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COMMITTEE AGAINST EXPANSION OF AMPUGNANO AIRPORT – SIENA

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The facts and figures of the Galaxy project

 

Air traffic, pollution and overbuilding: environmental impact equivalent to that of a vast industrial area

 

 

Since the middle of September, when the proposal to enlarge the small airport of Ampugnano was made public, the local press has made every attempt to distract public attention from the real significance of the project, either by totally ignoring the issue (La Nazione) or by reporting only one side of the debate (Il Corriere di Siena). The project, presented by the international investment fund Galaxy, seems supported by a sizeable segment of the productive sector and political forces, both government and opposition, of the Siena area. In this information booklet, the Committee against expansion of the airport of Ampugnano - Siena has condensed research into the problems of airports by experts and ordinary citizens, conducted since July, when disquieting articles began to appear in the Italian daily newspapers.

 

What is Galaxy?

Galaxy is a European investment fund whose core investors are the Italian Cassa Depositi e Prestiti, the French Caisse des depots et consignations, the German Kreditanstalt fuer Wiederaufbau (KfW), all three of which are public banks, the first two public savings  banks.  The Italian Cassa Depositi e Prestiti, which has a 40% stake in Galaxy, is an S.p.A. (a public limited liability company) in which the Ministry of Economy and Finance has a majority interest of 70%. Since Galaxy operates using public money, the onus of this operation is inevitably on the general public.

 

What is the project based on?

The industrial development plan, available on Internet, appears to be improvised and based on a dubious and superficial feasibility study. The estimated user catchment area includes central Tuscany, with a population of 482,000, and some small areas further south. The province of Siena has a population of only 256,000 and the plan does not take into account the important military airport of Grosseto, which recently received the go-ahead for an increase in its civil aviation activities from the European Union.

 

What does the project involve?

The project is presented as a first step towards successive stages of expansion. Let us examine the period 2008 - 2020, starting with the construction plan. The present structure of the airport will be completely altered, with construction on an estimated total surface area of 16 hectares, equal to about 23 soccer fields (see table). This area does not include other work (not quantified in the project) such as car parks for passengers and employees, structures for car and limousine rental, bus stops and taxi ranks (an extra 8-10 hectares).

The airport’s impact on the environment also depends on air traffic: in five years’ time - as early as 2012 – there will be more than 70 flights a day in summertime (departures and arrivals, see graph) and 350,000 passengers per year. In 2020, with a trend of steady growth, the annual number of passengers will reach 500,000 with more than 90 flights a day in summer.  If these figures astound citizens who believed the story of 10 - 20 flights a day, it is even more astonishing to read that the figures released by Galaxy were played down “to avoid panic among the local residents" (Il Sole 24 Ore, 18^th October 2007).  A sustainable project indeed! Well thought out and "in symbiosis with nature", to paraphrase proponents of this project!  Galaxy also assures us that the environmental impact will be controlled by "Italian laws and regulations ", exactly as is happening at the airports of Ciampino (Rome) and Malpensa (Milan)!

 

23 football fields of concrete for the airport alone

	Square metres
Runway extension	3,250
New taxiway	34,400
Aircraft parking facilities	63,000
New control tower	300
Cargo building	2,000
Ground handling services	5,400
Building for direction of loading and unloading	700
Fuel depot	4,000
Refreshment area	700
Police and customs	300
Fire prevention service	800
New electrical junction box	200
New water supply building	200
New waste water building	1,000
Waste disposal and garbage centre	250
New access to airport	40,500
total	157,000

 

 

 

Is this what we want?

Is this what the province of Siena really needs? In Switzerland, passengers can check in at the railway station, travel to the airport by train and go straight to their gate with no loss of time: the time it takes to get there by train replaces the long wait at the airport. Would it be so difficult to provide a service like this in Siena for travel to Pisa, which has an airport worthy of the name?  The airport of Florence is only 70 km from Siena, but what an odyssey to get there! Siena needs safe, fast roads, an efficient railway network and services linked to existing airports.  All the rest – threats of lost jobs and economic recession – is just idle and dangerous speculation unworthy of our area. The province of Siena, one of the richest in Italy, can only grow by pursuing development through optimisation of resources and with complete respect for the environment and land. The mindless plan of an international “niche” airport, in competition with nearby airports, just does not make sense.

 

Financial analysis

The plan presented by Galaxy lacks form and substance. It is more like a leaflet on business economics than an objective financial plan:  there is no data on which to base any real evaluation of its financial feasibility.  For example, the flow diagram on page 37 (see figure) is a vague, theoretical schematisation with unrealistic traffic forecasts, no indication of the macro-economic scenario, a hazy investment programme and no sign of any conversion factor to translate passenger figures into costs and income.  Indeed, it is impossible to tell when or whether the project will break even, an essential condition for evaluating the economic viability and feasibility of the plan. Nor is there any mention of steps taken by Galaxy to protect its investors from economic and financial risks (of which there are many).  Is public takeover or risk cover envisaged in the event of investment failure or poor performance?  It is not clear what Galaxy’s part in the operation is, or how Galaxy will acquire a controlling interest in Aeroporto di Siena S.p.a.  This will presumably be by an issue of fresh capital with Galaxy acquiring the full share, resulting in a proportionate decrease in the present shareholdings. But is it wise to place such an environmentally critical local infrastructure in the hands of international financial capital and at the mercy of its market ethics?  Besides, maintenance of control by Galaxy does not seem in line with typical public-private initiatives, which generally involve departure of the investor (Galaxy) at a specified date and resumption of control by the airport company. This is what happened, for instance, in the Airport of Exeter operation, in which Galaxy was involved.

 

 

There are other specific concerns:

• Direct and third party investments and recourse to borrowing will be concentrated in the two years 2008-09.  Regarding investment timing, the concomitance of the main structural investments (check-in, terminal and airport operation facilities, € 36.9 million) and the start of airport function in 2009 is over-optimistic. The source of the direct investment funds is unknown but is presumably liquidity that Galaxy aims to employ, although the return expected is unclear.  If, however, it is capital from the Cassa Depositi e Prestiti (CDP; which has a 40% stake in Galaxy and in which the Italian Ministry of the Economy and Finance has a 70% controlling interest), CDP would be using its own resources, largely net post office account deposits  (€ 19 billion according to CDP’s 2006 balance sheet). In any case, it would be interesting to know if post office savings account holders are aware of this investment.

Nothing is known about the third party investments (also concentrated in 2009, to the tune of €10.1 million) and recourse to borrowing. The finance may be provided by MPS in the form of loans, but with what guarantee?  Is it expected to rely on derivatives?  In this case the financial operation will be even more precarious.

• One condition of success made explicit in Galaxy’s plan concerns so-called "marketing incentives" and "a policy of substantial discounts", in other words, forms of subsidy using public money to launch the airport. Leaving aside any evaluation of the merits of using public funds for rendering competitive a structure of a private nature that is not a prime necessity for the local community (and would in any case be a type of niche airport), further explicit public intervention on behalf of Siena airport would seem unlikely since the European Commission has finally approved government aid to Grosseto airport to promote regional development. [1]   The idea of developing Tuscany by multiplying the number of airports seems exceedingly weak.

 

In essence, those who drew up the Galaxy plan do not seem to be aware of the report by A.T. Kearney on national development of transport, from which the following and other facts emerge:

• the profitability of Italian airports is much below that of their European counterparts;

• the incapacity of Italian airport services to meet the growing demand is not due to an absence of runways (Italy, the country of "a hundred runways but no airports") but to the lowest level of investment per passenger in Europe;

• unsatisfactory definition of roles between the Italian Ministry of Transport, Ministry of Infrastructures and Civil Aviation Authority;

• the absence of a national regulation policy: the Italian general transport plan of 2001 has never been implemented.

 

The declared but not well reasoned aim of economic/financial equilibrium would seem to be extremely shaky in an industry as strongly selective and competitive as that of air transport, not to mention the aim of reducing fixed costs by achieving a critical mass of air traffic, which will never be compatible with the declared objective of creating a structure of low environmental impact.