Montenegro’s decision to move towards cancelling the long-running concession process for Podgorica and Tivat airports has removed one development route without yet replacing it with a funded investment programme. After almost seven years of procedural delays, the country is left with the same strategic problem it had when the tender was launched in 2019: passenger traffic is rising faster than terminal, apron and operational capacity, while the airports remain the first and last impression for an economy heavily dependent on international tourism.
The condition of the two airports has moved beyond questions of comfort. Overcrowded terminals, insufficient gates, leaking buildings, constrained baggage systems and limited aircraft-handling capacity are affecting airline scheduling, passenger experience and Montenegro’s ability to capture growth from higher-value tourism markets. Tivat Airport’s restricted operating window, including the unresolved issue of regular night operations, is particularly damaging because it serves the country’s most valuable tourism corridor, stretching from Budva and Luštica Bay to Porto Montenegro, Portonovi and the Bay of Kotor.
Tourism specialists Ivo Županović and Petar Golubović argue that reconstruction can no longer be deferred while the government debates whether the investor should be the state or a private concessionaire. Županović believes the state-owned operator can combine internal cash generation, European funding and bank debt, beginning limited improvements before the 2027 summer season and completing larger works over three to four years. Golubović’s position is more direct: the ownership model is now less important than the speed with which construction begins.
That urgency is supported by the traffic outlook. Montenegro’s two airports exceeded 3mn passengers for the first time in 2025, despite operating with infrastructure that has received little strategic expansion during the concession process. The 2026 business plan projects approximately 3.63mn passengers, comprising 2.29mn at Podgorica and 1.34mn at Tivat. Podgorica’s forecast represents growth of around 31 per cent, driven largely by the opening of a Wizz Air base in March 2026.
Wizz Air has stationed aircraft in Podgorica, launched 17 new routes and announced approximately 1mn additional annual seats. The expansion strengthens year-round connectivity with European markets, but it also exposes the limitations of a terminal that had already been operating beyond its intended capacity before the new base opened. Airline growth without parallel ground-infrastructure investment risks converting commercial success into chronic congestion.
The state-owned operator, Aerodromi Crne Gore, expects to generate €65.93mn in revenue in 2026, against core expenses of approximately €32.2mn. The plan allocates another €18.06mn to airline incentive schemes and projects a pre-tax profit of about €15.67mn, with net profit estimated at approximately €13.37mn. These figures demonstrate that the airports are profitable, but they also reveal the limit of a purely self-funded reconstruction strategy.
The company estimates that capital infrastructure investments exceeding €150mn are required merely to bring the two airports to an adequate functional level. At the projected 2026 net-profit rate, accumulating that amount from retained earnings alone would take more than 11 years, before accounting for ordinary maintenance, fleet replacement, information technology, security upgrades and working-capital requirements. Passenger demand will not wait for that financing cycle.
The company can nevertheless support a substantial investment programme when internal cash is combined with long-term debt. A credible base case would use approximately €30mn–€40mn of retained cash and operating surpluses, €80mn–€100mn of bank or institutional financing and a further €20mn–€40mn from EU-linked grants or public co-financing. The exact mix would depend on the sequencing of projects and the extent to which Montenegro can access pre-accession, connectivity and green-infrastructure funding before joining the European Union.
A debt facility of €90mn with a maturity of 15 years and an interest rate of approximately 5–6 per cent would require annual debt service of roughly €9mn–€10mn. That is potentially manageable against an airport business producing operating cash flow substantially above current net profit, but the margin would be tighter while the company pays €18.06mn a year in airline incentives. Lenders would therefore examine whether those incentives create sustainable traffic and aeronautical revenue or merely subsidise volume without an adequate return.
The investment programme should be divided between immediate capacity relief and permanent reconstruction. A first package of approximately €20mn–€30mn could address roof and building failures, security and passport-control lanes, baggage-handling bottlenecks, passenger circulation, temporary gates, utilities, sanitation, staff facilities and selected apron works. Much of this could be delivered before or shortly after the 2027 season when procurement is launched immediately and designs are already sufficiently mature.
The second phase would require approximately €120mn–€160mn over three to four years. Podgorica needs a larger terminal, additional check-in and security capacity, an expanded baggage system, more gates, apron and taxiway improvements, upgraded ground equipment, digital passenger-processing systems and better public transport and road access.
Tivat presents a more difficult engineering case. Its summer traffic is compressed into short operating windows, its location is constrained by surrounding terrain and dense coastal development, and terminal and apron capacity are inadequate for peak demand. Expansion must address passenger facilities, aircraft stands, baggage systems, drainage, power supply, safety and environmental requirements. Enabling more reliable evening or night operations would require appropriate lighting, navigation and operational procedures, but the terrain and approach conditions mean the issue cannot be solved simply by installing runway lights.
A reasonable planning envelope would place Podgorica’s medium-term requirements at approximately €50mn–€70mnand Tivat’s at €80mn–€110mn, with the coastal airport receiving the larger allocation because of its deeper physical and operational constraints. These are analytical ranges rather than approved budgets; detailed design, geotechnical work, environmental assessment and airside-safety studies would determine the final CAPEX.
The risk of cost escalation is already visible. Construction prices, equipment costs and financing rates are materially higher than when the concession process began in 2019. A project estimated at €150mn today could move towards €175mn–€190mn after several more years of indecision, especially when works must be undertaken in phases while both airports remain operational.
The concession tender was originally intended to transfer this financing and delivery obligation to an experienced international operator. It offered a 30-year concession while preserving state ownership of the land and existing airport assets. The process eventually narrowed to two bids from Incheon International Airport Corporation of South Korea and Corporación América Airports, a Luxembourg-registered member of a global airport group.
The first-ranked Incheon consortium offered an upfront concession payment of €100mn, initial investment commitments reported at approximately €132mn, and a variable fee equivalent to 35 per cent of annual airport revenue. Corporación América offered an upfront payment of €101mn, approximately €158mn of initial investment and a variable fee of just over 17 per cent.
The valuation of the airports at approximately €264.36mn meant the concession required parliamentary approval because the assets exceeded the statutory threshold for government-only decision-making. The proposal remained stuck in Parliament until the validity of the bids and bank guarantees became an issue.
Incheon withdrew after requesting that payment of the €100mn upfront fee be postponed for one year. The Ministry of Transport refused to change a central financial condition after the tender had been completed, arguing that doing so would undermine the procurement framework. Corporación América indicated that it remained willing to proceed, but the government considered its financial offer insufficient and instead proposed cancellation of the tender. The final decision rests with Parliament.
The failure of the process does not prove that the concession model was commercially wrong. It shows that a procurement launched in 2019, interrupted by the pandemic, political changes, bid-evaluation disputes and parliamentary delay became increasingly detached from the airports’ current value and traffic prospects. The addition of the Wizz Air base, stronger financial results and record passenger numbers materially changed the economics on which the original tender was designed.
A concession can provide upfront capital, international operating expertise and delivery discipline. It can also transfer construction and traffic risk away from the state. The counterweight is that Montenegro would surrender a large share of airport cash flow for 30 years, while retaining ultimate ownership and part of the political responsibility for tariffs, access and employment.
Incheon’s proposed 35 per cent variable fee appears attractive as a state revenue mechanism, but it would also leave the concessionaire carrying investment obligations, operating expenses and commercial risk after paying more than one-third of airport revenue to the government. The request to delay the upfront fee suggests that the final financing structure had become difficult to close under the original terms.
The state-investment model preserves all future cash flow and strategic control, but only when Aerodromi Crne Gore is permitted to invest. During the concession procedure, projects worth more than €150mn were postponed because undertaking them could have changed the condition and value of the assets being offered. This created a damaging holding pattern: the airports remained profitable, but the company was discouraged from deploying that profitability into the infrastructure generating it.
Cancelling the tender without immediately authorising an alternative programme would extend that holding pattern. Starting another international concession process could require new feasibility studies, valuations, concession documents, consultations, prequalification and bid evaluation. Even a well-managed process would probably take 18–30 monthsbefore financial close, followed by design and construction. Repeating even half of the previous seven-year timetable would leave Montenegro entering the next decade with the same terminal constraints.
Direct public investment is therefore the only model capable of producing visible improvements before the 2027 season. That does not prevent the state from reconsidering a concession, management contract or partial public-private partnership later. The immediate programme can focus on no-regret investments that retain value under any future ownership structure: safety systems, baggage capacity, terminal weatherproofing, apron functionality, digital processing and passenger flows.
A larger public financing package should be prepared to institutional-lender standards. The state could approach the European Investment Bank, European Bank for Reconstruction and Development, Council of Europe Development Bank or commercial lenders for a structured facility linked to independently verified traffic forecasts and investment milestones. A state guarantee may reduce the cost, although Aerodromi Crne Gore’s own cash generation could support borrowing without transferring the entire exposure to the sovereign balance sheet.
Montenegro’s EU-accession position creates another financing option. Županović points to the reconstruction of Dubrovnik Airport, where European funding covered a substantial share of development costs. The broader Dubrovnik programme involved investment of around €215mn, of which the European Regional Development Fund contributed approximately €134.6mn. Montenegro cannot assume that the same grant intensity will be immediately available before membership, but the example shows the importance of preparing mature designs, environmental documentation and procurement packages early enough to qualify for European support.
Waiting for EU membership before beginning reconstruction would be commercially damaging. Montenegro aims to join the Union in 2028, but accession timing remains subject to reforms and unanimous approval by existing members. Airport works should therefore proceed under a financing plan that is viable without future grants, while allowing eligible phases to be refinanced or co-financed when European funding becomes available.
The investment case cannot be assessed only through airport profits. Montenegro’s 2025 tourism market generated 2.73mn arrivals and 15.37mn overnight stays, with 95.8 per cent of nights produced by foreign guests. Coastal resorts accounted for 92.6 per cent of the total. Air access therefore supports hotel revenues, VAT, employment, tourist taxes, restaurant spending, real estate, marinas and transport services far beyond the airport perimeter.
Tivat is particularly important to the premium segment. It is the main gateway for Porto Montenegro, Luštica Bay, One&Only Portonovi, Aman Sveti Stefan, Kotor and the wider Bay of Kotor. Guests paying €1,000–€5,000 per nightat luxury hotels should not encounter leaking terminal roofs, overcrowded processing areas and uncertain baggage delivery. The mismatch weakens the pricing credibility of Montenegro’s hospitality sector.
Airport congestion also has a direct airline effect. Limited stands, narrow operating windows and slow passenger handling restrict the number and timing of flights. Airlines can redirect aircraft to Dubrovnik, Tirana, Split or other airports offering better operational reliability and more efficient turnarounds. Once schedules and bases are established elsewhere, recovering those routes can require costly incentive packages.
This is the opportunity cost hidden inside the current €18.06mn airline-incentive budget. Financial incentives can attract carriers, but infrastructure determines whether they remain. Paying airlines to increase capacity while terminals and aprons are unable to process that capacity efficiently is an expensive substitute for investment.
The concession debate has also affected the company’s workforce. Employees and trade unions favour continued state ownership and argue that the profitable operator can finance reconstruction itself. Their position is commercially plausible, but state ownership must be accompanied by stronger governance, professional procurement and protection of investment cash from political distribution.
Retaining the airports in public ownership while extracting dividends or expanding payroll would not solve the infrastructure deficit. The company needs a ring-fenced capital plan, independent engineering supervision, transparent tendering and annual publication of project costs, delivery milestones and capacity gains. The airport operator must be managed as strategic transport infrastructure rather than as a source of short-term public revenue.
A workable programme now requires two decisions. Parliament must resolve the status of the failed concession process so that contractual and procurement uncertainty does not continue. The government must then approve a funded investment plan with immediate works for 2027, permanent expansion over 2027–2030 and a financing envelope capable of mobilising at least €150mn.
The airports are financially capable of supporting part of that programme, while traffic growth provides the economic case for long-term borrowing. Their projected €65.93mn revenue, €15.67mn pre-tax profit and passenger volume approaching 3.63mn make them bankable infrastructure assets. The missing element is no longer demand or access to capital, but a stable decision on who will procure, finance and supervise construction.
Seven years of indecision have already imposed a cost through delayed capacity, lost service quality and weaker tourism competitiveness. The next season can still benefit from targeted improvements, but permanent reconstruction requires a three-to-four-year delivery cycle beginning now. Montenegro’s airport problem has reached the point where postponement is itself the most expensive financing model.
