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Changi Airport unit joins race to operate 2 Brazil airports

Winning bid for Rio de Janeiro airport's 25-year concession to be announced on Friday

[SINGAPORE] Changi Airports International (CAI) has teamed up with Brazil's Odebrecht group to bid for the rights to operate two airports in Brazil as the country prepares for the throngs of visitors arriving for the 2014 World Cup and Summer Olympics in 2016.

According to Reuters, five groups have submitted proposals for a 25-year concession to run Rio de Janeiro's Galeao airport, while three of them are also in the running to secure the 30-year rights to operate Confins Airport, which serves Belo Horizonte.

While CAI and Odebrecht have set their sights on both airports, Heathrow operator Ferrovial and Brazilian engineering company Queiroz Galvao are working together to bid for Galeao, as is the consortium made up of France's Aeroports de Paris, Amsterdam's Schiphol and Brazil's Carioca Engenharia. Another group which delivered a proposal is said to be infrastructure firm Invepar and Germany's Fraport, which operates Frankfurt Airport. The winning bid will be announced on Friday.

CAI, a wholly owned subsidiary of Changi Airport Group (CAG), confirmed that it has submitted a bid each for the two airports.

The minimum bid for Galeao, the country's second busiest airport, has been set at 4.83 billion reais (S$2.62 billion) while that for Confins is 1.1 billion reais. However, the appointed operator will also be expected to pump in investments to the tune of 5.7 billion reais for Galeao and 3.5 billion reais for Confins over the course of the concession period in order to upgrade infrastructure and facilities.

For Galeao, this includes 26 loading bridges and a new parking facility, in addition to expansion of the airport apron, while Confins will require a second runway. The airports are run by state-linked airport management firm Infraero.

Brazil has been privatising some of its airports in a bid to revamp its existing and ageing infrastructure, which have failed to keep up with the pace of growth.

"For the great challenge of renovating and modernising infrastructure in the country, there is the new possibility that with international operators - operators with great experience - we can encourage a cultural change in our airports," Brazilian Civil Aviation Secretary Moreira Franco was quoted by Bloomberg as saying.

Brazil's domestic and international passenger growth slowed in 2012 as weaker GDP growth had a knock-on effect on travel demand, forcing the nation's carriers to scale back capacity and shelve expansion. This comes on the heels of sharp double-digit growth in 2010 and 2011. However, despite the ongoing challenges in the short term, the "outlook over the medium to long-term remains bright", noted CAPA, or the Centre for Aviation, in a report earlier this year.

Galeao, which handled about 17.5 million passengers in 2012, is expected to see this rise to 60 million per year by 2038 when the 25-year contract ends, while Confins' 10.4 million passengers is set to increase to 43 million passengers per year by 2043.

Last year, Brazilian national civil aviation agency Anac sold the rights to three other airports - including Sao Paulo International which drew a bid from CAI and its partner Odebrecht.

CAI, which provides management and consultancy services, has a track record that spans over 40 airports in more than 20 countries.