Tue | Sep 17, 2019

MBJ Airport marks concession midpoint with strong growth outlook

Published:Friday | February 23, 2018 | 12:00 AM
CEO of MBJ Airports Limited, Dr Rafael Echevarne, in his office at Sangster International Airport, February 8.
CEO of MBJ Airports Limited, Dr Rafael Echevarne.

Halfway into its 30 year concession to operate the Sangster International Airport in Montego Bay, MBJ Airports Limited is upbeat about projected passenger traffic growth over the next 15 years and looking to improve on its 2017 record for passenger throughput.

The company aims to grow last year's 4.2 million passengers over the years to 6.5 million passengers when the concession runs out in 2033.

Expected future passenger numbers provided by MBJ are nowhere near the 8.3 per cent jump in people passing through the busier of Jamaica's two international airports in 2017 over the previous year, but the operators of the airport are pinning their hopes on a dramatic expansion in hotel rooms in the western region to keep passenger flows growing at a steady clip of 3.2 per cent in 2018 and tapering off to no less than 2.7 per annual growth by 2033.

CEO Dr Rafael Echevarne - whose track record includes postings in his native Spain, Canada, New Zealand, Australia, Denmark and the United Arab Emirates - is of the view that compared to other main tourism destinations, Jamaica has not begun to scratch the surface of its beach tourism potential, yet alone its possibilities for developing, marketing and making more accessible, its natural attractions such as its countryside, other geographical features and cultural offerings.

Two years into his assignment in Jamaica, the Spanish economist, who specialises in aviation business, is leading the next era of the airport's development that is intended to transform the facility into being an integral part of destination Jamaica itself.

As a result, a makeover of sorts is in the offing at the airport that handled 3.2 million passengers in 2003 when it was divested by the Government. Shops and kiosks are being reimaged to add a more authentically Jamaican look and feel, and a request for new concession proposals will go to the public soon as part of the revamp of its retail space.

The addition of the airport depot by coach service Knutsford Express is also part of the upgrade that embraces a multi-modal transport network with the airport as the hub, Echevarne said during an interview at his office inside the airport on February 8.

The "sense of place" of which he speaks is the soft aspect that is intended to define more planned brick-and-mortar developments at the airport being driven by rapid traffic growth.

These developments include expansion of the runway that started in January 2018 and is scheduled to be completed within three years.

Echevarne did not disclose the total cost of the runway expansion, but its first 12 months costs are included in a US$40-million capital works programme budgeted for this year, which is being 100 per cent financed through a new loan from Scotiabank.

Other improvements under way include the upgrade of airplane parking aprons and ramps, the addition of new arrival and departure gates, new air conditioning and ticketing area upgrade between March and December this year. Departure and arrival halls are to be expanded and car parks extended and modernised.

A new terminal building is to be built in the medium term beyond 2020, but the budget for it is yet to be finalised and the contract has not yet been advertised for tenders. International project managers LeighFisher have already been engaged. The design for the terminal expansion is expected to be completed this year.

Echevarne said the first 15 years of the Sangster concession was devoted to development of the physical infrastructure with expansion of existing facilities and the construction of a new East Terminal building. Total investments to 2017 stand at just over US$230 million, including approximately US$22 million in Government of Jamaica grants. While opting not to disclose total revenues or average annual income over the period, the CEO said the investors - Mexico's Grupo Aeropuerto Pacifico (GAP) and Canada's Vantage Airport Group - have been able to reap a positive return on their investment to this point.

Sangster was divested on March 1, 2003, by the P.J. Patterson-led Government. In 2015, Albertis sold its 74.5 per cent stake to GAP.

According to Echevarne, the Montego Bay airport is a significant player in the multiple airports in the Latin American and Canadian operations run by its owners, including GAP's 12 airports in Mexico and several in Canada run by dedicated airport managers, Vantage. He said MBJ comes in at number four for revenue contribution and is "a positive investment" for its owners.

Sangster airport derives its main revenues from airline landing charges and passenger fees set by the Government. An airport improvement fee is also part of taxes paid by passengers. Refuelling, in-flight catering and ground handling concession are other revenue streams. Commercial airport business is determined by the airport operators and provides revenues mainly from the leasing of some 67 retail shops and kiosks.

"Retail is doing well," the MBJ CEO said, noting that commercial operations account for some 28 per cent of non-aeronautical revenues.

An annual concession fee is paid to the Government by the airport operators and is calculated based on the flow of passengers and cargo through the airport.

MBJ, multiple-time recipient of the Best Airport in the Caribbean award, already has air links with 65 other airports, with the top destinations being traditional ports such as Toronto, Atlanta, New York Kennedy and Fort Lauderdale.

MBJ is serving as a model for other airports run by its owners in respect of the cordial and productive relationships. Just this past week MBJ Airport representatives were in Quito, Ecuador, promoting Jamaica jointly with the Jamaica Tourist Board at the Routes Americas 2018.