Block tender for Santos Dumont and Galeão in 2023 is feasible and may strengthen the State as a national hub

A joint tender for Santos Dumont and Galeão airports in the second half of next year is positive not only for Rio de Janeiro, but for the country’s civil aviation system. And there is enough time to design a model that allows the two assets to be tendered in 2023.

This is the view of experts consulted by Valor, according to whom the auction is possible next year even with a possible change of government. According to them, bringing the two airports together in a single block will create a system capable of strengthening the city as a domestic distribution hub, without running the risk of tariff increases.

The decision to tender the two airports in a single block in 2023 was announced by Minister Tarcísio Freitas after concessionaire RioGaleão, controlled by Singapore’s Changi, confirmed its request for re-tendering.

For Delmo Pinho, former Rio Transportation Secretary and Fecomércio-RJ representative in the working group discussing the Santos Dumont tender model with the federal government, “it is very bad for the country when a major international operator leaves” a concession.

But Pinho argues that Changi’s exit has created a more favorable scenario for Rio to once again become a relevant hub in national aviation. “The new concession holder will not shoot itself in the foot, and the result could be excellent for Rio and Brazil. We will have a heavyweight competitor in a very important market, working cooperatively”.

In his view, it is possible to tender the two airports jointly in the second half of 2023, even considering a possible change of government after the elections. “A well-designed, consensus-based model does not change. We have this year to reach a consensus”, he stresses, noting that a barrier clause is needed to prevent concessionaires of  assets such as Guarulhos, Viracopos and Brasília from participating in the auction. “We must impose barrier clauses to prevent a private monopoly.”

Eduardo Rebuzzi, representative of the Rio Commercial Association in the Santos Dumont working group, denies that two airports managed by the same concessionaire would create a risk of monopoly. “Once acquired by the same company, it is obvious that [concessionaires] will seek to create a balance between the two airports”, he says.

For attorney Luiz Felipe Graziano, partner at Giamundo Neto Advogados, a tender in 2023 is “entirely feasible”, even though it depends on new stages, such as public hearings and review by the Federal Court of Accounts (TCU). “The fuel to make the tender viable is the convergence of interests”.

Graziano also notes that the airport asset concession initiative began to be structured and carried out under former President Dilma Rousseff, continued under Michel Temer and carried on under Jair Bolsonaro. “Since it has spanned three governments with very different profiles, it may well survive a change of power.”

Maurício Menezes, partner at Moreira Menezes Martins, says joining the airports “ends up being a solution”, but argues that “extremely broad” dialogue with the private sector is needed. “It is an opportunity to reflect on the best way [to structure it] not only from the public sector’s perspective, but mainly from the private sector’s.

He stresses that there will be no “harmful” competition between the airports, and adds that there is the advantage of spreading risks, with two large assets in the same block. Menezes plays down fears of higher tariffs because, he says, the National Civil Aviation Agency (Anac) has the power to prevent tariff escalation.

In an interview with “Veja” over the weekend, the minister said it is not Santos Dumont that steals passengers from Galeão, but Rio that is losing visitors. The statement was rebutted on Twitter by Rio’s mayor, Eduardo Paes, for whom the minister’s statements about Galeão “are always mistaken, inconsistent with the truth and not very gracious to Rio”. He asked him to “stop the idle talk with Rio”.

Story originally published on 02.13.2022, by Rafael Rosas, in Valor Econômico (in Portuguese).