Cost of Crete’s new Kasteli airport rises by €455 million, sparking political criticism

The cost of building Crete’s new international airport at Kasteli, near Heraklion, has risen by 73%, or €455 million, according to official figures cited in recent reports. The original construction budget of €625 million has grown to about €1.08 billion.

Most of the additional €455 million covers compensation owed to the private consortium building the airport because of delays in delivering the project, the reports say. A smaller share, under €10 million, covers an ongoing archaeological excavation triggered by the discovery of antiquities along the airport’s road-connection route.

Legal sources said the private consortium could bear a large part of the cost linked to the archaeological excavation, but that the bulk of the extra spending stems from compensation tied to delays in the airport’s delivery date.

Project timeline and early setbacks

The construction contract was signed in spring 2019, with an original completion target of 2025. The airport was intended to become Greece’s second-largest gateway after Athens International Airport. The COVID-19 pandemic caused the first setback, as new health measures led to a revision of the airport’s planned built area, raising the budget from an initial €521.84 million to €625 million.

Subsequent revisions, the discovery of antiquities, and the redesign of road connections at Kasteli led to further delays, adding costs that are being covered from public funds. Analysts, media outlets and opposition lawmakers have raised the question not only of the size of the increase but of who ultimately bears the difference, since the added cost falls on Greek taxpayers.

Ministry figures show costs still rising

According to recent decisions by the Ministry of Infrastructure and Transport, additional compensation and costs linked to the concession contract now total €444.3 million. The ministry said the figure is not final and corresponds to delays recorded through 2026. As recently as November 2025, the equivalent budget for delay-related compensation stood at €363.8 million, meaning about €80 million was added within a few months.

The final amount is expected to rise further. The project is now scheduled for delivery in 2028, and compensation to the private contractors is expected to increase again in 2027 and 2028. Informal estimates cited in the reports suggest the final compensation paid to the private side could reach as much as €700 million.

Tunnel construction cited as main driver

Supporters of the project’s current course argue the extra costs reflect objective difficulties and design changes rather than unjustified benefits. The most significant change involved building a three-kilometre tunnel on the road linking the airport to the BOAK highway, judged necessary after major archaeological finds were made along a 13-kilometre stretch. That change alone added €160 million to the project’s cost.

Excluding the tunnel, the remaining additional spending amounts to about €284 million, attributed solely to compensation owed to the private consortium for the extended construction period, a 24-month delay in the airport’s planned start of operations, and the effects of the pandemic.

State’s financial exposure grows

Under the original agreement, the consortium’s bid put the total capital required for design and construction at €521.84 million, with the Greek state’s financial contribution set at €180 million and the private side’s committed equity at €158.4 million.

Adding the original €180 million state contribution to the €284 million in later compensation brings the state’s total financial exposure to €464 million, while the private consortium’s committed equity remains unchanged at €158.4 million. Commentators cited in the reports note that, on this basis, for every €1 the private side originally invested, Greek taxpayers have now contributed roughly €2.93 through the state budget. Despite this, the ownership structure of the concession company remains unchanged, with private investors still holding a 54.1% majority and the state limited to a 45.9% minority stake.

Political reaction

Independent Heraklion MP Charis Mamoulakis framed the gap between financial contribution and ownership control as a political issue, saying the situation at Kasteli “can no longer be hidden behind the contract’s complex technical terms.”

“The state started with a financial contribution of €180 million and, together with the compensation, the bill already reaches €464 million. And yet private investors retain 54.1%,” Mamoulakis said, describing it as reflecting a government approach to investment in which the taxpayer covers delays while the private side keeps control. “This is the government’s concept of investment: private initiative, public money, and the taxpayer paying for the delays. And unfortunately, the bill still doesn’t appear to be closed,” he said.

Ministry of Infrastructure officials and legal sources, however, said concession contracts of this type follow international standards designed to attract foreign capital. They argue the compensation payments are a contractual obligation of the state, since they stem from matters that fall under state responsibility, such as land expropriations — originally budgeted at €54 million — and archaeological surveys. Without such investor-protection clauses covering “state risk,” they said, no major infrastructure project of this kind could be financed through international markets.

Further cost increases not ruled out

Concerns remain that the final account may not yet be settled. The €284 million in compensation was calculated based on a schedule shift to 2027, but recent estimates place the airport’s full completion and operation toward the end of 2028. If this additional delay generates new contractual rights for the consortium over lost expected revenue, further financial claims against the state cannot be ruled out, according to the reports.

The new airport is being built to serve as Crete’s main air gateway alongside Chania Airport in the island’s west. Its road connections also tie into the BOAK highway, Crete’s main coastal route, which the redesigned tunnel section was built to serve.