental demand for Curacao? JetBlue… Load Factor (cheap seats) or Yield (demand)?

Are We “Willing” To Put Curacao First?

• To create new tourism options
• Aggressively and uniquely

promote them

• To accept potential setbacks,

regroup, and press forward again

• Quit kicking ourselves (Curacao) in

the backside every chance we get!

• Focus on presenting Curacao in the

most favorable manner… every chance we get

Are We Willing?

• Be good to ourselves
• Send the right message to the world
• Full Page Ad to attack the Airport

Parking System?

• How about a Full Page Ad to

highlight $10M CAP invested over its

• bligation… and the PFC remained

the same?

• Use our media forces to engage

in a positive global communications message that encourages travel and interest in Curacao

✓Things could be better on Curacao… ✓ ✓ ✓ ✓ and more effectively…

Keep Things In Perspective

✓Th

Thin ings could ld be e better on Curacao…

✓Like everywhere else! ✓But, we

e se seem to focu cus obsessiv ively ly on th the bad

✓Many good th

thin ings that are happening, and can happen, to Curacao but not bei eing told ld

✓Th

That good story has to be e told ld more fr frequently ly and more effectively…

WHERE DO WE GO FROM HERE?

SAME OLD STU TUFF?

My y Coconut Tree Is Is Big Bigger Th Than Your Coconut Tree

Mayb ybe, , But My y Coconut Water Is Is Sweeter Th Than Your Coconut Water

OR DO WE TR TRY SO SOMETHING DIF IFFERENT?

OUT OF TH THE BOX??

 A un uniq ique trav travel l stim timula latin ing in initia itiativ ive  A A un uniq ique Pub ublic lic-Priv ivate tourism sm in initia itiativ ive  Tar argets lon long-stayin ing (4 (4 ni nigh ghts) touri rists in in Tax ax-Paying ac accommodations  Dif Differe rentia iates Cura uracao  Ge Gets visi isitors rs to sp spend mor

• re
• n
• n Cura

uracao  Inc Incentivizes crui ruise vis isit itors to com

• me ba

back  Cou

• uld

ld neu neutra ralize com

• mpetitiv

ive cha hall llenges

 Priva rivate sec sector pro provid ides $1 $1,0 ,000,000 Tre reasure  Government/CTB undertakes all international promotional activities  Already favorably “endorsed” by Government, CHATA , CTB and many Private sector entities  1s 1st Trea reasure re win inner r sel selected 12 12/2 /2018 at opening of the new Airport Terminal Opening

PPP Tourism In Initiative

Pro romotion in in Moti tion – A media Magnet

Im Imag agin ine A News Cam am See Seeing thi this s on

• n I-95

95 !! !!

 Will ill ene energ rgize the the Cura uracao Bran rand touris ism  Will ill at attra ract na nati tional l an and d international media attention… an and d tourists  Enthusi siastic ic su supp pport rt

• f
• f the

the priv private sec sector.  Cou

• uld

ld hel help res resolv lve the the Hotel- Tax ax iss issue by y eng engagin ing the the con

• nsumer

Many benefits

CAP $1 $100 00,000 CAH $1 $100 00,000 CAP/CAH (T

(Trus rust Fund)

$1 $100 00,000 MCB $10 100,000 CATS $

25

25,0 ,000

We’re already half-way there… Jo Join us!!

Participants

Alre lready Willi illing an and d Com

• mmitted

 We’re all in this together … Go Govern rnment an and d Priva rivate Sec Sector  Tou

• uris

ism su success mean eans su success for r al all l of

• f us

us  Se Set a a ne new an and d excit iting cou

• urs

rse to rein reinvigorate ou

• ur touris

ism pr product and and Jum Jump-start rt ou

• ur

r ec economy  If If yo you wou

• uld lik

like e to hea hear r ab about Trea reasure re Hun unt Giv Give me e a a cal all: l: 839 839 1009 1009

…ti time is is critical! Wil illing? Join Us!

Conclusion Yes, CAP and PPPs mean business for Curacao Question is is….

Conclusion

Is Is Curacao open for Business?

THANK YOU!