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Edinburgh Airport Enters the Market: A Closer Look at a Strategic Investment Opportunity

In a surprising move set to capture the attention of global investors, Edinburgh Airport has been put up for sale by its current owners, Global Infrastructure Partners (GIP), just in time for an early Christmas present to the investment community. The announcement was made by John Grant, Head of Analysts at OAG.

As a private equity firm, it was always on the cards that GIP would consider moving the asset at some point, and with the market recovering robustly, they likely feel now is as good a time as any.

"A sale in early January will pique the interest of investors worldwide, from sovereign funds to equity investors, infrastructure-focused funds, and even existing airport operators. So, in real estate agent terms, what exactly is on sale?" remarked the analyst.

While every airport is a constant construction site, Edinburgh has particularly been diligent in recent years, revamping the terminal and enhancing facilities, translating to more retail space.

Compared to two decades ago, the airport undeniably offers a more pleasant experience with direct tram access to the city and intermodal connectivity with the rest of Scotland, ticking many sustainability boxes. "Of course, any new owner will need to invest, but the basics and more are already in place," noted the expert.

Having access to a robust local market demand, especially from a thriving corporate community, enhances the appeal of any airport. Edinburgh meets this requirement with its financial and insurance base that can support services comparable to those of London's City.

"When combined with global events like the Edinburgh Festival, the city stands out for having strong both inbound and outbound markets; directionality and seasonality are balanced, undoubtedly appealing to those counting the dollars," Grant pointed out.

"An airport needs a stable and happy base of airline customers, and Edinburgh seems to be a popular facility judging by the variety of clients operating at the airport. 38 regular airlines have operated from Edinburgh this year, compared to 25 in 2010," Grant referred.

While notable victories since 2019 include Ryanair, some other airlines, including Emirates, are yet to return, and American Airlines will only resume services next year.

In the upcoming sales brochure, much emphasis is likely to be placed on easyJet's network and presence, which is larger than Ryanair's and makes it the largest airline operating at the airport.

Since 2010, Edinburgh has increased its capacity by over 44%, securing around 8.6 million scheduled seats.

This year, Edinburgh is one percentage point away from recovering 2019 capacity levels and is poised to surpass 2019 levels next year: "it's always a positive message when selling something."

In recent years, the airport has certainly followed an upward trajectory, much of which has been based on the return of Ryanair and the growth of other low-cost carriers, meaning 70% of scheduled capacity now comes from this sector compared to 58% in 2019.

The growth in the low-cost sector will undoubtedly be seen as a more creative base of airline customers who know how to stimulate market demand, rather than a risk to aeronautical revenue performance.

"Every house has its price, and every airport has an even higher price. The experience of airport transactions suggests there is always someone who believes the airport has advantages, that more non-aeronautical revenues can be generated, or that higher operational efficiencies can be achieved.

And in some cases, they can, and in others, it turns out to be more challenging than thought or paid for initially. However, one thing is certain: Edinburgh and its current owners will not sell it in January, and certainly not at a discounted price for anyone," concluded John Grant.

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