Latin Finance - March 2008 - 48

Mexico mexican airports it tougher for 2008 to top 2007’s 17% growth. Chee Mee Hu, senior vice president for project finance at Moody’s, says her agency sees no severe effect of a US downturn on Mexico’s airports in terms of passengers. “We foresee slower [traffic] growth this year,” says Guzman, whose group recorded almost 15% traffic growth during 2007. The growth in recent years of low-fare airlines such as Interjet and Volaris in the country has played a large part, by offering much lower fares. This year Guzman expects carriers to adjust routes and rates in an attempt to make them more profitable, which could lead to slower passenger growth. While the costs of necessities like fuel and leasing aircraft will continue to rise, the industry can also likely count on a Competition Time widening gap between the dollar and euro sending a few The creation of an independent entity to regulate tariffs is being considered this year. The call has been spurred on by a more vacationers to Mexico. This mix of good and bad could yield 7%-10% passenger Federal Competition growth, Guzman says. Thus Comission report claiming Mexican Airport Passenger Traffic far, ASUR’s Castro says that the country’s airports are Double-digit growth despite slowing cross-border among the most expensive traffic, local travel has kept in the world, which the 80 overall passenger traffic up, airport groups reject, and has surprising him with 12.5% received mixed reaction. year-on-year growth in Guzman does not expect the January. The other two creation of an independent 70 groups also saw increases, regulator for tariffs, claiming GAP of 14% and OMA of that it will double the 11%. bureaucracy. While Castro and Guzman The Yucatan’s Mayan 60 might not be betting on Riviera is also on the expansion to match last transportation and year’s, there are no doubts as communication ministry’s list 50 to the sector’s long-term of places in need of an airport. potential. In 2007, Mexico’s The government plans to begin domestic air travel system the concession process in the served some 32 million first half of this year. 40 passengers, according to UBS, “I’m not so sure the project 2005 2006 2007 2008e 2009e 2010e while there were over three will happen this year,” says Source: UBS billion bus travelers. This Castro, who points out that translates into 500 million to he has not seen the 1 billion potential new travelers annually, it says in a report, necessary information released about the process that based on an estimate that flights could replace bus trips of should be out now for the bidding to take place in the next more than 300 kilometers. Guzman says 18%-20% of longfew months. The government has also yet to disclose a distance trips were taken by air, compared to approximately specific location for the project, which he says would be a 80% in a country like the US. $120-$200 million project, depending on the type of “There is a huge potential for a country of 106 million,” ancillary construction included. explains Guzman. “But the tickets are expensive.” The There is also the matter of whether anti-trust authorities emergence of low-cost carriers has helped make air travel will permit ASUR, the operator of Cancún airport, to bid. more affordable, but prices need to continue to fall. Castro says ASUR does not yet have a clear response from Channeling more funds towards infrastructure is also key. the officials. A government spokesperson declined to GDP growth and integration of more Mexicans into the comment on the process. Guzman also says he considers the project unlikely. A ministry spokesman declined to comment formal economy will allow more low-income travelers to buy tickets with a credit card. Castro would like to see tickets sold on the prospects of an auction occurring this year. in more accessible locations, such as in convenience stores. Castro adds that many Mexicans who have never flown Creating a Flying Culture before remain scared or untrusting of air travel, and continue The double-digit passenger growth that GAP, ASUR and to take buses, even after they reach the point where they can Monterrey-based Grupo Aeroportuario del Centro Norte afford a ticket. “Cost is most important, but we must change (OMA) have been seeing in recent years is expected to last the culture, too,” he concludes. LF through 2010. Worsening economic conditions should make GAP has started looking at Central and South America for bigger project possibilities. “In my opinion it is a mistake if you divide the entity,” says Castro. “You need an integrated system working under the same principle.” One set of operations at an airport, he explains, directly affects another. Having, say security, under different management as the terminals, would not provide the most efficient experience for the customer, he says. Castro adds that the portions of the facility generating set tariffs – such as gate fees or departure and landing taxes – will offer financiers a better projection of future revenues and likely result in more straightforward financing. Passenger growth, ASUR, GAP, OMA (%) 48 LATINFINANCE March 2008

Latin Finance - March 2008

Table of Contents for the Digital Edition of Latin Finance - March 2008

Latin Finance - March 2008
Contents
Man of the Year
Peru Domestic Markets
General Atlantic Interview
Investment Bank Compensation
Vale Bids for Xstrata
Brazil Special Report
Infrastructure Finance
Oil & Gas
M&A Outlook
Private Equity
Mexico Special Report
Airports
Structured Finance
Argentine Mining
Latin Finance - March 2008 - Latin Finance - March 2008
Latin Finance - March 2008 - Cover2
Latin Finance - March 2008 - Contents
Latin Finance - March 2008 - 2
Latin Finance - March 2008 - 3
Latin Finance - March 2008 - 4
Latin Finance - March 2008 - 5
Latin Finance - March 2008 - 6
Latin Finance - March 2008 - 7
Latin Finance - March 2008 - 8
Latin Finance - March 2008 - 9
Latin Finance - March 2008 - 10
Latin Finance - March 2008 - 11
Latin Finance - March 2008 - 12
Latin Finance - March 2008 - 13
Latin Finance - March 2008 - Man of the Year
Latin Finance - March 2008 - 15
Latin Finance - March 2008 - 16
Latin Finance - March 2008 - 17
Latin Finance - March 2008 - Peru Domestic Markets
Latin Finance - March 2008 - 19
Latin Finance - March 2008 - General Atlantic Interview
Latin Finance - March 2008 - Investment Bank Compensation
Latin Finance - March 2008 - 22
Latin Finance - March 2008 - 23
Latin Finance - March 2008 - Vale Bids for Xstrata
Latin Finance - March 2008 - 25
Latin Finance - March 2008 - Brazil Special Report
Latin Finance - March 2008 - 27
Latin Finance - March 2008 - Infrastructure Finance
Latin Finance - March 2008 - 29
Latin Finance - March 2008 - 30
Latin Finance - March 2008 - 31
Latin Finance - March 2008 - 32
Latin Finance - March 2008 - Oil & Gas
Latin Finance - March 2008 - 34
Latin Finance - March 2008 - 35
Latin Finance - March 2008 - M&A Outlook
Latin Finance - March 2008 - 37
Latin Finance - March 2008 - 38
Latin Finance - March 2008 - 39
Latin Finance - March 2008 - Private Equity
Latin Finance - March 2008 - 41
Latin Finance - March 2008 - 42
Latin Finance - March 2008 - Mexico Special Report
Latin Finance - March 2008 - 44
Latin Finance - March 2008 - 45
Latin Finance - March 2008 - Airports
Latin Finance - March 2008 - 47
Latin Finance - March 2008 - 48
Latin Finance - March 2008 - Structured Finance
Latin Finance - March 2008 - 50
Latin Finance - March 2008 - 51
Latin Finance - March 2008 - 52
Latin Finance - March 2008 - 53
Latin Finance - March 2008 - 54
Latin Finance - March 2008 - 55
Latin Finance - March 2008 - Argentine Mining
Latin Finance - March 2008 - 57
Latin Finance - March 2008 - 58
Latin Finance - March 2008 - 59
Latin Finance - March 2008 - 60
Latin Finance - March 2008 - 61
Latin Finance - March 2008 - 62
Latin Finance - March 2008 - 63
Latin Finance - March 2008 - 64
Latin Finance - March 2008 - Cover3
Latin Finance - March 2008 - Cover4
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