Brazil Airport Auction May Leave Some Bizav Homeless

 - August 19, 2022, 12:20 PM
Túlio Machado, head of infrastructure investments at XP Asset, outlined plans for Brazilian general aviation airports Campo de Marte and Jacarepaguá after the company won 30-years concessions to operate the airports. (Photo: Richard Pedicini/AIN)

Brazil auctioned 30-year concessions for 15 airports on August 18 at the B3 stock exchange, including the three most vital to business aviation in the country’s two largest cities. One group of concessions featured Congonhas, where airlines vie for the country’s most profitable slots but which is also home to business aviation operations, hangars, and maintenance facilities. Others were Rio and São Paulo’s general aviation airports, Campo de Marte and Jacarepaguá respectively. The last group—the northern block—included Belém and Macapá airports, both near the mouth of the Amazon, and these attracted the only competitive bids. 

The general aviation block with Campo de Marte and Jacarepaguá was first to the hammer and attracted a single bidder, Brazilian financial group XP Investimentos. This was the only minimum bid of the afternoon. Túlio Machado, head of infrastructure investments at XP Asset, clarified in a post-auction press conference both the management structure—French airport operator Egis is not a partner but is contracted for five years—and plans to profit from the concessions, which seem to bode ill for business aviation. 

“In the [bid documents], Congonhas will soon expand where the business aviation terminals are now," Machado said. "That is, we will have the possibility of capturing part of this business aviation. We think that part of this share will go to Campo de Marte, [where] we have a runway of 1,400 meters, 45 meters wide [4,594 feet by 148 feet]. We have in our plans [adding an instrument approach to] the airport, that is, the capacity to really have a safe operation. So we believe that the revenue from the fees for takeoffs and landings will increase and we will resume this growth.”

Besides capturing business aviation forced out of Congonhas, XP’s plans include “...the capacity to exploit commercial revenue other than fees, which would be these real estate revenues. We have Avenida Olavo Fontura...an important avenue in front of Anhembi [the convention center], which has extremely relevant potential as real estate.” The property in question is occupied by hangars, ramp and taxiways, and general aviation businesses and organizations, some of which have been there for half a century or more, such as the São Paulo Aeroclube. Their fate was not discussed. 

When asked about eVTOL operations, Machado’s eyes lit up because this is a future opportunity that XP is considering.

Neighborhood groups and ABAG—the Brazilian Association for General Aviation—had attempted to bar the auction of Congonhas in the courts, the former alleging an increase in noise, the latter that the request for proposal (RFP) allowed for the exclusion of business aviation from the airport. Fractional-share operator Avantto houses its fleet of Embraer business jets at VOAR’s hangar at Congonhas and Lider has its largest maintenance operation at its Congonhas facility. 

The RFP suggests a number of possible alterations at Congonhas, some of which seem fanciful, such as replacing the current main and auxiliary runways with a longer central runway, or the construction of a new terminal linked by a tunnel on the opposite side of the runways, an area currently occupied by business aviation hangars. The reasoning behind some of these changes is that the terminal and runways of the 1937 airport are too close for current safety standards.

CCR, which already operates 20 airports including in Curitiba and Belo Horizonte’s downtown Pampulha, was expected to bid on the Congonhas block but dropped out when its board failed to authorize a bid two days before the auction. This was to the reported disappointment of the government and of CCR’s president, who immediately resigned, citing personal reasons. The block included 10 smaller airports, many unprofitable, and the required investments of $1.2 billion over the life of the concession may have been too big a bite for CCR. 

Real estate group JHFS, which built and operates the private business aviation-focused Catarina Executive International Airport, was considered interested in the pair of general aviation airports, but also did not bid.

A crowd of about 150 people in dark suits observed the auction from plastic chairs (the bidding groups got a reserved area and folding tables). The event’s biggest surprise? The sole and winning bid for Congonhas by Spanish group Aena was 231 percent over the minimum, a difference of $342 million, and this elicited only a faint murmur from the assembled crowd.

Taking live bids for the northern block, the auctioneer allowed a stately two or three minutes between bids, until Vinci Airports folded. Once the hammer dropped for the Novo Norte consortium, decorum was lifted and the crowd erupted in cheers, applause, and hugs. The usual formal speeches followed.