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2011-02-01

Brazil: Airports top the list of investment priorities

By Ricardo Corrêa for Infosurhoy.com—01/02/2011

The government may invest R$5.15 billion (US$3 billion) to improve airport infrastructure during the next four years.

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Brasília/Juscelino Kubitschek International Airport will receive an investment of R$748.4 million (US$448.1 million) through April 2013. (Courtesy of Elza Fiuza/Agência Brasil)

Brasília/Juscelino Kubitschek International Airport will receive an investment of R$748.4 million (US$448.1 million) through April 2013. (Courtesy of Elza Fiuza/Agência Brasil)

Editor’s note: Economic growth is averaging 5% since 2007, 29 million Brazilians have moved up the economic ladder to the so-called C class between 2003 and 2009, and the country’s import and export sector never had a better year than it did in 2010.

But the Brazilian economy, which is expected to expand in 2011, may encounter obstacles along the way. The traditional lack of investment in public infrastructure – mainly in the transportation sector – threatens its growth, according to specialists and investors.

Based on the study “Economic Infrastructure in Brazil: Diagnoses and Outlooks for 2025,” by Carlos Campos and Bolívar Pêgo of Brazil’s Institute for Applied Economic Research (IPEA), Inforsurhoy.com is publishing a four-story series on the problems facing the country’s airports, highways, railways and ports.

BELO HORIZONTE, Brazil – Carlos Arthur Nuzman, president of the Brazilian Olympic Committee, doesn’t mince words: “The airport issue might be the one thing everyone in Brazil can agree on.”

Nuzman’s statement, made last November during the Soccerex Global Convention in Rio de Janeiro, was supported by the Brazilian Sports Minister Orlando Silva, as well as FIFA Secretary General Jérôme Valcke.

“The airports are the main cause for concern,” Valcke said during a Dec. 6 ceremony to announce the finalists for FIFA’s Player of the Year award.

The need to modernize Brazil’s airports – even if the country was not hosting the World Cup in 2014 and the Olympics two years later – has emerged as the No. 1 priority for Brazilian officials.

Officials said R$5.5 billion (US$3.3 billion) will be needed to modernize the air transportation sector, which had been plagued by a lack of investment for decades.

The government-owned Brazilian Airport Infrastructure Company (Infraero) will invest R$5.15 billion (US$3 billion) in the 13 terminals in the dozen cities that will host World Cup games. Those airports account for 87% of air traffic in Brazil, which is home to 67 airports nationwide.

Another R$400 million (US$239.5 million) will be invested by the private sector in the city of Natal’s privatized São Gonçalo do Amarante airport, located in the Rio Grande do Norte state.

But the country’s busiest airports are the top priority.

The São Paulo/Guarulhos – Governador André Franco Montoro International Airport will receive a R$1.2 billion (US$718 million) investment. Brasília will receive an investment of R$748.4 million (US$448.1 million). The international terminal at Rio de Janeiro’s Galeão-Antonio Carlos Jobim airport is expected to receive R$687.4 million (US$411.6 million) in investments. The Tancredo Neves/Confins airport, serving the metropolitan area of Belo Horizonte (Minas Gerais state) will receive R$408.6 million (US$244.6 million), officials said.

Brazil’s federal budget for 2011 includes R$2.7 billion (US$1.6 billion) in airport spending. Of this amount, R$479.5 million (US$287.1 million) will be invested directly by the federal government in building, expanding and renovating terminals.

The remaining R$2.2 billion (US$1.3 billion), set aside for Infraero investments, will be applied to airport construction, engineering services and decor.

Infraero also is installing so-called “operational modules” – structures that extend an airport’s terminal.

The modular setup is similar to that found in conventional boarding areas, with air conditioning, bathrooms, a public address system and retail shops.

The Hercílio Luz (in Florianópolis, Santa Catarina state) and Juscelino Kubitschek (Brasília) airports already have some in place.

The modules also were used at Portugal’s Lisbon airport during the 2004 UEFA European Football Championships, and in Qatar’s Doha airport during the 2006 Asian Games, according to Infraero.

The international airports of Viracopos (Campinas, São Paulo state), Marechal Rondon (Cuiabá, Matto Grosso state) and Guarulhos (São Paulo) also will be equipped with modular structures.

World Cup highlighted the problem

World Cup 2014 is expected to cause the number of flights and passengers nationwide to increase 10% during the month-long tournament, according to estimates from the Ministry of Defense.

But the 29 million who have ascended the economic ladder into the so-called C class, according to a study carried out by the Fundação Getúlio Vargas, also have impacted the airport sector.

The number of passengers traveling in Brazil doubled between 2003 and 2010.

In 2003, there were about 71.2 million airline passengers.

In 2010, 154.3 million people traveled by plane.

“The demand [will grow] not only because of the expected continuation of economic growth in Brazil, but also because of the major international sporting events that will be held in the country in the coming years … with an urgent need for Infraero to expand its investment capacity,” stated a report from the Brazilian Federal Court of Auditors, signed by government minister, Raimundo Carreiro.

But is the money being spent to improve the sector?

As of September 2010 only 0.9% – R$49.3 million (US$29.3 million) – of the R$5.5 billion (US$3.3 billion) allocated for airport construction in anticipation of the World Cup has been invested, according to the Brazilian NGO Contas Abertas.

Infosurhoy.com made several attempts to confirm these figures with Infraero, but the state-owned company didn’t provide the information.

Airports responsible for bottlenecks at the South Africa World Cup

Brazilian officials don’t want a repeat of what happened at World Cup 2010 in South Africa.

South Africa invested about R$4.3 billion (US$2.57 billion) to improve air transportation nationwide but still suffered major problems.

The biggest debacle occurred on July 7 when about 600 fans of Spain and Germany missed the teams’ July 7 semifinal in Durban because they were unable to board their flights on time.

“More than US$2 billion was invested in order to modernize the sector,” said Angela Quintal, editor of Durban’s The Mercury newspaper. “And everything was going well until the match between Spain and Germany. When a lot people traveled to watch a single match in the city, it became clear that more was needed.”

At the time, the Airports Company South Africa (ACSA) reported that bad weather, the higher than expected traffic at Durban’s King Shaka International Airport and too many planes in the hangar and tarmacs caused flights to be delayed.

Poor oversight causing delays

In addition to making investments, authorities also have taken steps to prevent flights from being delayed, especially during peak travel times.

In December, the Brazilian National Civil Aviation Agency (ANAC) met with the six largest Brazilian airline companies to stipulate special “rules of conduct” that would be put in place during the holiday seasons.

The practice of selling tickets to more passengers than can be accommodated on a plane – known as overbooking – is now prohibited. Check-in services also have been expanded, and the companies are now required to have extra planes available.

In an attempt to improve the oversight of Brazilian aviation, President Dilma Rousseff’s administration is analyzing the possibility of relieving the Brazilian Ministry of Defense of its civil responsibilities, such as air traffic control.

Her administration is proposing the creation of a special secretariat in charge of airports, which would report directly to the president, much like the special secretariat in charge of Brazilian ports.

“Dilma has every intention of creating [a secretariat in charge of airports], and she is going to do it when she feels the time is right,” Minister of Planning Miriam Belchior recently said, according to Agência Brasil.

Editor's Note: Infosurhoy.com’s series on the investments the government is making for a better Brazil continues on Feb. 8, when Nelza Oliveira looks at what’s being done to improve the country’s ports.

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