Brazilian Airport Privatization

An Expert's View about Aerospace in Brazil

Last updated: 31 Aug 2011

Summary
The Brazilian federal government, which owns and operates Brazil's major airports will privatize the country's five largest airports, starting with airports in Sao Paulo and Brasilia, to be followed by airports in Rio de Janeiro and Belo Horizonte. The operations and expansion of Brazilian airports have become a key issue in the run-up to the 2014 World Cup, spread among 12 Brazilian cities, and the 2016 Olympic Games, to be held in Rio de Janeiro. There are growing concerns that without privatization, 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.

The five airports to be privatized--two in Sao Paulo State, one in the Capital of Brasilia, one in Minas Gerais, and one in Rio--serves an area that contains approximately 60% of Brazil's total gross domestic product. Brazil needs to investment of between USD$16 billion to 21.7 billion over the next 20 years in order to bring capacity in line with future demand. The current handling capacity of 130 million passengers needs to double over the next two decades to match the growth of air traffic demand of approximately 7 percent a year.

INFRAERO, the Brazilian airport authority, is responsible for designing, building, operating and managing 67 national and international airports, 80 flight support centers, and 32 logistics terminals. Since 2000, INFRAERO has been investing to improve the airport infrastructure 10 years but with the increase in air traffic, the Brazilian airport infrastructure remains insufficient for current and future demands and hence the need for concessions.

Brazil’s federal government will look to carry out restoration and expansion work at five international airports through concessions and public-private partnerships. National civil aviation authority, SAC, has not yet defined the criteria for the allocation of services and the government is planning to have work start on the airports very soon. The four airport concessions will require an estimated investment of 3.99bn reais (US$2.55bn). Projects will involve building new terminals, runways and expanding road networks, as well as other restoration and modernization work.

Tenders for Guarulhos and Viracopos airports in São Paulo and Brasilia that were supposed to issued in December are now postponed to April 2012, while the concession for the Cofins airport in Belo Horizonte and Galeão airport in Rio de Janeiro are due to be issued in the second semester in 2012.

As has occurred in Mexico and India, Brazilian construction companies are expected to be major consortium partners, including: Andrade Gutierrez, CamargoCorrea and Odebrecht Best prospects for U.S. firms should include: airport management services, passenger terminal equipment, cargo handling equipment, maintenance equipment, baggage X-rays, air traffic control equipment, radar systems and passenger bridges.

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Posted: 30 August 2011, last updated 31 August 2011

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