Brazil to invest billions in regional airports

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Brazil's federal government has established a new scheme to finance secondary airports through airport operator Infraero, drawing from the concession payments from the country's airport deals.

Infraero president Gustavo do Vale announced that all payments from the private concessionaires of airports previously operated by the state-owned operator will go to the newly created National Civil Aviation Fund (FNAC).

"Infraero will administrate [FNAC's] funds to modernize [regional] airports," said do Vale.

According to do Vale, after the conclusion of the second round of privatisations, which will include Belo Horizonte Confins International and Rio de Janeiro Galeao International, Infraero's income from airport operations will be reduced to about half of its former levels.

Concessions of the Brasilia International, Sao Paulo Guarulhos International and Viracopos-Campinas International airports closed in 2012.

While the original Infraero concept was based on cross-subsidising smaller airports from the income obtained from large city airports, the new system will guarantee that the concession income will still be used to improve airport infrastructure across the country. This also means that airport concession fees will not go into the general state coffers but will be reserved for aviation related investments.

In 2012, the Brazilian government announced an ambitious plan to decentralise Brazil's aviation infrastructure and network, which includes the preparation of 270 airports to support commercial aviation. Infraero will receive R$2.2 billion ($ 1.1 billion) to build and modernise those airports in 2014 with funding levels maintained during the following years, according to do Vale.

The economy of Brazil has grown at the high single digit percentages during the past decade, with the exception of 2012. Road, rail, port and airport infrastructure constraints have repeatedly been identified as major constraints to sustained growth, leading the Brazilian government to disembark in huge public investment and private concession projects to build and improve motorways, high speed trains and airports.