Tocumen Airport: Perspectives and valuation of a global node

Posted on 2024-10-25

Tocumen Airport is the second most important infrastructure in the Panamanian logistics network, after the Panama Canal. According to data from Tocumen Airport, this terminal handled some 17,825,465 passengers and 208,573 metric tons of cargo in 2023.

Tocumen Airport is the second most important infrastructure in the Panamanian logistics network, after the Panama Canal and its port-railway complex. This infrastructure makes tangible the strategic value of Panama's geographic location and the benefits that can be obtained from this position. According to data from Tocumen Airport, this terminal handled some 17,825,465 passengers and 208,573 metric tons of cargo in 2023.

The financial statements published by Tocumen International Airport, SA (Aitsa) - a state-owned company that has managed this terminal since 2003 - indicate that the airport has a book value of B/.1,859,556,624 (2023), including infrastructure, equipment and furniture.

This financial report highlights that “Tocumen maintains direct routes to approximately 90 destinations, through 16 commercial airlines. The markets that generate the most movements and connections in Tocumen are those of South America, which represent 44%, followed by North America with 28%, the Caribbean with 12%, Central America with 10%, and the European markets represent approximately 5%.”

The financial statements report also indicates that “the growth in the number of passengers and its commercial activity allowed Tocumen's income to reach B/. 265 million in 2023. This income would be approximately 16% higher than that of 2022, which was B/. 229 million. Of the total income in 2023, B/. 170 million was aeronautical income and 92 million was non-aeronautical income, that is, derived from activities such as concessions of stores, restaurants, rentals, services and others.”

Since 2004, the administration of Tocumen Airport has been implementing an expansion program with two main axes: 1) the airport city, which is focused on responding to the demands of passengers and commercial airlines; 2) cargo and multimodal zone, with the aim of modernizing the cargo terminal and creating the first 'State Logistics Zone of the Airport'.

In July 2022, the main component of axis 1, the new Terminal 2, was inaugurated. Construction began in March 2013. Terminal 2 cost B/.917 million dollars and allowed the existing passenger handling capacity to be expanded by 10 million per year. This investment must be added to the improvements in connections with Panama City through the construction of a new 5.5-kilometer viaduct (2016) and the construction of the Tocumen Metro station (2023).

Regarding the vision of the multimodal node, investments have been made in the construction of the logistics zone, which will initially have 20 warehouses and will operate under the free zone regime. These warehouses are part of the Tocumen Cargo City Project, which covers a total of 124 hectares owned by Aitsa, attracting investments of more than 300 million.

The expansion process will continue until 2040, when the terminal is expected to handle some 40 million passengers annually. To achieve this capacity, the airport's investment plan includes the construction of two new runways south of the existing runway, in addition to the expansion of Terminal 2 with new passenger modules and the construction of a new control tower.

In addition to the intrinsic value of the airport, there is also the value generated around it, due to investments in logistics, residential and commercial. According to the real estate consultancy CBRE Panama, for the second half of 2023, the Panama East area - where the airport is located - is the area with the greatest availability of logistics spaces in Panama City, with 602,620 square meters, as well as the largest footage under construction with 20 thousand square meters, which are rented between B/.5 and B/.10 per square meter per month.

Future prospects and integration with its environment

A report prepared by the PM Terminal Sur Consortium - attached to Tocumen's 2016 financial statements - is optimistic in stating that "airport traffic has grown steadily over the past 10 years, both in total volume and in destinations offered." This forecast is reaffirmed after the Official Aviation Guide ranked Tocumen Airport among the five with the best international connectivity in Latin America and the Caribbean, and among the 50 most important airport megahubs in the world in 2024.

According to the PM Terminal Sur Consortium report, Tocumen Airport stands out for its strategic location and favorable climate, which allows it to operate with fewer interruptions and offer operational advantages over airports at higher altitudes, such as Bogotá and Mexico City, by allowing takeoffs with greater load and better visibility in adverse weather conditions.

The two main challenges for the development of this expansion are to harmonize the relationship of Tocumen Airport with its natural and urban surroundings. With regard to the natural environment, the challenge of recurring floods affecting the Tocumen River sector must be resolved, in a context where rainfall becomes more intense in a shorter time due to climate change.

Rising sea levels are another threat that is expected to affect the areas to be used for the construction of the two new runways, which will require solutions to this issue to be incorporated as part of the development of these two new runways.

Tocumen Airport faces the challenge of integrating into its urban environment, surrounded by urban developments and informal settlements to the north, east and west, in addition to the proposal for a real estate development to the south. The expansion of the airport has driven the construction of logistical spaces around the roads that connect it to the city, in a dispersed and disjointed manner. The proposed connection with the future Panama-Costa Rica train highlights the importance of the airport's connectivity with the rest of the country.

These pressures should promote the implementation of a Partial Land Use Plan, which will allow for the creation of the urban spaces required for the airport to achieve the vision of creating a sub-region within Panama City, “whose infrastructure, land use and economy are centered on the airport,” and in which the residents who live in the area benefit from the economic activity that is generated.

Tocumen Airport, a key part of the services platform, has enormous strategic value for the country. In this sense, the report of the PM Terminal Sur Consortium (2016) highlights the advantages of its public administration by indicating that, “as a state-owned company, Tocumen, SA does not face the obligation of forced investments or the pressure of accounting depreciation that limits private operators, which gives it greater flexibility in its investment plan.” If in all metrics, Tocumen Airport in state hands seems to be a good business, the question that remains to be asked is what benefits would it bring to concession?