Aerostar lands $2.6B PR airport deal
The governor said the figure includes investment in construction and incentives for additional flights and passengers. He said the construction work would create 3,500 jobs in the next three years and 13,000 in the next 10 years. The airport currently generates more than 8,000 direct and indirect jobs.
“We are looking for the transformation of the airport for the benefit of Puerto Ricans and those who visit the island. It’s as simple as that,” Fortuño said. “As the principal entrance to Puerto Rico, the airport should be a reflection of our aspirations.”
AAH, comprising Aeroportuario del Sureste, which operates nine airports in Mexico, and Highstar Capital, which has made investments in Baltimore and London and has close relationships with British Airways, Lufthansa and Air France, rose from an original field of 12 bidders to win the bid.
Its final offer edged out the bid co-finalist Grupo Aerpuertos Avance, comprising Spain-based Ferrovial Aeropuertos, which operates six airports in the United Kingdom including Heathrow, and Macquarie Infrastructure & Real Assets, the world’s biggest infrastructure investment fund, which has invested in eight airports including sites in Brussels, New Delhi, Copenhagen and Australia.
The deal is still subject to Federal Aviation Administration approval, which officials said should be granted by year’s end, making SJU the only large U.S. airport to be managed by private operations.
Some nine other U.S. airports are participating in an FAA airport privatization pilot program.
While the deal will provide fresh cash to bail out the Ports Authority, which is weighed down by more than $1 billion in long-term debt and lacks the financial strength to tap municipal bond markets, officials say they also want to grow the airport through the deal, adding air routes and passengers served, which would impact the tourism industry and the entire island economy, which is just beginning to awaken from six years of recession.
Government officials are putting an emphasis on an operator’s ability to open new air routes and increase traffic, which officials said played a big role in the final decision. The governor said the passenger and flight traffic have been basically flat for the past 20 years.
“We want partners who will help us bring the growth we deserve,” Fortuño added, saying the new partners should increase passenger traffic by 200,000 passengers a year.
AAH said it plans to invest more than $1.4 billion at the airport and make an upfront payment of $615 million to the island’s Port Authority as part of the 40-year agreement. Its statement and the government didn’t provide a full breakdown of the $2.6 billion figure.
San Juan’s airport was long the hub for commercial air traffic in the Caribbean, but many flights have moved to Miami International Airport. The Puerto Rico airport gets about 8.5 million passengers a year and is served by 18 airlines that make more than 100 flights daily. The government has struggled to increase passenger traffic, expand and modernize the airport and make improvements to terminals and taxi ways and runways.
“This will give us a world-class airport that we currently don’t have,” Economic Development & Commerce Secretary José Pérez-Riera said. “It will have a huge, huge impact on tourism in Puerto Rico.”
The deal comes more than two years after Puerto Rico first proposed to privatize the airport’s management to ease the Port Authority’s crippling debt of $1.1 billion, which stands to be cut in half, authority director Bernardo Vázquez said.
The first improvements will target public bathrooms, lighting, stairs, air conditioning, Wi-Fi and the parking lot’s security system, Fortuño said. An additional 35,000 square feet (3,250 square meters) of retail area also will be built, he said.
The contract spells out very detailed goals, including that travelers wait no more than 12 minutes for their luggage after a flight and five minutes for a taxicab and that public bathrooms be cleaned 16 times a day.
Those are changes the Port Authority could never afford on its own, Vázquez said. “We don’t have the money or the personnel to run the airport properly,” he said.
Vázquez said the deal also will give the authority the means to improve the island's regional airports as well as its cruise ship piers, which were built nearly 60 years ago.
The contract says Aerostar will pay the Port Authority $2.5 million a year for the first five years. It is then expected to pay 5 percent of the airport's revenues in each of the next 25 years. During the final 10 years, the company is expected to pay 10 percent of revenues.
Vázquez said he expects the FAA to approve the deal by late September.
The deal is a result of a public-private partnership program that Fortuño created in June 2009 to help finance projects that the government could otherwise not afford. The program so far has pushed the renovations of 10 schools and the construction of two toll roads, Public-Private Partnership Authority Direcrtor David Alvarez said.
Associated Press writer Danica Coto contributed to this report.