Mexican Government Will Spend $9 Billion to Cancel Airport Project

The Mexican government will spend as much as $9 billion to abandon the construction of a new international airport in Texcoco, a sum that’s more than it would have cost to finish the project.

A new report from Bloomberg reveals that Mexican President Andres Manuel Lopez Obrador, who scrapped plans for the new airport last year, is now battling a variety of legal challenges as a result of his decision.

A group of disappointed business leaders and activists are trying to resurrect the new international airport project, which would have cost about $8.3 billion to finish.

Those challenging Lopez Obrador are unlikely to win given the sweeping authority presidents have in Mexico, according to Bloomberg.

“This is a perfect reflection of how, when he decides something is a priority, it’s almost impossible for him to change his mind,” Carlos Petersen, an analyst at Eurasia Group, told Bloomberg. “The airport cancellation was the first time investors got a look at how he’d operate, and we’re seeing the same with Santa Lucia.”

Santa Lucia is an air force base where two commercial runways are being built at the cost of about $4 billion.

Because the Defense Ministry is leading the project, it has been labeled as classified and thus information about contracts, viability and environmental-impact have not been made available. Mexico’s president has promised information about the Santa Lucia project will eventually be made public, stating: “We have nothing to hide. We’re not like the conservatives.”

There are more than 100 lawsuits pending against the Santa Lucia project, which is expected to be completed in 2022.

Meanwhile, troubles remain at Mexico’s Benito Juarez airport, which Bloomberg describes as airlines/mexico-city-airport-is-getting-a-third-maybe-fourth-terminal.html” target=”_self” rel=”nofollow noopener noreferrer”>plagued with congestion, aborted landings, runway traffic jams and more. In some cases, passengers sit for hours on arriving planes waiting for gates to open up.

Making matters worse, parts of the terminal are said to be sliding into a lake bed. To cancel the new airport project in Texcoco, for which financing was 70 percent complete and construction about one-third finished, the government had to buy back debt from bondholders and pay to settle contracts.

The International Air transport Association (IATA), which is the aviation industry’s biggest advocate and lobby group, said recently that Mexico desperately needs a new airport—or it stands to lose copious amounts of tourism dollars, not to mention travel-related jobs.

Peter Cerda, IATA’s regional vice president, said earlier this week Mexico’s economy could lose $20 billion and up to 20,000 jobs if a new facility is not constructed.

“The previous government made the decision, with great courage, to build a new airport knowing that it would not be completed at the end of its mandate. It was a project that the industry supported 100 percent,” Cerda said.

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