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Honduras to Privatize Four Airports
The Tico Times / February 18, 2000

By Larry Luxner

TEGUCIGALPA -- Faced with a big increase in both passenger and air-cargo traffic, the Honduran government has decided it has no choice but to privatize operations at the country's four international airports.

Under a law approved in December, the government will award a master concession Mar. 2 to one international consortium to operate all four airports: Toncontin at Tegucigalpa; Ramon Villeda Morales at San Pedro Sula; Goloson at La Ceiba and Juan Manuel Galvez at Roatan.

Mario Aguero Lacayo, the Ministry of Finance's privatization czar, said the winning consortium will invest $130 million over the next 20 years. About 40% of that total will go to Tegucigalpa, 25% to San Pedro Sula, and the remaining 35% to Roatan and La Ceiba.

Under the plan, all four airports will be upgraded to Class B. At present, Tegucigalpa's Toncontin barely squeaks by on its Class D rating -- making it one of the worst airports in Latin America. Besides getting a completely new terminal, Toncontin's main runway will be extended from 1,900 meters to 2,200 meters, significantly improving the safety factor.

"We were supposed to concession the airports by last September, but we had a delay in developing the basis for an auction," said Honduran Tourism Minister Norman Garcia, adding that the government didn't want to open bidding at the same time as a similar procedure was underway in Peru for Lima's Jorge Chavez International Airport.

Garcia said that up until now, the Honduran government has financed airport operations through a $25 departure tax that all tourists must pay upon leaving the country.

"The winner will offer to the government a certain percentage of its revenues," he explained. "In order to make this concession attractive, the government has decided to allow the concessionaire to keep the $25 airport tax. That should come to around $8 million in the first year."

So far, three major consortia have prequalified for the massive project. The first is led by Spanish airport operator Aena. The second is headed by YVR Airport Services Ltd., a subsidiary of the Vancouver Airport Authority, and includes Honduran financial services firm Cansa and Houston-based Brown & Root.

The third is a consortium between Zurich-based Swissport, San Francisco Airports, Miami-based Calmaquip, Pacific Architects & Engineers Inc. and Actividades de Construccion y Servicios, a Spanish construction company.

"We think it's a potentially attracive contract, though we can't confirm that until we do the financial modeling," said Frank O'Neill, chief executive officer of YVR. Late last year, YVR won the concession to rebuild the terminal at San Jose's Juan Santamaria International Airport, offering the Costa Rican government 42.3% of gross revenues. Because of a technicality, the contract was awarded to AGI, which had offered 35%. YVR protested the decision but lost.

"Cargo is terribly important to Honduras," says Miami-based aviation consultant Robert Booth. "A lot of freight moves to Honduras via somewhere else, and it's been bypassed a lot. But they're building a new cargo terminal in San Pedro Sula. Privatization will help obviously, and you're going to see a lot of action on the cargo side, because the potential is there."

Lacayo said growth in air cargo is a major impetus behind the privatization effort, especially in the case of San Pedro Sula, which handles 70% of the air cargo coming in and out of Honduras.

"San Pedro Sula is growing 7-8% a year, but air cargo traffic there is growing by 30% a year," he said. "The maquilas use air cargo when they need raw materials urgently. Some of these bidders are proposing to establish maquilas within the airport perimeter itself. There'd be no transportation costs, and they'd have tax incentives. Nobody is doing this now."

Fernando Rojas, an executive with Calmaquip, conceded that's one of the alternatives his consortium is studying, but that "until we present our proposals, it's very difficult to release any information."

"San Pedro Sula is the location for cargo," he added. "All the maquilas are there, and we foresee a lot of development in cargo in that area. La Ceiba are for tourism, and we foresee Tegucigalpa being an airline hub for Central America. With the new policy of open skies, you can have lots of alternatives."

Calmaquip is currently finishing an $84 million airport project in Aruba and recently won an award to build a new passenger terminal at Trinidad's Piarco International Airport.

Last month, the Dominican Republic awarded a 20-year concession to the Aerodom consortium to operate four international airports. Under that deal, the consortium -- made up of Santo Domingo-based Operaciones Aeroportuarias del Caribe (55%), Ogden Aviation Services (35%), YVR (5%) and Italy's Impregilo (5%) -- commits to invest $203 million in the first two years to improve the infrastructure of all four airports to meet projected traffic increases through 2015.

Of the total, $96 million will be spent on Santo Domingo's Las Americas International Airport; $47 million on Gregorio Luperon Airport in Puerto Plata; $55 million at Arroyo Barril Airport in Samana, and $5 million on Maria Montez in Barahona. A second round of improvements worth $106 million is foreseen to meet needs until the year 2030.

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