Mexico airport plans raise serious concerns

Outlook

Mexico City’s new international airport (NAICM) was contentious due to concerns about costs and environmental impacts, but by scrapping it mid-construction, President Andres Manuel Lopez Obrador (AMLO) has generated more controversy.

Investors mistrust AMLO, while aviation experts are concerned about his three-airport alternative. Challenges include the city’s high altitude, which necessitates long runways, and its topography, with mountains forcing complex flight patterns.

An ill-considered hill has already increased costs at Santa Lucia. Having pushed so hard to scrap the NAICM, AMLO faces all of the blame for problems that may arise with his alternative proposals; further overspends and overruns look likely.

Impacts

• Splitting air traffic across three airports could hinder Aeromexico, which benefits from having a single, major hub in the capital.
• Any failure to expand travel infrastructure and efficiency could weigh on central Mexico’s economic prospects.
• Fears that AMLO may launch more plebiscites such as that which led to the scrapping of the NAICM will hit investor faith in future projects.
• Major projects such as the three-airport plan will be a real test of AMLO’s ability to deliver on promises to prevent corruption.