Flight plan: The nation is bidding to become a leading regional aviation hub

A continued push to become a major transportation hub in the Americas goes far beyond Panama’s status as a logistics and trans-shipment point for goods traversing the canal. The government is also looking to establish the country as a major aviation hub, again drawing on its advantageous geographical position in the heart of the Americas. On top of that, Panama City and Tocumen International Airport, the primary point of entry, are threatened by neither the dangers of high altitudes that impact many of South America’s airports, nor the disastrous hurricanes and severe weather systems affecting many Caribbean nations. Strong economic growth driven by external demand from the logistics sector, the international finance centre, and growing sectors such as tourism also bode well for the country’s efforts to expand its presence in the aviation industry. Finally, the growth of Copa Airlines, Panama’s only major airline, into one of the largest airlines in Latin America has provided the country with the necessary commercial platform from which to expand as an aviation centre.

Inter-American Centre

The country’s rising status as an aviation hub stems principally from the growth of its primary international airport in Panama City. Indeed, Panama’s location makes it an ideal candidate as an inter-American hub. Excellent weather conditions, a sea level airport and its relatively equidistant proximity to both South and North America all add to that fact that the country boasts one of the region’s fastest-growing carriers in Copa Airlines, which was responsible for more than 80% of daily operations at Tocumen in 2012. Meanwhile, on a global level, airline traffic within the Latin American region is expected to expand at a rate of 6.9% between 2012 and 2032, according to Boeing’s “2013-32 Current Market Outlook”. In addition, traffic between Latin America and North America is expected to grow at a rate of 5% in the same time period. The airplane market further shows why Panama is well positioned to become a major hub. In 2012 Latin America’s airplane market was predominantly made up of single-aisle (narrow body) medium-range planes which accounted for 1050 of the market’s 1280 planes, or 82%. The region had just 140 larger twin-aisle planes and no large wide-body planes operating in 2012. The remaining 90 are regional jets. Boeing forecasts for 2032 show few changes, with single-aisle craft actually expanding their presence in the region from 80% to 83%. The large presence of single-aisle aircraft with relatively limited range in the region is significant in that it adds further credence to growing Panama as a hub for shuffling passengers from North America to South America (and vice-versa) on long-range routes as the country is within narrow body distance of virtually every major city in the Americas. At the time of writing just three carriers (Iberia, KLM and Air France) operated long-range, wide-body flights because of the transatlantic nature of the flights at Tocumen, although a fourth (TAP Portugal) is conducting the necessary studies to be able to operate such flights in June 2014.

A study published by the Centre for Aviation ( Centro Para la Aviación, CAPA) an international aviation consultancy, in 2013 shows how Tocumen and Copa have been able to successfully position the country as an integral part of a growing hub-and-spoke system employed in the Americas. CAPA’s study shows that even though Tocumen is ranked 12th in terms of overall size among Latin American airports, in terms of its international seat capacity it is easily the largest, with its 219,812 total seats – significantly higher than Lima’s Jorge Chávez International Airport in second place with 129,774 seats. The same is true of Copa, whose 224,614 seats were also enough for first place in Latin America by international seat capacity.

Tocumen Master Plan

Indeed, with just over 6m annual passengers in 2012, Tocumen is hardly the largest airport in the region, but it is certainly among the fastest-growing, having tripled in passenger traffic over the course of the past decade. As a result it is in the midst of a multi-phase $800m expansion plan due for completion by 2025.

Growing Numbers

Passenger traffic at the airport grew 11.8% year-on-year in November 2013 from 6.3m to 7.05m passengers. Furthermore, of that traffic, around half, or 3.52m passengers, never left the airport. Indeed, transiting passengers are the fastest-growing segment, having expanded their overall contribution from 41% in 2010 to 49.92% in 2012. Much of the growth in passengers is due to the addition of new direct routing destinations, which increased from 29 in 2004 to 70 in 2012 thanks to negotiations between the Civil Aviation Authority and other states.

In order to maintain pace with its expanding traffic, phase one of the airport’s expansion was carried out in 2006 when the passenger terminal was expanded at a cost of $21m. Six additional remote gates were added on in the process, and the cargo terminal was also upgraded. More recently, in 2012, phase two of the expansion was completed when the North Terminal (Muelle Norte) added an additional 12 gates, along with other investments made for new taxiways and support areas. The north terminal required an investment of $60m and brought the airport’s docking capacity to 40 gates, with one gate built especially to handle Airbus 380 and Boeing 747 aircraft.

Even before the completion of the north terminal the management was planning the next expansion phase for the airport, which is now under way. Phases three through five will see the north and south terminals expanded, as well as the addition of a new cargo area, and as a result docking capacity will be further increased to 73 gates capable of servicing 15m passengers by 2025, according to public statements made by Juan Carlos Pino, the general manager of Tocumen. The plan also calls for the possible addition of a third runway and expanded security, Customs and immigration areas. In July 2013 the administration’s cabinet approved an increase in maximum funding for the airport’s expansion from $550m to $650m.

Regional Airports

In addition to the renovation and expansion at the nation’s largest airport, investment is also being filtered towards the creation of several new or upgraded regional airports. The most expensive of these projects is the reconstruction of the Enrique Adolfo Jiménez airport in Colón. At a cost of $58m, the airport will continue to service the Colón Free Zone and thus a wide variety of passenger and cargo traffic. As a result it will feature a variety of passenger and cargo capabilities, though importantly it will now also be able to receive international flights, allowing businessmen and cargo flying into the Colón Free Zone to bypass flying into Panama City and driving across the peninsula.

The Scarlet Martinez International Airport, meanwhile, is being built in Río Hato-Cocle and will serve the central provinces. The cost of the project is $36m, of which $17.3m is going directly into the construction of the terminal building, control tower and other related airport infrastructure, with the remainder to construct the runway and a tunnel. The airport was inaugurated by President Ricardo Martinelli in November 2013. Finally, the Enrique Malek International Airport was inaugurated in January 2013 after the completion of a $26.2m expansion project. The airport services the city of David along the north-west Pacific coast of the country and will continue to be used primarily as a tourism and business hub.

Though it perhaps boasts the best geographic positioning for establishing a major aviation hub in the America’s, the case for Panama is indeed far stronger. Its rapidly expanding economy has put the country on the global aviation map and attracted a host of international carriers to the country.

Moreover, Tocumen’s two sea-level landing strips offer a level of safety not found elsewhere in the region. The airport’s growing role in transferring passengers in the region is aptly portrayed by the fact that transiting passenger traffic continues to be the largest and fastest growing segment at the airport, a trend which is expected to continue in the future.

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The Report: Panama 2014

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