On Monday , Mexico’s next President announced the cancellation of a partly built USD $13 billion Mexico City airport , a decision that has raised questions about the feasibility of his alternative plan, and the possible consequences of the change.
Andrés Manuel López Obrador
, who takes office on December 1, justified this decision based on the results of an informal referendum .
The U-turn is the latest step in a long-running battle over how to solve growing congestion at the Mexico City airport , where 40 million passengers pass through in one year.
LÓPEZ OBRADOR’S ALTERNATIVE PLAN
López Obrador
plans to add two runways to the Santa Lucia military air base, some 29 miles (47 km) north of the Benito Juárez International Airport , then connect both. He said it can be done for MXN $70 billion.
The plan also envisions upgrading the Benito Juárez hub and the Toluca International Airport , 41 miles (66 km) away, for about MXN $5 billion, and connect the latter by train to the capital. The projects would be completed in three years and altogether save some MXN $100 billion pesos, according to López Obrador.
DOUBTS SURROUNDING THE PROPOSAL?
Engineering consultancy Mitre Corporation said that Santa Lucia may not be able to operate simultaneously with the Benito Juárez airport , due to conflicting flight paths. Javier Jiménez Espriú , López Obrador ’s designated Transport Minister , denies the claims.
The business elite has argued that Santa Luc ia’s distance from the capital will deter tourism and could complicate travel for connecting flights from Mexico City .
WHAT ARE AMLO PLAN’S BENEFITS?
López Obrador
’s team said that the new airport being built on the bed of Lake Texcoco , on the capital’s eastern flank, would be too expensive to maintain because of its complex geology.
Canceling it would avoid damage to the city’s water table and benefit local ducks, López Obrador said. He wants the Texcoco site to become an ecological park.
Without providing evidence, López Obrador has said the Texcoco project was tainted by graft. He argues the cancellation of the project will send out a message in Mexico , that corruption between business interests and politicians is over.
POSSIBLE CONSEQUENCES AFTER THE CANCELLATION
By choosing to dump a project that has received billions of dollars in investment, the outgoing government said the Texcoco airport is about one-third complete, markets are reassessing López Obrador ’s commitment to existing laws and agreements.
That could negatively affect Mexico ’s ability to attract investment under López Obrador , who argues he has the “moral authority” to question the current system.
Billions of dollars were wiped off the value of the stock market on Monday during a sell-off by investors.
The airport’s cancellation may require the government to put up extra funds to pre-pay bonds issued in order to finance it, said outgoing President Enrique Peña Nieto . The group building the Texcoco hub issued USD$6 billion in bonds and USD $1.5 billion in an investment trust, backed by the current airport passenger tax.
WILL COMPANIES INVOLVED KEEP THEIR CONTRACTS
Jiménez Espriú
said companies already contracted by the airport group may be able to transfer their contracts to Santa Lucia or reach new agreements. López Obrador said he will honor existing agreements but has not provided further details.
Carlos Slim
, Mexico's richest man, is one of the most affected by the airport cancellation, whose family has been co-designing, co-building and co-financing the project that began construction in 2015.
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