PROJECTS

Regulatory Framework for Sangster Airport Privatization, Jamaica

The problem

Montego Bay’s Sangster International Airport serves as Jamaica’s main gateway for tourists, catering to the popular tourist destinations along the North Coast. Under public ownership, the airport faced significant congestion and provided subpar services, discouraging tourists and harming Jamaica’s tourism industry. Recognizing the need for improvement, the Government of Jamaica introduced a concession contract to attract private capital and expert airport management. This move aimed to modernize and streamline airport operations. However, the government encountered challenges due to its lack of experience and a proper regulatory framework to oversee privately financed airports effectively. This gap in expertise posed a significant obstacle to the successful implementation of the concession.

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

In 2003, the Vancouver Airport Services Consortium took control of Sangster International Airport through a 30-year concession agreement, privatizing the airport. This marked a significant milestone in the airport’s modernization. Under the new management, nearly US$200 million in private investment was mobilized, funding extensive expansions and airport infrastructure improvements. The airport significantly increased its capacity, accommodating up to seven million passengers annually—more than double its previous capacity. Additionally, the airport introduced 43 new retail spaces, boosting the local economy, creating job opportunities, and making Sangster International a more attractive and competitive hub for international travel.