Master Plan Confins

37.
0 mppa TANCREDO NEVE S INTERNATIONAL AIRPORT
Capacity of T1 + T2 + Fully Completed Terminal 3 at
BELO HORIZONTE, BRAZIL
AIRPORT STRATEGY REPORT

AUGUST 2009
Sub-Consultancy Agreement for Strategic Analysis, Master Plan, Operations and Commercial Strategy for the Development of Tancredo Neves International Airport (AITN) in Belo Horizonte Metropolitan Region, Minas Gerais, Brazil
VOLUME I
Airport Consultancy Report for Tancredo Neves International Airport (AITN)
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Table of Contents
1. INTRODUCTION ..................................................................................................1 1.1. VISION OF BHMR MULTIMODAL CORRIDOR HUB ............................................1 1.2. ROLES AND GOAL OF TANCREDO NEVES INTERNATIONAL AIRPORT ................1 2. OPERATING ENVIRONMENT ASSESSMENT ...................................................5 2.1. ANALYSIS FRAMEWORK ................................................................................5 2.1.1. Global Aviation Outlook ................................................................6 2.1.2. Historical Performance of AITN....................................................7 2.2 COUNTRY .....................................................................................................7 2.2.1. Socio-Economic Prospects of Brazil and Minas Gerais ............8 2.2.2. Tourism Potential.........................................................................10 2.2.3. International Trade.......................................................................13 2.3. COMPETITION .............................................................................................15 2.3.1. Country-level Competition ..........................................................15 2.3.2. State-level Competition ...............................................................18 2.3.3. Airport-level Competition ............................................................20 2.4. AIRLINES ....................................................................................................25 2.5. REGULATORY ENVIRONMENT.......................................................................28 2.6. CAPACITY...................................................................................................29 2.7. SWOT ANALYSIS .......................................................................................30 2.7.1. Strengths.......................................................................................30 2.7.2. Weaknesses..................................................................................31 2.7.3. Opportunities................................................................................31 2.7.4. Threats ..........................................................................................32 3. AIRPORT POSITIONING ...................................................................................32 3.1. FRAMEWORK ..............................................................................................32 3.2. POSITIONING OF AITN ................................................................................34 3.3. KEY STRATEGIC INITIATIVES FOR AITN........................................................36 4. 5. RECOMMENDATIONS FOR PAMPULHA AIRPORT .......................................36 RECOMMENDATIONS FOR CARLOS PRATES AIRPORT.............................38
6.
TRAFFIC FORECAST........................................................................................40 6.1. PASSENGER TRAFFIC FORECASTS ...............................................................40 6.1.1 Domestic Passenger Traffic Forecasts .....................................40 6.1.2. International Passenger Traffic Forecasts ................................41 6.1.3. Total Passenger Traffic Forecasts .............................................42 6.2. CARGO VOLUME FORECASTS ......................................................................43 6.2.1. Domestic Cargo Volume Forecasts ...........................................43 6.2.2. International Cargo Volume Forecasts......................................44 6.2.3. Total Cargo Volume Forecasts ...................................................45
7.
MASTER PLAN ..................................................................................................46
LIST OF TABLES Table 1: Ten Largest Brazilian States...........................................................................4 Table 2: Short-Term Air Traffic Projections...................................................................6 Table 3: Long-Term Air Traffic Projections ...................................................................7 Table 4: International Tourist Arrivals by Region........................................................11 Table 5: UNESCO World Heritage sites .....................................................................11 Table 6: Exchange Rates Changes of Major Currencies, 2009 - 15 ..........................13 Table 7: Share of International Passengers at Selected Brazilian Airports, 2008......23 Table 8: Share of International Cargo at Selected Brazilian Airports, 2008 ...............23 Table 9: Comparison of Brazilian Carriers with Major Foreign Carriers .....................27 Table 10: Passenger Airport Tax Rates (per Passenger)...........................................28 Table 11: Landing and Parking Charges ....................................................................29 Table 12: Radio and Visual Aid-in Charges ................................................................29 Table 13: Projected CAGR of Domestic Passenger Traffic at AITN...........................41 Table 14: Projected CAGR for International Passenger Traffic at AITN.....................42 Table 15: Projected CAGR for Total Passenger Traffic at AITN ................................43 Table 16: Projected CAGR for Domestic Cargo and Mail Volume at AITN ................44 Table 17: Projected CAGR for International Cargo Volume at AITN..........................45 Table 18: Projected CAGR for Total Cargo Volume at AITN......................................46
LIST OF FIGURES Figure 1: Top 10 Brazilian Airports (by Passenger Traffic), 2008.................................2 Figure 2: Top 10 Brazilian Airports (by Cargo Volume), 2008......................................3 Figure 3: Main Exporting States in Brazil......................................................................4 Figure 4: Operating Environment Assessment Framework ..........................................6 Figure 5: Brazils Real per capita GDP (US$ PPP), 1991 - 2030 .................................9 Figure 6: Comparison of Real per capita GDP Growth, 2009 - 15 .............................10 Figure 7: Minas Gerais Total Trade (bil USD), 1991 - 2008 ......................................14 Figure 8: Ranking by Cond Nast Magazine ..............................................................16 Figure 9: Travel and Tourism Competitiveness Index, 2009 ......................................17 Figure 10: Global Competitiveness Index, 2009 .........................................................18 Figure 11: Top 10 Leisure Destinations in Brazil ........................................................19 Figure 12: Top 10 Business Destinations in Brazil .....................................................20 Figure 13: Catchment Areas of GRU, GIG and AITN .................................................21 Figure 14: IATA Connectivity Index of Main Brazilian Airports ...................................22 Figure 15: Leakages of Traffic to GRU and GIG from AITN, 2008.............................24 Figure 16: Leakages of Cargo from AITN, 2008 .........................................................25 Figure 17: Share of Passenger Traffic by Airlines, 2008 ............................................26 Figure 18: Airport Positioning Framework...................................................................33 Figure 19: Current and Proposed Positioning of AITN ...............................................35 Figure 20: Passenger Traffic at PLU (MPPA), 2003 - 2008........................................37 Figure 21: ATM at PLU, 2003 - 2008 ..........................................................................38 Figure 22: Passenger Traffic at Carlos Prates Airport, 2003 - 2008...........................39 Figure 23: ATM at Carlos Prates Airport, 2003 - 2008 ...............................................39 Figure 24: Domestic Passenger Traffic Forecasts, 2009 2039 ...............................40 Figure 25: International Passenger Traffic Forecasts, 2009 2039...........................41 Figure 26: Total Passenger Traffic Forecasts, 2009 2039 ......................................42 Figure 27: Domestic Cargo Volume Forecasts, 2009 2039.....................................43 Figure 28: International Cargo Volume Forecasts, 2009 2039................................44 Figure 29: Total Cargo Volume Forecasts, 2009 2039............................................45 Figure 30: Phase 4 Development Plan for AITN.........................................................47
1.
1.1.
INTRODUCTION
Vision of BHMR Multimodal Corridor Hub
The Minas Gerais State Government is developing a 670 km2 site linking Belo Horizonte Airport City and Granbel FTZ/Inland Port into a dynamic multimodal corridor hub. There are five strategic objectives that the Belo Horizonte Metropolitan Region (BHMR) Multimodal Corridor Hub aimed to achieve and they are listed below. 1. 2. 3. 4. 5. To reduce the dependence of the economy on traditional industries To foster the States research and development (R&D) capability To enhance the productivity of the industries To leverage airport as a driver for growth To connect production centers with demand centers
To achieve these five objectives, the State Secretariat for Economic Development (SEDE) of the Minas Gerais State Government has engaged Jurong Consultant to develop the Master Plan for the BHMR Multimodal Corridor Hub. Frost and Sullivan, as part of the consortium, has identified seven industrial clusters for the BHMR Multimodal Corridor Hub. They are: 1. 2. 3. 4. 5. 6. 7. Aerospace and Defense Distribution Logistics & Wholesale Trading Education Electronic Components Info-Tech Life Sciences Tourism
As a result of the development, the population of the BHMR is expected to increase from the current 5.1 million to 6.7 million in 2030. If achieved, the seven sectors are also expected to generate more than 117,000 jobs in 2020 and 423,000 jobs in 2030 respectively. The contribution of these industries to the Minas Gerais economy will amount to more than US$25.7 billion in 2020 and to more than US$134.7 billion in 2030. 1.2. Roles and Goal of Tancredo Neves International Airport
The airport plays an integral role in achieving the objectives and vision of the BHMR multimodal Corridor Hub. The relationship between an airport and the economy of a country is symbiotic. On the one hand, the growth of the countrys economy will lead to a greater demand for air services, both passenger and cargo. This will translate into the growth of the airport in terms of its throughputs. On the other hand, an airport acts as a catalyst for the countrys economic growth by facilitating the growth of trade, tourism and international investment. An airport is also itself a generator of employment. In addition, airport through its role as a facilitator of economic growth also create jobs in other industries. Therefore, it is important to correctly position an airport so as to maximise the growth potential of the economy of the region surrounding the airport.
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Like any basic physical infrastructure, airports are regarded as a type of complementary capital. They require the existence of productive capital, either in the form of human or physical capital, in order to realise the countries economic growth potential. Thus, it should be borne in mind that infrastructure investment on its own could not create economic potential, only develop it where appropriate conditions exist. However, inadequate supply of infrastructure or unreliability in services may inhibit the investment of productive capital leading to a restriction or reduction in output. Since Tancredo Neves International Airport (AITN) is the only international airport in Minas Gerais and that there is no plan in the foreseeable future to commission another airport in Minas Gerais to become an international airport, the role and responsibilities of AITN are enormous. With passenger traffic of 5.2 million in 2008, AITN is ranked sixth among the airports managed by Infraero. Figure 1 shows the ranking of the top 10 Brazilian airports in terms of total passenger throughput. The largest airport is Guarulhos International Airport (GRU) in Sao Paulo. In 2008, a total of 20.4 million passengers passed through the airport. The second busiest airport is Congonhas Airport (CGH), which is a purely domestic airport. It has a passenger throughput of 13.7 million in 2008. The third largest airport is Galeo International Airport (GIG) in Rio de Janeiro. The airport handled a total of 10.8 million passengers in 2008. Compared to the top three airports, passenger traffic at AITN is only 25%, 38% and 48% of those in GRU, CGH and GIG respectively. Figure 1: Top 10 Brazilian Airports (by Passenger Traffic), 2008
GRU Guarulhos CGH Congonhas GIG Galeao BSB - Brasilia SSA -Salvador
CNF AITN POA Porto Alegre REC Recife CWB Afonso Pena SDU Santos Dumont
GRU
CGH
GIG
Source: Infraero
CWB
CNF
SDU
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POA
BSB
SSA
REC
In terms of cargo volume, AITN is ranked eighth among the airports managed by Infraero. In 2008, a total of 42 thousand metric tons of mail and cargo was handled by AITN. Figure 2 shows the ranking of the top 10 Brazilian airports in terms of total cargo volume. As in the case of passenger traffic, the largest airport in Brazil in terms of total cargo volume is GRU. In 2008, it handled a total of 490 thousand metric tons of mail and cargo. The second largest cargo airport is ViracoposCampinas International Airport (VCP) in Sao Paulo. The airport handled a total of 234 thousand metric tons of mail and cargo in 2008. The third largest airport is Eduardo Gomes International Airport (MAO) in Manaus, Amazonas. In 2008, the airport handled a total of 143 thousand metric tons of mail and cargo. Compared to the top three airports, cargo volume at AITN is only 9%, 18% and 29% of those in GRU, VCP and MAO respectively. Figure 2: Top 10 Brazilian Airports (by Cargo Volume), 2008
GRU Guarulhos VCP Viracopos MAO Manaus GIG Galeao SSA -Salvador
REC Recife BSB - Brasilia CNF AITN FOR - Fortaleza CWB Afonso Pena
MAO
GIG
GRU
FOR
SSA
BSB
Source: Infraero
Minas Gerais is an inland state that is located in the south-eastern part of Brazil. In terms of economic output, it is the third largest, after Sao Paulo and Rio de Janeiro. In 2006, the state has a Gross Regional Domestic Product (GRDP) of R$215 billion or approximately 9% of Brazils Gross Domestic Product (GDP). 1 The share of Minas Gerais GRDP to Brazils GDP was only a 2.5 percentage point lower than that of Rio de Janeiro.
1 In 2007, Minas Gerais has a GRDP of R$236.9 billion. Due to the need for comparison and the lack relevant data for the other states, the 2006 numbers were used instead.
CWB
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VCP
REC
CNF
In 2008, there were 20 million inhabitants in Minas Gerais, making it the second largest Brazilian state in terms of population size. Table 1 highlights the 10 largest states in Brazil in terms of economic output and population size. Minas Gerais is also the second largest exporter among the Brazilian states. In 2007, a total of US$18.4 billion worth of goods were exported, accounting for approximately 11% of Brazils total exports. As shown in Figure 3, Sao Paulo was the largest exporter among the Brazilian states. The other two major exporting states were Rio Grande do Sul and Parana. Table 1: Ten Largest Brazilian States 1 2 3 4 5 6 7 8 9 10 GRDP Sao Paulo (33.9%) Rio de Janeiro (11.6%) Minas Gerais (9.1%) Rio Grande do Sul (6.6%) Parana (5.8%) Bahia (4.1%) Santa Catarina (3.9%) Brasilia (3.8%) Goias (2.4%) Pernambuco (2.3%) Population Sao Paulo (21.3%) Minas Gerais (10.3%) Rio de Janeiro ( 8.3%) Bahia (7.5%) Rio Grande do Sul (5.7%) Parana (5.5%) Pernambuco (4.5%) Ceara (4.4%) Para (3.8%) Maranhao (3.3%)
Source: IBGE, FJP/CEI Note 1: The numbers in parentheses are the shares relative to the country as a whole. Note 2: GRDP is for the year 2006 while population is for the year 2007
Figure 3: Main Exporting States in Brazil
Others 40%
SP 32%
PR 8%
RS 9%
MG 11%
Source: FJP/CEI
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Using the states economic and demographic indicators as a basis of comparison, the current ranking of AITN as the sixth and eighth largest Brazilian airport in terms of passenger traffic and cargo volume respectively seems a bit low. In addition, the implementation of the strategic growth plan for the BHMR multimodal corridor hub together with the other economic development initiatives would place the state on a sustainable economic development growth path. This will have positive impact on the growth of AITN. In view of all these positive economic development in Minas Gerais, there is a great potential for AITN to assume a more important position in the aviation sector in Brazil. Thus, AITN should set its vision to become the third largest airport in terms of passenger throughput and the second largest airport in terms of cargo volume. In the remaining sections, the report will, through its analysis, identify the factors that have been holding back the development of AITN and some recommendations to overcome these impediments. The strategic initiatives for AITN to achieve its vision are presented. The focus of the analysis and recommendations is on AITN. However, at the request of SEDE, the strategic positioning of Pampulha Airport (PLU) and Carlos Prates Airport will also be reviewed.
2.
OPERATING ENVIRONMENT ASSESSMENT
Air travel is a derived demand. Although there are many reasons why people travel, the purpose of travelling can be broadly classified into three categories namely leisure, business and visiting friends and relatives (VFR). Regardless of the purpose of travel, the environment the airport is operating in has an influence on the growth of the airport. Through the analysis of the operating environment, one is able to pin-point the strengths and weaknesses of the airport and at the same time identify the opportunities and threats that the airport faces. With a good understanding of the operating environment, a strategy can be devised to capitalise on the strengths and to rectify the weaknesses of the airport. Furthermore, the devised strategy should also allow the airport to seize opportunities and to deflect potential threats it is facing. 2.1. Analysis Framework
Figure 4 shows the operating environment assessment framework used in this report. It consists of five factors, four external and one internal. The four external factors are country, competition, airlines and regulations and the internal factor is airport capacity and operation.
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Figure 4: Operating Environment Assessment Framework
Co Fa un ct try or
C om
pe tit
io n
Airport Capacity and Operation
2.1.1. Global Aviation Outlook With the world still suffering from the aftermath of the economic crisis that originated from the United States (USA), growth of the global economy is expected to remain sluggish for the coming years. According to EIU, real GDP of USA and Western Europe are forecast to grow at a Compound Annual Growth Rate (CAGR) of 1.3% and 0.9% respectively between 2009 and 2013. This will have a negative impact on the demand for air services in the country. Table 2 shows the short-term air traffic projections by International Air Transport Association (IATA). With the exception of the Middle East region, air traffic is expected to decline in 2009. The African and Latin American regions are projected to exhibit the sharpest fall in air traffic. Table 2: Short-Term Air Traffic Projections Global N America Europe Asia Pacific Middle East L America Africa 2006 5.3% 2.7% 4.9% 7.5% 11.8% -3.4% 7.0% 2007 5.3% 3.5% 2.1% 7.8% 16.4% 9.9% 4.5% 2008E -1.2% -2.5 % 1.3% -1.6% 6.1% 0.0% -4.1% 2009F -7.8% -7.5% -6.5% -6.8% 1.2% -7.8% -7.8%
Source: IATA, Industry Outlook (Mar 09), Domestic and international traffic. Include passenger and cargo by weight
However, in the longer term, the prospect for air traffic growth in the Latin America region looks good. Table 3 shows that air traffic growth for Asia Pacific and the Middle East would be consistently higher than those in North America. Airports Council International (ACI) and Boeing are of the view that air traffic growth would be higher in Asia Pacific than that in the Middle East. Boeing also projected that Latin America would see the second highest traffic growth between 2008 and 2027 among
A Fa irlin ct e or
u eg R tio la ns
the various regions, just a 0.2% point lower than that seen in the Asia Pacific region. On the other hand, Airbus was of the view that traffic growth in the Middle East would be higher than that in Asia Pacific.2 Table 3: Long-Term Air Traffic Projections World N. America L. America Europe Middle East Africa Asia Pacific ACI (2005 25) 4.0% 2.7% 4.5% 3.6% 4.6% 5.8% 5.8% Boeing (2008 27) 5.0% 3.4% 6.5% 4.1% 6.1% 6.0% 6.7% Airbus (2007 26) 4.9% 3.7% 5.3% 4.9% 6.5% 5.8% 6.1%
Source: ACI, Airbus, Boeing
2.1.2. Historical Performance of AITN In 2008, AITN had a total passenger traffic throughput of 5.2 million passengers per annum (mppa). Between 2005 and 2008, passenger traffic grew at a CAGR of 21.5%. More than 90% of the passenger traffic at the AITN is business traffic. Domestic and international passenger traffic made up 97% and 3% of total traffic respectively. Between 2005 and 2008, domestic and international passenger traffic grew at a CAGR of 20.8% and 56.7% respectively. Bulk of the growth in international passenger traffic was in 2008, where two foreign airlines (COPA and American Airlines) begun their operations at the AITN. AITN handled a total of 41,990 metric tons of cargo and mail in 2008. A substantial portion of the cargo handled at AITN is belly-hold. Between 2005 and 2008, cargo and mail volume grew at a CAGR of 13.1%. The shares of domestic and international cargo volume to total cargo volume were approximately the same. Between 2005 and 2008, while domestic cargo volume grew at a CAGR of 13.6%, international cargo volume grew at a CAGR of 12.5%. Passenger traffic and cargo volume projections for AITN are presented in Section 6 of this report. 2.2 Country
Country factors refer to the macro-environment that the airport is operating in. It covers the economic and demographic aspects of the country. One of the key drivers of traffic at any airport is the economy. Empirical studies have shown that people in richer country tend to travel more frequently. Similarly, rapid growth of a countrys economy will attract foreign investments into the country leading to an increase in the demand for air services from businessmen.
2
The projections were made before the financial crisis. However, the conclusion remains unchanged as it is expected that air traffic in N. America and Europe will be more adversely affected than those in Asia Pacific and the Middle East. Page 7
Besides passenger traffic, the state of the economy will also have an influence on the volume of air cargo handled by the airports. On the one hand, the demand for foreign goods will increase due to the increase in the level of income of the people. On the other, overseas demand for goods produced in the country is also expected to increase. Furthermore, as the country develops, the goods that are manufactured will have a higher skills component. This could tilt in the favour of air cargo since these types of products are more likely to be air freighted than shipped. The economic performance of the country is only one side of the coin. How the global economy performs will also have an impact on the countrys air traffic growth. With a stronger global economy, people are more willing to travel for leisure. The amount of business travel will also be higher. The population size of the country can also affect the traffic growth of the airport. The growth of the population will translate into bigger catchment area for that region. However, a bigger catchment area is only part of the equation. If the average income level of the people in that region is still relatively low, then a bigger catchment area may not necessarily translate into higher demand for air services. Another important factor is the attractiveness of the country as a tourist destination, both for leisure and business. If the country has plenty to offer to its tourists, the demand for air services will also increase in tandem. The cost of travel to the country and within the country is another factor to be considered. 2.2.1. Socio-Economic Prospects of Brazil and Minas Gerais Brazil is the fifth largest country in the world in terms of population and land area. It is also the largest country in the South American continent. A former colony of Portugal, Brazil has 26 states (estados) and one federal district. According to the Economist Intelligence Unit (EIU), Brazils real per capita GDP, in PPP term, was estimated to be approximately US$10,100 in 2009. Between 1991 and 2008, the countrys real per capita GDP grew at a CAGR of 3.7% and is forecasted to grow at a CAGR of 5% between 2009 and 2030, reaching a real per capita GDP of US$28,150 in 2030. Figure 5 shows the trend of Brazils real per capita GDP between 1991 and 2030. In 2008, Brazil has a population of 192 million and it grew at a CAGR of 1.5% between 1991 and 2008. The countrys population is expected to grow at a CAGR of 1.0% between 2009 and 2030, reaching 238 million in 2030. The relative high growth in the countrys per capita GDP implies that Brazilians consumption power will get stronger and the demand for air travel, both domestically and internationally, will increase. This development will have positive impact on passenger traffic at AITN. The increase in the affluence of the Brazilians will also lead to greater demand for foreign goods, resulting in an increase in air cargo.
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Figure 5: Brazils Real per capita GDP (US$ PPP), 1991 - 2030
CAGR = 5%
CAGR = 3.7%
Source: EIU
According to EIU, the world per capita GDP will grow at a CAGR of 3.4% in the coming five years. Figure 6 shows the expected per capita GDP growth between 2009 and 2015 of Brazil and those of countries that are Brazils main sources of international visitors. The growth in the number of tourists from Argentina and Chile is expected to be higher than that from Germany, Portugal and USA. Ceteris paribus, it is also expected that outbound traffic will grow at a faster rate than inbound traffic given the relatively higher per capita growth of Brazil vis--vis the other countries. In 2007, Minas Gerais had a nominal Gross Regional Domestic Product (GRDP) of R$236.9 billion. The state contributed approximately 9% to the countrys GDP. Between 2004 and 2007, the economy grew at a CAGR of 12.1%. For the corresponding period, Brazils nominal GDP grew at a CAGR of 11.9%. The Minas Gerais state economy is dominated by the services sector. In 2007, the services sector contributed nearly 60% to the states value added or R$121.8 billion. The shares of contribution by the agriculture and industrial sector were 8% and 32% respectively. Of the various industrial sub-sectors, manufacturing is the largest component, contributing 18.5% to the states value added. Despite its size, the services sector grew the fastest, at a CAGR of 14.3% between 2000 and 2007. The agriculture and industrial sectors grew at a CAGR of 10% and 6.1% for the corresponding period.
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
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Figure 6: Comparison of Real per capita GDP Growth, 2009 - 15

4.1 3.9 3.8
2.6 2.4 2.4
Brazil
Source: EIU
Chile
Argentina
Germany
Portugal
USA
Between 2000 and 2007, the states population grew at a CAGR of 1.4%, which was slightly below the countrys average of 1.6%. The nominal GRDP per capita was R$11,985 and it grew at a CAGR of 8.7% between 2004 and 2007. For the corresponding period, Brazil nominal per capita GDP grew at a CAGR of 8.7% and was R$13,720 in 2007. Assuming that the per capita GRDP of Minas Gerais continues to grow at the same rate as that of the countrys as a whole. Its projected CAGR between 2009 and 2020 is approximately 6.3%. However, this is a conservative view. The various economic development initiatives will boost the growth of the economy and thus the income level of the people in Minas Gerais. These include the Jaiba Project, Technology Park and Industrial Airport and the BHMR Multimodal Corridor Hub. As most of the industrial clusters are highly skilled industries, the wages earned by the inhabitants in the BHMR Multimodal Corridor Hub are expected to be higher than those in other parts of Minas Gerais. 2.2.2. Tourism Potential In 2007, a total of 5 million international tourists visited Brazil. Between 2003 and 2007, tourist arrivals grew at a CAGR of 5%. Table 4 shows the number of international tourist arrivals from various regions in 2007 and their CAGR between 2003 and 2007.
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The two main sources of tourist arrivals were South America and Europe. Each contributed 38% to total tourist arrivals in Brazil. Among the South American countries, Argentina was the main source of tourist arrivals into Brazil, accounting for nearly 50% of tourist arrivals from South America. The next largest source of tourists was Chile, which accounted for 14% of the South American tourists. On the other hand, the origins of international tourist arrivals from Europe are more diversified. The top five sources were Portugal (14.7% of European tourists), Italy (14.1%), Germany (13.5%), France (13.3%), and Spain (11.4%). Table 4: International Tourist Arrivals by Region Region South America Europe North America Asia Africa Middle East Central America Oceania Arrivals 1,906,451 (37.9%) 1,906,078 (37.9%) 821,921 (16.4%) 162,124 (3.2%) 75,923 (1.5%) 62,021 (1.2%) 46,495 (0.9%) 43,448 (0.9%) CAGR (2003 07) 4.8% 5.8% 1.1% 11.0% 9.7% 23.7% 12.0% 18.7%
Source: Brazils Ministry of Tourism, numbers in parenthesis are share of tourist arrivals
Being a large country, Brazil has a lot to offer to its tourists in terms of cultural and heritage, nature, and adventure. There are 17 UNESCO World Heritage sites in Brazil and they are listed in Table 5. Brazil will be hosting the FIFA World Cup in 2014. Table 5: UNESCO World Heritage sites Cultural Brasilia Historic Centre of Salvador de Bahia Historic Centre of So Lus Historic Centre of the Town of Diamantina (Minas Gerais) Historic Centre of the Town of Gois Historic Centre of the Town of Olinda Historic Town of Ouro Preto (Minas Gerais) Ruins of Sao Miguel das Missoes Sanctuary of Bom Jesus do Congonhas (Minas Gerais) Serra da Capivara National Park Natural Atlantic Forest South-East Reserves Brazilian Atlantic Islands: Fernando de Noronha and Atol das Rocas Reserves Central Amazon Conservation Complex Cerrado Protected Areas: Chapada dos Veadeiros and Emas National Parks Discovery Coast Atlantic Forest Reserves Iguau National Park Pantanal Conservation Area
Source: UNESCO
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The two main tourism themes of Minas Gerais are nature and historic sites. The state has more than 10 nature reserves that could be used to promote eco-tourism. Minas Gerais also has one of the largest numbers of UNESCO-registered World Heritage sites in Brazil. Of the 17 sites, three are in Minas Gerais. One of the most popular activities among the European tourists is to trace the Royal Road (Estrada Real). Formed by the routes of the first trails blazed by colonizers towards the end of the 17th century, the Royal Road passes through various tourist circuits, especially the Gold Circuit which runs through the main historic cities linked to the extraction of minerals and precious stones in the 18th century, like Ouro Preto, Mariana, and Diamantina. Business tourism is also being promoted in Minas Gerais. According to the officials from the State Secretariat for Tourism, there were 45 venues for exhibitions and conventions. In 2006, the Inter-American Development Bank held its annual meeting in Belo Horizonte. Minas Gerais is one of the hosting states for the FIFA World Cup in 2014. The tourism sector in Minas Gerais will be given a boost as it is one of the seven chosen industrial clusters in the BHMR Multimodal Corridor Hub. Specifically, three focus areas: business, leisure and medical tourism are identified. Besides, contributing to the growth of the Minas Gerais economy, this sector will also be a major contributor to the passenger traffic at AITN. However, the success of this sector is also dependent on AITN. Poor connectivity and inefficient operation at AITN will act as barriers for potential tourists to visit Minas Gerais. Even with fantastic tourist offerings, they would not be translated into actual tourist numbers and receipts when the tourists are not able to reach Minas Gerais due to poor connectivity at the airport or unwilling to use the airport due to its poor service. The other industrial cluster that is expected to have an impact on the passenger traffic is the education sector. With the setting up of a full-fledged university and other educational institutes in the BHMR Multimodal Corridor Hub, there will be students from other Brazilian states or even from other countries in the South American continent. This will positively affect the traffic at AITN. The strength of the currency will to a certain extent affect the number of tourists going in and out of the country, thus the passenger traffic at the airports. Table 6 shows the exchange rate changes of the Brazilian Real against major currencies. The Argentine Peso is expected to depreciate against the Brazilian Real making a trip to Brazil for Argentineans comparatively more costly. On the other hand, the strengthening of the other currencies such as Chinese Yuan, Korean Won and the Euro will make visiting Brazil a more attractive option for the citizens of those countries.
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Table 6: Exchange Rates Changes of Major Currencies, 2009 - 15

Argentina Peso British Pound Chinese Yuan Chilean Peso Euro Japanese Yen Korean Won US Dollar 36.1% -9.5% -14.7% -8.7% -8.7% -4.7% -16.1% -0.2%
Source: EIU Note: A positive sign indicates depreciation of the foreign currency against the Brazilian Real
2.2.3. International Trade Brazil has enjoyed strong growth in trade. Between 1991 and 2008, total trade grew at a CAGR of 12.2%, reaching US$371 billion in 2008. Despite the weak global economic condition, Brazils total trade is still projected by EIU to grow at a CAGR of 12% between 2009 and 2013, reaching US$481 billion in 2013. In 2008, Brazil exported US$197.9 billion worth of goods and services. Total exports grew at a CAGR of 11.2% between 1991 and 2008. The top five export destinations are USA, Argentina, China, Netherlands and Germany. The top five exports were transport equipment, machinery, fuels and oils, ores and slag, iron and steel. Growth of Brazils exports is projected to slow slightly to a CAGR of 10.5% between 2009 and 2013. In contrast, Brazils total imports grew at a slightly faster rate than its exports. Between 1991 and 2008, total imports grew at a CAGR of 13.2%, reaching US$173.2 billion in 2008. The top five sources of imports were USA, Argentina, China, Germany and Nigeria. The top five imports were fuels and oils, machinery, electrical and electronic equipment, transport equipment and chemical products. Brazils total imports are expected to grow at a CAGR of 13.6% between 2009 and 2013. By 2013, the countrys imports would reach US$220 billion. Minas Gerais is the second largest exporter of the country. Between 1991 and 2008, Minas Gerais total trade grew at a CAGR of 11%, reaching US$35 billion in 2008. The growth rate was slightly below that of Brazil, which grew at a CAGR of 12.2%. It can be seen from Figure 7 that growth in total trade in Minas Gerais has picked up pace since 2003. Between 2003 and 2008, total trade grew at a CAGR of 28.7%. In 2008, Minas Gerais exported US$24.4 billion worth of goods. Total exports grew at a CAGR of 10% between 1991 and 2008. In contrast, total exports grew at a CAGR of 26.9% between 2003 and 2008. Compared to total exports, exports by air from Minas Gerais grew at a slightly slower rate. Between 2003 and 2008, exports by air grew at a CAGR of 19.7%. In 2008, US$908.8 million worth of goods or less than 5% of total exports were by air. The top 10 destinations of Minas Gerais exports in 2008 are China, Germany, USA, Argentina, Japan, Netherlands, Italy, South Korea, Belgium and UK.
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Figure 7: Minas Gerais Total Trade (bil USD), 1991 - 2008

40
35
30
25 US$ Billion
20
15
10
0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Exportaminas
According to the information gathering during the site visit, goods produced by the following industries will form a significant portion of air cargo due to the implementation of the economic development initiatives in the future: fruits and flowers, fish, electronics, jewellery, biotechnology and pharmaceutical products. In 2008, Minas Gerais imported US$10.5 billion worth of goods. Total imports grew at a CAGR of 14.6% between 1991 and 2008. The CAGR for total imports increased to 33.9% between 2003 and 2008. The top 10 sources of imports are USA, China, Germany, Argentina, Italy, Canada, Russia, Australia, France and Japan. Three of the industrial clusters in the BHMR Multimodal Corridor Hub, namely electronic components cluster, life sciences cluster and distribution and logistics cluster, are expected to have positive impact on the cargo volume that is being handled at AITN. Similar to the impact of the tourism sector on passenger traffic at AITN, the positive impact of the three sectors can only be realised when AITN has the capacity to meet the requirements that are demand by the thee industrial clusters. The strength of the Brazilian Real will have an impact on the volume and direction of trade. The weakening of the Argentinean Peso will make goods imported from Argentina cheaper but make Brazilian exports to Argentina more expensive. On the other hand, the weakening of the Brazilian Real against major currencies such as Chinese Yuan, Japanese Yen, Euro and South Korean Won will have a positive impact on Brazilian exports.
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2.3.
Competition
Competition is another important factor to be considered when evaluating the operating environment of the airport. There are three levels of competition. Competition can be at the country level, at the state level and at the airport level. At the country level, countries compete for foreign investments and tourists. The attractiveness of the country as a Foreign Direct Investment (FDI) and tourist destination will influence the number of tourists (business and leisure) and cargo handled by the airports in the country. This kind of competition can also be seen among different states of the same country. This is especially true for the competition for FDI and business tourists. On the other hand, the case for leisure tourists is not that clear cut. States could compete or cooperate with each other to sell their destinations to visitors. Lastly, there is competition between airports for traffic. The closer the two airports are to each other, the keener the competition. Furthermore, if the country is wellconnected by land transport, the effect of competition between two airports will be magnified. For example, if the land transport between AITN and GIG is well developed, then foreign tourists that fly into GIG will just take the land transport to get to Belo Horizonte. This is to the detriment of AITN. On the other hand, it will be to the detriment of GIG if foreign tourists choose to fly into AITN and take the land transport to go to Rio de Janeiro. Given that the connectivity at GIG is better than that at AITN, the former scenario is more likely to occur. Conversely, foreign tourists that fly into GIG will have to take a domestic flight to go to Belo Horizonte if the land transport between the two cities is not well developed. In such a scenario, the total number of passengers will remain the same. However, there will be a difference in the classification of passengers, i.e. from international passengers to domestic passengers. This change in the mix of passengers will have an impact on the revenue earned by AITN. 2.3.1. Country-level Competition Countries compete for tourists and foreign investments. There are many factors that influence the decision of an individual to visit a country. These include the cost staying in the country and the time and cost of travelling to the country, the number and type of tourist offerings the country has vis--vis another country and the safety level of the country. According to the World Tourism Organisation, Brazil is the main tourist destination among the South American countries and is the second largest destination after Mexico in the Latin American region. Figure 8 shows the ranking of top tourist destinations by travellers magazine Cond Nast. In the survey, Brazil is ranked the fifth most popular tourist destination, behind New Zealand, India, Italy and Thailand. None of the other South American countries is on the top 10 list. The index measures how satisfied tourists are with the countrys travel facilities and services. Several criteria were used. These include value for money, cultural offerings,
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climate, food, hospitality, etc. In addition, Rio de Janeiro is ranked the twelfth most popular city in the world as a tourist destination. Figure 8: Ranking by Cond Nast Magazine
100
95.11
94.11 91.44 91.39 91.36 89.60 89.44 89.14 88.43
Thailand
S Africa
NZ
India
Italy
France
Source: Conde Nast Travellers Magazine
The survey indicates that as tourist destination, Brazil is a strong competitor against the other countries in South America. This observation is quite consistent with the Travel and Tourism Competitiveness Index (TTCI) published by the World Economic Forum. The index measures how conducive the country is for doing business in the travel and tourism industry, which in turns will have an impact on the growth of the tourism sector of the country. As shown in Figure 9, Brazil has the most conducive environment to develop business in the travel and tourism industry among the South American countries. Ranked 45th out of 133 countries, Brazil is ahead of Chile (57th), Uruguay (63rd), Argentina (65th), Colombia (72nd) and Peru (74th) in their ranking. The top three countries in the TTCI ranking are Switzerland, Austria and Germany respectively.
Greece
Page 16
Max
Brazil
US
Figure 9: Travel and Tourism Competitiveness Index, 2009
7.0 5.7 5.5 5.4 4.4 4.2 4.1 4.1 3.9 3.9
45
57
63
65
72
74
Germany
Switzerland
Argentina
Colombia
Chile
Uruguay
Max
Austria
Source: Travel and Tourism Competitiveness Report
As a destination for doing business, Brazil also competes favourably against other countries in South America. According to the Global Competitiveness Index (GCI), Brazil is ranked 64 out of 134 countries. As shown in Figure 10, the country is only behind Chile (28th) but is ahead of Colombia (74th), Uruguay (75th), Peru (83rd) and Argentina (88th). As the gap between Chile and Brazil is quite wide, Brazil needs to improve upon its business infrastructure in order to attract more foreign investments into the country. The top three countries in the GCI ranking are US, Switzerland and Denmark respectively Compare to other South American countries, Brazil has a relatively conducive environment for doing business. However, on a global scale, Brazil still lags behind most developed countries. By making the environment more conducive, it will have a positive impact on the growth of business traffic and cargo volume at the airports in Brazil.
Brazil
Peru
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Figure 10: Global Competitiveness Index, 2009
7.00 5.74 5.61 5.58 4.72 4.13 4.05 4.04 3.95 3.87
28
64
74
75
83
88
Colombia
Denmark
Chile
Switzerland
Source: Global Competitiveness Report
2.3.2. State-level Competition Competition for tourists and foreign investments can exist at the state level too. Figure 11 shows the top 10 destinations in Brazil for leisure travellers. Rio de Janeiro is the most popular destination. Of the people surveyed, 31.5% would like to visit Rio de Janeiro. Besides the beautiful beaches, one of the main attractions in Rio de Janeiro is the statute of Christ, the Redeemer, which is one of the Seven Wonders of the World. The sugar loaf mountain is another popular attraction in Rio de Janeiro. The next most popular destination in Brazil is Foz do Iguau, which is in `the state of Parana. The main attraction is the Iguau Falls. Approximately 17% of the people surveyed would like to visit the city. The third most popular destination is Sao Paulo. Nearly 13% of the people surveyed see Sao Paulo as a destination for leisure travelling. What stands out from the study is that neither Belo Horizonte nor any other municipality in Minas Gerais is on the top 10 list of destinations for leisure travellers. This is despite the fact that Minas Gerais has the highest number of UNESCO world heritage sites among the Brazilian states. Several factors could have contributed to this low ranking. The marketing effort rendered by the State Secretariat for Tourism is insufficient. More publicity is needed to inform tourists, both domestic and international, on what Minas Gerais has to offer. Another possible contributing factor could be that the land transport is not that efficient and the cost and time getting to these places of attraction may not warrant the journey.
Argentina
Max
Uruguay
Brazil
Peru
US
Figure 11: Top 10 Leisure Destinations in Brazil

31.5
17.0 13.6 12.1 11.5 6.7 6.4 5.8 5.4
4.0
Florianpolis
Salvador
Fortaleza
Sao Paulo
Balneario Camboriu
Source: Embratur
Figure 12 shows the top 10 destinations in Brazil for business events and conventions. The most popular destination is Sao Paulo. Of the people surveyed, nearly half would like to go to Sao Paulo to attend business events and conventions. This result is not surprising given that Sao Paulo is the commercial centre. The next most popular destination for business events and conventions is Rio de Janeiro. Although the city is in the second position, only 22% of the people surveyed would like to go to Rio de Janeiro for business events and conventions. The gap between the first and second position is very wide. Belo Horizonte is the fifth most popular destination. Only 4% of the people surveyed would consider attending business events and conventions in the city. From the study, it can be deduced that more effort is required to market Belo Horizonte as a destination for business events and conventions. The State Secretariat for Tourism and relevant agencies should find out what the city lacks to make it more attractive to business travellers. The lack of facilities to hold such events, the poor connectivity at the airport makes organising events in Belo Horizonte inconvenient especially for international visitors or just pure lack of publicity could be just a few of the possible contributing factors.
Manaus
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Rio de Janeiro
Buzios
Foz do Iguacu
Natal
Figure 12: Top 10 Business Destinations in Brazil
49.4
22.3
8.2
5.4
4.1 Belo Horizonte
4.1 Campinas
3.4 Brasilia
3.0 Foz do Iguacu
2.7 Salvador
1.8 Florianpolis
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Porto Alegre
Sao Paulo
Source: Embratur
States can also compete for foreign investments. Several factors will affect the attractiveness of a location for foreign investments. These include the basic infrastructure of the location, the amount of tax incentives offered by the state government and the availability of skilled labour. The BHMR Multimodal Corridor Hub is one of the few mega projects that aims to attract foreign investments to Minas Gerais. 2.3.3. Airport-level Competition Competition can also exist at the airport level. Airports compete for transfer traffic. There are three types of transfer traffic, namely international to international transfer, international to domestic transfer and to a less extent, domestic to domestic transfer. A good example of competition for international to international transfer traffic would be that between Charles De Gaulle Airport in Paris and Frankfurt Airport. The former is a transfer hub for Air France while the latter is the transfer hub for Lufthansa. Since none of the airports in Brazil is an international to international transfer hub, this type of competition is not applicable. GRU and GIG are two gateways to Brazil. These two airports act as an international to domestic transfer hub for passengers that are getting in or out of Brazil and thus are competing with each other for the international to domestic transfer passengers. AITN due to its limited international connectivity is not able to compete with the other two airports in this aspect in this juncture.
Curitiba
Rio de Janeiro
There is another type of traffic known as Origin and Destination (O&D) traffic. Generally, airports do not compete for O&D traffic. However, due to reasons such as poor connectivity, passengers have to go via another airport and this has implications on the amount of aeronautical revenue earned and even on the number of passengers handled at the airport. The closer the airports are to each other, the greater the implication will be. Figure 13 shows the catchment area, defined as 1hour flight time, of the two main airports in Brazil, namely GRU and GIG and that of AITN. As can be seen from the diagram, there is a greater overlapping of catchment area between AITN and GIG than that between AITN and GRU. The distance between GIG and AITN is 360km while the distance between GRU and AITN is 493km. Figure 13: Catchment Areas of GRU, GIG and AITN
AITN GIG
GRU
Source: CAI Econometric Unit
Because of the long distance between GRU and AITN, if a traveller cannot fly to AITN directly and chooses to fly via GRU, he or she still has to take a domestic flight to AITN. As a result, the total number of passengers remains unchanged; just a change in the classification of passengers from international to domestic. However, aeronautical charges will be affected.
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On the other hand, the distance between AITN and GIG is relatively shorter. A traveller going to Belo Horizonte but is unable to fly directly to AITN and he chooses to fly to GIG, he or she can either choose to fly subsequently to AITN on a domestic flight or take a land transport to reach Belo Horizonte. The former scenario is similar to that described earlier between AITN and GRU. In the latter scenario, AITN will lose the passenger totally. This not only affects the aeronautical revenue earned by AITN, but it also affects the number of passengers handled at AITN. Thus, in this aspect, AITN faces competition from other modes of transport. It was made known during one of the site visits that leisure travellers prefer to drive to Rio de Janeiro from Belo Horizonte while business travellers prefer to fly to Rio de Janeiro from Belo Horizonte. The amount of competition that was introduced due to the proximity between two airports seems to be applicable to passenger traffic only. As will be shown shortly, the competition for cargo is quite independent of the distance between the two airports. Thus through this analysis, the impact of competition on AITN posed by GRU is not as great as those posed by GIG. Proximity is only one of the factors that determine the competition between two airports. The connectivity of airports could accentuate the competition between them. Figure 14 shows the IATA connectivity index computed for selected airports in Brazil. The connectivity index is computed using three indicators, namely the number of domestic and international destinations, the frequency for each destination and the number of seats for each destination.
Figure 14: IATA Connectivity Index of Main Brazilian Airports

GRU GIG BSB SSA CNF POA CWB REC
Source: CAI Econometric Unit
93.7 43.0 22.6 20.4 19.4 16.4 15.2 14.7
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Not surprising, being the main point of entry into Brazil, GRU is the most connected airport. This is followed by GIG. Although AITN is ranked fifth in terms of connectivity among the major airports in Brazil, its connectivity index is way below those of GRU and GIG. More specifically, AITN loses out to the two main airports in terms of number of destinations and frequency. Table 7 shows the share of international passengers to total passengers at selected Brazilian airports as at 2008. With connection to more than 30 international destinations, approximately 43% of the traffic at GRU is international passengers. In contrast, the share of international passengers at AITN is less than 5%. Part of the reason for the low share could be due to the fact that American Airlines and COPA Airlines only started their scheduled services in the second half of 2008. Table 8 shows the share of international cargo to total cargo at selected Brazilian airports as at 2008. Nearly 50% of the cargo handled at AITN is international cargo. This compares favourably to GRU, which has a share of 57% and is better than GIG which has a share of 44%. Compared to the share of international at VCP (95%), there is still room for improvement for AITN. Table 7: Share of International Passengers at Selected Brazilian Airports, 2008 Airport GRU GIG POA SSA REC CNF CWB BSB
Source: Infraero
% of total traffic 43% 21% 8% 6% 5% 3% 2% 2%
Table 8: Share of International Cargo at Selected Brazilian Airports, 2008 Airport VCP GRU CWB CNF GIG MAO SSA REC
Source: Infraero
% of total cargo volume 95% 57% 50% 49% 44% 28% 13% 8%
There are many contributing factors to the poor international connectivity at AITN. One of the main reasons is that there is a lack of demand for air services from a particular city to Belo Horizonte. In addition, AITN has been used by the two main Brazilian airlines, TAM and GOL-Varig, as a spoke airport to feed traffic to their hubs in GRU and GIG respectively. The lack of marketing effort to attract foreign airlines
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and the inability to use financial incentives to sway airlines to move to AITN are also possible reasons. Because of the poor connectivity at AITN, especially to international destinations, leakages of passengers to GRU and GIG are quite severe. Figure 15 shows the estimated amount of passenger traffic leakage from AITN to GIG and GRU. Using data from Market Information Data Tapes (MIDT) for 2008, of the 430,000 passengers that flew to or came from GRU, nearly 60% are transfer or transit passengers. Similarly, of the 907,000 passengers that go GIG, nearly one-third is transfer or transit passengers.3 Overall, the leakage of passenger traffic from AITN to the airports is approximately 40%. The data capture only the number of passengers that took domestic flights from AITN to the two airports. Thus, the 40% only shows the change in the mix of passengers from international passengers to domestic passengers and a lost of aeronautical revenue. What the data are not able to capture is the number of passengers that used land transport to go to the two airports. This is especially relevant to GIG given its proximity to AITN. The lost of passengers due to this reason is not only a lost of aeronautical revenue but is also a lost of traffic. The 40% share is also an under-estimation of the leakage problem faced by AITN. Figure 15: Leakages of Traffic to GRU and GIG from AITN, 2008
907K
Transfer Passengers (32%)
430K
Transfer Passengers (58%)
GRU
Source: Computed using data from MIDT
GIG
Figure 16 shows the severity of the leakage of cargo problem at AITN. Of the goods that are manufactured in Minas Gerais that are required to be air freighted, only 5% are exported through AITN. Nearly 70% of goods are trucked to airports in Sao Paulo to be flown out.
There could be some double-counting here as some of the services have connecting points at GRU and GIG.
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Figure 16: Leakages of Cargo from AITN, 2008
Confins Airport 5%
Others 12%
Rio de Janeiro Airport 14% Campinas Airport 30%
Sao Paulo Airport 39%
Source: Exportaminas
The poor connectivity (in terms of destinations and frequency) at AITN is definitely one of the causes that resulted in such severe leakage problem. Another possible reason is that there is insufficient bulk of air cargo at Minas Gerais that make it economically unattractive for the goods to be flown out straight from AITN. Looking at the distribution of cargo leakage, it can be seen that distance between airports does not play such a critical role in determining the severity of leakage compared to passenger traffic. Connectivity is the more important factor. The types of goods that are being exported by air could also influence the amount of leakage. Holding other aspects constant, the higher the value or the more perishable the item is, the less likely the item will be trucked to another airport for export. This is because time is lost during the land transportation or safety issues are involved. Another observation that can be made on Brazilian airports is that they are run by a single operator, Infraero. The advantage of having a single operator is that the operator gets to enjoy the benefits of economies of scale. Efforts are also made to minimize competition between airports to reduce cannibalisation of traffic. However, the downside of having a single operator is that resources will be focused on developing one or two airports to be the primary airport of the country and let the remaining airports to play a secondary role. The lack of competition can also result in the airports being inefficiently managed.
2.4.
Airlines
Airlines also play an important part in the growth of the airport. They are the vehicles that carry the passengers and cargo. As at 2008, there were seven airlines offering scheduled services to 25 destinations from AITN. The seven airlines are TAM, GOLVarig, Webjet, Oceanair, American Airlines, TAP Portugal and COPA Airlines. Webjet is the only Low Cost Carrier (LCC) operating at AITN. TAM and GOL-Varig are the two main Brazilian airlines that are based in GRU and GIG respectively.
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Table 9 compares the key operating and financial indicators of major hub carriers and Latin American airlines with those of the Brazilian airlines for 2008. The two main Brazilian airlines are stronger compared to the other Latin American airlines. They fly to more destinations, carried more passengers, have a larger operating fleet size and have a more ambitious expansion plan. However, the average load factors for the two Brazilian airlines are lower than their Latin American counterparts. Compared to the major hub carriers, there is room for further improvement for TAM and GOL-Varig in terms of the number of destinations, load factor and operating fleet size. Notwithstanding the fact that the two main Brazilian airlines are still in the stage of growing their network and fleet size, the two airlines have no intention to make AITN their primary base. It was brought up during the meeting with the management of TAM that Sao Paulo and Rio de Janeiro will always be the top two cities when it comes to the airlines operations. Furthermore, GOL-Varig has no plan in the near future to operate direct international flight services from AITN Figure 17 shows the share of traffic by the major carriers that operate at AITN. More than 90% of the passenger traffic is carried by TAM and GOL-Varig. The share of passenger traffic carried by LCCs was a paltry 4%, which is considered quite low compared to those in European countries and USA. More effort can be expended either to attract more LCCs to operate at AITN or to get Webjet to increase their presence at AITN. In European and American airports, LCCs are a major contributor of traffic growth to an airport, especially for domestic and regional routes. Figure 17: Share of Passenger Traffic by Airlines, 2008
Webjet 4% Others 4%
TAM 44% Gol-Varig 48%
Source: Infraero
.
Table 9: Comparison of Brazilian Carriers with Major Foreign Carriers Number of Destinations Major Hub Carriers AF-KLM American Airlines British Airways Delta Airlines Lufthansa Airways Latin American Carriers Aeromeixco LAN Aerolineas Argentinas Main Brazilian Carriers GOL-Varig TAM Oceanair Webjet
Source: Air Transport World, * denotes 2007 numbers
Passengers Carried (m) 74.3 92.8 33.1 106.1 57.1
Load Factor (%) 79.7 80.6 77.0 82.0 78.6
Profit Margin (%) -0.8 -7.9 -2.4 -36.7 5.4
Operating Fleet Size 373 608 234 443 252
Expansion Plan 63 87 54 36 110
213 150 164 189 182
38 46 50
7.3 11.1 2.9
71.7 76.6 n.a.
n.a. 11.8 n.a.
49 56 38
15 54 0
69 54 21 14
30.0 30.1 1.7 0.32*
61.6 71.0 65.2 66.9
-1.4 6.3 n.a. n.a.
112 131 20 15
95 79 0 0
Changi Airport Consultants (Company Registration No. 200507762K). All rights reserved.Lee chee tong
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2.5.
Regulatory Environment
The growth of an airport will be stifled if the aviation sector is heavily regulated. There are two main aspects of the regulatory environment, namely those of air rights and airport charges. The issue on air rights have been discussed in greater details in the route development chapter of the Operations Report. In this report, only the issue of airport charges will be discussed. Airport charges in Brazil are set by Agncia Nacional de Aviao Civil (ANAC), the equivalence of the Civil Aviation Authority in most countries. For passengers, they have to pay what is commonly known as the airport tax. For airlines, besides paying for landing and parking, they have to pay for the radio and visual aid-in services too. For the passenger airport tax and landing and parking charges, all Brazilian airports are classified into four categories. There are 16 airports in the first category, 39 airports in the second category, 42 airports in the third category and 95 airports in the fourth category. AITN is classified as a Category 1 airport. For the radio and visual aid-in services, airports are classified into six categories, namely, A, B, C, D, E and F. There are 10 airports in Category A and AITN is under this category. There are 18 airports in Category B, 15 airports in Category C, 19 airports in Category D, 54 airports in Category E and 1 airport in Category F. Table 10 gives the tariff rates for each category of airports and each type of passengers respectively. Table 10: Passenger Airport Tax Rates (per Passenger) Type Category 1 2 3 4 1 2 3 4 1 2 3 4 Period Value US$ 36 30 24 12 36 30 24 12 n.a. n.a. n.a. n.a. R$ 86 72 57 29 81 68 54 27 19.62 15.42 11.58 8.01
1/3/2009 31/5/2009
International
1/6/2009 31/8/2009
Domestic
Source: ANAC
n.a.
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Table 11: Landing and Parking Charges Type Category 1 2 3 4 1 2 3 4 Landing (per ton) 5.66 5.14 4.41 2.20 1.67 1.47 0.96 0.45 Parking (ton hour) Patio Manobras Area of Stay 1.13 0.23 1.03 0.21 0.88 0.18 0.44 0.09 0.33 0.07 0.29 0.06 0.19 0.04 0.09 0.02
International
Domestic
Source: ANAC
Table 12: Radio and Visual Aid-in Charges Type Category A B C D E F A B C D E F Flight (by Operation) US$112.70 US$90.18 US$63.12 US$44.18 US$30.92 US$21.64 R$100.36 R$80.28 R$56.22 R$39.34 R$27.54 R$11.02
International
Domestic
Source: ANAC
Airport charges are levied according to the category the airport is being classified. Such inflexibility has two implications. First, airports cannot adjust the tariff rates to influence demand due to idiosyncratic reasons. In addition, they are not able to adjust the charges to suit their marketing effort and thus are unable to compete for passengers and airlines in this area. 2.6. Capacity
The capacity and operation efficiency of airport will, to a certain extent, influence the traffic growth of the airport. For example, if the airspace and runway are too congested, airlines would be hesitant to operate at the airport due to safety concerns. Similarly, if the terminal is over-crowded, the service quality will drop. This could result in passengers flying off from another nearby airport that is less crowded. As the issues of capacity and operation efficiency will be discussed at length in the Master Planning and Operation Review Modules, this section briefly summarises the key points.
The terminal capacity of AITN is estimated to be around 4.5 mppa and currently handling 5.2 mppa. Although the airport is operating slightly its capacity, the congestion of the terminal can be quite serious during peak hours. Queues that stretched to the kerbside were spotted during peak hours. Figure 18 shows the capacity of the growth in passenger traffic between 2008 and 2030 and the growth in terminal capacity for the corresponding period. Although the terminal capacity has been reached, this is not so for the runway. According to estimation done by the CACs Master Planning team, the only runway at AITN is only 50% utilised. Thus there is ample room for further growth. This compares favourably to the utilisation rate of the runways at GRU and GIG. A rough estimation indicates that the runways at GRU are operating at 87.5% of its capacity while those in the GIG are operating at 67.5% of its capacity. Furthermore, there is sufficient land surrounding the airport for further expansion. In this aspect, AITN has a competitive advantage over the other two airports. 2.7. SWOT Analysis
2.7.1. Strengths a) Strong Traffic Growth AITN has seen strong traffic growth for the period between 2005 and 2008. Passenger traffic and cargo volume grew at a CAGR of 21.5% and 13.1% respectively. This is higher than the traffic growth for all the airports operated by Infraero. Passenger traffic and cargo volume for all the 66 airports grew at a CAGR of 5.6% and -1.6% respectively. With the implementation of the BHMR Multimodal Corridor Hub, traffic growth especially international traffic growth is expected to remain robust for the coming years. The tourism sector will be a major contributor to this growth in passenger traffic. Similarly, the electronics components cluster, life sciences cluster and distribution and logistics cluster are expected to give the cargo volume at AITN a boost, b) Sufficient Runway Capacity The utilisation rate of the only runway at AITN is estimated to be around 50%. Compared with the estimated runway utilisation rates of 87.5% and 67.5% at GRU and GIG respectively, the runway at AITN can accommodate more flights. Airlines would be hesitant to add more flight services and could even divert some flights to AITN for safety reason. c) Ample Land for Further Expansion There is sufficient land surrounding AITN for the construction of more terminal buildings and runways. This is not the case for the airports in Sao Paulo and Rio de Janeiro. The master plan for three terminal buildings that accommodate up to 37 mppa and for two runways has been developed by CAC. The availability of land for future expansion is a critical factor for the
growth and development of an airport. This is especially so for AITN given that demand for air services is expected to increase significantly due to implementation of the BHMR Multimodal Corridor Hub. 2.7.2. Weaknesses a) Terminal Capacity Constraint The current terminal capacity of AITN is 4.5 mppa but the current passenger throughput is 5.2 mppa. The airport is operating above its capacity. Long queues at check-in counters can be seen during peak hours. The level of service is thus being reduced and this could have an influence on passengers flying out from other nearby airports. b) Poor International Connectivity Currently, AITN has only five international destinations, namely Buenos Aires, Lisbon, Miami, Paris and Panama City. This is low compared to GRU which has about 30 international destinations. Developing international traffic will not only mitigate the leakage problem faced by AITN, the airport will also earn higher aeronautical charges. In addition, the successful of the several clusters in the BHMR Multimodal Corridor Hub are also dependent on AITN having very good international connectivity. c) Lack of Home Base Carrier AITN has been used by the two main Brazilian airlines as a spoke airport to feed traffic to GRU and GIG. There is no plan in the near future for the two airlines to make AITN their base. GOL-Varig also does not have the intention to start direct international flight services at AITN. The reason given for their hesitancy is that there is insufficient load at AITN to make it economically feasible to start a direct international service. The lack of a home base carrier will make developing AITN into a transfer hub difficult.
2.7.3. Opportunities a) Tourism Potential Minas Gerais has the largest number of UNESCO World Heritage sites among the Brazilian states. The state is rich in mineral resources and mining has been going on since colonial time. This resulted in the state having a rich mining heritage. Belo Horizonte is also the top five destinations for business events and conventions. Minas Gerais is one of the hosting states for the FIFA World Cup in 2014. The tourism sector will be given a boost in Minas Gerais as it is one of the focus clusters identified for the BHMR Multimodal Corridor Hub growth plan.
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b)
Large Catchment With a population of approximately 20 million, Minas Gerias is the second largest Brazilian state. Belo Horizonte has a population of 5 million people. This relatively large catchment size bodes well for the growth of AITN. Furthermore, the income level of people in Minas Gerais has been growing at the same rate as that for the country as a whole. The BHMR Multimodal Corridor Hub is expected to boost the population from the current 5.1 million to 6.7 million in 2030. In addition, the average income level of the people in the Multimodal Corridor Hub is expected to be higher than those in other parts of Minas Gerais. This has positive implications for traffic growth at AITN.
c)
LCC Potential The traffic at AITN is being dominated by TAM and GOL-Varig. Currently, LCC traffic only accounted for 4% of total traffic at AITN. This is quite low compared to the airports in Europe and US. Data from countries with a significant volume LCC traffic shows that LCC is a major contributor to the growth of an airport, especially for domestic and regional traffic.
2.7.4. Threats a) Proximity to Key Airports AITN is only 360km from GIG and 493km from GRU. The proximity has resulted in the leakage of passengers and cargo to these two airports. The problem caused by GIG is especially severe. In total, the leakage of passenger traffic from AITN to the two airports is approximately 40%. b) Inflexible Airport Charges Airport charges in Brazil are governed by ANAC and airports are classified into categories and have to charge according to the category they are in. This inflexibility has two implications. If the traffic at AITN suffered for some idiosyncratic reasons, the airport is not able to influence demand through the downward adjustment of the airport tariffs. Furthermore, AITN is not able to adjust the charges to suit their airline marketing effort.
3. AIRPORT POSITIONING
3.1. Framework
As shown in Figure 18, airports can be categorised into four different groups depending on the environment and the home carrier. They can be regional airports, international O&D airports, secondary hub airports and main hub airports. The different types of airports can be differentiated in the following way.
Figure 18: Airport Positioning Framework
Environment
STRONG
ATTRACTIVE
Main Hubs
Secondary Hubs
Home Carriers
International Origin & Destination Regionals
Regional Airports Regional airports are characterised by an absence of transfer traffic. The airports serve a relative small or remote catchment area. Most of the airlines that operate at the airports are either regional airlines or LCCs. A good example of a regional airport is Liverpool John Lennon Airport in UK.
International Origins and Destinations (O&Ds) Airports International O&D airports are characterised by a low share of transfer traffic. The airports serve a larger catchment area compared to regional airports and they are the main hubs of an international airline or the secondary hub of major airlines, which are subordinate or niche players in alliance. Examples of international O&D airports are Rome Leonardo da Vinci - Fiumicino Airport in Italy and Madrid-Barajas International Airport in Spain.
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Secondary Hub Airports Secondary hub airports are characterised by a modest share of transfer traffic. They serve a sizeable catchment area and are main hubs of regional airlines or secondary hubs of major airlines which have a subordinate role in an alliance. Examples of secondary hub airports are Munich Airport in Germany, London Stansted Airport and London Gatwick Airport in UK.
Main Hub Airports Main hub airports are characterised by a high share of transfer traffic and serve very large catchment area. These airports are main hubs of a major international airline which has a leadership role in an alliance. Examples of main hub airports are Frankfurt International Airport in Germany, London Heathrow Airport in UK and Paris Charles de Gaulle International Airport in France.
3.2.
Positioning of AITN
Besides benefiting from the growth of traffic brought about by the development of the BHMR Multimodal Corridor Hub, AITN should be positioned in such a way that it will support the growth of the Multimodal Corridor Hub. AITN should have sufficient terminal and runway capacities for passengers and cargo and an optimal number of international destinations. Based on the above analysis, GRU can be classified as an international O&D airport and is the main gateway to Brazil. GIG can also be considered an international O&D airport but is weaker in terms of its number of international connectivity and the number of airlines that operate there. In contrast, AITN is a predominantly domestic airport with an insignificant amount of international traffic. Given that the two main Brazilian airlines are still developing their networks and have yet to reach the status of an international hub carrier like those in the European countries and USA, it is unlikely that in the next 10 years that any airport in Brazil will become a main international transfer hub airport. Furthermore, as the focus of operation of TAM and GOL-Varig will still be in GRU and GIG and considering the proximity between the two airports and AITN, the likelihood of AITN becoming a secondary international hub is quite low. AITN should take advantage of the fact that GRU is already quite congested and the airport may have difficulties in performing its role as a gateway airport to the country in an efficient manner. Thus, in the short to medium term, AITN should build up its domestic and regional network, as shown in Figure 19. By doing so, AITN acts as a gateway to Brazil for the South American countries. Although this role is currently served by GRU and to a lesser extent by GIG, the network connectivity at GRU and GIG to South American cities is still quite weak.
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In the short to medium term, Minas Gerais, even with the development of the BHMR Multimodal Corridor Hub, may not have the sufficient load to warrant an airline to mount new domestic services. Thus the reason for developing the regional network concurrently is to add to traffic to the domestic network and vice versa. Figure 19: Current and Proposed Positioning of AITN
Environment
STRONG
ATTRACTIVE
Main Hubs
Secondary Hubs
GRU (2030) GRU
Home Carriers
International GIG Origin & Destination

AITN Regionals AITN (2030)
In the long run, as the BHMR Multimodal Corridor Hub project becomes more substantial, there is a need for more international connectivity. AITN should aim to become an international O&D airport by increasing its international connectivity. This can be achieved by attracting more foreign hub airlines to operate at AITN to complement the network provided by the Brazilian airlines. Not only will this bring in O&D traffic, but it will also bring in passengers that use the hub airports as their transfer point. As AITN is not allowed to compete on pricing and it is not allowed to offer financial incentives to airlines to draw them to operate at AITN, the domestic and regional network that has been built up earlier will act as a plus point to sway foreign airlines to operate at AITN. This is because without the traffic from other South American countries and other Brazilian states, there could be insufficient passenger load to make it economically viable to operate international services at AITN. By doing so, not only can passengers use AITN as an alternative gateway to Brazil, they can also use it as a gateway to the South American countries.
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3.3.
Key Strategic Initiatives for AITN S-O Strategies pursue opportunities that are a good fit to AITNs strengths. Develop AITN as a gateway to Brazil for South American countries in the short to medium term and position AITN as an international O&D airport in the long term. The focus of this strategy will be on ensuring that AITN has sufficient capacity (terminal and runway) and land to meet the increasing needs due to the growth in the catchment size brought about by the development of the BHMR Multimodal Corridor Hub. W-O Strategies overcome weaknesses to pursue opportunities. The focus of this strategy will be on route development, consistently working with airlines to develop new routes as it is critical to long-term traffic growth. AITN should aim to attract more foreign airlines to operate at the airport to complement the limited the international network provided by the two main Brazilian airlines. In the short to medium term, besides attracting full service carriers such as IAN Airlines and Aerolineas Argentinas, AITN should attract LCC such as Webjet and EasyFly (Colombia) to operate at the airport. In the long term, AITN should target attracting major hub carriers from Europe and USA. S-T Strategies identify ways that AITN can use its strengths to reduce its vulnerability to external threats. Compared the runway utilisation rate at AITN to GRU and GIG, AITNs runway can still accommodate more flights. AITN should make use of this strength to shift the intra-state flights from PLU to AITN and to attract some international-domestic traffic from GRU and GIG. W-T Strategies establish a defensive plan to prevent AITNs weaknesses from making it highly susceptible to external threats. The poor international connectivity at AITN has led to the leakage of passengers and cargo from AITN. The proximity of two major airports has accentuated the magnitude of leakage. Route development effort must be expended to attract major foreign airlines and LCC to operate international and regional routes respectively. By building up the domestic, regional and international connectivity progressively, not only will it prevent the further worsening of the leakage problem, it could even reverse it.
4.
RECOMMENDATIONS FOR PAMPULHA AIRPORT
PLU is located in the city and has been used as a regional and executive airport in Belo Horizonte. The airport serves mainly destinations that are within 1,000 km radius of the airport. Most of its flights were intra-state, but the airport also has some inter-state service to destinations such as those in Rio de Janeiro and Campinas. The airport has a single runway that is 2,540 m long and has a terminal capacity of 2 mppa. The three main airlines operating at PLU are TRIP, Air Minas and Passaredo. Besides regular flights, TAM and Lider also provide air taxi service. There is also an air medical service provided by helimed. The airport has 26 executive aviation hangars. PLU also has significant amount of general aviation (GA) maintenance.
There is not much land for further expansion at the airport for the terminal and runway. Due to congestion at PLU, some of the traffic was shifted from the airport to AITN in 2005. Before the shift, there were A320 aircraft operated at PLU but after the shift, only aircraft with less 50 seats are allowed to land at the airport for safety reasons. In 2008, the airport has a passenger traffic throughput was 561,000. Between 2005 and 2008, passenger traffic declined at a CAGR of 24.1%. Figures 20 and 21 show the passenger traffic and Air Traffic Movements (ATM) at PLU from 2003 to 2008 respectively. As can be seen from the diagram, passenger traffic at the airport has been falling since 2005 notwithstanding the fact ATM have been increasing for the past three years. The fall in passenger traffic could suggest that the demand for intra-state air services has dwindled due to better highway infrastructure that link up the state. On the other hand, the increased in ATM could be due to the using of smaller aircraft, the increase in other aviation-related activities such as MRO, etc. Figure 20: Passenger Traffic at PLU (MPPA), 2003 - 2008
3.19 2.97
1.28
0.80
0.76 0.56
2003
Source: Infraero
2004
2005
2006
2007
2008
In view of the declining demand for air passenger service at the airport and the state governments effort to promote the aerospace industry, it is recommended that the intra-state flights from PLU be shifted to AITN. By doing so, passengers that need to take a connecting flight to another domestic destination or to an international destination need not travel from PLU to AITN thus saving them time and cost. It is also proposed that PLU be transformed into an aerospace park. The park can host a
wide range of activities including Maintenance, Repair and Overhaul (MRO); design and manufacturing of aircraft systems, components and potentially light aircraft, and business and general aviation activities. Due to the limited length of the runway, PLU only allows smaller aircraft to land. Thus, the aerospace park at PLU will restrict the types of MRO activities and other aviation activities to aircraft of smaller sizes. The idea of the aerospace park is to reap synergies from being in an integrated environment. The benefits include economies and increased efficiency. There is also significant scope for new collaborations through the parks shared infrastructure and close proximity of suppliers, customers and partners. Figure 21: ATM at PLU, 2003 - 2008
75,476 76,094
57,776 52,812 49,457 47,602
2003
Source: Infraero
2004
2005
2006
2007
2008
5.
RECOMMENDATIONS FOR CARLOS PRATES AIRPORT
Carlos Prates airport is used for pilot training, GA for aeroclub aircraft and helicopters. There are four training schools, one for helicopter (Helit) and three for small aircraft (aero-sita). The airport, which has a 928m long runway, covers an area of 549,000 sq. m. Besides housing training schools, there are maintenance and assembly facilities for ultra light aircraft, a fueling station and a fire station at the airport. Hangers for small aircraft can also be found. Figure 22 shows the passenger traffic at Carlos Prates airport. Traffic peaked in 2006 and has been declining for the past two years. Between 2003 and 2008, passenger traffic grew at a CAGR of 12.6%. Figure 23 shows the ATM at the airport between 2003 and 2008. During the period, ATM grew at a CAGR of 13.3%.
In view of the limitation imposed by the runway length at the airport and small land area, CAC recommends that Carlos Prates airport should expand to become a regional aerospace campus which will house aerospace educational, training institutes and research facilities. Figure 22: Passenger Traffic at Carlos Prates Airport, 2003 - 2008
15,472 14,342 13,648 13,172
9,066 7,280
2003
Source: Infraero
2004
2005
2006
2007
2008
Figure 23: ATM at Carlos Prates Airport, 2003 - 2008

16,084 16,124
13,850 11,956
8,655
8,973
2003
Source: Infraero
2004
2005
2006
2007
2008
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6.
TRAFFIC FORECAST
This section sums up the traffic forecast (domestic, international and total) for AITN for the period between 2009 and 2039. Forecasts for passenger traffic and cargo volume are presented. Details of the air traffic forecasts can be found in Chapter 3 of the Master Planning report. 6.1. Passenger Traffic Forecasts
6.1.1 Domestic Passenger Traffic Forecasts To forecast the domestic passenger traffic at AITN, a basic econometric model is used. Several assumptions are also made to derive the final forecast for each scenario. Figure 24 depicts graphically the trend of domestic passenger traffic at the AITN for the three scenarios. Between 2009 and 2039, domestic passenger traffic is expected to grow at a CAGR of 5.9%, reaching 26 mppa in 2039 for the Base scenario. In the Low scenario, domestic passenger traffic is forecast to grow at a CAGR of 4.7% reaching 18 mppa in 2039 while the High scenario will see the domestic passenger traffic grow to 34 mppa in 2039, at a CAGR of 6.7% Figure 24: Domestic Passenger Traffic Forecasts, 2009 2039
40
35
30
25 MPPA
20
15
10
0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Actual
Low
Base
High
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Table 13 summarises the projected CAGR of domestic passenger traffic at AITN for the various periods. Between 2009 and 2019, domestic passenger traffic is expected to grow at a CAGR of 8.3%. It will slow to 7.5% between 2009 and 2029 and to 5.9% between 2009 and 2039. Table 13: Projected CAGR of Domestic Passenger Traffic at AITN 2009 2019 2009 2029 2009 2039 Low 4.8% 5.7% 4.7% Base 8.3% 7.5% 5.9% High 10.9% 8.8% 6.7%
6.1.2. International Passenger Traffic Forecasts Similarly, the starting point for the international passenger traffic forecast for AITN is an econometric model. Several assumptions are then made to derive the forecasts for the three scenarios. Figure 25 depicts graphically the trend of international passenger traffic at the AITN for the three scenarios. Between 2009 and 2039, international passenger traffic is expected to grow at a CAGR of 14.5%, reaching 11 mppa in 2039 for the Base scenario. In the Low scenario, international passenger traffic is forecast to grow at a CAGR of 13.3% reaching 8 mppa in 2039 while the High scenario will see the international passenger traffic grow to 14 mppa in 2039, at a CAGR of 15.5%. Figure 25: International Passenger Traffic Forecasts, 2009 2039
16 14 12 10 MPPA 8 6 4 2 0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Actual
Low
Base
High
Page 41
Table 14 summarises the projected CAGR of international passenger traffic at the AITN for the various periods. Between 2009 and 2019, international passenger traffic is expected to grow at a CAGR of 33.3%. It will slow to 20.2% between 2009 and 2029 and to 14.5% between 2009 and 2039. The higher growth rates seen are due to the lower traffic base and the positive impact brought about by the various economic projects especially the BHMR Multimodal Corridor Hub. Table 14: Projected CAGR for International Passenger Traffic at AITN 2009 2019 2009 2029 2009 2039 Low 29.0% 18.2% 13.3% Base 33.3% 20.2% 14.5% High 36.4% 21.6% 15.5%
6.1.3. Total Passenger Traffic Forecasts Figure 26 depicts graphically the trend of total passenger traffic at the AITN for the three scenarios. Between 2009 and 2039, passenger traffic is expected to grow at a CAGR of 5.8%, 7.0% and 7.8% reaching 26 mppa, 37 mppa and 48 mppa in 2039 for the Low, Base and High scenarios respectively. Due to the faster growth in international passenger traffic, the share of domestic passengers will decrease to 71% while the share of international to total passengers will increase to 29%. Figure 26: Total Passenger Traffic Forecasts, 2009 2039
60
50
40
MPPA
30
20
10
0 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Actual
Low
Base
High
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Table 15 summarises the CAGR of total passenger traffic at AITN for the various periods. Between 2009 and 2019, international passenger traffic is expected to grow at a CAGR of 10.9%. It slows to 9% between 2009 and 2029 and to 7% between 2009 and 2039. Table 15: Projected CAGR for Total Passenger Traffic at AITN 2009 2019 2009 2029 2009 2039 6.2. Low 7.3% 7.2% 5.8% Base 10.9% 9.0% 7.0% High 13.5% 10.2% 7.8%
Cargo Volume Forecasts
6.2.1. Domestic Cargo Volume Forecasts To forecast the domestic cargo and mail volume at the AITN, a base econometric model is first specified. The results are adjusted by making further assumptions. Three scenarios are developed, namely Low, Base and High. Figure 27 depicts graphically the trend of domestic cargo and mail volume at the AITN for the three scenarios. Between 2009 and 2039, domestic cargo and mail volume is expected to grow at a CAGR of 7.3%, reaching 173,000 tonnes in 2039 for the Base scenario. In the Low scenario, domestic cargo and mail volume is forecast to grow at a CAGR of 6.1% reaching 121,000 tonnes in 2039 while the High scenario will see the domestic cargo and mail volume grow to 224,000 tonnes in 2039, at a CAGR of 8.1%. Figure 27: Domestic Cargo Volume Forecasts, 2009 2039
250
200
Thousand tons
150
100
50
0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Actual
Low
Base
High
Page 43
Table 16 summarises the projected CAGR of domestic cargo and mail volume at the AITN for the various periods. Between 2009 and 2019, domestic cargo is expected to grow at a CAGR of 8.7%. It will slow slightly to 8.3% between 2009 and 2029 and to 7.3% between 2009 and 2039. Table 16: Projected CAGR for Domestic Cargo and Mail Volume at AITN 2009 2019 2009 2029 2009 2039 Low 6.9% 6.7% 6.1% Base 8.7% 8.3% 7.3% High 10.4% 9.6% 8.1%
6.2.2. International Cargo Volume Forecasts Similarly, to forecast the international cargo and mail volume at the AITN, a basic econometric model is used. The results are then adjusted by making further assumptions. Figure 28 depicts graphically the trend of international cargo and mail volume at AITN for the three scenarios. Between 2009 and 2039, international cargo and mail volume is expected to grow at a CAGR of 9.1%, reaching 265,000 tonnes in 2039 for the Base scenario. In the Low scenario, international cargo and mail volume is forecast to grow at a CAGR of 7.8% reaching 185,600 tonnes in 2039 while the High scenario will see the international cargo and mail volume grow to 344,700 tonnes in 2039, at a CAGR of 10.0%. Figure 28: International Cargo Volume Forecasts, 2009 2039
400 350 300 250 200 150 100 50 0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Thousand tons
Actual
Low
Base
High
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Table 17 summarises the projected CAGR of international cargo and mail volume at the AITN for the various periods. Between 2009 and 2019, international cargo is expected to grow at a CAGR of 18.3%. It will slow to 12.1% between 2009 and 2029 and to 9.1% between 2009 and 2039. Similarly, the BHMR Multimodal Corridor Hub project is expected to add significantly to the volume of cargo handled at AITN. Table 17: Projected CAGR for International Cargo Volume at AITN 2009 2019 2009 2029 2009 2039 Low 14.6% 10.2% 7.8% Base 18.3% 12.1% 9.1% High 21.3% 13.6% 10.0%
6.2.3. Total Cargo Volume Forecasts Figure 29 depicts graphically the trend of total cargo volume at the AITN for the three scenarios. Between 2009 and 2039, cargo volume is expected to grow at a CAGR of 7.1%, 8.3% and 9.2% for the Low, Base and High scenarios respectively. In 2039, the total cargo volume at the AITN will exceed 430,000 tonnes. Due to the faster growth in international cargo volume, the share of domestic to total cargo will decrease to 40% while the share of international to total cargo will increase to 60%. Figure 29: Total Cargo Volume Forecasts, 2009 2039
600
500
400
Thousand tons
300
200
100
0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Actual
Low
Base
High
Page 45
Table 18 shows the CAGR of total cargo and mail volume at the AITN for the various periods. Between 2009 and 2019, total cargo is expected to grow at a CAGR of 14.2%. It will slow to 10.5% between 2009 and 2029 and to 8.3% between 2009 and 2039. Table 18: Projected CAGR for Total Cargo Volume at AITN 2009 2019 2009 2029 2009 2039 Low 11.2% 8.7% 7.1% Base 14.2% 10.5% 8.3% High 16.7% 11.8% 9.2%
7.
MASTER PLAN
From the air traffic forecast, a Master Plan for the expansion of AITN is developed. Details of the Master Plan can be found in the Master Planning report. In short, four phases of development are planned for the period between 2009 and 2039. Figure 30 shows the development plan for AITN at Phase 4. Phase 1, with the completion of the first phase of Terminal 2, which is expected to be completed by 2013, will increase the capacity of AITN from 7 mppa to 12 mppa. This increase in terminal capacity should be able to cater to the increase in the need for terminal space for the FIFA World Cup in 2014. By 2017, the second phase of the development plan would have been kicked in. In this phase, it would see the completion of the second phase of Terminal 2 which will increase terminal capacity from 12 mppa to 17 mppa. Phase 3 will see the implementation of the first phase of development plan for Terminal 3, which will increase the terminal capacity from 17 mppa to 27 mppa. This phase of development is expected to be completed by 2022. By 2029, the second phase of Terminal 3 expansion plan will be implemented and this phase will see the terminal capacity increasing from 27 mppa to 37 mppa.
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Figure 30: Phase 4 Development Plan for AITN
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37.

0 mppa TANCREDO NEVE S INTERNATIONAL AIRPORT

Capacity of T1 + T2 + Fully Completed Terminal 3 at

BELO HORIZONTE, BRAZIL

AIRPORT STRATEGY REPORT

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

MASTER PLAN ..................................................................................................46

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Figure 3: Main Exporting States in Brazil

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

OPERATING ENVIRONMENT ASSESSMENT

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Figure 4: Operating Environment Assessment Framework

Airport Capacity and Operation

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Source: ACI, Airbus, Boeing

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Figure 6: Comparison of Real per capita GDP Growth, 2009 - 15

2.6 2.4 2.4

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Table 6: Exchange Rates Changes of Major Currencies, 2009 - 15

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Figure 7: Minas Gerais Total Trade (bil USD), 1991 - 2008

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

94.11 91.44 91.39 91.36 89.60 89.44 89.14 88.43

Source: Conde Nast Travellers Magazine

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Figure 9: Travel and Tourism Competitiveness Index, 2009

Source: Travel and Tourism Competitiveness Report

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Figure 10: Global Competitiveness Index, 2009

Source: Global Competitiveness Report

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Figure 11: Top 10 Leisure Destinations in Brazil

17.0 13.6 12.1 11.5 6.7 6.4 5.8 5.4

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Figure 12: Top 10 Business Destinations in Brazil

4.1 Belo Horizonte

3.0 Foz do Iguacu

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Source: CAI Econometric Unit

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

Figure 14: IATA Connectivity Index of Main Brazilian Airports

93.7 43.0 22.6 20.4 19.4 16.4 15.2 14.7

Airport Consultancy Report for Tancredo Neves International Airport (AITN)

% of total traffic 43% 21% 8% 6% 5% 3% 2% 2%

Airport Consultancy Report for Tancredo Neves International Airport (AITN)