13 Apr Can Brazil achieve growth when its main airports are maxed out?

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March 31st the Economist published about the Brazilian waxing and waning economy. With a decrease of 3,8% in GDP last year there are certainly continued worries for concern. In spite of this economic situation the country’s infrastructure needs to be improved in order to achieve future growth. This is equally true for the aviation infrastructure that is for a large part outdated.

The aviation situation in Brazil is complicated. There are a number of parties involved: government agencies like DECEA (the air navigation service provider) and INFRAERO (the government agency responsible for the aviation infrastructure); as well as commercial parties like airlines and privately owned airports. These parties all share a common interest and cooperation is essential. Furthermore new opportunities can arise from increased collaboration.

What is the common interest?

Growth; according to a McKinsey Analysis in 2013 Brazil will be the 5th largest aviation market by 2020 [1]. Brazil has 2,463 aerodromes registered by ANAC (National Civil Aviation Agency) – 1,806 private and 657 public [2]. But 98% of 199 million shipments and air landings in the country are concentrated in 65 airports (international, national and regional), all of which have passenger volume above 1 million. Brazil has a huge potential for growth as long as it can accommodate this capacity growth.

According to INFRAERO, seven of the 16 airports in Brazil’s main cities were operating at 85 percent of capacity in 2013—and three (São Paulo, Brasília, and Mato Grosso) were operating over the maximum recommended capacity [3]. How to achieve this growth when the main airports are maxed out? New tarmac is always a possibility and a staggering number of 270 new airports is already planned for the near future, these can range from upgraded airstrips to completely new fields. Apart from the direct consequences like additionfal environmental impact and the implementation of new noise abatement procedures it will take a long time before these new airports become effective.

To pay for these new airports: privatization has been and will be continue to be the answer. More and more airports are privately owned and the investors demand a return on their investment. At the same time airlines are constantly looking at new ways to cut costs, and actively search for alternative destinations. An increase of airport tariffs in unlikely to happen in a market with so many competitors.

How to move forward?

The only way to achieve profitable operations without increasing tariffs is to accommodate more movements per hour.

Maxed out using the current procedures does not mean maxed out according to currently available standards. This does require more efficiency on the ground, more support for increased safety and security efforts and the overall Air Traffic Flow Management system will have to accommodate this.

Procedural improvements take a lot less time and can increase capacity using existing infrastructure. Collaboration and sharing of information between all parties is essential. Brazil can learn from experiences across the globe where the situation is often even more complicated when supranational cooperation is required.

About To70. To70 is one of the world’s leading aviation consultancies, founded in the Netherlands with offices in Europe, Australia, Asia, and Latin America. To70 believes that society’s growing demand for transport and mobility can be met in a safe, efficient, environmentally friendly and economically viable manner. For more information please refer to www.to70.com

[1] Brasil Aviation Fact Sheet

[2] http://www.aviacao.gov.br/assuntos/aeroportos (in Portuguese).

[3] McKinsey Global Institute, Connecting Brazil to the world: A path to inclusive growth (2014) p.57

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Jan van Galen
Jan van Galen
Jan van Galen is managing director of To70 Brasil
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