Bienvenidos a Cancun: Privatization stimulates expansion at Cancun International Airport

Privatization stimulates expansion at Cancun International Airport CANCUN, MEXICO – Located on the Northeast tip of the Yucatan Peninsula in Quintana Roo, Mexico, Cancun International Airport (CUN) is the gateway to turquoise waters and white...


Privatization stimulates expansion at Cancun International Airport

CANCUN, MEXICO – Located on the Northeast tip of the Yucatan Peninsula in Quintana Roo, Mexico, Cancun International Airport (CUN) is the gateway to turquoise waters and white sandy beaches. A visitor less than five years ago might have been overwhelmed by the simplicity of the airport.

Today, despite the construction of the international terminal, visitors will find an extensive shopping area, stunning architecture, and decorating that reminds them they have reached paradise. Three years after the government turned over control of CUN to a private holding company through a privatization process, the airport has undergone millions in renovations, expansion, and technological improvements, and is ready to face continued growth.

Adolfo Castro, chief financial officer of ASUR (Grupo Aeroportuario del sureste, S.A. de C.V.), the private holding company that operates CUN, explains: "Cancun is a miracle. Believe it or not, 30 years ago, there was nothing at all. Not even ’old town.’ Today it has around $4.5 million just in hotel infrastructure."

ASUR has invested $70 million in
renovations at CUN, including this domestic gate area. Renovation costs at all nine airports are expected to total some $110 million.

In 1974 Quintana Roo was declared a state and Cancun opened for tourism. Visitors have been crowding the area ever since, helping to make tourism Cancun’s top industry.

Troublesome Tenants

Before the privatization process of some of Mexico’s
airports, a formal lease program for concessionaires at
airports did not exist. Adolfo Castro, CFO of ASUR, explains that when ASUR took over operations at Cancun, there were tenants that had not paid rent for more than five years.

"We received the airport pregnant with a lot of tenants, a lot of problems, tenants that were not paying rent, and tenants that were not complying with airport rules. So our first [project] was to change that."
The group was successful in evicting most of the tenants in the main terminal, but visitors through the airport can still see the remnants of one shopkeeper who refused to leave. "She’s asking 300,000 pesos for the ten square meters. We’re not going to pay that," Castro says.
ASUR has entered into litigation to have the tenants that are not paying rent evicted, including several in the international terminal.
In December 2001, ASUR decided it could not put off renovations in the international terminal any longer, and the construction work is now being done around the old tenants. Castro says that as soon as each is evicted, ASUR will complete the renovations.
Along with bringing new retailers to the airport, ASUR also redesigned the rent structure. "We cancelled the flat rent per square meter, and now have a royalty payment. At the end of the day we are partners in the same business. We have an alliance in objective. In this way we can better serve the passengers."

Cancun International Airport has seen passenger traffic grow at a rate of 7.4 percent each year for the last 12 years. And ASUR expects that the 7.7 million enplanements the airport is currently experiencing will increase substantially in the upcoming years.

PRIVATIZATION PROCESS

Three years ago the Mexican government made the decision to privatize 35 of the country’s 58 airports, which, according to Castro, was an effort to improve the airports.

Because of the structure of the government, money that was generated by airports was sent to the federal government and immediately became part of the national budget. If the airports needed money, they were often at the end of the receiving line. Castro explains that this left the airports badly in need of general maintenance and improvements.

This content continues onto the next page...

We Recommend