Brussels, Inc.

BRUSSELS, INC.

Privatization revitalized the Belgian airport in the ’90s; soon, it may revolutionize how airports operate

BY John F. Infanger, Editorial Director

August 1999

BRUSSELS — In the mid-1980s, this city, which is often referred to as the capital of Europe, faced a comprehensive modernization effort of its airport terminal and other facilities. As a result, in 1989 a private company, the Brussels Airport Terminal Company (BATC), was formed to build and operate the terminal. By 1994, a new terminal and concourse (Pier B) were officially opened.

But the privatization initiative and its impact on Belgium and neighboring European countries doesn't stop there. Much like the rail stations in major cities across the continent, the Brussels Airport has become a primary transfer point for passengers at a time when inter-European travel is increasingly becoming less cumbersome.

In retrospect, the timing was on target.

Today, initiatives underway could prove to be just as well-timed in an airport industry that is undergoing dramatic change worldwide. BATC is no more, transformed into the Brussels International Airport Company (BIAC) in 1998 when it merged with the Airport & Airways Agency, which had operated the Brussels airside operations.

Perhaps the most striking initiative is the exploration by BIAC officials of aligning with other European airports to further build on efficiencies, offer a wider range of travel options to travelers, and potentially counterbalance the alliances created by major airlines in recent years. And, by 2001, the company hopes to have reduced the state's ownership from its current 63 percent of Brussels operations to 25 percent, at which time it will open itself to outside investors on the stock market.

"We combined our efforts with the purpose of being able to go to the stock market," explains BIAC chief operating officer Mark Duyck. "We are at the moment a mixed company. We have private shareholders and we have the state as a shareholder. Right now, we're moving toward a 50-50 ownership so there will be more of a balance of power.

"Current thinking is that after 2001 the state will further sell its shareholdership. We understand that airports are still strategic businesses that would not be completely commercialized; even BAA in the United Kingdom has certain restraints.

"Airports are still part of the public scene and you need to be synchronized with what the public thinks. So, the best way of mixing the public interest with the commercial interest of an airport is to have them on your board as a representative of the people."

An Ongoing Transformation
Brussels International is currently the eleventh busiest airport in Europe with some 18.5 million passengers annually, more than four million of which are transfer passengers. In 1998, passenger counts jumped 2.5 million and by 2010 projections estimate the airport will handle some 30 million passengers or more. Sabena, the Belgian-based dominant carrier here, handled almost nine million passengers in 1998, a 27 percent increase.

The airport transformation, which focused initially on construction, continues. The company successfully modernized the information technology processes during the 1990s to the point that it created a separate subsidiary that now markets its services to other airports (see sidebar, page 15). And, construction is underway on a $216 million concourse (Pier A) at midfield for inter-Europe travelers.

Along with a modern terminal came new retail facilities that are injecting necessary revenues and are helping to make Brussels an attractive airport for air carriers. "The fact that we have invested in retail means shopping facilities have led to our airline fees being very, very low," says Duyck. "Our ranking in Europe, although we are not the cheapest, for rates and charges is very low, which is a direct benefit for the airlines."