The International Olympic Committee’s decision on 2 October to select the Brazilian capital of Rio de Janeiro as the host city for the 2016 Olympic and Paralympic games is likely to have significant repercussions for the future infrastructure and economic development of the nation.
From new investment in roads, airports and railways to the rapid development of the country’s hotel and tourism industry, Brazil will witness the launch of a number of large-scale projects over the course of the next seven years.
The fact that the country will also play host nation for the 2014 FIFA World Cup only provides further incentive to complete necessary infrastructure upgrades on time and problem free. According to UK Trade & Investment, Brazil’s infrastructure could require an investment of £10–30bn to successfully prepare for the event.
Realising this, the Brazilian government has already launched its flagship investment programme aimed at stimulating economic growth and developing infrastructure. Announced in 2007, the Accelerated Growth Programme has allocated about £208bn for the next four years and a further £125bn for investments post-2010. By the end of 2009, the government hopes to have outlined state-funded infrastructure projects that can support the World Cup in 2014.
As the fifth-largest country in the world and the most influential economy in South America, Brazil is under particular pressure to successfully deliver for the Olympics Games, which it faced stiff competition from the US to host. The event will mark the first time a South American country has hosted the event and with Brazil now being widely considered alongside Russia, India and China – together they form the powerful BRIC emerging economies – the spotlight for the event will be evermore intense.
Improving transport links remains a particular priority for the Brazilian government and the country’s airport sector is likely to receive serious attention. Brazil has more than 2,000 officially registered airports, of which 66 account for over 95% of all passenger traffic.
During 2008’s economic recession, the top 20 Brazilian airports showed a combined decrease in aircraft movements of 2.5%, which compares favourably to figures in Europe and the US.
In recent years, the Brazilian airport operator Emprese Brasileira de Infra-Estrutura Aeroportuaria, more simply known as Infraero, has invested heavily in airport expansions and modernisation programmes. A further £1.4bn is estimated to be invested in the nation’s airports during the next five years to offer appropriate levels of service for passengers during the World Cup and then the Olympic Games.
We caught up with Frost & Sullivan’s industry consultant for airports Matheus Salvadori to find out what this could mean for Brazil’s airport sector:
Alex Hawkes: How do you rate the levels of airport infrastructure across Brazil and which areas in particular are lacking sufficient aviation capabilities?
Matheus Salvadori: About six years ago the Brazilian Government created a stake holding company (Infrareo) responsible for managing and operating about 95% of the country’s airports. The aim was not only to blend and budget future movements in terms of airport expansion and passenger demand, but also to become the interface between the airports and commercial entities, such as shops and airline services.
In terms of what Infrareo faces now, some airports are lacking the landside infrastructure to operate for a higher demand of passengers.
"We estimate that about 500,000 new tourists will visit Brazil for the World Cup. If you take into consideration that every person will potentially make at least three trips between cities, that equates to an additional three million departures during the month of the World Cup.
It is a substantial increase from what Brazil can cater to now and presents two major problems – firstly how to handle and manage passengers in airports and terminals, and secondly how to handle the increase in aircraft flying across the Brazilian skies.
Some years ago, Brazil encountered severe problems from air traffic controllers going on strike. They were supposed to be operating nine aircraft at a time but were instead operating beyond their capacities and handling 12 or 14. From what we can gather, Brazil can lack reliable airside services, particularly on the navigation front. This is an area the authorities will have to address.
AH: What level of investment in airport infrastructure is likely to occur in the lead up to the World Cup and the Olympic Games?
MS: Over the next five years, about £1.4bn will be invested by Brazil in airports for the World Cup. We are likely to then see more investment for the Olympics Games.
It is useful that the country is able to use the World Cup as an infrastructure test ahead of the Olympics, but at the same time the world will be judging how it will handle that tournament. There is a fear in Brazil at the moment of being compared to South Africa, which is struggling to get all projects 100% complete before the beginning of the games.
It is likely Brazil will therefore turn to public-private partnerships to leverage more money to achieve that.
AH: So what business opportunities will this offer to domestic and international airlines, airport operators and airport technology solution providers?
MS: Security and safety will be of the utmost priority. Brazil is likely to leverage the knowledge of other cultures when it comes to those areas, in particular examining how other enforcement agencies interact during large-scale events.
The UK, for example, is very developed when it comes to the defence sector and this could be an area that Brazil leverages on. Automated baggage-handling systems and radio-frequency identification technology will also be areas the country could explore, especially as those systems generally don’t exist in that region.
AH: How does this situation differ, to say, London’s efforts to prepare for the 2012 Olympic Games?
MS: London has a very developed system of international hubs and regional airports that are supported by an extensive city transport network. It is very easy for people in England to travel within their own country while in Brazil this is not the case. Low-cost airlines exist in Brazil but they are not necessarily low fare, which brings problems when travelling from Rio to other cities.
It is, of course, complicated to compare the two situations due to the vast geographical and cultural differences.
AH: Finally, is such investment in Brazilian airport infrastructure likely to have strong repercussions for the nation’s aviation sector even after the games have been held?
MS: One of the key goals for Brazil is making the nation a transport hub for the whole of Latin America. It needs to establish three or four major international airports which then connect to other South American countries and regional locations. We believe the country is likely to see an increase in regional airports in the next decade to achieve this.