BRAZIL: Weak Economic Recovery Hurts Airport Managers In The Country

(RTTNews) - The two-year economic recession that hit Brazil had significant effects on freight and passenger traffic in the South American country's airports, forcing the government and management companies to renegotiate concessions' terms.

The most notorious case involves the Viracopos airport, in Campinas, the third largest city in the São Paulo state. ABV, the Viracopos' administrator, decided to return the airport to the government after facing financial difficulties.

Official estimates at the time when the Viracopos concession was auctioned pointed that 17.9 million passengers would use the airport in 2016, but the real number was equivalent to half of this projection. Cargo movement was also below expectations, at 40% of the 409 thousand tons expected.

At the Guarulhos airport, the largest in Brazil, the management wants to renegotiate payments deadlines with the government. Those payments should total R$ 1 billion by the end of this year. So far, however, only R$ 115 million was disbursed.

In 2015, Brazil experienced the peak of air travel. Airlines transported 96,164 million people on domestic flights. In 2017, under the impact of the most severe economic recession to hit the country in the last century, there was a 7.8% decline in that traffic, to 88,648 million. Demand for air travel remained weak in the first half of this year, with a 0.6% decline in the number of passengers compared to the same period of 2016.

The difficulty faced by companies in honoring payments to the government also hurts the result of public accounts in Brazil. President Michel Temer's economic team has determined that this year the fiscal target would be a primary deficit of R$ 139 billion, but the slow pace of recovery in tax collection increased the risk of missing that goal.

Last month, the federal government nearly doubled a tax on gasoline and diesel oil in an attempt to keep the deficit from rising above the limit, but investors still show mistrust about the measure's effectiveness.