Brazil faces airport shortfall at World Cup

Brazil risks public embarrassment because it will run out of space at its airports well before it hosts the World Cup in 2014 due to a rapid increase in demand and inadequate development plans, according to leading airline industry executives.

Without more development, observers fear that Brazil will face flight delays and cancellations around the World Cup and, in the long term, constrained economic growth and continued substandard travel conditions.

“To avoid a national embarrassment, Brazil needs bigger and better facilities for the 2014 World Cup and the 2016 Olympics,” Giovanni Bisignani, head of the International Air Transport Association, the airline trade body, told a conference in Panama on Thursday.

“But I don’t see progress and the clock is ticking,” Mr Bisignani said. “The time for debate is over.”

The comments underscore long-running concerns that the country’s infrastructure will not be adequately prepared for the two high profile events that Brazil is due to host in the next six years.

“Even if earmarked investments are made as planned, we will reach airport capacity before the World Cup, given the demand creation we are seeing today,” according to Constantino de Oliveira Junior, chief executive of Gol Airlines, Brazil’s second-largest airline by revenues.

Much of the criticism has been directed at Infraero, the government owned company that runs Brazil’s 67 largest airports, for failing to develop national infrastructure or move ahead with plans to privatise key hubs as a way to inject capital and expertise.

For its part, Infraero says that it has an investment plan for the World Cup and will spend billions of dollars improving airports at the 12 cities directly involved with the event using prefabricated modules in many places that are quick and cheap to build.

Earlier in the year a report from McKinsey, the management consultancy, sponsored by the Brazilian development bank, concluded that 13 of Brazil’s 20 busiest airports already have severe bottlenecks.

To meet demand, by 2014, Brazil will need to invest up to R$8.4bn ($4.9bn) in its 20 largest airports, according to McKinsey. For comparison Infraero has earmarked about R$6bn until the end of 2014.

In a separate report published this week, Fitch, the rating agency, said that “airports need to be part of the new president’s 2011 agenda.

Otherwise the current problems will be further aggravated to the point where government intervention … will become unavoidable.”

By 2014 the market could reach 165m passengers a year, up from about 111m in 2009, while the World Cup could increase traffic by 10 per cent in a short space of time. By 2020, passenger traffic could hit 257m a year if GDP growth continues above 7 per cent.

In the long run to meet expected demand Brazil requires the equivalent of nine new airports, each one the size of Guarulhos, one of the country’s largest and busiest international airports, according to McKinsey.

Still, Mr Junior said that at least the problem is gaining recognition. “Everybody knows that we have to invest more in airport infrastructure. The authorities know that. All the candidates for president [understood] that.”