Introduction
General Airport Infrastructure Concession Plan
Development Programme for Regional Aviation
State project proposal

Comment

Introduction

In addition to increased investments stemming from the concessions of major federal airports, the government has enacted policies to expand regional airports in order to create a better infrastructure for domestic flights around several areas of Brazil.

From January 2011 to June 2014, R11.3 billion was invested in main Brazilian airports. These investments led to a substantial increase in the airports' capacity – from 215 million passengers per year to 285 million per year. This means that an additional 70 million passengers may travel annually, equivalent to six times the population of Sao Paulo. This was made possible because, in addition to expanding passenger terminals by 400,000 square metres (from 1.1 million square metres to 1.5 million square metres), 290 parking spaces for commercial aircrafts were created,1.4 million square metres of apron was constructed, 65 new boarding bridges were built and 12 runways were restored.(1)

Airports may be operated by:

  • the Airport Infrastructure Company and its subsidiaries;
  • the private sector through concession or authorised regimes;
  • Aeronautics Command, in case of military airports; and
  • the states, federal district and municipalities, by means of delegation from the federal government.

The government recently published the General Airport Infrastructure Concession Plan and proposed Provisional Measure 652 to Congress. Both initiatives aim to foster regional aviation development and increase the use of air transportation in Brazil.

General Airport Infrastructure Concession Plan

The General Airport Infrastructure Concession Plan summarises the current legal structure of the aviation sector, establishing guidelines and models for the operation of public airports. For example, it establishes criteria that the Secretariat of Civil Aviation (SAC) will adopt in order to define the next airports to be granted private initiative, such as the annual movement of passengers, cargo and aircraft, infrastructure congestion levels, management improvements and operational efficiency.

The plan also creates another type of regime for private companies interested in the aviation sector. The authorisation regime is regulated by Federal Decree 7.871/2012, but is exclusively directed at private air services. Interested parties may submit an authorisation request to the SAC for approval, which will be further analysed by the National Civil Aviation Agency.

Development Programme for Regional Aviation

While the General Airport Infrastructure Concession Plan is a road map of the legal framework of Brazil's aviation sector, Provisional Measure 652/14 – which creates the Development Programme for Regional Aviation – is an attempt to create subsidies for low-density routes. It aims to provide the population with access to air transportation, integrating isolated communities into the national aviation network by increasing the number and frequency of routes that are not commercially feasible.

Through the development programme, the government is proposing to subsidise airport and air navigation tariffs, as well as part of flight costs. A commission containing members of Congress is currently analysing Provisional Measure 652, which is expected to be made into law by mid-November, in case Congress supports the policy proposed by the government.

The development programme will be financed by the National Fund for Civil Aviation (FNAC) – a special fund that provides financial support to the airport infrastructure. Most of FNAC's revenue stems from the concession fees paid by airport concessionaires to the government, as indicated in the chart below:

 

State project proposal

Regardless of the success of the development programme's initiatives, a state project that sets out parameters for future regional airport projects was recently launched. In the format of a public-private partnership, Minas Gerais has published a request for proposal for the Zona da Mata Regional Airport. Located close to the border of Minas Gerais and Rio de Janeiro, the airport will be operated by the bidder that offers the lowest annual public investment, limited to R6.5 million. FNAC's funds are expected to increase in 2014, provided that the new concessionaires for the Galeão Airport (Rio de Janeiro) and the Cofins Airport (Minas Gerais) will start to operate and pay the concession fee.

Comment

As regional aviation appears to be a government priority, the next question is which project format will make regional airports commercially feasible and attract private investments? There is a clear sign that the Brazilian aviation sector will continue to provide investment opportunities for Brazilian and foreign companies, and it is up to them to seize the opportunities to come.

For further information on this topic please contact Claudia Elena Bonelli, Ana Cândida Lemos de Mello Carvalho or Marjorie Iacoponi at TozziniFreire Advogados by telephone (+55 11 50 86 50 00), fax (+55 11 50 86 55 55) or email (cbonelli@tozzinifreire.com.br, amcarvalho@tozzinifreire.com.br or miacoponi@tozzinifreire.com.br). The TozziniFreire Advogados website can be accessed at www.tozzinifreire.com.br.

Endnotes

(1) News released from the Brazilian press, relaying SAC Minister Mr Moreira Franco's public announcements.