Airport upgrades to strengthen air travel in Peru

The largest airport in Peru, Jorge Chávez International Airport, located in Lima, was voted the best airport in South America in the Skytrax World Airport Awards for 2019. In line with this growing recognition and to improve its services for an increasing number of travellers, the facility is undergoing a major expansion that will increase its size from 2m sq metres to 9m sq metres. After a delay caused by disputes over the compulsory purchase of the land required to build the airport’s second runway, works began in October 2018 when the project received environmental approval.

In the Works

Lima Airport Partners (LAP), the company that operates the airport, invested $455m in upgrades through to December 2018. The firm is set to invest an additional $26m in 2019 for the continued expansion of the facility, which is expected to take a total of four years. Parts of the upgrade of the airport completed as of April 2019 included a new VIP lounge for domestic passengers that is double the size of the previous one, a remodelled domestic arrivals terminal and an expanded domestic baggage claim area with two additional carousels, bringing the total to six. The airport has also added an express bus service to central Lima, and new retail outlets have opened in both the domestic and international terminals, welcoming global brands such as Starbucks and TGI Fridays. In 2019 LAP plans to add 18 additional check-in desks in the domestic departures hall and five more departure lounges.

In March 2019 President Martín Vizcarra Cornejo said the government would invest $250m in the airport’s expansion during the year, as part of the total $1bn planned for the project. He called on LAP to comply with the time frame set out for delivery of the expansion works and, if possible, finish the new terminal building ahead of schedule, which was originally set to be operational in 2023. Echoing this wish, that same month Édmer Trujillo, the minister of transport and communications, told local media that efforts were being made to accelerate construction work of the second runway to allow it to be completed by 2021, one year ahead of schedule.

Factors at Play

Amid calls for the swift delivery of the project, the airport’s crowdedness – which is caused by a growing passenger numbers and flight frequency – is a source of concern among stakeholders. Therefore, the airport authorities are seeking immediate solutions to alleviate congestion so the upgrades can be carried out on time. LAP reported that the airport set a new record in 2018 by handling 22.1m passengers, when it was originally designed for a capacity of 10m.

“Work has at last begun on the expansion of Jorge Chávez International Airport, and it should be finished within four years. However, it is urgent that the government and LAP work on transition plans to alleviate the saturation and decide how to handle the almost double-digit annual growth in air traffic,” Carlos Gutié rrez Laguna, general manager of Peru’s Association of International Air Transport Companies, told OBG. “Domestic air traffic is growing even faster than international traffic, in part due to the proliferation of lowcost airlines, but also because the economy is more stable and the middle class is growing. Airlines are also targeting people who traditionally travel by bus.”

Indeed, passenger numbers are on the rise in part because the number of airlines using the capital’s facility is growing, adding to congestion on the runway and in the airport terminals. In April 2019 Chilean low-cost airline Sky began operating in Peru, initially offering flights between Lima, Cusco and Piura, with plans to add more routes later in the year. The airline has the goal of taking a 7% market share, which would equate to transporting 900,000 passengers per year. Sky is the second budget carrier in Peru after Viva Air from Colombia. Also in April, low-cost airline Norwegian received permission from Spanish aviation authorities to operate daily flights between Spain and Peru.

However, over-crowdedness is just one reason why the government is pushing for rapid expansion of the facility. Development of the project has been slow moving, largely due to delays caused by disputes over land ownership, with the required land belonging to various owners. However, stakeholders are ready to see the project through to completion now that most disputes have been settled. Indeed, when LAP set to work in October 2018 more than 99% of the 9m-sq-metre space was free of conflict and ready for building.

Regional Airports

Growing air traffic is leading the country to upgrade and develop regional airports as well. This includes expanding and building new passenger terminals, control towers, navigation systems, runways and car parks. Gutiérrez says offering more regional flights – such as direct flights between Trujillo and Cusco, along with Cusco and Pisco – could allow passengers to bypass Lima and thereby help limit congestion at the airport. After Lima, Peru’s busiest airports by annual passenger numbers are those in Cusco, Arequipa, Iquitos and Piura, according to the Airports and Commercial Aviation Corporation of Peru.

Aeropuertos del Perú (ADP), the holder of 11 airports concessions in Peru, announced in March 2019 that it had awarded a contract to the consortium Sener-Alauda from Spain to draw up technical details for the rehabilitation of runways and infrastructure at Pisco International Airport, costing $25m. In February 2019 ADP awarded a similar contract for the technical preparations for works on the international airport in Iquitos, at a cost of $31m. Work began on upgrades to Chiclayo International Airport that same month, which include new cargo and passenger terminals, and a fire station. The contract was awarded to the Spanish company Sacyr Construcción, with the works expected to cost $43m and conclude by August 2020.

In a bid to make the country’s regional airports more competitive, the Ministry of Transport and Communications (Ministerio de Transportes y Comunicaciones, MTC) plans to award concessions for eight additional airports by 2021, adding to those already under management by ADP, according to Emerson Castro, the technical coordinator for airports at the Transport Concessions Office. He added that the government also plans to upgrade airports not operated by the holders of concessions, and to create logistics platforms for freight at the airports in Pisco, Trujillo, Piura, Chiclayo and Lima. In November 2018 Castro estimated that passenger air traffic in Peru will grow by an average of 8.1% annually, totalling 30.9m passengers by 2021.

Cinchero Airport

Another development in the segment is the proposed Chinchero Cusco International Airport. The facility is expected to complement and then eventually replace the nearby Alejandro Velasco Astete International Airport. The initial stage of preparing and levelling the land began in January 2019, with the entire project expected to take between four and five years to complete, according to the MTC.

However, the project is proving controversial given the altitude of the site. An open letter signed by pilots raised concerns regarding the feasibility and safety of the airport, in addition to objections voiced by environmentalists and archaeologists. “The airport would be at a higher altitude than the existing airport and a higher altitude implies more restrictions, such as the weight of aircraft upon take-off,” Gutiérrez told OBG. “Just like a plane leaving Quito must land in Guayaquil to refuel before continuing a long-haul journey, this could restrict the routes that planes take upon leaving Cusco, making a Cusco-to-Europe connection very difficult.” Gutiérrez added that planes used to have to implement such measures on the Cusco-Lima-Miami route, but this was not financially viable and therefore discontinued.

Nevertheless, the MTC is committed to moving ahead on the development of the new airport. Proposals for technical assistance were received in April 2019 from companies in Canada, France, South Korea, Spain and Turkey, with final proposals to be submitted in May. Awarding the contract to build the Chinchero airport will then be carried out through a public tender process.