AIRTRANSPORTANNUALREPORT2012 - Archive

In certain cases, a blend of firstphase BOT
followedbypublicoeringcanmaximizeben
efits
2) IFC PublicPrivate Partnerships (PPP) Advi
soryMandatesinAirlines
As the airline industry has proceeded along
thisprivazaonpathoverthelast20years,
IFC has parcipated in nearly a dozen airline
transacons. Unfortunately, many have
proved to be dicult projects due to im
portantsectorspecificstructuralreasons:
Fixedcoststructure:Airlinestendtobuild
up a legacycosts base (sta and fleet)
that is dicult for a new owner to man
age. In addion, fuel costs are beyond
management’s control. During therecent
oil price spike, they accounted for as
muchas30%ofthecostbase.
Pricesensiveproduct:Demandfortravel
ishighlyelasc,especiallyintouristmar
kets.Inrecessions,peopleforgovacaons
for other consumer goods. Conversely,
pricereduconsincreasepassengernum
bersdramacally.
Complicated demand chain: Customers
oen purchase ckets through travel
agents,frequentlyinapackagewithhotel
accommodaons. Since airlines rely on
theseotheractorsfortheirsales,ifthere
are bolenecks elsewhere the aviaon
sectorsuers.
Overregulaon: Bilateral agreements be
tween governments, sll prevalent in
manypartsoftheworld,preventcompe
on from funconing normally. Open
skies are being adopted, but not in all
countries.
3.)IFCAirTransportaonExperience
When undertaking a transacon advisory
mandate,IFCprovidesaonestopsoluonto
governmentscoveringallaspectsofthepro
posed transacon. One of the disnguishing
featuresofIFC’svalueaddionisitsabilityto
balance private and public sector interests
and take into account sustainable long term
economicandsocialeects.
IFCADVISORYSERVICES
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