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Puerto Rico airport P3 draws many comments online

If all goes according to the government’s plan, by year’s end, the Luis Muñoz Marín International Airport should be under private management through a public-private partnership arrangement.

While dozens of representatives from the public, private and labor sectors asked for a turn to speak during last Friday’s Federal Aviation Administration-sponsored hearing on the proposal to transfer the operation of Puerto Rico’s main airport facility, the Luis Muñoz Marín Airport, out of the government’s hands, others have opted to go online to express their thoughts on the historic transaction.

So far, the docket set up by the FAA has drawn dozens of submissions, which upon close inspection reveal that interest in the proposed public-private partnership is wide-ranging, and is not just from locals, but from stateside organizations as well.

Most noticeably among those commenting are the Airports Council International, North America and the Maryland Department of Transportation.

While the ACI-NA did not take a position for or against the privatization of any specific airport, in its letter, the trade group said “we support greater flexibility for airports and their sponsors, increased independence of operations and means of developing investment capital to improve and expand facilities.”

However, the ACI-NA — which represents local, regional and state governing bodies that own and operate commercial service airports in the United States and Canada — said the local airport’s participation in the FAA’s Airport Privatization Pilot Program is positive.

“We believe this application represents a new approach in U.S. airport financing, oversight and management which will create opportunities for much needed airfield, terminal and concessions improvements at the Luis Muñoz Marin Airport. We applaud the…commencement of the public review and comment period on the application,” the Washington D.C.-based group said.

Friday’s daylong hearing session was the first and only of its kind that the FAA has scheduled on the island to address the P3 through which the government has selected Aerostar Airport Holdings, a consortium composed by Mexico’s Grupo Aeroportuario del Sureste and Highstar Capital, to take over LMM’s management.

Port of Baltimore

Contingent on the FAA’s final approval, Aerostar would run the airport facility for 40 years, during which the local government estimates it will receive some $2.6 billion in revenue and other benefits.

In its letter to the FAA, Maryland Department of Transportation Acting Deputy Secretary Leif Dormsjo compared the proposed LMM project to the P3 in place at the Port of Baltimore’s Seagirt Maritime Terminal, which transferred the administration of the facility to Highstar Capital’s Port America Chesapeake in January 2010.

Under the agreement inked, PAC is responsible for running the daily operations of the terminal and committing some $245 million in upfront capital investments, he said.

“I can report that Highstar Capital has been a strong and responsible corporate partner,” he said, vouching for the infrastructure investment fund manager. “The firm has been an active member of the local community, sponsoring civic events, charitable causes and educational programs.”

PAC’s management team maintains relations with the International Longshoremen Association and the American Federation of State, County and Municipal Employees, said Dormsjo referring to existing employee contracts.

Local groups drop comments
The online file also includes letters from several local hotels, namely the Courtyard by Marriott in San Juan and the San Juan Water & Beach Club — which were brief in their similar endorsements — as well as representatives outside the tourism realm, including the Puerto Rico Bankers Association and the Private Sector Coalition.

“The San Juan Water & Beach Club Hotel endorses Aerostar Airport Holdings’ intention to administer the Luis Muñoz Marin Airport,” said the hotel’s Vice President Joaquin Bolívar. “We believe that this deal is in the best interest of the future growth and development of the aviation and travel industries in Puerto Rico.”

Puerto Rico Bankers Association Executive Vice President Arturo L. Carrión

Meanwhile, in a three-page letter, the Bankers Association also expressed its support of the proposed P3, scrutinizing the transaction based on an analysis by economic firm Estudios Técnicos Inc. that concluded that by 2020, more than 22,999 jobs and $766.7 million in salaries would be supported by a projected increase in $4 billion in commercial activity at the airport.

“Estudios Técnicos concluded that the proposed P3 investment will result in substantial economic impact during the initial 10 years of the agreement,” said Arturo Carrión, executive vice president of the Bankers Association. “Local businesses will perceive $2.3 billion per year in new commercial activity, which will support 14,461 new jobs per year, and $437.4 million in annual salaries.”

Saying the needs of the airport “exceed the government’s capacity to finance its future development,” the group urged the FAA to evaluate the deal based “on the pursuit of the public interest and the economic well being of the Puerto Rican economy.”

The Private Sector Coalition said there could be “both positive and negative effects” from the P3 transaction that could only be gained by greater access to information on all aspects of the proposed deal.

The nonprofit that represents a broad swath of local business organizations also based its analysis on the Estudios Técnicos study, but said the government needs to provide more data and hike its transparency regarding all aspects of the transaction.

“Without the benefit of additional data and further clarification by the Commonwealth government we can only express that the Private Sector Coalition has endorsed the concept of the Public Private Partnership,” the group said.

The mayors of Ponce and Aguadilla — which host two of the island’s most active regional airports — also filed their comments online expressing their support of the P3, as it would benefit the future development of their facilities.

Private citizens weigh in
But not everybody who submitted their comments online is in favor of the deal.

In his comments, Josué Acevedo-Pagán, who owns transportation and logistics company Greetes, LLC, believes the proposed P3 will negatively affect Puerto Rico’s economy because the company investing is foreign “meaning that eventually the income generated from airlines and service providers will leave the island.”

“Second, the privatization will result in higher operating costs for airlines, service providers, rental car and transportation companies, among many others, these costs will eventually be passed to their customers,” he said. “Higher costs mean less travelers, less hotel occupancy, less conventions, less meetings, services companies like mine depend to subsist.”

“I believe that the privatization of the Luis Muñoz Marin International Airport will result in private monopolies, cross subsidization, higher air fare charges, and the loss of the opportunity of positive investments, other emerging airports will be forced to shut down as well,” he added. “The San Juan airport is a Puerto Rican patrimony and as such, shall be operated by the people of Puerto Rico.”

Meanwhile, citizen Ada Morales-Oyola also voiced her disagreement to turning over “Puerto Rico’s sole international airport into foreign private hands.”

“I also believe the lease is too biased in favor of the contractor and the public interest is not protected,” she said. “Employees are not protected and the contractor is given too much participation in decisions regarding other island airports.”

Describing himself as an “individual with no vested interest” in the transaction, citizen Jesús Padilla also expressed himself against the agreement, saying it will result in that “there will not be any upgrading to any of the other airports that are located in Puerto Rico.”

Jorge Bracero, president of Bracero Limousine, listed in detail some of the LMM’s most pressing needs to better serve arriving and departing passengers. (Credit: © Mauricio Pascual)

On the other hand, the owner of another well-known transportation service provider, Jorge Bracero of Bracero Limousine, addressed the age-old argument that the government has purposefully let the airport deteriorate over time.

“To that I say: There is no public administration that can correct the LMM’s operations. Period. Facilities such as our airport cannot be run without reinvesting in its infrastructure almost daily,” Bracero said. “Much less when staff directors change nearly every quarter.”

In his letter, he described a list of problems that need immediate attention, especially infrastructure-related problems he said affect the staff but also arriving and departing passengers.

“Of the improvements I mentioned, 90 percent of them involve almost no substantial monetary cost but rather the desire to make things right, as it should be,” he said. “We can not and must not continue with the hopes that our governments (past, present and future) will be able to carry [airport] to the place Puerto Rico and each of us deserves.”

The FAA has given the public through Nov. 19 to submit their comments on the transaction.

On Friday, agency representatives heard from key government officials — including Secretary of State Kenneth McClintock, Resident Commissioner Pedro Pierluisi, P3 Authority Executive Director David Álvarez, and Tourism Company Executive Director Luis Rivera Marín — as well as airport employee representatives, who spoke inside while a group protested outside the session that took place at the Verdanza Hotel in Isla Verde.

Author Details
Author Details
Business reporter with 30 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.

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