Sep 12 2018

Turkish govt pays conractor 20 million for airport 95 percent short of passenger targets

A Turkish construction firm is set to make a fortune in public money by operating an airport that has fallen 95 per cent short of its passenger targets, anti-corruption organisation Transparency International has revealed in figures shared on social media.

Turkish construction corporation IC İçtaş has already been paid over 20 million euros by the Turkish treasury in its first five years operating Victory Airport in the west Turkish province of Kütahya, thanks to a tender that guarantees the airport’s operator an income if it does not achieve its passenger quotas.

From its opening in 2012 until 2016, the last year presented in TI’s data, which is based on figures from a court of public accounts report, the tender guarantees IC İçtaş a payment of two euros for every domestic and 10 for every international passenger below the quotas, which totalled 2,395,916 and and 1,677,142 respectively.

However, just 124,867 domestic and 45,667 international passengers travelled through the airport, a total that fell 95.8 per cent below quotas and netted IC İçtaş 20.85 million euros of public money.

Moreover, the quotas are set to increase by 3 per cent each year for the first 10 of the tender, which runs until the year 2044.

At that rate, TI estimates the construction firm will earn back its 50 million euro investment in the project in public funds in just ten years, and will stand to earn over 205 million euros by the end of its tender.

This amounts to a very tasty return for operating an airport in a region that by the construction company’s own accounts does not carry enough passenger potential to warrant new routes from from most airlines.

The airport was designed to service the three western Turkish provinces of Kütahya, Uşak and Afyonkarahisar, which have a combined total population of 1,652,920 and total annual tourist numbers of 676,752, the majority of whom visit from elsewhere in Turkey.

Yet the guaranteed total passenger number for the year 2017 was 1,137,364 people. A staggering figure given that the airport is only connected by bus to the three provinces it services.

In Kütahya, IC İçtaş has benefited from a business model encouraged by the Justice and Development Party (AKP) that has come under severe criticism for what many say amounts to plundering the public vaults.

Contracting firms have been handed tenders that allow them to operate the public infrastructure projects they construct, earning guaranteed income in dollars or euros in many cases for decades before turning them over to the state.

IC İçtaş alone commands a portfolio of similar projects that includes the third bridge in Istanbul, which it will operate until 2023, a renewal of Antalya International Airport, where it has the right to operate terminals for over 15 years, and the marina in Çeşme, one of Turkey’s busiest tourist resorts, which it was handed the right to operate for over 23 years.

The AKP government has built a strong brand as a force for development in Turkey around the numerous and ambitious public projects pushed through under its reign, but projects like Kütahya airport have left the government open to criticism in recent months even from allies.

In August Devlet Bahçeli, who leads the far-right Nationalist Movement Party (MHP) that allied with the AKP in the Jun. 24 elections this year, questioned why the government continued to pay contractors in dollars and euros amid a currency crisis that has seen the Turkish lira fall around 40 percent to the dollar since the start of the year.