Congress Issues Favorable Report on InterAirports

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 003150

SIPDIS

FOR GUATEMALA COMMATT:DTHOMPSON

E.O. 12958: N/A
TAGS: EAIR EINV HO
SUBJECT: Congress Issues Favorable Report on InterAirports


1. Summary. On November 11, a congressional commission
released a favorable report finding that U.S.-led consortium
InterAirports, which was awarded the contract to manage
Honduras' four international airports in October 2000, has
complied with all the terms of the concession contract.
InterAirport officials hope that the inquiry will clear the
consortium of any perceived non-compliance of the contract
and allow them to proceed with the next stages of the
project, principally the improvements in the airport in
Tegucigalpa. InterAiports representatives thanked the
Embassy for its support and advice throughout. End summary.


2. After a series of media attacks and complaints by
private sector groups, the National Congress named a special
commission in July to investigate InterAirports for possible
breach of contract. The U.S.-led Interairports consortium
(51 percent U.S.-owned) took management control of Honduras'
four international airports in October 2000. Critics
charged that the San Francisco Airport Authority was not an
active, full partner in the consortium (participation of a
major airport was a requirement in the public tender and
subsequent contract) and that the company had not followed
through with investments. They have also been criticized
for fee increases and critics questioned the concession
process itself.


3. The commission was comprised of seven congress deputies
and was charged with investigating the bidding process, the
contract and subcontracts and contract implementation plans.
The commission also held a series of meetings with private
sector associations and current and former GOH officials
responsible for negotiating and implementing the concession
contract. InterAirports representatives provided over 2,000
pages of supporting documentation to the commission.


4. On November 11, the congressional committee issued a
favorable report, finding that the concession process was
transparent and that Interairports has complied with all its
commitments under the concession contract, including correct
and appropriate involvement of San Francisco Airport
Authority. The commission also found that delays in
contract-mandated investments, such as extending the runway
at the Tegucigalpa airport and building a new terminal, are
the result of government delays and inaction. Construction
of the terminal is underway after the GOH settled a legal
dispute with a private party, permitting the demolition of
an old hangar on adjacent land that had been embargoed per a
court order.


5. The commission made a number of recommendations, mostly
directed toward the GOH, including expediting the
expropriation of land so that InterAirports can begin
extending the runway, providing the Superintendent of
Concessions with enough resources to supervise the
implementation of the concession contract and requiring the
Superintendent to submit a quarterly report to Congress on
the implementation of the contract.


6. In response to customer service complaints,
InterAirports representatives stated that they have begun to
focus on customer service training for Interairports
personnel. They are trying to work more cooperatively with
the airlines on reducing landing fees at the four airports
and aircraft parking charges at the San Pedro Sula airport.


7. In a meeting with InterAirports representatives after
the commission reported its findings to Congress, Minister
without portfolio for investment Camilo Atala stated that
the GOH would support InterAirports and the terms of the
contract. Before the study, President Maduro and other
government officials had publicly stated that InterAirports
had complied with the contract.


8. In a meeting with Emboffs, InterAirports thanked the
Embassy for its advocacy and advice. They believe that the
Tegucigalpa airport construction will now proceed and that
the GOH will provide them long overdue documentation that
will allow them to solidify financing for the next stages.
In addition, they are interested in having the GOH complete
an inventory of the airport and stop aircraft with unpaid
bills from using the airport, both GOH commitments.


9. On an issue unrelated to the congressional inquiry,
InterAirports representatives indicated that the consortium
is willing to help the GOH build an international airport in
Copan in western Honduras, if desired. The GOH and private
sector have been discussing the feasibility of building an
airport near the site of one of Honduras' main tourism
attractions, the Mayan ruins of Copan. The terms of the
concession contract prohibit the GOH from using government
financing to build a new international airport without the
consent of InterAirports.

Comment
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10. Despite the fact that Adolfo Facusse, President of the
National Association of Industrialists (ANDI) and the person
who has been behind many of the attacks on InterAirports,
offered to cooperate with InterAirports representatives
during a recent meeting, we expect continued private sector
sniping. Delays in construction projects, particularly at
the Tegucigalpa airport, have contributed to a souring of
public opinion of the concession process in general. We
believe that the consortium is dedicated to improving their
public image and providing the users with better service.
End comment.

Palmer