Latin Finance - March/April 2011 - 66

Brazil transport

Soft Landing for World Cup?
by Alexandre Spatuzza t 9pm on a Thursday night in early February, hundreds of weary travelers trudge through the Infraero labyrinth at São Paulo’s congested Guarulhos airport. Senior investment bankers dressed for a Manhattan power meeting rub shoulders with backpackers in flip flops heading off to the jungle. North American IT and oil service providers worry about missing flights as the wait drags on and Brazilian nationals are rushed ahead to an express line through security and immigration. The frustration is palpable for both road warriors and newcomers, as seemingly endless lines twist and turn at a snail’s pace. The legions of international investors, entrepreneurs and financiers beating an increasingly frequent path to Brazil could not be left with a worse impression of a country that aspires to the big leagues. “The system is inefficient and if three or more airplanes land at the same time in any airport in Brazil, Fasten your seatbelts: Brazil is scrambling to revamp a creaking airports network you cannot move,” says Gilberto and infrastructure research coordinator at the government’s Nagai, manager of the Itaú Ações advanced economics think tank IPEA in Brasília. “The legal Infraestrutura FICIFI at Banco Itaú. The infrastructure fund has changes gave companies and airports more flexibility in charging 166.5 million reais in assets under management. tariffs and fares,” he adds. Twenty-five-year-old Guarulhos is Brazil’s busiest airport, According to a study by McKinsey, fares have dropped 48% accounting for 17% of total nationwide passenger traffic of 150 million trips a year. It grew by 21% in 2010 alone and on average since 2003 while GDP has grown over 4% on average in the same period. It adds that although Brazilian airfares per kilometer by 10% a year since 2003, says Brazil’s federal airport authority flown are 8.8% more expensive than the international average, Infraero. as of early 2011, they are competitive when compared to bus Brazil’s airport network, inaugurated in the 1930s, relies tickets, Brazil’s main form of transport, which ferries almost 200 on more than 700 airports and airstrips, but, according to civil million passengers a year. aviation regulator ANAC only 127 regularly receive national “I recently bought a return air ticket from Brasília to the and international commercial flights. This has declined in city of Vitória over 1,100 kilometers away for 140 reais. By bus recent years due to lack of investment all over the network and it would take over eight hours of travel and would be more heightened competition between airlines focused on the main expensive,” says Pego. “It was a promotion, which are becoming hubs of São Paulo, Rio de Janeiro and Minas Gerais. quite common, but I know the air company would not lose “Driving the sector are increases in national income and money”. higher competition between airlines after the sector was Brazilians are therefore flocking to airports, forcing most deregulated in the 1990s,” says Bolívar Pego, economist

With one eye on the 2014 World Cup and the other on Congress, the new president is hatching a master plan to renovate Brazil’s overcrowded, overburdened and trouble-ridden airport system.

66 LatinFinance

March/April 2011

Latin Finance - March/April 2011

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