GAP wants to push back Jamaican airport upgrades to 2023

Pacific Airport Group, GAP, which controls two international airports in Jamaica, is awaiting word from its regulator on the adjustment to the timeline for heavy capital upgrades that it wants to push back to the start of next year.

GAP operates the Caribbean’s largest airport, Sangster International in Montego Bay, through MBJ Airport Limited, and Norman Manley International in Kingston, through PAC Kingston Airport Limited, or PACKAL.

Since the pandemic, which devastated the world travel market, the Mexico-based airport operator has been putting off capital projects agreed with the Airports Authority of Jamaica until the market regains its footing.

GAP said in its newly released annual report that the Montego Bay airport has requested a further deferral of its development programme “to begin in early January 2023, or as agreed with the AAJ”.

HEAVY FALL IN TRAFFIC DUE TO COVID-19

It had planned to invest US$213 million (about $32 billion) in projects over five years to 2024, across both local airports. That timeline was affected negatively by the heavy fall in traffic stemming from COVID-19. Additionally, the operator cannot unilaterally adjust its tariffs, which are regulated and comprise a key component of its revenue, so it’s been in negotiations with the Airports Authority on that issue, as well as new timelines for its capital projects.

“We filed a petition to review the tariffs, capital expenditures and the terms and conditions of the concession agreement for both airports due to the traffic impact of the COVID-19 pandemic. Our petition is under review; we expect a final decision during 2022,” the airport operator said.

GAP originally planned to spend US$22 million at Sangster International and US$35 million at Norman Manley this year. But that was before the onset of the pandemic.

It was a similar situation in 2021, where tens of millions was originally projected for upgrades to both airports. Instead, just US$4.6 million was spent at Sangster and US$2 at Norman Manley.

BOOSTING ENERGY EFFICIENCY

Additionally, since 2021, it’s been outfitting the two airports with solar systems to boost energy efficiency. The Kingston plant is expected to start generating electricity this year.

The Airport Authority’s negotiations with GAP is being done by a team comprising representatives of the AAJ, Ministry of Transport and Mining, Ministry of Finance and the Public Service, the Attorney General’s Chambers and the Development Bank of Jamaica. The team is to be assisted by a hired consultant.

The AAJ said previously that GAP already received grants of contractual relief provided by the concession agreement as remedies to ameliorate the adverse effects of the pandemic, which it called a force majeure event.

In 2021, Sangster International counted 2.6 million terminal passengers, of which some 11,300 were on general aviation flights – which describes private aircraft such as jets – and 7,300 were transit passengers. In 2021, NMIA counted 830,500 terminal passengers, of which some 6,200 were on general aviation flights and an additional 90 were transit passengers. Traffic numbers are down more than one-third from pre-pandemic levels.

The AAJ wants its hired consultant to assess the revenue forecasts for the airports, based on demand both prior to the pandemic and during the pandemic.

A total of 21 international airlines touch down at Sangster Airport in Montego Bay, and nine at Norman Manley. The principal airlines are American Airlines, which paid over 270 million pesos in 2021 (US$13.3 million) from passengers passing through Sangster. Jetblue paid over 190 million pesos in 2021 (US$9.3 million) from passengers passing through Norman Manley, according to the GAP annual report.

Flight arrivals are down from 2019, but over that period, MBJ had invested in expanding its food court to drive non-aeronautical revenues.

Sangster International’s largest commercial customers were food service company Express Catering, at US$2.1 million in 2021, US$4.4 million in 2020 and US$3.4 million in 2019; followed by lounge operator VIP Attractions Limited, at US$1.6 million in 2021, US$1.6 million in 2020 and US$900,000 in 2019.

NMIA’s largest commercial customers in terms of revenues paid were duty-free store TM Traders Limited, at US$2.1 million in 2021 and US$1.6 million in 2020; followed by Island Car Rental Limited, at US$400,000 in 2021 and US$300,000 in 2020.

GAP operates 12 airports in Mexico and two in Jamaica.

The group made a profit of 6 billion pesos in 2021, up 215 per cent from 1.9 billion pesos in 2020 and outpacing its pre-pandemic earnings of 5.5 billion pesos in 2019.

business@gleanerjm.com