Brazil privatizes 3 airports ahead of World Cup

Improving airports plagued with bottlenecks, long lines and poor infrastructure was a key promise the government made in its winning bid to host soccer's premiere event in 2014. Hundreds of thousands of fans will fly between the 12 host cities for matches.

Brazil's airports have buckled under demand that tripled in the past decade. In 2002, airlines flew 34.3 million passengers on flights originating in Brazil. That rose to 107.8 million last year, Brazil's civil aviation agency reported.

Top officials from FIFA, soccer's governing body, have consistently criticized Brazil for the lack of upgrades to the ailing air system. But the privatizations are aimed at quick improvements. The government is expected to soon auction the rights to run other airports, including Rio de Janeiro's international airport.

Some analysts see this as the first push by the pragmatic President Dilma Rousseff to address Brazil's infrastructure woes with the help of private capital, despite resistance from the base of her leftist Workers Party.

“The auctions should be seen as part of a broader, multifaceted effort to attract private capital to infrastructure in order to overcome acute bottlenecks in rail, roads, ports and civil aviation,” the U.S.-based Eurasia Group consulting firm wrote in a research note Monday. “If successful, the airport auctions could reinvigorate the push for concessions on other transport infrastructure sectors.”

Infraero, the state-run agency that has long operated airports, retains a 49-percent stake in the privatized airports, which include the nation's busiest airport in Sao Paulo, along with those in the capital Brasilia and in the city of Campinas in Sao Paulo state.

Together, the three airports are responsible for 30 percent of Brazil's passenger traffic.

The 20-year contract to operate Sao Paulo's Guarulhos international airport was won by the Invepar consortium, 90 percent of which is controlled by Brazil's Investimentos e Participacoes em Infraestrutura SA and the rest in the hands of the Airports Company South Africa.

The InfrAmerica consortium won the right to run Brasilia's airport for 25 years. Argentina's Corporacion America SA holding company and Brazil's Engevix SA each have a 50 percent stake in that consortium.

Viracampos airport in Campinas will be operated for 30 years by the Aeroportos Brasil consortium, made up of Brazil's Triunfo Participacoes SA and UTC Participacoes SA, along with a 10 percent stake held by France's EGIS Airport Operation.

Completing work on new terminals before the 2014 World Cup is the main challenge for the three consortiums. They will be fined US$87 million plus US$875 million for each day they're late after the Cup begins. A new terminal at Guarulhos is expected to see 7 million passengers move through each year, that in Campinas will handle 5.5 million passenger and the terminal in Brasilia is forecast to handle 2 million.

Monday's action isn't the first privatization for Brazil's air system. Last August, the government auctioned the rights to build and operate an airport in the nation's northeast near the city of Natal, which will host 2014 World Cup matches.

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