News Article

NAIM is No More; Regionalization the Way to Go

Thu, 12/06/2018 - 11:17

Even before entering office, the new President Andrés Manuel López Obrador (AMLO) issued a popular consultation to get feedback from the population on the construction of NAIM. The result green-lit an alternate development in Santa Lucia. But, is this enough to solve the connectivity issues plaguing the country? Maybe for the short-term, said Francisco Bautista, Leading Partner of the Aerospace Industry at EY during a panel of experts at Mexico Aerospace Forum 2018 (MAF) held at the Sheraton Maria Isabel hotel this Wednesday.

“Santa Lucía is a short-term solution, maybe for the next 15-20 years,” he said. At the moment, the Santa Lucia project is still at a conceptual stage and there is no certainty of when the project could begin or end. Furthermore, panelists agreed it does not contemplate further development of the aviation industry.

“Industry growth has been exponential since 2010, especially with the introduction of low-cost airlines,” said Bernardo Moreno, CEO of Redwings. Both executive aviation and MRO services have felt the surge in the industry, even considering the economic and political hurdles the country is currently facing. “Demand in MRO services has already surpassed the available offer,” said Jesús Navarro, CEO of Mexicana MRO. “The company had to reject 10 services between February and June 2018 because of lack of space. Furthermore, the company had not planned new hangars at the Mexico City Airport because we were planning to move by 2021.”

This challenge could be even further exacerbated according to Navarro, following AMLO’s strategy to decentralize government dependencies. “This situation will create more demand, which means we will have to strengthen routes that do not go through Mexico City,” he said.

The problem for Moreno, however, is that growth has been focused on the same routes and toward the center of the country. Mexico has favored its four main airports: Mexico City, Cancun, Guadalajara and Monterrey. Yet, no attention has been given to regional airports and aerodromes that could help alleviate the pressure currently on the Mexico City Airport.

A regional infrastructure development effort, therefore, could be key to solve part of these issues but there are some challenges in implementing this strategy. Although transportation costs are increasing beyond the offering of low-cost airlines and security concerns are pushing people to fly more, infrastructure in smaller airports and aerodromes has not grown at the same pace as demand.

“Insecurity and the drug war have led to the closing of many runways and we have failed to open more,” said Moreno. “We need a national hub to have a single connection point with other countries – maybe an intermodal one – but we need stronger regionality.”

Juan José Simón, Director of SAE said regionality could help detonate the economy in otherwise overlooked regions of the country. “Aerodromes have to be reopened to increase connectivity and also reactivate the economy in regions like the north of the country,” he explained.

Regulation has been an obstacle for regional development. According to Moreno, aerodromes are forced by the DGAC to operate under the same conditions as larger airports. Because of this, even though the aerodrome might experience demand of only 30 passengers, DGAC forces the facility to have the same number of employees to operate thus disincentivizing investment.

“We will soon feel the impact of the lack of infrastructure,” warned Navarro. “Eventually we will fill all slots available in 24 hours. After that, airlines will have to start operating with larger airplanes. Once we reach this point, tourism and economic development will stall.” Moreno added that this will lead to an industry plateau. “There might not be an impact on the economy but there will be no further growth,” he said.