DO WE REALLY MEAN BUSINESS? A Direct Investor’s Perspective

on the Public Private Partnership Experience On Curacao

Curacao Airport Partners (CAP)

Agenda

• Who we are; What we do; How we do it.

• Airport programs over past 5 years

• How we see our role as a

Direct Investor & Government Partner

• Past Challenges

• Future Challenges --- More Critical

• Moving Forward

Calculated Risks

Let’s start with a fundamental premise:

If Curacao does not “win”, CAP cannot “win”

Essentially goes for all of us here…not just CAP

To win, you have to be willing to take calculated

risks, but risks never the less

Swing the bat, you can get a hit, or even a home

run… BUT, you can also strike out!

A quick personal “calculated risk” story

A Bold & Visionary Strategy

Decision to

privatize:

bold and visionary

Would optimize

airport productivity

and economic

potential

Create a platform for

success – Curacao &

CAP

IF the Partnership

attitude, mindset and

agreement is

observed by both

parties

Fundamentals of the CAP PPP

CAP is the Private Airport Operator

Extension? Has CAP been a good partner? Has

CAP demonstrated the right “attitude”,

“mindset”… TBD

30 year DOMA – 15 to go - CRITICAL POINT

Government (CAH) owns the airport and

provides oversight of the DOMA

Note: CAH is an objective, responsible and success-focused government partner

Curaçao Airport Partners (CAP) is a

consortium of private international

investors:

CCR (Brazil) controls 80% of shares

(Infrastructure management company)

A-Port (a.o. Zurich Airport) controls 10%

of shares (Global airport operational

experts)

Janssen De Jong controls 10% of

shares (Infrastructure construction

company)

Concession Ownership

Financial Managerial Operational standards are high

Airport under CAP: From financial

losses to financial gains

Curacao (CAH) receives

15%-30% annual income

from total revenues*

*Generated by

airport – based on passenger traffic

A successful partnership that could be a model

for other government assets

Important Characteristics

$$$

CAP’s Vision for CUR

• Optimal competitiveness

• Encouraging development and growth

• Fair and equal treatment of all users

• Respecting the investments of the shareholders and the Government

• Enforcing industry best practices

Critical Success Factors

Operational Excellence – Best Ops Platform

Financial Strength – Best Business Platform

Continuous improvement of the passenger experience

Encouraging growth among existing users

Promoting CUR and Curacao to new users

Our Business Environment 1

Very high private Investment

Airport is a fixed national asset – cannot be relocated – CAP is bound to Curacao

CAP’s private investors assume all final risks

Airlines can relocate assets – Airports are ‘fixed’ in place

Our Business Environment 2

Extensive regulation & oversight from international and local Regulatory or Advisory entities

Requirements for specific CAP investments stipulated in the DOMA

Safety, Operational and Navigational infra-structure required by international regulators are all paid by CAP

Our Business Environment 3

CAP controls very little In consultation with airline users (who believe that a $1.00 increase in PFC will destroy the competitive position of Curacao, but a $50 baggage , or $200 change fee” fee on the same passenger has no impact) … (When was the last time that an airline consulted with you, the user, regarding their proposed fare increases? )

Non-Aeronautical fees are not regulated

Aeronautical fees (PFC) proposed by CAP

Approved by a Government Regulator (BTP)

Our Business Environment 4

Two critical factors that drive success: • Passenger Levels • Rates & Charges

Over which CAP has very little or no control • Airlines:

Passenger Capacity • Government:

Rates & Charges

A true Partnership between the Government and CAP is critical to ensure success… for CAP and for Curacao

BUT…. DOES CAP REALLY MEAN BUSINESS

FOR CURACAO?

Let’s take a Quick Look At Some Numbers

Financial & Investment Overview August 2003 – December 2018

Direct investment 2016

Payments to CAH

Investments CAP in 2015

Investments CAP in 2016

USD 100M

USD 70M

USD 9M

USD 9M

Other investments to 2018

Terminal Expansion

Per DOMA

Right attitude/ mindset?

Actually Invested

CAPEX

Other

USD 36M

USD 10M

USD 25M

USD 11M

Airport Economic Impact KPMG EIS Study 2016

220 CAP FTEs Dec. 2016

1,870 Employees by Airport

Based Companies

5,760 Total Airport Related

Employment

9% Of total

Curacao Employment

Income to Government

6.5% Of total

Government Income

USD 58.3M

PROJECTS CAP HAS COMPLETED

OVER THE PAST 5 YEARS?

Let’s take a Quick Look

CAP

continuously

improves the

airport

infrastructure

2015 improvements

One of the first

airports in the

region to have

automated

passport control!

Passport control

made easy use

our our new

gates.

2016 improvements:

Immigration e-gates

2016 improvements:

new arrivals hall

2016 improvements:

new car rentals counters

2016 improvements:

new F&B options

2017 Projects:

Parking System

Project is on

track - planned to

be completed in

4th Qrt of 2018.

Update Terminal Expansion

Doubling the departure area: 2.5 million passenger p.a.

Adding a gate for the largest planes in the

world

Investment of NAF 65 million

A380

Adding a food court to the departure area

Faster processes: more capacity &

automated

Adding the coolest Mirador in the region

Terminal Expansion

- The Key Facts

Update Terminal Expansion

Update Terminal Expansion

Air-Conditioned &

Expanded Check-in Hall - COMPLETED JULY 2014

Closed &

air-conditioned

Expanded & check-

in machines added

Investment of NAF

3.2 million

Improved Look & Feel

Check-in Hall

Project

defines new

design

standards

Improved Look & Feel

Check-in Hall - COMPLETED DECEMBER 2014

New floor

and color

scheme

A fresh & modern look

for the toilets - COMPLETED MARCH 2015

Existing capacity doubled Investment of

NAF 3.5 million

Preparation of the baggage

system for the future - COMPLETED

Jet Centre Curacao for private jets

- COMPLETED DECEMBER 2014

Separate terminal

for private jets

High

convenience &

privacy

Investment of

NAF 2.25 million

Separate high-

end terminal for

private jets

Same services as

normal terminal:

• immigration

• customs

• security check

• waiting hall

• shower

• duty free

Jet Centre Curacao

for private jets

Jet Centre Curacao

for private jets

Investment of

NAF 10.5

million so far....

Refurbishment of

Runway & Taxiway - COMPLETED

Mirador for public use

(Rooseveltweg) - COMPLETED

Upgrade

Departure

Screening Point

Previous setup:

no air-

conditioning for

queuing

passengers

concrete floor

Recent Improvements

-BEFORE

Recent Improvements

-AFTER

new floor

3rd line (business pax)

air-conditioned

waiting area

steel tables

Upgrade

Departure

Screening Point

Commercial Plaza

Commercial Plaza

Commercial Plaza /

Boulevard

Commercial Plaza /

Boulevard

Improved Look & Feel

Departure Hall

Improved Look & Feel

Departure Hall

Goals:

• provide a closed

arrivals hall

• refurbish the

rental car

counters

New Arrivals Hall & Rental

Car Counters

-BEFORE

New Arrivals Hall &

Rental Car Counters

New Arrivals Hall &

Rental Car Counters

Airport Expansion (NAF 45 Million)

Curacao Airport 2018

1a) expanded check-in hall

1b) shopping plaza

2b) additional gate 2c) mirador on roof

1c) new arrivals hall

3) center expansion

2d) arrival corridor

2a) west expansion

The Terminal

Expansion consists

of 3 phases:

1.preparation projects

2.west expansion

3.center expansion

1.preparation projects

2.west expansion

3.center expansion

The Terminal Expansion consists of 3

phases: 1.2014-2015

2.2015-2016

3.2016-2018

Curacao Airport 2025?

New Parking & Central Building

Curacao Airport 2025?

It’s up to us!

WHY DOES THE CAP PPP WORK?

Critical Elements in a PPP

A Calculated Risk – on both sides

A long-term contract

A public client

A private company/consortium operator

A critical national infrastructure asset

Requires a balance of expertise, creativity, money…& political realities

DOMA: More Than An Agreement

• PPP is also a relationship

• An attitude – on both sides

• A state of mind

• Predisposed to optimization & success

• Solutions oriented

• No easy way out… and can be expensive

Different Objectives?

Public Sector partner focused on: National image National good Political philosophy and vision Safety & convenience of the Public Credibility of its international reputation

As it should be…

Different Objectives?

Private Sector partner focused on Optimizing shareholder value Enhancing business reputation International operational credibility New business opportunities As it should be…

Mutually Exclusive? Not at all

Partners objectives optimized IF each does their job reasonably

Agreement must be structured as a framework for mutual success

Reality always challenges the framework

Things will change

Attitude and mindset are critical

Solutions… or dissolution

Public: Know What You Want

• Asset to be functional and competitive

• Fortify the island’s economic interest

• Success-driven attitude for both partners

• Investment risks aggressive, but realistic, for private investors

• Facility operated to highest international standards

Know What You Don’t Want

• A Taj Mahal - an asset that looks fantastic but makes no economic sense

• A winner/loser formula or attitude

• Unqualified or disengaged public regulator or private operators

• International standards that are an afterthought

So… Caveat Emptor

Very carefully vet the private partners

Qualified, capable, and willing to perform

No agreement signed until satisfied with operator and general reasonableness of the terms and conditions

Partners confident in each other’s attitude, and success/solutions-oriented mindset

Government puts a lot of faith & trust in CAP as its partner for critical national asset

For the Private Operator

• Welcome appropriate oversight

• Appropriately question managerial intrusion

• Acknowledge problems and differences

• Find and present solutions to differences

• Seek to optimize the value of the asset

• Agreement is a framework for success

Don’t Complain Unnecessarily

Agreement is interpreted “one-sided” Government does not think “out of the box” The “system” is wrong Things don’t work…or “takes too long” Too much politics… This get’s you nowhere... Look for solutions

Don’t jump Back into “The Box”

Private investors say we are “creative”, “innovative”, “cost effective”, “efficient”…

But often run to the government for solutions at the first sign of challenge…

Don’t go to the government with problems Go with solutions Solutions that make sense for both sides

An Example: Tourism

• CAP depends primarily on Passengers

• Extremely high “fixed operating costs” that must be met

• Fewer passengers = less revenue

• Less revenue = value to the shareholders, and the government, is reduced

• Not a good scenario

Mindset & Attitude 1

CAP can say: Government’s job to promote travel and commerce to the island

Sit back and increase PFCs according to the DOMA.

Curacao “perceived” as being less competitive

Airlines reduce services… Long-term traffic declines… Everybody loses longer term CAP get’s its return…

in the short-term

Mindset & Attitude 2

Helping ourselves

Tourism Manager employed by CAP

Try to engage other private companies & Government in the effort…

Look at a pro-active route… initiate action!

Initiate PP Tourism initiative Treasure Hunt to differentiate Curacao & stimulate travel

CAP has $150,000,000 invested… can’t simply wait for the Government to solve problem

OUR CHALLENGES? COALITION OF THE…

UNWILLING?

CAP Challenges Have Changed

• Past challenges were fundamentally

• Political dissatisfaction

• Difficulties obtaining critical permits

• Mis-perceptions of intent and attitudes

• Essentially...interpretive challenges

• Public concerns or mistrust

• Employee concerns or mistrust

• The FAA Category 2 downgrade – 5 years

CAP Challenges

Have Changed

Past challenges were fundamentally

• Political dissatisfaction

• Difficulties obtaining critical permits

• Mis-perceptions of intent and

attitudes

• Essentially… interpretive

challenges

• Public concerns or mistrust

• Employee concerns or mistrust

• The FAA Category 2 downgrade

- 5 years

CAP Challenges Have Changed • Today’s challenges are different, global, and

economically much more serious

– Social and public media mis-information

– Obsessive focus on what is wrong on Curacao

– Globally broacasting all that is wrong on Curacao

– Constant de-valuing the Curacao image

globally...Branding Curacao negatively

CAP Challenges

Have Changed

Today’s challenges are different, global,

and economically much more serious

• Social and public media mis-

information

• Obsessive focus on what is wrong

on Curacao

• Globally broadcasting all that is

wrong on Curacao

• Constant de-valuing the Curacao

image globally… Branding Curacao

negatively

Are We “Willing” To Be Successful? Are We Willing

To Be Successful?

Helping ourselves

Tourism Manager

employed by CAP

Try to engage other private

companies & Government

in the effort…

Look at a pro-active

route… initiate action! Initiate PP Tourism

initiative Treasure Hunt

to differentiate Curacao

& stimulate travel

CAP has $150,000,000

invested… can’t simply

wait for the Government

to solve problem

✓Presentation by (then) Steven Martina to VBC

✓“Coalition of the Willing”…

✓Provocative and visionary…got me thinking about our real challenges

✓Two (2) VERY critical words

✓Coalition – that’s the easy part

✓Willing - This is the tricky part

“Willing”?

• This is another story; “Willing” takes:

- Commitment

- Discipline

- Exposure to failure

- Money

- A new way of doing things

- Stepping out of the box

- Swinging for the fences… and maybe striking out

- Easy to go to the ball game… hard to be a “player”

Willing?

This is another story; Willing takes:

Commitment

Discipline

Exposure to failure

Money

A new way of doing things

Stepping out of the box

Swinging for the fences… and maybe striking out

Easy to go to the ball game… hard to be a player

Willing is Fundamental

To Success

• We cannot “talk” our way to success

• Willing to do those things that are

difficult, uncertain, unique…

• Willing to fail from time to time…

and learn and try again

- But better to fail trying to steal

second base, than to languishing on

first base

Are We Really Willing?

✓CTB Director unfilled for over 4 years?

✓Inadequate or sub-optimized Tourism Budget

✓No new & creative hotel capacity

- East End of Curacao is a “blank sheet of paper” with potential to create an entirely new tourism product and stimulate economic growth

✓No unique & stimulating tourism products that could create fundamental demand for Curacao?

Are We Willing?

✓To Send better and more positive messages to the world about Curacao?

✓To DO what we are “willing” to “talk” about

✓To facilitate business and act as partners instead adversaries

✓To find solutions instead of obstacles

✓To focus on fundamentals… buy more air service… or create fundamental demand for Curacao? JetBlue… Load Factor (cheap seats) or Yield (demand)?

Are We “Willing”

To Put Curacao First?

• To create new tourism options

• Aggressively and uniquely

promote them

• To accept potential setbacks,

regroup, and press forward again

• Quit kicking ourselves (Curacao) in

the backside every chance we get!

• Focus on presenting Curacao in the

most favorable manner… every

chance we get

Are We Willing?

• Be good to ourselves

• Send the right message to the world

- Full Page Ad to attack the Airport

Parking System?

- How about a Full Page Ad to

highlight $10M CAP invested over its

obligation… and the PFC remained

the same?

• Use our media forces to engage

in a positive global communications

message that encourages travel and

interest in Curacao

Keep Things In Perspective

✓Things could be better on Curacao…

✓Like everywhere else!

✓But, we seem to focus obsessively on the bad

✓Many good things that are happening, and can

happen, to Curacao but not being told

✓That good story has to be told more frequently

and more effectively…

Keep Things In Perspective

✓Things could be better on Curacao…

✓ Like everywhere else!

✓But, we seem to focus obsessively on the bad

✓Many good things that are happening, and can happen, to Curacao but not being told

✓That good story has to be told more frequently and more effectively…

WHERE DO WE GO FROM HERE?

SAME OLD STUFF?

My Coconut Tree Is Bigger Than Your Coconut Tree

Maybe, But My Coconut Water Is Sweeter Than Your Coconut Water

OR DO WE TRY SOMETHING DIFFERENT?

OUT OF THE BOX??

A unique travel stimulating initiative

A unique Public-Private tourism initiative

Targets long-staying (4 nights) tourists in Tax-Paying accommodations

Differentiates Curacao

Gets visitors to spend more on Curacao

Incentivizes cruise visitors to come back

Could neutralize competitive challenges

Private sector provides $1,000,000 Treasure

Government/CTB undertakes all international promotional activities

Already favorably “endorsed” by Government, CHATA , CTB and many Private sector entities

1st Treasure winner selected 12/2018 at opening of the new Airport Terminal Opening

PPP Tourism Initiative

Promotion in Motion – A media Magnet Imagine A News Cam Seeing this on I-95 !!

Will energize the Curacao Brand tourism

Will attract national and international media attention… and tourists

Enthusiastic support of the private sector.

Could help resolve the Hotel-Tax issue by engaging the consumer

Many benefits

CAP $100,000

CAH $100,000

CAP/CAH (Trust Fund) $100,000

MCB $100,000

CATS $ 25,000

We’re already half-way there… Join us!!

Participants Already Willing and Committed

We’re all in this together … Government and Private Sector

Tourism success means success for all of us

Set a new and exciting course to reinvigorate our tourism product and Jump-start our economy

If you would like to hear about Treasure Hunt Give me a call: 839 1009

…time is critical!

Willing? Join Us!

Conclusion

Yes, CAP and PPPs mean business for Curacao

Question is….

Conclusion

Is Curacao open for Business?

THANK YOU!