ADP Ingénierie and NACO–InterVISTAS Proposals and the Feasibility Study for Bălți-Leadoveni International Airport

ADP Ingénierie and NACO–InterVISTAS Proposals and the Feasibility Study for the Development of Bălți-Leadoveni International Airport

Between 2019 and 2021, the prospect of developing Bălți-Leadoveni International Airport entered a distinct technical and institutional phase. Public statements by the Government of the Republic of Moldova, the Terms of Reference prepared by the Civil Aviation Authority, and proposals formulated by international airport consultants such as ADP Ingénierie (ADPI) and NACO Netherlands Airport Consultants / InterVISTAS outline a process in which the development of Bălți Airport was to be supported by technical and economic assessments, a feasibility study, a Master Plan and, according to the intentions publicly stated by the Government at the time, the attraction of private investment through a public-private partnership.

The documents must, however, be distinguished from one another. They include capability presentations, model technical proposals, formal expressions of interest in providing services and participating in a tender, and Terms of Reference for a feasibility study. Neither ADPI nor NACO–InterVISTAS has received any response from the Moldovan authorities to this day. Neither the tender nor the feasibility study has been carried out to this day.

2016 — ADP Ingénierie and the Project for a New Bălți International Airport

ADP Ingénierie’s interest in Bălți predates the 2019–2020 government initiative. On 10 October 2016, ADPI prepared a presentation entitled “BZY – New Balti International Airport Project”.

The material presented the company’s capabilities across the entire airport development cycle: traffic forecasting, strategic planning and Master Planning, airside infrastructure, runways and taxiways, airport pavements, the ACN/PCN method and Pavement Condition Index, terminals, baggage and security systems, air navigation, ATC/CNS/ATM, NAVAIDS, ICAO/EASA certification, risk management and implementation supervision.

The document is relevant because it shows that the development of Bălți-Leadoveni was already being considered in relation to the expertise of an international airport consultant well before the Government officially revived the subject in 2019.

2019 — ADPI and the Technical Assessment of the Bălți-Leadoveni Runway

A subsequent ADPI document, “Pavement survey and PCN: Bălți International Airport — Technical/Financial Proposal”, describes in detail how an assessment of the airside infrastructure of Bălți International Airport could be carried out.

The document is expressly marked as a non-contractual model, without legal value and subject to modification and, therefore, should not be understood as an executed contract.

Its technical scope is nevertheless very precise: the runway, taxiways and apron of Bălți Airport were to be assessed through a Pavement Condition Index inspection, an analysis of the existing technical documentation and the calculation of the PCN.

If the “as-built” documentation did not allow the PCN to be determined reliably, ADPI envisaged proceeding to additional geotechnical investigations. These could include FWD/HWD testing, ground-penetrating radar, drilling and concrete testing in order to establish the structure and thickness of the pavement layers and identify weak areas.

The result was to include PCI and PCN values, photographs and defect mapping, repair and maintenance priorities, and a preliminary cost estimate.

This proposal is particularly relevant to what subsequently appeared in the Moldovan authorities’ Terms of Reference: these likewise required the investment programme for each airport to take account of the runway Pavement Classification Number — PCN.

9 December 2019 — Oleg Tofilat: the Study Must Be Carried Out by International Experts

On 9 December 2019, Oleg Tofilat, then adviser to Prime Minister Ion Chicu on transport matters, explained in an extensive interview with Radio Free Europe how the Government envisaged the assessment of regional airports. [1]

Tofilat recalled that Bălți Airport had previously already been included among the priority public-private partnership projects and argued for the need for a “proper feasibility study, carried out by international experts”. It was to analyse several locations, among which, according to Tofilat, Bălți and Mărculești would certainly be included, together with at least one location in the south.

The study was to determine the investments required for the runway, taxiways, apron, passenger terminal and equipment.

With regard to Bălți, Tofilat referred to his own preliminary calculations made around 2014: with an investment of approximately EUR 50 million and charges significantly lower than those at Chișinău, approximately 3–3.5 daily flights operated with Airbus A320/Boeing 737 family aircraft could, under his assumptions, support the operation of the project. He emphasised, however, that such estimates were no substitute for the professional study that was to be carried out.

Oleg Tofilat interview — Radio Free Europe, 9 December 2019. [1]

December 2019 — Government Considers Bălți More Commercially Attractive

During the same period, Prime Minister Ion Chicu made an important distinction between Bălți and Mărculești.

Following an initial analysis, Chicu stated that, from a commercial perspective, Bălți Airport was more attractive because of its proximity to the municipality of Bălți and the larger number of settlements within its catchment area. The disadvantage was said to be the much greater investment requirement. At the same time, no calculations or studies were presented that would make it possible to reach this conclusion — namely, that the investments required for Bălți-Leadoveni, which had many years of regular commercial and charter operations, would be greater than those required for Mărculești, where no commercial flight had ever taken place and where restrictions signed by the CAA itself existed/exist in the operating authorisations for passenger and cargo transport. [2] [3]

The Prime Minister linked the development of Bălți to a PPP mechanism:

“We need to carry out the feasibility study.”

According to his explanation, the study was to determine what contribution the state would make to the project and what obligations would fall upon the private investor before the state could organise the PPP tender. [2] [3]

In a subsequent interview, Chicu described the advantages of the Bălți location even more explicitly: in his view, the airport was “much more attractive” commercially, being located near the city and an important road (M5) and being accessible from Ukraine as well. Bălți was nevertheless said to require major investments, including in the runway and airport infrastructure, which was why the Government had opted for development through a PPP following completion of the feasibility study. Again, with regard to the “major investments” mentioned, it is unclear what calculation basis underlay these statements. [7]

Terms of Reference — Bălți, Mărculești and Ceadîr-Lunga Were to Be Evaluated

These political statements have a counterpart in a technical document: “Republic of Moldova / PPP Feasibility Study in the Transport Sector — Regional Airports”.

The Terms of Reference were prepared by the Civil Aviation Authority, with coordination fields for the Ministry of Economy and Infrastructure and the Public Property Agency.

The document identifies Bălți as a potentially important regional airport and explicitly establishes that the study should focus on three airports:

• Bălți, Mărculești and Ceadîr-Lunga.

Accordingly, the planned study did not formally begin from the premise that Mărculești had to be selected for northern Moldova. The consultant was also required to rank the relative priority of each of the three airports, taking into account their catchment areas, competing airports, safety, certification and the role of regional airports.

What the Study Was Supposed to Analyse

The mandate was considerably broader than an assessment of runway condition.

First, the consultant was required to determine the commercial and financial viability of each of the three airports, including whether each of them was necessary and justified for the Republic of Moldova.

The following were to be analysed — as, incidentally, had also been mentioned in the civic report of 14 June 2016:

• the country’s socio-economic situation and economic geography;
• the air transport market and competition from airports in Moldova and the wider region;
• the history, traffic, infrastructure, equipment and functionality of each airport;
• critical issues and urgent investments;
• the runway PCN and the investments required in relation to it;
• minimum requirements for certification in accordance with ICAO and EASA standards;
• the financial and institutional situation;
• forecasts for scheduled, charter and cargo traffic;
• aeronautical and non-aeronautical revenues;
• operating costs;
• risk analysis;
• CAPEX and urgent and subsequent investments;
• the possibility of private-sector participation;
• the legal framework for PPPs and procurement;
• the Master Plan, business plan and marketing strategy.

For each airport, an individual assessment was to be carried out of its infrastructure, critical issues, investment requirements, financial position and role within its community and region.

Bălți’s Traffic and Viability Were to Be Demonstrated by Figures

For each airport, the consultant was to prepare separate forecasts concerning scheduled-flight passengers, the number and types of aircraft, scenarios with and without investment, cargo traffic and non-scheduled flights.

In parallel, airport charges, potential revenues, operating costs and opportunities for additional revenue were to be estimated.

The ToR then required a clear conclusion for each airport regarding its financial viability, based on analysis of demand, risks, costs, revenues, balance sheet, cash flows and sensitivity analyses.

This is important for Bălți-Leadoveni: the choice of airport for development was to be substantiated by traffic, costs and economic performance, rather than solely by the infrastructure’s physical condition at a particular moment.

Including the Cost of the “Do Nothing” Scenario

The study was to distinguish urgent investments from those required at a later stage and compare intervention with a baseline scenario explicitly including the “do nothing” option, up to the possible closure of the airports.

The consultant was to determine the EIRR both for the three-airport programme as a whole and separately for each airport. Environmental issues that could affect the assessment were also to be identified.

Master Plan for Bălți and the Attraction of Scheduled Flights

The ToR also provided for examining the need to finance an individual Master Plan for each airport, together with a business plan and marketing strategy.

These plans were to identify the investments required over the long term and include marketing and contracting strategies to attract additional traffic, new routes and new air carriers. The consultant was also asked to analyse the advisability of a general Master Plan for the entire airport system of the Republic of Moldova.

For Bălți-Leadoveni, this meant that the study was not supposed to be limited to the question of whether the runway could be used in its existing condition. It was to define the optimal development programme, investments, traffic, economic model and instruments required to attract airlines and flights in practice.

The Study Was Directly Linked to the Government

The consultant was to report to the Civil Aviation Authority while maintaining liaison with the Ministry of Economy and Infrastructure and the Prime Minister’s Office.

The CAA was to facilitate access to information held by the Ministry, the Prime Minister’s Office, MoldATSA, official statistical authorities, each regional airport and the operators of Chișinău International Airport.

The draft report was to be prepared approximately eight weeks after commencement, with the final report due one week after receipt of comments.

The consultant was required to have experience in feasibility studies for transport PPPs, preferably airport-related, while the team was to include expertise in airport finance, airport civil engineering and PPP structuring in Central and South-Eastern Europe.

January 2020 — Chicu: the Main Airport in the North Should Be in Bălți

In an interview published by NewsMaker, Ion Chicu went even further in describing the strategy for northern Moldova. [4]

Referring to Bălți-Leadoveni Airport, the Prime Minister stated that Bălți was commercially attractive and easily accessible and said:

“It is clear that in the north of the country, the main airport should be precisely there.”

He specified that the project required major investment, which should not be borne by the state, and that the feasibility studies were to establish the value of the project and the PPP conditions before the tender for investors was launched. Reminder — the justification and precise calculation basis for the “major investment” figure were never presented.

In another statement from the same period, the Prime Minister said that a feasibility study involving foreign experts was to be carried out for Bălți, after which the costs would be assessed, the conditions for state participation in the PPP established and a tender for an investor organised. [8]

February 2020 — Government Announces an International Company for the Bălți Study

An official Government communication from February 2020 explicitly links this strategy to Bălți Airport.

During Prime Minister Ion Chicu’s discussions with the German Ambassador, the Government announced that the Republic of Moldova needed another international airport and that: [5]

“an international company will be contracted”

to carry out the feasibility study concerning the opening of the airport in Bălți, with the project to be implemented through private investment.

Government of the Republic of Moldova — feasibility study for Bălți Airport. [5]

On 12 February 2020, following a meeting with Canadian and Israeli investors interested, among other areas, in airport infrastructure, the Government once again recorded the Executive’s intention to carry out a feasibility study in order to clarify opportunities for the development of airport infrastructure in the Republic of Moldova. [6]

Government of the Republic of Moldova — meeting with investors, 12 February 2020. [6]

28 February 2020 — ADP Ingénierie’s Offer of Expertise for Bălți

Against this background, on 28 February 2020, ADP Ingénierie sent a letter to the Director of the State Enterprise Moldaeroservice with the following subject:

“Expression d’intérêt, développement de l’Aéroport international de Balti”.

ADPI expressed its readiness to make its expertise available for the development of Bălți International Airport in the following areas:

• preparation of a development programme;
• technical studies;
• economic studies;
• preparation of a short-, medium- and long-term Master Plan.

ADPI specified that it was awaiting a concrete definition of the client’s requirements in order to formulate a tailored proposal.

Accordingly, ADPI’s February 2020 expression of interest was not a generic presentation concerning Moldova’s airports: the recipient was the operator of Bălți Airport, and the subject of the letter explicitly concerned the development of Bălți International Airport.

29 February 2020 — NACO–InterVISTAS Proposes Due Diligence for Bălți

Only one day later, on 29 February 2020, NACO Netherlands Airport Consultants sent the management of Moldaeroservice an expression of interest entitled:

“Expression of Interest — Due Diligence, Bălți International Airport Moldova”.

NACO stated that it understood the need to identify a technical consultant to perform due diligence in connection with the anticipated transaction concerning Bălți International Airport.

The proposal combined NACO’s expertise in airport planning, design and engineering with InterVISTAS’ expertise in traffic, economics, commercial matters, finance and transactions.

The proposed assessment included:

• demand and traffic forecasting;
• technical due diligence;
• infrastructure and capacity analysis;
• Master Plan;
• development requirements;
• CAPEX;
• OPEX;
• aeronautical and non-aeronautical revenues;
• Airport City development;
• environmental analysis;
• financial modelling and cash-flow assessment.

Thus, the NACO–InterVISTAS proposal approached Bălți Airport as a complete investment project in which infrastructure, traffic, airport development and financial viability were to be analysed together.

Compatibility Between the Feasibility Study and the ADPI and NACO Proposals

The documents reveal methodological convergence without this in itself demonstrating that the Government selected either of the two companies. The COVID-19 pandemic intervened immediately after these initiatives; nevertheless, no public act was identified in the sources examined demonstrating that a tender procedure was formally abandoned specifically for this reason.

• The Terms of Reference require: infrastructure condition → PCN and investment → traffic → capacity → CAPEX/OPEX → revenues → economic and financial viability → Master Plan → PPP.
• For Bălți, ADPI proposed a technical assessment of pavements and PCN, technical and economic studies, a development programme and a Master Plan.
• For Bălți, NACO–InterVISTAS proposed: traffic forecast → technical due diligence → airport development → CAPEX/OPEX → commercial revenues → financial model → transaction/PPP.

These proposals appeared on 28–29 February 2020, during the same period in which the Government was publicly announcing its intention to contract an international company for the feasibility study of Bălți Airport. [5]

March 2020 — the Pandemic Radically Changes the Context

Only a few weeks after the expressions of interest of February 2020, the COVID-19 pandemic triggered international travel restrictions and an unprecedented collapse in air traffic.

A NACO/InterVISTAS paper dated 26 March 2020 was already analysing different scenarios regarding the scale of the crisis and the recovery of traffic, some extending the recovery period to 2022–2023.

Consequently, the airport development process initiated under 2019 market conditions found itself, only a few weeks after the February 2020 proposals, in a completely different economic and operational environment. The Government tender has still not taken place to this day.

2021 — NACO Returns with “Feasibility Study Regional Airports Moldova”

The continuity of the dossier is confirmed by a new NACO letter dated 11 March 2021, addressed to the Director of the Civil Aviation Authority of the Republic of Moldova. The article cited by NACO itself as contextual background: [9]

“Expression of Interest — Feasibility Study Regional Airports Moldova”.

NACO recorded the interest of private companies in investing in Bălți and Mărculești airports and the need for a feasibility study to determine whether private-sector participation was appropriate and, if so, in what form.

For the study, NACO again proposed an integrated methodology:

• data collection and airport visit → traffic forecast → capacity assessment → development requirements → revenues and OPEX → CAPEX → financial and economic model.

The proposed capabilities included market analysis, traffic forecasting, aeronautical and non-aeronautical revenues, technical due diligence, Master Planning, CAPEX, Airport City, cost-benefit analysis and environmental assessment.

The fact that NACO submitted a new expression of interest in 2021 demonstrates the continuity of professional interest in the regional-airports feasibility study.

Significance of the Documents for Bălți-Leadoveni International Airport

Taken together, these documents change the perspective on the Bălți-Leadoveni project during the 2019–2021 period.

Bălți Airport did not appear merely as one of the Republic of Moldova’s existing pieces of airport infrastructure. In the Prime Minister’s statements, it was described as more commercially attractive than Mărculești, while in one interview Ion Chicu stated that the main airport in northern Moldova should be in Bălți. [2] [3] [4] [7]

The Government officially announced its intention to contract an international company for the feasibility study of Bălți Airport and its intention to develop the project through private investment. [5] [6]

In parallel, the Terms of Reference prepared by the CAA provided for a professional assessment of Bălți, Mărculești and Ceadîr-Lunga, including a ranking of the relative priority of the three airports. It is striking that Cahul International Airport was not included for southern Moldova — the only airport in southern Moldova with international status and a history of scheduled flight operations.

And during exactly the same period, two international groups specialising in airports formulated proposals directly related to Bălți: ADP Ingénierie for development, technical and economic studies and a Master Plan; NACO–InterVISTAS for the technical, commercial and financial due diligence of Bălți International Airport.

The documents therefore outline a development path that could have progressed from diagnosis of the existing infrastructure and determination of the PCN, through traffic forecasting and market assessment, and then to a Master Plan, investment programme, CAPEX/OPEX, financial analysis, certification, attraction of airlines and, ultimately, the structuring of a PPP and attraction of a private investor.