Panama Jack
6th Feb 2005, 03:18
Peru Airport Operator Upgrades in Regional Hub Bid
By Alex Emery
Feb. 4 (Bloomberg) -- Lima Airport Partners, a group led by Frankfurt-based Fraport AG, is investing $1.2 billion in runways, terminals and security as it seeks to turn Peru's capital into a regional hub serving 7 million passengers a year by 2008.
The group, which includes San Francisco-based Bechtel Group Inc., and Singapore Changi Airport Enterprise Pte., Ltd., last week opened seven jetways and a 5,000 square-meter concourse to complete the $140 million first phase. The group is now talking with United Airlines, Inc., and US Airways, Inc., to use Lima for flights to the region, Chief Executive Jaime Daly said.
``U.S. airlines are competing with low-cost carriers on domestic flights and need to expand abroad,'' Daly said in an interview in his office overlooking the runway last month. ``We plan to bring Lima up to international standards and make it the most modern airport in Latin America.''
Peru put the airport under private management four years ago as the government shed state assets in a bid to accelerate economic growth. The airport expansion fits into plans to boost tourism, the country's fifth largest industry, and increase exports of fresh farm products.
To compete with bigger airports in Mexico City, Sao Paulo and Buenos Aires, Peru needs to improve its infrastructure, security and training for workers in tourism, say business leaders such as Carlos Canales, president of the Peruvian Chamber of Tourism.
Lima's airport serves 22 airlines carrying 5.2 million passengers a year, compared with Mexico City's 23 million passengers on nearly 900 flights a day by 43 airlines. Sao Paulo's Congonhas Airport handles 12 million passengers. Buenos Aires' Ezeiza received 5.5 million passengers last year.
Concession
``It's a demanding goal. Peru needs more airlines, more frequencies, better connectivity,'' Canales, said in a phone interview. ``It's an effort that involves the government, the private sector and the Peruvian people.''
High fuel taxes and a bid to charge airport taxes to transit passengers have also drawn criticism.
``Lima Airport Partners has to understand that it has to lower costs, fuel surcharges and the like, in order to be successful,'' Robert Booth, president of Miami-based airline consultant Aviation Management Services, said in a phone interview.
Lima Airport Partners began operating the facility in February 2001 under a 30-year concession from the Peruvian government that requires $1.2 billion of investment in exchange for a 46.51 percent royalty on annual revenue.
The first phase included an airport perimeter wall, runways, baggage screening, electrical wiring and water systems to qualify for the ISO 14000 certification. Plans include buying adjoining land for an additional runway and a four-star, 100-room hotel, Daly said.
Financing
``Five years ago, people and even horses from the next-door shantytown used to wander across the runway,'' Daly said.
The Lima airport group's partners already run two of the world's busiest airports, Frankfurt and Singapore, while Bechtel is the world's largest engineering company.
Lima Airport Partners is financing the project with capital from its partners plus its own cash flow, spokeswoman Claudia Vivanco said today. The group, which posts $70 million in annual annual revenue from the airport, has shelved plans for a $110 million bond sale, she said.
Link to article (http://www.bloomberg.com/apps/news?pid=10000086&sid=aatMaqzMLJII)
By Alex Emery
Feb. 4 (Bloomberg) -- Lima Airport Partners, a group led by Frankfurt-based Fraport AG, is investing $1.2 billion in runways, terminals and security as it seeks to turn Peru's capital into a regional hub serving 7 million passengers a year by 2008.
The group, which includes San Francisco-based Bechtel Group Inc., and Singapore Changi Airport Enterprise Pte., Ltd., last week opened seven jetways and a 5,000 square-meter concourse to complete the $140 million first phase. The group is now talking with United Airlines, Inc., and US Airways, Inc., to use Lima for flights to the region, Chief Executive Jaime Daly said.
``U.S. airlines are competing with low-cost carriers on domestic flights and need to expand abroad,'' Daly said in an interview in his office overlooking the runway last month. ``We plan to bring Lima up to international standards and make it the most modern airport in Latin America.''
Peru put the airport under private management four years ago as the government shed state assets in a bid to accelerate economic growth. The airport expansion fits into plans to boost tourism, the country's fifth largest industry, and increase exports of fresh farm products.
To compete with bigger airports in Mexico City, Sao Paulo and Buenos Aires, Peru needs to improve its infrastructure, security and training for workers in tourism, say business leaders such as Carlos Canales, president of the Peruvian Chamber of Tourism.
Lima's airport serves 22 airlines carrying 5.2 million passengers a year, compared with Mexico City's 23 million passengers on nearly 900 flights a day by 43 airlines. Sao Paulo's Congonhas Airport handles 12 million passengers. Buenos Aires' Ezeiza received 5.5 million passengers last year.
Concession
``It's a demanding goal. Peru needs more airlines, more frequencies, better connectivity,'' Canales, said in a phone interview. ``It's an effort that involves the government, the private sector and the Peruvian people.''
High fuel taxes and a bid to charge airport taxes to transit passengers have also drawn criticism.
``Lima Airport Partners has to understand that it has to lower costs, fuel surcharges and the like, in order to be successful,'' Robert Booth, president of Miami-based airline consultant Aviation Management Services, said in a phone interview.
Lima Airport Partners began operating the facility in February 2001 under a 30-year concession from the Peruvian government that requires $1.2 billion of investment in exchange for a 46.51 percent royalty on annual revenue.
The first phase included an airport perimeter wall, runways, baggage screening, electrical wiring and water systems to qualify for the ISO 14000 certification. Plans include buying adjoining land for an additional runway and a four-star, 100-room hotel, Daly said.
Financing
``Five years ago, people and even horses from the next-door shantytown used to wander across the runway,'' Daly said.
The Lima airport group's partners already run two of the world's busiest airports, Frankfurt and Singapore, while Bechtel is the world's largest engineering company.
Lima Airport Partners is financing the project with capital from its partners plus its own cash flow, spokeswoman Claudia Vivanco said today. The group, which posts $70 million in annual annual revenue from the airport, has shelved plans for a $110 million bond sale, she said.
Link to article (http://www.bloomberg.com/apps/news?pid=10000086&sid=aatMaqzMLJII)