Changi Airports International (CAI), which is the majority shareholder of the operator of Tom Jobim International Airport in Rio de Janeiro, Brazil, has authorised the airport’s manager to file for a re-auction of the concession.
CAI, a wholly-owned subsidiary of the Changi Airport Group (CAG), owns 51% of the airport’s manager, Concessionária Aeroporto Rio de Janeiro (RIOgaleao). The remaining 49% is held by Brazil’s state-owned airport operator, Infraero.
The current concession was awarded in November 2013 and is a 25-year term that’ll last till 2039.
RIOgaleão has submitted the re-auction application on Feb 10 to regulator National Civil Aviation Agency of Brazil (ANAC). The application will be subject to the approval of ANAC, the Ministry of Infrastructure, Investment Partnership Program Council and the President of Brazil. Once approved, following current legislation, a new operator will be defined in an auction structured and launched by the Brazilian federal government.
Investment ‘substantially impaired’
According to CAI, the investment in Tom Jobim airport had been “substantially impaired” in the last two years due to the air travel restrictions amid the Covid-19 pandemic.
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“The group will perform an updated impairment review of the investment for the financial year ending March 31, which will take into consideration, inter alia, estimated cash flows over an expected period of completing the process of re-auction,” it writes in its Feb 11 statement.
The filing for a re-auction by RIOgaleão is not expected to result in any material financial impact for the group for the financial year ending March 31.
“Tom Jobim Airport’s operating conditions today have changed drastically since 2013. The country’s deep economic recession, coupled with the global Covid-19 pandemic that has decimated travel demand, has made it untenable for the concession to continue under the existing terms of agreement,” says Eugene Gan, CEO of CAI.
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“With the strong foundation of quality airport services that RIOgaleão has put in place under CAI’s stewardship over the years, we believe Tom Jobim Airport can benefit from a re-auction for sustainable operations in the long run,” he adds.
Brazil’s aviation industry was hit following the Covid-19 pandemic, seeing a 90% drop in flights.
Total aviation passenger traffic in Brazil dropped by about 7% during the recession and had barely recovered to the 2013 level, when Covid-19 became a health crisis and further weakened the airport’s operating conditions.
Despite the support from the Brazilian government in 2020 and 2021, the recovery has been slow and Covid-19 will continue to affect the aviation industry for years to come, says CAI.
Airport manager’s performance
As manager, RIOgaleão expanded the airport’s capacity and enhanced its operations since it took over in 2014.
Tom Jobim Airport, which played host airport to the 2016 Olympic Games in Rio de Janeiro, saw enhancements such as the addition of new lounges and the introduction of Brazil’s first walkthrough duty-free stores.
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Under CAI’s stewardship, the airport has also made significant headway in its cargo operations. In 2017, it became the first airport in South America to achieve the IATA CEIV Pharma for its cargo operations. This positioned the airport as an important logistics partner in the pharmaceutical supply chain, and a main port of entry for pharmaceutical products in Latin America.
The airport went on to launch a first-of-its-kind grade ‘A’ logistics warehouse that handles import and export logistics in one place, with a higher level of security and shorter processing time, further cementing its position as a key cargo hub.
By 2019, the airport had significantly increased its share of the market for imported goods bound for the state of Rio de Janeiro, compared to 67% in 2013, before privatisation.
