United World talks to Mr. Kjeld Binger, CEO of Airport International Group, the company in charge of managing, operating and promoting the Kingdom’s prime gateway, QAIA, in a manner that is befitting of this exceptional country with its warm people and unique offerings.
We would like to start with a general view of the current situation the aviation industry is going through at the moment in Jordan, with all the political turmoil surrounding the region.
I think there are two main issues that need to be addressed in this respect. Number one, of course, is the general political situation. We are very fortunate that Jordan is a safe spot in the Middle East and it has been a safe spot for a long time and I truly believe it will continue to be a safe spot also in the future. This is obviously due to the security apparatus in Jordan, which is second to none from what I have seen around the world (and I have seen quite a bit here and there). It is some of the most efficient I have ever seen.
And, somehow, this also reflects into the aviation industry and it has an impact. What we see for the time being is that the market for incoming tourism is decreasing from the Western part of the world, specifically from the US and from Europe. This is due to, I think, some kind of misperception of what is going on. The headlines are about Syria, Lebanon, Iraq, etc. but people see these headlines and, since they know, in a map, Jordan is in the middle of all of this, they decide they don’t want to come here.
So this is an issue we are dealing with when looking at inbound tourism into Jordan. Not so much on the business side, I think business people go more to the point in seeing what really goes on and are better educated. So it is a communication issue, which is why I believe this interview is very relevant.
On the other hand, funny enough, it also has a positive effect on inbound travel to Jordan, because what we have seen is a huge increase in travel from the Gulf into Jordan.
So we see a huge influx of tourists coming from the region. And what we have seen so far since the last crisis came up in Syria, and now in Iraq, is that we have been able to see a massive growth in traffic despite everything; and this growth is coming from the region. So, the political situation has in some respects had a negative impact but in other respects has had a positive impact. What we see is extraordinary, because the positive impact, traffic-wise, is actually more than the negative. So, all in all, the equation is not that bad.
The other part of the equation is how does the aviation industry develop itself from a Jordanian perspective? And we cannot discuss that without talking about RJ. RJ is an institution in Jordan; it is a very important national symbol for Jordan.
Unfortunately, RJ has been hit by this disease that we have seen in almost any flight carrier in the world, and that they all have to overcome. And those of them who are strong and really have the support overcame these issues and are now strong businesses. I can mention British Airways and Lufthansa and Iberia, for example; all of them have been through these periods where they have had to adjust to a new world. RJ went through a certain strategic shift years ago, when they decided to go for the 787 Dreamliner. Personally I believe this was a very important step, because focusing on the Dreamliner is also focusing on a market segment that is slightly more difficult to handle for, for instance, Emirates and their A380 strategy. The 787 are more suitable because they are smaller, but they are more economic to fly.
So you can identify markets that were not suitable because of range, because you have to combine range with the big, expensive wages. But all of a sudden you can combine the market, the range, into a plane that is more suitable for this particular market. And there, I think, RJ can find a niche that can support Jordan as a regional hub. A hub cannot be a hub without having a hub carrier, and I cannot see any other hub carrier than RJ. So I think this symbiosis between the operation of RJ, the fleet of RJ, the market itself and the local market, laced very closely together.
I am very well aware that RJ has very serious financial issues to deal with now, but on the other hand I also believe that they have the will and capability to come out of these troubles and then start growing again and start manifesting their position in this market.
And if that can be created, then the channel of inbound tourism will also open, because hubbing is all about feeding into the hub. Feeding consists partly of transit passengers and partly of origin and destination passengers, and they have to live together; and those two markets are actually supporting each other. So, when you create a hub you also stimulate point-to-point travel, because you create an opportunity that was not there before. This is what I think will create what we have defined internally in AIG as a regional niche hub, because it is based on a niche market.
So, I am actually very optimistic that this strategy is valuable and it will create a new future of aviation and tourism in Jordan.
QAIA Reached a historical 700,000 visitors in September. What does this mean for you? What are your expectations for the coming years after such a historical figure?
First of all, it makes me very happy and it really boosts my sense of optimist. I have always said, and I maintain this, that infrastructure in itself does not create a new market. However, it is very helpful. So, having an infrastructure that makes people say “Wow!” when they arrive I believe has a positive effect, it spreads like rings in the water, it spreads through hearsay and so on. It is an evolving sort of communication and appreciation that comes out and, of course, it has a huge impact. So, passing that record number is generating, I think, positive energy. You cannot say that because we reached 700.000 automatically we will reach more and more, but it creates new energy and even among the airlines and the players in the tourism industry and ourselves we walk the extra mile to give the extra service, etc.
And that is very important, because I happen to believe that prosperity comes out of optimism, energy and will to go the extra mile. So, this positive boost is extremely encouraging.
We have RJ going through a very challenging time at the moment but at the same time we have Queen Alia international Airport, we have Airport international Group with a 700 million dollar investment, 25 year concession agreement. So, within the challenge there is a huge optimism for further development in years to come. So, what is the role AIG is going to play in the future of Jordan’s aviation industry?
First of all, since we made our last agreement with the Jordanian government for the expansion of the airport and how to construct it in the future, we have also changed slightly our investment profile. So, from around the 900 million dollar investment we were counting on early on, we have now changed our estimates and the total investment will probably be in the range of 1.2 billion.
So, we are a little bit more optimistic than we were earlier on, when we were talking about a capacity after 25 years of approximately 12 million passengers; we have revised that to 16 million passengers. So, the optimism is even coming out and materializing in higher investments.
So, what role do we play in that? I think the most important role for us is that we need a new vision statement for the company. The vision statement that we agreed with the board is that Queen Alia International Airport shall be at all times among the 20 best in the world, among its peers, which consists of airports from 1 to 15 million passengers. It must at all times be among the 20 best in the world, measured by a very well recognized method. This is our goal, and by staying there we maintain a quality product.
I think this is the most important role AIG can play, apart from just bringing the money to the table, it is to operate the airport in a way that it is always mentioned in a positive way. Because one of the ways we can market Jordan is through delivering a quality product that creates a brand outside the country.
I believe the best promotion for a country nowadays is its national airline and their airport, because it is the first and last thing you see when you visit. Airport International Group is contributing tremendously to the social economic development of this country; once the 25 agreement passes you will have contributed more than 1 billion dollars to the national archives?
By the end of this year we will have accumulated more than 450 million dollars. So I don’t have the exact number, but by that time we will be well beyond a billion dollars. That is one billion dollars in direct revenue but, of course, during that period of time we will have contributed to the GDP with another 2 or 3 billion dollars through investment and daily operations. So it is a huge contributor to the daily economy.
You are also a major support of His Majesty King Abdullah’s vision of transforming the country into a modernized knowledge-based society and being at the top in terms of infrastructure development.
I think that is very important for Jordan strategically and I firmly believe and completely agree with His Majesty’s vision. It is extremely important for Jordan to concentrate on the higher end of the value chain. Therefore you have to focus on high-technology, high-quality products.
The Jordanian population is extremely well educated and a large percentage of the people ending high school go to university, and the problem is that there are not enough jobs for these young people when they come out of university. Those jobs need to be created, now, to create those jobs you need infrastructure and you need modality, you need a transport sector and so on. I can give an example: everyone knows about Dubai. When Sheikh Rashid started the development of Dubai he was investing in the port, he made a 2 billion dollar investment in that port and today you can’t even count the number of billions that it would have meant today. It was a huge step, but it was a step into infrastructure. And then came the airport and then came Emirates. When Sheikh Rashid’s brother started Emirates he got two wet lease planes to be able to start flying; again, the first step was infrastructure.
To some extent I see the airport as playing a similar role, not to the same extent, but I see the airport playing a very important role here. We are not sitting here trying to work in a shell, we are very well aware that we need to look at competition, because competition creates business.
How are you participating in the development of Queen Alia international Airport and how is AIG focusing its efforts on generating a very sustainable long-term vision for the expansion of the terminals?
We believe that we have to invest in the future. And this is why we changed our investment model. We truly believe that we need to show that this is not a hit and run, this is really an attempt to create something sustainable, something that lasts beyond our time.
The fact of the matter is that AIG shareholders have invested into what we call a very loaded project, and that means that the return to the shareholders will only come out at the very end of the concession; until then they will have to wait patiently. What I am saying is that even from the very beginning, all the shareholders, of course they do it for business, but it is also a business model based on the long term. So it is in the blood of the entire project that this is long term.
Therefore, this is why everybody agreed to come up with more money and agreed to accelerate the infrastructure, believing that we would have to do it as an emergency sometime in the future, which we don’t want, because then all of a sudden we cannot deliver the same quality anymore. And that is the worst thing that can happen. So, by doing this we avoided a setback and I think this is one example of how sustainability is playing a huge role in the way we are thinking. And that goes for the government and for AIG in the partnership, which is extremely important because without that partnership it couldn’t work.
From the outside it is seen as one of the healthiest PPPs ever in the region. Can you please expand on how that relationship has evolved throughout the years?
It has been evolving, in my opinion, as one of the most successful I have ever seen. And I have seen quite a few in my career. This relationship is the very best I have seen globally, and when I say globally I mean from China, to Europe, to the Americas, all over the globe. And I think this is one of the most successful; we have a very tight and positive connection. I am walking in and out of the minister of transport’s office as if it were my own and vice versa.
Of course, we have our glitches now and then, like everyone, but overall it is working out very well. I will say the last agreement we made was a wonderful way of cementing the fact that this is a partnership. And I noticed that His Majesty in his speech mentioned the project several times.
Would you encourage American investors to look into this market, to tap into the potential of Jordan not only in the infrastructure sector but also in the economy in general?
I would strongly recommend investments in Jordan. I strongly recommend partnerships with the government because I see that there are long-term sustainable projects with partnerships here becoming very successful.
It is very important that a business model can be created that gives the Jordanian people optimism and positive perception, making them part of it. So, again, I see ventures in technology, energy, etc. but up the value chain, something that gives the young Jordanian people a positive perception, and a perception that here they have an opportunity. This is extremely important; it is not about slamming a million dollars on the table and saying: We invest so we expect a return quickly. You have to come in with a sustainable business that can be sold as a venture for the future. This is what is important, and AIG is a prime example in this regard. We are a Jordanian company that has garnered high levels of expertise in the fields of airport management, construction and finance from Jordanian, Arabian Gulf and European partners including: Invest AD (38%), Noor Financial Investments Co. (24%), Edgo Group (9.5%), J&P (Overseas) Ltd (United 9.5%), J&P-Avax SA (9.5%) and Aeroports de Paris Management (9.5%). Our approach is closely aligned with His Majesty King Abdullah II’s vision to attract foreign investment to Jordan and generate job opportunities for Jordanians, consequently creating long-term benefit for both the country and its people.
With your professional experience across most of the world, what has been your experience in Jordan?
Yes, there is not a country in South America I haven’t visited. After having spent, all in all, seven years in the Middle East I can say 100 percent that Jordan is my number one.
Give us one last message for our readers, what would you like to convey to that audience?
Jordan is a country of prosperity; Jordan is a country with a leadership that really cares about the development of the country. I think the reform process that is happening in Jordan will eventually lead to the most modern society in all of the Middle East; not necessarily the richest, but the most modern and the most accommodating society in the Middle East. This is the place where, I believe, one should have the focus when speaking about foreign investments.