The cost of upgrades to all three Cayman Islands airports will cost $122 million over 18-20 years including $40 million for maintenance.

$90 million of that money will be needed for ORIA with Phase 1 that is needed now costing $50 million.

The Cayman Islands government has approved the Strategic Business Case and the Outline Business Case Owen Roberts and over 100 persons attended the public meeting at The Mary Miller Hall Last Monday (21) where Deputy Premier Moses Kirkconnell did the presentation.

He said there will be no borrowing needed as the monies needed can be funded from the expected incomes.

The following, including all attachments is taken from the Business Case studies that comprise a total of nearly 430 pages.

International Airport (ORIA)

Air terminal building:

• At a size of 8,175 sq ft, the holdroom capacity is wholly insufficient for the regular weekly traffic peaks and well below the relevant International Air Transport Association (“lATA”) capacity guidelines;
• Only four gates currently service the eight aircraft stands, washrooms are undersized and there is no common use lounge facility for premium travel;
• Concession space is insufficient and diversity and general aesthetics of the concessions offering is also inadequate, with the added difficulty of lack of storage and access for concession products;
• Security screening represents another major bottleneck due to insufficient capacity, with only two lanes, which falls sho1t of lATA standards;
• Check-in space also doesn’t meet lATA standards for the h·affic levels with only 29 check in positions, and a lack of any flexible Common Use Passenger Processing Systems (“CUPPS”), resulting in severe congestion on peak days;
• Immigration has only 12 counters and a lack of queuing space, which has also resulted in regular outside queuing outside the terminal building. This has been temporarily resolved with outdoor covered space.
• The baggage claim area is also undersized and provides a poor level of service.
• Parking facilities, while sufficient for current volumes, do not have a viable revenue management system, which undermines convenience as well as CIAA revenues.

Runway, apron and taxiways:

• While the runway condition supports current traffic mix, runway strengthening is required in the short term to support BA’s proposed switch to Boeing 777 (“B777’s”) in 2016;
• Further, there is insufficient land at present in Runway Safety Area (“RESA”) at the Eastern end of the runway.
• The current runway length, of 7,008 ft can only accommodate short haul traffic from N01th and Central America and, to a limited extent, South America;
• ORIA currently has only 8 aircraft parking stands on commercial apron, which is insufficient for current traffic cannot accommodate B777’s·within regulations due to tail height infringements on runway zoning; and
• General Aviation apron experiences severe congestion on peak days.

Safety, regulatory compliance and operations:

While the ORIA infrastructure is generally in reasonable condition, WSP has identified a number of safety and regulatory improvements required.

Conclusion

The Cayman Islands Airports system has a number of operational shortfalls, which are acting as a constraint on economic drivers and social utility. Based on long term demand forecasts these operational constraints will soon become even more severe, particularly in the case of 0RIA.

Funding availability to address the infrastructure needs is limited by constraints on OG borrowing and the historical financial performance of ClAA. However, current and future PFCs provide a ring-fenced source of funding for the

Project, assuming historical collection issues are addressed.

A prioritization of the Airports’ competing needs has been established with CIG/CIAA and in consultation with a broad range of stakeholders:

• Priority 1 – Safety and regulatory compliance
• Priority 2 – ORIA terminal capacity shortfall
• Priority 3 – ORIA short I medium term airside capacity
• Priority 4 – Little Cayman, publically owned airport
• Priority 5 – Long term capacity building

WSP’s master plan identifies a series lifecycle and capital investments, phased over the short (1-5 years), medium (5-10 years) and long term (11years plus) to meet these priority needs.

Based on the options assessment, it is recommended that the existing terminal at ORIA be expanded, rather than a new terminal constructed at this stage. This approach has consequences for boarding bridges and US pre-clearance, both of which would be better adopted as part of a new terminal construction.

The proposed capital program to address the CIAA priority needs totals circa $122m (in real dollars), with an additional $40m of lifecycle costs required. The capital program is shown below, split by airport:

The expansion projects are dominated by work at ORIA, chiefly the terminal expansion in Stage 1, and generally decline for the period through 2025. The LCA construction constitutes a proportionately considerable expense in Stage 2.

In addition, certain other investments are identified which do not sustain a viable business case at present, principally due to lack of affordability or the long period of pay-back of investment relative to the expected tem1inallife. These include a new ORIA terminal, runway extension, US pre-clearance and passenger boarding bridges.

However, this assessment may change dependent on potential future bigger events, such as significantly higher growth rates than forecast. Accordingly, potential investment trigger events should be monitored carefully in future and the master plan must remain flexible.

The economic appraisal indicates substantial potential benefits from the Project, principally derived from investment in ORIA releasing constraints on the tourism sector and supporting further investment in Grand Cayman.

However, the risk analysis also identifies significant list of cost escalation and Project delays driven mainly by the complexity of the project. While the financial analysis indicates that the master plan is affordable, the results are highly sensitive to timing delays.

Effective program management will be crucial to success of the Project, and it will be necessary to secure external suppo1t in this regard.

Given the CIAA’s affordability and debt constraints, the nature of the program and the need for flexibility, it is recommended that CIG proceed with a DBB procurement approach, with a combination of firm, fixed price lump sum contracts under a General Contractor and the Multiple Prime Model.

In order to maximize benefits from the Project, and reduce the funding list, CIAA should explore options for further commercializing operations; in particular to better control the cost base and pro-actively develop non-aeronautical revenues. Such options could include privatization, sale of a minority interest and/or operating concessions.

Prior to moving forward to procurement, it will be necessary to:

• Secure final Cabinet approval of the OBC, following a public consultation process;
• Secure sufficient program management suppo1t for project delivery, and build CIAA finance team and commercial capacity; and
• Develop the detailed procurement timetable with the new program management resource, aligned to the WSP master plan timeline.

See also iNews Cayman today’s Editorial “Airport expansion ready to take off”.

You can download the complete Outline Business Case at www.mtd.gov.ky