Jose Luis Romo, director of planning, outreach and strategy at Grupo Aeroportuario de la Ciudad de México, speaks with Rani Mehta about the challenges of developing Mexico City’s vast new airport and the project’s goals to boost Mexico’s economy and be sustainable
Can we begin by discussing what benefits you think Mexico City’s new airport will bring to the country?
As an airport, the Mexico City New International Airport [NAICM] will allow us to increase our airport infrastructure’s capacity, and with it we will see an increase to daily passenger and cargo transit. This will not just improve the flow and exchange of merchandise, it will also increase economic and touristic activities.
Mexico’s strategic geographical location, combined with the NAICM, will strengthen its place as twelfth most important exporter in the world, and eleventh most important importer. This will promote the integration of the country’s regional markets, reduce transit times, connection times, and connection costs within the region and the rest of the globe.
The project also involves a comprehensive water management programme that is being overseen by the National Water Commission [CONAGUA] in an effort to increase water capture and treatment capabilities for the area. This includes the construction of 38 kilometers of drainage, and a little over 145 kilometers of residual water collectors, actions that will directly improve the quality of life in the area by mitigating health risks, flooding, and even noxious odors.
There are many benefits to this project. It is not limited to the aeronautical component, or the improvement of our infrastructure. Our goal is for the NAICM to be the driving force behind the regional development of the entire area.
What drove the cost of the airport from $9 billion to $13 billion?
The cost of the project has always been the same. However, the scope has probably been interpreted differently by some sources. For example, the $13 billion budget includes the airport infrastructure and the hydraulic works surrounding the perimeter. So even though we can consider them separately, the cost of each has always remained the same.
The airport’s financing is a mix of private and public funding. How did you come to decide how much of the project would be financed privately and how much of the project would be funded publically?
The financing was 50% private and 50% from public or fiscal resources. The private sources were determined by the maximum level of debt that the current airport could safely handle.
How are you ensuring that the loans are not considered public debt?
The debt issuer is a private trust that segregates the TUA (departing tariff) from the existing airport. The transactions involve a true sale in which the existing and future airport assign their collection rights for this tariff into a special purpose vehicle. This SPV or trust in turn issues debt collateralised by the flows from the TUA.
Did the 2014-2018 National Infrastructure Program [PNI] introduced by President Peña Nieto plan for this project?
The PNI indicates that in regards to airports, the air saturation problem for the center of the country must be resolved. NAICM was announced after the PNI as the studies and analysis to determine the project’s viability at the former Texcoco Lake needed to be completed. These studies resulted in a positive result for technical viability.
Can you tell me more about the studies that were conducted?
In regards to air navigation, the Massachusetts Institute of Technology Research Establishment [MITRE] performed climate, runway configuration, approach and take-off vector, air-space and acoustic impact studies to verify viability for the project. The Federal Aviation Administration [FAA] made recommendations that were followed by ARUP’s master plan for the location and configuration of runways so as to avoid attracting birds that could cause problems upon landing and take-off of airplanes.
On the matter of the grounds themselves, we worked with the Engineering Institute of the National Autonomous University of Mexico [UNAM] for the development of topographical, geotechnical, ground, subsidence, and cracking studies. They also performed analyses by developing test strips, making drainage evaluations, with the purpose of determining the most viable solutions for the airport. As you might imagine, these studies included the conceptualisation of the runways, platforms, and taxiways for the NAICM.
In 2002, the government tried to open a new airport but ultimately did not because of protests from farmers. What steps have been taken to assuage their concerns this time?
The NAICM project does not require any additional land. The entire project has been planned for development on federal property.
Building NAICM will foster economic development. During its first phase of construction it will create 160 thousand jobs. Once the airport goes into operation in October 2020, for every million passengers it will create 1000 direct jobs and 3000 indirect jobs.
In terms of the environment, our goal is to transform an area that is currently degraded into a new lung for the east side of the Valley. To achieve this - and in addition to complying with the environmental plans and programs for the project – we are reforesting over 2000 hectares of land. We are also creating a forest of approximately 670 hectares, an area that will equal that of the Chapultepec Forest.
Finally, we are working together with the social sector of the government on improving social infrastructure in the area. This includes providing schools, hospitals, public spaces, transportation, and access to public services such as water, electricity, and plumbing. This will also involve improving the area’s overall urban image.
Could protesters prevent or delay the opening of the airport this time?
As the responsible party for the project, we are open to having a dialogue with any of the groups that consider the NAICM could affect their lives in any way. We have already had dialogue regarding the environment. A public meeting was held with around 650 residents that live near the new airport’s grounds, and with them we reviewed 30 presentations covering several issues, while answering 50 inquiries that had been submitted to the project.
We have also instituted a formal mechanism for complaints, comments and suggestions on our website as a means for maintaining an open and permanent dialogue with society.
I can also tell you that we are working hand-in-hand with civil and international organisations on matters of transparency and accountability. Two concrete issues we can talk about are the signing of the Agreement on Legality and Transparency with the OECD [Operation for Economic Co-operation and Development], with which we have gained their support in the implementation of best practices; the other is our collaboration with the Citizen’s Observatory of the NAICM, a group composed of four renowned civil organisations in Mexico, IMCO, CEMDA, CTS Embarq and Mexicans First, formed with the purpose of resolving any concerns that the citizens may have regarding the project.
We are maintaining an open dialogue and inviting public scrutiny. We want this project to become a global reference on how to drive projects that have an integral social vision that is close to its citizens.
Can you tell me more about the airport’s sustainability goals?
We want to become the first airport - outside Europe - to achieve a carbon neutral footprint, and the first on the entire continent to achieve LEED Platinum certification. We want a green airport, and to do that we’ve proposed that 100% of the airport’s water supply be treated, with 70% of it being recycled and reused. Energy will be provided from clean energy sources of which our primary source will be produced from solar energy. In addition to these goals, we will also have effective waste management in place that is in accordance with environmental regulations and best practices.
We are also implementing 20 environmental plans and programs for mitigating, compensating, and improving the habitat. They are especially focused on the flora and fauna that are native to the area, or that migrate through it. To this date we have used MXN90 million [$5 million] on these actions, from a budget of a little over MXN1 billion.
How did you select your external counsel for this project?
We invited some of the best ranked national and international firms for a beauty contest in which we evaluated their expertise, reputation, experience and price. A panel of government authorities, financial experts, banking institutions and distinguished lawyers evaluated their proposals.
Do you prefer hourly or fixed rates?
It depends because it depends on the service. We are mostly using fixed.
Are you relying more on global or local counsel?
Both. The dimension of the project makes this airport a local and a global matter. Most of the financing will be issued in foreign markets so will have to be compliant with international regulations, 144a and Regulation S. Additionally, a great part of public procurement will involve international bidding process that will have to be compliant with global regulations.
Can the global firms match the local ones when it comes to knowledge of the domestic market and its rules and regulations?
Yes. I think global and local firms can complement each other with experience and technical experience and local knowledge. In this kind of project learning curves should be very short in order to execute within schedule.
What is the next stage for the project?
In matters of finance, we will be going into the third stage which involves issuing bonds.
In regards to transparency and integrity, we will be consolidating our alliance with the OECD by implementing their recommendations.
On a regional level, 2016 will be a key year for imbuing the project with its integral nature. We will be making progress on the global sustainability vision through the three mainareas: gaining LEED certification for the project, meeting the environmental guidelines established for the project, and implementing the water management plan along with the environmental plan. These last two are being handled by SEMARNAT [Secretary of Environment and Natural Resources] and CONAGUA respectively.
We are also moving forward on connectivity and mobility projects that will connect the NAICM with the city and the metropolitan area.
Last but not least, we are advancing in matters of urban development, territorial planning, and the implementation of the social aspect of the project: improving the quality of life of the people that live in the vicinity of the project.
We are working on the goals we set back in 2014: starting operations at the airport by October 2020, and driving the development of the Valley of Mexico’s east side. These are the goals that get us going every morning.
Jose Luis Romo
Director of planning, outreach and strategy
Grupo Aeroportuario de la Ciudad de México (GACM)
Jose Luis Romo is director of planning, outreach and strategy at Grupo Aeroportuario de la Ciudad de México (GACM). He obtained his BA in economics from Instituto Tecnológico Autónomo de México in 1999, an MS in economic analysis and policy from University of Warwick in 2005 and an MPP in public policy from Harvard University in 2008.
Before being appointed to his current position, he worked in several other prominent positions in the Mexican government. These include director of special projects and communications for the Minister of Finance and head of the Mexican Social Security Institute´s planning and strategy unit.