Brazil's Govt to open airports up to private investment

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Brazil's new Government is preparing a major restructuring of the country's aviation framework, including new regulations which could open up the capital of state-owned airport operator Infraero to private investors and allow private construction and operation of airport terminals.

According to a report in the Folha de Sao Paulo daily newspaper, newly-elected President Dilma Rousseff has already launched a number of internal aviation-related initiatives since coming to office on 1 January, indicating that her government will assign a high priority to solving the problems associated with Brazil's fast growing aviation sector.

One of the most crucial measures will be the appointment of a new secretary of civil aviation, which would finalise the de-militarisation process initiated by former President Luiz Inacio Lula da Silva.

While Lula's conversion of the air force-controlled DAC (Brazil's Civil Aviation Authority until 2003) into the current civil ANAC was a first step, it created numerous institutional conflicts as the ultimate control over Brazil's civil aviation remained with the military.

The creation of the new role is also seen as necessary to allow private investors to get involved in the development of Brazil's highly-constrained aviation infrastructure.

According to the Folha report, the new government will urgently seek private investment for the construction and operation of new passenger terminals at Sao Paulo's Guarulhos International and Campinas airports, and eventually also at Brasilia International Airport.

Rather than privatising entire airports, the new administration is looking into opening airport operator Infraero to private capital and eventually floating a minority stake on Sao Paulo's Bovespa stock exchange.

During the election period, Rousseff urged then-president Lula to put on hold the parliamentary process to approve a new regulatory framework which would have allowed the privatisation of Brazilian airports under certain circumstances.

But aware of the difficulties of adapting airport capacity to the needs of the 2014 Soccer World Cup and 2018 Olympic Games with only state funds, she is now pushing an alternative scheme to speed up crucial projects with private capital without giving up state control over the aviation infrastructure.

There are also deeper legal obstacles to privatising entire airports, although the government has previously announced intentions to find "new models" to put entire airports under private management.

According to an Infraero source, some of the terminals needed for the 2014 Soccer World Cup will be constructed "using temporary models" as it is "already too late" for a full public licitation and construction process of new terminal buildings before 2014.

This is in line with the information published by Folha, which sees relatively short concession periods of no more than 20 years for the new private terminals earmarked for Guarulhos, Campinas and Brasilia.