Government Creates Conditions for Kapan Airport to Become International
The Government of Armenia has approved a decision endorsing the fifth amendment to the concession agreement signed between the Government of the Republic of Armenia and Corporación América S.A., and authorizing the Deputy Prime Minister of Armenia to sign the amendment.
According to the justification of the decision, its main objectives are to expand the capacity of Armenia’s international airports, improve infrastructure, enhance service quality, and create the necessary conditions for the Kapan “Syunik” Airport, which currently serves domestic flights, to be transformed into an international airport.
Under the approved decision, the formulas related to the guaranteed Internal Rate of Return (IRR) and compensation for losses under the concession agreement are annulled. The clause granting the right to an indefinite extension of the concession term is also revoked. It is officially recorded that, as of the date of signing the extension agreement, the Government of Armenia and the Concessionaire have no outstanding financial obligations toward each other.
The restrictions of the concession agreement regarding the Kapan “Syunik” Airport are lifted, and the overall concession term is extended until December 31, 2067.
The Concessionaire commits to making capital investments totaling approximately USD 425 million. The Master Plan and investment program, which will also include investments made since 2023, will be agreed upon with the Government. Changes to existing tariffs will be carried out on an annual basis solely through indexation, taking into account the average of U.S. Consumer Price Indices, average inflation rates in European countries, and Armenia’s Consumer Price Index.
A rule is also established whereby, if during the concession period passenger traffic declines—through no fault of the Concessionaire—to below 4 million passengers per year for two consecutive years, the Government will compensate the Concessionaire’s losses through tariff adjustments for a period of up to three years.
The decision further regulates mechanisms related to possible extensions of the concession agreement or tariff adjustments in cases where investments exceed USD 425 million, compensation calculations in the event of early termination of the concession, enforcement mechanisms in case of failure to meet Master Plan obligations, and other related matters.
The Government also proposes that Deputy Prime Minister Mher Grigoryan, acting as the Government’s representative, sign the fifth amendment to the concession agreement with Corporación América S.A. within one month. The expected outcome of the decision includes the development of airport infrastructure in Armenia, improvement of service quality, and growth in passenger traffic and the number of air travel destinations.
Deputy Minister of Territorial Administration and Infrastructure Armen Simonian stated that the Master Plan is expected to be submitted by January 31, and that the planned investments must be completed by 2033. He also noted that in 2025, Armenia’s international airports recorded a significant passenger flow of 5.754 million passengers, which is 7.5 percent higher than in 2024. According to the Deputy Minister, these figures clearly demonstrate the need to expand infrastructure and provide services in line with established standards.
Commenting on the decision, Deputy Prime Minister Mher Grigoryan stated that once the amendment is signed, the Kapan Airport will be able to operate as an international airport from that day onward.
“This means that Armenia will have a second international airport,” he emphasized.
