Colombia airport investment and construction opportunities improving as internal security improves


While Brazil faces up to a persistent economic decline, equally visible in passenger air traffic falling by over 25% at some airports in Oct-2015, and with similar weaknesses apparent in Argentina, the privatisation of airports – especially in Brazil – has slipped out of investors’ consciousness for the moment.

South America is a large continent though, and there are opportunities elsewhere.

This report examines the credentials of Colombia, a country that has had more bad press in the last decade or so than most, but which could be described as a surprise package, economically speaking. There are airport investment opportunities arising now, and in the near future.

Colombia, a "CIVET", with dynamic economic growth - still

Colombia is located in the northwest of the South America landmass. The country is bordered by Venezuela, Brazil, Peru, Ecuador and Panama. Bogotá is the capital and the next largest cities are Medellín, Cartagena and Cali. The Andes mountains run north-south down the country and the eastern part – mainly virgin rainforest - is considerably less populated than the section that is west of Bogotá to the coast, and border with Panama. The country’s population is 46.7 million (Jul-2015).

Location map for Colombia

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In a previous CAPA report Colombia was identified as one of the CIVETS, a group of widely dispersed countries (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) that were all dynamic and diverse emerging economies, having inflation under control and sophisticated financial systems, with an absence of sovereign debt bombs. They also shared common problems that could influence airport investors adversely, such as unemployment and corruption.

According to The Economist Intelligence Unit, which coined the phrase, the CIVETS would have healthy growth rates for the next 20 years, which would be double the levels predicted for the G7 (now G8) countries. This is not the topic to evaluate all of these, but Vietnam and Turkey stand out as two of that group that have fulfilled their promise, as well as Colombia.

Colombia was identified as having the following positive characteristics:

  • A large and diverse country with a relatively advanced economy;
  • Primary commodities remained its main exports (in particular crude oil, coal, coffee, and non-ferrous metals). It competed on a global scale in these commodities;
  • The world’s fifth largest coal producer (2008);
  • Second only to Brazil regionally for hydro electric power – the Ituango scheme cost USD2.4 billion and produces 2400 MW;
  • The third largest global coffee producer after Brazil and Vietnam;
  • The largest supplier of cut flowers to the US;
  • A major producer of gold and supplier of 70% of the world’s gem stones;
  • The largest producer of nickel in South America.

Little appears to have changed significantly for the worse since the earlier CAPA report was published four years ago. Stability in macro-economic and monetary policies has become the watchword.

Sound economic policies and aggressive promotion of free trade agreements in the intervening years have bolstered Colombia’s ability to weather external shocks. Real GDP has grown more than 4% per year for the past four years, following almost a decade of strong economic performance.

Colombia's GDP growth rate bettering those of Argentina and Brazil

A positive picture is painted by the GDP growth rate, which at 4.5% in 2014 was better than those of both Brazil and Argentina. It is expected to decrease this year, and in following years, as depicted in the chart below.

GDP Growth of Colombia (percent change)

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Colombia's government debt has been upgraded to investment grade, which helped to attract record levels of investment in 2013 and 2014, mostly in the hydrocarbons sector.

Colombia still depends heavily on energy and mining exports though, making it vulnerable to a drop in commodity prices. It is now the world's fourth largest coal exporter and Latin America's fourth largest oil producer as well.

The lack of infrastructure is still an issue that impacts negatively on many industries. It stymies economic development in a country with an unemployment rate of 9.1% (2014); one of Latin America’s highest and one that will decrease only slowly in coming years.

Unemployment rate of Colombia (percent of total labour force)

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Santos government looks to the world for business

The current centre-right Santos Administration's foreign policy has concentrated on bolstering Colombia's commercial ties and boosting investment at home. Colombia has signed, or is negotiating, free trade agreements with more than a dozen countries. The USA has become a particularly strong investor in Colombia, while Spain has never gone away.

Indeed the administration is carrying on where previous administrations left off. The previous President, Alvaro Uribe, had also invoked pro-market and pro-business economic policies, facilitating the integration of foreign firms and individuals into the market. FDI reached a record USD10 billion in 2008 during his regime, and provided a platform for future investment. The government offered a further incentive through the instigation of a national five and 10 year infrastructure plan.

Colombia is also a founding member of the Pacific Alliance – a regional grouping formed in 2012 by Chile, Colombia, Mexico, and Peru to promote regional trade and economic integration. In 2013, Colombia began the process for joining the OECD.

So, many of the factors are in place for foreign firms to trade successfully with, and invest in, Colombia. Another one is that Colombia has been declared in surveys to be ‘the easiest place in Latin America to do business’. There is, however, a caveat. It is not always the case that support is available for investors from what remains a bureaucratic country.

Investment is evident in the airports sector, where there has been a considerable degree of privatisation activity already, and most evidently at the capital city airport, Bogotá.

The total number of passengers using Colombia’s airports each year has increased to around 33 million by way of 11% year-on-year growth. Passenger growth is now anticipated by local airport sources to be in the order of 5-8% per year over the next 10 years, thereby requiring further airport upgrades across the nation.

Regulation – responsibilities shared between the aviation authority and the infrastructure agency                                                                        

The regulation of air transport in Colombia, insofar as it affects airports, is as follows:

Aerocivil is the national civil aviation authority and regulator of Colombian airspace. It is also the owner of most of the public sector airports, apart from a few municipally owned ones such as Pereira (Matecaňa Airport), although often it is not the operator.

ANI is the national infrastructure agency, and the one which awards and controls airport concessions. It has two main divisions, an awarding division and one that controls contractual management.

The state believes it should always remain as the regulator, but that private entities are better at operations.

This is a relatively recent change of role emphasis: ANI becoming a ‘friend of concessions’. Once an airport reaches a position where ANI concludes it can make money, then it is rapidly placed into a concession bidding marketplace. Not all of them can make money, and it is the private sector that has thrown out some airports it has been offered, as will be demonstrated shortly.

Airport concession agreements have changed over time

Airport concessions began in the 1990s and have been signed at different times with different government priorities, contractual obligations and rights. They can be classified by generation.

The first generation concessions, in the mid-1990s, included Cartagena and Barranquilla airports.

Cartagena went to Sociedad Aeropuertos del Caribe S.A. (SACSA) in 1996, and Barranquilla in 1997 to the company Aeropuertos del Caribe S. A., which is known by the acronym ACSA, (not to be confused with Airports Company South Africa, which has the same acronym). Both were in cooperation with Spain’s AENA, which was a minority shareholder. Also – a rare example of a runway-only concession, anywhere – the runway at Bogotá’s El Dorado airport, which went to CODAD (Abertis Airports).

These concession periods were for only 15 years, which was considered too short by many bidders.

The second generation example is the Cali Airport, which was awarded to Aerocali in 2000 – this time for 20 years – after the wake-up call from the first round had registered with the government. The quid pro quo, however, was that the contractual commitments of the operators were increased.

The third generation examples come from the mid-2000s. The most important one was the Bogotá El Dorado airport concession to the consortium Operadora Aeroportuaria Internacional (OPAIN) in 2006, comprising Colombian construction and engineering companies and Flughafen Zürich. This concession excluded the runway, on which the separate deal was already in existence.

Other third generation concessions included:

  • San Andrés & Providencia airports, close to Nicaragua, to CASYP consortium (2006). This was not a successful deal, with the operator not fulfilling its obligations. It was revoked, and the concession is now vacant, due to be re-tendered in 2016;
  • North Central Airports (to Airplan, 2008, eight airports anchored on Medellín);
  • Northeast airports (to Aeroriente, 2010), six airports anchored on Bucaramanga;
  • Barranquilla Airport, serving an important industrial city on the Atlantic coast. It is the most recent, and was retendered in 2015 – this time to Grupo Aeroportuario del Caribe.

The two other airports that were to be included with Barranquilla were left out on the basis of lack of profitability, and a solution for them is yet to be found.

San Andrés Gustavo Rojas Pinilla International Airport annual passenger numbers

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The way in which the process has developed over time can be summarised:

The first and second generation deals were only for operation and management of the airports, while the third generation deals also included the execution of expansion and modernisation works.

But increasing obligations have been matched by increasing benefits. Thus far, over 90% of passenger traffic travels through concessioned airports compared with 20 years ago, when it was just 9%.

New concessions will need to be awarded to replace contracts expiring in the following years, and both Aerocivil and ANI are particularly looking for international experience in airport master planning. At the same time projected costs must be more reasonable. Moreover, a debate is taking place about who should assume which risk, and under what conditions. This refers back to the failed San Andrés & Providencia deal that was mentioned earlier.

Five consortia now control many of Colombia’s airports

Colombia has attracted foreign investors to its airports for several decades now. Spain’s Abertis Airports (which no longer functions) had the runway management contract at Bogotá’s El Dorado airport for example, and in 2007 Abertis also acquired Desarrollo de Concesiones Aeroportuarias, a holding company with stakes in 15 airports in Central and Southern America, including Colombia.

Latterly it is consortia that are operating airports, and they tend to be formed out of local Colombian companies working either with established foreign operator/investors or construction companies. Spain figures highly in these consortiums. There are Asia Pacific based companies too, but the Chinese are not yet in evidence. Where a consortium is made up of Colombian companies only, there is a tacit acceptance that they might benefit from some foreign expertise.

OPAIN likely to operate the second "complementary" Bogotá airport

OPAIN is the most important concessionaire at this time, and it has operated during both the second and third generation concessions. Its original concession duties were to expand (traffic, not infrastructure) at Bogotá’s El Dorado airport. At the commencement of the concession the airport had some eight million passengers annually, and 500,000 tons of cargo. The contract specified that OPAIN should double both amounts.

There is some residual military activity at Bogotá airport but this is being reduced, with a new airport for the military to be provided.

Land was previously acquired by Aerocivil for expansion but El Dorado II has taken precedence as a ‘complementary’ airport, also likely to be operated by OPAIN unless someone else makes a better offer that embraces all the parameters (revenues, costs, management, investment etc). While there is no official ‘right of first refusal’ to OPAIN, its knowledge of the market and operational matters at the existing airport give it an advantage.

El Dorado II will be to the west of the present facility. It is a new project at an embryonic stage, and is intended to be constructed as a PPP exercise with a 20 year concession, with national (domestic) operators in the main. International companies are needed for the supply of operational equipment.

While El Dorado II’s future is decided, expansion works have started very recently at the existing airport. According to the CAPA Airport Construction Database, the project will be divided into four stages and is expected to conclude in two years. Immediate works involve terminal expansion by 38% to 239,100sqm, introducing additional aircraft parking spaces and demolishing the old control tower for a new replacement. Both public and private investment is involved and the objective is to increase passenger capacity to 60 million per annum.  27.4 million passengers used the airport, which is Latin America’s third busiest, in 2014 (see table).

Top 10 Airports (2014), ranked by passenger numbers 



Passenger numbers


Sao Paulo Guarulhos International Airport



Mexico City Juarez International Airport



Bogota El Dorado International Airport



Brasilia International Airport



Sao Paulo Congonhas Airport



Cancun Airport



Rio de Janeiro Galeão International Airport



Santiago International Airport



Lima Jorge Chavez International Airport



Buenos Aires Aeroparque Jorge Newbery Airport


Bogota El Dorado International Airport capacity, seats per week, all carriers

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Bogota El Dorado International Airport annual passenger numbers

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Airplan manages both Medellín airports

Airplan is a Colombian/Chinese consortium that in 2008 won the right to operate the Olaya Herrera airport at Medellín in Antioquia (Colombia’s second city and the financial centre) and five other airports in the north-central region of Colombia, for a period of 40 years.

The other five airports are (city/province):

  • José Maria Cordóva (Rionegro, Antioquia);
  • Antonio Roldán (Carepa, Antioquia);
  • Los Garzones (Montería, Córdoba);
  • Las Brujas (Corozal, Sucre);
  • El Caraňo (Quibdó, Chocó).

Not only had the concession period been extended considerably during the third generation deals, the requirement was also extended to include the administration, operation, commercial exploitation, modernisation and maintenance of the airports.

The objective was to increase cumulative passenger flows from two million ppa to 10 million ppa.

The Olaya Herrera airport is in the centre of Medellín. The José Maria Cordóva airport is about one hour’s drive from that city. To have two airports that close together is not common in Colombia, but is representative of the express need of the city to facilitate international flights to support its business and financial activities (José Maria Cordóva).

The Quibdó airport is on the Pacific coast. Master planning exercises are currently under way at the Corozal, Quibdó, Montería and Carepa airports.

At José Maria Cordóva Airport cargo terminal remodelling and expansion are taking place, partly as a result of airlines such as Avianca shifting freight services from Bogotá, driven by both geographic and meteorological reasons. The airport has commenced a feasibility study for the construction of a second runway. The initial study was budgeted at COP3760 million (USD1.2 million) and consists of ground and meteorological survey. Additionally, COP223 million (USD72 million) will be invested on the expansion of the domestic and international terminals.

Other examples of construction activities are:

  • Olaya Herrera Airport: USD2.3 million construction of ATC Tower and VIP terminal;
  • Los Garzones Airport: USD9.8 million expansion of passenger terminal building.

Medellin Jose Maria Cordova Airport annual passenger numbers

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Medellin Jose Maria Cordova Airport international capacity, cargo payload, by region, 16 to 22-Nov-2015

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AeroOriente – manager of the northeast region airports

AeroOriente is a Colombian/Korean consortium that won the concession for six airports in the northeast region of the country for 25 years, in 2010. Traffic has increased by 16% during that period and total passenger traffic was 3.9 million in the period Jan-2015 to Sep-2015.

The six airports are:                             

Passenger throughput varies from 100,000 to four million ppa. Palonegro Airport is investing USD7.95 million in the expansion of its passenger terminal. The Simón Bolívar Airport’s runway will be extended at a cost of USD79.4 million, in addition to other works including a new ATC tower. The runway could be extended into the ocean, and that possibility remains under examination.

A terminal expansion is planned for Camilo Daza Airport, up to 4,350sqm. Finally, the government will invest USD4.7 million for a new terminal at Yarigüies, in what is a major oil refining port.

Grupo Aeroportuario del Caribe invests heavily in Barranquilla Airport

This consortium won the concession contract for the Ernesto Cortissoz Airport in Barranquilla (the main city on the Caribbean coast), in 2015, and this time for only 20 years. Passenger traffic has increased by 16% and in the first nine months of 2015 it has handled two million passengers.

USD120 million of investment will be made during the next 10 years, including the remodelling of the passenger terminal and the construction of a new cargo terminal.

The group is mainly formed of local companies, with experience of engineering and finance rather than airport operations. Accordingly some team building remains to be done.

Aerocali – the smallest concessionaire

Aerocali is a Spanish-Colombian consortium that in 2000 won the concession for the Alfonso Bonilla Aragn Airport in Cali, for 20 years. Airport expansion was by a consortium of the local company Latco and Portugal’s Opway, and this is continuing.

That airport is approaching its capacity limits, with movements approaching 80,000 per annum.

Forthcoming master planning opportunities

Typically, master planning contracts are negotiated and agreed with Aerocivil, though it should be noted that ANI can also issue master planning tenders.

The master plan for the Olaya Hererra Airport is anticipated to be tendered in the first week of Dec-2015. It was to have been tendered with the José Maria Cordóva airport, but for political reasons they were split.

The master plan for San Andrés & Providencia airport is expected to be tendered in 1Q2016 and to be valued at an estimated USD2.3 million.

Also in 1Q2016, the master plan for the northeast airports will be tendered with an estimated value of USD2.6 million.

A tender for the structuring of the El Dorado airport, after the completion of the master plan, will go to tender at the end of 2015. The anticipated value is USD3.8 million.

Some construction works contracts are likely to be tendered to increase capacity in the Montería and Valledupar airports.

Finally, the intention remains to issue concession tenders for the three unprofitable airports that were to have been tendered with BarranquillaArmenia, Popayán, and Neiva – but which were suspended because of a lack of any investor interest.

The Risks – government is pro-private sector but it has its own agenda

There is negligible political risk – or so it is claimed, on the grounds that the government is “committed” to foreign private sector participation in airport projects and concessioning, and irrespective of any agreements for joint ventures with local companies. The current centre-right government is expected to remain in power in the foreseeable future.

In previous deals, risk has been awarded to the concessionaire. In future it is likely that each project would be assessed on a case by case basis. There remains a fundamental dichotomy, though, between the potential concessionaires, which seek to mitigate risk as far as possible and increase their profits, and the state, which is more concerned with increasing service levels, gaining more rent for itself and decreasing the cost of operations so that air travel becomes cheaper for the population.

There have been longer concession periods and the results have been better for those concessionaires (and thus the government), who have also benefitted from more opportunities to expand. It is understood by the government that potential concessionaires will continue to make these demands, and it is expected to soften its approach.

Colombia's security situation improving

Despite the bad press that Colombia has received in the past regarding internal security (many countries’ foreign affairs departments still urge visitors to use extreme caution), public order has improved consistently over a period of 10 years. A peace process is under way, as acknowledged (for example) by the US Department of State, which advises that travel in and around major cities is safe, but still insists that its own employees may not travel by road in some areas.

The British government Foreign & Commonwealth Office advises against all but essential travel to some departments (provinces), including some that are mentioned in this text, and states that there is still a high threat from terrorism.

Colombia’s drug wars between the government and the Farc rebel group, escalated in the 1990s, but violence has been on the decrease during the last decade, even if some residual clashes remain.

The Santos administration is using tax reform to help finance implementation of the peace deal, in the event Farc and the government reach an agreement in 2015 or 2016.

President Santos and the leader of the Farc, known as Timochenko, set a six month deadline to sign a peace deal in Sep-2015. Negotiations have been taking place in Cuba since 2012, brokered by Cuban President Raul Castro, with input from the Vatican. The guerrilla group also agreed to surrender its weapons within 60 days of a final accord being signed.

Colombian officials estimate a peace deal may bolster economic growth by almost 2%.

The remaining opportunities include San Andes & Providencia and El Dorado

The San Andrés & Providencia airport concession that was revoked must be awarded to somebody, which could be of interest to organisations that are not risk averse.  The El Dorado runway concession will be expiring and will offer another opportunity, though it must be weighed against the future impact of El Dorado II.

There are no formal restrictions on foreign company involvement in Colombian projects. As mentioned earlier in the report there is already a large presence from Spanish companies (though that is only to be expected, they have always played a major role in Latin America), and also from Chinese and Korean companies.

Tenders take around 12 months to be evaluated and decided upon.

Summary and conclusions: investment opportunities are improving significantly

Considering its relatively small size, Colombia plays an important role in Latin American aviation. Bogotá is the third busiest airport in Latin America, one that is considerably bigger than those at cities such as Rio de Janeiro, Santiago, Lima and Buenos Aires. Strong passenger growth is expected over the next 10 years.

The diverse economy is on an increasingly sound footing, under the auspices of an outward looking centre-right government that promotes free trade. Concerns remain about a high unemployment rate, which is impacted by insufficient infrastructure investment generally.

Regulation of air transport that affects airports is under the control of two separate departments – civil aviation (Aerocivil) and infrastructure (ANI), as it is in many countries, which creates occasional overlap of responsibility but no issues of serious concern. ANI has become the ‘friend of the concessionaire’.

Airport concession agreements have matured through three generations of deals. The first and second generation deals were only for operation and management of the airports, while the third generation deals also included the execution of expansion and modernisation works.  Their duration has increased overall, as concessionaires have requested.

The Colombian-Spanish joint venture OPAIN is the most significant one, as it has the concession on Colombia’s main airport. It will likely be awarded the concession on ‘El Dorado II’ as well, though that is not written in stone. Meanwhile there is a considerable degree of construction work taking place at the existing airport.

Many of Colombia’s other airports are now managed by one of four other consortiums: Airplan, AeroOriente, Grupo Aeroportuario del Caribe, and Aerocali, some of which have foreign participants.

A number of master plans will be tendered by the end of 2015 and in early 2016. The unprofitable airports that were to have been tendered with Barranquilla (Armenia, Popayán, and Neiva) will come back on the market.

The government is stable, centre-right, and favours foreign private sector involvement in the airport sector. However the situation regarding concession length remains fluid.

The security situation continues to improve, although some parts of the country still remain off limits to foreigners. An anticipated peace accord with the rebel group Farc could make a dramatic difference to the country's future.

Most of the main airports are already under concession, however some smaller deals are imminent, and the government is keen to clear the decks of those airports which attracted very little interest previously.

Moreover, some of the early contracts will reach their expiry dates within the next few years (Cali, for example). There is no absolute certainty that OPAIN will be awarded the concession on El Dorado II. 

Overall, the greatest opportunity for foreign firms in the immediate future will be in consulting, master planning and equipment supply.

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