1

AIR TRANSPORT ANNUAL REPORT 2012

THE WORLD BANK GROUP

IBRD , IDA, IFC AND MIGA

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Cover page: The World Bank finances a variety of projects and studies across its five regions focusing on ins tu onalstrengthening, capacity building and infrastructure.

Cover Page Picture: ATR 42 flying over South Pacific Islands where the WBG has recently approved a US$125 Mio grant forimproving Avia on Safety and Security. OFV19FEB12

AIR TRANSPORT ANNUAL REPORT 2012

ADS B / C Automa c Dependent Surveillance – Broadcast /– Contract

AGL Aeronau cal Ground Lights

ATC Air Tra c Control

ATM Air Tra c Management

BOT Build Operate Transfer

BOO Build Own Operate

BOOT Build Own Operate Transfer

BTO Build Transfer Operate

CAA Civil Avia on Authority

CASDR IFC Advisory Services Department (WBG)

CES Charles E. Schlumberger, Lead Air Transport Specialist (WBG)

CINTS IFC Infrastructure Department, Transport Division (WBG)

COCESNA Central American Air Tra c Control Organiza on

DME Distance Measuring Equipment

GNSS Global Naviga on Satellite System

EASA European Avia on Safety Agency (agency of the European Union)

EC European Commission

ESW Economic Sector Work

FAA Federal Avia on Administra on of the United States of America

IATA Interna onal Air Transport Associa on

IASA Interna onal Avia on Safety Assessment (FAA)

IBRD Interna onal Bank for Reconstruc on and Development (WBG)

ICAO Interna onal Civil Avia on Organiza on (UN Agency)

IDA Interna onal Development Associa on (WBG)

IFC Interna onal Finance Corpora on (WBG)

ILS Instrument Landing System

IOSA IATA Opera onal Safety Audit

MIGA Mul lateral Investment Guarantee Agency (WBG)

PPPA Public Private Partnership Agreement

PPP Public Private Partnership

SARPS Standards and Recommended Prac ces

TA Technical Assistance

TWITR Transport Unit of the Energy Transport Water Department (WBG)

US DOT US Department of Transporta on

USOAP Universal Safety and Security Oversight Audits Program (ICAO)

VOR VHF Omni direc onal Radio Range

WBG World Bank Group

WRDSS World Routes Development Strategy Summit

ABBREV

IATIONS

TABLE

OFCO

NTENTS

Execu ve Summary …………………………………………………………………………………………….. 1

Acknowledgements …………………………………………………………………………………………….. 2

Foreword ……………………………………………………………………………………………………………... 3

World Bank Group Air Transport Por olio ………………………………………………………….. 4

IBRD and IDA ……………………………………………………………………………………………………... 5

IBRD and IDA Project Overview ………………………………………………………………... 5

IBRD and IDA Project Highlights ……………………………………………………………….. 12

Africa …………………………………………………………………………………………………. 12

Middle East and North Africa …………………………………………………………….. 17

La n America and Caribbean ………………………………………………………………. 18

East Asia and Pacific ……………………………………………………………………………. 20

South Asia Region ……………………………………………………………………………….. 22

Europe and Central Asia …………………………………………………………………….. 23

IFC ……………………………………………………………………………………………………………………….. 24

IFC Project Overview …………………………………………………………………………………. 24

IFC Project Highlights ……………………………………………………………………………….. 27

IFC Advisory Services (CASDR) …………………………………………………………………… 31

MIGA ……………………………………………………………………………………………………………………. 35

External Rela ons ……………………………………………………………………………………………….. 37

Internal Dissemina on …………………………………………………………………………………………. 40

Research and Internal Services ……………………………………………………………………………. 41

Outlook for Fiscal Year 2013 ………………………………………………………………………………… 43

1

EXECUTIVE

SUMMAR

Y

TheWorld Bank Group (WBG) fiscal year 2012Air Transport Por olio includes nearly 30 projects or project components in all six WorldBank regions, as well as 20 ac ve IFC investments and several advisory mandates.

FY12 has been a successful year for airtransport despite a small decline in the ac veair transport por olio volume of the WBG of4.5% from US$1,304.8 to $US1,245.6 due tothe comple on of several projects. A par cularhighlight of this year has been the approval ofa US$125 million regional avia on project inthe South Pacific.

The majority of projects in the IDA and IBRD AirTransport Por olio are being implemented inthe Africa Region, with new and addi onalcommitments in Tanzania and Sierra Leone approved this year. The focus of these projects ispar cularly on infrastructure rehabilita on, ins tu onal strengthening, and capacity building.Most new ac vity has been recorded in theEast Asia and Pacific Region with the launch ofthe Pacific Avia on Investment Program (PAIP).The implementa on of IBRD and IDA financedprojects in La n America and the Caribbeanand the Middle East and North Africaprogressed sa sfactorily in FY12.

The IFC Air Transport Por olio decreasedslightly in FY12, by 7.7% percent in ac ve project commitments to US$632.9 million. IFC Advisory expanded its por olio services however,having ini ated several airport mandates during FY11 with follow up in FY12.

MIGA has been involved in air transport withthe issuance of guarantees for two airport projects in Ecuador and Peru.

Safety and Security and Environmental Challenges remain the core focus of External Relaons with the Interna onal Civil Avia on Or

ganiza on (ICAO). The WBG, ICAO, and Routes(represen ng the airline industry) also heldtheir 7th Global Avia on Strategy Summit inBerlin, Germany in October 2011.

In line with the objec ve of its external relaons, the focus internally has also be on envi

ronmental issues. The Air Transport Unit therefore organized a Brown Bag Lunch this year onthe controversial inclusion of avia on in to theEU Emission Trading Scheme (ETS) with a representa ve of the EU invited as a presenter.

Finally, industry relevant Research by the WBGthis year was focused on low cost airlines analyzing opportuni es and impact of businessmodel in developing countries. This research isplanned to be completed in FY13.

2

AKN

OWLEDGEM

ENTS

This report benefited from the knowledge and exper se of air transport sta acrossthe World Bank Group.

We especially wish to acknowledge the contribu ons of Chris Benne , FernandoBlanco, Sylvia Michele Diez, Ibou Diouf, Amer Zafar Durrani, Fabio Galli, Harsh Gupta,Layne Hill, Negede Lewi, Jus n Taylor Locke, Yoans Elisikia Mchovu, Gylfie Palsson,Noroarisoa Rabefaniraka, Jus n Runji, Kavitah Sethi, Evelina Stanoeva and AdamStone Diehl.

We would also like to thank Jose Luis Irigoyen, Director of Transport, Water, and Informa on and Communica ons Technology, and Marc Juhel, Sector Manager,Transport, for their con nued guidance and support, and Nora Weisskopf for herassistance with the research and compila on of this report.

3

FORE

WORD

Air transporta on around the globe con nued to recover in fiscal year 2012, which resulted in the airlinesector expec ng a collec ve profit for 2012. However,profits for 2012 are expected to be less than half theUS$8.4 billion that the industry earned in 2011.Growth, nevertheless, varies greatly between regions.Nega ve or flat growth, resul ng in losses for airlines,has been experienced in Europe, while North American shows signs of recovery. In emerging markets, theMiddle East and La n America con nue their solidexpansion, followed by a good development in China,and overall Asia Pacific. Africa recovered from its decline in 2009, and shows modest but sustainedgrowth. The main challenges of the industry con nueto be the high oil price and a slow global recovery.Airlines are focusing on reducing costs and increasinge ciency. Air cargo experienced con nued decliningfreight volumes, sugges ng a slowdown in globaltrade paired with some possible modal shi in transporta on services.

The outlook for the industry, on the other hand, connues to remain posi ve for the medium and long

term. The air transport industry collec vely seesstrong con nued growth over the next two decadesresul ng in a doubling of passenger tra c by 2030.World passenger tra c is forecast to grow by about4.5 percent in that period, which is well over the expected growth in world GDP of an average 3 percent.The strongest development is forecast to occur in theemerging markets of China and India, where

passenger tra c is expected to grow by 7 8 percentper year.

Despite the posi ve outlook, growing concern aboutthe sustainable development of the industry is beingvoiced due to its dependence on a ordable fuelcosts, its challenge to reduce greenhouse gas emissions, and its vulnerability to recessions that hamperglobal trade. Behind this uncertainty, many large infrastructure investments in airports or air tra c control systems must be launched early to meet an uncertain future demand. If necessary investments arenot made, future economic development may be impacted.

The World Bank Group (WBG) will con nue to support its client countries in developing a sustainable airtransport sector. The development focus will remainon the provision of safe, secure, and a ordable airtransport services, which secure global sustainabilityof the industry through green growth of avia on. Theinstruments of the WBG to support this growth areinvestment projects in public or private air transportprojects, investments guarantees, policy advice togovernments, advisory services and technical assistance, and research projects.

Dr. Charles E. Schlumberger

Lead Air Transport Specialist

4

WORLD

BANKAIR

TRANSPORT

PORT

FOLIO

Acve

Projects

(inmillions

USD

)IBRD

IDA

IFC

TOTA

L

FY12

FY11

change

FY12

FY11

change

FY12

FY11

change

FY12

FY11

change

WBGrou

pTotal

Acve

Porolio

105,134

102,305

2.8%

68,573

69,450

1.3%

45,275

42,777

5.8%

218,981

214,532

2.1%

WBGrou

pAc

vePo

rolio

Transport

26,755

26,005

2.9%

11,718

13,156

10.9%

2690

2,695

0.2%

41,163

41,856

1.7%

%of

TotalA

cve

Porolio

25.4%

25.4%

0.0%

17.09%

18.9%

1.9%

5.9%

6.3%

0.4%

18.8%

19.5%

0.7%

AirTran

sportAcve

Projects

277.2

285.0

2.8%

335.5

334.2

0.4%

632.9

685.5

7.7%

1,245.6

1,304.8

4.5%

%of

TotalA

cve

Porolio

0.3%

0.3%

0.5%

0.5%

1.4%

1.6%

0.2%

0.57%

0.6%

%of

TotalTranspo

rtPo

rolio

1.0%

1.1%

2.9%

2.5%

23.5%

25.4%

1.9%

3.03%

3.1%

TheWBG

FY12

airtransportpo

rolio

iscompo

sedof

vario

uslend

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omicSector

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edby

theWorld

Bank

(IDAandIBRD

).In

addi

on,the

IFChasacurren

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olio

ofpro

posedandac

velend

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investmen

tfinancingthrougho

uttheavia

onsector.

Theoverview

abovesummarize

stheWBG

’smostim

portantprojects

WBG

.Several

smallerscaleprojects,p

roject

compo

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stages

ofde

velopm

enta

reno

tinclude

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lateralInvestm

entG

uarantee

Agen

cy(M

IGA)

AirTran

sportPo

rolio

5

IBRD

andIDAcontrib

uteto

almost3

0projectsworldwidefocusin

gon

regulatory

reform

,capacity

buildingandsomeinfrastructure

investmen

ts.

IBRD&IDA

PROJECT

SOVER

VIEW

6

AFR

ICA

Coun

try

ProjectID

Code

ProjectFullNam

eDescrip

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(Avia

onCo

mpo

nent)

WGBCo

mmitmen

t(M

illionUS$)

Prod

uctLine

Status

as

ofen

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June

2012

Project

Total

Avia

onCo

m

pone

nt

Burkina

Faso,Ca

meroo

n,Guine

a,

Mali

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frica

AirT

ranspo

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SecurityProject

Instu

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safety

andsecurityIm

prove

men

tsat

maininterna

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airport

35.76

31.6

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itAc

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Congo,

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onaleco

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Rep

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of

P129594

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Mod

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ddion

alFi

nancing

Transportcon

necvityim

provem

enta

ndna

onaleco

nomicintegra

on180

9IDAGrant

Pipe

line

Burkina

Faso

P114911

DonsinAirport

Feasibility

stud

yof

ane

wair

port

0.307

0.307

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lend

ing)

Acve

Burkina

Faso

P120960

BurkinaFaso

Donsin

TransportInfrastructure

Project

TechnicalA

ssistancesfor

new

Ouagado

ugou

Airport

656.5

IDA

Specific

Investmen

tLoan

Pipe

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Rep

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ofCa

pe

Verde

P127411

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redit

Ope

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capacityim

provem

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s12

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IDAcred

itAc

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7

AFR

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Coun

try

ProjectID

Code

ProjectFull

Nam

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mpo

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mmitmen

t(M

illionUS$)

Prod

uct

Line

Status

asof

end

June

2012

Project

Total

Avia

onCo

mpo

nent

Kenya

P082615

NorthernCo

rri

dorT

ranspo

rtIm

provem

ent

Project

Enhanceavia

onsafety

andsecurity,Inst.

Strengthen

ingandCa

paci

tyBu

ilding

207

41.5

IDACred

itAc

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Kenya

P106200

NorthernCo

rri

dorT

ranspo

rtIm

provem

ent

Project

(Add

ion

alFi

nancing)

CargoHa

ndlingat

Nairobi

Airport,KenyaAirw

ays

Priva

zaon

253

48.1

IDAcred

itAc

ve

Kenya

P124109

KenyaTransport

Sector

Supp

ort

Project

Inst.Stren

gthe

ning

and

CapacityBu

ilding

300

27IDAcred

itAc

ve

Madagascar

P082806

TransportInfra

structureInvest

men

tProject

AirportS

afetyandSecurity

Improvem

ents,TAto

the

Establish

men

tofP

PPsin

theAirportS

ector

150

8.3

IDAcred

itClosed

Mau

ritania

P089672

TransportS

ector

Inst.D

ev.A

ndTechnicalA

ssis

tanceProject

AirportM

asterP

lan,ins

tuon

capacityplan

4.5

0.65

IDAcred

itClosed

8

AFR

ICA

Coun

try

ProjectID

Code

ProjectFullNam

eDescrip

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(Avia

onCo

mpo

nent)

WGBCo

mmitmen

t(M

illionUS$)

Prod

uctLine

Status

as

ofen

d

June

2011

ProjectTo

tal

Avia

onCo

m

pone

nt

Nigeria

P100785

Westa

ndCe

ntralA

frica

AirT

ranspo

rtSafety&

SecurityProject(Phase

II)

Inst.Stren

gthe

ning,Safetyand

SecurityIm

provem

entsat

MainAirports

46.65

46.65

IDAcred

itAc

ve

Sierra

Leon

eP0

78389

Infrastructure

Develop

men

tProject

Infrastructure

Rehabilita

onat

FreetownAirport

4413

.8IDAcred

itAc

ve

Sierra

Leo n

eP1

10968

Infrastructure

Develop

men

tProject(Add

ion

alfin

ancing)

Infrastructure

Rehabilita

onat

FreetownAirport

112.75

IDAcred

it,IDA

grant

Acve

Tanzan

iaP0

55120

TransportS

ectorS

uppo

rtProject

Rehabilita

onandextensionof

region

alairports

270

69.2

IDAcred

itAc

ve

Tanzan

iaP1

26206

TransportS

ectorS

uppo

rtProject(A d

dion

alfi

nancing)

Rehabilita

onandextensionof

thetaxiwaysa

ndapronat

the

Zanzibar

airport

5957

.23

IDAcred

itAc

ve

Tanzan

iaP1

03633

Second

CentralTranspo

rtCo

rridor

Zanzibar

Airportimprovem

ent

190

17.1

IDAcred

itAc

ve

Ben

in,M

aurita

nia,Sene

gal

P108583

Westa

ndCe

ntralA

frica

AirT

ranspo

rtSafety&

SecurityProject(Ph

aseII

B)

Avia

onSafetyandSecurity

Improvem

ents

16.57

16.57

IDAgrant,IDA

cred

itAc

ve

9

MIDDLE

EAST

ANDNORT

HAFR

ICA&

LATINAMER

ICAANDCA

RIBBEA

N

Coun

try

ProjectID

Code

ProjectFullNam

eDescrip

on

(Avia

onCo

mpo

nent)

WGBCo

mmitmen

t(M

illionUS$)

Prod

uct

Line

Status

asof

endJune

2011

ProjectTo

tal

Avia

onCo

m

pone

nt

Egypt

P101201

Cairo

AirportD

evelop

men

tProjectTB

2Re

habilita

onandexpansionof

Term

inalBu

ilding2

280

280

IBRD

loan

Acve

Yemen

P088435

PortCi

esDe

velopm

ent

IIProject

Rehabilita

on/e

xten

sionof

Mukallaairport

356

IDA

Grant

Acve

Coun

try

ProjectID

Code

ProjectFullNam

eDescrip

on

(Avia

onCo

mpo

nent)

WGBCo

mmitmen

t(M

illionUS$)

Prod

uct

Line

Status

asof

endJune

2011

ProjectTo

tal

Avia

onCo

m

pone

nt

Bolivia

P122007

Na

onalRo

adsa

ndAir

portInfrastructure

Pro

ject

Region

alintegra

onstrength

eningandairportinfrastruc

ture

developm

ent

109.5

6.0

IDAcred

itAc

ve

Grena

da,

St.V

incent

&Grena

dine

sP1

17871

Region

alDisaster

Vulner

ability

Redu

con

APL1

Improvem

ento

femergency

respon

secapability

20.92

5IDAloan

Acve

Hai

P120895

Infrastructure

andInstu

onsE

mergencyRe

cov

eryProject

Repairof

Portau

Prince

air

port’sde

partureterm

inal

653

IDAgrant

Acve

10

EAST

ASIAPA

CIFIC

Coun

try

ProjectID

Code

ProjectFullNam

eDescrip

on(Avia

onCo

mpo

nent)

WGBCo

mmitmen

t(M

illionUS$)

Prod

uctLine

Status

as

ofen

d

June

2011

ProjectTo

tal

Avia

onCo

m

pone

nt

Tonga

P096931

TransportS

ectorC

onsoli

daon

Project

TechnicalA

ssistance

toCA

A5.4

2.4

IDAgrant

Acve

Tonga

P128939

Pacific

Avia

onInvest

men

tProgram

(Phase

1)

Infrastructure

Investmen

t,Sec

torR

eform

andTraining,

Strengthen

ingAirportO

pera

onsa

ndManagem

entC

apacity

27.21

27.21

IDAgrant

Acve

Kiriba

P12 8938

Pacific

Avia

onInvest

men

tProgram

(Phase

1)

Infrastructure

Investmen

t,Sec

torR

eform

andTraining,

Strengthen

ingAirportO

pera

onsa

ndManagem

entC

apacity

22.91

22.91

IDAgrant

Acve

Tuvalu

P128940

Pacific

Avia

onInvest

men

tProgram

(Phase

1)

Infrastructure

Investmen

t,Sec

torR

eform

andTraining,

Strengthen

ingAirportO

pera

onsa

ndManagem

entC

apacity

11.85

11.85

IDAgrant

Acve

Samoa

,Van

uatu

andSolomon

Island

sP1

43408,

P133454,

P143906

Pacific

Avia

onInvest

men

tProgram

(Phase

2and3)

Infrastructure

Investmen

t,Sec

torR

eform

andTraining,

Strengthen

ingAirportO

pera

onsa

ndManagem

entC

apacity

TBD

TBD

IDAgrant/loan

Pipe

line

China

P123729

JiangxiShangrao

San

qingshan

AirportP

roject

Developm

enta

ndop

era

onof

theShangrao

Sanq

ingshan

Airport

5050

IBRD

loan

Pipe

line

11

SOUTH

ASIAREG

ION,EURO

PEANDCE

NTR

ALASIA&GLO

BAL

Coun

try

ProjectID

Code

ProjectFullNam

eDescrip

on(Avia

onCo

m

pone

nt)

WGBCo

mmitmen

t(M

illionUS$)

Prod

uct

Line

Status

as

ofen

d

June

2011

ProjectTo

tal

Avia

onCo

mpo

nent

Pakistan

P101684

TradeandTransport

Facilita

onII

Restructuringandmod

erniza

on25

2IDAcred

itAc

ve

Coun

try

ProjectID

Code

ProjectFullNam

eDescrip

on(Avia

onCo

mpo

nent)

WGBCo

mmitmen

t(M

illionUS$)

Prod

uct

Line

Status

as

ofen

d

June

2011

Project

Total

Avia

onCo

mpo

nent

Tajikistan

P126042

Programma

cDe

velop

men

tPolicyGrant6

Mod

ernizin

gAv

iaon

Services

204.8

IDAgrant

Pipe

line

Coun

try

ProjectID

Code

ProjectFullNam

eDescrip

on

(Avia

onCo

mpo

nent)

WGBCo

mmitmen

t(M

illionUS$)

Prod

uct

Line

Status

as

ofen

d

June

2012

ProjectTo

tal

Avia

onCo

mpo

nent

Globa

lP1

32939

Low

CostCarriers:O

ppor

tuni

esandIm

pactinDe

veloping

Coun

tries

LowCo

stAirline

sAnalysis

0.02

0.02

ESW

Acve

12

AFRICA

West and Central Africa Safety Project ( P108583, P083751, P100785)

In FY12 the implementa on of the AirTransport Safety and Security Project in Westand Central Africa progressed successfully.The project’s objec ve is to (i) improve theCivil Avia on Authority's (CAA) compliancewith Interna onal Civil Avia on Organiza on(ICAO) safety standards; (ii) increase CAA'scompliance with ICAO's security standard; and(iii) enhance the main interna onal airports'compliance with ICAO's security standards.

The program focuses on a variety of ac vi es,from capacity building to procurement ofsafety and security equipment. Due to thesmall size of the air transport industry and thelimited resources in each country, regionalcoopera on is key. The establishment of Regional Avia on Safety Oversight Agencies(RASOAs) has therefore been an importantenabler for airports to reach compliance. Theproject team is also monitoring progress under ICAO’s Coopera ve Development of Opera onal Safety and Con nued AirworthinessProgram (COSCAP) with sub regional organizaons (the UEMOA countries, the Banjul Ac

cord countries, that is, Non UEMOA countrieswithin ECOWAS, and the CEMAC countries).

With the program’s structure being a horizontal Adaptable Program Loan (APL), any

Western or Central African country not included in the ini al phase is able to join duringsubsequent phases, under the same eligibilitycriteria. Phase I included Burkina Faso, Cameroon, Guinea and Mali, with an overall allocaon of US$35.67million. Phase II A of the Pro

gram was ini ated in FY08 and included Nigeria’s par cipa on in the program for anamount of US$46.65 million. In FY09 andFY10, Benin and Senegal joined the Programunder Phase II B, and were allocated a totalamount of US$16.57 million.

Through sustained training of technical sta inair transport safety and security issues, instu onal reforms and regulatory frameworkupdates, Phase I countries have alreadyachieved or even surpassed the project's mostsignificant monitoring indicators (e.g. compliance with ICAO safety and security standards;number of technical sta trained).

Even Guinea’s air transport sector, despitepoli cal turmoil, has improved significantly:they completed a study to create an autonomous CAA and are implemen ng a plan tocomplete their ins tu onal reform. The second phase of the project, APL2 A, helped Nigeria drama cally improve its safety standard.

PROJECT

HIGHLIGHTS

13

The  country  has  also  made  no ceable  progress  in  their  compliance  with  ICAO  safety  and  secu-‐rity  standards  through  an  update  of  their  regu-‐latory   framework,   and   training   of   their   tech-‐nical   staff.   The   APL1’s   closing   date   has   just  been   extended   from   end   December   2011   to  end  June,  2013,  to  allow  the  full  comple on  of  on-going  and  a  few  scheduled  ac vi es,  to  en-‐sure  that  the  project’s   implementa on   is   fully  sa sfactory.

Nigeria,  as  the  only  country   in  the  region,  has  received  a  US  Federal  Avia on  Administra on  (FAA)   Interna onal   Avia on   Safety   Assess-‐ments  (IASA)  Category  1  ra ng  in  August  2010.  This  means  that  the  Nigerian  Civil  Avia on  Au-‐thority,  is  capable  of  enforcing  interna onal  air  safety  standards  set  by  ICAO  for  aircra s  oper-‐a on   and  maintenance,   and   that   the   country  has   the   laws   and   regula ons   necessary   to  oversee   air   carriers   in   accordance   with   mini-‐mum   interna onal   standards.   As   a   result,   Ni-‐geria’s  registered  carriers,  such  as  Arik  Air,  can  now  offer  direct  flights  to  the  USA  for  the  first  me  in  nearly  30  years.  

Despite   improvements   in   safety   and   security  oversight  of  the  avia on  sector  however,  cri -‐

cal  reforms  are  s ll  needed  regarding  the  over-‐all   ins tu onal   arrangements   and  governance  in  the  sector.  An  in-depth  study  on  ins tu on-‐al   reform   is   in   its   last   version  providing   some  insight   into  the  development  of  a  be er  over-‐all   strategy   and   financial   management.   A  roadmap   and   a   discussion   of   the   study’s   rec-‐ommenda ons   will   be   presented   at   a   work-‐shop   organized   by   the   Ministry   of   Avia on  next  year.  The  recer fica on  process  of  Nigeri-‐an   air   carriers   has   been   sa sfactorily   estab-‐lished,  and  contributed  to  air   transport   safety  improvement   by   strengthening   NCAA’s   tech-‐nical   staff   capacity.   Some   airlines   s ll   remain  to  be   re-cer fied   in   line  with   the  new  revised  guidelines,   include  Dana  Air   that  has  been   in-‐volved  in  a  fatal  accident  last  year  in  Lagos.  

Despite   slower   compara ve   progress,   Benin  has  also  shown  some  significant  achievements  in   the   last   year.   Compliance  with   ICAO   safety  standards   has   increased   from   19.2%   2007   to  42.9%  in  2012.  Senegal’s  audit  is  s ll  outstand-‐ing   but   the   internal   audit   carried   out   by   the  CAA   concluded   that   compliance   with   ICAO's  standards  is  85%  and  89%  for  safety  and  secu-‐rity  respec vely.  

Contact   Person   is   Noroarisoa   Rabefaniraka   at          nrabefaniraka@worldbank.org

Tanzania  Transport  Sector  Support  Project  (P055120,  P126206)

In   May   2010,   the   Bank   approved   a   credit   of  US$270  million   for   the   Transport   Sector   Sup-‐port   Project   (TSSP)   in   Tanzania.   In   support   of  the   Transport   Sector   Investment   Program  (TSIP),   the   project’s   goal   is   the   rehabilita on  and   prepara on   of   designs   for   part   of   the  paved  na onal  road  network,  and  the  rehabili-‐ta on  and/or  upgrading  of  regional  airports.

The   three   works   contracts,   namely;     (i)     the  paving  and  rehabilita on  of  the  runway  at  Kig-‐oma   airport   (ii)   the   rehabilita on  of   the  main  runway   at   Tabora   airport,   as   well   as   (iii)   the  extension,  rehabilita on  and  paving  of  the  run-‐way  and  the  replacement  of  the  apron,  termi-‐nal   and   car   parking   at   Bukoba   airport,   were  signed  in  FY12.  

The  project  received  addi onal  funding  (AF)  of  US$59  million  on  30  of  June  2011.  This  prompt-‐ed  the  revision  of  the  project  development  ob-‐jec ves  and  the  expansion  of  the  scope  of  the  avia on   component.   As  men oned   above   the  AF   will   finance   the   works   and   the   associated  supervision   services   to   rehabilitate,   expand  and/or  extend  the  exis ng  taxiways  and  apron  of  Zanzibar  Airport.  The  Revolu onary  Govern-‐ment  of  Zanzibar  (GoZ)  has  also  secured  a  loan  from  the  China  Exim  Bank  to  finance  a  new  ter-‐minal  building.          

Contact   person   is   Negede   Lewi   at  nlewi@worldbank.org

PROJECT

 HIG

HLIG

HTS

14

Tanzania Second Central Transport Corridor Project (P103633)

Approved for a credit of US$190 million onMay 27, 2008, the Second Central TransportCorridor Project (CTCP2) in Tanzania aims tosupport Tanzania's economic growth byproviding enhanced transport facili es thatare reliable and cost e ec ve, in line with theNa onal Transport Policy and Strategy. Thisincludes the establishment of the Bus RapidTransit (BRT) system in Dar es Salaam and therehabilita on and extension of Zanzibar airport runway.

The Zanzibar airport component was implemented successfully between April 2009 andJuly 2010 and was completed o cially on August 3, 2010.The airport’s runway was rehabilitated and extended from 2462 meters by 560meters to 3022 meters long. Other works included runway marking, the construc on of a

perimeter access road, repair and provision ofnew aeronau cal ground lights (AGL), and provision of a new filter drainage system on eachside of the runway for the full length.

The project also financed the detailed designfor rehabilita on and extension of Zanzibarairport taxiways and apron. The subsequentworks are being financed under the addi onalfinancing credit of IDA’s Transport Sector Support project (TSSP) with an alloca on ofUS$57.23 million for works and supervision.The project improved safety and customersa sfac on and has enabled an increase in thenumber of commercial regular flights toZanzibar.

Contact person is Yonas Mchomvu atymchomvu@worldbank.org

Sierre Leone – Infrastructure Development Project (P078389, P110968)

In support of Sierra Leone’s Na onal TransportStrategy and Investment Plan (2003 2007)(SLNTP), the World Bank approved a US$44million credit for the Infrastructure Development Project. The project’s objec ve is to rehabilitate selected priority roads, port, and airport facili es in Sierra Leone, while also suppor ng regulatory and ins tu onal reforms toensure e ec ve management of the country'sroad, port, and airport sectors.

The focus of its avia on component is on therehabilita on of Freetown Interna onal Airport and capacity building for its management.This includes among other things the rehabilita on and strengthening of the runway, withupgrading of turning loops and taxiway entrances to safely accommodate modern aircra works. Through the project the government has procured and installed power generators and independent water supply as well asan Instrument Landing System (ILS) and Air/Ground Communica ons System.

The naviga on installa on and tower equipment are in the process of being installed andopera onal training for airport employees isongoing. Over the course of the year therehave been some delays with regards to thisinstalla on; comple on is now scheduled forJanuary 2013.

TWITR provided technical advice throughoutthe prepara on of design and bidding documents for the airport infrastructure rehabilitaon. Civil works are under way and goods are

now being procured.

Contact person is Kavita Sethi atksethi@worldbank.org

PROJECT

HIGHLIGHTS

mailto:ymchomvu@worldbank.orgmailto:ksethi@worldbank.org

15

In 2003, the World Bank approved the firstmajor African air transport infrastructure andregulatory capacity building project in Kenya.The focus of this ongoing project, is to (i) support the Kenya Airports Authority (KAA) inairport infrastructure improvements and enhancing security at Kenyan airports, and (ii)support the Kenya Civil Avia on Authority(KCAA) in regulatory capacity building andspecific investments in naviga on aids andtraining equipment. Due to the success of theproject and a high growth in passenger flowsresul ng from a sudden economic upturn, anaddi onal credit of US$253 was approved inApril 2009. The addi onal financing supportsthe building of a new passenger terminal atKenya a Interna onal Airport (JKIA).

In FY12 works have progressed successfully.At the request of its stakeholders, the newterminal at JKIA is being converted into aninterna onal terminal. The apron has beenexpanded and the taxiways extended increasing the aircra parking space capacity by 50%.The remodeling and renova on of Units 1, 2and 3 of the airport are experiencing somedelays. Due to the con nuous improvementsJKIA has obtained security clearance from theUS Transport Security Administra on and ison a good track to achieve FAA IASA Category1 Cer fica on. The government of Kenya hasalso endorsed the restructuring of KCAA and

both KAA and KCAA have been given financialautonomy and now retain the revenues generated. As part of this process, KCAA has beenraising the pay packages for key flight safetyopera ons sta , cri cal for carrying out itsoversight func on. Furthermore KAA has taken over the responsibility of screening passengers and baggage from the Kenyan police.A consultant for the separa on of the serviceprovision from its regulatory func on hasbeen selected to assist KCAA.

Expansion of Kisumu airport has been completed and is fully opera onal. The Government of Kenya (GoK) has awarded a contractfor further expansion of the airport, whichinvolves the construc on of an apron for acargo handling facility; the construc on oftaxiways and expansion of the new terminalbuilding. Tra c has increased from 70,000passengers in 2005 to about 300,000 in 2010.With the opening up of and growth prospectsin Western Kenya, a further increase is to beexpected. The GoK will also focus on the rehabilita on of the runway at Mombasa Interna onal Airport in FY13.

Contact person is Josphat O. Sasia atjsasia@worldbank.org

Kenya – Northern Corridor Transport Improvement Project andTransport Sector Support Project (P082615, P106200, P124109)

PROJECT

HIGHLIGHTS

mailto:jsasia@worldbank.org

16

In 2010, the Bank approved an IDA grant ofUS$255 million for the first transport projectin Democra c Republic of Congo since theend of the civil war. The objec ve of the Mulmodal Transport Project's (MTP) is to (i) to

improve transport connec vity in theDemocrac c Republic of Congo (DRC) so as tosupport na onal economic integra on, (ii) torestore Société Na onale des Chemins de Ferdu Congo’s (Na onal Railway Company ofDRC SNCC) financial and opera onal viability, and (iii) to implement a sector wide governance plan and strengthen transport stateowned enterprises (SOEs) opera onal performances.

US$10 million of the grant are dedicated tothe avia on sector. The funds finance (i) theprocurement and installa on of ADS B surveillance equipment by the Na onal AirwaysManagement Agency (RVA), (ii) a newcategory II ILS/VOR/DME system for the capital’s interna onal airport Kinshasa/N’Djili

(FIH), (iii) two studies on the development ofairports in the country (one on freight development at FIH, and one on secondary airports), and (iv) training for RVA personnel inair tra c control, and airport rescue and firefigh ng services.

Based on the Bank’s avia on component inDRC which includes a SOE reform component,the African Development Bank (ADB) prepared an airport/air transport project ofUS$180 million, which provides complementary investments to the RVA moderniza onplan.

A significant reduc on in average annualnumber of Air Tra c System (ATS) incidentsrelated to failed communica ons has beenachieved.

Contact person is Jean Charles Crochet atjcrochet@worldbank.org

Democra c Republic of Congo Mul Modal Transport Project

(P092537, P129594)

PROJECT

HIGHLIGHTS

mailto:jcrochet@worldbank.org

17

The air transport sector is highly strategic forEgypt’s economic development, genera ng significant employment and suppor ng its tourismsector. Tourism accounts for 3.5% of Egypt’sGDP, with 12.4 million of tourists and a total revenue of US$10.5 billion in FY09. Around 80% oftourist tra c comes through Egypt’s airports andtourism counts for half of the passenger internaonal tra c at Cairo Interna onal Airport (CAI).

Air transport is progressively being liberalized.Twenty years ago, the Government of Egypt(GoE) realized the growing importance of airtransport as a driver of growth in its own right.The GoE’s objec ve therefore became to ensurethat the liberaliza on of the industry would contribute posi vely to the development of theEgyp an avia on sector. Consequently, Egypt hasembarked on the gradual liberaliza on of interna onal air services on a bilateral basis with several countries in the Middle East, Africa, and Europe. It has also significantly improved airportservices through a range of capacity investmentsand the strengthening of airport opera ons.

However, Egypt needs to con nue expanding airport infrastructure and improve airport servicesto meet the growing demand, especially at CAIthe main gate to Egypt. It also has to con nuestrengthening air tra c control (ATC) infrastructure and air tra c management (ATM).

The Egypt Cairo Airport Development Project,approved in 2010, is suppor ng the Egyp anGovernment to (i) enhance the quality of airtransport services in Egypt by increasing tra chandling capaci es at CAI, and (ii) strengtheningEgypt’s air transport in the context of internaonal compe on. The principal target benefi

ciaries include: (i) business and tourism passengers, who will benefit from be er airport infrastructure and services, (ii) businesses, which willbenefit from extended air transport services anda more a rac ve CAI’s area, and (iii) workers,who will benefit from job crea on during construc on, which would contribute to Egypt’ss mulus package in response to the economiccrisis, and a er construc on through airport acvi es as well as ac vi es of industries and ser

vices a racted to the CAI area.

In FY12 the two project components movedahead at a good pace. The procurement of theworks contract for the rehabilita on and expansion of the Terminal Building 2 at Cairo Internaonal Airport was awarded to a Joint Venture

between Limak and CMR. The second componentfinances the development of five studies. Todate, two studies have been completed, twostudies are under prepara on, and the procurement of the last fi h study is currently on going.

Contact person is Olivier Le Ber atoleber@worldbank.org

MIDDLE EAST AND NORTH AFRICAEgypt Cairo Airport Development Project TB 2 (P101201)PR

OJECT

HIGHLIGHTS

18

PROJECT

HIGHLIGHTS

LATIN AMERICA AND CARIBBEAN

The small island states of the Eastern Caribbean (EC) regularly su er disasters related tonatural events such as earthquakes, hurricanes, landslides, rains and droughts. Thesenatural hazards have caused significant andrecurrent damages to na onal infrastructureincluding housing, road networks, schools,hospitals and other facili es.

Grenada’s Maurice Bishop Interna onal Airport (MBIA) func ons as an important regional infrastructure site in the region’s emergency response capacity. It is the alternate airport for Trinidad and Tobago, Barbados, andSt. Vincent and the Grenadines, and providesair tra c support in emergency situa ons tothe island of Saint Vincent. The con nuedopera on of the airport is therefore cri cal tothe region as well as to Grenada.

Several cri cal investments are needed at theairport to maintain an adequate emergencyresponse capability and to comply with opera onal standards as required by the Internaonal Civil Avia on Organiza on (ICAO). In

absence of these investments, Grenada andthe region risk a downgrading of its airportcer fica on. This would lead to a halt of most

commercial air ac vity severely a ec ngcommunica ons and tourism.

In order to address these deficiencies, theRegional Disaster Vulnerability Reduc onProgram will support the avia on sectorthrough the provision of works, technical advisory services, training, and acquisi on ofgoods. This includes training on open waterrescue opera ons, construc on of a new water tank and emergency coordina on center,as well as acquisi on of rescue boats, fire detec on and alarm systems, runway fric onmeasuring equipment and radio communicaons equipment. A contract for the producon and delivery of 3 ARFF trucks was signed

in August 2012, with expected delivery in2013. These investments will allow the airport to comply with ICAO requirements, andimproving opera onal resilience and response capacity to disaster impacts.

Contact person is Jus n T. Locke atjlocke@worldbank.org

Grenada Regional Disaster Vulnerability Reduc on APL1 (P117871)

mailto:Justin

19

PROJECT

HIGHLIGHTS

The Bolivia Na onal Roads and Airport Infrastructure Project (P122007) supports roadinfrastructure improvement in the department of La Paz and and upgrading of airportinfrastructure and equipment in the town ofRurrenabaque in the department of Beni.

The investment is being used for the construc on of a new taxiway, apron, controltower, opera ons building, rescue and firefigh ng buildings, an access road, and a

passenger terminal; and the acquisi on andinstalla on of avia on control, rescue andfirefigh ng equipment. The client, AASANA(Administracion de Aeropuertos y ServiciosAuxiliares a la Navegacion Area), is in theprocess of engaging a supervision consultantand civil works will be bid before end of2012.

Contact Person is Gylfi Palsson atgpalsson@worldbank.org

Bolivia – Na onal Roads and Airport Infrastructure (P122007)

Hai Infrastructure and Ins tu ons Emergency Recovery (P120895)

On January 12, 2010, Hai was shaken by a7.0 magnitude earthquake, at a depth of 10km, which was followed by several a ershocks, some as strong as 6.1 and 5.9 magnitudes.

Global relief e orts followed immediatelya er the earthquake with the World Bankannouncing support of US$100 million on 13January 2010. As the only opera onal entrypoint, Port au Prince (PAP) proved to be avital in conduc ng humanitarian reliefe orts. The airport was also severely damaged however. Major structural damage occurred to the terminal building and to thecontrol tower. In addi on, the ligh ng systems and power supply are insu cient fornight opera ons, and naviga onal aids (ILS/VOR) do not have a backup system. Althoughnot severely a ected by the earth quake theairport’s runway and apron also had preexis ng cracks and damages which represented a danger to aircra .

The Bank’s board approved the Hai Infrastructure and Ins tu ons Emergency Recovery Project on 09 March 2010, consis ng of aUS$65 million grant. Its objec ve is to support Hai in its early recovery e orts,through selected interven ons aiming athelping to rebuild key ins tu ons and infrastructure. The project is financing the reha

bilita on of key avia on infrastructure by anini al grant of US$3million, which includes (i)reconstruc on of ground air communicaons tower, (ii) repair and/or replacement of

two VORs, and verifica on of ILS (IMG), (iii)repair of runway lights at PAP, (iv) financingof associated cost for air tra c controllerstraining, and (v) construc on of a runwayend safety area on RWY10 at PAP.

In FY12 GoH requested an addi onal financing which has been prepared and approvedby the board of director on 27 Sept 2012 foran amount of US$35 million with US$5 million dedicated to the air transport sector.This addi onal financing will support (i) governance and capacity building (ii) equipmentfor air safety naviga on system (iii) con nuity of opera on from treatment of debris othe earthquake (iv) roads to support development of tourism in the north (vi) supportto Ministry of PW to handle the reconstrucon process. The Technical Coopera on Bu

reau (TCB) finalized the Haï Site Survey Report, iden fying equipment need and providing terms of reference for the various components.

Contact person is Pierre Bonneau atpbonneau@worldbank.org

20

PROJECT

HIGHLIGHTS

EAST ASIA AND PACIFIC

Based on the successful implementa on of theavia on component of the Tonga Transport Sector Consolida on Project, the World Bank approved a grant of US$ 125 Million in Dec 2011for the Pacific Avia on Investment Program. Theobjec ve of the regional program including Tonga, Kiriba and Tuvalu in a first and Vanuatu,Samoa and Solomon Islands in subsequent phases, is to improve opera onal safety and oversight of interna onal air transport infrastructurein the Pacific.

The main components of the project include: (i)Avia on Infrastructure Improvements in orderto meet ICAO standards (ii) Avia on Sector Reform suppor ng the Civil Avia on Departments/Authori es of each country to strengthenState’s civil avia on system and to assist in thecapacity and e ciency of the regional safetyoversight agency, the Pacific Avia on SafetyO ce (PASO) (iii) Strengthening Airport Operaons and Management Capacity; and (iv) Pro

gram Support and Training to the Technical andFiduciary Services Unit (TFSU) to implement theProgram and Implemen ng Agent (Tonga Airports Limited) to support the project asnecessary.

In FY12 the program has already achieved considerable progress. ICAO audits of the respec veairports have been conducted iden fying thedeficiencies that need to be addressed in orderto make airports compliant with ICAO Standardsand Recommended Prac ces (SARPs). The Design and Supervision (D&S) Consultant for infrastructure has been appointed and are mobilizingsta and equipment to commence the detaileddesign work for each runway, with the objec veof bidding by June 2013.

As part of the project the Pacific Avia on SafetyO ce is to be restructured to provide more ecient and cost e ec ve services to its memberstates. A consultant has been appointed to prepare the PASO business plan. The dra plan waspresented to the PASO Council at the PASOMee ng on October 30 31 in Tonga. In theevent that the PASO Council agrees to implement this plan, the project will then: (i) financethe costs of restructuring PASO to implementthe business plan; and, (ii) Tonga will be able touse the project funds to finance PASO servicesto Tonga.

Pacific Avia on Investment Program (P128939, P128938, P128940)

21

Determined in the legal covenants of theProject, a Safety and Security Levy is to beintroduced in order to cover safety and security cost incurred by the airport operator andthe CAA. This also includes future fees thatwill paid to the Pacific Avia on Safety O cefor regional safety oversight and cer ficaon. The introduc on and mechanism for

collec on of the tax has progressed

considerably in FY12 with Air New Zealandagreeing to support with IATA the collec onof the safety and security levy as part of thecket price.

Contact person is Christopher Benne atcbenne 2@worldbank.org

PROJECT

HIGHLIGHTS

With its remote loca on, small size, dispersed islands se ng and other geographicalfactors, Tonga faces many challenges in developing and maintaining sustainable internal, regional and interna onal transport andcommunica on linkages, all of which are crucial to the economic development and socialwell being of its es mated 105,000 populaon. Recognizing the key role of transport in

the economy and the social fabric of thecountry, Government of Tonga (GoT) is commi ed to improving the e ciency of the sector, a process it commenced in 2004 following a request to IDA to support a joint reviewof Tonga’s en re transport sector and formulate recommenda ons for improving sectorperformance. The Tonga Transport SectorReview (TTSR) was completed in 2005 andmany of its recommenda ons subsequentlywere adopted by Government as policy.Among some of the ac ons already havebeen, for example, the crea on of the TongaAirports Ltd (TAL) in July 2007 as a corporazed airport company under the Public En

terprises Act.

Consistent with the Government’s StrategicDevelopment Plan (SPD8) and the recommenda ons of the TTSR, GoT requested IDAgrant assistance to con nue and acceleratethe process of reforming and consolida ngits transport sector to be er respond to bothcurrent and future needs. An IDA grant of$US 5.4 million was approved in FY09 thatfocuses on achieving (i) stronger policy, planning, and regulatory ins tu ons and framework, (ii) improved safety and security facilies and compliance with interna onal safety

and security standards, and (iii) greater domes c capacity for road rehabilita on andmaintenance. The project progressed successfully in FY12. In the avia on sector, alloriginally planned high priority equipmentand technical ac vi es have been completed.

Contact person is Christopher Benne atcbenne 2@worldbank.org

Tonga Transport Sector Consolida on Project (P096931)

22

SOUTH ASIA REGION

In support of its Na onal Trade Corridor Improvement Program (NTCIP) the Government of Pakistan requested technical assistance lending from the World Bank in 2006.The objec ve of the project is to (i) supporten es directly concerned with the implementa on of NTCIP and establish a sustainable monitoring system including communicaons, (ii) support implementa on process of

NTCIP through analy cal work on trade procedures and suppor ng infrastructure andservices needs (including roads, railways,ports & shipping, avia on, and energy subsectors), and (iii) further strengthen par cipa on of the private sector aiming to internalize public private collabora on on tradefacilita on through a dedicated project component.

The avia on component focuses on the development of Air Transport Master Plan forPakistan and an air safety improvement component that aims to improve opera onal

safety by financing several GNSS based instrument approaches, and by assessing theregulatory oversight by the CAA. In FY12 ansuccessful audit of Pakistan’s CAA was conducted by ICAO repor ng a lack of compliance of 16.4%, well below the global average.

Contact person is Manzoor Ur Rehman atmrehman1@worldbank.org

Pakistan – Second Trade and Transport Facilita on Project (P101684)

PROJECT

HIGHLIGHTS

23

PROJECT

HIGHLIGHTS

The Programma c Development Policy Grant 6(PDPG6) builds on a series of Programma cDevelopment Policy Grants that were ini atedin 2006.

The focus of PDPG 1 3 was to support a strategic set of policy reforms in private sector development, public sector management and social service delivery. The two main objec vesof the PDPG4 6 are to: (a) mi gate the negave impact of the crisis on poverty and vulner

ability in Tajikistan, and (b) pave the way forpost crisis recovery and sustained growth. ThePDPG 4 6 series seeks to (i) protect socialspending and increase its e ciency, (ii) improve the climate for private sector development and (iii) strengthen government e ecveness. Through PDPG4 support, the govern

ment approved the na onal avia on policy in2010, which allows progressively increased access to interna onal airlines in terms of routesand frequency; removes any restric ons on air

cargo in terms of aircra types, size, frequency, upli or discharge (as long as technicallyfeasible); ensures equal treatment at the airports for all carriers in terms of pricing, fueling,and other services; and improves air safetythrough adequate funding and strengthenedlicensing cer fica on, monitoring complianceand inspec on.

The Bank has con nued to monitor implementa on of the new avia on policy and assessthe extent to which PDPG supported reformshave helped expand access to cheaper, safer,and more frequent avia on services. UnderPDPG 6 the government will con nue to fostercompe on in air transport to expand accessand strengthen avia on sector opera ons.

Contact person is Salman Zaidi atszaidi@worldbank.org

Tajikistan – Programma c Development Policy Grant 6 (P117692,P126042)

EUROPE AND CENTRAL ASIA

24

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27

IFCPR

OJECT

HIGLIGHTS

Vuela (branded Volaris) commenced operaons on 13 March 2006. It ini ally operated

five routes with four aircra throughout Mexico from its base at Aeropuerto Internacional deToluca but has plans to grow significantly overthe next decade, with a planned fleet of 90 aircra including Airbus 319, A320 and A320 Neo.

Vuela will provide substan ally discountedfares in a market historically marked by limited

compe on and high fares. This will s mulatedemand and make air transporta on accessiblefor a larger share of the Mexican popula on,promote connec vity, and economic growth.

The IFC investment is an IFC revolving creditline of $30 million for the financing of aircrapre delivery payments and a $10 million.

Mexico — Vuela Aircra Financing

Aerovias del Con nente Americano S.A.(Avianca) is one of the largest airlines in La nAmerica and the largest in Colombia, opera ng from its main base at El Dorado Internaonal Airport in Bogota. The company pro

vides scheduled services to 21 interna onaldes na ons (in Europe and the Americas) and21 domes c des na ons. Avianca has fivecode sharing agreements with interna onalcarriers (Iberia, Mexicana, Delta, Air Canadaand Taca).

Avianca is planning to renew its fleet over theperiod 2008 2012 to reduce costs, improvee ciency and safety as well as provide be erpassenger service. The company has nego at

ed the purchase of 42 aircra over the next 5years (including at least 12 Boeing 787s and anumber of Airbus 319/320/330s) to replace itsMD 83 and Boeing 757/767 aircra . IFC is toprovide financing of up to $50 million to Avianca and its subsidiaries, Sociedad Aeronau cade Medellin Consolidada S.A (SAM) and Aviaon Leasing Services Investment S.A. (ALS) to

help finance the implementa on of thecompany’s fleet renewal program.

Colombia—Avianca Airline Fleet Renewal

28

IFCPR

OJECT

HIGLIGHTS

The Aga Khan Fund for Economic Development(“AKFED”), through its Avia on Services division, is currently expanding its ac vi es in bothEast and West Africa. The aim of the division isto assist in maintaining the cri cal avia on infrastructure in support of economic development and to provide much needed regional airline services in Africa. IFC’s involvement withthe organiza on includes a corporate loan ofup to $25 million to AKFED for on lending to itsthree airlines: Air Burkina, Air Mali and AirUganda. This allows AKFED to consolidate all ofthe Division’s airlines and avia on ac vi es andop mize rou ng, synergies and overall e ecveness across the group’s airline opera ons.

The proposed project is expected to promoteinter regional and interna onal trade in the

region. Addi onally, the Project is also expected to provide a boost to tourism. Con nued trade and economic growth in Africa iscon ngent on further investments and improvements in regional transport infrastructureand services. The division’s opera on will fillthe service gap that exists today and will resultin increased frequencies for exis ng des naons as well as the addi on of new des naons, be er passenger service and improved

e ciency and safety. Such improvements willincrease the connec vity, compe veness anda rac veness of these countries’ economies.Moreover, the proposed project will supportregional integra on by assis ng the development and expansion of a group of regional airlines.

Africa—AKFED Avia on

Air connec vity is a key requirement in Nepalgiven its di cult terrain and poor road networkand strong domes c airlines are needed to provide reliable and safe air services. With touristarrivals in Nepal growing at 12% annually since2006, with Nepal increasingly focusing on tourism revenues and with a GDP growing at ~4.5%p.a., the requirement for domes c/ tourist airline seats is expected to grow further.

Buddha Air Private Limited is a closely held private limited company providing air servicessince 1997. BAPL currently has 357 seats acrossa fleet of three Beechcra s (18 seats), threeATR 42s (47 seats) and two ATR 72 (72 seats).The expansion to its current fleet had beenpar ally financed by an IFC corporate loan of$US10 Million in FY09. BAPL had a 42% marketshare by passengers in the first half of 2011,

and was the first one to bring in larger 45seater turbo prop aircra for domes c routesin Nepal and also the first to fly to Bhutan andto towns across the Indian border.

For the follow up project Buddha Air II, IFC isproviding financing of $6.9 million to BAPL tonow purchase its second ATR 72, which it hastaken on lease since September 2011, at a costof $8.6 million. IFC's will also help the Companyenhance safety standards and undergo IATAIOSA audit. financed with a US$6.9 million loan.

Nepal—Buddha Air Private Ltd I and II

29

IFCPR

OJECT

HIGLIGHTS

A ordable and e cient airline services are vitalin Brazil, given the size of the country and itsinadequate rail transporta on infrastructure.However, historically high domes c fares in Brazil have reserved the avia on market for a smallsegment of the Brazilian popula on.

The entry of the first low cost airline Gol intothe market has lowered the costs of air travel inBrazil to both business and leisure travelers, andhas thus made air transporta on accessible tothe general popula on. Gol is now extendingthe benefits of low cost travel to other regionaldes na ons including Argen na, Bolivia, Uruguay and Paraguay. Gol’s low cost model willalso contribute to making the industry morecompe ve and more e cient.

The company’s strategy is to grow its businessby popularizing air travel, s mula ng andmee ng demands for a ordable and convenientair travel in Brazil and between Brazil and otherSouth American des na ons for both businessand leisure passengers. It currently o ers over470 daily flights to 49 major business and traveldes na ons in Brazil, Argen na, Bolivia, Paraguay and Uruguay. GOL’s long term businessobjec ve is to bring a ordable air travel to allsignificant des na ons in South America.The IFC project is a $50 million corporate loan tothe company for the financing of spare partsand working capital.

Brazil— GOL Financing

Precision Air Service Limited. the largest Tanzania based airline, is undergoing a gradual fleetexpansion along with financing regular company’s capital expenditure. The Company plans toincrease its fleet with 5 addi onal aircra s tocome by 2015, 2 to be owned and the remainder through leases. The major part of the fleetexpansion will be with the turboprop ATRs tocater for short haul and domes c markets, butthe company also plans to expand its narrowbody fleet with an addi onal Boeing 737 300series for the medium haul and regional markets.Precision Air aims to triple its capacity (ASK) aswell as to grow the number of transported passengers from close to 1 million per year to over1.6 million and double its revenues by 2016. Tofinance the resul ng capital expenditure, theairline has raised TZS11.84 billion (or US$7 million) through an IPO in November 2011. TheCompany plans to complete its financing needswith internal cash flow genera on and externaldebt.

IFC is contempla ng an investment of US$4 toUS$6 million, which will contribute to financingthe Company’s capital expenditure.

From a social and labor point of view, PrecisionAir's proposed capital expenditure is expectedto help crea ng a li le less than 600 new jobsin Tanzania (currently 771 employees) most ofwhich are of a technical/qualified labor nature.Addi onally, the opening of over 10 new regional des na ons will contribute to a highermarkets integra on in Sub Saharan Africa and,in par cular, in the fast growing East Africanregion and foster tourism in a high poten altouris c area. Moreover, this will help remoteTanzanian regions get a be er access to othercountries of Sub Saharan Africa in a regionwhere there are o en no land transport alterna ves. Finally, the Project will contribute toimproved safety and reliability of flights to/from Tanzania.

Tanzania—Precision Air Expansion

30

IFCPR

OJECT

HIGLIGHTS

Kenya Airways Ltd. (KQ) the na onal flag carrierof Kenya and the third largest airline in SubSaharan Africa in terms of seat capacity o ered,is in the midst of the implementa on of a strategic fleet and network expansion plan focusedon growing its passenger network and diversifying its fleet to match the network needs as wellas launching a dedicated freighter division. Having reached a cri cal mass and achieved a solidfinancial posi on, KQ finds itself well posi onedto capitalize on the growth prospects and opportuni es that the African region and the interna onal market presents. KQ’s strategic intent is to establish its brand and its presence inthe most important intra African markets aswell as become a significant player in long haulorigin des na on city pairs that are expectedto grow over the next few years. To implementthe project, the Company has placed firm orders to aircra manufacturers in connec onwith the acquisi on of nine Boeing 787 Dreamliner aircra and ten Embraer 190 aircra .

Earlier this year, KQ ini ated capital raisinge orts to support the expansion. In June 2012,IFC invested $23 million dollars of equity and iscurrently in the process of documen ng an $80

million pre delivery payments (PDP) financingfacility. The investment in KQ is IFC’s first everequity investment in the airline sector and together with the PDP facility it will be the largestinvestment in the sector to date.

IFC's support of Kenya Airways’ expansion planis expected to have significant developmentimpact. At the regional level of Sub SaharanAfrica, the launch of the freighter division coupled with the opening of new intra Africa desna ons will contribute to markets integra onand will reduce the transac onal costs of trade,an aspect that is extremely important to promote the economic development of the SSAeconomies. KQ's entry into new interna onalmarkets will also promote compe on as wellas provide a key transporta on link betweengrowing economies in the Middle East andNorthern Africa region and Asia promo ng interna onal trade, South South Investments andtourism to and from Africa.

Kenya—Kenya Airways Expansion Plan

Contact persons for all IFC air transport projects are Ravinder Bugga at rbugga@ifc.org and HarshGupta at hgupta@ifc.org

31

IFC  AD

VISO

RY  SER

VICE

S

The   Infrastructure   Advisory   Services   Depart-‐ment   of   the   IFC   provides   advisory   assistance  to   governments   on   structuring   and   imple-‐men ng   (tendering)   Public-Private-Partnerships   (PPPs)   in   infrastructure.   IFC   has  undertaken   more   than   100   advisory   transac-‐ons   in   over   67   countries   over   the   last   20  

years.  IFC/World  Bank's  reputa on  for  compe-‐tence,   transparency,   and   fairness   allows   it   to  play   the   role   of   neutral   partner   to   balance  each   party's   interest,   thus   reassuring   foreign  investors,   local   partners,   other   creditors,   and  government  authori es  

The   two   main   domains   in   air   transporta on  advisory   services   are   private   sector   par cipa-‐on  in  airports  and  air  carriers.

1)   IFC   Public-Private   Partnerships   (PPP)                Advisory  Mandates  in  Airports

Only  2%  of  the  world’s  10,000  commercial  air-‐ports  are  managed  or  owned  by  private  sector  en es.  However,  as  passengers  carried  by  air  transport  has  exceeded  two  billion  since  2005,  and   that   same   year,   40%   of   all   merchandise  and  goods  (in  value)  were  air  freighted  –  Pub-‐lic-Private-Partnerships   (PPPs)   in   airport            infrastructure   will   grow   to   meet   investment  

and   required   service   standards.   Airport   PPPs  are   useful   approaches   to   meet   both   private  and  public  sector  objec ves.

Of   the   various   airport   PPP   models   available,  experience   shows   that   concessions   and   full  dives ture  are  most  effec ve:  

Concession   Contracts   (BOT,   BOO,   BOOT,  BTO,  etc.):   State   retains  ownership  of  air-‐port   but   transfers   investment   as   well   as  opera ons   and   management   responsibili-‐es  to  the  private  sector

Full   Dives ture:   Ownership,   opera ons,  and   investment   responsibili es   are   fully  transferred  to  the  private  sector.

In  certain  cases,  a  blend  of  first-phase  BOT  followed   by   public   offering   can   maximize  benefits

Air  Transport  Advisory  Mandates

©    Photo  ADPI  Designers  and  Planners

32

In certain cases, a blend of first phase BOTfollowed by public o ering can maximize benefits

2) IFC Public Private Partnerships (PPP) Advisory Mandates in Airlines

As the airline industry has proceeded alongthis priva za on path over the last 20 years,IFC has par cipated in nearly a dozen airlinetransac ons. Unfortunately, many haveproved to be di cult projects due to important sector specific structural reasons:

Fixed cost structure: Airlines tend to buildup a legacy costs base (sta and fleet)that is di cult for a new owner to manage. In addi on, fuel costs are beyondmanagement’s control. During the recentoil price spike, they accounted for asmuch as 30% of the cost base.

Price sensi ve product: Demand for travelis highly elas c, especially in tourist markets. In recessions, people forgo vaca onsfor other consumer goods. Conversely,price reduc ons increase passenger numbers drama cally.

Complicated demand chain: Customerso en purchase ckets through travelagents, frequently in a package with hotel

accommoda ons. Since airlines rely onthese other actors for their sales, if thereare bo lenecks elsewhere the avia onsector su ers.

Overregula on: Bilateral agreements between governments, s ll prevalent inmany parts of the world, prevent compeon from func oning normally. Open

skies are being adopted, but not in allcountries.

3.) IFC Air Transporta on Experience

When undertaking a transac on advisorymandate, IFC provides a one stop solu on togovernments covering all aspects of the proposed transac on. One of the dis nguishingfeatures of IFC’s value addi on is its ability tobalance private and public sector interestsand take into account sustainable long termeconomic and social e ects.

IFCADVISORY

SERV

ICES

33

IFCADVISORY

SERV

ICES

Selected IFC Advisory Mandates in Airports

Selected IFC Advisory Mandates in Airlines

Project Name Country Year Mandate / Result

Air Jamaica Jamaica 2009 Awarded to Caribbean Airlines

Drukair Buthan 2008 Strategic analysis

JAT Yugoslavia 2006 Strategic analysis

Polynesian Airlines Samoa 2005 49% sold to Virgin Blue

Cameroon Airlines Cameroon 2005Awarded but Cancelled by Gov

ernment

Air Tanzania Tanzania 2002 49% sold to SAA

Kenya Airways Kenya 199676% sold to KLM, financial inves

tors

Project Name Country Year Mandate / Result

Madinah Airport Saudi Arabia 2012Successfully awarded to TAV /Saudi Oger / Al Rajhi consor um

Vanuatu Airport Vanuatu 2012Due Diligence / Project Structur

ing completed

Jamaica Airports Jamaica 2011 ongoing Ini al Due Diligence Ongoing

Dili Airport East Timor 2012 ongoing Ini al Due Diligence Ongoing

Maldives Airports Maldives 2010Successfully awarded to GMR

MAHB consor um

Queen Alia Airport Jordan 2007Successfully awarded to Aéroports de Paris / ADIC / J&P /

Noor consor um

Hajj Terminal Saudi Arabia 2007Successfully awarded to SaudiBin Laden Group / Aéroports de

Paris consor um

Nigeria Airports Nigeria 2006Successfully awarded to AbujaGateway Consor um (AirportAuthority + equity partners)

34

IFCADVISORY

SERV

ICES

Malé Interna onal Airport (MIA) servicesnearly 80% of the tra c to the Maldives. Theairport has a unique inter modal process withinter change between conven onal aircra todomes c conven onal aircra , seaplanes(that ensure connec ons with island resortssca ered throughout the Maldivian archipelago) or boats. As tourism is a significant component of the Maldivian economy, the availability of adequate airport infrastructure iskey. The lack of available land, limited interna onal best management prac ce of the airport and available financing for necessary improvements to terminal capacity as well asinterna onal safety standard compliancehave however been proving to be major obstacles in ensuring this.

Consequently, the Government of Maldives(GoM) invited private sector par cipa on toexpand and rehabilitate the airport, and builda new terminal. This decision was part of abroader strategy by the government to liberalize air transport policies, improve the compe veness of Maldives’ airports and boostan economy that is heavily dependent ontourism related ac vi es.

In August 2009, the government recruited IFCas the Lead Transac on Advisor to assist withthe implementa on of the PPP. In June 2010,IFC completed its mandate and, following acompe ve bidding process, Malé Airportwas successfully awarded to a consor um of

GMR Infrastructure Limited (GMR) from Indiaand Malaysia Airports Holdings Berhad(MAHB) from Malaysia as a 25 year concession. The project included rehabilita ng exis ng facili es, construc ng a new terminalwith a capacity of five million passengers peryear, and opera ng the airport.

The winning bid comprised a US$78 millionupfront fees component and a revenue percentage share that represents nearly US$1billion (calculated on NPV basis) of fiscal benefits for the government over the length ofthe concession. The proposed investment ofUS$ 400 million by GMR MAHB in MIA represents nearly a third of Maldives’ US$ 1.3 billion GDP (2009 figures).

The project was implemented in a record ninemonths. This is the first successful publicprivate partnership project in the Maldivesand marks a flagship deal for the Governmentof Maldives’ priva za on program. It is already serving the Maldives as a model forlaunching a full scale public private partnership in infrastructure.

IFC Advisory Project: Concession of Malé Airport, Maldives

Contact persons for all IFC air transport advisory services are Ramatou Magagi at rmagagi@ifc.organd Alexandre Leigh at aleigh@ifc.org

mailto:rmagagi@ifc.org

35

MULTILAT

ERAL

INVE

STMEN

TGU

ARAN

TEEAG

ENCY

Guarantees provided by the Mul lateral Investment Guarantee Agency (MIGA) cover projects in abroad range of sectors, with projects in infrastructure accoun ng for the largest share (41%) of theagency’s outstanding por olio. Infrastructure development is an important priority for MIGA, giventhe es mated need for US$230 billion a year solely for new investment (maintenance needs are ofa similar magnitude). This is to deal with the rapidly growing urban centers and underserved ruralpopula ons in developing countries. Two recent example projects of MIGA guarantees are JorgeChavez Interna onal Airport project in Peru and New Airport project in Quito, Ecuador.

Peru Jorge Chavez Interna onal Airport (JCIA)

MIGA provided Fraport AG, of Germany with aguarantee for US$11.5 million, to cover itsUS$12.8 million counter guarantee for a performance bond posted for the priva za on ofLima's airport, Jorge Chavez Interna onal Airport (JCIA). The coverage is against the risk ofexpropria on (the wrongful call of the performance bond), and extends for eight years.

The Peruvian government sees airport privaza on as a key factor in its e ort to expand employment opportuni es, and create a moderntransporta on facility to serve as the country'sgateway to the world. It will also enhance andexpand tourism, another government goal.

During the first four years of the concession,the consor um is expected to invest overUS$130 million in new infrastructure, includingupgrades to the current terminal, construc onof a new passenger concourse, expansion andaddi on of new aircra aprons and taxiways,and crea on of a hotel and world class retailcenter within the exis ng airport perimeter

© Photo Peru Tourism Bureau

36

MIGA issued three guarantees of US$32.8million, US$16.4 million, and US$16.4 millionto the Aecon Group INC. of Canada, the HASDevelopment Corpora on of the UnitedStates, and ADC Management Ltd. of theUnited Kingdom for their respec ve shareholder loans to Corporacion Quiport of Ecuador. In addi on, MIGA also issued guarantees of US$450,000, US$225,000, andUS$225,000 for the investors' respec ve equity investments in the project enterprise.The Aecon Group and HAS DevelopmentCorpora on have coverage for a period offourteen years for their shareholder loanswhile the remaining four guarantees are fora period for fi een years. Each guarantee

provides coverage against the risks of Transfer Restric on, War and Civil Disturbance,and Breach of Contract.

The project involves the construc on of anew airport near Puembo, 24 km. outsidethe capital city of Quito. The project will be akey economic driver for sustainable economic development of the metropolitan regionof Quito. The airport is expected to be opera onal by early 2008 to replace the exis ngairport in the city of Quito, which su ersfrom safety deficiencies as well as capacityconstraints.

Ecuador – New Airport at Quito

MULTILAT

ERALINVESTM

ENTGUARANTEEAGEN

CY

Contact person for all MIGA guarantees is Margaret A. Walsh at mwalsh@worldbank.org

37

EXTERNALRELAT

IONS

Interna onal Civil Avia on Organisa on (ICAO)

The Interna onal Civil Avia on Organiza on(ICAO) is the specialized air transport agencyof the United Na ons. The WBG and ICAOhave been working closely together on various air transport issues. ICAO has among other things provided safety and security auditsand supervision services for the Bank’s projects in West and Central Africa and in theSouth Pacific and has assisted in iden fyingneeds and priori es of air transport projectsin various countries.

In April 2012 Charles Schlumberger represented the World Bank Group (WBG) at the Interna onal Air Transport Symposium as speakeron the Panel: Financing Air Transport: Challenges and Prospects (h p://www.icao.int/Mee ngs/iats/Pages/default.aspx). On thepanel of financing air transporta on, he presented the WBG air transport por olio, andoutlined challenges and opportuni es.

In addi on, the Bank maintained regularcontact and mee ngs with ICAO o cials during FY12. A par cularly prominent topic inthese mee ngs has been the ongoing debatedon environmental sustainability of avia on.With regards to this, ICAO, IATA, ATAG andthe WBG have been engaged in discussionthroughout the year with regards to a possible coopera on on the se ng up of a globalscheme addressing interna onal avia on CO2emissions.

38

As in previous years ICAO, the World Bank,and Routes jointly held the Global Avia onStrategy Summit (GASS) in Berlin, Germanybetween 2 October and 4 October 2011. Thisannual event serves as a pla orm for exchange between the Bank, ICAO and the avia on community including airlines, airportsand service providers. The conference, theseventh of its kind, was co located with the17th World Route Development Forum atthe Messe Berlin. In a series of panel discussions the industry’s most prominent issueswere discussing including topics such as theavia on industry today, the environmentalchallenges and opportuni es for the avia onindustry, avia on as an economic development catalyst, and the role of alliances andnew aircra in the development of airportinfrastructure. The successful event, moder