Capacity for sell-offs

While a flurry of airport privatisations has taken place across Latin America, a big unanswered question still remains over whether that will extend to the region's real giant, Brazil.

Privatisation of Infraero, the Brazilian airports authority, has been talked about for years. But when Cardoso's four-year government auctioned off road, railway, telephone, mining and electricity companies among others, the company was not included.

Cardoso was re-elected for a further four-year term in last month's presidential elections, but he has not announced whether or not he intends to sell off Infraero during that time.

In fact, Infraero is quite a different animal from the usual state-owned basket cases that have been put up for auction in the region. Infraero has been quietly embarking on an ambitious investment programme in the last two years to expand capacity and meet growing demand. Infraero, which administers 67 airports that account for 90% of Brazilian air traffic, handled 55 million passengers and 1.3 million tonnes of cargo last year. These numbers are projected to rise to 69 million and 2.6 million, respectively, by 2001, according to the authority's own statistics.

It has already opened new airports this year at Sïo Luís, Fortaleza, Aracaju, Rio Branco and Natal and is planning to invest a further $3.2 billion by the end of 2001. A large part of this will go towards continued modernisation of a further 25 airports, including new terminals at Porto Alegre and Sïo Paulo (Guarulhos) and a second terminal at Rio de Janeiro's Galeïo international airport.

Rather than all-out privatisation, Infraero has preferred to bring in private partners on specific projects. Until recently, this was restricted to retail and catering but that is extending to the car parks, hotels and beyond. Private investment is running at R60 million this year is due to reach R190 million by 2000, representing over a quarter of the total spend. But there remains opposition from the military-run Ministry of Aeronautics, which still controls Infraero, and only 10 airports are profitable today.

Privatisation in neighbouring Argentina finally went through this year after a long battle between the government and Congress. A 30-year concession to run 33 of the country's airports was awarded to the Aeropuertos Argentinos 2000 (AA 2000) consortium, which is led by Milan airport operator SEA and the USA's Odgen.

The deal has not gone entirely smoothly, with International Air Transport Association (IATA) is already concerned over rising charges as the consortium struggles to meet the annual $171 million concession fee and a compulsory $1.3 billion investment programme.

Elsewhere, Mexico expects to have sold off the first of four regional packages of airports by the end of the year, while Panama said in September that it was waiting to see how many companies would actually bid for its only international airport.

Peru also announced plans to sell off its five major airports as a group, but rapidly changed its mind. Now the airports are to be sold separately with bid packages expected for potential investors next year. By then if should be clear just how successful the region's privatisation drive has actually been.

Source: Airline Business