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Mexico’s Populist President-Elect Scraps $13 billion Airport Construction

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Mexico’s Populist President-Elect Scraps $13 billion Airport Construction

Mexico’s Populist President-Elect Scraps $13 billion Airport Construction
October 30
14:19 2018

LONDON – This past weekend Mexico hosted a referendum where citizens voted to either scrap or move forward with the construction of a massive US$13 billion new international airport, which is set to replace the current Mexico City Benito Juarez International Airport (MEX) that’s maxed out of capacity.

In a very surprising turnout, more than 70% of the voters asked to stop the construction.

The mega project, which is well underway with at least one-third of it completed, would cost Mexico more than $10 billion if the country’s President-elect, Andres Manuel Lopez Obrador, decided to indeed halt its construction.

Photo: Cuartoscuro

Alternatively, the President-elect is proposing to build two new runways at Santa Lucia Airport, located north of the city, to absorb the overflow that MEX has not managed to retain.

Moreover, Lopez Obrador proposed to upgrade Toluca Airport, located about 40 miles away from Mexico City, noting that by going in this direction, “billions of dollars would be saved by preserving the investment in the current airport facility.”

The potential cancelation of the new airport has detonated a massive drop in the Mexican peso. In fact, it’s been listed as the sharpest drop since US President Trump won the election in 2016.

Legality Of Referendum Questioned

There may, however, be a lifeline for the new airport’s project with a voter turn out of less than one percent of the Mexican electorate.

The opposing parties have lobbied that the vote cannot count as it did not follow the proper rules.

The vote was seen as informal, with numerous people voting several times throughout different voting centers.

Several experts in the field claim that the referendum is not legally binding. However, the President-elect has said that the vote of the Mexican people would be taken into consideration when his government decides on how to proceed.

Lopez Obrador is not due to take his seat until December 1, 2018. He had argued that the project, which has been hit by scandals of corruption, would later become a financial burden for Mexico.

The airport has been under construction since 2015 and has, so far, proved to be a challenging project.

IATA Strongly Against

In April this year, the Internation Air Transport Association (IATA) released a report that claimed that if a new airport is not constructed in Mexico City soon, the country would lose out on around 20 million passengers by 2035.

Such a loss of traffic would impact approximately $20 Billion in future GDP, according to experts.

In addition, the main issue highlighted in this report was also that the decreased job opportunities. The construction and operation of the new airport would bring 200,000 jobs to a population that desperately needs it.

Peter Cerda, IATA’s regional vice president for the Americas said, “The current airport is bursting at the seams. It serves 47 million passengers, almost 50 percent over its design capacity of 32 million.”

“A new airport is vital to enable Mexico City to benefit more fully from its ideal geographic position linking North America and Latin America.”

A passenger numbers chart from Sabre Market Intelligence showed the number of passengers traveling to/from MEX has been on a steady increase over the years.

The country has seen passenger numbers from 2012 of 30,000,000 people rise to over 45,000,000 by 2017 and with that number already continuing to grow by 5% during the first six months of 2018.

But today, Alexandre de Juniac, IATA’s Chairman, said that the potential cancelation of the airport’s construction is tremendously bad news.

De Juniac added during the ALTA forum in Panama City that “the new airport is needed. Canceling it would delay everything from five to 10 years. It would be a disaster,” he said.

Moreover, Luis Felipe de Oliveira, ALTA’s Director, said that the proposed plan to operate three airports in the region “is not viable,” citing that the inefficiencies would prove disastrous for passengers, airlines, and all stakeholders included.

“No one is going to make a connection through Mexico if they have to change airports. They’ll go to Panama or Bogota, instead,” he declared.

De Oliveira plans to fly to Mexico and meet with the new government as soon as possible, looking to find a suitable solution for the country’s aviation plans.

Aeromexico’s CEO, Andres Conesa, left the ALTA forum earlier than expected after learning the results of the referendum. His airline might be severely affected by the populist decision made by the President-elect, Lopez Obrador.

In the meantime, current President Enrique Pena Nieto, said yesterday that as long as he is in office, the airport’s project will continue moving forward full-throttle.


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Tomos Howells

Tomos Howells

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