Indo-Greek JV to begin work on $1 bn airport in Crete next year

A Greek-Indian consortium has been awarded the contract to build a new airport on the island of Crete, a consortium official said on Friday.

Ariadne Airport Group, a joint venture between India's GMR Airports and Greek contractor GEK Terna, was the preferred bidder for the 850 million euro ($1 billion) project and will begin construction at the start of next year.

Greece formally accepted the offer on Thursday after the terms of the contract were finalised and EU and other authorities gave the necessary approvals.

A Greek court of auditors is expected to clear the project next month before the contract is signed and put to a Greek parliamentary vote by the end of the year, the Ariadne official said.

"Construction sites logically will start being set up at the beginning of next year," the official told Reuters on condition of anonymity.

Since 2010 Athens has made several attempts to build the new airport at Kasteli to replace Heraklion airport, which is Greece's second-largest in terms of traffic but struggles to handle the 6.7 million passengers, mainly tourists, that pass through annually.

Though the debt crisis that gripped Greece from late 2009 had deterred investors, the country exited the biggest bailout in economic history in August and is now on a recovery path, propped up by private consumption and tourism, with arrivals expected to top 32 million this year.

Last year a German-Greek joint venture led by Fraport paid about 1 billion euros to take over 14 regional airports, most of them on popular Greek islands, and aims to revamp them in the coming years.

The cost of building the Kasteli airport in Crete and related road connections is estimated at about 500 million euros, with the state offering 180 million euros to acquire a 46 per cent stake in the airport.

The joint venture will own the rest and operate the airport for 32 years after construction is completed in an estimated five years.