PROJECTS

Regulatory Framework for Sangster Airport Privatization, Jamaica

The problem

Montego Bay’s Sangster International Airport is Jamaica’s main tourist airport, serving tourist areas of the North coast. Under public ownership, congestion and low-quality services at the airport deterred tourists and harmed Jamaica’s tourism industry. The Government of Jamaica decided to let a concession contract for the island to bring in private capital and airport-management expertise but lacked experience in regulating privately-financed airports.

How we helped

Castalia designed the charging arrangements for the concession contract. We advised on the landing fees and passenger charges and determined how these charges could be adjusted periodically. We structured the charges to allow the private operator to earn a reasonable return on capital while promoting efficiency and preventing monopoly pricing.

Impact

In 2003, Vancouver Airport Services Consortium privatized Sangster International Airport and took over its operations under a 30-year concession agreement. Nearly US$200 million in private investment was mobilized in expansions and improvements. The airport’s capacity doubled to seven million passengers per year, boosting the tourism industry, and 43 new retail spaces were created.