Chile has suffered more than its fair share of traumas over the years – both natural and man-made – but today, the future is looking increasingly bright for this rugged coastal country.
After a decade of military rule, Chile has emerged as one of the most prosperous states in South America, with a thriving economy based on copper exports and international trade.
Stable, and with solid growth, the country is appealing to investors worldwide. It welcomed a record-breaking three million visitors in 2011 and is firmly on the tourist map, with the New York Times listing Chile in its top 10 must-see countries for 2012.
And all this has helped to drive passenger growth to its main gateway – Santiago’s Comodoro Arturo Merino Benítez International Airport (SCL).
The airport handled 12.1 million passengers last year – a healthy 17.4% increase on 2010, which was itself a record year – making it South America’s sixth busiest gateway, and traffic is expected to exceed 30 million passengers by 2030.
The recent annual double-digit increases in passenger numbers means that traffic throughput at the gateway has grown by an average of 6% per annum since 2004.
Without doubt, the upturn has been helped by Chilean national airline, LAN, outperforming many of its regional competitors.
Against this backdrop, SCL, which has been run by an international consortium since 1999, has been steadily improving its facilities.
Indeed, privatisation has been a key component of the Chilean economy in the last decade, with the government aiming to get the country lean, mean and punching above its weight in the globalised economy.
Awarded the 15-year airport concession in 1998, Santigo–Merino Benítez’s operator, Terminal Aereo Santiago SA, is an international consortium comprising Chilean, Spanish and
Key players in the consortium tasked with operating and developing the airport’s main passenger terminal are Agunsa (47%), Abertis (15%), Global Via (15%), Inmobiliaria Parque Tres SA (13%) and the Vantage Airport Group – formerly YVR Airport Services – (10%).
Investment in infrastructure
“Thanks to a public-private partnership (PPP), the privatisation of the airport in 1999 allowed the terminal to finally offer first-class infrastructure and a high quality of standard for passengers,”
says airport CEO Alfonso Lacámara. “Since then, we have invested over $300 million to successfully anticipate the demands of the aviation industry.”
The upgrades have included the 2001 opening of a newly integrated terminal for both domestic and international passengers, although with a design capacity of around 9.5 million passengers a year, Lacámara readily accepts that further expansion is necessary.
In addition to the terminal, over the last 14 years the consortium has opened a second 3,800m runway, a new control tower, a water treatment plant and a host of cargo facilities that include new terminals and specialised facilities for handling agriculture products and livestock.
The new freight facilities are designed to ensure that Santiago–Merino Benítez remains the biggest cargo gateway in Chile, handling 90% of all shipments handled nationwide each year.
And Lacámara, who left the Sabco investment group to become airport CEO in 2007, is more than aware that more needs to be done to allow the airport to keep up with demand.
Indeed, the airport recently reached an agreement with the Ministry of Public Works of Chile to expand various areas of the new terminal, which at the moment, suffer from peak time congestion.
The projects will involve an investment of approximately $65 million and, in order to allow operator SCL Terminal Aéreo Santiago SA Sociedad Concesionaria time to complete the work, the government has agreed to extend its concession until 2015.
“We have begun the process of engineering studies, which means that some construction work will begin in August this year, and will be completed in stages,” says Lacámara.
“If all goes to plan, the first phase will be completed in 2013, and I think passengers will notice a big difference in terms of space and comfort levels.”
Meanwhile, Canadian design consultants Aviotec Group have been awarded a contract to act as a technical consultant to LAN, a key airline at the airport, which is investing $500 million in facilities over the coming years.
And the Chiliean government has hired Aéroports de Paris Ingeniérie (ADPi) – the architecture, engineering and technical subsidiary of French airport operator ADP – to come up with a new long-term master plan for the airport.
The expansion will take into account a capacity growth to 14 million annual passengers by 2014, 34mppa by year 2034 and up to 50mppa by 2045.
This plan is expected to consider proposals for new a domestic terminal, additional commercial areas within the existing passenger terminal and the construction of a light railway connecting the airport to Santiago’s metro system.
Luckily, the devastating Chilean earthquake of two years ago didn’t impact too severely on the airport’s existing infrastructure.
“Although the earthquake caused problems to some major infrastructure in Chile, the airport escaped the worst of it, although that’s not to say we were completely unscathed,” says Lacámara.
“However, thanks to the combined and co-ordinated efforts of all the different airport stakeholders, including the airlines, we were able to reopen the airport within a few hours of the earthquake, and within a month, the terminal was receiving passengers again.”
Indeed, IATA recognised the airport’s stunning bounce back to full operations with an award at its annual summit in Singapore last year, which Lacámara proudly points out as being a highlight of his tenure.
But that wasn’t the last challenge that Mother Nature had for the airport, for 2011 saw the Puyehue-Cordón Caulle eruption – Chile’s equivalent of the Icelandic ash cloud – which caused flight disruption in countries as far away as Australia.
Once again, however, it would seem that the impact on Comodoro Arturo Merino Benítez International Airport was relatively minor.
“In relation to the ash cloud, although it caused the rescheduling of several flights, our ability to co-ordinate a fast and efficient response with the airlines meant that the incident actually had quite a low impact on our passengers,” he muses.
In terms of route development, Lacámara admits that having Chilean group, Agunsa, as the major shareholder has had unexpected benefits.
“As well as being our main shareholder, Agunsa also represents Emirates and Air Canada in Chile,” he explains.
Buenos Aires and São Paulo, respectively, are the two busiest international routes from Santiago today, underscoring the important trading relationship Chile enjoys with its neighbours – Argentina and Brazil.
However, in December 2011, Argentinean authorities spectacularly revoked the licence allowing LAN’s Argentinean subsidiary to operate flights from Buenos Aires’s downtown domestic Aeroparque Jorge Newbery Airport to Santiago.
The move, which forced LAN to shift its Santiago flights to the less convenient Ezeiza International Airport outside the city limits, was effectively a protectionist move intended to boost Aerolineas Argentinas’ services from Aeroparque to Santiago.
In other route development news, Qantas gave SCL a big present with the launching of a new Sydney route on March 26.
Santiago’s geographic position gives it the edge in flights to Australasia, and Qantas clearly believes that it can make the route work following the launch of three-weekly B747 departures to Sydney. LAN currently flies to Sydney and Auckland from Santiago.
Hub carrier LAN’s development plans calls for the launch of flights to London, Rome and other European cities from Santiago, and its ambitions to expand its route network has led it to place an order for 32 B787s with delivery dates between this autumn and 2014.
LAN’s planned merger with Brazilian rival TAM will also create the biggest airline in South America, with its base in Santiago.
Good news for SCL, surely?
“Mergers invariably impact on airport revenues because the parties involved seek to optimise airline efficiency by reducing their costs,” says Lacámara, somewhat philosophically.
“Having said that, we hope and expect to see an important increase in passenger traffic.”
Chile’s odd shape and vast size means a big market for domestic flying too, with Santiago also acting as a hub for Sky Airline and PAL Airlines – two domestic carriers which offer extensive services to cities across the country.
Indeed, domestic passenger numbers soared by 17.6% to 6.2 million passengers in 2011, and shows every sign of growing again this year.
Lacámara describes the position of CEO of Santiago–Merino Benítez as a “great challenge”, due to the airport’s importance to Chile and the nation’s economy.
“The aim is simply to provide quality services to both passengers and the airlines. As such, my aim is to continue to work for greater efficiency, focus on the expansion of the existing terminal and strive daily to raise service standards.”