São Paulo is auctioning 22 airports today; expected investment is R$447 (US$90) million

RIO DE JANEIRO, BRAZIL – The Socicam group, a medium-sized operator, is considered the favorite in the competition, according to people familiar with the matter. The company currently manages the federal airports of Cuiabá, Sinop, Rondonópolis, and Alta Floresta, in Mato Grosso.

The airfields in the interior of the state will be granted concessions by the administration of João Doria (PSDB) for 30 years and should receive investments of at least R$447 million during the period. With the concession, the government expects to save at least R$700 million on maintenance of the airports during the term of the contracts.

Most of the planned investments (R$266.5 million) are in the Southeast region of the state, which has 11 airports, the most important being that of Ribeirão Preto; before the pandemic it received about 1 million passengers a year.

The airfields of Araraquara, Avaré, Bauru-Arealva, Franca, Guaratinguetá, Marília, Registro, São Carlos, São Manuel and Sorocaba are also part of the group. According to the public notice, whoever takes the airports will need to contribute R$75.5 million in the first four years of the contract.

Currently focused on executive aviation, the Sorocaba airport has faced competition from the private São Paulo Catarina airport, owned by JHSF, located in São Roque. The competitor is closer to the São Paulo capital and recently obtained authorization for international flights.

For the state’s Logistics and Transportation Secretary, João Octaviano Neto, Ribeirão Preto airport has the vocation to expand its regularly scheduled commercial flights and even explore executive and cargo flights on international routes.

The private operator will be able to explore the buildings of the airport area commercially. “The operator can make investments in the search for the best performance for the airport, such as placing international executive aviation. We provide all the conditions for them to transform this into an excellent business,” says Octaviano Neto.

The second block to be bid, located in the Northwest region of the state, also with 11 airfields, has as its main asset that in São José do Rio Preto. The commercial airports of Araçatuba, Presidente Prudente and Barretos are also part of the lot, besides runways in Andradina, Assis, Dracena, Penápolis, Presidente Epitácio, Tupã and Votuporanga.

The minimum concession bids are R$6.8 million for the Northwest block and R$13.2 million for the Southeast one. The winner will be the one who offers the highest premium in relation to these values.

“The expectation is low regarding competition in this auction, the most important airports are still Ribeirão Preto and São José do Rio Preto. Due to the project’s design, the interested parties should be smaller and national operators, focused on regional aviation,” says Lucas Sant’Anna, a partner at Machado Meyer law firm.

Sant’Anna points out that logistics operators may also be interested in participating in the project.

“The exploitation of accessory revenue, such as the rental of hangars and parking lots, in addition to the possibility of developing real estate projects in the airport areas, is what makes the auction attractive” says Rodrigo Campos, partner at Porto Lauand law firm.

According to him, Voa-SP, the current concessionaire of five regional airports in São Paulo, granted in 2016, may also be interested. “The current project is quite similar to the one they already manage.”

The reduced demand in the middle of the pandemic is not necessarily a problem if the demand projections of the São Paulo government are correct, in the assessment of lawyer Luís Felipe Valerim, professor at FGV Direito and partner at the law firm XVV.

“The government modulated the demand projections due to the pandemic, which is critical for the current aviation moment, but not for the project. Since the resumption of demand for domestic flights is faster, especially in business aviation,” he says.

The dense population of the largest cities in the interior of São Paulo and the high GDP of the cities can count in favor of the project, according to him, but it is necessary that the investor bets on the realization of the potential of regional aviation.

“It makes sense that these airports are good assets, there is a historical potential for the development of regional aviation, although so far it has not been realized,” says Valerim.