A Mexican company will take over operations of Puerto Rico's main international airport as part of a $2.6 billion deal that the U.S. territory's government said Thursday will improve service and increase the number of flights and destinations.
Aerostar Airport Holdings said it plans to invest more than $1.4 billion at the Luis Munoz Marin airport in San Juan and make an upfront payment of $615 million to the island's Port Authority as part of the 40-year agreement. Its statement and the government didn't provide a full breakdown of the $2.6 billion figure.
The company is a joint venture of Highstar Capital and Grupo Aeroportuario del Sureste, which operates the Cancun airport and eight other airports in southeastern Mexico. It won the concession over Spain's Grupo Aeropuertos Avance, which is made up of Ferrovial Aeropuertos and Macquarie Infrastructure and Real Assets.
San Juan's airport was long the hub for commercial air traffic in the Caribbean, but many flights have moved to Miami International Airport. The Puerto Rico airport gets about 8.5 million passengers a year and is served by 18 airlines that make more than 100 flights daily. The government has struggled to increase passenger traffic, expand and modernize the airport and make improvements to terminals and taxi ways and runways.
"This will give us a world-class airport that we currently don't have," Economic Development Secretary Jose Perez-Riera said. "It will have a huge, huge impact on tourism in Puerto Rico."
The deal comes more than two years after Puerto Rico first proposed to privatize the airport's management to ease the Port Authority's crippling debt of $1.1 billion, which stands to be cut in half, authority director Bernardo Vazquez said.
The first improvements will target public bathrooms, lighting, stairs, air conditioning, Wi-Fi and the parking lot's security system, Gov. Luis Fortuno said. An additional 35,000 square feet (3,250 square meters) of retail area also will be built, he said.
The contract spells out very detailed goals, including that travelers wait no more than 12 minutes for their luggage after a flight and five minutes for a taxicab and that public bathrooms be cleaned 16 times a day.
Those are changes the Port Authority could never afford on its own, Vazquez said. "We don't have the money or the personnel to run the airport properly," he said.
Vazquez said the deal also will give the authority the means to improve the island's regional airports as well as its cruise ship piers, which were built nearly 60 years ago.
The contract says Aerostar will pay the Port Authority $2.5 million a year for the first five years. It is then expected to pay 5 percent of the airport's revenues in each of the next 25 years. During the final 10 years, the company is expected to pay 10 percent of revenues.
Fortuno said the deal will bring 3,500 new jobs in the next three years and 13,000 more jobs within a decade. The airport currently generates more than 8,000 direct and indirect jobs.
Vazquez said he expects the U.S. Federal Aviation Administration to approve the deal by late September.
The deal is a result of a public-private partnership program that Fortuno created in June 2009 to help finance projects that the government could otherwise not afford. The program so far has pushed the renovations of 10 schools and the construction of two toll roads, director David Alvarez said.