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Curaçao to enlarge, modernize its aging airport terminal
The San Juan Star / November 22, 2004

By Larry Luxner

WILLEMSTAD, Netherlands Antilles — Curaçao's Hato International Airport is undergoing a $60 million facelift in order to cope with increasing passenger and cargo demand.

The project is being coordinated by Curaçao Airport Partners (CAP), which in late 2002 was awarded a 30-year concession to build a striking new passenger terminal and operate the airport itself.

"There were some earlier interests, but nobody else ended up bidding on the project," said the consortium's CEO, Walter Abernathy. "Under the concession, we have responsibility for all airport functions including security, check-in, police, fire and rescue. We do everything except operate the control tower. That's still a government function."

CAP is 51% owned by Alterra Partners, one of the world's leading airport management, construction and refurbishment companies. Alterra, in turn, is jointly owned by Bechtel Enterprises and Singapore Changi Airport, which in addition to Curaçao operates airports in Costa Rica, Peru, Qatar and the United Kingdom.

Minority partners in CAP include a Venezuelan company, Trabajos Industriales y Mecánicos C.A. (38%) and the local subsidiary of a Dutch firm, Janssen de Jong (11%).

Abernathy said 1.2 million passengers transited the airport last year, which is more than the existing 50-year-old terminal can efficiently handle.

"This project didn't fit all the screening our parent companies usually have," he told The STAR. "For one thing, it was in the Caribbean, not in the Pacific where Singapore is strong. But the more we looked at it, the more it intrigued us. There was clearly a need for a new passenger terminal. This building is old and tired."

Which is somewhat of an irony, considering that Curaçao — with its oil refinery, drydock, free zone and booming tourist industry — enjoys one of the Caribbean's highest per-capita incomes. Projections call for a 7.5% increase in passenger volume in 2005, and at least a 4% annual growth in successive years.

Abernathy said CAP is spending $43 million to construct a new passenger terminal, which should be finished by mid-2006. The new two-story terminal, comprising 12,000 square meters on two levels, will provide direct access to jet aircraft via loading bridges at three aircraft gate positions. An additional 3,000 square meters of support functions will be provided in the existing terminal.

Financing accounts for much of the remaining $17 million cost of the project, which the consortium played a crucial role in arranging.

In Phase I of the project, Curaçao's new terminal will be able to handle up to 1.6 million passengers through 2009. Phase II will accommodate 2.5 million passengers a year. The terminal will be expanded to this capacity when traffic reaches 1.6 million passengers, providing for growth forecast through the year 2031.

"That would carry us through the life of the concession," he said. "Phase II won't be that big of a deal, because we're building the basic infrastructure into Phase I. It's just adding some more wings."

Under terms of the concession, CAP receives all revenues derived from the airport passenger tax and other sources, then pays the government a fixed fee of $1.5 million or 15% of gross revenues, whichever is greater.

Yet things haven't exactly been smooth sailing for CAP. Abernathy said that in April, after his group was awarded the concession, the government changed hands.

"We were greeted with a new government that had to approve contracts that the previous one had already authorized in principle. They said they wanted to look at the concession from start to finish. The final delay was such that the employees went on strike in favor of the privatization. It's usually the other way around."

Asked why, he said the airport's employees realized they would get a better deal in the long run if the airport were modernized and upgraded to meet international standards.

"When we came in, the security did not meet our standards, so our first priority was to bring that up to par," said Abernathy, a longtime Bechtel official who before coming to Curaço worked on the Lima airport project. "There was no proper badging system; the badges hadn't been changed in years. We went through a program of checking people before they could get a badge, and we brought the badges down from many thousands to only a small number of people working here."

At the moment, the leading passenger market for Curaçao is Europe (34% of the total), followed by South America (26%), the Caribbean (21%) and North America (19%).

Not surprisingly, the leading carrier at Hato International Airport is KLM, which offers direct flights to and from Holland. American Airlines — the only U.S. carrier serving Curaçao — also flies at least once a day to Miami, while American Eagle offers daily service to San Juan, and Aeropostal flies every day to Caracas.

Other airlines serving Hato include Surinam Airway, which flies nonstop to Paramaribo, and Amerijet International, which carries cargo four times a week from Miami.

One opportunity for additional revenues is air cargo.

"The island itself is finite in terms of what it can produce, so we have to find cargo that can be transferred through here from other islands, where they have a shortage of lift, for example, flowers and perishables coming out of Ecuador. There are certain times of the year where they can't get enough lift out of those South American countries. We have lift available here."

For the duty-free concession, Aldeasa competed with several other firms to take over the outlets that until recently were being run by two local companies, Willemstad Duty-Free and Penha. It defeated the local companies as well as Duty-Free Americas and Panama-based Waked International to win the contract, the terms of which are confidential.

Beginning this month, Aldeasa will manage four general retail outlets for a five-year period, with an option to extend the contract by three years. The shops will sell perfumes, tobacco and spirits, including local specialties such as San Pablo rum and Original Curaçao Liqueur. Two outlets are located inside the terminal building itself: one covering 245 square meters in the departure area, and the other, measuring 30 square meters in the arrivals hall. The other two shops will be located in the new terminal now being built by CAP.

According to CAP, "the new terminal will provide nearly 10% more overall concession area than the existing one. In addition, the new concession space is more conveniently located near passenger processing and waiting areas than in the existing terminal, where over half of the space is remotely located on an upper floor away from the primary passenger flow."

Aldeasa, with 2003 sales of 598 million euros, operates six duty-free shops inthe Mexican airports of Mérida, Cozumel and Cancún, the area's main tourist destinations. It also has airport shops in Colombia, Chile and Peru, as well as 11 shops in Portugal, Cape Verde, Morocco and Jordan.

"For Aldeasa, this agreement signifies another stop toward the consolidation of its international strategy, as well as the entry into a market with vast future potential, namely the non-Spanish speaking Caribbean," the company said in a press release. "With the allocation of these new outlets in Curaçao, Aldeasa has gained a foothold in the southern Caribbean at a time of significant tourism growth throughout the region."

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