Changes in Rio airport auction raise fears on Guarulhos

The possible revision of the auction of Santos Dumont airport, in Rio de Janeiro, due to pressures from the state government, has generated concern in part of the sector and questions in the state of São Paulo. The fear is that changes will be political, rather than having technical nature. In addition, there are criticisms that the changes could benefit Rio, but affect the situation of Guarulhos airport, in São Paulo — which could trigger a new front of dispute.

Rio´s state and municipal governments have been pressuring the federal government since last year to change the Santos Dumont auction, seen as one of the “crown jewels” of the sector. They fear the new investments will jeopardize the operation of the state’s other airport, Galeão, controlled by Singapore’s Changi. Therefore, they ask for restrictions to be included in the Santos Dumont operation to, according to them, prevent Galeão’s demand from being harmed.

Faced with threats of litigation and the revocation of environmental licenses for the project, the federal government agreed to negotiate the terms of the public notice through a working group, which will be created this week.

This move, however, can generate reactions. The Guarulhos concessionaire, controlled by Invepar, has already asked the Ministry of Infrastructure to take part in the group. The company says that its purpose is “to contribute to a possible technical solution that does not generate competitive asymmetry between the airports involved and São Paulo International Airport,” it said in a statement.

The assessment is that the creation of mechanisms to stimulate demand at Galeão artificially increase competition at Guarulhos airport. In this way, the São Paulo concession would be doubly affected by the increase in competition, since the federal government also plans to auction Congonhas airport, in São Paulo.

A source says that, if Galeão is benefited, the concessionaire of Guarulhos will have to plead an economic-financial rebalance or similar advantages – for example, the creation of restrictions also in the new concession of Congonhas.

For a source who closely followed the structuring of the project, Guarulhos’ complaint makes sense, since the São Paulo airport is Galeão’s main competitor today in international flights.

For Fábio Falkenburger, a partner at Machado Meyer, the creation of restrictions at Santos Dumont airport could be a solution to avoid a dispute with Rio de Janeiro and Galeão. However, it would represent a change of attitude on the part of the federal government in relation to airport auctions and, therefore, could create a precedent for other concessions to raise similar questions.

“The positioning so far has always been: the risk of passenger demand is an exclusive problem of concessionaires. That was the stance in the clash between Confins and Pampulha [in Minas Gerais], in the questioning of concessions in São Paulo regarding the possibility of a fourth airport in the state. So, if a protection is created in this case, there is room for questioning from other groups,” he says.

An alternative already suggested by the Ministry of Infrastructure would be, instead of imposing restrictions on Santos Dumont, using the fixed concession payments to generate investments in access to Galeão. This would be the ideal solution, says Renato Sucupira, a partner at BF Capital. “Putting a limitation on the airport goes against common sense, it would be cut in Rio de Janeiro’s own throat. It would be much better to create improvements to Galeão than to destroy investments in Santos Dumont,” he says. Mr. Sucupira recalls that the federal government has already converted Guarulhos fixed concession payments into investments in mobility to improve access to the airport – therefore, there would be no lack of equality in this case.

Asked about the Guarulhos issue, the Ministry of Infrastructure stated that “the concessions follow strictly technical criteria and the public interest”, as well as the regulatory principles of freedom of supply and tariff freedom.

The ministry also states that the feasibility studies of the auction took into account the impacts of the new concessions on the local economy where the airports are located, and that the creation of the working group indicates that the government “keeps the dialogue channel open with the stakeholders in the process to improve the proposal.”

The National Agency of Civil Aviation (Anac) stated that “any change that may be made to the modeling will be widely discussed and analyzed by the technical staff.”

Right now, analysts don’t see the risk of disputes as a factor that will drive investors away. The creation of the working group by the federal government was seen as an attempt to neutralize the negative effects, says Caio Loureiro, with law firm Cascione Pulino Boulos Advogados.

“This discussion is not good, it generates some risk, which the market could see as negative. At this point, it’s not enough to drive [investors] away, but it’s a point of attention. Because the working group may also not reach any conclusion and the airport may go to auction with this resistance,” he says.

Even with possible restrictions in the operation, the assessment is that Santos Dumont – which will be auctioned in block with the airports of Jacarepaguá (Rio de Janeiro), Montes Claros, Uberlândia and Uberaba (Minas Gerais state) – remains attractive to the private sector. However, limitations tend to affect the price of offers, highlights Bruno Aurélio, a partner at Demarest. “It can impact the price, by reducing the number of flights and non-fare revenue,” he says.

Another possible impact of the imbroglio is the delay of the auction. In this case, he believes that it would be interesting to separate the Santos Dumont block from the other two lots planned in the seventh round — São Paulo-Pará (which includes Congonhas) and the North (with Belém and Macapá).

Source: Valor international