Airports Company South Africa was formed in 1993 as a public company under the Airports Act (No. 44 of 1993) and, although majority owned by the South African Government, is legally and financially autonomous and operates under commercial law.
Over the years, the company has transformed a fragmented, infrastructural parastatal into a focused, customer driven, efficient and commercially successful business, whose airports have become critical success factors to Brand South Africa.
Airports Company South Africa SOC Ltd (the Company) owns and manages a network of nine airports in South Africa, including the three main international gateways of O.R. Tambo International, Cape Town International and King Shaka International Airports. In 2017, the nine airports facilitated nearly 41 million passengers.
The Company is involved in equity investments abroad and provides technical advisory and consultancy services to other airports globally. Our majority shareholder is the South African Government (74.6%).
In line with the South African Government’s objectives, we focus on creating sustainable value that positively impacts our business, our people and society, and our environment over the short, medium and long term. We do this by managing the Company in an integrated manner.
As a State-owned company, Airports Company South Africa has a greater mandate than simply delivering profitability for its shareholders. We are mandated to advance South Africa’s national agenda of economic growth and development while delivering a sustainably profitable business.
As a South African business, we are committed to achieving transformation by providing development opportunities for previously disadvantaged people. Our transformation agenda is aligned with South Africa’s NDP and is guided by our transformation imperatives and Sustainability Framework. We strive to fulfil this mandate by conducting our business in an ethical manner that enables inclusive growth and creates sustainable value for all our stakeholders.
Our three-pillar strategy, namely to Run airports, Develop airports and Grow our footprint is supported by our Sustainability Framework. Each of these elements are aligned to our mission, vision and objectives. We implement our strategy and measure our performance against a set of strategic objectives and KPIs.
This strategy outlines key outcomes that define our success that will help us achieve our Vision 2025 objectives and become the most sought-after partner in the world for sustainable technical advisory and consultancy services. This is aligned to our mission to develop and manage world-class airport businesses for the benefit of all stakeholders.
Airports Company South Africa is a significant enabler of economic growth, transformation and socio-economic development. In 2017 the Company commissioned a Social, Economic and Environmental Impact for FY 2017¹ and the report reflected that we:
• Generated R9.5 BILLION for South Africa’s economy
• Supported 14 950 direct and indirect jobs
• Supported R2.8 BILLION in income for its employees and those of its local suppliers
Airports Company South Africa has two distinct revenue streams, which have generated similar income for the past few years. One source is defined as aeronautical income and is derived from regulated charges or tariffs. These consist of aircraft landing and parking charges, and passenger service charges. The non-aeronautical income is generated from commercial undertakings and flows from retail operations, car parking, car rental concessions, advertising, property leases and hotel operations.
Another component of non-aeronautical revenue is generated by international operations. Airports Company South Africa formed part of a consortium that took over the expansion and management of Chhatrapati Shivaji International Airport in Mumbai, India. The success of the venture in India encouraged the Company’s Commercial Services division to seek similar opportunities elsewhere. Such undertakings allow the leveraging of the pool of skills and experience that the Company has amassed over the years to grow the business and increase shareholder value.
Airports Company South Africa, in partnership with the Brazilian company, Invepar, was successful in a bid to manage the development, maintenance and operations of Guarulhos International Airport in São Paulo, Brazil, the busiest international airport in Latin America. The consortium with Invepar will own 51 percent of the airport concession, with 49 percent being held by Infraero, the current airport operator. Airports Company South Africa owns ten percent of the consortium with Invepar.
The nine airports are major generators of direct and indirect employment and business opportunities, providing the core of development nodes. The concept of the ‘aerotropolis’, whereby a range of manufacturing, logistics and commercial facilities, complemented by hotels, retail outlets, entertainment complexes and offices are clustered around an airport is likely to further accelerate the core role of airports.
This is particularly true for King Shaka International Airport and its associated Dube Trade Port and the drive for an aerotropolis surrounding O.R. Tambo International, which is directed by Ekurhuleni Metropolitan Municipality.
The Company is mandated to undertake the acquisition, establishment, development, provision, maintenance, management, operation and control of any airport, any part of any airport, or any facility or service at any airport normally related to an airport function. This mandate is in line with the Airports Company Act, No. 44 of 1993, as amended.
The Company is a Schedule 2 public entity in terms of the PFMA and operates as a legally and financially autonomous company within the legal framework outlined in the Companies Act, No 71 of 2008.
Airports Company South Africa will continue to play its role as a key driver of South Africa’s economy by demonstrating socioeconomic and environmental responsibility through its various activities and programmes.
South Africa’s airports were owned and operated by the state until 23 July 1993, when Airports Company South Africa was officially established and nine airports were transferred to the company. The company’s sole shareholder from then, until partial privatisation was the state, through the Ministry of Transport.
In April 1998, i di Roma, an Italian airports-management firm, won a competitive bid to become Airports Company South Africa’s strategic equity partner and paid R819 million for 20% of the company’s shares. The bidding process revealed that top international airport companies had high regard for entity’s professionalism, and confidence in the company’s inherent value – indicating just how well it measured up to international best practices.
Other shareholders include five empowerment consortia: G10 Investments, Telle Investments, Pybus Thirty-34, Up-Front Investments 64 and Lexshell 342 Investments Holdings. Together they own 4.2%.
Airports Company South Africa is now a mature organisation. We have emerged from a phase of radical, sustained transformation and reconstruction to become an efficient, expanding commercial company with a skilled and motivated management team and staff.
An important development has been the introduction of a balanced scorecard management system. This multi-dimensional system enables us and our stakeholders to consider business’s objectives, decisions and actions – and to assess our progress – in relation to four major determinants of business success: financial performance, customer satisfaction, business systems and human capital development. This approach enables Airports Company South Africa to plan for a future filled with technological, global, economic and regulatory challenges. It enables us to use our assets – including brand, expertise and intellectual capital – to the full.
Our success as a commercial, world-class, globally competitive company is a model for successful privatisation. Airports Company South Africa is a prime example of how an innovative, private-enterprise undertaking can emerge from a loss-making, state-owned company.