Brazil is turning to the private sector to help it build and modernise its airports, ahead of hosting the World Cup in 2014 and the Olympic Games two years later - but will it work?
A call of "Just give us more" is the common refrain from every market player when it comes to airport capacity in Latin America's fastest growing economy. Speaking at last year's ALTA Forum in Panama, Solange Paiva, then president of ANAC - Brazil's civil aviation authority - said: "This is the great challenge we have in Brazil - infrastructure."
Speaking to Airline Business in the run-up to this year's Forum, IATA regional vice-president Latin America and the Caribbean, Patricio Sepulveda, said: "In Brazil you have the hottest infrastructure issue in the region."
But Brazil's solution - the privatisation of three important airports in 2012 - has airlines deeply concerned. While IATA is less worried that the experience of the flawed Latin airport privatisations of the late 1990s and early 2000s will be repeated in Brazil, Sepulveda raises issues about government bureaucracy slowing the projects down.
In October the country's secretary of aviation, Wagner Bittencourt, outlined the tender process, investment requirements and construction milestones for the privatisation of Sao Paulo's Guarulhos and Viracopos-Campinas airports - and that of the capital Brasilia.
With so much spending needed across a host of infrastructure projects in the next few years, private money is essential to supplement public investment. As a foreign investment body, the US Commercial Service, noted in a report: "There are growing concerns that without privatisation, Brazil's airport infrastructure will not be ready to deal with the expected influx of visitors for these games. The government wants to pick up the pace of improvements not only to meet the increased demand during the sporting events, but also to ensure that capacity meets the country's future air traffic needs." Former IATA director general Giovanni Bisignani told the British Chamber of Commerce in Sao Paulo in March: "The Infraero model, which controls 94% of Brazil's airports, is broken."
The plan for Guarulhos - Brazil's main international gateway, with 27.4 million passengers handled in 2010 - foresees new capacity coming on line 18 months after privatisation. The airport is heavily congested, slot-constrained and features old terminals. There will initially be a major new terminal, 13 new airbridges and more apron parking. Later three more terminals will be added, almost tripling the airport's current terminal and parking capacity.
Viracopos, the base of domestic players Azul and TRIP, will also get a new terminal. By 2031, the plan envisages a huge expansion, with four runways and a four-concourse terminal. Airlines welcomed the expansion, of course, but question the model. "The government, through Infraero, will have a major shareholding in the airport, and the government airport regulator will receive a share of the airport gross revenue, creating a serious conflict of interest," Sepulveda explained.
Sepulveda's apprehension is heightened because of previous experience in dealing with Brazil - and that despite the will of all concerned, the country's complex legal and political systems will throw a spanner in the works. "All these intentions are in front of a tremendous wall. I am very worried because I know very well how Brazil works."
There is no doubt that Brazil's government and all the related aviation bodies face a massive challenge to get these schemes off the ground. Then there is the challenge of sticking to schedule and to budget, and finally - at the end of the day - keeping charges at levels airlines can afford.
Source: Flight Daily News
