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Brazilian airports move closer to privatization
Renato Alves . Sep 23, 2020
Plane lands on Congonhas airport, in São Paulo. Photo: Alf Ribeiro
Potentially the most thrilling and striking commercial flight one can take is departing from Rio de Janeiro’s Santos Dumont Airport and landing one hour later in Congonhas Airport in São Paulo. Taking off from Santos Dumont, in the center of the Wonderful City, aircrafts bank around the picturesque Guanabara Bay, passing Sugarloaf Mountain and the Christ the Redeemer statue, giving passengers an aerial view of this geographically improbable city.
On approach to São Paulo — South America’s biggest city — planes descend into an apparently endless blanket of high-rise buildings. As the only airport in the city proper, landing in Congonhas can be a bit of a white-knuckle ride. After negotiating around corporate towers and apartment buildings, pilots finally can bring the craft down on the runway.
Now, these two airports — among Brazil’s busiest — are moving closer to being sold off to private companies.
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<p>Despite being scheduled for March or April 2021, the invitation for studies for the seventh round of Brazilian <a href="https://brazilian.report/business/2019/03/16/airport-auction-privatization/">airport auctions</a> is set to be published at the beginning of October. This latest wave of sales includes Congonhas Airport in São Paulo, and Santos Dumont Airport in downtown Rio de Janeiro.</p>
<p>The publication will be brought forward after a request from Infrastructure Minister Tarcísio de Freitas, as revealed by newspaper Folha de S. Paulo and confirmed by <strong>The Brazilian Report</strong> after consulting Mr. Freitas’ staff. The ministry is keen on avoiding any delays to the timetable of the seventh round of auctions, in line with the guidelines of concession processes that precede it.</p>
<p>The sixth round includes 22 Brazilian airports grouped into three regional blocks: South, Center-West, and North. According to the Brazilian Civil Aviation Agency (Anac), before the <a href="https://brazilian.report/business/2020/07/13/brazilian-private-airport-administrators-fear-collapse/">coronavirus crisis hit</a>, these terminals accounted for 11 percent of passengers travelling nationwide, with 23.9 million arrivals and departures Brazil-wide in 2019.</p>
<p>Meanwhile, the seventh round includes a total of six airports, with final auctions tipped to take place at the start of 2022. Once the project is complete, Brazil will be one of the few countries in the world where practically all airports are run by the private sector, a sell-off frenzy set to raise a total of BRL 239 billion (USD 43.3 billion), according to the government.</p>
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<h2>Airports demand investments</h2>
<p>The government’s move towards privatization comes at the most uncertain time. The aviation industry has been one of the worst-hit sectors by the Covid-19 pandemic — with most flights grounded for months. Airlines such as <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/07/01/aeromexico-files-for-chapter-11-bankruptcy-protection/">Aeromexico</a>, Latam, and Avianca have filed for Chapter 11 bankruptcy. Other players are buried in debt — and a bailout plan has yet to become a reality. Meanwhile, private companies running airports around the country <a href="https://brazilian.report/business/2020/07/13/brazilian-private-airport-administrators-fear-collapse/">fear collapse</a> and demand government investments. </p>
<p>The Infrastructure Ministry’s Civil Aviation Secretariat forecasts that the coming rounds of airport concessions will demand investments of BRL 8.8 billion. A large part of this amount is set to come from the block including the Congonhas and Santos Dumont airports, with BRL 2.4 billion. </p>
<p>Neither Congonhas or Santos Dumont are compliant with a series of international norms and the rectification of these problems are deemed to be expensive and difficult to carry out — which explains the forecast of high investment demands. Improving the infrastructure of both airports could involve the construction of new runways, a possibility which is yet to be discussed with technicians and the Department of Space Control.</p>
<p>Congonhas is a regional airport located in a heavily populated neighborhood of São Paulo, flying to major cities around the country. Santos Dumont is also located in Rio’s city proper. Known colloquially as an airbridge, the route between Congonhas and Santos Dumont transports more passengers than anywhere in Brazil. </p>
<h2>Government says pandemic doesn’t affect plans</h2>
<p>When the Covid-19 pandemic began, studies for the sixth round of airport concessions were filed at the Federal Accounts Court (TCU), but these analyses were all carried out with a pre-coronavirus attitude in mind, despite the fact officials were aware they would need alterations to account for the drop in demand. </p>
<p>However, Infrastructure Minister Tarcísio de Freitas has stressed that the <a href="https://brazilian.report/business/2020/01/10/brazil-infrastructure-privatizations-2020/">transfer of 43 airport terminals</a> administered by the Brazilian Airport Infrastructure Company (Infraero) would not be affected by the negative impacts of the Covid-19 pandemic. “We’re gonna rock the sale of airports!” Mr. Freitas declared, during a live social media broadcast.</p>
<p>The <a href="https://www.jornaldocomercio.com/_conteudo/2017/10/economia/592849-governo-inclui-13-aeroportos-em-lista-de-privatizacao-mas-retira-congonhas.html">initial concession plan</a> foresaw Congonhas and Santos Dumont remaining under Infraero’s control, as a way of keeping the state-owned company and it’s regional airport network alive. A change in the strategy means the pair will be the last properties to be sold off.</p>
<p><fontsninja-text id="fontsninja-text-1172" class="fontsninja-family-1756">The current government changed the rules for airport concessions, altering the total of shareholder control of the terminal on behalf of the private buyer. The first block, sold in 2012, foresaw Infraero staying on as a partner with 49 percent control. The argument was that this rule would allow Brazil to hold on to its sovereignty, yet it demanded constant investments while the state-owned company hemorrhaged revenue.</fontsninja-text>
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