LABACE Convention News

Capacity Increases at Brazil's Airports

 - August 11, 2017, 5:33 PM
Events such as the World Cup soccer competition and the Summer Olympics stimulate upticks in business aviation in Latin America. Privatizing general aviation-specific airports is one strategy for handling competition for access to airports where airline service dominates.

Four years ago, several business aviation airport projects in Brazil were announced in response to a leftist government trying to prolong double-digit airline growth by squeezing private aviation out of airports that hadn't been expanded in decades. Last year, however, the economy hit its severest recession on record—impacting both business and commercial aviation fleets shrinking. But following an epic corruption scandal, it was the leftist government that wound up being squeezed out.

The recession's reduction of demand merely postponed airport saturation, but investment in some major airports after privatization has increased capacity. The new federal government has proposed privatizing the remaining airports, closing government airport management company Infraero. After several attempts, the state of São Paulo has successfully auctioned management of five airports, which should all receive an influx of funding, including important GA maintenance center Jundiaí. The Coroa do Avião airport has opened at Igarassu in the northeastern state of Pernambuco, but in São Paulo one proposal has evaporated, Catarina Executive Airport has shortened its planned runway and put off its opening, and Aerovale, stalled by environmental protection claims and consequent financial problems, continues moving forward in stages, as close as a year to opening. Socoraba airport, already home to Embraer, Dassault and Gulfstream service centers, has gradually received improvements and additional hangars.

Fleet and Flying Shrank in 2016

The commercial fleet in Brazil shrank by 6 percent last year, from 727 to 686 aircraft, according to IBA's 2017 Brazilian Civil Aviation Yearbook, and the number of passengers dropped 6.9 percent the same year, from a record 117.7 million in 2015 to 109.6 million in 2016. While the number of general aviation aircraft remained stable, more expensive business aircraft showed declines. Twinjets fell by 5 percent (from 784 to 743); trijets remained stable at 19 aircraft; twin-turbine helicopters dropped by 4 percent (from 519 to 498); and single-turbine helicopters dropped 1 percent (from 894 to 885). While the IBA Yearbook does not calculate fleet value, the last ABAG yearbook put the sum of those categories at 74 percent of the total value of the general aviation fleet.

The drop in usage was even steeper, 11 percent for commercial and general aviation in 2016, from 2,022,415 to 1,794,327 operations and 563,325 to 500,113 operations, respectively. Many busy airports that serve only general aviation operations are not included in that figure, but it remains clear that demand at Brazilian airports dropped significantly in 2016.

Infraero's statistics through May 2017 show a drop even from 2016's numbers, as did statistics from São Paulo airport authority DAESP. A recovery is anticpated, but still not here.

Privatized Airports in the Pinch

Privatizations of airports took place around five years ago amid a climate of double-digit passenger growth. Major airports went to groups benefitting from public financing and headed by construction companies at the heart of the ongoing corruption scandal. The recession caused a drop in passengers, flights and revenue, which meant cash flow was incompatible with ongoing lease payments. The corruption investigations have further pinched the investors. Contractor Engevix sold its share of the Brasília airport. UTC, a major investor in Viracopos airport in Campinas, filed for protection from creditors on July 17 with a billion dollars in debt. Other prominent names in the scandal include OAS, investor in the GRU Airport, and Oderbrecht, investor in Rio's Galeão Airport.

Scandals and recession aside, major improvements were made. Viracopos now has a large modern terminal and serves as hub for airline Azul. Guarulhos added a gleaming international terminal and transformed a freight hangar to handle more domestic passenger flights. Rio, which under public management seemed to find it an insurmountable challenge to maintain functioning bathrooms and escalators, added a new terminal, new ramp space. And additional FBOs and private hangars have been built. RioGaleão operations director Herlichy Bastos said in April 2016, “There is no comparison between 2014 and 2016. It’s not the same airport.” Congonhas Airport, the country's second-busiest airport and host to LABACE, while still under public airport authority Infraero, built a new control tower and expanded the terminal.

Upcoming Privatizations

In March of 2017, the Florianópolis, Salvador, Porto Alegre and Fortaleza airports were privatized. In June federal government announced plans to privatize the entire network of 56 airports still managed by Infraero, in groups including both profitable and unprofitable airports. A major stumbling block is Infraero's bloated staff of 10,000, a number determined more by political than by technical criteria. The airports themselves are a heterogeneous lot. The one with the largest deficit is São José dos Campos, home to Embraer but at present with no commercial flights. São Paulo's Campo de Marte is the country's busiest GA airport, busiest heliport, and also home to the Brazilian Air Force's central engine maintenance shop. But it also has no commercial flights.

Not all airports are operated by the federal government's Infraero. São Paulo airport authority DAESP operates 26 airports, five of which were privatized as a group last month, including important GA and maintenance poles Jundiaí and Campo dos Amarais in Campinas. DAESP plans further privatizations, and FBO operator World Way Aviation has made a proposal to manage the Sorocaba airport, under a new state procedure. Its FBO is located there, as are maintenance centers for Embraer, Dassault, Gulfstream, and Pratt &Whitney Canada.

Ready for the rebound?

One business aviation airport proposal was apparently stopped by the recession, but two creep forward. Aerovale, in the town of Caçapava, beyond São José dos Campos, was originally conceived by paving contractor and developer Roger Penido not as an airport, but as a business condominium with an airstrip. Despite the recession, the project is moving forward, engineering manager Humberto Penido told AIN. The ANAC and environmental licenses remain valid, and the state has built a special exit from the Rio-SP Carvalho Pinto freeway alongside the airport. Earthmoving is 95 percent complete. “It could be done all at once in 12 months, but we're working on a phased schedule over 24 months. The first phase is the remaining earthmoving, the runway, the connection from the runway down to the highway exit, and some lots.”  Before aircraft can use the runway, Penido explained, the paving and earthmoving need to be finished, the runway fenced to ANAC standards, and ANAC must inspect and approve the runway.

To the west of São Paulo in the town of São Roque, on the way to Sorocaba, the Catarina Executive Airport project has slowed but continues, although less ambitiously: he second runway became a taxiway, the main runway will be inaugurated with 1,600 meters (5,249 feet), rather than the 1,940 meters (6,365 ft) in initial plans. Luxury real estate and shopping mall developer JHSF has had its whole portfolio battered by the recession, but its outlet mall on the highway facing the airstrip is in operation. Franciso Lyra of aviation partner C>Fly says, “We're close to restarting work, since the economy is showing signs of a changing trend and future growth. The earthmoving is 95 percent complete. The next steps will be paving the runway and constructing the FBO, ramp space and hangars.”

Alternatives

When growth returns, a zero-sum dispute between airlines and GA at existing airports, with GA inevitably losing out is not the only possibility. Privatization and investment have improved airports, not merely adding shopping concourses to terminals, but improving runways, ramp space, and navigation aids. Hangarage cost increases during the boom, and threats of multiplied lease costs for MRO hangars have already led some users to look farther from the major cities. Azul installed its hub at underutilized Campinas and attracted passengers from São Paulo. It also found new passengers from smaller cities outside the capital. TAM Aviação Executivo opened a new maintenance center at a new airport in the beach town of Aracati in the northeast. Also, airline Gol seeks a new hub in that region. Some airports, such as São José dos Campos, remain underutilized.

The possibility of a new major airport in the São Paulo region was raised, and a location identified. With the recession, it became financially impossible, though the technical possibility was proven. New technologies such as remote control towers, and the Loft helicopter-sharing application being tested for the first time in São Paulo, may decrease the cost of operating airports, and reduce the time needed to reach distant airports. The recession gave breathing room for business aviation to find places to land, and made more alternatives possible.