São Paulo government puts 22 small airports up for auction and plans new regional routes

RIO DE JANEIRO, BRAZIL – The government of São Paulo has scheduled the auction of 22 regional airports for July of this year and included important units that are either at a standstill or unable to be expanded, such as the terminals in Ribeirão Preto, Presidente Prudente and São José do Rio Preto.

The expectation is that private investment will expand routes within the state and boost the local economy.

The bid notice, published on Wednesday, May 5, determines a 30-year operating concession period. The government forecasts that the private sector’s investment will reach almost R$450 (US$83) million during the period. The bidding is scheduled for July 15.

Two lots will be sold (southeast and northwest) in an international competition. Some of these airports already have commercial lines, but large companies do not yet use most of them.

The concession provides for a tariff and non-tariff remuneration model by exploring accessory revenues – such as hangar rents or commercial activities, restaurants, and parking – or through investments in real estate exploration.

Ribeirão Preto, which leads the southeast block, has experienced an imbroglio in the last two decades with the Leite Lopes airport. Lawsuits prevented works at the site, and the bureaucracy stopped, for example, the extension of the runway, necessary to receive larger aircraft.

The main airport under state government management, Leite Lopes, is five kilometers from the city center.

The region where it is located, the northern part of the city, has received recent infrastructure investments. Viaducts started to be built to improve traffic flow – they are expected to be ready in November – and there are prospects for the concession or even sale of public areas in the surrounding area.

In the last few years, private cargo storage terminals have been built in the region to meet the airport’s demand, which has not increased.

“Long-awaited, the auction will result in changes in the runway structure, in aircraft navigation equipment, in the aircraft yard, in the passenger terminal and improvements in the surrounding area, so that [the airport] can receive more flights and prepare for the internationalization of executive aviation, cargo, and passengers,” says the mayor of Ribeirão, Duarte Nogueira (PSDB).

Today’s airport has a runway 2,100 meters long by 45 meters wide, and its patio can hold eight aircraft, such as Airbus A320 or Boeing 737/800. As a comparison, the main runway at Congonhas airport is 1,940 meters long and 45 meters wide.

Nogueira says that the concession should generate investments in the surrounding area, including the possible sale of the city’s exhibition park area.

“The city hall is evaluating what to do with the area of the permanent exhibition park. We will probably grant or sell it to the private sector since, with the imminent concession of the airport, it has become valuable,” said the mayor.

The site has more than 200,000 square meters. Besides the works in the surroundings, the airport is close to the Anhanguera highway, which connects the city to Campinas and São Paulo and Ribeirão’s railway station, which allows the projection of an intermodal terminal in the city.

“Leite Lopes is already the main regional airport in Brazil, but it will serve a wider area than our expanded metropolitan region, reaching even the Minas Gerais triangle,” said Nogueira.
The 22 units move 2.4 million people per year. The government estimates that the number will grow to 8 million with the investments during the concession period.

Besides Ribeirão Preto, the southeast lot includes Bauru-Arealva, Marília, Araraquara, São Carlos, Sorocaba, Franca, Guaratinguetá, Avaré-Arandu, Registro and São Manuel. The minimum award for this first block is R$ 6.8 million.

The second group, the Northwest, encompasses the airports at São José do Rio Preto, Presidente Prudente, Araçatuba and Barretos, besides the airfields of Assis, Dracena, Votuporanga, Penápolis, Tupã, Andradina and Presidente Epitácio. The minimum grant for this is R$13.2 million.

The São José do Rio Preto airport leads the group. The construction of an international and cargo airport is seen as one of the pillars for regional development and has already been discussed in the region.

In January, the mayors of ten cities in northwestern São Paulo met virtually to present the goals of each administration and discuss regional integration, intending to create the Rio Preto metropolitan region – the state government is expected to send a bill on the subject to the Legislative Assembly in May.

The governors signed a term committing themselves to follow some guidelines in the next years, including the construction of a dry port and an international airport.

“Granted to the private initiative, we are waiting for improvements that will certainly bring modernity, economic development, and a significant increase in passenger movement,” says the mayor of São José do Rio Preto, Edinho Araújo (MDB).

After the concession, the airport will be modernized, with more security for air traffic, besides the expansion of the total number of flights of the current companies. “I understand that the increase in demand may reduce the price of tickets and thus attract tourists to our region.”

In Presidente Prudente, the city government claims the need for two works, seen as essential for the region’s development and its interconnection with the city.

“We made placements of what could satisfy us, I don’t say totally, but satisfy the region. Prudente was placed in a package, but it is bigger than this package,” says Mayor Ed Thomas (PSB).

“Our airport is the third busiest in the state, and we need to expand the passenger terminal, which has already been remodeled, but it was too small, and we wanted to guarantee the connection of the airport with the city through an avenue since today it is through the highway.

These works would give more comfort to passengers, in the case of the terminal, and would improve urban mobility in the region. “We are in a region very close to Mato Grosso do Sul and Paraná; it is a strategic location.”

For João Octaviano Neto, São Paulo’s Logistics and Transportation Secretary, private initiative investment will expand each airport’s airline network. “We will be able to have smaller planes flying between Iracema and Barretos, Barretos and Itaratinguetá, and so on.

Besides stimulating the development of regional aviation, the concession will relieve the state, which spends R$65 million per year with the units, according to Rodrigo Garcia, vice-governor of São Paulo.

“Regional aviation is a catalyst for business not only in cargo and passenger transportation, but it also encourages the spreading of logistics and distribution centers, as well as the food processing industry, for example, to all regions,” he says.

National and foreign companies, consortiums, financial institutions, and investment funds are eligible to participate in the bidding.

The contracts will provide public services for the operation, maintenance, exploitation, and expansion of the state’s airport infrastructure, currently managed and operated by Daesp (Aerovial Department of the State of São Paulo).

Artesp (Regulatory Agency of Delegated Public Services of Transport of São Paulo) will become the regulatory agency of the concession contract.

The winners of each of the lots will be those bidders that present the highest offer for a fixed concession.

In the first phase, the winning concessionaire must make obligatory investments in the airports for four years. The other investments in modernization and expansion of the infrastructure are planned throughout the contract period.

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