beyondbrics

February 6, 2012 – the day that Brazil turned its back on decades of state capitalism and privatised three of its biggest airports. Or did it?

Invepar, the Brazilian fund that will control 90 per cent of the 20-year concession for São Paulo’s Guarulhos international airport, is actually controlled by state-run pension funds (Petrobras and Banco do Brasil’s).

Even the whopping R$16.2bn it bid will partly be funded by BNDES, Brazil’s government-run development bank. In fact, all three winners said they would rely on cheap state loans.

But perhaps this should come as no surprise. Not only is a heavy state presence in the airports more palatable to president Dilma Rousseff’s Workers’ Party, but the thought of running Brazil’s airports is also pretty terrifying for the private sector.

Last year, a study by Brazil’s Institute for Applied Economic Research (Ipea), estimated that 10 of the 13 airport terminals being upgraded across the country would not be ready before Brazil hosts the World Cup in 2014. Even if they were ready, more than half of Brazil’s airports would already be operating over capacity by then, Ipea said.

The (un)lucky consortiums will also have to work with Infraero, the notoriously inefficient state-run airport operator, who will hang on to 49 per cent of each airport. Although Infraero promised on Monday to keep out of major decision-making, the new operators will still have to deal with the bureaucracy and workplace culture it has left behind.

Then there are also the more bizarre challenges of trying to operate an airport in Brazil. On New Year’s Day, for example, scores of passengers missed their flights at Guarulhos because the opening of an evangelic church turned a nearby motorway into a car park.

Even the baggage reclaim area can present unforeseen challenges. On Monday, just as the concessions were being auctioned off, four airline workers were arrested in São Paulo for regularly stealing passengers’ luggage.

No wonder then perhaps that the shares of unsuccessful bidders, such as Brazil’s Ecorodovias and CCR Rodovias, actually rose on Monday after the results of the auction were announced.

Related reading:
Consortiums win Brazil airport deals, FT
Who wants to run a Brazilian airport?, beyondbrics
Brazil airports operator to be readied for float, FT
Bad airports might ground Brazil’s World Cup dreams, beyondbrics
World Cup lands Brazil with airports crisis, FT