This week, the Brazilian government held an auction to privatize 22 airports throughout the South American country. As a result, the government raised approximately 3.3 billion reais (about US$588 million).
Brazil’s plan to privatize airports
Before the 2014 World Cup celebrated in Brazil, the country’s government was worried about the capacity constraints throughout the territory. Therefore, the government decided to privatize the airports in six World Cup cities by means of public auctions.
Between 2017 and 2019, the government transferred another 17 airports to private investors. Now, the Brazilian authorities have held a new auction putting 22 airports up for privatization, divided into three blocks. The private concessions will last 30 years.
Block South was composed of the airports in Curitiba, Foz do Iguaçu, Navegantes, Londrina, Joinvile, Bacacheri, Pelotas, Urugaiana, and Bagé. Meanwhile, the Central Block included the hubs in Goiania, Sao Luis, Teresina, Palmas, Petrolina, and Imperatriz. Finally, the North Block included Manaus, Porto Velho, Rio Branco, Cruzeiro do Sul, Tabaginta, Fefe, and Boa Vista.
For 2022, Brazil plans to auction 17 more airports, including two critical hubs, Congonhas in Sao Paulo and Santos Dumont in Rio de Janeiro. Last year, Ronei Glanzman, civil aviation secretary, said,
“The last round is the most anticipated for having Congonhas and Santos Dumont airports, and we expect a greater number of interested parties for both studies and the auction. But they represent two major challenges for engineering due to the lack of space in urban centers.”
Who got these 22 airports?
Two companies obtained the three airport blocks during this past auction. Companhia de Participações em Concessões (CCR, in English) won the privatization contracts in the South and Central blocks.
Meanwhile, Vinci Airports obtained the North Block, said the Civil Aviation National Agency in a statement.
CCR paid 2.1 billion reais (US$377 million) for the South Block, which includes the highly coveted Curitiba Airport. This airport had over 6.3 million passengers in 2020, ranking 12 overall in Brazil.
For the Central Block, CCR paid 754 million reais (US$135 million). The most important hub in this block is Goiania, which received over 3.1 million passengers in 2019.
Finally, Vinci Airports paid 420 million reais (US$75 million) for the North Block. Manaus, deep in the Amazon rainforest, is the most important city on this list. In 2019, it had 2.9 million passengers.
Terms and conditions
After the auction, Brazil’s Infrastructure Minister, Tarcisio de Freitas, said,
“We had an extraordinary result in this auction, despite the fact that the COVID pandemic strongly affected all airports.”
This auction raised a similar amount of money as a previous one in 2019, said Reuters. Now, both CCR and Vinci Airports have a few terms and conditions they have to follow for the next 30 years.
The new administrators of these 22 airports have to invest at least six billion reais during the three decades of concession. Plus, in the first 36 months, the companies will have to improve the infrastructure and modernize it to serve passengers adequately.
Nevertheless, these auctions should benefit Brazil’s overall aviation industry growth. In a research made last year by Cornelis van Rij, the Netherlands ambassador in Brazil, he said,
“Today’s numbers confirm that Brazil is seriously addressing outlined issues, increasing competitiveness in the local aviation market and bringing significant rewards to the sector. With demand set to double over the next 15 years, the economic contribution of aviation to the Brazilian economy could amount to more than USD$88 billion per year and the supporting of more than 1.4 million jobs.”
Brazil has the second most number of airports in the world. But, from a total of 2,499 existing aerodromes in Brazil, 82.6% of all the flights in 2018 took off from one of the 20 main airports. Therefore, there’s a lot of room to grow.
What do you think of Brazil’s plans? Let us know in the comments.