Luke Bugeja is an aviation industry veteran. Over the past 35 years, the Australian has worked his way through airlines, airports and investment management. He is now chief executive officer of Ferrovial Airports, a division within the Spain-headquartered infrastructure group Ferrovial, which is one of the biggest airport operators in the world. 

It recently hit the headlines for the £2.37bn sale of its 25% stake in the UK’s Heathrow airport, announced last November. But one year earlier it made an even bigger announcement: ploughing $9.5bn into the New Terminal One (NTO) project at JFK Airport in New York. Mr Bugeja sat down with fDi to explain the firm’s US strategy, Covid-19’s legacy and the ultimate airport investment model. 

Q: Aside from a €140m investment in Turkey’s Dalaman airport, JFK is Ferrovial Airports’ first airport investment in 16 years. Why did you decide on this deal? 

This investment absolutely made sense. JFK is the largest international gateway in the US, and NTO [has] purely long-haul, international, wide-body gates. That is a scarcity, so it’s a project where demand outstrips supply. Also, Ferrovial [the group] has a strong focus on North America and is pretty well established as an organisation in the US through its toll road business. JFK is our first foray into US airports and it is key to demonstrate that [Ferrovial Airports] are a good steward of critical infrastructure for the community. As if we are successful here, it will give us the credentials and credibility for the next opportunities to do more in the US.

Q: NTO is part of JFK’s broader $19bn redevelopment which is the US’s biggest public-private partnership (PPP). Is this the best model for developing an airport? 

Infrastructure has gone through a period where there were full privatisations with the government selling the assets and land freehold — as we saw in the UK [in the 1980s] — and then it moved to PPPs and concessions which are, in effect, a joint venture. PPPs work extremely well because you share a clear objective and work hand in hand. Privatisations have worked for many of us in the past, but the flipside is that the seller — which is the government in some cases — becomes the regulator. That [model] is probably not as aligned as in PPPs. 

Also, JFK is quite unique in that we at NTO are in competition with the other terminals [which have different owners]. That’s unlike Heathrow, where we are a 25% shareholder in the four terminals. So you have to be offering value for money, quality of service, and that is key for driving growth. 

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Q: What are airports’ biggest investment trends?

Airports are now totally different to when I first started working in them in 1989. The biggest difference is service quality, infrastructure and technology to improve the seamless passenger experience from curbside to gate. Today, passengers demand a lot more than they have in the past 10 years. They want to be able to move through an airport quickly, wifi access, value-for-money retail, comfortable gate lounges and infrastructure that works. Airports that have really taken off around the world have ploughed a huge amount of investment into the customer experience, but also technology that helps create a secure and safe airport.

Q: Has Covid-19 affected these trends? 

Yes, people want a safe and open space, and a lot of airports have made this an investment focus. The outlook for aviation has seen a very strong bounceback and airfares are high, which is a reflection of supply: a lot of it is linked to the lack of airlines’ capacity for the recovery. So the demand for travel will absolutely be there, and we are focused on creating great airports around the world that airlines will decide to fly into.

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