Expansion of Busy Latin America Airport Revised on Travel Slump

(Bloomberg) -- Colombia is scaling back a planned $2.5 billion expansion of one of Latin America’s busiest airports after the Covid-19 pandemic caused a collapse in air travel.

Bogota’s El Dorado airport, the country’s biggest, was set for an upgrade to more than double capacity to about 80 million passengers a year by 2050, from the roughly 35 million it saw last year. The outbreak of the pandemic will force the government to recalculate the plan, however, said Manuel Felipe Gutierrez, president of ANI, Colombia’s Infrastructure Agency.

“The dynamics of the airline sector have changed and as a consequence, traffic projections change,” he said in a phone interview. He did not specify how much the project would be cut.

The global air travel collapse has hit Latin America especially hard as governments enacted bans and anxious customers stayed home. The crisis, which has already forced three of the region’s largest carriers --Latam Airlines Group SA, Avianca Holdings SA, and Grupo Aeromexico SAB-- into bankruptcy, is likely to affect airports for years.

Fitch Ratings in April forecast a 48% decline in traffic this year for El Dorado’s operator, Sociedad Concesionaria Operadora Aeroportuaria Internacional SA, known as Opain, a division of Grupo Argos. Traffic is not expected to fully recover until after 2021, the ratings agency said.

El Dorado, the busiest cargo airport in Latin America and the region’s third busiest for passengers, was previously expected to see growth of at least 3.5% per year for domestic passengers and 3.9% for international through 2027, Fitch said in a report last year.

Opain didn’t reply to messages seeking comment.

Infrastructure plan

Colombia has been pushing to upgrade its infrastructure system with a series of airport, road, rail and waterway projects. The so-called 4G, or fourth generation, program, launched in 2014, is about 42% complete. Work was halted for less than a month due to Covid-19 precautions and is currently above pre-pandemic levels, Gutierrez said.

Investors continue to show interest in road concessions on a secondary market, allowing builders to sell their stakes and invest the capital in new civil works projects, he said. In February, Australian group Macquarie Capital announced the acquisition of a highway in central Colombia. And Medellin-based Grupo ISA recently completed an acquisition of a road concession on the Caribbean coast.

The expansion of El Dorado is part of an ambitious new set of projects known as 5G, which the government is currently structuring. The program aims to integrate travel systems across the country at a cost of around 50 trillion pesos ($13.7 billion).

Despite the pandemic, the projects are drawing attention in firms from France, Austria, Spain, the U.S., Colombia and Latin America, Gutierrez said, adding that some funds are crowd-funding for financing. He did not name them.

“There is interest from various pension funds to invest in infrastructure projects in the new generation of concessions, which we expect to happen between this year and the next,” he said.

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