Brazil's Pampulha airport concession draws 3 interested bidders – report

At least three Brazilian groups have shown interest in the concession of Pampulha airport, in Minas Gerais state.

Socicam, Voa-SP – a consortium formed by medium-sized local engineering companies – and infrastructure firm CCR are evaluating the concession, according to newspaper Valor Econômico, which did not unveil the source of the information.

The auction is expected to take place on October 5 and carries a minimum fee of 18mn reais (US$3.3mn). Estimated investment during the 30-year concession period is 150mn reais.

The concession was in doubt for years, because in 2005 the state restricted the airport to only small aircraft, effectively excluding commercial flights.

However, a few years ago the federal government authorized commercial flights, blocking various attempts of BH Airport, concessionaire of Tancredo Neves international airport, about 30km north of Pampulha, to have the decision overturned in the courts. BH Airport argued the authorization hurts demand at Tancredo Neves. Both airports serve Minas Gerais capital Belo Horizonte.

PANDEMIC EFFECTS

The Pampulha auction comes as Brazil's airports are still grappling with the impacts of the pandemic.

In August, 5.5mn domestic passengers were registered, a 30% drop compared to August 2019, according to latest figures by airport regulator Anac.

"The comparison of these indicators with the same period of 2019 has been carried out by the agency considering that aviation was not under the impact of the pandemic caused by COVID-19, which has affected air transport for at least a year and a half," Anac said in a press release.

According to sector stakeholders, the pandemic brought structural changes to the airline industry.

"In my view, the volume of business air travel we had before the pandemic will no longer be recovered. In contrast, we tend to see, once the pandemic is over, an increase in tourism travel, especially domestic tourism," Jerome Cadier, CEO of Latam Airlines Brasil, told a webinar hosted by Fitch Ratings on Wednesday. 

"Next year we likely already have a resumption to pre-pandemic levels in relation to domestic flights, but a resumption of international flights, only in 2023 or 2024," he added. Cadier highlighted auctions of airport concessions as positive because concessionaires are investing heavily to improve airport infrastructure.