Relocation and Redevelopment of the Richards Bay Airport

N/A

Amount Raised

N/A

Total Investors

Project Overview

The Richards Bay Airport has operational and locational constrains. Operationally, the airport cannot meet International Civil Aviation Organisation (ICAO) requirements for new aircraft types and does not offer runway extension opportunities or options to increase lateral safety strips. The airport also has poor accessibility to transport networks. The current airport is land locked between residential areas with no land for expansion of the airport or related economic activities.

Sectors

  • Transport & Mobility
US$34,000,000
Funding Goal
South Africa
Country
Africa
Region

Objectives

The following provides a summary of some of the findings from the pre-feasibility study in terms of aviation demand and land suitability analysis that forms the rational for the project:

  1. Passengers flying between Johannesburg and Richards Bay either fly directly to and from Richards Bay or via King Shaka International Airport (KSIA) in Durban and transfer by ground transportation to Richards Bay. Since 2013 there has been an accelerated downward trend in passenger numbers flying to and from Richards Bay directly with a compound decline for full 7 year period of -6,0%. To further understand this declining trend the following key casual drivers of passenger travel choice were investigated and found to contribute to the observed declining passenger numbers in Richards Bay:
    • On time service (frequency, seat availability, departure time)
    • Time to/from the airport (ease of access, ease of check-in)
    • Safety (security, parking)
    • Ticket price (parking price, public transport price) Some of the above listed casual drivers cannot be improved upon at the current airport premises therefore further mooting the need to redevelop the airport elsewhere.
  2. Apart from the above, the following provides details on some additional issues that were considered during the pre-feasibility study that outline the need for the project. As such, these are objectives associated with the project:
    • The impact of low flight frequency on the declining passenger numbers has resulted in a proposal that a new airport would require about 5 rotations daily.
    • Airport urbanism is synonymous with higher value goods and services. As such, there is a need for an economic shift away from merely primary and secondary goods/services of the local economy toward the tertiary sector as well.
    • At present the local economy is not geared toward high value, time sensitive goods from the agricultural sector so the agricultural sector is not presently a driver in terms of airfreights demand. This change to higher value, time sensitive agricultural goods could happen if a suitable regional airport is available and the benefits to the regional economy will be substantial.
    • Improving accessibility to the larger Richards Bay Area and region, for personal, essential services, business or tourism reasons.
    • The mix of proposed land uses in the airport precinct (“outside the fence”) in particular will contribute to make the area more attractive for investment by certain sectors, in particular knowledge intensive industries, such as biotechnology, pharmaceuticals, universities, and financial services.
    • Stimulating infrastructure and property development close to the airport.
    • Ensuring availability of facilities and provision for training, recreational and sport aviation to create pilots and related profession for the future of aviation.
    • Creation of employment opportunities. ACSA (Airports Company of South Africa) has forecast that one job created for every R150,000 of CAPEX and one job for every R110,000 of OPEX is created by investment in airports.

Progress Tracker

Phases

  • Phase 1 (Completed)

    Inside the Fence The development of an estimated 92 Ha of land that is essential for the operation of the airport. The following provides details of some of the key components/infrastructure requirements: 1)Car parking is provided to service the terminal building, hence “Terminal Parking” and provides the most convenient parking spaces for passengers. These facilities will provide short-term and long-term spaces. 2)Airport Utilities notably water, sewerage, and (electric) power. Early in the planning of the new airport the site utilities will be assessed to ensure that sufficient capacity is available. 3)Surface Water Drainage and run-off from buildings and hard surfaces must drain into the suitable stormwater systems. A range of opportunities exist to implement climate smart designs in this regard, for example permeable paving. 4)Any refuse (solid waste) must be stored in a proper waste management facility for collection. 5)The proposed Boundary Fencing is to delineate the external and internal boundaries of the airport precinct. The specification with regards to fencing is to maintain a minimum height of 1.8m and a maximum height of 2.1m, subject to SACAA (South African Civil Aviation Authority) approval. 6)Landscaping methods are adopted to control erosion and storm water runoff from the site. In addition, adequate landscaped areas reduce heat islands, this should be incorporated around walkways and parking areas to reduce the amount of heat absorption. 7)Ancillary Uses as part of Phase 1 include (1) the fuel farm that must be suitably located and (2) Airport Rescue and Firefighting services. 8)Key elements of the terminal building include curb front pedestrian facilities, curb front vehicle lanes, parking, exit and entry roadways as well as commercial vehicle/transit staging areas. 9)Passenger amenities include, amongst others, information centres, counters and kiosks. 10)The airport roadway system includes the airport access road as well as the interior airport roads that are linked to the local and regional roadway system. 11)With the proposed development of the new Richards Bay Airport, and the commercial developments within the precinct, it will become a major destination node in the uMhlathuze Municipality and will be connected by Public Transport. The future public transport network will include the Airport as a new destination node, and re-align public transport routes (if and where required) to accommodate this node. At present the uMhlathuze Municipality is finalising its Comprehensive Integrated Transport Plan (CITP) as a way of also planning for the public transport requirements of the City.

  • Phase 2

    Outside the Fence An estimated 441 Ha of land forming part of the airport precinct and the phasing of this development will be informed by, amongst others, the market research undertaken during the feasibility stage. During the pre-feasibility study, the land use concept provided for a wide array of land uses in the airport precinct that could be accommodated in the long term as proposed hereunder: 1)Light industrial, limited to the logistical requirements of the airport. 2)Office component to leverage on the time cost saving for business travel. 3)Commercial/Retail to serve needs of notably the mixed use and residential land use components. 4)Mixed Land Use to create versatility and adaptability. 5)Residential development near places of employment is central to New Urbanism. The entire spectrum of housing typologies is provided for. 6)Social services is required resultant from residential development and is important to create integrated spaces. 7)Open Space notably as a result of riparian features and the role of such to create social cohesion. 8)Hotel and Conferencing to cater for a long identified need noting that such is complimentary to an airport.

  • Phase 3

    N/A

  • Phase 4

    N/A

Current Stage

Feasibility Assessment: Proof of concept, economic model, licensing and approvals obtained. Clearly presents rationale and identifies technical and financial challenges.

Timeline

No

Project Milestones

N/A

ESG Impact

The existing pre-feasibility study adopted a ‘triple bottom line’ approach to assessing the long-term (20 year) sustainability of the airport, whether on the existing site or at a new one. This approach considers the portfolio effect of:

  • the financial (business) case of the airport, including ‘inside the fence’ aeronautical and non-aeronautical revenue streams
  • catalytic/stimulatory effects that the airport will have on property developments in the adjoining precinct (‘outside the fence’) and vice versa
  • Socio-economic benefits derived from job creation, improved regional economic efficiency, environmental benefits and suchlike. The air transport industry is a significant contributor to the total global economic activity. Aviation provides the only worldwide transportation network and plays a vital role in facilitating economic growth, particularly in developing countries such as South Africa. Air transport also facilitates world trade and boosts productivity across the global economy. Air transport improves the efficiency of the supply chain and is widely regarded as an enabler of investment both into and out of countries and regions.

The typical impacts of an airport can therefore be broadly listed as: – Airports generate employment – Airports create wealth – Airports stimulate tourism – Airports have wider benefits to economy as a whole by improving efficiencies of connectivity – Airports are major contributors to the tax base – Airports contribute to world trade Employment associated with airport operations includes the airlines, aircraft support services, passenger services (including restaurants, shops and desks for car rental and ground transport), air freight services and government activities (including immigration). ACSA (Airports Company of South Africa) estimated a total job multiplier of 3.3 times for airports. ACSA also about one job created for every R150,000 of Capex and one job for every R110,000 of Opex spent at airports. With regard to governance, The uMhlathuze Municipality has the largest (in terms of volume) sea port on the Country as well as one of only two IDZ (SEZs) in the Province. In order to support the anticipated growth in the area as a result of ongoing investment in these two major drivers (the Port and the IDZ/SEZ) a functional and sustainable airport is required. At present, the current Richards Bay Airport has numerous operational constraints and challenges. It is located between residential suburbs and an informally settled area (with an estimated 500 households) has developed boundary fence of the airport, within the 55dBA noise contour. Operationally, the airport has limitations in terms of the width of the runway and is located 11 and 18 kilometres respectively from major arterial and national road intersections. Also, very limited land available for expansion of the airport precinct to accommodate much needed airport related ancillary services/facilities. The above listed operational and constrains in itself does not foster economic development in this area that has plentiful development potential and advantages.

Beneficiaries

The functional attributes of a regional airport, at the scale and magnitude proposed, would render a multiplicity of benefits from local and sub-nation to national and even international. The latter being attributed to the strategic locality and importance of Richards Bay in relation to national and international trade and investment imperatives. The current Population of City of uMhlathuze is 407 740 (2017), with a population growth of 1,6% per annum that is higher than that of the province of KwaZulu-Natal at 1.3% and also above the national growth rate of 1.5%. The age profile illustrates that proportionally the City of uMhlathuze has the highest percentage of people falling within the 20 to 34 year age bracket for both Males and Females, i.e. the working age group. This age profile of the City is typical of a municipality with a substantial industrial and/or trade base. The proposed new regional airport (re)development by the uMhlathuze Municipality will not only benefit the local municipality’s young, working class population but also the larger northern inland and coastal regions of KwaZulu-Natal. The latest population survey (2016) indicates that the larger northern inland and coastal regions of KwaZulu-Natal have an estimated population of over 2,500 000 million, that stand to benefit from the direct and indirect spin-offs of the project. The respective unemployment rates in the region are between 35% and 42%, making it an area that can benefit immensely from the proposed intervention.

SDG Goals

SDG 1: No PovertySDG 2: Zero HungerSDG 3: Good Health and Well-beingSDG 4: Quality EducationSDG 5: Gender EqualitySDG 6: Clean Water and SanitationSDG 7: Affordable and Clean EnergySDG 8: Decent Work and Economic GrowthSDG 9: Industry, Innovation and InfrastructureSDG 10: Reduced InequalitySDG 11: Sustainable Cities and CommunitiesSDG 12: Responsible Consumption and ProductionSDG 13: Climate ActionSDG 14: Life Below WaterSDG 15: Life on LandSDG 16: Peace and Justice Strong InstitutionsSDG 17: Partnerships to achieve the Goals

Rationale

SDG 1 – No Poverty

At a development cost of $34 000 000, approximately $57 500 000 is expected to be channelled into and will boost the local economy, through the creation of an estimated 5600 jobs. Job creation from this investment would have a net positive impact on reducing poverty in the region.

SDG 3 – Good Health and Well-being

The design informants for this urban precinct would be such that air quality impacts from the development and operations are negated as far as practically possible. This was particularly evident in the site selection process where noise impacts were granted priority consideration. The detail thereof would be expanded upon in the Environmental Impact Assessment phase. The development would furthermore subscribe to exemplary occupational health standards, as required by law, throughout the lifecycle of the project.

SDG 5 – Gender Equality

Gender equality and women’s empowerment are cross-cutting themes with the City of uMhlathuze’s programmes. This aligns with government’s mandate around the same which ensure that gender equality and women empowerment are mainstreamed into policies, legislation and programs at all levels.

SDG 6 – Clean water and Sanitation

As a Water Services Authority, the City of uMhlathuze shall provide potable water and an efficiently designed sewer infrastructure for the airport precinct. Related bulk service upgrades would also be attended to informed by the availability of existing capacity in water reservoirs and sewer treatment facilities. The proposed airport precinct is furthermore an off-taker from a 40 Megalitre waste water re-use project. This happens to be a catalytic climate adaptation initiative of the Municipality in ensuring security of water supply in periods of protracted drought spells.

SDG 7 – Affordable and Clean Energy

The airport development has taken into cognisance the Energy Sector Plan of the Municipality. The same plan also sets a ground breaking framework for diversification of energy from traditional power generation sources, to include renewable energy sources; as well as energy efficient lighting and energy applications. The latter being particularly relevant with regard to the building/construction elements of the airport and its larger precinct. Also, the Municipality is compiling green building guidelines to aid efforts toward sustainable planning and development/implementation.

SDG 8 – Decent work and Economic Growth

An estimated $57 500 000 is expected to be channelled into boosting the local economy. Approximately 5600 jobs will be created in the process. The strategic location of Richards Bay, which hosts a premier deep water port and a host of multi-national companies, subsidiaries and downstream industries are all dependent on efficient logistics, which the proposed airport will cater for.

SDG 9 – Industry, Innovation and Infrastructure

To ensure civil aviation efficiencies, the prefeasibility phase of the airport redevelopment incorporated elements of
• Empirical model development
• Gravity modelling
• Air Traffic Forecasting
Further stages of planning would also unpack design of airport utilities (water, sewerage, natural gas, and electric power, storm water and other civil infrastructure components). Fuel farms, aircraft rescue and firefighting facilities and key terminal building elements have also been scoped in the pre-feasibility stage.

SDG 10 – Reduced Inequality

Skilled jobs for the poor would reduce inequality, which the Country is addressing through urban and economic development policy. The development concept also seeks to redress spatial disparities inherited from previous reforms.

SDG 11 – Sustainable Cities and Communities

The City of uMhlathuze is implementing the Integrated Urban Development Framework (IUDF) which aims to guide the development of inclusive, resilient and liveable urban areas, while addressing triple bottom line of poverty, inequality and unemployment. To achieve this transformative vision, the Municipality would like to deliver on the levers contained in the Integrated Development Framework by working toward the following:
– Developing a coherent plan for the airport to stimulate a rational organization and use of space that guides investment prudent use of land and natural resources
– Ensuring that the masterplan for the airport demonstrates spatial re-structuring to achieve environmentally friendly, safe living and working conditions
– The current airport inefficiencies from an operational and accessibility perspective need to be redressed. By addressing these, improved integration for all transport modes can be attained resulting in improved and more efficient mobility.
– The provision of a well-planned airport that is suitably provided with all infrastructure services will contribute to attaining inclusive growth in a region that is has a lot of potential but a lot of poverty as well.
– The Municipality is committed to climate proofing and various initiatives attest to this. The Municipality is currently compiling green building guidelines in support of sustainable planning endeavours.

SDG 13 – Climate Action

The airport re-development is documented in the Climate Action Plan of the Municipality as a flagship development to incorporate climate proofing elements. Such elements address greenhouse gas reduction, climate adaptation and overall improving climate resilience. There are a number pillars which the airport development is compelled to consider in the lifecycle of the project:
– Disaster management
– Stormwater management
– Water Resource Management
– Biodiversity and Landscaping
– Sustainable Urban planning
– Efficient Transport planning
– Energy Management
– Waste Management

SDG 15 – Life on land

The airport siting has followed a rigorous due diligence process in ensuring the preservation of biodiversity elements that include wetlands, avifauna as well other fauna, flora. Investigation into soil potential also ensured that the agricultural potential of the land is not compromised. The project preparation phase of the airport would carry forward these sustainability elements.

SDG 17 – Partnerships

The financial vehicle used in the project packaging relies on public private partnerships (PPPs). Such partnerships are regulated by strong regulatory frameworks, which require multi-level governance arrangements. Both National and Subnational finance authorities are involved in the project preparation phases and would continue through delivery of the project.

Risks and Limitations

What are the key risks, constraints and dependencies related to the project?

During the pre-feasibility stage of the project, a risk assessment was compiled to ensure that decision-making and mitigation measures are formulated and implemented timeously. The risk assessment process consisted of three steps, i.e.:

Step 1: All possible risk by the various technical work streams
Step 2: Determining a risk score, or risk rating, for each risk based on the likelihood of the risk occurring and the severity/consequence of the risk
Step 3: Propose mitigation measures for the identified risks and perform the rating score again.

Following the above process, the following three key risks were identified and summarised hereunder:

1. Environmental Authorisation would be required in terms of the Environmental Management Act and the National Water Act.
Control/Mitigation: Adhere to legal permitting requirements, adequate Public Participation during the process, relevant specialist studies. Project planning should include the timeframes for obtaining approvals in advance.

2. The National Department of Agriculture would possibly not allow for development authorisation to be issues through the non-release of this agricultural land.
Control/Mitigation: Possible land offset for agricultural use as well as more intense agricultural practises within the study area could be proposed as mitigation measures for the loss of agricultural land.
3.1 Overhead Powerlines: (1) 1. The 275 kV Athene-Imvubu line to the north of the proposed runway and the 400 kV Athene-Pegasus 2 line to the south of the runway, with pylons standing between 35 and 40m high.
Control/Mitigation:
ESKOM has indicated that both the 275kV and 400kV lines cannot be cabled. Only mitigation is the re-alignment. Municipality to approach ESKOM on willingness to deviate and obtain order of magnitude cost of possible deviation for inclusion in business case financials. If ESKOM is willing to re-align, risk is transferred to the business case.
Option 1: Re-align which could be very difficult. Option 2: put underground for about 300m each, i.e. N and S. Option 3: Airport won’t work. Upon consulting with ESKOM to have option 1 undertaken as option 2 not appropriate solution. Subsequent discussions with airline operators was established that the new performance based navigation standards allow for the approach and departure surfaces to be amended to 6.5% from the 2% that was initially proposed in this study. This will require approval from the Civil Aviation Authority.
3.2 Overhead Powerlines: (2) Medium voltage overhead ESKOM 11kV electrical network overhead line is planned for construction over the proposed runway route in the future
Control/Mitigation: Engagement with ESKOM is required in the next stage of the project.

Risk mitigation and continuity

The City of uMhlathuze is pursuing several catalytic projects, which are at various stages of implementation and the Proposed Richards Bay Airport Relocation and Redevelopment is a top priority for the uMhlathuze Municipality. The Municipality annually compiles/reviews its IDP (Integrated Development Plan) and SDF (Spatial Development Framework). These plans are legislated strategic documents. From these plans, notably the SDF, the need for feasibility studies and or precinct plans, emerges to give effect the development agenda of the Municipality. Notably, the SDF has an horizon of more than 5 years. Apart from being adopted in the respective strategic documents and funding being committed for the project, the project has also been registered as a catalytic project in the Province of KwaZulu-Natal and appears on the provincial register with reference number KZN00113. Similarly, following a submission to the GTAC (Government Technical Advisory Centre) of National Treasury the project has been registered as a Public Private Partnership Project with reference number TASM168. Furthermore, the essence of the project model asa PPP (public private partnership) will further ensure continuity in the event of a change of government.

Financing

Type of Investment

Equity

Financing Structure

Public Private Partnership

Secured Investment

The project is still in its planning phase and the feasibility stage that is now being entered into will provide more accurate cost estimates in terms of construction, operational structures, potential investors etc. To date, funding has only been sought for planning work, i.e. the pre-feasibility and feasibility phases. To this end, two contributions have been received from the KwaZulu-Natal Province, the Department of Economic Development, Tourism and Environmental Affairs. One contribution to the amount of R1 000 000 (approximately $68 000) and a further R800 000 (approximately $55 000). The balance of the investment to date on the projects has been funded by the uMhlathuze Municipality to the value of about R1 600 000 (approximately $110 000). An additional commitment of R 2 000 000 or $ 136 986 from the uMhlathuze Municipality is available at this stage. In summary, investment from the KwaZulu-Natal Province, the Department of Economic Development, Tourism and Environmental Affairs amounts to R 1 800 000 or $123 000. Investment from the uMhlathuze Municipality amounts to R 3 600 000 or $247 000.

Committed Government Funding

Yes. $370,000

National and Subnational Investors

Investment from the KwaZulu-Natal Province, the Department of Economic Development, Tourism and Environmental Affairs amounts to R 1 800 000 or $123 000 (subnational). Of this amount, about $68 500 has already been spent and about $55 000 is committed for finalising the feasibility study. Investment from the uMhlathuze Municipality amounts to R 3 600 000 or $247 000 (municipal). Of this amount, about $109 500 has already been spent and about $137 000 is committed for finalising the feasibility study.

Committed Private Funding

No

Support

Technical Support Required

At the local government level, the uMhlathuze Municipality resolved to adopt the pre-feasibility study during (April 2018) and resolved to pursue the finalisation of the feasibility study by way of a PPP. To this end, a submission was made to the GTAC (Government Technical Advisory Centre) of National Treasury and the project has been registered as a Public Private Partnership Project with reference number TASM168. At the provincial level in the KwaZulu-Natal Province, the Department of Economic Development, Tourism and Environmental Affairs have supported the initiative with financial support for both the pre-feasibility and feasibility phases and have been active contributors to the project liaison (steering committee) process undertaken thus far.

Stakeholders

Governmental Buy-in

Yes. National Level, Subnational/regional level, Other.

Other Forms of Governmental Support

At present, significant technical support is being received from national and sub-national level with regard to various elements of the project. Both the National and Provincial Treasuries are providing invaluable support with matters relating to the Public Private Partnership (PPP) while the provincial (sub-national) government of KwaZulu-Natal is providing support on technical issues relating to airports and the aerotropolis model from their provincial Department of Economic Development, Tourism and Environmental Affairs Department.

National Ministries Involved

National Treasury: Government Technical Advisory Centre (GTAC) - Transaction Advisory Service & PPP Unit. Mr Themba Mdletshe (Senior Project Advisor): Municipal Desk

SubNational Ministries Involved

1. KwaZulu-Natal Province, Department of Economic Development, Tourism and Environmental Affairs. Mr C Hamadziripi (Director Policy and Planning: Aerotropolis)
2. KwaZulu-Natal Provincial Treasury: Public Private Partnership Unit. Ms T Kankqu (Chief Director: PPP Unit)

Other Entities Involved

uMhlathuze Local Municipality. Dr NJ Sibeko (Municipal Manager)

Licenses and Permits

No

Updates

  • 10th February 2020

    Cities Investment Platform in progress - updates pending

  • 10th February 2020

    Project featured on the Cities Investment Platform, which was launched at the Tenth Session of the World Urban Forum (WUF10)

Supporting Documents

No supporting documents included.

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