Brazil Is Major Emerging Market for Zurich Airport; Further Investments Likely

RIO DE JANEIRO, BRAZIL – In only 14 months, Flughafen Zürich AG (Zurich Airport) has built the brand new Hercílio Luz Airport (FLN) in Florianópolis (Floripa) for R$550 (US$127) million.

With a total capacity of eight million passengers, Florianópolis will be able to grow rapidly. Currently, only four million passengers transit through the airport. Tobias Markert, CEO of Rio de Janeiro-based Zurich Airport Latin America Ltda. told The Rio Times: “The proposal to build the airport in 14 months came from ANAC, and we managed to do it within that time frame despite great pressure”.

Why is Zurich Airport investing in Brazil? Markert explains: “South America in general and Brazil in particular is one of the most significant emerging markets in the aviation industry. Brazil has a population of 200 million and about 120 million annual flights. That is a relatively low ratio. The ratio in Europe is up to ten times higher. So flying has great development potential in Brazil. The country is huge and there are few trains. If people’s purchasing power improves, they’ll certainly fly more.”

In 2018 Zurich Airport received the World Travel Award in the “Leading European Airport” category for the 16th year running. The Skytrax Award also ranks Zurich Airport among the top 10 airports in the world by millions of travelers each year, and in 2017 it ranked first in the “20-30 million passengers” category.

The experience and the high quality standards that Zurich Airport has incorporated into the construction and operation of the airport were immediately recognized by passengers. Florianópolis is already considered the best airport in Brazil in the category up to five million passengers and second best airport in all categories after Campinas. This is the result of a survey on airport infrastructure published on February 6th by the National Secretariat for Civil Aviation (SAC) of the Ministry of Infrastructure.

The latest SAC surveys show that the new Florianópolis airport, inaugurated last September, has achieved the highest percentage improvement (22.5 percent) compared to the same quarter last year.

Zurich Airport possesses in-depth knowledge and a wealth of experience in managing and developing an airport that meets high quality standards. The company applies this knowledge on an international level to a number of airport projects.

The so-called ‘silent airport’ has been introduced, where all calls at Floripa are automated and professionalized. Among other things, passenger wait times have been reduced to no more than ten minutes at all bottlenecks, and Brazil’s only observation deck is designed to bring flight operations closer to anyone interested.

A new aspect for Brazil is the establishment of a shopping mall and event venue in the airport’s outdoor area. It is called “Boulevard 14/32” and features shops, boutiques, hairdresser, pharmacy, beauty salon, restaurants and a first-class supermarket as well as the first “Starbucks” outside São Paulo and Rio de Janeiro. Markert says: “The boulevard concept has won over the Starbucks managers. That’s why Floripa Airport can offer a Starbucks Café before other much larger airports in Brazil”.

The “place to be”

Access to Boulevard 14/32 is free of charge and open to the public, regardless of whether visitors are airline passengers. Boulevard 14/32 is the main venue for major airport events in Brazil and the name refers to the name of the main runway of the airport – runway 14/32.

This “Boulevard” is designed to become the “place to be” where people enjoy going even if they do not want to use the airport. At the event venue visitors may read a book, watch the latest YouTube videos, or simply enjoy watching the hustle and bustle. On the weekend there are also regular shows, concerts and events, all of which are free of charge.

Tobias Markert sums up the Swiss involvement in Florianópolis as follows: “We want to be perceived as a fair partner and try to convey this. Social commitment is also important to us. That’s why the concerts, lectures and events in the Boulevard are free of charge every weekend. Everyone should be able to come. The Boulevard is a stage and the airport is a meeting place. Floripa is a display case that shows what we can do.”

Real estate construction around the new airport

How will the Floripa airport be developed? According to Markert, this can be done in Florianópolis primarily with the assets of the state of Santa Catarina. “Santa Catarina is the safest state in Brazil and the second most competitive state after São Paulo, which attracts investors to the area. With more than 1,000 startups, the greater Florianópolis area is one of the most vibrant business incubation biotopes in the country and, as Brazil’s fourth largest event market after São Paulo, Rio and Brasília, a rapidly growing event destination”.

The fact that Floripa is the second most popular holiday destination in Brazil after Rio will also contribute to the boom. “This island is a paradise. And even though beach tourism (season) is not as long as in the north of the country due to the climate, Floripa can rely on winter tourism, sports tourism, hiking, cycling. European destinations have had excellent results with such strategies”.

Therefore, when developing the area around the airport, buildings such as startup centers and incubators, a business hotel, event venues and the like, in line with the region’s assets, are being considered: “We are in the process of drawing up a master plan,” says Markert, mentioning the outstanding cooperation from the city and state authorities of Santa Catarina.

Markert is thus confident that with the new business-related real estate buildings around the airport, in active cooperation with the airport authorities, the airport area can be turned into an “economic magnet”.

Markert makes it clear that Zurich Airport is open to the participation of investors in the real estate development projects at the airports of Florianópolis and Vitoria.

In the upcoming privatization rounds of Brazilian airports, Zurich will carefully assess the available airports to see if they can be suitable to expand their current airport portfolio.

Latin America is one of many emerging markets for Zurich Airport

In addition to its headquarters in Zurich, Zurich Airport AG is now present at nine airports in four countries in Latin America.

In November 2013, a consortium consisting of Brazil’s CCR and Zurich Airport was awarded a 30-year concession to develop and operate Belo Horizonte’s Tancredo Neves International Airport (CNF), which serves Brazil’s third-largest metropolitan area with approximately 5.5 million inhabitants. Zurich Airport has a comprehensive service contract with BH Airport and provides support in commercial and operational issues. The company is responsible for the position of Chief Operation Officer.

In March 2017, Zurich Airport won the concession for the development and operation of Hercílio Luz International Airport (FLN) in Florianópolis in southern Brazil. This is the first airport project to be 100 percent owned by the Swiss company. The concession is effective until 2047.

Recently, Vitoria Airport in Espirito Santo and Macaé Airport in Rio de Janeiro were added to the portfolio.

Through Aport S.A. (Santiago of Chile), Zurich Airport indirectly holds the concessions for the two regional airports Antofagasta and Iquique in the north of Chile. The concession of Iquique has an expected term of 18 years to a maximum of 25 years. The Antofagasta concession runs until 2022. The Swiss hold 100 percent of Aport S.A. and Aport Operaciones S.A. The latter is the operational branch of Zurich Airport in Latin America and the Caribbean.

Since 2009, Zurich Airport has held a minority interest (9.7 percent) in Curaçao Airport Partners N.V. (CAP), the concessionaire and operator of the airport in Curaçao, through Aport S.A. and has taken on the position of Chief Operation Officer. Several experts from Flughafen Zürich AG and Aport Operaciones S.A. are supporting CAP in various fields such as flight operations, commercial and infrastructure development.

Aport Operaciones assists the concessionaire of El Dorado Airport in Bogotá in all operational and technical matters through a service contract. Under the service agreement, Aport Operaciones acts as the airport’s Chief Operation Officer and holds six other management positions.

Zurich Airport wins major deal with India

Zurich Airport was commissioned to plan, develop and operate a new airport near the Indian capital Delhi, after outbidding local companies.

The Swiss company said in a statement on an external communication that it would develop and operate the new Noida International Airport in Yevar in the state of Uttar Pradesh under a 40-year concession.

“The new airport will be located approximately 80 kilometers south of Delhi and will be vital to meet the expected growth rates of air traffic in the national capital region,” the statement said.

An Uttar Pradesh state government spokesman, Mritunjay Kumar, told the Associated Press that the state authorities had purchased 2,063 hectares of land and obtained the environmental permit for one of Asia’s largest airports. According to the Times of India, once completed it is expected to feature six to eight runways, the most in India.

Zurich Airport stated that the capital investment in the first stage of the project over the almost four-year construction period is expected to amount to approximately US$650 million. In the initial stage, the airport should be able to handle approximately 12 million passengers per year.

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