Airports Privatization in Brazil Can Adopt "Steak with Bone" Model

07/27/2016 - 11h15

The privatization of airports can be made in the "steak with bone" model, in which profitable units such as Congonhas (SP) and Santos Dumont (RJ) will be conceded to the private sector in a package including loss-making airports.

The government analyzes whether this formula would be more advantageous than the one planned since 2015 to restructure Infraero, the state-run airport management company - to privatize profitable units, maintaining the income from the concessions with the federal company to manage the loss-making airports.

In an interview with Folha earlier this month, the interim President, Michel Temer, said the government plans to privatize Congonhas and Santos Dumont (which have the busiest route in the country, Rio-São Paulo) to reduce the shortfall in the public accounts, which should reach R$ 170.5 billion (US$ 52 billion) this year.

The plan to save Infraero was prepared after the company lost five of its most profitable airports in the 2012 and 2013 concessions: Guarulhos, Campinas, Brasília, Confins (MG) and Galeão (RJ). The company kept 60 units, of which only ten are profitable.

Worse, it took over 80% of employees of the privatized airports, getting even more bloated. The result: loss of R$ 3 billion (US$ 917 million).

Airports in inner cities or capitals with little movement lose money because the revenue in this sector depends on stores' trade. In these units, the movement and business revenues do not support the high costs of receiving aircrafts.

The "steak with bone" model was used by the government of ex president Fernando Henrique Cardoso in the privatization of the Brazilian telephony system in the 1990s. The country was divided into lots with more and less profitable areas.

Translated by MARINA DELLA VALLE

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