The dominant private players in Brazil's airport sector

Brazil’s airport sector is now mostly run by private firms, following in the footsteps of the country's telecom and electric power industries.

Earlier this month, the government concluded the concession auction for 15 airports, meaning that private firms now handle 91.6% of Brazil’s air passenger transport.

"The domain of private sector participants brings more dynamism to the airports and this is very positive for companies that provide services and works for concessionaires, as there is much less bureaucracy involved compared to the relationship with the public sector," Adalberto Vasconcelos, founder of infrastructure consultancy ASV Infra Partners and former head of government investment partnerships program PPI, told BNamericas. 

A similar level of private participation exists only in the telecom and energy markets, which were privatized in the 1990s. Airport concession auctions started in 2011. Previously, airport authority Infraero administered the facilities.

“The consolidation of private sector participants in the airport industry brings regulatory challenges; the segment still does not have the same regulatory maturity as the telecom and electricity sectors,” said Vasconcelos.

CURRENT PLAYERS

Local players in the segment are CCR, Socicam, Invepar and XP, while international players are Aena Desarrollo, Vinci Airports, Inframérica, Fraport and Flughafen Zürich.

CCR manages the airports in the cities of Curitiba, Foz do Iguaçu, Londrina, and Bacacheri, in Paraná state; Navegantes and Joinville in Santa Catarina state, Pelotas and Bagé in Rio Grande do Sul, Goiânia in Goiás, São Luís and Imperatriz in Maranhão, Teresina in Piauí, Palmas in Tocantins, and Petrolina in Pernambuco.

Socicam has 24 facilities and won the airports of Belém, in Pará state, and Macapá, in Amapá in the August 18 auction.

More Brazilian players entered the sector with that auction. Among them are investment firm XP Asset, winning the concession of Campo de Marte airport in São Paulo state and Jacarepaguá in Rio de Janeiro.

Meanwhile, infrastructure firm Invepar is the controlling shareholder of GRUPar, which owns the concession for the country’s busiest airport, Aeroporto de Guarulhos in São Paulo state.

Spain’s Aena aggressively increased its sector footprint. The company already operated six airports in Brazil’s northeast and won the block that includes the country’s second busiest airport, Congonhas, in São Paulo state. Aena was the sole bidder, offering a fee of 2.45bn reais (US$480mn), while the minimum was 740mn reais.

This block also involves Campo Grande, Corumbá and Ponta Porã in Mato Grosso do Sul state; Antares, Marabá, Parauapebas and Altamira in Pará; and Uberlândia, Uberaba and Montes Claros in Minas Gerais.

“We want to contribute to airport sector development in Brazil. The country is a very important part of our strategic vision of international expansion,” Aena’s international director told a press conference after the auction.

France's Vinci Airports administrates facilities in Manaus, Tabatinga and Tefé in Amazonas state; Porto Velho in Rondônia, Rio Branco and Cruzeiro do Sul in Acre state, and Boa Vista in Roraima state.

Meanwhile, Switzerland’s Flughafen Zürich manages Florianópolis airport in Santa Catalina state, along with Vitória in Espirito Santo and Macaé in Rio de Janeiro state.

Germany's Fraport operates the airports of Porto Alegre in Rio Grande do Sul and of Fortaleza in Ceará state.

Concessionaire Inframérica, controlled by Argentine holding company Corporación América, operates Brasília international airport and São Gonçalo do Amarante airport in Rio Grande do Norte state capital Natal.

HEADWINDS

But the sector also grapples with problems.

"Contracts in the electricity sector undergo periodic reviews every five years to verify the need for rebalancing. In the case of airport concessions there is no such periodic review, so the companies assume the risk throughout the 30-year contract," said Vasconcelos.

Several concessionaires with contracts acquired before 2015 ran into problems, as passenger demand forecasts did not materialize, forcing some companies to return their contracts to the government for re-bidding.

Inframérica is in the process of returning São Gonçalo do Amarante, while RIOGaleão,controlled by Singapore's Changi Airport, is returning the concession for Rio de Janeiro's Galeão international airport.

In addition, the concession of Viracopos airport, which serves São Paulo state’s Campinas city, will likely also be reoffered as Aeroportos Brasil Viracopos (ABV), comprising TPI-Triunfo Participações e Investimentos, UTC Participações and EGIS Airport Operation, returned it.

Returning concessions is provided for in the contracts and possible once a company expresses interest. The government assesses if compensations must be paid by any party and then usually approves the process.

The pandemic hit the sector hard, passenger demand collapsed in 2020 and 2021 due to mobility restrictions. To help, the government evaluated the impacts of the pandemic on each airport and authorized lower annual fee payments by concessionaires to compensate for the unexpected drastic drop.

THE 2023 AUCTION

The sector is poised to be fully run by private players from next year. The federal government recently authorized adding Galeão international airport and Santos Dumont domestic airport, both in Rio de Janeiro, to the PPI.

With that authorization, the facilities' concession can advance. The infrastructure ministry is planning to offer both in a single concession next year.