Montenegro has terminated the concession procedure for Podgorica and Tivat airports after the preferred bidder, a consortium led by Incheon International Airport Corporation, withdrew before the concession agreement was signed.
The government approved the termination decision at an electronic session on 23 July 2026, following a recommendation from the Ministry of Transport that the remaining offer was not acceptable. The decision was forwarded to Parliament, which had also been expected to approve the original concession award due to the strategic importance of the two airports.
Government cites inadequate remaining offer after preferred bidder exit
Incheon formally notified the government that it was withdrawing from the process, but the company and authorities did not initially disclose the specific reason behind the decision. According to local reports citing sources familiar with the negotiations, the dispute centred on the planned €100 million upfront concession payment. The South Korean-led consortium reportedly sought either a postponement of the payment or additional state-backed protection related to the obligation after its offer had already been selected.
Such a modification would have changed a key financial condition used in evaluating the bids. Allowing changes to material terms after the ranking process could have created the possibility of complaints or arbitration from other bidders. The withdrawal came after a change in Incheon’s management and around three months after the government approved the proposed concession agreement on 8 April 2026. The documents were submitted to Parliament on 17 April 2026, with a request for an expedited decision, but the concession was not placed on the parliamentary agenda during the following three months.
Seven-year tender process ends before contract signing
The airport concession tender was launched in 2019 under the government of former prime minister Duško Marković. Opposition parties that had criticised the concession later became part of government, contributing to changes in policy, administration and institutional positions during the process. By 2026, the tender documentation was based on assumptions developed before the COVID-19 pandemic, before the recovery of air traffic, higher construction costs and the increase in European interest rates.
The selected Incheon proposal included a €100 million fixed payment and a reported 35% variable concession fee on gross airport revenue. The government estimated the overall economic effect of the proposed 30-year concession at around €1 billion, including the initial payment, approximately €300 million in capital investment, and around €600 million from variable concession fees.
Financing structure created challenges for concession model
The concession structure required the future operator to finance operating expenses, investments, debt servicing, taxes and shareholder returns from remaining airport revenues after paying the gross-revenue fee. Unlike a charge based on earnings or free cash flow, a fee calculated on gross revenue remains payable even when margins decline or investment costs increase.
The €100 million advance payment represented a significant initial financing requirement before the concessionaire generated operating cash flow from the airports. The payment would have affected the project’s financial returns unless recovered through future airport charges, commercial revenues, parking, property development or passenger growth.
The concessionaire would also have been responsible for a major airport modernisation programme. Podgorica Airport requires expanded terminal and airside capacity, while Tivat Airport faces constraints related to seasonal congestion, limited terminal capacity, access infrastructure and the concentration of passenger traffic during the summer tourism season. The government’s estimated €1 billion economic effect consisted of different components with different financial characteristics. The planned €300 million investment programme would represent capital spending on airport assets rather than direct budget revenue, while the projected €600 million variable fee component depended on passenger traffic and revenue performance over three decades.
Corporación América Airports remains alternative bidder
The termination also ended the immediate possibility of proceeding with Corporación América Airports, the Luxembourg-American operator that was ranked second in the tender. CAAP had publicly stated that it remained interested in the process and had extended its bid guarantee until August 2027. The company highlighted legal certainty, equal treatment of bidders and compliance with the established procedure.
Moving directly to the second-ranked bidder would have required additional assessments, including whether the tender documents allowed negotiations after the preferred bidder’s withdrawal, whether CAAP’s financial offer remained valid and whether updated investment and traffic assumptions were necessary due to the time elapsed since the original bidding process. The government decided instead to cancel the entire procedure, reducing the immediate possibility of disputes related to a direct award but leaving potential legal questions regarding bidder claims, tender provisions, bid guarantees and the treatment of participant costs.
Aerodromi Crne Gore faces responsibility for future investment
The cancellation leaves Aerodromi Crne Gore, the state-owned airport operator, responsible for financing the next investment cycle at Podgorica and Tivat airports. The government has stated that the company’s improving operating results allow Montenegro to avoid accepting a concession under unfavourable conditions.
Maintaining state ownership would preserve future airport revenues, but financing the required investments would likely require a combination of retained earnings, bank financing, state-supported lending or support from development institutions such as the European Bank for Reconstruction and Development and the European Investment Bank.
Debt financing would allow the state to retain long-term operational control but would transfer construction, procurement and traffic risks directly to Aerodromi Crne Gore and its public shareholder. A public investment model would require stronger project management, technical oversight and procurement procedures. Investment priorities would need to distinguish urgent operational improvements from longer-term expansion plans, including terminal capacity, baggage systems, security infrastructure, apron arrangements, passenger circulation, energy efficiency and access infrastructure.
Airport investment remains important for tourism sector
Further delays in airport development could affect Montenegro’s tourism sector, which depends heavily on international air connectivity, particularly for visitors from northern and western Europe. Limited terminal capacity, insufficient aircraft stands and access constraints can affect the ability to introduce additional routes, extend the tourism season and support new hospitality investments.
Airport infrastructure also influences investment decisions in coastal real estate, hotels and conference facilities. Delayed expansion can affect the wider economic value of projects dependent on reliable international transport links.
The concession cancellation does not directly threaten public finances and avoiding an unfavourable agreement could strengthen Montenegro’s long-term position. However, the end of a process that began in 2019, reached preferred-bidder selection and draft contract approval, and ended before signing highlights challenges in moving infrastructure projects from procurement decisions to financial close. For future investors, the issue remains the predictability of the process from policy decision and tender launch through contract award and implementation. Changes in government, parliamentary delays and attempts to revisit commercial terms after bid evaluation can increase uncertainty for infrastructure investment.
