When it comes to privatisations, things don’t get much more complex than Bogotá–El Dorado International Airport, but with a new terminal being built and traffic on the rise, the business model appears to be working. The gateway’s 2006 privatisation was a little different to others because concessionaire winner Operadora Aeroportuaria Internacional (Opain) – a consortium made up of Colombian construction and engineering companies – is only responsible for the management and development of the passenger terminal and
The task of operating and maintaining El Dorado’s runways and taxiways is carried out by Codad, a subsidiary of Spanish transportation infrastructure giant Abertis.
While the Colombian government, through the state-owned Civil Aviation Authority, is responsible for air traffic control services, runway lighting and the installation of radar, instrument landing systems and all other navigational aids at El Dorado.
Under the terms of the concessions, Codad is entitled to all landing fees and Opain makes its money from activities such as aircraft parking, passenger taxes and the use of airbridges to office rental and shopping.
The terms of Opain’s 20-year concession also states that it must give 46.16% of its profits to the Colombian government.
And as if that wasn’t complicated enough Opain – which paid the Colombian government $650 million for the airport concession – has since signed a Technical Services Agreement (TSA) with the A-Port consortium to operate the airport on its behalf.
A-Port is a joint venture set up two years ago by Zurich Airport and South America’s Camargo Corrêa Group (Brazil) and Gestión e Ingeniería SA (Chile).
Confused yet? “It is a tough one to get your head around, but this is how it is and we just get on with it,” laughs Bogotá–El Dorado International Airport’s chief operating officer, Ralf Etzold.
Codad recently built a second runway and Opain is currently overseeing the construction of a new terminal, based on a master plan that was drawn up in the year 2000 – six years before it became the concessionaire.
Being constructed between the existing main passenger handling complex and Avianca’s domestic terminal about 1.6 kilometres away, the first phase of the new terminal is set to be completed in late 2011 ahead of a planned June 2012 opening.
It will initially serve as El Dorado’s new international terminal before the addition of two new concourses allows it to handle domestic traffic. Avianca’s existing domestic facility will then be closed and today’s main terminal bulldozed.
When the work is complete, El Dorado will be capable of accommodating 16mppa and Opain will have spent a cool $1.1 billion upgrading its passenger facilities. The piece tag doesn’t include the money it has invested on new cargo infrastructure.
“The new terminal will make a massive difference to passenger satisfaction levels, the quality of service we are able to provide and operational efficiency as the main facility we use today was built in 1951, and although there have been a lot of improvements since then, it has basically outlived its time,” admits Etzold.
“We’re trying very hard, but we really don’t have much today in terms of passenger facilities. The new terminal will change that. We will be able to develop a commercial strategy for the first time and plan not only the exact number of retail and F&B outlets we want but who operates them and the merchandise they sell. It will be good for passengers and our revenues. We shall begin the RFP process for the concessionaires later this year.”
Despite the improvements the fully completed terminal will bring, Etzold already knows that additional infrastructure is needed to ensure that Bogotá is capable of meeting rising demand.
As a result, Opain is currently in talks with the government over the need to work on a new long-term development strategy for El Dorado. The Colombian government contracted Aéroports de Paris subsidiary, ADPi, to draft the old master plan and Etzold feels that it is time for a new one. Zyscovich Architects were the Architect of Record on the project.
Opain also wants the Colombian government to introduce an IATA approved Level 2 airport slot management system at El Dorado that would allow the airport to ensure that they are used throughout the day and not only during busy peak periods.
Etzold reveals that many airlines want to launch flights to Bogotá today, but will not for now, because there are no available slots when they want them.
“If the existing system is changed, we could comfortably handle many more flights and enjoy 10% per annum traffic growth for the foreseeable future,” admits Etzold. “This is why the introduction of a slot system must be an absolute priority in our talks with the civil aviation authority. Next on the agenda is the need to look to the future. What development plans does the newly elected government have for the next 20 years?” Colombia officially has 36 domestic and 10 international airports, of which Bogotá–El Dorado is by far the biggest, accounting for around 48% of all passengers and 80% of the cargo traffic.
In terms of numbers, El Dorado handled a record 14.9 million passengers and a healthy 450,000 tonnes of cargo in 2009.
And with traffic showing no sign of slowing down in 2010, Etzold predicts that up to 17 million passengers and 480,000 tonnes of freight will pass through the gateway by year-end.
The figures make Bogotá the biggest cargo gateway in Latin America and the second busiest passenger airport after Mexico City–Benito Juarez International Airport.
Etzold’s happiness at Bogotá’s lofty cargo status is, however, softened by the fact that El Dorado accommodated a record 600,000 tonnes of cargo in 2008. He ruefully attributes last year’s decline to “the impact of the world economic crisis”.
“We were not alone in suffering a significant decline in cargo tonnage last year, but there is no point dwelling on it as it was caused by circumstances beyond our control,” points out Etzold. “Things began to get better toward the end of last year and cargo is on the rise again in 2010, although it maybe a few years before we get back to the 2008 levels.”
On the positive side, Etzold is delighted with the continued upturn in passenger throughput – traffic increased 10% in 2009 and has soared nearly 30% since 2006 – and attributes the rise down to the expansion plans of its airlines.
Colombian national flag carrier Avianca, on the verge of bankruptcy before being saved by Brazilian entrepreneur German Efromovich six years ago, is now regarded as one of the most successful airlines in Latin American with a fleet of over 50 aircraft.
A network of 35 destinations across Colombia, the Americas and Europe from Bogotá ensure that Avianca is currently responsible for 58% of all passengers handled at the gateway.
While a multi-million dollar order for 12 Boeing 787 Dreamliners, which it has already hinted that it might use to launch flights to Asia, provides some evidence of its new-found confidence and ambitions.
Efromovich also owns shares in AeroGal and Taca Airlines (merged with Avianca), both of which serve Bogotá and have helped El Dorado build up its transfer traffic, according to Etzold.
“His dream is to create a Latin America wide airline system and this ambition has proved instrumental in helping transform Bogotá into one of the region’s fastest growing hubs,” says Etzold.
Another big reason is the late 2008 decision by Aires to reinvent itself as low-cost carrier in the mould of an Air Berlin or easyJet in Europe or Southwest in North America.
The move proved a masterstroke as the airline now accounts for a significant share of the domestic traffic in Colombia and 15% of the total throughput at El Dorado.
“You have to remember that Colombia is very mountainous, with some peaks reaching almost 6,000 metres, so travelling by air is the quickest and best way to go if you can afford it,” comments Etzold, who points out that a 700 kilometre journey between Bogotá and Cartagena on the Caribbean Coast can take 90 minutes by aircraft as opposed to at least 12 hours by road. There is no train system.
“Its low fares have led to an explosion of traffic on certain domestic routes and within 18 months the airline’s fleet had grown from nothing to nine Boeing 737-700s,” he adds. “The international market has enjoyed stable growth for a number of years but Aires has totally reinvigorated the domestic market.”
In 2009, domestic traffic accounted for 10 million people or two-thirds of the 14.9 million passengers handled in Bogotá.
Avianca and Aero República currently provide Aires with its toughest competition domestically, but that will change from 2012 when new start-up AerOasis, with the support of LAN Chile, is set to enter the market with up to 15 A320s.
Etzold says that the fleet size theoretically means that the new carrier could handle 5.2 million passengers per annum on its own, a total that would put severe pressure on El Dorado’s facilities.
It will be joined by new low-cost carrier, FAST, which has announced its intention to enter the domestic market in 2011 using a fleet of B737 or A320 aircraft.
The most popular international destinations outside of Latin America currently served non-stop from Bogotá are Madrid, Barcelona and Miami.
Colombia’s status as the world’s leading exporter of cut flowers and a major producer of agricultural produce, should ensure that cargo continues to be of great importance to the South American gateway.
Opain has contracted US-based global air cargo and transportation infrastructure development company, Lynxs Group, to operate El Dorado’s newly opened cargo terminal.
Bizarrely, German-born Etzold ended up on secondment in Colombia because he didn’t want to leave Switzerland.
He explains: “Although I am German, I lived and worked in Switzerland for 34 years, am now a Swiss citizen and call it my home. I actually liked Switzerland so much that when Lufthansa wanted to post me elsewhere, I joined Zurich Airport so that I could stay! However, that was a few years ago now, and I felt that I couldn’t turn down the chance to go to Bogotá once I realised that Colombia was a very different country today than it was a few years ago.”
Colombia is one of those countries that conjure up many different images in people’s minds, and Etzold is among the first to admit that for those who haven’t been there recently, not all of them are good.
For this reason he is keen to point out that safety and security have improved dramatically over the past few years. Indeed, the much-publicised violence associated with armed struggles and drug trafficking have all but gone away now and rarely making the headlines these days. In fact, the Colombian Tourist Office recently launched an advertising campaign that declares that “the only risk, is that you will want to stay.”
Did you know, for example, that Colombia has one of the most stable political systems in South America and boasts the region’s fourth largest economy?
With over 45 million people, it is also the second largest country in South America after Brazil in terms of population and a major trading point for goods travelling between North, South and Central America.
“The government has done an excellent job and Colombia is a different country these days,” enthuses Etzold. “I would compare living in Bogotá to somewhere like Barcelona. It is safe and exciting in Bogotá as long as you are careful.”
It certainly appears as if things have changed and are continuing to change for the better in Colombia. However, one thing that won’t be altering – for now anyway – is the name of the airport, which was going to be changed to that of a former politician before the country’s President ruled otherwise.
“I personally think he made the right decision,” says Etzold. “Everybody knows and likes El Dorado and I believe we should to stick with it.” That will sound like music to the ears of the Colombian government.
Airport World 2010 - Issue 4