Tariff Row Holds Up Italian Airport Investments

June 25, 2012

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Benetton family holding Edizione and its partners are ready to spend EUR€12 billion (USD$15 billion) to upgrade Rome's airports, but any investments would be conditional on a rise in tariffs still to be approved by the government, Edizione's chairman said.

Big infrastructure investments are a crucial plank of Italy's efforts to revive its anaemic economic growth.

At talks in Rome on Friday, Prime Minister Mario Monti agreed with the leaders of France, Germany and Spain on a EUR€130 billion package to kickstart growth in austerity-hit euro zone countries, including the launch of project bonds to co-finance major public investment programmes.

Gilberto Benetton told Corriere della Sera in an interview the financial holding that indirectly runs Rome's two airports had put investments on hold because of uncertainty over tariffs.

"We are ready to invest EUR€12 billion in ADR (the unit running Rome airports), but unfortunately we can't do it, we are stuck."

ADR has said it expects passenger numbers at Fiumicino, Rome's biggest airport, to nearly triple to 100 million by 2044, but Benetton said the development plan was being held back because of a long-running dispute with the government over tariffs for airport services.

The planned expansion would bring Fiumicino into line with other international airports such as Madrid, London and Singapore, and aid Italy's competitiveness, according to ADR.

The plan calls for two new runways and a near doubling of the airport's area to 2,700 hectares, with a view to handling 55 million passengers by 2020 and 90-100 million in 2044.

ADR is a unit of holding company Gemina which in turn is controlled by Edizione through another Benetton family holding, Sintonia, in which the Singapore sovereign wealth fund and Goldman Sachs also have minority stakes.

"ADR was privatised in 2000... since then the company has worked in a regulatory vacuum and without an adjustment in tariffs for more than 10 years," Benetton said.

"Already today, Rome's (Fiumicino) airport for 50-60 days a year cannot host additional flights, it is full... It's not easy to explain this to our partners in Singapore and Goldman Sachs and all those investors who just want clear rules."

In May, Benetton had said he was confident about tariff negotiations with the government.