There is a saying in the English language about being ‘penny wise, pound foolish’. It is all about being extremely careful with smaller, inconsequential amounts of money, but ultimately losing any gains you might receive from those savings on extravagant larger purchases. A bit like what appears to be happening in Mexico City with regard to new airport infrastructure.
After suspending construction of its long-awaited brand new international airport due to concerns over its hefty investment, an expansion of the heavily constrained Benito Juárez International airport and conversion of the Santa Lucia airbase to handle commercial operations was deemed a better investment by the country’s President Andrés Manuel López Obrador, or AMLO as he likes to be known.
Now it has emerged that Mexico’s Defence Secretariat has adjusted the construction costs for the Santa Lucia Airbase conversion increasing the projected costs by around a sixth (17%) to MXN92 billion (USD4.7 billion) and that projection does not include the cost of studies or ATM equipment.
That cost is preciously close to the USD5 billion that had already been invested in the proposed new six-runway airport AMLO stopped in Oct-2018 and which has effectively written off. It will bring infrastructure investment levels up the USD13 billion estimated for the purpose built facility, but delivered reduced connectivity for Mexico City.
World Travel & Tourism Council president and CEO Gloria Guevara has described the conversion of Mexico City Santa Lucia Airbase to handle commercial operations as not feasible. She said: “We have the need for a quality airport… the experts I interact with from the ACI [also] do not believe the airport is feasible”. She added that the impacts of the cancellation of New Mexico City International Airport (NMCIA) will be felt in “about five years, we are setting ourselves in a great competitive disadvantage”.
While the new airport cancellation theoretically left AMLO with US10 billion in his pocket to pay for the social projects he treasures it is now clear that figure is being increasingly eaten into as costs escalate for the alternatives and as the scope of those alternatives grow.
Apart from the growing cost of converting Santa Lucia, which is now projected, out of nowhere, to handle 100 million ppa eventually, despite legal objections which held up and subsequently delayed the commencement of the procedure, costs are also growing at the other two airports which, with Santa Lucia, will handle Mexico City’s air traffic instead of one.
Plans are under way for a third terminal at Benito Juárez International, but it remains to be seen how much the expansion will alleviate congestion at an airport that is already operating well above its capacity. Ultimately, Mexico City’s potential to become a powerful global hub will be significantly diminished. And the bill will not be a low one; a decent new terminal for Latin America’s busiest airport will cost USD1 billion or more.
The three-airport system that deliver a “major commercial and technical” challenge, according to the International Air Transport Association (IATA), and will leave the industry in limbo. It’s regional vice president of the Americas Peter Cerda told CAPA TV earlier this year that a capacity crisis in Mexico City is looming.
Latin American and Caribbean Air Transport Association (ALTA) director Luis Felipe de Oliveira also believes that adding a third terminal Benito Juárez International will be insufficient to resolve capacity issues, due to the lack of runway capacity and issues with connections between passenger terminals. That suggests another runway may be required, along with additional terminal infrastructure. Another couple of billion dollars.
Then there is forgotten, overlooked Toluca, which was always the bridesmaid in all this. This 60km distant airport is the only one that is (part) privately owned, and only handled 700,000 passengers in 2018. It could have offered the entire solution to Mexico City’s capacity problem (and a strong case was made for it around five years ago) if the government had been prepared to countenance the cost of a high-speed downtown rail link.
Now, belatedly, the Government intends to add a second runway as part of its constantly evolving national plan to address Mexico City’s airport infrastructure saturation. Toluca will be expanded to handle 10 million ppa, the aforementioned runway and, while not yet mentioned, probably additional terminal infrastructure. Another USD1 billion bill, at least although the private sector might share some of that pain.
You don’t require a mathematics degree to work out that the costs of the three-airport system are stacking up. If you then also consider the USD5 billion that was written off on the abandoned ‘new airport’ then the bill is already very close to the one for that project. A case of ‘penny wise, pound foolish’?
READ MORE… A CAPA – Centre for Aviation report in Jun-2019 dealt with some of these issues in greater depth:Mexico City: future airport infrastructure mired in bad decisions