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, the airport was congested and provided low-quality services, deterring tourists and harming 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. The charges were designed to allow the private operator to earn a reasonable return on capital while promoting efficiency and preventing monopoly pricing.

Impact

Sangster International Airport was privatized in 2003, with Vancouver Airport Services Consortium taking over the airport 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.