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 cargo facilities.
Operation and maintenance of El Dorado’s runways and taxiways is carried out by Codad, a subsidiary of Spanish transportation infrastructure giant Abertis.
The Colombian government, through the 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.
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.
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.
New terminal construction
Codad recently built a second runway and Opain is currently overseeing construction of a new terminal, based on a master plan drawn up in the year 2000 – six years before it became the concessionaire.
Situated 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 due 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 nearly $1.1 billion upgrading its passenger facilities.
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 consulting with the government over the need to work on a new long-term development strategy for El Dorado.
Improved slot management
Opain also wants the Colombian government to introduce an IATA-approved Level 2 airport slot management system at El Dorado to ensure the airport is used throughout the day and not only during busy peak periods.
“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.
With traffic showing no sign of slowing down in 2010, speaking at the end of the year, Etzold forecast that up to 17 million passengers and 480,000 tonnes of freight will pass through the gateway by year-end.
This makes Bogotá the largest cargo gateway in Latin America and the second busiest passenger airport after Mexico City–Benito Juarez International Airport.
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 to the expansion plans of its airlines.
Avianca
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 America with a fleet of over 50 aircraft.
A network of 35 destinations across Colombia, the Americas and Europe from Bogotá ensures that Avianca currently handles 58% of all the gateway’s passengers.
Impending Star Alliance membership and 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 evidence of its ambitions.
Efromovich also owns shares in AeroGal and TACA Airlines (merged with Avianca), both of which serve Bogotá and have helped El Dorado develop 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.
LAN’s acquisition of Aires
Another big reason is the late 2008 decision by Aires, which was acquired by oneworld carrier LAN in October 2010, to reinvent itself as low-cost carrier in the mould of an Air Berlin or easyJet in Europe or Southwest in North America.
Aires is the second largest operator in Colombia, operating a fleet of nine B737-700s, 11 Q200s and four Q400s and accounts for 15% of the total traffic 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. He 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.
“Aires low fares have led to an explosion of traffic on certain domestic routes and within 18 months the airline’s fleet grew 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.
New airline entrants
Avianca and Copa Airlines Colombia (previously Aero República) 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.
It will be joined by new low-cost carrier, FAST. This carrier has announced its intention to enter the domestic market in 2011 using a fleet of B737 or A320 aircraft.
Perception problems
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 those images are positive.
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 make the headlines these days.
The Colombian Tourist Office recently launched an advertising campaign declaring 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.
