Airport Concessions and Taxes

Interairports, owned by Grupo Terra's President, Freddy Nasser, and operated by Edgardo Maradiaga, has had the concession on airports in Honduras since 2000 and the current concession was set to run untiil 2020.

Now, Interairports has announced it will invest $129 million to build a passenger and cargo terminal at Soto Cano Air Base, also known as Palmerola, about 82 kilometers north of Tegucigalpa.

This would become Honduras's fifth international airport, joining those at San Pedro Sula, La Ceiba, Roatan, and Tegucigalpa.

Interairports, or Aeropuertos de Honduras as it now wishes to be known, announced a $300 million investment in Honduras's airports, including $52 million for San Pedro, $42 million for Roatan, $45 million for La Ceiba, and $7 million for Tegucigalpa.

The proposed investment in a modern terminal and separate cargo area at Palmerola that will be able to accommodate up to 1 million passengers and aircraft up to the size of 747s and Airbus 330s has a projected $129 million price tag.

Curiously, that leaves $25 million of the proposed $300 million investment unaccounted for.

Back in 2008, Interairports told the Honduran government that it would take rather more to build the facilities contemplated in Comayagua: $166 million, to be exact.

Now, with the new proposal and new numbers, Interairport's concession has been extended by the Honduran Congress to 2040, without discussion or bidding by other companies.

The concession extension was a quid-pro-quo for Interairport's announced $300 million investment.

Perhaps needless to say, this deal does not follow government regulations for large contracts.

We can't help wondering how much of the construction work will be outsourced to Grupo Terra's construction division, thus moving the "investment" in airport improvements back into Freddy Nasser's pockets.

But there is a much more immediate return on the investment that was part of the deal.

After extending the concession for twenty years, Congress passed a bill nearly doubling of the airport exit tax paid to Interairports for operating the airports, from $37 to $60.30. This tax is separate from the security tax, collected to pay the cost of required airport security, and the immigration tax, paid to the government.

This would generate about $36 million/year for Interairports at current passenger levels, or, assuming passenger levels stay the same, $1.044 million over the life of the concession.

This move makes Honduras's exit tax the highest in Central America, where comparable charges range from Panama at $40 to El Salvador at $20. An executive of Interairports, who did not wish to be named, was curiously inaccurate when he told La Prensa that:

"the airport taxes in Central America revolve, with the exception of Panama, around 60 dollars and by this measure we are standardizing Honduras with the rest of the region."

This is really new math: $20-$40 is "around $60".

An Interairports executive told La Tribuna that this increase was appropriate because Honduras's 600,000 annual passengers was "very low." That's supposedly the total number of passengers at all four airports. But there's also something wrong with this number, since publicly available sources cite over 600,000 annual passengers at Ramon Villeda Morales airport in San Pedro Sula alone (here, here, and here, for example)

By way of comparison, Juan Santamaria Airport in Costa Rica serves about 4.1 million passengers annually. Tocumen airport in Panama serves 3.1 million passengers annually. El Salvador International Airport in El Salvador gets about 2 million passengers annually. Augusto Sandino International airport in Nicaragua serves about 1.1 million passengers annually.

Congress extended the concession to 2040 as part of a deal between the Executive Branch and Interairports, approved in the November 29 Council of Ministers meeting.

The question of why Honduras needs an airport in Comayagua alone that can handle 1 million passengers annually when that's more passengers than all four airports combined supposedly see now is left unanswered; as is the question of why Congress approved the exit tax increase without debate.

How this will affect tourism in 2012 is also unknown, but at least here, there's a clear indication of what the answer likely will be. In Europe, where high airport taxes are all the rage now, airlines expect a 5% reduction in passengers next year.

Juan Bendeck , president of the Camara de Turismo de Honduras (CANATURH), calls the new tax "robbery". But in this case, the robbery is taking place in plain sight.

The First Reaction from the US Embassy

Wikileaks has now released more Honduran cables (see quotha for a list with links). The latest includes a cable from June 29, 2009-- the day after the coup itself. Paragraphs 13 and 14 are a report about the coup in the heading "significant events":

¶13. (C) WHA Honduras - Honduran military forces arrested
President Manuel Zelaya June 28 according to orders issued by
the National Congress and the Supreme Court of Honduras.
Zelaya was taken to a local air force base and flown to Costa
Rica. Emergency Action Committee (EAC) Tegucigalpa
subsequently met to discuss the ramifications of the seizure
of the president by host-cost country military forces. The
RSO noted the general climate in the capital was calm;
however, a standfast order was issued, and additional
security measures were implemented. The Embassy released a
Warden Message regarding the actions against Zelaya and urged
AmCits to remain in the residences or hotels for the day.


¶14. (C) Later in the day, Congress officially named Roberto
Micheletti interim president. The U.S. Ambassador gave a
press conference outside the Embassy; he insisted that
President Zelaya was the only democratically elected
president of the country and urged that freedom of expression
and circulation be restored. He also demanded the release of
those government officials said to be in military custody.
The EAC reconvened to assess the situation. Protest activity
has centered around the presidential palace, some roads in
the capital were blocked, and there were some troops on the
street. However, traffic flow was reported normal in most of
the city. Authorized Departure for family members was
discussed, but not warranted at this time. Embassy personnel
were advised to remain in their homes for the rest of the day
and to limit their movements today, June 29. All Peace Corps
volunteers have been accounted for and are on standfast. Post
will be open today for emergency services only. The EAC will
continue monitoring events in-country and provide updated
information as available. (Tegucigalpa Spot Report; telcon;
Warden Message; Appendix sources 8-10)

There has been an explosion of punditry over the first cable, all reaching whatever conclusion they had already reached, in which perhaps the most interesting thing from our perspective is the repudiation of the analysis by conservative congress members and their continued insistence that there was "no coup": Connie Mack and colleagues are more insistent on this point now than any Hondurans, with the possible exception of Roberto Micheletti. Otherwise, the Honduran perspective has been that yeah, it was a coup, but (in the notorious phrase) a "good coup".

We would agree that the cables are unlikely to change minds, and we doubt there are any true smoking guns to find. The smoking guns were all out in the open in US policy on Honduras: dithering about whether it was a "military" coup; Thomas Shannon assuring the Honduran and US right wing that whether or not the Tegucigalpa-San Jose Accord was implemented properly, the US would recognize whoever came out on top in the presidential election; and the outright failure of scholarship embodied in the Library of Congress producing a report that validated the coup through an analysis repudiated by leading scholars of the Honduran constitution, through relying on the personal communications of an advocate of the coup.

But from the perspective of researchers on history, and on the production and circulation of meanings, seeing the precise way things unfolded does matter.

It matters that on the day after the coup, the US Embassy, despite the ambassador speaking out against the coup, reported that President Zelaya had been "arrested" (when he had not been); that this was on "orders of the National Congress and the Supreme Court" (when it was not); and that he "was taken to a local air base" (without mentioning the stop at Soto Cano/Palmerola).

And it matters that the cable says "Congress officially named Roberto Micheletti interim president". Not only does that mistakenly imply that congress had the authority to act ("officially": why not say "illegally", or "extra-officially"-- especially as the special session held violated the rules of order for Congress, people who voted reportedly included members without authority, and the reported number of votes has always be questioned).

Worse: it gives Micheletti a status that even the Honduran Congress did not try to give him. Their claim was that he was now "President". By inventing an office of "interim president", the US early on chose to treat Micheletti as a legitimate actor, insisting that he and the real elected president negotiate.

The US, in other words, never quite got the point about what constituted the rule of law in Honduras. In this they joined many Honduran political actors; and yes, I hear you all already telling me that's how politics works.

But some situations present us with a moment of choice: do we follow principle, or abandon it? The US never even seems to have contemplated the issues-- despite having an ambassador who clearly understood them in place in the country.