By Sarah de Sainte Croix, Senior Contributing Reporter RIO DE JANEIRO, BRAZIL – The Brazilian government’s civil aviation agency (ANAC) received R$24.5 billion last Wednesday following the auction of concessions for three of the country’s biggest airports. The final value surprised economists by going almost five times higher than the minimum price of R$5.5 billion stipulated by the government. The privatization of Guarulhos airport was won for R$16.2 billion, photo by F. Mafra/Flickr Creative Commons License. The winning bid for the privatization of São Paulo’s Guarulhos international airport was won by Infrastructure and Investment Holdings SA, a consortium comprising Invepar (ninety percent) and Airports Company South Africa (ten percent). They paid R$16.2 billion, in exchange for a 51 percent partnership with the state-owned airport operator, Infraero. Also on offer were controlling stakes in Viracopos airport (100km from São Paulo) and President Kubitschek International Airport in Brasilia. They were won by Brazil Airports Consortium (for R$3.8 billion) and Infrámerica Airports (for R$4.5 billion) respectively. The Invepar consortium’s bid for Guarulhos outstripped the next highest bid by a clean R$4 billion and surpassed the starting price by over R$10 billion. There were eleven bidders in total. Wagner Bittencourt, Chief Minister for the Department of Civil Aviation took it as a positive sign that the Brazilian market was considered safe and profitable. “All the winners made very assertive, positive and aggressive bids, which demonstrated the will and courage of those concerned,” he said. Wagner Bittencourt, Chief Minister for the Department of Civil Aviation, photo by Valter Campanato/ABr. However, a report by The Economist says that some skeptics have speculated that the price for Guarulhos ran so high because the government was “dealing with itself.” It points out that the winning consortium is led by pension funds from Petrobras (oil) and Banco do Brasil – two of Brazil’s biggest state controlled companies – and that the state development bank, the BNDES, will fund the enterprise. But the biggest concern raised so far is that the inflated bids will be passed on to the consumer in the way of airport taxes. Both the International Air Transport Association (IATA) and the Latin American Airline Association (ALTA) voiced these concerns at the end of last year when the privatization project was first announced. The contracts stipulate that the consortia controlling each of the three airports will also be expected to make annual payments to the Fund for National Civil Aviation (FNAC) which – according to the President of the BNDES (the Brazilian National Development Bank), Luciano Coutinho – will be used to increase investment in Brazilian airports, giving more people access to air travel. The deal also demands that the airports be completely overhauled ahead of the World Cup in 2014 and the Olympic Games 2016. The airport infrastructure for the World Cup games in particular have been called into question, which this move hopes to address. A report by independent aviation consultancy service, the Centre for Aviation (CAPA), has a more routine explanation for the high bids, pointing towards the recently booming economy and a huge increase in air travel, thanks to a growing Brazilian middle class. They predict annual market growth levels of around ten percent over the medium to long term. 8 Responses to "Airports Privatized for R$24.5B in Brazil" Pingback: Airline Art | Airplane Prints Pingback: Rio's Bay With 146 Percent More Ships: Daily Update | The Rio Times | Brazil News Pingback: Auctioned Airports to See Marked Improvement by 2013 | The Rio Times | Brazil News Pingback: President Dilma Rousseff to Cut Energy Prices for Businesses in Brazil | The Rio Times | Brazil News Pingback: Galeão Airport in Rio Set For Improvements | The Rio Times | Brazil News Pingback: Brazil's Airport Workers on Strike: Daily Update | The Rio Times | Brazil News Pingback: Brazilian Airlines Face Challenges in 2014 | The Rio Times | Brazil News Pingback: Taxes Increase at Brazilian Airports Administered by Infraero | The Rio Times | Brazil News Leave a Reply Cancel Reply Your email address will not be published.