8/9/2019 Infrastructure Intelligence Series: "Mexicos Airline Industry, flying toward expansion"

1/2

Many specialists estimate that the number

o domestic airline passengers in Mexico

will rise by 5-7% this year ater the heavy

blow sustained during last years global

recession. In the midterm, they orecast

that the growth rate will s tabilize at around

5.5% per year. The rebound in demand also

improves the sectors outlook in light o the

major hit it took in recent years because o

high uel costs, not to mention the human

inuenza outbreak and the worldwide

economic recession.

As airline trafc recovers, it will also be

necessary to expand airport inrastructure

in the country. Some projects are already

underway while others are tied into various

government plans. In addition, some

regulations in the country have begun to see

change, prompted by the launch o a bidding

process or the Riviera Maya airport on May

11 that will encourage private participation.

Some 34 airport projects are included in

the 2007-2012 National Inrastructure

Program (PNI) including 13 or expansion,

18 complementary works and 3 new

airports: Mar de Corts, Ensenada and

Riviera Maya.

The PNI also looks at developing regional

airports to improve connections. Airport

concession holder ASA says the country

has the necessary inrastructure to meet

demand or the next ten years; however, as

part o sector policy, some inrastructure

projects are being considered with a view

to reinorcing existing acilities based on

growth plans at each airport.

In this report, we will evaluate the

outlook or Mexicos airline industry

and the inrastructur e needs that have

been identiied or accommodating

expected growth.

May 2010

EXECUTIVE SUMMARY

Mexicos Airline Industry,ying toward expansion

For sponsorship opportunities, please contact:Dora Mancera at dmancera@bnamericas.com or call +56 (2) 941 -0420

For sponsorship opportunities, please contact the Sales Advertising Manager, Ana Surez, at asuarez@BNamericas.com

or +56-2 941 0404.

thismonthsseries:

Getting back on its feetAccording to global aviation industry consultancy OAGAviation, to the month of May this year passengerairline operations for domestic travel in Mexico havegrown 2.9% year on year, with an outstanding 12.7%rebound for operations at low cost carriers.

ConsolidationIndustry specialists said that the national airlineindustry is undergoing a process of supplyconsolidation which will not take place withoutmergers between airlines or a thinning of the pack.

Higher demandEstimates from Aeropuertos y Servicios Auxiliares(ASA), a decentralized agency that operates24 airports throughout the country, indicate thatpassenger air travel this year within the ASA gridwill reach yearly growth of between 5% and6%, similar to growth on a national level.

The costs in MexicoMexico ranked 51st out of 133 countries evaluatedin the Tourism and Transport Competitiveness Index(ICTT) compiled by the World Economic Forum(WEF) in 2009. As regarding infrastructure for airtransport the country ranked 40th overall, althoughin the sub-category of air transport infrastructurequality it took 56th place and in terms of airportfees it ranked 126th.

PNI ProgressSome 34 airport projects are included in the2007-2012 National Infrastructure Programincluding 13 for expansion, 18 complementaryworks and 3 new airports: Mar de Corts,Ensenada and Riviera Maya.

Other needsThe PNI also looks at developing regional airportsto improve connections. The country seems tohave the necessary infrastructure to meet demandfor the next ten years; however, as part of sectorpolicy, some infrastructure projects are beingconsidered with a view to reinforcing existingfacilities based on growth plans at each airport.

ConclusionThe role of the private sector in the airport sectoris increasingly urgent. Although the lack of clarityand information on government projects arefrequent complaints from the various economicagencies or research and analysis groups, several

adjustments have appeared in recent years thatare slowly phasing out roadblocks to investment.

Boxes- The three airport operators and investorpreference- The series of problems at AICM

60,000

50,000

40,000

30,000

20,000

10,000

1989199019911992199319

941995

1996199719

981999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Mexican passenger trafc over last 20 years

Source: SCT

18,543

29,131

30,922 35,287

42,176

45,406

53,300

46,971

(1000s)

8/9/2019 Infrastructure Intelligence Series: "Mexicos Airline Industry, flying toward expansion"

2/2

Infrastructure Daily

At the beginning of 2008, Mexicos government created a

US$3.9 billion National Infrastructure Fund to nance projects

worth a total of US$25 billion in this sector over the next 5

years. In Brazil, a federal plan to accelerate economic growth

includes investments in the order of US$30 billion in roads

and highways between 2007 and 2010, and in Peru, the road

infrastructure decit is some US$7 billion.

From whichever angle, infrastructure investment requirements

(and plans) come to billions of dollars. While this is nothing

new, this time round the possibilities of these investments

being made are higher than theyve ever been before.

This means that in the next fewyears, business opportunitiesare as numerous as they are

lucrative.

This is the context in whichBNamericas is launching a new

product, the Infrastructure

Intelligence Series, which every

month will focus on the biggest

trends and topics within the region

in order for you and your company

to have all the information and

analysis necessary to fnd your way

among the projects and regulations

upon which this growing and

attractive sector of Latin American

business is based.

The Infrastructure IntelligenceSeries will focus on topics such as:

Concessions Privatizations Port development Logistical integration projects Airports Railways Urban transport Water and waste treatment

CONTACT US

Contact us today to receive afree 2-week trial subscription:

+56 (2) 941-0300

info@BNamericas.com

www.BNamericas.com

Copyright NoticeAll rights reserved. No part of this publicationmay be reproduced or transmitted in any form or by any means,electronic or mechanical unless as used in the paragraph below.Any unauthorized use, sharing, reproduction, or distribution isstrictly prohibited. This report does not come with ANY resale rights.Legal Notice While attempts have been made to verify informa-tion provided in this publication, neither the author nor the publisherassumes any responsibilities for errors, omissions, or contradictoryinformation contained in this document. This document is notintended as legal, investment, or accounting advice. The purchaseror reader of this document assumes all responsibility for the useof these materials and information. Business News Americasassumes no responsibility or liability whatsoever on behalf of anypurchaser or reader of these materials. 2010 Business News Americas.BNamericas is a bilingual news and intelligence service that coversthe most important stories in 12 different business sector throug-hout Latin America and the Caribbean. Business News Americasmain ofce is located in Santiago, Chile, with full regional presence

in Sao Paulo, Buenos Aires, Caracas and Mexico City.

Santiago Headquarters:

San Patricio #2944, Las Condes, Santiago, Chile

Tel: +56 (2) 941-0300

Fax: +56 (2) 232-9376

US Voice/Fax: +(800) 535-2137 USA

Written and researched by

Ixel Yutzil Gonzlez

Content Development & Analysis

EditorRal Ferro

Executive editorHenriette Iraabal

Financial services analystMara Alejandra Moreno

Mining analystLaura Superneau

Telecom analystPhil Anderson

Energy analystMichael LaGiglia

Financial data analystMara Jos Arredondo

ResearchersGonzalo Vergara

Carlos Montoya

BNamericas Infrastructure Group

Editor

Catherine Setterfeld

Santiago, Chile

Eva Medalla

Indiana Corrales

Sao Paulo, BrasilDaniel Bland

Account Manager ResourcesDora Mancera

Designed byTamara Lorca