A critical appraisal of public-private-partnership as a financial model and critical success factors in aviation sector in Turkey

Abstract

Purpose- Due to the complexity and high-tech nature of airport projects, their completion takes a substantial amount of time and cost, posing significant financial hurdles for governments. In recent decades, infrastructure finance challenges are increasingly being met through the Public-Private Partnership (PPP) model, which brings together public and private sectors to build and maintain public facilities. This study provides an overview of the PPP model and the major stakeholders in its implementation. In addition, the financial structuring of PPP projects and the financial instruments typically employed in PPP model is also highlighted. Besides, it is aimed to discuss the critical success factors of PPP model in airport projects in Turkey. Methodology- In this study, the charactheristics of PPP model, its associated stakeholders and the financial structure of PPP projects are highlighted through a review of literature and it is aimed to determine and classify the critical success factors of PPP model in airport projects in Turkey. Findings- PPP project contracts need to address the adequate sharing of risk, profit, and the costs associated with making new investments. In the study, the macro-level and project-level critical success factors are determined through a review of literature and classified into 7 sub-groups. Conclusion- In a general sense, a PPP project is considered successful if its objectives are met and its stakeholders are satisfied with the results. Besides, taking into consideration the significant EBITDA profitability of PPP airport projects in Turkey, the government’s partnership in the SPV companies with a public minority share is proposed in order to make it possible for the public to get its share of the profit and to gain more control over these companies. In this model, since the government is involved in the project as an active actor with its legislative power and expertise, the resilience, transparency, and profitability of the project will increase, and both sides may benefit more from the PPP project. Keywords: Public-private-partnership, aviation industry, critical success factors, airport investments JEL Codes: L93, R42, G20, H81