News Is My Business / March 2, 2016
By Larry Luxner
Agustín Arellano has worked as a private pilot, air traffic controller and general director of air traffic services throughout his long career, but three years ago, the Mexican aviation pioneer took on his latest challenge: transforming Puerto Rico’s flagship airport from an obsolete relic of the 20th century into a modern world-class gateway.
Today, Arellano — general manager of Aerostar Airport Holdings LLC — says his company is well on its way to making that dream come true.
At a press briefing this morning, Arellano will outline the venture’s achievements in the three years since the Federal Aviation Administration approved a deal for Aerostar to run San Juan’s Luís Muñóz Marín International Airport.
Total cumulative investment in LMM, he said, comes to $937.4 million, including the $615 million which Aerostar agreed to pay the Puerto Rico Ports Authority up front. The PRPA will receive a total of $552.5 million over the 40-year life of the concession, during which time Aerostar expects to invest nearly $1.4 billion.
The lease agreement, signed July 24, 2012, also requires the investors to make annual payments of $2.5 million and 5 percent of annual gross revenues between years six and 30, rising to 10 percent of annual gross revenues from year 31 to year 40.
“In the three years since Aerostar Airport Holdings took the reins of operation and administration at LMM, we have demonstrated that the transaction was the correct one,” Arellano told us in a prepared statement. “We committed to a destination whose annual passenger traffic was falling and have ensured that traffic will increase by 14 percent compared to 2013.”
Last year, the airport — inaugurated in 1955 — handled 8.9 million passengers. That’s up from 7.9 million in 2012, 8.33 million in 2013 and 8.57 million in 2014.
He said LMM’s expansion has resulted in 400 direct and 2,500 indirect jobs, adding that “we found an airport that needed substantial structural work, improvement of commercial offerings and a change of focus, and we’ve been successful in our mission.”
Among other things, Arellano said Aerostar has spent:
* $135 million on capital improvements, property and equipment
* $50 million on labor costs
* $25 million on regional airports
* $6 million on the Puerto Rico tourism promotion fund
* $21.7 million to implement a new in-line baggage handling system
* $17 million on 22 new jet bridges
* $2.7 million for escalators and elevators
* $65 million on annual maintenance costs
In 2014, Aerostar installed a new central security checkpoint to comply with rules established by the U.S. Transportation Security Administration. It has eight inspection lines that allow screening of up to 1,800 passengers per hour. If necessary, the checkpoint can be reconfigured to 12 lines, screening as many as 2,400 passengers per hour.
The renovated check-in area covers 230,000 square feet and boasts 60 new check-in counters. Meanwhile, LMM’s in-line baggage handling system, installed in 2014, has Explosive Detection Systems (EDS) technology and can handle up to 2,700 bags an hour. The airport also claims to be the first under FAA jurisdiction to deploy video analytics technology that gives security personnel data on all passengers at all times.
On the retail side, new shops at LMM include the Garbo boutique, El Market Puerto Rico, Desigual & Folli Follie and Terminal B’s Dufry Walk Through — which at 23,680 square feet is the largest airport duty-free shop of its kind in the Caribbean. Featured brands at these new outlets include Dior, Chanel, Giorgio Armani, Pandora, Swaroski, Don Q and Bacardi.
In the three years since Aerostar’s takeover, half a dozen airlines have begun flying to SJU from numerous overseas destinations including Avianca (Bogotá); Air Europa and Iberia (Madrid); Volaris (Cancún, Monterrey and Mexico City); Insel (Aruba), and Norwegian Air Shuttle (Stockholm, Oslo, Copenhagen and London).
Aerostar is a 50-50 venture between New York-based Highstar Capital and Grupo Aeroportuario del Sureste (ASUR), which manages Cancún International Airport and eight other airports throughout southeastern Mexico.