Brazilian airport concessions: Rio and São Paulo to be included

The Brazilian airport concession programme took another unexpected turn when a further tranche – this time of 44 airports in six regional blocks – was reported to have been drafted on the orders of recently elected President Jair Bolsonaro.

Many of the most attractive airports, especially so to foreign operators and investors, appear to have gone already, but in this instance both the Santos Dumont Airport in Rio de Janeiro and Congonhas Airport in São Paulo will also be included.

But events in Belo Horizonte, where a secondary airport may be restored to full functionality, contrary to the understanding of the concessionaire on the primary one, threaten to impact negatively on the current and future tranches.

Another Brazilian (small) airport concession procedure by block is announced by the new president.
But this one reintroduces important Rio de Janeiro and São Paulo airports.
Infraero’s days are numbered.
Flughafen Zürich is not happy about the reopening of a rival (Infraero) airport in Belo Horizonte.
No sooner has an announcement been made confirming the fourth tranche of Brazilian airport concessions than the President-elect, Jair Bolsonaro – who takes power on 01-Jan-2019 – is reported to be drafting a project for the concession of six additional regional blocks of airports by 2022, this time encompassing 44 airports. Under a draft schedule plan, three blocks would transfer under concession in 2020.

While the location of the airports is not yet known, a similar problem affecting their disposal applies, and indeed it may even be more acute.

The ripe low hanging fruit has already been picked, and the smaller and more provincial an airport is, the less the interest in it from foreign investors is likely to be. Brazil is running out of attractive anchor airports to be the lead attraction in a ‘block’ of airports, none of which otherwise put through as many as one million passengers annually.

However, there is a twist in this particular tale, in that for the first time Rio de Janeiro’s Santos Dumont Airport and São Paulo’s Congonhas Airport are included.

Both have been slated for inclusion in the concessions programme previously, in the third tranche, together with airports in big cities like Fortaleza and Porto Alegre, but Santos Dumont was to have been bundled with a host of relatively underperforming airports (including Belo Horizonte Pampulha).

The economic decline that has blighted Brazil in recent years cast doubt on the deal, and then the decision was taken to exclude Santos Dumont altogether and leave it with the state operator Infraero – apparently on the grounds that without that asset Infraero would have no profitable ones at all.

A similar set of circumstances applies to Congonhas, which was left off the list entirely for the previous round, partly because of “technical issues” and partly, again, because including it would complicate the financial situation of Infraero. There may have been some political shenanigans as well, involving the previous administration.

The end may be in sight for Infraero
But new brushes sweep clean, and Mr Bolsonaro is doing just that. He seems to have written off Infraero. In a local media interview earlier in Dec-2018 he said he intended to grant the entire network of Brazilian airports to concessionaires within three years (not all of them are owned by Infraero, by any means) and then to “terminate” Infraero.

Both Santos Dumont and Congonhas are regarded as the remaining ‘jewels in the crown’, but after that there simply aren’t any.

Source: CAPA

Philippines: Mindanao airport gets private sector interest

Conglomerate Aboitiz Equity Ventures Inc. submitted an unsolicited offer to develop and operate Laguindingan Airport, which is located in Misamis Oriental and is considered a gateway to Northern Mindanao.
This was disclosed last week by Manuel Tamayo, undersecretary for aviation at the Department of Transportation (DOTr) .
Tamayo said the unsolicited proposal was submitted to the Civil Aviation Authority of the Philippines. He could not immediately provide details on the offer.
Laguindingan Airport, now considered the country’s sixth-busiest air gateway, was opened in 2013. It has a 2,100-meter runway and serves close to two million passengers annually.
The airport serves Cagayan de Oro City and nearby areas such as Iligan City, Marawi City and Bukidnon province.
This is the second provincial airport that AEV, through Aboitiz InfraCapital, has expressed interest in operating.
The company earlier won original proponent status to operate and further develop the Bohol Panglao International Airport, which was inaugurated last month.
The Cebu-based Aboitiz Group has interests that span power, banking, property development and agribusiness. It is also part of a consortium of seven conglomerates seeking to modernize and operate Manila’s Ninoy Aquino International Airport.
Among the groups that were prequalified to join the Aquino administration’s tender for regional airports, a Public-Private Partnership project, AEV shifted gears after the Duterte administration scrapped the PPP.
In May 2017, the DOTr announced its preference for government funding or foreign loans to finance the development of provincial airports. That policy direction changed anew as unsolicited offers were made.
Last October, it awarded original proponent status to businessman Dennis Uy’s Chelsea Logistics Holdings Corp., which made a P49-billion unsolicited offer for the Davao International Airport, the country’s third busiest gateway.

It also conferred an original proponent status to Mega 7 Construction Corp. for its P3.8-billion proposal for Kalibo International Airport, a gateway to Boracay Island, a popular destination for tourists.


Vietnam receives wave of investments in aviation infrastructure

A significant wave of private investments are flying into aviation infrastructure on the back of improvements in long-term development planning for the sector in Vietnam.

With the master plan to operate 28 airports by 2030, including 15 domestic and 13 international ones, in which Noi Bai, Da Nang, Cam Ranh, Tan Son Nhat and Long Thanh are key international gates, Vietnam is attracting investors to pour money into aviation infrastructure projects.

The Imex Pan-Pacific Trading Group, chaired by Johnathan Hanh Nguyen, has recently sent a document to Minister of Transport Nguyen Van The proposing to join the Airports Corporation of Vietnam (ACV) to invest in Passenger Terminal (T3) at Tan Son Nhat International Airport.

This is the second time this year Johnathan has expressed such a desire.

Meanwhile, the real estate developer FLC Group of Trinh Van Quyet is also interested in investing in the aviation sector. The group has received approval in principle from authorities in the central province of Quang Binh to invest in and upgrade Dong Hoi to an international airport.

The provincial People’s Committee said the project would be implemented under a public-private-partnership (PPP) model.

Quang Binh authorities and FLC Group have jointly asked the transport ministry to approve the project, which is expected to raise capacity from 500,000 passengers to ten million by 2020.

One of the typical examples of increased private investment is Van Don International Airport. The airport is the first private one in Vietnam invested in the form of BOT (Build-Operate-Transfer), with investment capital of VND7.5 trillion (USD321.4 million).

The airport is directly invested and operated by Sun Group.

The aviation services at the airport are still managed by the State in accordance with law.

Van Don is approved by the Ministry of Transport (MoT) as an airport of grade 4E (according to ICAO standard code). It is modern with a 3.6km long, 45m wide landing strip and is capable of accommodating large cargo and passenger aircraft. Van Don Airport is scheduled to begin operation this Sunday.

In their latest report, experts from Vietcombank Securities (VCBS) said they witnessed a trend of privatisation in infrastructure investment.

“This trend on one hand reduces pressure on the state budget and improves service quality, on the other hand, it creates a less positive sign for businesses with a large market share in the industry when the market is shared,” said experts fromVCBS.

VCBS experts also assessed that aviation infrastructure had not caught up with the industry’s development. The total passenger transport market of Vietnamese airlines is predicted to increase by an average of 16 per cent per year by 2020 and 8 per cent in the period 2020-30.

The passenger transport volume in 2020 and 2030 is 64 million and 131 million, respectively, according to the transport ministry’s forecast.

Meanwhile, this year witnessed the five biggest airports of Vietnam, Tan Son Nhat, Noi Bai, Da Nang, Cam Ranh and Phu Quoc, all serving passengers exceeding their designed capacity. In particular, Tan Son Nhat Airport exceeded the figure by 40.7 per cent.

“Despite improvements in technology, the process partially meets the increasing number of passengers each year, the expansion and upgrades to these airports is still an indispensable requirement,” VCBS stressed.

According to ACV, in the period 2018-25, there will be 15 key airports that will receive upgrades. Construction works will also be undertaken on Long Thanh International Airport in phase 1 and new passenger terminals for Dien Bien, Na San and Lao Cai airports.

It is expected that the total investment of terminal and apron projects (excluding Long Thành Airport) amounted to more than VNÐ56.7 trillion with capital accumulated from ACV’s business activities. In addition, it needs more than VNÐ20.7 trillion to invest in the airfield projects, with capital accumulated from this area.

In the above projects, investment priority will belong to Tan Son Nhat Airport.

According to Deputy General Director of Vietstar Airlines Luong Hoai Nam, quoted by online newspaper at the Vietnam Travel and Tourism Summit held early this month in Hanoi, since 1975, Vietnam has only really built completely and put into operation Phú Quoc Airport and most recently Van Don Airport, the rest are mostly upgraded from military airports with limited land funds, making the ability to expand very slight.

Vietnam has 21 airports, while Thailand has 38. The capacity of all Vietnam’s airports is 75 million passengers per year, which is just one-third of Thailand’s. The combined capacity of all airports in Vietnam is that of Changi Airport of Singapore or Kuala Lumpur of Malaysia.

Source: Borneo Bulletin

Philippines NEDA approves New Manila Airport concession agreement

Philippines’s National Economic and Development Authority (NEDA) approved (24-Dec-2018) negotiation results of the concession agreement between the Philippines Department of Transportation and San Miguel Corporation for the New Manila International Airport project. The PPP proposal involves construction operation, and maintenance of the airport on a 2500 hectare area of land in Bulakan, north of Manila Bay. The proposal entails a total project cost of PHP735.6 billion (USD13.9 billion).

Source: CAPA