Brazil to privatize airports in Rio and Belo Horizonte

BRASILIA: Brazilian President Dilma Rousseff on Thursday announced that airports in Rio and Belo Horizonte, two host cities for the 2014 World Cup, will be privatized during a September 2013 auction.

"International experience shows that airports are good business," Rousseff said, recalling that last February, 20-year concessions were granted to manage three airports, two in Sao Paulo and one in Brasilia.

Brazil, a continent-sized country of 194 million people, is seeking to upgrade its creaking infrastructure ahead of the 2014 World Cup.

The previously granted concessions, valued at a total of $14 billion, will upgrade congested terminals in preparation for handling the tens of thousands of tourists expected for the World Cup.

Rousseff said Thursday that any private entities participating in the September auctions will have to include at least one international partner "with experience in running an airport handling at least 35 million passengers a year."

This operator must have "at least a 25 percent stake" in the consortium.

Companies with majority stakes in operations of other airports will not be allowed to take part in next year's auction.

Rousseff said Brazil was now a "middle class country" in which more and more people will fly, including many of the "40 million Brazilians lifted out of poverty over the past decade".

Civil Aviation Minister Wagner Bittencourt said the government hopes to raise $5.7 billion through the concessions: $3.3 billion for Rio's Tom Jobim airport and $2.4 billion for Belo Horizonte's Confins airport.

Brazil has announced huge investments in airport, highway and rail projects in partnership with the private sector to modernize its creaking infrastructure and jumpstart a sluggish economy expected to grow a mere one percent this year.

Bittencourt said that in an initial phase, the government plans to invest $3.6 billion to modernize 270 small airports.

The longer term objective is to upgrade 689 public airports, he added.

Experts meanwhile warn that the aviation sector has to contend with higher taxes and fuel costs, inadequate infrastructure and a leveling-off of demand.

"2012 can be seen as the worst year for commercial civil aviation," Paulo Kakinoff, president of Gol, the country's second biggest airline, said last week.

"This is due to a series of factors: a nearly 60 percent hike in fuel costs, the 10 percent depreciation of the real in relation to the dollar, higher taxes and new taxes."