20-F 1 pac-20f_20201231.htm 20-F

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

Commission File Number: 001-32751

Grupo Aeroportuario del Pacífico, S.A.B. de C.V.

(Exact name of registrant as specified in its charter)

Pacific Airport Group |  | United Mexican States
(Translation of registrant’s name into English) |  | (Jurisdiction of incorporation or organization)

Avenida Mariano Otero No. 1249-B

Torre Pacífico, Piso 6

Col. Rinconada del Bosque

44530 Guadalajara, Jalisco

Mexico

(Address of principal executive offices)

Saúl Villarreal García

Chief Financial Officer

Grupo Aeroportuario del Pacífico, S.A.B. de C.V.

Avenida Mariano Otero No. 1249-B

Torre Pacífico, Piso 6

Col. Rinconada del Bosque

44530 Guadalajara, Jalisco

Mexico

Telephone: + 52 (33) 38801100 ext. 20151

svillarreal@aeropuertosgap.com.mx

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Series B Shares |  | GAP B |  | New York Stock Exchange, Inc.*
American Depositary Shares (ADSs), each representing ten Series B Shares |  | PAC |  | New York Stock Exchange, Inc.

*Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: N/A

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Title of each class: |  | Number of Shares
Series B Shares |  | 441,425,547
Series BB Shares |  | 84,150,000

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Note: Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). N/A

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐
|  |  |  | Emerging growth company | ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards* provided pursuant to Section 13(a) of the Exchange Act. ☐

*The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board | ☒ | Other | ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 |  | ☐ |  | Item 18 |  | ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Table of Contents

TABLE OF CONTENTS

|  | Forward-Looking Statements |  | 1
Item 1. |  | Identity of Directors, Senior Management and Advisers |  | 2
Item 2. |  | Offer Statistics and Expected Timetable |  | 2
Item 3. |  | Key Information |  | 2
|  | Selected Financial and Other Data |  | 2
|  | Risk Factors |  | 5
Item 4. |  | Information on the Company |  | 27
|  | History and Development of the Company |  | 27
|  | Business Overview |  | 34
|  | Regulatory Framework |  | 65
|  | Organizational Structure |  | 83
|  | Property, Plant And Equipment |  | 83
Item 4A. |  | Unresolved Staff Comments |  | 84
Item 5. |  | Operating and Financial Review and Prospects |  | 84
Item 6. |  | Directors, Senior Management and Employees |  | 119
Item 7. |  | Major Shareholders and Related Party Transactions |  | 127
|  | Major Shareholders |  | 127
|  | Related Party Transactions |  | 128
Item 8. |  | Financial Information |  | 130
|  | Legal Proceedings |  | 130
|  | Dividends |  | 133
Item 9. |  | The Offer and Listing |  | 134
|  | Trading Markets |  | 134
Item 10. |  | Additional Information |  | 135
|  | Corporate Governance |  | 135
|  | Material Contracts |  | 142
|  | Taxation |  | 142
|  | Documents On Display |  | 145
Item 11. |  | Quantitative and Qualitative Disclosures About Market Risk |  | 145
Item 12. |  | Description of Securities Other Than Equity Securities |  | 147
Item 12A. |  | Debt Securities |  | 147
Item 12B. |  | Warrants and Rights |  | 147
Item 12C. |  | Other Securities |  | 147
Item 12D. |  | American Depositary Shares |  | 148
Item 13. |  | Defaults, Dividend Arrearages and Delinquencies |  | 149
Item 14. |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 149
Item 15. |  | Controls and Procedures |  | 149

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Item 16. |  | Reserved |  | 152
Item 16A. |  | Audit Committee Financial Expert |  | 152
Item 16B. |  | Code of Ethics |  | 152
Item 16C. |  | Principal Accountant Fees and Services |  | 152
Item 16D. |  | Exemptions from the Listing Standards for Audit Committees |  | 153
Item 16E. |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |  | 153
Item 16F. |  | Change in Registrant’s Certifying Accountant. |  | 153
Item 16G. |  | Corporate Governance |  | 153
Item 17. |  | Financial Statements |  | 157
Item 18. |  | Financial Statements |  | 157
Item 19. |  | Exhibits |  | 158

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FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F contains forward-looking statements. We may from time to time make forward-looking statements in our reports to the Securities and Exchange Commission, or the SEC, on Forms 20-F and 6-K, in our annual reports to shareholders, in offering circulars and prospectuses, in press releases and other written materials and in oral statements made by our officers, directors or employees to financial analysts, institutional investors, representatives of the media and others. Examples of such forward-looking statements include:

| • | projections of revenues, income from operations, net income (loss), net income (loss) per share, capital expenditures, dividends, capital structure or other financial items or ratios;

| • | statements of our plans or objectives;

| • | changes in our regulatory environment;

| • | statements about our future economic performance or that of the countries in which we operate or the countries to and from which the passengers who use our airports arrive and depart; and

| • | statements of assumptions underlying such statements.

Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “should” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from the projections, plans, objectives, expectations, estimates and intentions expressed in forward-looking statements. These factors, some of which are discussed below under “Risk Factors,” include material changes in the performance or terms of our concessions, developments in legal proceedings, economic and political conditions and government policies in Mexico, Jamaica or elsewhere, inflation rates, exchange rates, regulatory developments, customer demand and competition. We caution you that the foregoing list of factors is not exclusive and that eventualities related to other risks and uncertainties, including the duration and severity of the recent coronavirus (“COVID-19”) outbreak and its impacts on our business; may cause actual results to differ materially from those expressed in forward-looking statements.

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments.

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PART I

Item 1. | Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. | Offer Statistics and Expected Timetable

Not applicable.

It em 3. | Key Information

SELECTED FINANCIAL AND OTHER DATA

The following tables present selected financial and other data for each of the periods indicated. This data should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements referred to in Item 18 hereof and included elsewhere in this document, including the notes thereto. Our audited consolidated financial statements are prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.

References in this annual report on Form 20-F to “U.S. dollars” or “U.S.$” are to the lawful currency of the United States of America. References in this annual report on Form 20-F to “pesos,” “Mexican pesos” or “Ps.” are to the lawful currency of Mexico. References in this annual report on Form 20-F to “Jamaican dollars” or “J$” are to the lawful currency of Jamaica. We publish our audited consolidated financial statements in Mexican pesos.

This annual report on Form 20-F contains translations of certain peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise indicated, U.S. dollar amounts have been translated from Mexican pesos at an exchange rate of Ps.19.8920 to U.S.$1.00, the noon buying rate for pesos on December 31, 2020, as published by the U.S. Federal Reserve Board. On April 16, 2021, the exchange rate for pesos as published by the U.S. Federal Reserve Board was Ps. 19.9120 to U.S.$1.00.

This annual report on Form 20-F contains references to “workload units,” which are units measuring an airport’s passenger traffic volume and cargo volume. A workload unit currently is equivalent to one terminal passenger or 100 kilograms (220 pounds) of cargo. When we refer to “terminal passengers,” we mean the sum of all arriving and departing passengers on commercial and general aviation flights, other than transit passengers. “Transit passengers,” are those who are generally not required to change aircraft while on a multiple-stop itinerary and who generally do not disembark from their aircraft to enter the terminal building. When we refer to “total passengers,” we mean the sum of terminal passengers and transit passengers. When we refer to “commercial aviation passengers,” we mean the sum of terminal and transit passengers, excluding general aviation passengers, such as those on private, non-commercial aircraft. This annual report on Form 20-F contains references to “air traffic movements,” which represent the sum of all aircraft arrivals and departures of any kind at an airport.

In reviewing this annual report, you should take into account the fact that certain margin and ratio calculations that utilize “total revenues” or “total operating costs” will reflect the effects of International Financial Reporting Interpretation Committee 12 Service Concession Arrangements (“IFRIC 12”), which provides the accounting treatment to be followed for service concession contracts for services considered to be public in nature. We recognize revenues and the associated costs of improvements to concession assets that we are obligated to perform at the airports as established by our Master Development Programs for our Mexican airports and by our Capital Development Programs for our Jamaican airports. The amount of revenues for these services are equal to the amount of costs incurred, as we do not obtained any profit margin for these construction services. The amounts paid are set at market value. As a result, revenues from improvements to concession assets do not have a cash impact on our results and do not represent a cash inflow. Furthermore, they are not directly related to our passenger traffic, which is the main driver of our revenues.

Consequently, changes in total revenues, total operating costs, operating margin, total revenues per terminal passenger and other ratios included in this annual report, as well as other ratios potentially useful to investors, may not be comparable between periods. In such instances we have included a parenthetical notation with comparable amounts or measures. Nominal results for amounts used in calculating certain margins, such as income from operations, are not affected by the adoption of IFRIC 12 and are therefore comparable. See “Item 5, Operating and Financial Review and Prospects – Critical Accounting Policies.”

In April 2015, we acquired Desarrollo de Concesiones Aeroportuarias, S.L. (“DCA”). DCA has a 74.5% stake in MBJ Airports Limited (“MBJA”), the entity that holds the concession to operate the Sangster International Airport in Montego Bay, Jamaica (the “Montego Bay International Airport” or “Montego Bay airport”). MBJA uses the U.S. dollar as its functional currency, and its financial statements are prepared in accordance with IFRS. As a result, consolidation of MBJA’s financial statements with GAP’s financial statements do not require any substantial accounting changes.

On October 10, 2019, we took control of the operation, management and administration of the Norman Manley International Airport (“NMIA”) located in Kingston, Jamaica, pursuant to a concession agreement that we signed with the Government of Jamaica on October 10, 2018 (the “NMIA Concession Agreement”). PAC Kingston Airport Limited (“PACKAL”), our wholly owned Jamaican subsidiary incorporated in September 2018, holds the concession for the operation of NMIA. As a result of taking over the operation and management of NMIA in October 2019, our selected consolidated financial and operating data for the fiscal year ended December 31, 2019 includes the consolidation of PACKAL’s financial and operating data from October 10, 2019. Therefore, financial and operating data for the fiscal year ended December 31, 2019 may not be directly comparable with financial and operating data for other fiscal years. PACKAL uses the U.S.

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dollar as its functional currency, and its financial statements are prepared in accordance with IFRS. As a result, consolidation of PACKAL’s financial statements with GAP’s financial statements do not require any substantial accounting changes.

|  |  | Year ended December 31, |
|  | 2016 |  |  | 2017 |  |  | 2018 |  |  | 2019(13) |  |  | 2020 |  |  | 2020 |
|  |  | (thousands of pesos, except per share and per ADS data) |  |  | (thousands of U.S. dollars; except per share and per ADS data) (1) |
Profit or loss and other comprehensive income data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services (2) |  | Ps. |  | 7,037,920 |  |  | Ps. |  | 8,280,522 |  |  | Ps. |  | 9,499,154 |  |  | Ps. |  | 10,547,720 |  |  | Ps. |  | 7,225,742 |  |  | U.S.$ |  |  | 363,249 |
Non-aeronautical services (3) |  |  |  | 2,393,604 |  |  |  |  | 2,772,905 |  |  |  |  | 3,183,532 |  |  |  |  | 3,771,500 |  |  |  |  | 2,448,053 |  |  |  |  |  | 123,067 |
Improvements to concession assets (4) |  |  |  | 1,676,037 |  |  |  |  | 1,312,491 |  |  |  |  | 1,440,204 |  |  |  |  | 1,906,801 |  |  |  |  | 2,192,578 |  |  |  |  |  | 110,224 |
Total revenues |  |  |  | 11,107,561 |  |  |  |  | 12,365,918 |  |  |  |  | 14,122,890 |  |  |  |  | 16,226,021 |  |  |  |  | 11,866,373 |  |  |  |  |  | 596,540 |
Operating costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Costs of services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee costs |  |  |  | 584,560 |  |  |  |  | 663,360 |  |  |  |  | 773,630 |  |  |  |  | 877,068 |  |  |  |  | 970,481 |  |  |  |  |  | 48,788 |
Maintenance |  |  |  | 346,805 |  |  |  |  | 505,352 |  |  |  |  | 528,929 |  |  |  |  | 578,510 |  |  |  |  | 426,523 |  |  |  |  |  | 21,442 |
Safety, security & insurance |  |  |  | 282,310 |  |  |  |  | 317,023 |  |  |  |  | 386,079 |  |  |  |  | 428,208 |  |  |  |  | 458,316 |  |  |  |  |  | 23,040 |
Utilities |  |  |  | 222,891 |  |  |  |  | 278,895 |  |  |  |  | 334,994 |  |  |  |  | 380,370 |  |  |  |  | 355,562 |  |  |  |  |  | 17,875 |
Other |  |  |  | 345,805 |  |  |  |  | 345,777 |  |  |  |  | 430,090 |  |  |  |  | 480,708 |  |  |  |  | 457,825 |  |  |  |  |  | 23,016 |
Total costs of services |  |  |  | 1,782,371 |  |  |  |  | 2,110,407 |  |  |  |  | 2,453,722 |  |  |  |  | 2,744,864 |  |  |  |  | 2,668,707 |  |  |  |  |  | 134,161 |
Technical assistance fees (5) |  |  |  | 301,820 |  |  |  |  | 357,451 |  |  |  |  | 411,477 |  |  |  |  | 461,549 |  |  |  |  | 289,154 |  |  |  |  |  | 14,536 |
Concession taxes (6) |  |  |  | 764,349 |  |  |  |  | 944,197 |  |  |  |  | 1,076,350 |  |  |  |  | 1,318,220 |  |  |  |  | 908,310 |  |  |  |  |  | 45,662 |
Depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation (7) |  |  |  | 300,880 |  |  |  |  | 324,460 |  |  |  |  | 400,205 |  |  |  |  | 446,517 |  |  |  |  | 495,292 |  |  |  |  |  | 24,899 |
Amortization (8) |  |  |  | 1,047,507 |  |  |  |  | 1,119,102 |  |  |  |  | 1,169,432 |  |  |  |  | 1,329,620 |  |  |  |  | 1,505,069 |  |  |  |  |  | 75,662 |
Total depreciation and amortization |  |  |  | 1,348,387 |  |  |  |  | 1,443,562 |  |  |  |  | 1,569,637 |  |  |  |  | 1,776,137 |  |  |  |  | 2,000,361 |  |  |  |  |  | 100,561 |
Other (income) expense |  |  |  | (295 | ) |  |  |  | (83,921 | ) |  |  |  | (73,152 | ) |  |  |  | 1,212 |  |  |  |  | (12,726 | ) |  |  |  |  | (640 | )
Cost of improvements to concession assets (4) |  |  |  | 1,676,037 |  |  |  |  | 1,312,491 |  |  |  |  | 1,440,204 |  |  |  |  | 1,906,801 |  |  |  |  | 2,192,578 |  |  |  |  |  | 110,224 |
Total operating costs |  |  |  | 5,872,669 |  |  |  |  | 6,084,187 |  |  |  |  | 6,878,238 |  |  |  |  | 8,208,783 |  |  |  |  | 8,046,384 |  |  |  |  |  | 404,504 |
Income from operations |  |  |  | 5,234,892 |  |  |  |  | 6,281,731 |  |  |  |  | 7,244,652 |  |  |  |  | 8,017,238 |  |  |  |  | 3,819,989 |  |  |  |  |  | 192,036 |
Finance cost - net |  |  |  | (603,032 | ) |  |  |  | (99,389 | ) |  |  |  | (236,033 | ) |  |  |  | (671,132 | ) |  |  |  | (1,434,222 | ) |  |  |  |  | (72,100 | )
Share of (loss) gain of associates |  |  |  | (11,728 | ) |  |  |  | (10,620 | ) |  |  |  | (947 | ) |  |  |  | 79 |  |  |  |  | 3 |  |  |  |  |  | - |
Income before income taxes |  |  |  | 4,620,132 |  |  |  |  | 6,171,722 |  |  |  |  | 7,007,672 |  |  |  |  | 7,346,185 |  |  |  |  | 2,385,770 |  |  |  |  |  | 119,936 |
Income tax expense |  |  |  | 1,266,573 |  |  |  |  | 1,440,641 |  |  |  |  | 1,869,041 |  |  |  |  | 1,891,443 |  |  |  |  | 467,067 |  |  |  |  |  | 23,480 |
Profit for the year |  |  |  | 3,353,559 |  |  |  |  | 4,731,081 |  |  |  |  | 5,138,631 |  |  |  |  | 5,454,742 |  |  |  |  | 1,918,703 |  |  |  |  |  | 96,456 |
Other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translating foreign operations |  |  |  | 773,453 |  |  |  |  | (226,494 | ) |  |  |  | (103,569 | ) |  |  |  | (269,440 | ) |  |  |  | 580,308 |  |  |  |  |  | 29,173 |
Remeasurements of employee benefit – net of income taxes |  |  |  | 10,773 |  |  |  |  | (2,602 | ) |  |  |  | (161 | ) |  |  |  | (1,404 | ) |  |  |  | (16,658 | ) |  |  |  |  | (837 | )
Cash flow hedges, effective portion of changes in fair value, net of income tax |  |  | n/a |  |  |  | n/a |  |  |  | n/a |  |  |  |  | (172,094 | ) |  |  |  | (299,013 | ) |  |  |  |  | (15,032 | )
Total comprehensive income for the year |  |  |  | 4,137,785 |  |  |  |  | 4,501,985 |  |  |  |  | 5,034,901 |  |  |  |  | 5,011,804 |  |  |  |  | 2,183,340 |  |  |  |  |  | 109,760 |
Profit for the year attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling interest |  |  |  | 3,281,884 |  |  |  |  | 4,649,120 |  |  |  |  | 5,037,368 |  |  |  |  | 5,360,152 |  |  |  |  | 1,968,856 |  |  |  |  |  | 98,977 |
Non-controlling interest |  |  |  | 71,675 |  |  |  |  | 81,961 |  |  |  |  | 101,263 |  |  |  |  | 94,590 |  |  |  |  | (50,153 | ) |  |  |  |  | (2,521 | )
Profit for the year |  |  |  | 3,353,559 |  |  |  |  | 4,731,081 |  |  |  |  | 5,138,631 |  |  |  |  | 5,454,742 |  |  |  |  | 1,918,703 |  |  |  |  |  | 96,456 |
Total comprehensive income for the year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling interest |  |  |  | 3,948,323 |  |  |  |  | 4,451,659 |  |  |  |  | 4,936,526 |  |  |  |  | 4,937,027 |  |  |  |  | 2,164,639 |  |  |  |  |  | 108,817 |
Non-controlling interest |  |  |  | 189,462 |  |  |  |  | 50,326 |  |  |  |  | 98,375 |  |  |  |  | 74,777 |  |  |  |  | 18,701 |  |  |  |  |  | 940 |
Total comprehensive income for the year |  |  |  | 4,137,785 |  |  |  |  | 4,501,985 |  |  |  |  | 5,034,901 |  |  |  |  | 5,011,804 |  |  |  |  | 2,183,340 |  |  |  |  |  | 109,760 |
Basic and diluted earnings per share (9) |  | Ps. | 6.2443 |  |  | Ps. | 8.8457 |  |  | Ps. | 9.5845 |  |  | Ps. | 10.1986 |  |  | Ps. | 3.7461 |  |  | U.S.$ |  |  | 0.1883 |
Dividends per share (10) |  | Ps. | 4.07 |  |  | Ps. |  | 5.7200 |  |  | Ps. |  | 7.6200 |  |  | Ps. |  | 8.4200 |  |  | Ps. |  | 0.0000 |  |  | U.S.$ |  |  | 0.0000 |
Basic and diluted earnings per ADS (9) |  | Ps. | 62.443 |  |  | Ps. |  | 88.4577 |  |  | Ps. |  | 95.8448 |  |  | Ps. |  | 101.9863 |  |  | Ps. |  | 37.4610 |  |  | U.S.$ |  |  | 1.8832 |
Dividends per ADS (10) |  | Ps. |  | 40.7000 |  |  | Ps. |  | 57.2000 |  |  | Ps. |  | 76.2000 |  |  | Ps. |  | 84.2000 |  |  | Ps. |  | 0.0000 |  |  | U.S.$ |  |  | 0.0000 |
Other operating data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total terminal passengers (thousands of passengers) (11) |  |  |  | 36,549 |  |  |  |  | 40,709 |  |  |  |  | 44,948 |  |  |  |  | 48,709 |  |  |  |  | 27,328 |  |  |  |  |  | 27,328 |
Total air traffic movements (thousands of movements) |  |  |  | 513 |  |  |  |  | 527 |  |  |  |  | 552 |  |  |  |  | 557 |  |  |  |  | 399 |  |  |  |  | 399 |
Total revenues per terminal passenger (12) |  | Ps. |  | 304 |  |  | Ps. |  | 304 |  |  | Ps. |  | 314 |  |  | Ps. |  | 333 |  |  | Ps. |  | 434 |  |  | U.S.$ |  |  | 22 |
Aeronautical and non-aeronautical services per terminal passenger |  | Ps. |  | 258 |  |  | Ps. |  | 272 |  |  | Ps. |  | 282 |  |  | Ps. |  | 294 |  |  | Ps. |  | 354 |  |  | U.S.$ |  |  | 18 |
Statement of financial position data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | Ps. |  | 5,188,138 |  |  | Ps. |  | 7,730,143 |  |  | Ps. |  | 6,151,457 |  |  | Ps. |  | 7,500,193 |  |  | Ps. |  | 14,444,549 |  |  | U.S.$ |  |  | 726,149 |
Total current assets |  |  |  | 5,998,574 |  |  |  |  | 8,980,159 |  |  |  |  | 7,840,207 |  |  |  |  | 9,367,484 |  |  |  |  | 16,846,109 |  |  |  |  |  | 846,879 |
Airport concessions, net |  |  |  | 12,384,923 |  |  |  |  | 11,754,661 |  |  |  |  | 11,412,118 |  |  |  |  | 10,821,596 |  |  |  |  | 10,649,220 |  |  |  |  |  | 535,352 |
Rights to use airport facilities, net |  |  |  | 1,043,695 |  |  |  |  | 986,995 |  |  |  |  | 930,296 |  |  |  |  | 873,598 |  |  |  |  | 816,898 |  |  |  |  |  | 41,067 |
Total assets |  |  |  | 36,051,462 |  |  |  |  | 39,517,532 |  |  |  |  | 39,550,502 |  |  |  |  | 41,577,804 |  |  |  |  | 51,361,173 |  |  |  |  |  | 2,582,001 |
Current liabilities |  |  |  | 1,941,299 |  |  |  |  | 2,295,147 |  |  |  |  | 2,172,523 |  |  |  |  | 4,676,566 |  |  |  |  | 5,262,675 |  |  |  |  |  | 264,562 |
Total liabilities |  |  |  | 13,646,893 |  |  |  |  | 17,440,763 |  |  |  |  | 17,778,353 |  |  |  |  | 20,908,361 |  |  |  |  | 28,508,390 |  |  |  |  |  | 1,433,158 |
Total equity attributable to controlling interest |  |  |  | 21,333,015 |  |  |  |  | 21,028,215 |  |  |  |  | 20,708,985 |  |  |  |  | 19,628,172 |  |  |  |  | 21,792,811 |  |  |  |  |  | 1,095,557 |
Common stock |  |  |  | 10,778,613 |  |  |  |  | 9,028,446 |  |  |  |  | 7,777,576 |  |  |  |  | 6,185,082 |  |  |  |  | 6,185,082 |  |  |  |  |  | 310,933 |
Non-controlling interest |  |  |  | 1,071,554 |  |  |  |  | 1,048,554 |  |  |  |  | 1,063,165 |  |  |  |  | 1,041,271 |  |  |  |  | 1,059,972 |  |  |  |  |  | 53,286 |
Statement of cash flows data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net cash flows provided by operating activities |  | Ps. |  | 5,641,203 |  |  | Ps. |  | 6,168,702 |  |  | Ps. |  | 7,235,619 |  |  | Ps. |  | 8,164,057 |  |  | Ps. |  | 3,566,567 |  |  | U.S.$ |  |  | 179,297 |
Net cash flows used in investing activities |  |  |  | (1,816,557 | ) |  |  |  | (1,938,575 | ) |  |  |  | (2,550,411 | ) |  |  |  | (2,586,095 | ) |  |  |  | (3,217,691 | ) |  |  |  |  | (161,758 | )
Net cash flows (used in) provided by financing activities |  |  |  | (1,771,185 | ) |  |  |  | (1,687,316 | ) |  |  |  | (6,166,694 | ) |  |  |  | (4,231,529 | ) |  |  |  | 6,288,427 |  |  |  |  |  | 316,128 |
Effects of exchange rate changes on cash held: |  |  |  | 138,178 |  |  |  |  | (806 | ) |  |  |  | (97,200 | ) |  |  |  | 2,303 |  |  |  |  | 307,053 |  |  |  |  |  | 15,436 |
(Decrease) increase in cash and cash equivalents |  |  |  | 2,191,639 |  |  |  |  | 2,542,005 |  |  |  |  | (1,578,686 | ) |  |  |  | 1,348,736 |  |  |  |  | 6,944,356 |  |  |  |  |  | 349,103 |

(1) | Translated into U.S. dollars at the rate of Ps.19.8920 per U.S.$1.00, the noon buying rate on December 31, 2020, as published by the U.S. Federal Reserve Board. The U.S. dollar information should not be construed to imply that the peso amounts represent, or could have been or could be converted into, U.S. dollars at such rate or at any other rate. Per-share dollar amounts are expressed in U.S. dollars (not thousands of U.S. dollars). Operating data are expressed in the units indicated.

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(2) | Revenues from aeronautical services principally consist of a fee for each departing passenger, aircraft landing fees, aircraft parking fees, fees for the transport of passengers from an aircraft to a terminal building, security charges for each departing passenger and other sources of revenues subject to regulation under our maximum rates. See “Item 4, Information on the Company – Regulatory Framework” for a description of our regulatory framework, including our maximum rates, and “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges” for certain exclusions to these fees in each of Mexico and Jamaica.

(3) | Revenues from non-aeronautical services consist of revenues not subject to regulation under our maximum rates, which are primarily revenues from leasing of commercial space to tenants, advertisers, certain ground transportation providers and other miscellaneous sources of revenues, as well as the revenues derived from business lines operated directly by us, which include car parking charges, advertising, VIP lounges and convenience stores. Pursuant to our operating concessions and the Mexican Airport Law (Ley de Aeropuertos) and the regulations thereunder, car parking services are currently regulated under the Mexican Airport Law but are excluded from regulated services under our maximum rates, although the Ministry of Communication and Transportation (Secretaría de Comunicaciones y Transportes), or “SCT,” could decide to regulate such rates.

(4) | Revenues from improvements to concession assets represent revenues generated from improvements made to concession assets and the related costs stemming from capital expenditures made as agreed with the Mexican government under our Master Development Programs for each fiscal year and with the Jamaican government in relation to our Capital Development Programs. These amounts did not result in actual cash inflows, nor did they have an effect on our consolidated net income, as revenues earned were equal to the costs incurred. See “Item 4, Information on the Company – Business Overview.”

(5) | We pay Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V., or “AMP,” a technical assistance fee under the technical assistance agreement entered into in connection with AMP’s purchase of our Series BB shares. This fee is described in Item 7 hereof.

(6) | Each of our subsidiary concession holders in Mexico is required to pay a concession tax to the Mexican government under the Mexican Federal Duties Law (Ley Federal de Derechos) for the use of public domain assets pursuant to the terms of its concession. The concession tax is currently 5.0% of each concession holder’s gross annual revenues (excluding revenues from improvements to concession assets and the recovery of costs). Gross annual revenue from the concession tax at the Montego Bay Airport (excluding revenues from improvements to concession assets and the recovery of costs) was 27.6%, 31.6% and 20.7% during 2018, 2019 and 2020, respectively. In the case of the Kingston airport the concession tax is of 62.01% over the gross annual aeronautical and commercial revenues. For more information, see “Item 5, Operating and Financial Review and prospects – Mexican Concession Tax and Jamaican Concession Fee.”

(7) | Reflects depreciation of machinery, equipment, and improvements on leased buildings.

(8) | Reflects amortization of concessions, improvements to concession assets, rights to use airport facilities, recovered long-term leases and parking lots.

(9) | Based on a weighted average of 525,575,547 common shares outstanding (excluding treasury shares) for the years ended December 31, 2016, 2017, 2018, 2019 and 2020, due to our stock repurchase program. Earnings per ADS are based on the ratio of 10 Series B shares per ADS.

(10) | Dollar amounts per share were U.S.$0.1744 in 2016, U.S.$0.2912 in 2017, U.S.$0.3880 in 2018, U.S.$0.4464 in 2019 and U.S.$0.1883 in 2020 per ADS were U.S.$1.7436 in 2016, U.S.$2.9125 in 2017, U.S.$3.8808 in 2018, U.S.$4.4642 in 2019 and U.S.$1.8832 in 2020. Per-share dollar amounts are expressed in U.S. dollars (not thousands of U.S. dollars).

(11) | Includes arriving and departing passengers as well as transfer passengers (passengers who arrive at our airports on one aircraft and depart on a different aircraft). Excludes transit passengers (passengers who arrive at our airports but generally depart without changing aircraft).

(12) | Total revenues for the period divided by terminal passengers for the period, expressed in pesos (not thousands of pesos).

(13) | Includes information for the Kingston airport for the period from October 10 to December 31, 2019.

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RISK FACTORS

Summary Risk Factors

Our business is subject to numerous risks and uncertainties, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more fully below and include, but are not limited to, risks related to:

Risks Related to Our Operations

•Developments relating to the outbreak of the COVID-19 have had, and may continue to have, a material adverse impact on our financial condition or results of operations.

•Our revenues are highly dependent on levels of passenger and cargo traffic volumes and air traffic, which depend in part on factors beyond our control.

•A global economic and financial crisis may affect our business.

•Negative economic developments in Mexico could reduce domestic passenger traffic at our Mexican airports, which would adversely affect our business and results of operations.

•Our business is particularly sensitive to economic conditions and other developments in the United States.

•Our business is highly dependent upon revenues from five of our airports and could be adversely impacted by any condition affecting those airports.

•International events, including acts of terrorism, wars and global epidemics, could have a negative impact on international air travel.

•Cyber-attacks or other interruptions of our security or information network could have an adverse effect on the operations of our airports and consequently on our financial results.

| • | We identified a material weakness in our internal controls related to ineffective general information technology controls which, if not remediated in an appropriate or timely basis, could adversely affect our ability to report our results of operations accurately and cause a loss of investor confidence and may adversely impact our stock price.

•Our leverage could adversely affect our ability to raise additional capital to fund our operations and limit our ability to react to changes in the economy or our industry.

•If a change in relations with our labor force should occur, such a change could have an adverse impact on our results of operations.

•The loss of, or suspension of operations by, one or more of our key customers could result in a loss of a significant amount of our revenues.

•The main domestic airlines operating at our Mexican and Jamaican airports have in the past refused to pay certain increases in our specific tariffs for aeronautical services and could refuse to pay additional increases in the future.

•The operations of our airports may be disrupted due to the actions of third parties, which are beyond our control.

•Legal claims and other actions by the former holders of land comprising certain of our Mexican airports may disrupt the operations and security of these airports.

•Extreme weather and natural disasters could adversely affect our business.

Risks Related to the Regulation of Our Business

•Our business is dependent on international regulations affecting airlines.

•We provide a public service regulated by the governments of Mexico and Jamaica, and our flexibility in managing our aeronautical activities is limited by the regulatory environments in which we operate.

•We cannot predict how the laws and regulations governing our business will be applied.

•The regulations pursuant to which the maximum rates applicable to our aeronautical revenues in Mexico and to the maximum regulated charges that we may collect at our Jamaican airports are established do not guarantee that we or any of our airports will be profitable.

•The Mexican government may terminate or reacquire our Mexican concessions under various circumstances, some of which are beyond our control.

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•The Jamaican government may terminate or reacquire the concessions held by our Jamaican airports under various circumstances, some of which are beyond our control.

•The Mexican and Jamaican governments could grant new concessions that compete with our airports.

•Federal tax legislation in Mexico may have an adverse effect on our financial condition and our results of operations.

•Changes to Mexican laws, regulations, and decrees applicable to us could have a material adverse impact on our results of operations.

Risks Related to Our Strategic Shareholder

•AMP, our strategic shareholder, has significant influence over our operations, and AMP’s interests may differ from those of other shareholders.

•Disputes among AMP’s shareholders may affect our shareholders’ meetings or management.

•If AMP should decide to sell all or a portion of its interest in us, our operations could be adversely affected.

•Our operations could be adversely affected if the technical assistance agreement is not renewed with AMP.

•Failure to comply with certain requirements of the privatization guidelines and the participation agreement relating to our privatization could have a material and adverse effect on our operations or the value of our securities.

Risks Related to Mexico

•Depreciation or fluctuation of the peso relative to the U.S. dollar could adversely affect our results of operations and financial condition.

•The value and prices of securities issued by Mexican companies may be adversely affected by developments in other countries.

•Political conditions in Mexico could materially and adversely affect Mexican economic policy or business conditions and, in turn, our operations.

•High incidences of crime in Mexico and violence related to drug trafficking could adversely affect our business.

•Increased environmental regulation and enforcement in Mexico may affect us.

•Minority shareholders may be less able to enforce their rights against us, our directors, or our strategic shareholders in Mexico.

Risks Related to Jamaica

•Adverse economic conditions in Jamaica may adversely affect our financial condition or results of operations.

•Political conditions in Jamaica could materially and adversely affect Jamaican economic policy or business conditions and, in turn, our operations in Jamaica.

•Our business in Jamaica is subject to substantial governmental regulation.

•High incidences of crime in Jamaica and violence related to drug trafficking could adversely affect our business.

•Government tax legislation in Jamaica may have an adverse effect on our financial condition and results of operations.

Risks Related to Our Structure, Shares and the Securities Market

•The Company's bylaws can discourage acquisitions and depress the market for our shares.

Risks Related to Our Operations

Developments relating to the outbreak of the COVID-19 have had, and may continue to have, a material adverse impact on our financial condition or results of operations.

In December 2019, a novel strain of coronavirus, known as COVID-19, was reported to have surfaced in Wuhan, Hubei Province, China. In January 2020, COVID-19 spread to other countries, including the United States, and efforts to contain the spread of this COVID-19 intensified. On March 11, 2020, the World Health Organization (the “WHO”) declared the COVID-19 outbreak a pandemic which caused the gradual cancellation of international flights from Canada, the United States and Europe. On March 19, 2020, the United States issued a travel advisory recommending that travelers avoid all international travel. The following day, on March 20, 2020, the United States closed its border with Mexico, except to essential travel and trade and commerce. On March 31, 2020, Mexico’s Ministry of Health implemented various measures to control the spread of COVID-19, including extraordinary actions, such as school closures and the suspension of non-essential activities in the country through April 30. On April 21, 2020, the suspension was extended through May 30, 2020. For purposes of these measures, airports were considered essential, and our airports remained operational, but passenger traffic decreased significantly. Beginning in

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June 2020, activities that had been deemed non-essential began the process of reactivation and passenger traffic improved; however, non-essential activities have continued to be restricted to different degrees in the states most affected by the pandemic, including certain states in which our airports are located. Regarding our operations in our Jamaica n airports, the g overnment of Jamaica suspended all incoming international flights starting March 25, 2020, excluding transportation of cargo and merchandise, and only allowed the departure of commercial flights, extending the suspension until June 15, 2020.

The COVID-19 outbreak, and measures taken to contain or mitigate it, have had, and may continue to have, adverse consequences for the global economy, including materially reducing demand for, and availability of, worldwide air travel and therefore has had, and may continue to have, a material adverse effect on our business and results of operations. COVID-19 has led to travel restrictions imposed by governments, flight cancellations, and a marked decline in passenger demand for air travel, domestically and worldwide. Among other adverse effects of the COVID-19 outbreak in our business, we experienced a decrease in passenger traffic (a 53.4% decrease for the period from April through December 2020, as compared to passenger traffic for the same period the previous year). The measures we have taken to mitigate the adverse effects of the COVID-19 pandemic, and any other strategic actions that we may take in the future in response to the COVID-19 pandemic, may not be effective in offsetting decreased passenger traffic and other adverse effects COVID-19 pandemic on our business. The degree of recovery for our operations and results will depend on the duration and measures of containment of the pandemic implemented by the governments of Mexico, Jamaica, United States, Canada and Europe. For instance, beginning January 26, 2021, all air passengers arriving to the United States from a foreign country have to get tested for COVID-19 no more than 3 days before their flight departs and present the negative result or documentation of having recovered from COVID-19 to the airline before boarding the flight. The potential for a continued period of significantly reduced demand for travel has and will likely continue to result in significant lost revenue. See “Item 5, Recent Developments – Developments related to the outbreak of COVID-19.”

The extent to which COVID-19 could continue to adversely impact our results will depend on future developments that are highly uncertain and hard to predict, including new information which may emerge concerning the severity of COVID-19, the actions taken to contain COVID-19 or treat its impact and other developments which may impact public perception of the virus, availability of effective vaccines, the recurrence of the pandemic or the introduction and spread of new variants of the virus which may be resistant to currently approved vaccines, any additional travel warnings and restrictions , including any government mandates on air service, the impact it may have on passenger traffic and financial health and operations of our customer airlines. We cannot currently fully predict the extent to which the COVID-19 outbreak will continue to impact the frequency and pattern of our domestic and international passenger traffic, global air travel and the demand for air travel in the regions in which we operate. Continued travel restrictions or operational issues resulting from the rapid spread of COVID-19 could have a material adverse effect on our business and results of operations. We are also not able to predict whether the COVID-19 pandemic will result in permanent changes to frequency and pattern of our domestic and international passenger traffic, with such changes including but not limited to a permanent reduction in business travel as a result of increased usage of "virtual" and "teleconferencing" products and more broadly a general reluctance to travel by consumers, each of which could have a material adverse impact on our business, financial condition, or results of operations.

Furthermore, we could incur in additional operating expenses and significant investments related to new regulatory procedures in order to preserve the health of the passengers and the airport community, which could not be recovered through our maximum tariffs, as a result of this pandemic. During 2020, we incurred in Ps. 13.0 million of expenses and donations related to the measures against the pandemic.

In addition, an outbreak of another disease or similar public health threat, or fear of such an event, that affects travel demand, travel behavior or travel restrictions could adversely impact our business, financial condition, and operating results. Outbreaks of other diseases could also result in increased government restrictions and regulation, such as those actions described above or otherwise, which could adversely affect our operations.

The impact of the COVID-19 pandemic may also exacerbate other risks discussed in this annual report.

Our revenues are highly dependent on levels of passenger and cargo traffic volumes and air traffic, which depend in part on factors beyond our control.

Our revenues are closely linked to passenger and cargo traffic volumes and the number of air traffic movements at our airports. These factors directly determine our revenues from aeronautical services and indirectly determine our revenues from non-aeronautical services. Our principal source of aeronautical service revenues is passenger charges. Passenger charges are payable for each passenger departing from the airport terminals we operate (except certain exclusions in each of Mexico and Jamaica, described below under “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges”) and are collected by the airlines and paid to us. In 2018, 2019 and 2020, passenger charges represented 54.9%, 52.9% and 50.0% respectively, of our total revenues (in 2018, 2019 and 2020 passenger charges represented 61.1%, 60.0% and 61.3% respectively, of the sum of our aeronautical and non-aeronautical revenues).

Passenger and cargo traffic volumes and air traffic movements depend in part on many factors beyond our control, including economic conditions in Mexico, Jamaica, the United States, Canada and Europe, the political situation in Mexico, Jamaica and elsewhere in the world, public health crises, the attractiveness of the destinations that our airports serve relative to those of other competing airports, fluctuations in petroleum prices, disruptions of global debt markets and changes in regulatory policies applicable to the aviation industry. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our

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financial conditions or results of operations.” Any decreases in air traffic to or from our airports as a result of factors such as these could adversely affect our business, results of operations, prospects and financial condition.

A global economic and financial crisis may affect our business.

A global economic and financial crisis may lead to high volatility and lack of liquidity in the global credit and other financial markets. Such a downturn in the global economy may lead to increased commercial and consumer delinquencies, lack of consumer confidence, decreased market valuations, increased market volatility, high financial risk premiums and a widespread reduction of business activity generally. These conditions may also limit the availability of credit and increased financial costs for companies around the world, including companies in Mexico, Jamaica, and the United States. Such a recession could significantly affect our ability to access credit to finance our future projects, therefore adversely affecting our business. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.”

Competition from other tourist destinations could adversely affect our business.

The principal factor affecting our results of operations and business is the number of passengers using our airports. The number of passengers using our airports (particularly our international airports at Los Cabos, Puerto Vallarta and Montego Bay) may vary because of factors beyond our control, including the level of tourism in Mexico and Jamaica. In addition, our passenger traffic volume may be adversely affected by the attractiveness, affordability, and accessibility of competing tourist destinations in Mexico, such as Acapulco and Cancun, or elsewhere, such as Hawaii, Puerto Rico, Florida, Cuba, the Dominican Republic, the other Caribbean islands and destinations in Central America. The attractiveness of the destinations we serve is also likely to be affected by travelers’ perceptions of the safety and political and social stability of Mexico and Jamaica. There can be no assurance that tourism levels, and therefore the number of passengers using our airports, in the future will match or exceed current levels. A reduction in tourism to the destinations served by our airports could directly and indirectly affect our revenues from aeronautical and non-aeronautical services.

Negative economic developments in Mexico could reduce domestic passenger traffic at our Mexican airports, which would adversely affect our business and results of operations.

Although a substantial portion of our revenues is derived from foreign tourism, domestic passengers have represented two-thirds of the passenger traffic volume at our Mexican airports for the last three years. Aside from our operation of the Kingston airport, the Montego Bay airport concession in Jamaica and the operation of DCA in Spain, all our assets are located, and all our operations are conducted, in Mexico. Because our revenues are largely dependent on the level of passenger traffic at our airports, any decline in domestic traffic could have an adverse effect on our business, results of operations, prospects, and financial conditions. Therefore, if inflation or interest rates increase significantly or the Mexican economy is otherwise adversely impacted, our business, financial condition and results of operations could be materially and adversely affected because, among other things, domestic demand for transportation services may decrease. For more information on the potential impact of negative economic developments in Mexico, see “Item 3, Key Information – Risks Factors – Risks Related to Mexico – Adverse economic conditions in Mexico may adversely affect our financial condition or results of operations” and “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.”

Our business is particularly sensitive to economic conditions and other developments in the United States.

Our business is particularly sensitive to trends in the United States relating to leisure travel, consumer spending and international tourism. In 2018, 2019 and 2020, 88.1%, 89.7% and 89.6%, respectively, of the international terminal passengers served by our Mexican airports arrived or departed on flights originating in or departing to the United States and 68.6%, 70.3% and 73.8%, respectively, of the passengers served by our Jamaican airports arrived or departed on flights originating on or departing to the United States.

Thus, our business is highly dependent on the condition of the U.S. economy, and events affecting the U.S. economy may adversely affect our business, results of operations and financial condition. In 2018, 2019 the U.S. gross domestic product (“GDP”) increased at a rate of 3.0%, 2.2% respectively, and decreased 3.5% in 2020, according to the U.S. Bureau of Economic Analysis. The outbreak of COVID-19 has adversely affected the economies and financial markets of many countries, including the United States, Jamaica and Mexico. The extent to which COVID-19 impacts these economies will depend on future developments, which are highly uncertain and cannot be predicted. If the U.S. economy falls into a recession or economic growth in the U.S. decelerates significantly, it would likely have a material adverse effect on our results of operations due to decreased passenger traffic travel to and from the United States. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.”

Any decision taken by the current U.S. administration, including any changes to laws and policies governing foreign trade and foreign relations, that could have a negative impact on the Mexican economy, such as reductions in the levels of remittances, reduced commercial activity among the two countries or a slowdown in direct foreign investment in Mexico, could adversely affect our business and our results of operations.

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The USMCA entered into force on July 1, 2020. We cannot predict the impact of the USMCA on particular industries or government policies and the changes to international trade and travel that may result, and consequently, we cannot predict what effect it will have on our business and our results of operations.

In addition, changes in economic, political, and social conditions in the United States could have an impact on the Mexican economy, which, in turn, could affect our business and results of operations. For example, in 2020, presidential elections were held in the United States, which resulted in a change in the presidency and could lead to political, economic, and social changes that could have an effect on our business.

Other trends and developments in the United States may also adversely impact the frequency and pattern of our international passenger traffic, which may adversely affect our business, financial condition, or results of operations. For example, any development that could make travel to and from the United States less attractive to our passengers, including any tax reforms and changes to economic policies that could create tension between the Mexican and U.S. governments or reduce economic activity between Mexico and the United States, could negatively affect the level of passenger traffic in our airports and could have an adverse effect on our business and our results of operations.

Changes in U.S. immigration and border policy could adversely affect passenger traffic to and from Mexico.

Immigration reform and border policies, especially with respect to Mexico, continue to attract significant attention in the U.S. government and public arena. If new federal immigration legislation is enacted, such laws may contain provisions that could make it more difficult for Mexican citizens to travel between Mexico and the United States. Our Tijuana airport is connected to the U.S. border by the Cross-Border Express, or “CBX,” an international bridge that allows passengers to cross directly to the United States. By facilitating transfers between the United States and Mexico for travelers holding a boarding pass to all flights departing from or arriving in Tijuana and reducing connection and waiting times at both the San Isidro and Otay Mesa border crossings, the CBX has been a main driver in increasing passenger traffic at our Tijuana airport since its inauguration in December 2015. Any changes to U.S. laws and policies that could affect the operation of the CBX, could adversely impact the passenger traffic at the Tijuana airport, which could have an adverse effect on our business and our results of operations.

In addition, new immigration and border legislation could lead to uncertain economic conditions in Mexico that may affect leisure travel, including travel to and from Mexico. Such restrictions could have a material adverse effect on our passenger traffic results.

Levels of passenger and cargo traffic volumes and air traffic at our airports are highly sensitive to the impact on airlines of international petroleum prices and access to credit.

Our revenues are closely linked to passenger and cargo traffic volumes and air traffic movements at our airports, which are determined by the operating levels of airlines at our airports. Airlines’ costs are highly sensitive to the price of petroleum and their access to credit to finance their operations. Increased costs may increase ticket prices and reduce fleets, thereby decreasing flight frequencies and negatively impacting passenger and cargo traffic volumes.

International petroleum prices have experienced significant volatility in the recent past. For example, European Brent crude oil spot prices dropped from U.S.$67.77 per barrel on December 31, 2019, to U.S.$9.12 per barrel on April 21, 2020. On December 31, 2020, the European Brent crude oil spot price was U.S.$51.22 per barrel with an average price of U.S.$41.96 per barrel during 2020, according to the U.S. Energy Information Administration. The price of fuel may be subject to further fluctuations resulting from a reduction or increase in output of petroleum, voluntary or otherwise, by oil-producing countries, other market forces, a general increase in international hostilities, or any future terrorist attacks. High fuel prices result in increases in airlines’ costs and may lead to airline financial difficulties and bankruptcies, higher ticket prices, cancellations of routes and decreases in frequencies of flights, and may decrease demand for air travel generally. Each of these may reduce passenger and cargo traffic at our airports.

Most airlines also depend on reliable access to credit at interest rates they can afford to finance their fleet of aircraft and make other large investments. As evidenced by the 2008-2009 global recession and financial crisis, high interest rates and disruptions in the global debt markets had an adverse effect on airlines’ ability to operate their fleets, forcing many to raise ticket prices, cancel routes, decrease the frequencies of flights or forego scheduled investments. Such reductions in operations by airlines lead to lower passenger and cargo traffic volumes at our airports, which may have an adverse impact on our results of operations.

See “Item 3, Key Information – Risks Factors – Risks Related to Our Operations – The loss of, or suspension of operations by, one or more of our key customers could result in a loss of a significant amount of our revenues” for a more detailed description of which of our major airline customers have recently reduced or cancelled operations at our airports.

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Our business is highly dependent upon revenues from five of our airports and could be adversely impacted by any condition affecting those airports.

In 2020, approximately 79.8% of the sum of aeronautical and non-aeronautical revenues was generated from five of our fourteen airports. The following table lists the percentage of the sum of aeronautical and non-aeronautical revenues generated at our airports in 2020:

Airport |  | For year ended December 31, 2020 |
Guadalajara |  |  | 27.9 | %
Tijuana |  |  | 15.8 | %
Los Cabos |  |  | 14.8 | %
Puerto Vallarta |  |  | 10.8 | %
Montego Bay |  |  | 10.5 | %
Eight other Mexican airports (combined) and Kingston |  |  | 20.2 | %
Total revenues |  |  | 100.0 | %

As a result of the substantial contribution to our aeronautical and non-aeronautical revenues from these five airports, any event or condition affecting these airports could have a material adverse effect on our business, results of operations, prospects and financial condition.

International events, including acts of terrorism, wars and global epidemics, could have a negative impact on international air travel.

International events may negatively impact international air travel. Terrorist attacks, wars, other armed conflicts, and public health crises could negatively affect the frequency and pattern of air travel worldwide.

Any future terrorist attacks, whether or not involving aircraft, may adversely affect our business, results of operations, prospects, and financial condition. Moreover, we cannot predict what effect any future terrorist attacks or threatened attacks on the United States or any retaliatory measures taken by the United States in response to these events may have on the U.S. economy or leisure travel trends, which may negatively affect our results of operations. Similarly, our Mexican and Jamaican airport operations could be negatively impacted by terrorist attacks on aircraft such as those which occurred with international airlines’ aircraft operating over Egypt and the Ukraine in 2015.

The COVID-19 outbreak is materially reducing demand for, and availability of, worldwide air travel and could therefore have a material adverse effect on our business and results of operations. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.”

Because our revenues are largely dependent on the level of passenger traffic in our airports, any general increase of hostilities relating to reprisals against terrorist organizations, further armed conflict around the world, outbreaks of health epidemics or other events of general international concern (and any related economic impact of such events) could result in decreased passenger traffic and increased costs to the air travel industry and, as a result, could cause a material adverse effect on our business, results of operations, prospects and financial condition.

Cyber-attacks or other interruptions of our security or information network could have an adverse effect on the operations of our airports and consequently on our financial results.

Cyber-attacks and their impact on our networks and systems, including the introduction of viruses, malware, faulty software, equipment outages and other interruptions in or unauthorized access of company systems, have increased in frequency, extent and potency in recent years. We continuously evaluate our weaknesses, maintain security software, and employ countermeasures to prevent breaches to our data and systems, and regularly review these preventive measures to avoid cyber-attacks and other interruptions to our business. For example, our information systems are protected from exogenous events with backup systems, including physical and software safeguards, such as malware protection, secure privileged access accounts, penetration tests and red team exercises, as well as inventory of authorized and unauthorized software and hardware. In addition, we have implemented secure Wi-Fi in all of our airports network and used “CyberArk” software to monitor the activity of all our users and the “SUITE Trend Micro” antimalware to enhance the security of our servers.

Nevertheless, any disruption, failure, or security breach of our information technology infrastructure, including our back-up systems, could have a negative impact on our operations. The preventive actions that we employ to reduce the risk of experiencing a cyber-attack and to protect our network and information could be inadequate to stop a cyber-attack in the future, which could hinder our ability to protect the privacy of our clients and business and cause the unauthorized distribution of valuable financial information and confidential data relating our clients and business. The costs associated with a possible cyber-attack on our systems include increased expenses associated with reinforcing cyber-security measures, loss of business due to the interruption of services, litigation and damage to our reputation. Such outcomes could cause significant losses or decreases in the price of our shares. The potential losses related to cyber-attacks and disruptions of our network could also surpass our insurance coverage.

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We identified a material weakness in our internal controls related to ineffective general information technology controls which, if not remediated in an appropriate or timely basis, could adversely affect our ability to report our results of operations accurately and cause a loss of investor confidence and may adversely impact our stock price.

Our management identified a material weakness in internal control related to ineffective general information technology controls (GITCs). As a result, management concluded that our internal control over financial reporting was not effective as of December 31, 2020. Internal controls related to the operation of IT systems and databases are critical to maintaining adequate internal control over financial reporting. The material weakness in our internal control over financial reporting arose because we did not: maintain effective controls over the segregation of duties within IT environments; did not appropriately perform certain periodic risk assessments of certain system configurations; did not maintain effective monitoring controls over certain key financial systems and databases’ administrators; and did not maintain effective IT service desk controls. This material weakness did not result in any material misstatement of our historical financial statements. For more information, see “Item 15—Controls and Procedures.”

As of the date of this report, the process of designing, implementing, and validating remedial measures related to the material weakness noted above is ongoing. Remedial measures may require us to invest in additional technology and incur other expenses. If we are unable to remediate the material weakness, we may be unable to report our results of operations accurately and make our required filings with government authorities, including the SEC. Furthermore, our business and operating results and the price of our securities may be adversely affected by related negative market reactions and loss of investor confidence. We cannot be certain that in the future additional material weaknesses will not exist or otherwise be discovered.

Security enhancements and requirements may require additional investments or result in additional expenses.

The air travel business is susceptible to, and has experienced, increased costs resulting from enhanced security and higher insurance. Following the events of September 11, 2001, we reinforced security at our airports, and our general liability insurance premiums increased substantially. For more information on the insurance policies we carry, see “Item 4, Information on the Company – Property, Plant and Equipment.” Because a substantial majority of our international flights involve travel to the United States, we may be required to comply with security directives of the U.S. Federal Aviation Authority, in addition to the directives of the Mexican and Jamaican civil aviation authorities.

The users of airports, principally airlines, also have been subject to increased costs, as they have been required to adopt additional security measures and their insurance premiums have also increased substantially. While governments in other countries have agreed to indemnify airlines for liabilities they might incur resulting from terrorist attacks, the Mexican and Jamaican governments have not done so and have given no indication of any intention to do the same. In the future, airlines may be required to comply with more rigorous security rules or guidelines and premiums for aviation insurance could rise further. In addition, fuel prices, supplies and interest rates for airlines aircraft lease agreements, which constitute a significant cost for airlines using our airports, may be subject to increases resulting from any future terrorist attacks, a general increase in international hostilities or a reduction in output of fuel, voluntary or otherwise, by oil producing countries. Increases in airlines’ costs may result in higher airline ticket prices and decreased demand for air travel generally, thereby having an adverse effect on our revenues and results of operations.

If authorities require enhancements to security equipment or adoption of additional security measures, we may be required to undertake significant additional expenses and capital expenditures. We cannot guarantee that these expenses and/or capital expenditures will be considered for our Mexican airports in our Maximum Tariff and Master Development Programs negotiations. Therefore, these additional expenses could negatively affect our cash flows and affect our results of operations.

In the case of any change in security enhancement requirements in Jamaica, the Jamaican civil aviation authorities have permitted any such unavoidable and unforeseen expenditure to be treated as a cost pass-through for the purposes of regulation, allowing for an increase in regulated charges at any time within the tariff review period to cover the cost of additional security requirements. However, we can provide no assurance that we would be successful in negotiating new tariffs to recover the expenses and/or capital expenditures needed to comply with any new security requirements.

The operation and maintenance of new baggage screening equipment could increase our expenses and may expose us to greater liability.

The Mexican government requires that all checked baggage on all commercial flights undergo a comprehensive screening process. The screening process requires the installation of dedicated screening equipment and the manual inspection of baggage if such equipment alerted to the potential presence of prohibited items. Although the Mexican Airport Law expressly provides that airlines bear the responsibility for baggage screening, we incur ongoing expenses to maintain and operate this equipment, which we currently recover from our airline customers. However, if it is determined that we are responsible for all or a portion of the cost or that we are liable for certain issues arising from our operation of the screening systems, our exposure to liability could increase significantly. These operational costs were reviewed during the negotiation of the Master Development Programs for our Mexican airports for the years 2020-2024, completed in December 2019, and revised in November 2020, and there were no changes contemplated to the operational costs or to the cost recovery procedures. However, there can be no assurance that these operational costs or the cost recovery procedures will not be revised in the next negotiation of the Master Development Program in 2024.

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We also expect to incur ongoing expenses to maintain any equipment purchased, and we could be required to undertake significant additional capital expenditures for items such as a new screening technology or additional equipment if screening guidelines are expanded further and require that additional steps be taken to comply with the requirements. For instance, replacement of current baggage screening equipment with new Computer Tomography X-ray (“CTX”) baggage screening equipment is scheduled for 2021. In addition, the Federal Civil Aviation Agency (“AFAC”) issued a document titled Airport Security Recommendations, which established that airports must have alternative methods for baggage screening to be used in case the inspection technology that is used is not available. We believe that we comply with the requirement with the new equipment, but the AFAC may require additional investments.

These additional investments and expenses could restrict our liquidity and adversely affect our results of operations if such costs are higher than those accepted in the negotiations of our Master Development Programs for the 2020-2024 period. For more information on screening equipment, see “Item 4, Information on the Company – Regulatory Framework – Mexican Airport Concessions – Scope of Concessions.”

Our revenues and profitability may be adversely affected if we fail in our business strategy.

Our ability to increase our revenues and profitability depends in part on our business strategy, which consists of setting prices as close as possible to our regulatory maximum rates for any given year for our Mexican and Jamaican airports, as well as, reducing operating costs, controlling our capital expenditure commitments under our Master Development Programs with the Mexican government and under the Capital Development Program with the Jamaican government, increasing passenger and cargo traffic at our airports and increasing revenues from commercial activities.

Our ability to increase our commercial revenues is significantly dependent, among other factors, on increasing passenger traffic at our airports and on our ability to continue remodeling, expanding, and modernizing the commercial areas we operate within our airports and on the introduction of new business lines. Further, we are in the process of expanding the amount and types of business lines that we operate directly within our airports. Revenues from business lines operated directly by us represented 26.0%, 26.5% and 23.3% of non-aeronautical revenues in 2018, 2019 and 2020, respectively (6.5%, 7.0% and 5.9% of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2018, 2019 and 2020, respectively).

We cannot provide assurance that we will be successful in implementing our strategy of increasing our passenger traffic or our revenues from commercial activities, including those that we operate directly. The passenger traffic volume in our airports depends on factors beyond our control, such as the attractiveness of the commercial, industrial and tourist centers that the airports serve. Additionally, our new commercial strategy of increasing revenues by operating lines of businesses in our airports directly could result in the loss of a significant amount of revenues, or not generate the level of profitability sufficient to increase our results of operations. Accordingly, there can be no assurance that the passenger traffic volume in our airports will increase or that our profitability will increase. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.”

Our acquisitions may not achieve anticipated benefits, and may increase our liabilities, disrupt our existing business and harm our results of operations.

The benefits we expect to receive from our acquisitions depend on our ability to integrate the operations, services, personnel and administrative infrastructure of the acquired businesses in a timely and efficient manner. Acquisitions also entail increased operating costs, as well as greater allocation of management resources away from daily operations. Additionally, the business growth opportunities, revenue benefits, cost savings and other benefits we anticipate resulting from our acquisitions may not be achieved as expected or may be delayed. To the extent that we incur higher integration costs or achieve lower revenue benefits or fewer cost savings than expected, or if we are required to recognize impairments of acquired assets, investments or goodwill, our results of operations and financial condition may be adversely affected.

In October 2018, we signed the NMIA Concession Agreement with the Government of Jamaica for the operation, modernization, and expansion of the NMIA located in Kingston, Jamaica. On October 10, 2019, we took control of the operation, management, and administration of the NMIA. While the NMIA is the second airport we operate in Jamaica, we may not be able to fully implement our business strategy or integrate its operations with the Montego Bay Airport, which could adversely affect our results of operations and financial condition.

Our leverage could adversely affect our ability to raise additional capital to fund our operations and limit our ability to react to changes in the economy or our industry.

As of December 31, 2020, our outstanding consolidated indebtedness was Ps.24.4 billion (approximately U.S.$1.2 billion). This indebtedness may constrain our ability to raise incremental financing or increase the cost at which we could raise and maintain any such financing or impair our ability to take advantage of significant business opportunities that may arise. As a result of this indebtedness, we may also be more vulnerable to general adverse economic, industry or competitive conditions. We cannot assure you that our business will generate cash in an amount sufficient to enable us to service our debt or to fund our other liquidity needs, which may adversely affect our overall performance. We may need to refinance all or a portion of our debt on or before maturity, and we cannot assure you that we will be able to

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refinance any of our debt on commercially reasonable terms. These risks may be intensified in 202 1 due to the impact of the COVID-19 pandemic. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.” and “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources.”

Covenants in our indebtedness may limit our discretion with respect to certain business matters.

The instruments governing our indebtedness, or the indebtedness of our operating entities may contain restrictive covenants limiting our discretion with respect to certain business matters. These covenants could place significant restrictions on, among other things, our ability to incur additional liabilities, acquire new equity investments, engage in mergers or acquisitions, pay dividends, create liens or other encumbrances or make certain other payments, investments, loans and guarantees. These covenants could also require us to meet certain financial ratios and financial condition tests. A failure to comply with any such covenants could result in a default which, if not cured or waived, could permit acceleration of the relevant indebtedness.

If a change in relations with our labor force should occur, such a change could have an adverse impact on our results of operations.

Although we believe we maintain positive relations with our labor force, if any conflicts with our employees were to arise in the future, including with our unionized employees (which accounted for 35.0% of our total employees in Mexico and 40.0% in Jamaica as of December 31, 2020), resulting events such as strikes or other disruptions that could arise with respect to our workforce could have a negative impact on our results of operations.

The loss of, or suspension of operations by, one or more of our key customers could result in a loss of a significant amount of our revenues.

Most of our revenues are driven by the operations of a few key airline customers. In 2020, Concesionaria Vuela Compañía de Aviación, S.A. de C.V. (“Volaris”), Aeroenlaces Nacionales, S.A. de C.V. (“VivaAerobus”), Grupo Aeroméxico, S.A.B. de C.V. (“Aeroméxico Group” a holding company that owns Aeroméxico and Aeroméxico Connect) and American Airlines, Inc. (“American Airlines”) transported a significant percentage of our passenger traffic. During 2020, the passenger charges collected by these four airlines accounted for 20.1%, 5.6%, 4.7% and 4.7%, respectively, of total revenues in our airports (24.7%, 6.8%, 5.7% and 5.7%, respectively, of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2020).

In June 2020, Aeromexico Group announced that it filed for Chapter 11 bankruptcy due to the unprecedented challenges relating to the COVID-19 pandemic. During 2019 and 2020, the passenger charges collected by Aeromexico accounted for 6.0% and 4.7% of total revenues in our airports, respectively (6.8% and 5.7% of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2019 and 2020, respectively). As of the date hereof, the process has not affected Grupo Aeromexico’s operations or its payments to our airports, however we cannot predict whether there could be operating interruptions in the future.

Since December 2020, Interjet stopped operations at our airports and has a balance due of Ps. 47.6 million. During 2019 and 2020, the passenger charges collected by Interjet accounted for 3.9% and 1.0% of total revenues in our airports, respectively (4.3% and 1.2% of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2019 and 2020, respectively).

None of our contracts with our airline customers obligate them to continue providing service to our airports, and we can offer no assurance that if any of our key customers reduce their use of our airports, competing airlines would add flights to their schedules to replace any flights no longer handled by our principal airline customers. In addition, Mexican law prohibits an international airline from transporting passengers from one Mexican location to another, except if the passenger originated travel outside Mexico, thus limiting the number of airlines providing domestic service in Mexico. Accordingly, we expect to continue to generate a significant portion of our revenues from domestic travel from a limited number of airlines.

Furthermore, passenger charges, which accounted for 52.9% and 50.0% of our revenues in 2019 and 2020, respectively (60.0% and 61.3%, respectively, when taking into account only the sum of aeronautical and non-aeronautical revenues), are collected, pursuant to passenger charges collection agreements, by airlines from passengers on our behalf and are later paid to us, depending on the airline, within no more than 60 days following the date of each flight. During 2019 and 2020, the average collection term of passenger charges was 54 and 67 days, respectively. See “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges – Passenger Charges in Mexico.” Consequently, if any of our key airline customers were to become insolvent or seek bankruptcy protection, we would be an unsecured creditor with respect to any unpaid passenger charges, and we would not be assured of collecting the amounts invoiced to that airline for passenger charges despite cash deposits held in guarantee. Additionally, we could not be assured that we would recover the traffic they would stop transporting. Both scenarios could negatively affect our cash flows from operations or our results of operations.

Furthermore, the COVID-19 pandemic has and will likely continue to adversely affect the global airline industry, which is experiencing significant financial difficulties. As a result, one or more airlines could stop making payments to our airports. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.”

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Additionally, if some of our commercial clients were to face difficulties making their payments to our airports, some clients may decide to leave our commercial spaces and cancel their contracts. This could potentially have a negative effect on our revenues.

The main domestic airlines operating at our Mexican and Jamaican airports have in the past refused to pay certain increases in our specific tariffs for aeronautical services and could refuse to pay additional increases in the future.

In the past, certain of the domestic airlines operating at our Mexican and Jamaican airports refused to pay certain increases in the specific tariffs we charge for aeronautical services. Although these prior disputes were resolved, because only a few airlines contribute a substantial portion of our revenues, our results of operations could be adversely impacted if any of these (or any of our other) airlines should refuse to make payments in the future. Moreover, during periods of economic downturn, the airlines that operate at our airports may be more likely to oppose increases in our charges for aeronautical services in future years, which could adversely impact our results of operations. See “Item 4, Information on the Company – Business Overview – Principal Customers – Principal Aeronautical Services Customers – Airline Customers.”

The airlines at our airports may refuse to continue collecting passenger charges on our behalf or we may decide to collect passenger charges ourselves, which would result in increased costs for us.

The airlines operating at our airports collect a passenger charge on our behalf from each departing passenger on an aircraft (except certain exclusions in each of Mexico and Jamaica, described below under “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges”).

Currently, we have entered into collection agreements with the airlines that operate at our Mexican airports to collect those passenger charges on our behalf. As a result, passenger charges are included in the cost of passengers’ tickets, and we issue invoices for those charges to each airline. We and the airlines with which we have these collection agreements have the right to cancel them with prior notice to the other party. If we or one of our airline customers were to cancel a collection agreement, we would have to implement a collection system of our own to collect passenger charges from passengers directly. The installation and operation of such a collection system would result in additional costs for us, which would negatively impact our results of operations.

MBJA does not have agreements with some of the airlines that operate at the Montego Bay airport for the collection of passenger charges on its behalf. However, the collection of passenger charges by the airlines is implied under the current operating agreements signed by each airline operating at the Montego Bay airport, whereby these airlines must pay MBJA for regulated passenger charges. Newly issued Air Carrier Operating Agreements, however, have been amended to expressly require airlines to collect passenger service charges.

As part of the transition process, all agreements held by the previous operator of the Kingston airport were assigned or novated to PACKAL. All agreements with airlines and the International Air Transport Association (“IATA”) that were assigned or novated to PACKAL by the previous operator as part of this process are space license agreements, each of which includes a schedule of conditions of use outlining the policies for aeronautical operation and requiring that each airline collect all passenger and security charges from departing passengers on behalf of the airport and remit such charges to the airport operator. Airlines operating in NMIA could refuse to collect passenger charges on behalf of the airport.

The operations of our airports may be disrupted due to the actions of third parties, which are beyond our control.

As is the case with most airports, the operation of our airports is largely dependent on the services of third parties, such as air traffic control authorities, airlines and ground transportation providers. We also depend upon the government or entities of the government for provision of services, such as electricity, supply of fuel for aircraft, air traffic control and immigration and customs services for our international passengers. Additionally, the disruption or stoppage of taxi or bus services at one or more of our airports could also adversely affect our operations. We are not responsible for and cannot control the services provided by these parties. Any disruption in, or adverse consequence resulting from, their services, including a work stoppage or other similar event, may have a material adverse effect on the operation of our airports and on our results of operations.

In addition, we are dependent on third-party providers of certain complementary services such as catering, baggage handling, and operation of airport buses and passenger walkways. If these service providers were to halt operations at any of our airports, we would be required to seek a new service provider or provide services ourselves, either of which would likely result in increased capital expenditures or costs and have an adverse impact on our cash generation and results of operations.

Legal claims and other actions by the former holders of land comprising certain of our Mexican airports may disrupt the operations and security of these airports.

Some of our airports are partly sited on lands that were expropriated by the Mexican government pursuant to its power of eminent domain. Prior to their expropriation, some of these lands had been held by groups of individuals through a system of communal ownership of rural land known as an ejido. Certain of these former ejidos’ participants have asserted indemnity claims against the Mexican government challenging the expropriation decrees. See “Item 8, Financial Information – Legal Proceedings – Ejido participants at Tijuana, Guadalajara and Puerto Vallarta airports.”

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The Mexican government owns the land on which Guadalajara International Airport operates and has granted us the right to use that land for the purpose of operating the airport pursuant to our concession. Currently, there are squatters residing on or claiming rights to a portion of the property, at least one of whom has attempted to subdivide and sell off certain portions of the property. As owner of the property, the Mexican government must initiate any actions directed at removing these persons from the property.

In addition, during various periods of 2018, 2019 and 2020, members of an ejido called el Zapote blocked access to commercial areas of the Guadalajara International Airport, specifically the parking facilities, which resulted in commercial revenues losses of Ps.8.1 million in 2018 (5.8% of our total car parking charges at the airport for 2018), Ps.28.5 million in 2019 (19.5% of our total car parking charges at the airport for 2019) and Ps.16.7 million in 2020 (23.2% of our total car parking charges at the airport for 2020). Although we recovered control of these areas on February 12, 2020, if these persons occupy the area again in the future, their presence could have an adverse impact on our operations, revenues and security, and could restrict our ability to expand our operations, at the Guadalajara airport.

In addition to challenging the expropriation, certain of the former ejido Tampico participants are also currently occupying portions of Tijuana International Airport property. While these persons are not currently interfering with the airport’s operations, their presence could limit our ability to expand the airport into the areas they occupy. There can also be no assurance that the former ejido participants will not seek to disrupt the airport’s operations if their legal claims against the Mexican government are not resolved to their satisfaction, which may negatively impact our results of operations.

Our Mexican concessions guarantee our access to the land and any interruption caused to our operations by any of the ejidos is the responsibility of the Mexican government. Although the Mexican government must provide restitution for any economic loss resulting from a disruption in access to our airports, there can be no assurance that the former ejido participants will not seek to disrupt the airport’s operations if their legal claims against the Mexican government are not resolved to their satisfaction. There also can be no assurance that the legal proceedings will be resolved in our favor, which may negatively impact our results of operations.

We may be liable for property tax claims asserted against us by certain Mexican municipalities.

We remain subject to ongoing property tax claims that have been asserted against us by certain municipal authorities for the payment of property taxes with respect to certain of the properties on which we operate our airports. We believe that under the law, the Mexican government, as the owner of the property upon which we operate our airports, would currently be responsible for paying these taxes directly if a court were to determine that these taxes must be paid. See “Item 8, Financial Information – Legal Proceedings – Property tax claims by certain municipalities” for a full discussion of these property tax proceedings.

Additionally, if the Mexican government changes the current laws or if we do not prevail in the aforementioned proceedings, these tax liabilities could have an adverse effect on our financial condition and results of operations.

Inability to generate sufficient future taxable profits or adverse changes to tax laws, regulatory requirements or accounting standards could have a negative impact on the recoverability of certain deferred tax assets.

We recognize deferred tax assets relating to tax losses carried forward and deductible temporary differences only to the extent that it is probable that future taxable profit will be available against which the tax losses carried forward and the temporary differences can be utilized. Net deferred tax assets amounted to approximately Ps.5.9 billion at December 31, 2020. The deferred tax assets are quantified based on currently enacted tax rates and accounting standards and are subject to change because of future changes to tax laws or the rules for computing taxable profits and allowable losses. Failure to generate sufficient future taxable profits or changes in tax laws or accounting standards may reduce our estimated recoverable amount of net deferred tax assets. Such a reduction could have an adverse effect on our Consolidated Statement of Profit or Loss. For further information on deferred tax assets, refer to Note 12 to our audited consolidated financial statements. See “Item 5, Operating and Financial Review and Prospects – Critical Accounting Policies – Deferred Tax Assets.”

Extreme weather and natural disasters could adversely affect our business.

The Pacific and Central regions of Mexico and the island of Jamaica experience seasonal torrential rains and hurricanes (particularly during the months of July through September), as well as earthquakes. Extreme weather and natural disasters may impede operations, damage infrastructure necessary to our operations or adversely affect the destinations served by our airports. Any of these events could reduce our passenger traffic volume.

The occurrence of extreme weather and natural disasters, including increases in frequency, severity, or duration of such disasters due to climate change, in the destinations we serve could adversely affect our business, results of operations, prospects, and financial condition. We have insured the physical facilities at our airports against damage caused by natural disasters, accidents, or other similar events, but do not have insurance covering losses due to resulting business interruption for our Mexican airports. Moreover, should losses occur, there can be no assurance that losses caused by damages to the physical facilities will not exceed the pre-established limits on any of our insurance policies.

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Risks Related to the Regulation of Our Business

Our business is dependent on international regulations affecting airlines.

Airline regulations promulgated by international bodies or regulatory agencies in other countries could affect our operations and potentially affect our revenues or results of operations.

For instance, on July 30, 2010, the U.S. Federal Aviation Administration (“FAA”) announced that, following an assessment of the Federal Civil Aviation Agency, it had determined that Mexico was not in compliance with international safety standards set by the International Civil Aviation Organization (“ICAO”), and, as a result, downgraded Mexico’s aviation safety rating from “Category 1” to “Category 2”.

Under FAA regulations, because of this downgrade, Mexican airlines were not permitted to expand or change their current operations between the United States and Mexico except under certain limited circumstances; code-sharing arrangements between Mexican and U.S. airlines were suspended; and operations by Mexican airlines flying to the United States were subject to greater FAA oversight. These additional regulatory requirements resulted in reduced service between our Mexican airports and the United States by Mexican airlines, which resulted in a decrease in demand for travel at our Mexican airports.

The FAA restored Mexico’s Category 1 rating on December 1, 2010. In 2018, 2019 and 2020, 10.4%, 10.7% and 9.6% of the passengers who traveled through our Mexican airports traveled on flights to or from the United States operated by Mexican airlines. Jamaica has held an FAA Category 1 rating since 1997.

The FAA, however, may downgrade Mexico’s or Jamaica’s air safety rating in the future. We cannot predict what impact such a downgrade would have on our passenger traffic or results of operations, or on the public perception of the safety of our airports.

We provide a public service regulated by the governments of Mexico and Jamaica, and our flexibility in managing our aeronautical activities is limited by the regulatory environments in which we operate.

Our aeronautical fees charged to airlines and passengers are regulated, like those of most airports in other countries. In 2018, 2019 and 2020, 67.3%, 65.0% and 60.9%, respectively, of our total revenues were earned from aeronautical services (in 2018, 2019 and 2020, 74.9%, 73.7% and 74.7%, respectively, of the sum of aeronautical and non-aeronautical revenues were earned from aeronautical services), which are subject to price regulation under our maximum rates in Mexico and under the maximum regulated charges in Jamaica. These regulations may limit our flexibility in operating our aeronautical activities, which could have a material adverse effect on our business, results of operations, prospects, and financial condition. In addition, several of the regulations applicable to our operations that affect our profitability are authorized or established by the Mexican government (as in the case of our Master Development Programs or our maximum rates, respectively) or the Jamaican government (as in the case of maximum regulated charges for MBJ and NMIA) for five-year terms. Except under limited circumstances, we generally do not have the ability to unilaterally change our obligations (such as the investment obligations under our Master Development Programs and Capital Development Programs or the obligation under our Mexican concessions and Jamaican concessions to provide a public service) or increase our maximum rates and regulated charges applicable under those regulations should the passenger traffic or other assumptions on which the regulations were based change during the applicable term. In addition, there can be no assurance that this price regulation system will not be amended in a manner that would cause additional sources of our revenues to be regulated.

We cannot predict how the laws and regulations governing our business will be applied.

Many of the laws, regulations and instruments that regulate our business in Mexico were adopted or became effective in 1999, and there is limited precedent that would allow us to predict the impact of these legal requirements on our future operations. In addition, although Mexican law establishes ranges of sanctions that might be imposed should we fail to comply with the terms of one of our Mexican concessions, the Mexican Airport Law and its regulations or other applicable laws, we cannot predict the sanctions that are likely to be assessed for a given violation within these ranges. We cannot provide any assurance that we will not encounter difficulties in complying with these laws, regulations, and instruments.

Although our maximum rates through 2024 have been set, we cannot predict what our Master Development Programs for the next five-year period from January 2025 to December 2029 will establish. We also cannot provide assurance that other regulatory agencies or the Mexican legislature will not impose regulations adverse to our operations in the future or that the laws and regulations governing our business, including the Master Development Programs, the maximum rate-setting process and the Mexican Airport Law, will not change in the future or be applied or interpreted in a way that could have a material adverse effect on our results of operations. For a discussion of the regulatory provisions applicable to our business in Mexico, see “Item 4, Information on the Company – Regulatory Framework – Sources of Mexican Regulation.”

Similarly, there is limited precedent that would allow us to predict the impact of the laws, regulations and instruments that regulate our business in Jamaica and we cannot provide any assurance that our Jamaican airports will not encounter difficulties in complying with these laws, regulations and instruments. In addition, although the concession agreements for our Jamaican airports and Jamaican law establishes ranges of sanctions that might be imposed should our Jamaican airports fail to comply with the terms of the concession, other Jamaican

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applicable law, and its regulations, we cannot predict the sanctions that are likely to be assessed for a given violation within these ranges. Although the maximum regulated charges have been set for our Jamaican airports through December 2024, we cannot predict what maximum regulated charges the Jamaican government will establish for the next five-year period from January 2025 to December 2029. We also cannot provide assurance that other regulatory agencies or the Jamaican legislature will not impose regulations adverse to our Jamaican airports’ operations in the future or that the laws and regulations governing our business in Jamaica, including the Jamaican Civil Aviation and Airports Authority acts and the process for setting maximum regulated charges, will not change in the future or be applied or interpreted in a way that could have a material adverse effect on our results of operations. For a discussion of the regulatory provisions applicable to our business in Jamaica, see “Item 4, Information on the Company – Regulatory Framework – Sources of Jamaican Regulation.”

The regulations pursuant to which the maximum rates applicable to our aeronautical revenues in Mexico and to the maximum regulated charges that we may collect at our Jamaican airports are established do not guarantee that we or any of our airports will be profitable.

The regulations applicable to our aeronautical activities establish an annual maximum rate for each Mexican airport, which is the maximum annual amount of revenues per workload unit that we may earn at that airport from services subject to price regulation. Our Mexican concessions provide that an airport’s maximum rates will be adjusted periodically for inflation determined by reference to the Mexican Producer Price Index (Índice Nacional de Precios al Productor), or “Mexican PPI,” excluding petroleum. Although we are entitled to request additional adjustments to an airport’s maximum rates under certain circumstances, including the amendment of certain provisions of the Mexican laws and regulations that structure and influence our business, our Mexican concessions provide that such a request will be approved only if the SCT determines that certain events specified in our Mexican concessions have occurred. The circumstances under which we are entitled to an adjustment are described under “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Services Regulation – Special Adjustments to Maximum Rates.” Therefore, there can be no assurance that any such request would be made or granted. For a discussion of the framework for establishing our maximum rates in Mexico and the application of these rates, see “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Services Regulation.”

The Jamaican Airports (Economic Regulation) Act 2002, requires that the Jamaica Civil Aviation Authority, or “JCAA,” adjust the maximum amounts that may be levied by an airport operator at the end of each succeeding period of five years. Specifically, every five years, MBJA and NMIA must submit to the JCAA a proposal for increases to the maximum revenues per passenger (revenue yield cap per passenger) as justified by a schedule of five-year estimates for traffic growth, operating costs and investment commitments, including capital expenditures for capital projects and required improvements at our Jamaican airports under the MBJA and NMIA concession agreements (in the case of MBJA, a “Capital Development Program,” in the case of NMIA, the “Capital Works,” and together, the “Capital Development Programs”), as well as the opening Regulated Asset Base (RAB). After the JCAA’s review of the maximum amounts to be levied based on these estimates, the JCAA makes its determination as to the maximum revenues per passenger for each year of the succeeding five-year period. Under the terms of the MBJA and NMIA concession agreements with the Airports Authority of Jamaica, or “AAJ,” if the JCAA approves the new maximum amount to be levied, MBJA and NMIA must fulfill the estimated capital expenditures included in the Capital Development Programs. For a discussion of the framework for establishing MBJA’s and NMIA’s maximum regulated charges in Jamaica, see “Item 4, Information on the Company – Regulatory Framework – Jamaican Aeronautical Services Regulation.”

Our Jamaican airports have an obligation under their respective concession agreement to satisfy certain requirements applicable to a Capital Development Program. We cannot provide assurance that AAJ will determine that any such Capital Development Program complies with the applicable requirements under their respective concession agreement, or that AAJ will not request our Jamaican airports to undertake additional capital expenditures.

Under the terms of our concessions, there is no guarantee that our consolidated results of operations or the results of operations of any airport will be profitable.

Our results of operations may be adversely affected by required efficiency adjustments to our maximum rates in Mexico.

Our maximum rates in Mexico are subject to annual efficiency adjustments, which have the effect of reducing the maximum rates for each year to reflect projected efficiency improvements. For the five-year terms ending 2019 and 2024, an annual efficiency adjustment factor of 0.7% was established by the SCT. Future annual efficiency adjustments will be determined by the SCT in connection with the setting of each Mexican airport’s maximum rates every five years. For a description of these efficiency adjustments, see “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Services Regulation – Methodology for Determining Future Maximum Rates.” We cannot provide assurance that we will achieve efficiency improvements sufficient to allow us to maintain or increase our income from operations because of the progressive decrease in each Mexican airport’s maximum rate.

If we exceed the maximum rate at any Mexican airport at the end of any year, we could be subject to sanctions.

Historically, we have set the prices we charge for aeronautical services at each Mexican airport to come as close as possible to the authorized maximum rate for that airport in any given year. We expect to continue to pursue this pricing strategy in the future. For example, in 2018, 2019 and 2020, our revenues subject to maximum rate regulation represented 100.0%, 100.0% and 99.2% respectively, of the amount we were entitled to earn under the maximum rates for all our Mexican airports. However, there can be no assurance that we will be able to establish prices in the future that allow us to collect virtually all the revenues we are entitled to earn from services subject to price regulation.

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The specific tariffs we charge for aeronautical services are determined based on various factors, including projections of passenger traffic volumes, the Mexican PPI, excluding petroleum, and the value of the peso relative to the U.S. dollar. These variables are outside of our control. Our projections could differ from the applicable actual data, and if these differences occur at the end of any year, they could cause us to exceed the maximum rate at any one or more of our airports during that year.

If we exceed the maximum rate at any Mexican airport at the end of any year, the SCT may assess a fine and may reduce the maximum rate at that airport in the subsequent year. The imposition of sanctions for violations of certain terms of a concession, including for exceeding an airport’s maximum rate, can result in termination of the concession if the relevant term has been violated and sanctions have been imposed at least three times for the same cause. If any one of our Mexican airport concessions is terminated, our other Mexican airport concessions may also be terminated.

In prior years, in order to ensure our compliance with the maximum rate at a particular airport when the possibility of exceeding that maximum rate has arisen, we have taken actions in the latter part of the year, such as reducing our specific tariffs and offering discounts. We can offer no assurance that, should external factors cause us to risk exceeding our maximum rates close to or at the end of any given year, we will have sufficient time to take the actions described above in order to avoid exceeding our maximum rates prior to year-end.

If we fail to fulfill the requirements of our Master Development Programs during a given five-year period, we could be subject to sanctions from the Mexican government.

Historically, our capital expenditure commitments under our Master Development Programs are determined by reference to the Mexican PPI’s construction price index. Using the index, we aim to be as close as possible to the five-year period capital expenditure commitments at any time. We expect to continue this capital expenditure control strategy in the future. Using this strategy, our capital expenditure during 2018, 2019 and 2020 was 101.0%, 102.0% and 101.5%, respectively, of our capital expenditure commitments under our Master Development Programs. However, there can be no assurance that our capital expenditure control strategy will be sufficiently accurate and that we will not fall below our capital expenditure commitments. If, as a consequence of the annual maximum tariff fulfillment review, the SCT determines that we are not in compliance with the committed investments, the government may assess a fine and may reduce the maximum rate of that airport in the subsequent year. Non-compliance with committed investments could also result in the termination of the concession if the relevant term has been violated and sanctions have been imposed at least three times for the same cause. If any one of our Mexican concessions is terminated, our other concessions may also be terminated.

Although in prior years, in order to ensure compliance with our Master Development Programs, we have taken actions in the latter part of the year, such as increasing the amount or pace of certain construction projects, we can give no assurance that, should external factors cause us to risk failing to meet our investment levels, we will have sufficient time to take actions to comply with our Master Development Programs.

Our operating results could be adversely affected if the airlines fail to collect sufficient Airport Improvement Fees for MBJA or if MBJA does not receive approval for the use of these funds to offset costs associated with capital investments at the Montego Bay airport.

The Airports (Economic Regulation) Act and related agreements require the airlines operating at our Jamaican airports to charge an Airport Improvement Fee (“AIF”) from embarking international passengers on behalf of our Jamaican airports and to deposit the fees on a monthly basis in a trust account controlled by the Jamaican Ministry of Transport and Mining (“MTM”). Subject to the MTM’s approval, our Jamaican airports may use these funds for additional capital investments not included in their respective Capital Development Programs, as well as for interest expenses relating to the financing thereof. Our Jamaican airports are required to commit to such additional capital investments in exchange for the right to use the AIF funds.

The MTM approval of collection of AIF funds at the Montego Bay airport was renewed on February 25, 2015 for the period ending April 11, 2030, unless otherwise revoked. However, because the MTM’s prior approval of MBJA’s use of AIF funds is for specified capital investments in projects that have already been carried out, MBJA is not currently authorized to use any AIF funds collected after April 11, 2015. As of the date hereof, MBJA has entered into a Memorandum of Understanding (“MOU”) with the AAJ to fund “Phase 3” investments including the extension of the existing runway and installation of Runway End Safety Areas through the AIF. In the MOU, the AAJ has committed to guarantee the financing of specific capital projects to limit MBJA’s exposure to financial risks resulting from AIF shortfalls arising from lower than expected passenger traffic.

If MBJA’s passenger traffic projections are above the levels of passenger traffic realized at the Montego Bay airport, the amount of AIF to be collected may not be sufficient to finance all capital projects approved by the MTM and their financial cost. We can provide no assurance that the Montego Bay airport will achieve the passenger traffic required to recover MBJA’s capital investments committed in exchange for the use of the AIF funds. However, there is an Implementation Letter in place between AAJ and MBJA which will indemnify MBJA for any funds advanced towards the approved capital projects to be funded by the AIF which eliminates any exposure to the company.

This does not apply to NMIA as the AIF funds will solely be used by the government through the AAJ. NMIA will have no benefit from the collection of these funds.

See “Item 4, Information on the Company – Regulatory Framework – Jamaican Aeronautical Services Regulation.”

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If our Jamaican airports fail to fulfill the requirements of their respective Capital Development Programs, the airports could suffer specific negative consequences, including a termination of their respective concessions.

Under their concession agreements, our Jamaican airports are required to make capital expenditures to meet Capital Development Program requirements by certain strict deadlines. Additionally, our Jamaican airports are also responsible for maintaining the tangible concession assets under the concession agreements, which involves capital investment projects and improvements to concession assets. If either MBJA or NMIA fails to comply with the terms and conditions of its concession agreement, it could be in default and face liquidated damages, and, if it fails to remedy the breach within the applicable grace period, it could suffer other negative consequences, including the termination of its concession.

The Mexican government may terminate or reacquire our Mexican concessions under various circumstances, some of which are beyond our control.

Our concessions are our principal assets, and we would be unable to continue operations without them. A Mexican concession may be revoked by the Mexican government for certain prescribed reasons, including failure to comply with our Master Development Programs, a temporary or permanent halt in our operations, actions affecting the operations of other concession holders in Mexico, failure to pay damages resulting from our operations, exceeding our maximum rates or failure to comply with any other material term of our Mexican concessions. Violations of certain terms of a concession (including violations for exceeding the applicable maximum rate) can result in revocation of a concession only if sanctions have been imposed for violations of the relevant term at least three times. Violations of other terms of a concession can result in the immediate termination of the concession. Our Mexican concessions may also be terminated upon our bankruptcy or insolvency.

We would face similar sanctions for violations of the Mexican Airport Law or the regulations thereunder. Under applicable Mexican law and the terms of our Mexican concessions, our Mexican concessions may also be made subject to additional conditions, including under our renewed Master Development Programs, which we may be unable to meet. Failure to meet these conditions may also result in fines, other sanctions, and the termination of the concessions.

The Mexican government may also revoke one or more of our Mexican concessions at any time through reversion, if, in accordance with applicable Mexican law, it determines that it is in the public interest to do so. See “Item 4, Information on the Company – Regulatory Framework – Other Regulation of Mexican Concessions and Concession Assets – Revocation of Concessions” The Mexican government may also assume the operation of any airport in the event of war, public disturbance, or a threat to national security. In addition, in the case of a force majeure event, the Mexican government may require us to implement certain changes in our operations. In the event of a reversion of the public domain assets that are the subject of our Mexican concessions, the Mexican government under Mexican law is required to compensate us for the value of the concessions or added costs based on the results of an audit performed by appraisers. In the case of a mandated change in our operations, the Mexican government is required to compensate us for the cost of that change. Similarly, in the event of an assumption of our operations, other than in the event of war, the government is required to compensate us and any other affected parties for any resulting damages. There can be no assurance that we would receive compensation equivalent to the value of our investment in, or any additional damages related to, our Mexican concessions and related assets in the event of such action.

If any one of our Mexican airports’ concessions is terminated, whether through revocation or otherwise, our other concessions may also be terminated. Thus, the loss of any concession would have a material adverse effect on our business and results of operations.

The Jamaican government may terminate or reacquire the concessions held by our Jamaican airports under various circumstances, some of which are beyond our control.

Our Jamaican airport concessions are our principal assets in that country, and we would be unable to continue operations at our Jamaican airports without them. As owner of the concession assets, the AAJ is entitled under certain circumstances, however, to expel us from all or part of our Jamaican airport sites or to take over or carry on the operation and management of the airports or provision of airport services. The AAJ may step into the public domain assets that are the subject of the Jamaican airport concessions for as long as may be required if it determines that we are in breach of the concession agreements, to prevent material disruptions in service at the airports or in cases of national emergencies. Upon such a step-in by the AAJ, the AAJ must account to us for any revenues collected at the airports during the step-in period. Where the AAJ steps into the public domain assets that are the subject of the airport concession pursuant to any uncured event of default or to prevent material disruptions in service, we are required to bear all costs (except consequential losses) and expenses associated with the AAJ exercise of its step-in rights. There can be no assurance that we would receive compensation equivalent to the value of our investment in, or any additional damages related to, our concessions and related assets in the event of such action.

Following notice and good-faith consultations to avoid such a result, the AAJ may terminate the concession agreements upon an event of default on our part. Regardless of cause for termination, a termination fee is due to us upon a termination or revocation of the concession. However, the concession agreements expressly limit the AAJ’s liability to such termination fee. If the AAJ terminates the concession with or without cause, there can be no assurance that the loss of the airport concession would not have a material adverse effect on our business and results of operations.

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See “Item 4, Information on the Company – Regulatory Framework – The Montego Bay Airport Concession – AAJ’s Rights to Step In, Terminate or Grant a New Concession.” See “Item 4, Information on the Company – Regulatory Framework – The Kingston Airport Concession – AAJ’s Rights to Step In, Terminate or Grant a New Concession.”

The Mexican and Jamaican governments could grant new concessions that compete with our airports.

The Mexican and Jamaican governments could grant additional concessions to operate existing government-managed airports, authorize the construction of new airports or allow existing privately held domestic airports to change into international airports and permit them to receive regular domestic and international flights, all of which could lead to increased competition for our airports.

One factor that may significantly increase competition from other airports is the expansion of the permits of existing private airports that are currently not permitted to operate regular commercial routes. Under Mexican law, any privately held airport that has operated with a permit to provide public service for at least five years automatically acquires the right to also operate regularly scheduled commercial flights and to receive a concession to operate as a public service airport. In addition, through an amendment proposed by the SCT and confirmed by the Presidency, an airport operating with a permit to provide public service could become an international airport.

Any competition from other such additional airports could have a material adverse effect on our business and results of operations. Under certain circumstances, the grant of a concession for a new or existing airport must be made pursuant to a public bidding process. If a competing concession is offered in a public bidding process, we cannot provide assurance that we would participate in such process, or that we would be successful if we were to participate. See “Item 4, Information on the Company – Regulatory Framework – Other Regulation of Mexican Concessions and Concession Assets – Grants of New Mexican Concessions” and “Item 4, Information on the Company – Regulatory Framework – The Montego Bay Airport Concession – AAJ’s Rights to Step In, Terminate or Grant a New Concession.”

The SCT could require us to monitor certain aircraft movements at our Mexican airports that we do not currently control, which could result in increased costs.

The Mexican Air Traffic Control Authority (Servicios a la Navegación en el Espacio Aéreo Mexicano) or “SENEAM,” could require us to monitor certain aircraft movements at our Mexican airports that we do not currently control, which could result in increased costs. SENEAM currently requires us to manage and control aircraft movements in and out of our arrival and departure gates and remote boarding locations at our Guadalajara, Tijuana, and Puerto Vallarta airports. At our other Mexican airports, these aircraft movements are monitored by SENEAM. Should SENEAM require us to control, or if we, for efficiency purposes, request to control, these aircraft movements directly at any or all of our other Mexican airports in the future, our results of operations could be negatively impacted by increased operating insurance and liability costs resulting from taking on these obligations.

The Mexican civil aviation authority could require us to extend the official operating schedule at our Mexican airports, which could result in increased operating costs.

The AFAC is responsible for establishing the official operating schedules of our Mexican airports. Outside of our Mexican airports’ official hours of operation, we are permitted to double our airport charges for services that we provide. Currently, our airports at Guadalajara, Puerto Vallarta and Morelia have official operating schedules of 24 hours per day. The AFAC can issue a decree extending the official operating schedule of one or more of our other airports from its current schedule, which would deprive us of the ability to double our airport charges for off-hour services at airports for which such a decree has been issued. For instance, as of April 2, 2015, the operating schedule of our Los Cabos airport was expanded from 7:00 a.m. to 6:00 p.m. to 7:00 a.m. to 9:00 p.m. Such extensions of our official operating schedules result in increases in operating costs, and we can provide no assurances that we would be able to recover those costs.

Federal tax legislation in Mexico may have an adverse effect on our financial condition and our results of operations.

The terms of our Mexican concessions do not exempt us from generally applicable Mexican tax laws. Changes to tax laws and regulations in Mexico could significantly increase our tax expense, which could have a material adverse impact on our results of operations.

For instance, on January 1, 2014, new tax laws came into force following tax reforms in Mexico that, among other changes: maintained the income tax rate on corporations of 30%; imposed withholding tax in respect of dividends paid to Mexican and foreign shareholders; eliminated deductions previously allowed in respect of payments between related parties or certain foreign corporations; limited the tax deductions for certain benefits paid to employees; and increased the value-added tax in certain areas of Mexico.

We cannot predict the impact that changes in law will have, if fully implemented and applied to us, on our business, financial condition, and results of operations. In addition, we cannot predict the indirect impact that such legislation could have on our customers and shareholders.

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Changes to Mexican laws, regulations, and decrees applicable to us could have a material adverse impact on our results of operations.

The Mexican government has in recent years implemented various changes to the laws applicable to Mexican companies, including us. For example, in March 2021, the Mexican Congress approved a reform to the Mexican Electric Industry Law where the main modification is to the legal structure for the generation and use of electric energy. This reform could have a negative impact on the cost of electricity of our airports. Likewise, in labor matters, there is a reform initiative regarding outsourcing, that, among others, could limit subcontracting and impact the profit-sharing scheme, and we cannot foresee the impact of these reforms if they were to be implemented, nor their final terms. The terms of our Mexican concessions do not exempt us from any changes to Mexican laws. Changes to the Mexican constitution or to any other Mexican laws could have a material adverse impact on our results of operations.

For more detailed information on current sources of regulation governing the operation of airports in Mexico, see “Item 4, Information on the Company – Regulatory Framework – Sources of Mexican Regulation.”

Risks Related to Our Strategic Shareholder

AMP, our strategic shareholder, has significant influence over our operations, and AMP’s interests may differ from those of other shareholders.

AMP holds Series BB shares currently representing 15% of our total capital stock. The Series BB shares have certain special rights that allow AMP to exercise significant influence over our operations. Through its right to appoint and remove members of our senior management, AMP participates in the decision-making process of our management in areas such as business strategy, operations, financing, acquisitions and dispositions of assets or business.

Pursuant to our bylaws, AMP (as holder of our Series BB shares) has the right to appoint and remove our top-level executive officers (upon consultation with our Nominations and Compensation Committee), to elect four members of our board of directors and their alternates and to designate three members of our Operating Committee and 20% of the members of each other board committee (or one member of any committee consisting of fewer than five members). Audit Committee members are selected according to Mexican and U.S. independence standards. Certain matters require the favorable vote of the majority of the Series “BB” shares of which the current holder is AMP. (including the approval of our financial statements, increases or decreases of our capital stock, the payment of dividends, the amendment of our bylaws and any decision that has the objective to modify or annul its right to appoint our top-level executive officers). These rights are not conditioned on whether the technical assistance agreement and the participation agreement remain in force. Pursuant to our bylaws, if at any time AMP (as the holder of our Series BB shares) were to hold less than 7.65% of our capital stock in the form of Series BB shares, such shares would be mandatorily converted into Series B shares, which would cause AMP to lose all of its special rights. Shareholders of AMP have allocated among themselves certain veto rights relating to the exercise by AMP of its veto and other rights, which increases the risk of impasse at AMP shareholders’ meetings and ultimately at our shareholders’ meetings. Differences in points of view among AMP’s shareholders with respect to our management could affect our results of operations. The interests of AMP may differ from those of our other shareholders.

Disputes among AMP’s shareholders may affect our shareholders’ meetings or management.

On November 19, 2014, Controladora Mexicana de Aeropuertos, S.A. de C.V. (“CMA”) became 66.66% owner of the capital stock of AMP. As a result of this transaction, CMA agreed that the minority shareholders’ consent is required with respect to certain significant actions or decisions. See “Item 7, Major Shareholders and Related Party Transactions – Major Shareholders – AMP Trust, Bylaws and Shareholders’ Agreement.”

In the past there have been certain disputes among AMP’s shareholders. If disputes among AMP’s shareholders were to occur in the future, it is not possible to predict if they would result in deadlock at our shareholders’ meetings or distract our management, or what effects such events might have on the price of our stock, its liquidity or our market value and the effects that these conflicts could have on our business or results of operations. In addition, AMP’s veto, appointment, and other rights could adversely impact our operations and constitute an obstacle for us to bring in a new strategic shareholder and/or operator.

If AMP should decide to sell all or a portion of its interest in us, our operations could be adversely affected.

AMP currently exercises significant influence over our management, as described above. AMP can sell nearly all the shares that it owns. Our bylaws provide that, subject to certain exceptions, Series BB shares must be converted into Series B shares prior to transfer. Should AMP divest its interest in us or cease to hold Series BB shares, our management could change, and our operations could be adversely and significantly affected as a result.

Our operations could be adversely affected if the technical assistance agreement is not renewed with AMP.

AMP provides services through the technical assistance agreement, through which AMP provides our airports with expertise in operating in the aeronautical sector and strategic planning guidance to increase aeronautical and non - aeronautical revenues, in addition to knowledge of the Mexican government and business sectors and assistance with the negotiation of our Master Development Programs. Therefore, if either we

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or AMP decides not to renew the technical assistance agreement, it would require time and potentially higher costs for us to replace AMP’s strategic expertise through contracts with new external advisors; apart from the possible higher costs, the need to replace AMP could have an impact on our business strategy and ongoing projects, such as the successful negotiation of tariffs, investments, and other elements of our Master Development Programs. As a result, our results of operations could be negatively affected. For more detailed information on the technical assistance agreement with AMP, see “Item 4, Information on the Company – History and Development of the Company – Investment by AMP.”

Failure to comply with certain requirements of the privatization guidelines and the participation agreement relating to our privatization could have a material and adverse effect on our operations or the value of our securities.

Pursuant to the guidelines published by the Mexican government during the first phase of our privatization and the participation agreement setting forth the rights and obligations of each of the parties involved in our privatization, AMP assumed certain rights and obligations.

Although we believe AMP satisfies all their requirements under the privatization guidelines and the participation agreement, there can be no assurance that allegations or official inquiries relating to AMP’s compliance with its obligations under those requirements will not take place. In the event of future inquiries or an official finding that AMP is or was not in compliance with the requirements of the privatization guidelines or the participation agreement, AMP could be subject to fines and the technical assistance agreement between us and AMP could be terminated, which could have a material effect on our operations. In addition, there can be no assurance that any such developments would not result in a material decrease in the market value of our shares or ADSs or their liquidity.

Certain actions by Grupo México, S.A.B. de C.V. may affect our management, financial condition, or results of operations.

Articles X and XII of our bylaws, among others, limit the ability of Series B shareholders, directly or with related parties, other than AMP, to hold more than 10% of our outstanding capital stock, and any shares held in excess of that amount must be sold in a public offering. In accordance with our bylaws, until the public offering of such shares takes place, such excess shares have no voting power and cannot be represented in any shareholders’ meeting.

On June 13, 2011, Grupo México, S.A.B. de C.V. (“Grupo México”) announced that its board of directors had approved the acquisition, directly or indirectly, of at least 30%, and up to 100%, of our shares outstanding at that time, excluding treasury shares, through a public tender offer. Grupo México and its subsidiary, Infraestructura y Transportes México, S.A. de C.V. (“ITM”), then commenced legal proceedings seeking (i) to modify our bylaws to eliminate the foregoing limitations and (ii) to terminate AMP’s special rights that stem from AMP’s ownership of our Series BB shares.

On June 17, 2015, the Mexican Supreme Court issued an amparo ruling upholding the validity of Articles X and XII of our bylaws regarding the limitations on ownership of our capital stock. On February 17, 2016, the Superior Court of Mexico City declared that Grupo México and ITM were in violation of the Company’s bylaws due to the fact that together they held more than 10% of our outstanding capital stock and ordered Grupo México and ITM to sell any Series B shares held in excess of that limit. Consequently, the challenge initiated by Grupo México and ITM against these articles has been definitively concluded, with the ruling confirming the validity and effectiveness of these articles in support of the position we maintained and defended. Grupo México filed an appeal looking for clarification regarding the ruling. On November 9, 2016, the Grupo México complaint was declared unfounded. We filed a complaint seeking fees and expenses. On May 8, 2019, a civil court in Mexico City granted Grupo Mexico´s request for an amparo challenging the constitutionality of Article 48, Section III of the Mexican Securities Law. We then filed a direct amparo appeal. On March 26, 2021, the civil court in Mexico City upheld the validity of Article 48, Section III of the Mexican Securities Law and confirmed the validity of Articles X and XII of our bylaws . See “Item 8, Financial Information – Legal Proceedings – Litigation related to Grupo México, S.A.B. de C.V. seeking to void certain of our bylaws.”

In its most recent filing on Schedule 13D with the SEC on February 19, 2021, Grupo México disclosed that it beneficially owned 8.1% of our total issued shares. It is not possible to predict the extent to which these disputes with Grupo México will distract our management, the effects that future developments in this dispute might have on the price of our stock, its liquidity or our market value or the effects that these conflicts could have on our business or results of operations.

Risks Related to Mexico

Adverse economic conditions in Mexico may adversely affect our financial condition or results of operations.

All of our operations conducted in Mexico are dependent upon the performance of the Mexican economy. As a result, our business, financial condition, or results of operations may be affected by the general condition of the Mexican economy, over which we have no control. In the past, Mexico has experienced economic crises, caused by internal and external factors, characterized by exchange rate instability (including large devaluations), high inflation, high domestic interest rates, economic contraction, a reduction of international capital flows, a reduction of liquidity in the banking sector and high unemployment rates. We can provide no assurance that such conditions will not return or that such conditions will not have a material adverse effect on our business, financial condition, or results of operations. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.”

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According to the Mexican National Institute for Statistics and Geography (Instituto Nacional de Estadística y Geografía), or “INEGI,” GDP increased 2.0% in 2018, decreased 0.1% in 2019, and decreased 8.5% in 2020, in each case compared with the previous year. The annualized interest rates for 28-day Mexican Treasury Bills (CETES) averaged approximately 7.6%, 7.8% and 5.2% in 2018, 2019 and 2020, respectively. As of April 16, 202 1, the 28-day Interbank Equilibrium Interest Rate (Tasa de Interés Interbancaria de Equilibrio), or “TIIE-28,” was 4.2831%. To the extent that we incur peso-denominated debt in the future, it could be at high interest rates.

If inflation or interest rates increase significantly or if the Mexican economy is otherwise adversely impacted, our business, financial condition or results of operations could be materially and adversely affected.

Additionally, economic conditions in Mexico may also be affected by political developments in the United States, such as the change in administration in January 2021, and economic developments in the United States, such as interest rates, exchange rates and GDP growth, among others. We cannot assure you that any developments in the U.S. or elsewhere will not materially and adversely affect us in the future.

Depreciation or fluctuation of the peso relative to the U.S. dollar could adversely affect our results of operations and financial condition.

Any future significant appreciation or depreciation of the peso could impact our aggregate passenger traffic volume, which could have a material adverse effect on our results of operations. Following the devaluation of the peso and the economic crisis beginning in 1994, the aggregate passenger traffic volume in our airports in 1995 (then operated by our predecessor) decreased as compared to prior years, reflecting a decrease in Mexican passenger traffic volume that more than offset an increase in international passenger traffic volume. Another substantial decrease in value could occur, and it could (notwithstanding other factors) lead to a decrease in domestic passenger traffic that may not be offset by any increase in international passenger traffic. In 2018, the peso appreciated 0.3% against the U.S. dollar. In 2019, the peso appreciated 4.0% against the U.S. dollar. In 2020, the peso depreciated 5.1% against the U.S. dollar. Any future significant depreciation of the peso could impact our aggregate passenger traffic volume by increasing the cost of travel for domestic passengers, while any future significant appreciation of the peso could impact our aggregate passenger volume by increasing the cost of travel for international passengers. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.”

International passengers and international flights pay tariffs denominated in U.S. dollars. However, in Mexico, these tariffs are generally invoiced and collected in Mexican pesos. Because such tariffs are invoiced taking into account the average of the exchange rate for the 30 days prior to the date of a flight, a significant depreciation of the peso during the final two months of any year could result in our exceeding our maximum rates, which would be a violation of our concession. If a significant depreciation of the peso occurred, we could be required to issue rebates to our customers to avoid exceeding our maximum rates. On the other hand, a significant appreciation of the peso could result in us invoicing substantially less than our maximum rate per workload unit. We do not have any means of recovering lost revenue if we charge less than the maximum rate as a result of a significant appreciation in the peso. We attempt to set our U.S. dollar-denominated tariffs to avoid exceeding our maximum rates while attempting to charge as close to the maximum rate as possible.

Due to the acquisition of 100% of the shares of DCA in 2015, we incurred indebtedness in U.S. dollars. A devaluation of the peso would increase the debt service cost of such U.S. dollar-denominated indebtedness and result in foreign exchange losses. In 2020, approximately 98.0% of MBJA’s and NMIA’s revenues, 60.0% of its operating expenses and 99.0% of its capital expenditures were denominated in U.S. dollars, with the remaining 40.0% of operating expenses and 1.0% of its capital expenditures denominated in Jamaican dollars, which are pegged to the U.S. dollar. All MBJA’s indebtedness was also denominated in U.S. dollars in 2020. Accordingly, fluctuations in the exchange rate between the Mexican peso and the U.S. dollar may also affect our performance through the consolidation of MBJA and NMIA’s financial and operating results.

In addition, fluctuations in the exchange rate between the peso and the U.S. dollar, particularly depreciations, may adversely affect the U.S. dollar equivalent of the peso price of the Series B shares on the Mexican Stock Exchange. As a result, such peso depreciations will likely affect the market price of the ADSs. Exchange rate fluctuations would also affect the ADS depositary’s ability to convert into U.S. dollars, and make timely payment of, any peso cash dividends and other distributions paid in respect of the Series B shares.

We can provide no assurance that depreciation or fluctuation of the peso relative to the U.S. dollar will not require us to issue rebates to avoid exceeding our maximum rates or cause us to invoice substantially less than our maximum rate per workload unit, negatively impact our financial results or our performance through the consolidation of MBJA and NMIA’s financial and operating results, or adversely affect the market price of our ADSs. In addition, although most of our operating costs are denominated in pesos, we cannot predict whether our cost of services will increase as a result of the depreciation of the peso or as a result of other factors.

The value and prices of securities issued by Mexican companies may be adversely affected by developments in other countries.

The Mexican economy may be, to varying degrees, affected by economic and market conditions in other countries. Although economic conditions in other countries may differ significantly from economic conditions in Mexico, investors’ reactions to adverse developments in other countries may have an adverse effect on the market value of securities of Mexican issuers. For instance, the credit freeze and global recession that began in 2007 and continued into 2009 had a significant impact in Mexico. Mexico’s stock market fell 48% during that period.

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Similarly, the European debt crisis that began in Greece and then spread to other countries such as Italy and Spain as well as European financial institutions, affected financial markets around the world and in Mexico.

We cannot provide assurance that events in other emerging market countries, in the United States or elsewhere, will not materially and adversely affect our business, financial condition or results of operations.

Political conditions in Mexico could materially and adversely affect Mexican economic policy or business conditions and, in turn, our operations.

The Mexican government has exercised, and continues to exercise, significant influence over the Mexican economy. Mexican governmental actions concerning the economy could have a significant impact on Mexican private sector entities in general, as well as on market conditions and prices and returns on Mexican securities, including our securities.

In 2018, presidential elections were held in Mexico, which could lead to political, economic, and social changes beyond our control, in addition Mexico is scheduled to hold midterm elections on June 6, 2021, and Mexicans will be voting for the 500 seats of the Mexican Congress and, in almost half the 32 states, for their congresses and governors, which could result in economic or political conditions in Mexico that could materially impact our operations. As with any governmental change, this change to the country’s administration may lead to significant changes in laws, public policies, or regulations, may affect the political and economic environment in Mexico, and consequently, they may contribute to economic uncertainty and to heightened volatility of the Mexican capital markets and in securities issued by Mexican companies.

We can provide no assurance that changes in the policies of Mexico’s federal government will not have an adverse effect on our business, financial conditions, and results of operations. Consequently, we can provide no assurance that Mexican political or social developments, over which we have no control, will not adversely affect our financial conditions, results of operations, our ability to make dividend payments to our shareholders or the market price of our securities.

Our business could be adversely affected by other claims by certain Mexican municipalities.

Certain of our Mexican airports are subject to claims by the municipalities in which they operate regarding our failure to obtain certain municipal licenses. Although we do not believe that we are subject to the license requirements at issue, if the municipalities require additional licenses or make changes to the current laws and we are unable to obtain the necessary licenses or if we do not prevail in proceedings challenging these requirements, our failure to obtain these licenses could have a material adverse effect on the operations of certain of our airports and consequently on our financial condition and results of operations.

High incidences of crime in Mexico and violence related to drug trafficking could adversely affect our business.

Travel alerts issued by the U.S. Bureau of Consular Affairs, the most recent as of April 20, 2021, called for increased caution in Mexico due to crime and kidnapping. These travel alerts emphasize the extent of criminal activity in different Mexican states and cities, including recommending against travel in states such as Michoacán, Colima, and Sinaloa in which our Morelia, Manzanillo and Los Mochis airports are located.

In addition, perceptions about crime in Mexico and violence related to drug trafficking may also have an adverse effect on our business as they may decrease the international passenger traffic directed to Mexico or the domestic passenger travel using our airports in affected states.

Higher incidences of crime throughout Mexico and drug trafficking-related violence could have an adverse effect on our business as it may decrease the international passenger traffic directed to Mexico or the domestic passenger travel using our airports in affected states.

Increased environmental regulation and enforcement in Mexico may affect us.

The level of environmental regulation in Mexico is increasing and the enforcement of environmental laws has become more common. For instance, a new carbon dioxide (“CO2”) market commenced operating in Mexico during 2018. The market will require that industries that generate above a certain amount of CO2 emissions pay for rights to excess emissions. As of 2019, companies subject to the legislation were required to report their global emissions for verification by the Mexican Emissions Registry (Registro Nacional de Emisiones). We are subject to this legislation and began reporting our emissions in 2018. In 2019, we began submitting our emissions reports for verification by the Mexican Emissions Registry. In addition, new water quality standards are being discussed, which would require expanding and updating our wastewater treatment plants to achieve these requirements. There can be no assurance that environmental regulations or their enforcement will not change in a manner that could have a material adverse effect on our business, results of operations, prospects, or financial condition. For more information on environmental regulation, see “Item 4, Information on the Company – Regulatory Framework – Mexican Environmental Regulation.”

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Minority shareholders may be less able to enforce their rights against us, our directors, or our strategic shareholders in Mexico.

Under Mexican law, the protections afforded to minority shareholders are different from those afforded to minority shareholders in the United States. For example, because provisions concerning fiduciary duties of directors have only recently been incorporated into the new Securities Market Law, it may be difficult for minority shareholders to bring an action against directors for breach of this duty and achieve the same results as in most jurisdictions in the United States. In addition, the procedures for class action lawsuits were incorporated into Mexican law and became effective in March 2012; however, certain rules and procedures could be different than the ones in the United States. Therefore, in some cases it may be more difficult for minority shareholders to enforce their rights against us, our directors, or our strategic shareholders than it would be for minority shareholders of a U.S. company.

We are subject to different corporate disclosure and accounting standards than U.S. companies.

A principal objective of the securities laws of the United States, Mexico and other countries is to promote full and fair disclosure of all material corporate information, including accounting information. However, there may be different or less publicly available information about issuers of securities in Mexico than is regularly made available by public companies in countries with highly developed capital markets, including the United States.

In addition, accounting standards and disclosure requirements in Mexico differ from those of the United States. Our financial statements are prepared in accordance with IFRS, which differs from U.S. GAAP in several respects. Items on the financial statements of a company prepared in accordance with IFRS may not reflect its financial position or results of operations in the way they would be reflected if such financial statements had been prepared in accordance with U.S. GAAP.

Risks Related to Jamaica

Adverse economic conditions in Jamaica may adversely affect our financial condition or results of operations.

Despite 99% of the passenger traffic through our Jamaican airports consisting of international passengers, the general condition and performance of the Jamaican economy, over which we have no control, may affect our business, financial condition, or results of operations. Jamaica is a small, emerging market country, which has struggled with low growth and high public debt. Due to its size, indebtedness, reliance on exports to a small number of principal markets, such as the United States and Canada, and the concentration of its economic activity in its two principal industries of bauxite mining and tourism, the Jamaican economy is highly susceptible to external shocks. Jamaica is also affected by social and security problems, including, among others, trafficking in drugs and high rates of violent crime, underemployment, and youth unemployment.

If growth remains lower than what is needed for reducing the poverty, and the country continues to be confronted by serious social issues that predominantly affect youth, such as a high level of crime and violence and high unemployment. The Statistical Institute of Jamaica estimated the unemployment rate in Jamaica at 12.6% in July 2020 up from 7.8% in July 2019 and 8.4% in July 2018.

If Jamaican inflation or interest rates increase significantly or if the Jamaican economy is otherwise adversely impacted, our business, financial condition or results of operations could be adversely affected. See “Item 5, Recent Developments – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations.”

Political conditions in Jamaica could materially and adversely affect Jamaican economic policy or business conditions and, in turn, our operations in Jamaica.

Any administration change in the Government of Jamaica could give rise to economic or political conditions in Jamaica that could have a material impact on our operations. In addition, any adverse change in legislation in the future could have a negative impact on our business, financial condition, performance of operations and cash flows.

Our business in Jamaica is subject to substantial governmental regulation.

Our Jamaican airport concessions are regulated principally by the AAJ, an agency of the Jamaican government, under the Airports Authority Act of 1974. In April 2003, the AAJ divested operational responsibility for the Montego Bay airport to MBJA under a concession agreement pursuant to which MBJA is responsible for the management of the day-to-day operations of the Montego Bay airport in keeping with specific performance criteria and prescribed international standards. In addition, on October 10, 2018, the AAJ signed a concession agreement with PACKAL, for the management of the day-to-day operations of the Kingston airport. The AAJ retains ownership of the non-movable assets of these airports. Our Jamaican airports pay a concession fee to the Jamaican government and at the end of the concession agreements will transfer the infrastructure of our Jamaican airports, and any moveable assets acquired during the period of the concessions, to the AAJ. Regular performance reviews and other contract administration oversight functions are conducted by the AAJ, as specified under the concession agreements. There can be no assurance that governmental regulations or their enforcement will not change in a manner that could have a material adverse effect on our business, results of operations, prospects, or financial condition. However, there are certain provisions within the concession agreements that offer some protection to MBJA and PACKAL in the event of adverse changes in Jamaican law. In certain instances, if there is an adverse change in Jamaican law resulting in an unavoidable net increase in costs or net reduction in revenues to

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MBJA and PACKAL, both will be entitled (subject to remaining provisions of the MBJA and PACKAL Concession Agreements) to monetary compensation from AAJ. See “Item 4, Information on the Company – Regulatory Framework.”

High incidences of crime in Jamaica and violence related to drug trafficking could adversely affect our business.

Travel alerts issued by the U.S. Bureau of Consular Affairs, the most recent as of April 20, 2021, informed of the risks of traveling in Jamaica due to (i) health and safety measures and COVID-related conditions and (ii) threats to safety and security posed by increased crime, including violent crime, in many areas across Jamaica. The travel alerts emphasize the increase of criminal activity in different areas across Jamaica, including in certain areas in Montego Bay and Kingston, near where our Jamaican airports are located.

In addition, perceptions about crime in Jamaica and violence related to drug trafficking may also have an adverse effect on our business as they may decrease the international passenger traffic directed to Jamaica.

Higher incidences of crime throughout Jamaica could have an adverse effect on our business as it may decrease the international passenger traffic directed to Jamaica.

Government tax legislation in Jamaica may have an adverse effect on our financial condition and results of operations.

The Jamaican government has in recent years implemented various changes to the tax laws applicable to Jamaican companies. Except certain relief from withholding tax in relation to interest on commercial and shareholder’s loans to non-resident lenders and to dividends to non-resident shareholders, and in the case of our Jamaican airports certain relief from customs duty and general consumption tax on major capital investment, the terms of our concession agreements do not exempt us from generally applicable Jamaican tax laws. Changes to tax laws and regulations in Jamaica could significantly increase our tax expense, which could have a material adverse impact on our results of operations.

We cannot predict the impact that changes in law, if fully implemented and applied to us, will have on our business, financial condition, and results of operations. In addition, we cannot predict the indirect impact that such legislation could have on our customers and shareholders.

Certain Risk Factors Related Our Structure, Shares, and the Securities Markets

Our ability to pay dividends and meet our debt obligations depends on our subsidiaries paying us dividends and transferring other income to us.

We are a holding company whose only significant assets are the shares of our subsidiaries and our cash and cash equivalents positions. Our ability to pay dividends and meet our debt obligations depends on our subsidiaries paying us dividends and transferring other income to us. The ability of our subsidiaries to pay dividends and transfer other resources to us may be subject to legal, regulatory, or contractual restrictions.

Priority in Case of Bankruptcy.

In the case of bankruptcy and our subsequent liquidation, our shareholders will be considered, in terms of priority, as our last creditors. In accordance with the Mexican Commercial Bankruptcy Law, in the event of a declaration of bankruptcy, all claims against us, including claims in favor of employees, tax claims and claims by our creditors will have preference over our shareholders' right to receive payment. In the event of our total liquidation, it is highly probable that our current shareholders, including current owners of our Series “B” shares, will recover an amount significantly lower than that originally paid for their shares.

The Company's bylaws can discourage acquisitions and depress the market for our shares.

Certain provisions in our bylaws could have the effect of delaying, deterring, or preventing a hostile takeover, which could be supported by certain shareholders. For example, individual shareholders (or groups of related parties) cannot own more than 10% of our Series “B” shares, except if our shareholding limits were to be amended. In addition, in the event that a person or group of related persons intended to acquire ownership of 30% or more of our shares, in accordance with Mexican legislation, said persons would be required to carry out the acquisition through a public offering, under the terms and conditions outlined in the Mexican Securities Market Law and subject only to the exceptions provided therein. These provisions may reduce the interest of certain investors in our Shares.

As a result of the volatility of the Mexican stock market, the market price of shares may experience extreme fluctuations in price and trading volume.

Lack of liquidity or market volatility may limit the ability of a holder of Series “B” shares to sell their interest and may also adversely affect the market price of our Series “B” shares. The trading volume of instruments issued by emerging market companies tends to be lower than the trading volume of instruments issued by companies in more developed countries.

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Item 4. | Information on the Company

HISTORY AND DEVELOPMENT OF THE COMPANY

We hold concessions to operate, maintain and develop twelve international airports in the Pacific and Central regions of Mexico and two international airports in Jamaica. As operator of the airports under our concessions, we charge airlines, passengers, and other users’ fees for the use of the airports’ facilities. We also derive rental and other income from commercial activities conducted at our airports, such as the leasing of space to restaurants and retailers.

Grupo Aeroportuario del Pacífico, S.A.B. de C.V., a corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico, was incorporated in 1998 as part of the Mexican government’s initiative to open Mexico’s airports to private investment. The corporation’s period of duration is set at 100 years.

Each of our Mexican concessions has a term of 50 years beginning on November 1, 1998. The term of each of our Mexican concessions may be extended by the SCT under certain circumstances for up to 50 additional years. Our wholly owned Spanish subsidiary, DCA, holds a 74.5% stake in MBJA, the entity that holds the concession to operate, maintain and utilize the Montego Bay International Airport in Jamaica for a period of 30 years beginning on April 12, 2003 but includes no extension provision.

On October 10, 2018, we signed a concession agreement with the Government of Jamaica to operate, modernize and expand the NMIA in Kingston, Jamaica for a period of 25 years with a possible five-year extension. We took control of the operation and management of NMIA on October 10, 2019.

The address of our registered office is as set forth on the cover of this annual report on Form 20-F. Our telephone number is +52 (33) 3880-1100. Our U.S. agent is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711.

Opening of Mexican Airports to Private Investment

In February 1998, the Mexican government issued the Investment Guidelines for the Opening of Investment in the Mexican Airport System. Under these guidelines, the SCT identified 35 of Mexico’s 58 principal airports as being suitable for investment. These 35 airports were divided into four airport groups: Grupo Aeroportuario del Pacífico, or the Pacific Airport Group (twelve Mexican airports); Grupo Aeroportuario del Sureste, or the Southeast Airport Group (nine airports), Grupo Aeroportuario de la Ciudad de México, or the Mexico City Airport Group (one airport) and Grupo Aeroportuario del Centro-Norte, or the Central-North Airport Group (thirteen airports).

The guidelines generally provided for the airport groups to become open to private investment through a two-stage program. In the first stage, a series of public auctions were conducted to award a minority interest in each airport group to a strategic shareholder. In the second stage, all, or a portion of the remaining interest in each airport group was sold through public offerings in the Mexican and international capital markets. Except for the Mexico City Airport Group, all of the other airport groups have completed both stages of the program.

As a result of the opening of Mexico’s airports to private investment, we and our subsidiaries are no longer subject to the Mexican regulations applicable to government wholly owned companies. We believe that this provides us greater flexibility to develop and implement our business strategy and to respond to potential business opportunities.

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Investment by AMP

In 1999, through a public auction held as part of the first stage of the private investment program, the Mexican government sold a 15% equity interest in us to AMP.

The following are AMP’s current shareholders:

| • | Controladora Mexicana (“CMA”) owns 66.66% of AMP. Controladora Mexicana is a private company 50%-owned by Pal Aeropuertos, S.A. de C.V. (“PAL”) and 50%-owned by Promotora Aeronáutica del Pacífico, S.A. de C.V. (“PAP”), PAL is a Mexican special purpose vehicle owned by Eduardo Sánchez Navarro Redo and Juan Gallardo Thurlow, and PAP is a Mexican special purpose vehicle previously owned by Laura Díez Barroso Azcárraga and her spouse, Carlos Laviada Ocejo. On May 5, 2020, Mrs. Díez Barroso and Mr. Laviada Ocejo transferred to direct family members all of their interest in PAP. See “Item 7. Major Shareholders and Related Party Transactions —Major Shareholders.” Pursuant to the privatization guidelines published by the Mexican government during the first phase of our privatization, which require our strategic shareholder to have, among other characteristics, an “operating” partner and a “Mexican” partner (each a “key partner”), CMA is one of AMP’s two key partners, acting as its designated “Mexican” partner.

| • | Aena Desarrollo Internacional, S.A. (“Aena Internacional”) owns 33.33% of AMP. Aena Internacional is a wholly owned subsidiary of Aena, S.A. (“Aena”), parent company of the Spanish economic group Grupo AENA. Aena is a listed company with 51% of its shares currently held by E.P.E. Enaire, a Spanish government corporation, and the remaining 49% currently traded on the Spanish stock exchange. Aena operates 46 airports and two heliports in Spain, six airports in Brazil and is one of the largest airport operators in the world. Pursuant to the privatization guidelines described above, Aena Internacional is one of AMP’s two key partners, acting as its designated “operating” partner. In addition to its investment in AMP, Aena Internacional also owns 51.0% of London Luton Airport Holding III Limited, a British airport company that owns the airport company concessionaire of the London Luton Airport in the United Kingdom, as well as relevant stakes in two other airport concession companies in Latin America.

AMP paid the Mexican government a total of Ps.2.45 billion (nominal pesos, excluding interest) (U.S.$261 million based on the exchange rates in effect on the date of AMP’s bid) in exchange for:

| • | all of our Series BB shares, representing 15% of our capital stock; and

| • | the right and obligation to enter into various agreements with us and the Mexican government, including a participation agreement setting forth the rights and obligations of each of the parties involved in the privatization (including AMP), a fifteen-year technical assistance agreement setting forth AMP’s right and obligation to provide technical assistance to us in exchange for an annual fee and a shareholders’ agreement under terms established during the bidding process. These agreements are described in greater detail in Item 7.

The Technical Assistance Agreement with AMP

Under the technical assistance agreement, AMP provides management and consulting services and transfers industry expertise and technology to us in exchange for a fee. The agreement provides us an exclusive license in Mexico to use all technical assistance and expertise transferred to us by AMP or its shareholders during the term of the agreement. AMP provides us assistance in various areas, including development of our commercial activities, preparation of marketing studies focusing on increasing passenger traffic, assistance with the preparation of the Master Development Programs that we are required to submit to the SCT and the improvement of our airport operations. Our management believes that if we were not to receive the technical assistance provided via our agreement with AMP, this could adversely and significantly affect our results of operations.

Upon expiration, the agreement automatically renews for successive five-year terms unless one party provides notice of termination at least 60 days prior to a scheduled expiration date. Under our bylaws, a decision by us to renew or cancel the technical assistance agreement is subject to the approval of 51% of Series B shareholders other than AMP or any related party of AMP (to the extent that AMP or any such related party holds Series B shares). A party may also terminate the technical assistance agreement prior to its expiration date upon non-compliance with its terms by the other party. The technical assistance agreement with AMP was automatically renewed on August 25, 2019 for five additional years.

The technical assistance fee is equal to the greater of U.S.$4.0 million, adjusted annually for U.S. inflation since August 25, 2000 (measured by the U.S. CPI), or 5% of our annual consolidated income from operations from our Mexican airports (calculated prior to deducting the technical assistance fee, income taxes and depreciation and amortization, in each case determined in accordance with MFRS). We believe that this structure creates an incentive for AMP to increase our annual consolidated earnings. AMP is also entitled to reimbursement for the out-of-pocket expenses it incurs in its provision of services under the agreement. In 2018, 2019 and 2020, the technical assistance fee, based on our Mexican airports’ income from operations, amounted to Ps.411.5 million, Ps.461.6 million and Ps.289.1 million, respectively. These amounts represented 4.5%, 4.5% and 4.7% of our annual consolidated income from operations (calculated prior to deducting the technical assistance fee, income taxes and depreciation and amortization), respectively.

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The technical assistance agreement allows AMP, its shareholders, and their affiliates to render additional services to us only if our Acquisitions Committee determines that these related parties have submitted the most favorable bid in a public bidding process involving at least three unrelated parties. For a description of this committee, see Item 6 herein. Our bylaws, the participation agreement and the technical assistance agreement also contain certain other provisions designed to avoid conflicts of interest between AMP and us.

AMP’s Rights and Obligations under Our Bylaws

Pursuant to our bylaws, AMP (as holder of our Series BB shares) has the right to appoint and remove our top-level executive officers (upon consultation with our Nominations and Compensation Committee), to elect four members of our board of directors and their alternates and to designate three of the members of our Operating Committee and 20% of the members of each other board committee (or one member of any committee consisting of fewer than five members). According to Mexican and U.S. independence standards, the members of our Audit Committee must be independent. Pursuant to our bylaws, AMP (as holder of our Series BB shares) also has the right to veto certain actions requiring approval by our shareholders (including the payment of dividends, the amendment of our bylaws and any decision that has the objective of modifying or annulling its right to appoint our top-level executive officers). In addition, shareholders of AMP have allocated among themselves certain veto rights relating to the exercise by AMP of its veto and other rights, which increases the risk of impasse at the AMP shareholders’ meetings and ultimately at our shareholders’ meetings. See “Item 3, Key Information – Risk Factors – Risks Related to Our Strategic Shareholder.”

Our bylaws provide that, subject to certain exceptions, Series BB shares must be converted into Series B shares prior to transfer. Our bylaws and certain of the agreements executed in connection with the privatization process prohibited AMP from transferring any of its Series BB shares before August 25, 2004. Since August 25, 2014, AMP has been permitted to sell its interest in our Series BB shares. However, pursuant to our bylaws, if at any time AMP (as the holder of our Series BB shares) were to hold less than 7.65% of our capital stock in the form of Series BB shares, its Series BB shares would be mandatorily converted into Series B shares, which would cause AMP to lose all of its special rights.

AMP Shares in Bancomext Trust

As required under the participation agreement entered into in connection with the Mexican government’s sale of our Series BB shares to AMP, AMP has transferred its Series BB shares to a trust, the trustee of which is Banco Nacional de Comercio Exterior, S.N.C. (“Bancomext”). For a description of this trust, see “Item 7, Major Shareholders and Related Party Transactions – Major Shareholders – AMP Trust, Bylaws and Shareholders’ Agreement.”

Pursuant to the terms of the trust, AMP may direct the trustee to vote only shares representing up to 10% of our capital stock. Any shares in excess of 10% are voted by the trustee in accordance with the vote of the majority of Series B shares. The trust does not affect the veto and other special rights granted to the holders of Series BB shares described above.

Global Offering and Establishment of ADR Facility with NYSE Listing

In 1999, 85% of our capital stock was transferred from the Mexican government to a trust established in Nacional Financiera, S.N.C., Institución de Banca de Desarrollo (“NAFIN”), a Mexican government-owned development banking institution. In February 2006, we conducted an initial public offering to allow NAFIN to dispose of its 85% interest in us. Through this offering, all of our outstanding Series B shares were sold to the public in Mexico, the U.S. and elsewhere, and NAFIN ceased to be a shareholder. The net proceeds from the sale of shares were remitted entirely to the Mexican government. We received no proceeds from this offering. At the same time, we established an American Depositary Receipt facility with The Bank of New York Mellon (formerly The Bank of New York) and obtained approval to list our ADSs on the NYSE. In addition, we registered our Series B shares with the National Securities Registry (Registro Nacional de Valores) and listed our Series B shares on the Mexican Stock Exchange.

Master Development Programs

Under the terms of our Mexican concessions, each of our Mexican subsidiary concession holders is required to present a Master Development Program for approval by the SCT every five years. Each Master Development Program includes investment commitments for the regulated part of our Mexican airports business (including capital expenditures and improvements) for the succeeding five-year period. Once approved by the SCT, these commitments become binding obligations under the terms of our Mexican concessions.

On December 12, 2019, the SCT approved our Master Development Programs for each of our Mexican airports for the five-year period from January 1, 2020 through December 31, 2024. Due to the COVID-19 pandemic, we delayed certain non-obligatory capital investments and during the month of August 2020, we filed a petition for an Extraordinary Review Process of our Master Development Program with the SCT in response to the impact of the COVID-19 pandemic on our operations. See “Item 3, Risk Factors – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations control,” and “Item 5, Recent Developments – Developments related to the outbreak of COVID-19.” The adjustments to our Master Development Program approved as a result of this Extraordinary Review Process and announced on November 30, 2020, postponed investments by approximately 20 months. As such, certain investments that were scheduled to conclude in 2024 will now conclude in 2026. Our committed investments decreased by 27% for the 2020-2024 period, after the Extraordinary Review Process.

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The table below sets forth our historical capital expenditures for our Mexican airports. Capital expenditures are calculated on a cash flow basis, meaning that capital expenditures are equal to those investments actually paid for by each airport during a given year and not including investments allocated for by the airport during that year but not paid for during the given year. The investments shown in the table below therefore reflect our expenditures actually paid for by our Mexican airports for the years indicated. In order to be compared with our committed investments for a given year, the investments made in the previous year but paid for in the given year need to be subtracted while the investments allocated but not paid for in the given year ne ed to be added. For 2018, 2019 and 2020, our investments allocated but unpaid totaled Ps.318.5 million, Ps.286.4 million and Ps.540.9 million, respectively. The substantial majority of these investments were made under the terms of our Master Development Programs.

Historical Capital Expenditures by Mexican Airport

|  | Year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  |  | (thousands of pesos) |
Guadalajara |  | Ps. |  | 271,966 |  |  | Ps. |  | 990,610 |  |  | Ps. |  | 882,798 |
Tijuana |  |  |  | 377,220 |  |  |  |  | 356,236 |  |  |  |  | 744,672 |
Los Cabos |  |  |  | 417,856 |  |  |  |  | 343,284 |  |  |  |  | 421,328 |
Puerto Vallarta |  |  |  | 98,196 |  |  |  |  | 70,480 |  |  |  |  | 212,032 |
Guanajuato |  |  |  | 114,035 |  |  |  |  | 69,496 |  |  |  |  | 33,177 |
Hermosillo |  |  |  | 61,107 |  |  |  |  | 43,671 |  |  |  |  | 84,613 |
Mexicali |  |  |  | 117,174 |  |  |  |  | 40,465 |  |  |  |  | 139,475 |
La Paz |  |  |  | 93,959 |  |  |  |  | 76,181 |  |  |  |  | 67,979 |
Aguascalientes |  |  |  | 22,430 |  |  |  |  | 70,536 |  |  |  |  | 49,375 |
Morelia |  |  |  | 34,223 |  |  |  |  | 48,261 |  |  |  |  | 82,389 |
Los Mochis |  |  |  | 44,162 |  |  |  |  | 32,918 |  |  |  |  | 38,422 |
Manzanillo |  |  |  | 36,346 |  |  |  |  | 31,339 |  |  |  |  | 29,908 |
Other (1) |  |  |  | 153,676 |  |  |  |  | 53,505 |  |  |  |  | 118,481 |
Total |  | Ps. |  | 1,842,350 |  |  | Ps. |  | 2,226,982 |  |  | Ps. |  | 2,904,649 |

(1) | Includes SIAP, CORSA, PCP, ADP and Fundación GAP.

The following table sets forth our historical capital expenditures by type of investment across all of our Mexican airports for the years indicated:

Historical Capital Expenditures by Type for our Mexican Airports

|  | Year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  | (thousands of pesos) |
Terminals |  | Ps. |  | 733,284 |  |  | Ps. |  | 1,271,197 |  |  | Ps. |  | 1,758,019 |
Runways and aprons |  |  |  | 518,656 |  |  |  |  | 543,597 |  |  |  |  | 609,013 |
Machinery and equipment |  |  |  | 515,370 |  |  |  |  | 389,379 |  |  |  |  | 507,866 |
Other |  |  |  | 75,040 |  |  |  |  | 22,809 |  |  |  |  | 29,751 |
Total |  | Ps. |  | 1,842,350 |  |  | Ps. |  | 2,226,982 |  |  | Ps. |  | 2,904,649 |

During 2018, 2019 and 2020, 1.9%, 2.4% and 3.1%, respectively, of our capital expenditures were funded by cash flows from operations, while the remaining balance was funded by long-term debt securities issued on the Mexican capital markets (Certificados Bursátiles de Largo Plazo). We expect to continue funding the most significant portion of our capital expenditures for our Mexican airports in the future with new debt issuances on the Mexican capital markets; however, our ability to incur debt may be restricted by our leverage levels or market conditions. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources.”

Our capital expenditures in 2020 were allocated to the following types of investments at the majority of our Mexican airports:

| • | Terminals. During 2020, we continued the expansion of several of our airports either by expanding and renovating existing airport facilities or by continuing the construction of new terminal buildings, primarily at our Tijuana, Los Cabos, Mexicali, Morelia, and Guadalajara airports.

| • | Runways and aprons. During 2020, we continued renovating and expanding aprons and runways at several of our airports including our Tijuana, Guadalajara, Puerto Vallarta, La Paz, and Aguascalientes airports.

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| • | Machinery and equipment. We invested in machinery and equipment including the latest technology in baggage handlings systems, metal detectors, other security-related equipment, passenger walkways, air conditioning equipment, and public information systems.

| • | Other. During 2020 we began the installation of solar carport systems within the parking areas of our Mexican airports with the exception of our Los Cabos airport due to local energy regulations. The solar carport systems will consist of more than 40,000 square meters of solar panels and will produce over 14.3 MWH. This will reduce the energy consumed and the carbon footprint of our airports and will also protect our passengers and their vehicles from sunlight, wind, and rain. During 2020, we completed the solar carport system installation at our Aguascalientes, Guanajuato, Guadalajara, La Paz, Los Mochis, Manzanillo, Mexicali, Morelia, and Puerto Vallarta airports, and we expect to conclude the installation at our Hermosillo and Tijuana airports during the first quarter of 2021.

The following table sets forth our estimated committed investments for each airport for the five-year period from 2020 through 2024 under the new Master Development Programs expressed in thousands of constant pesos as of December 31, 2017, that were initially approved by the SCT on December 12, 2019 and revised on November 30, 2020. We are required to comply with the investment obligations under these programs on a year-to-year basis.

Estimated Committed Investments by Mexican Airport (2020-2024)(1)

|  | Year ended December 31, |  |  |  |  |  |
|  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  |  | Total |
|  | (thousands of constant pesos as of December 31, 2017) (1) |  |  |  |  |  |
Guadalajara |  | Ps. |  | 1,095,712 |  |  | Ps. |  | 1,148,523 |  |  | Ps. |  | 1,843,155 |  |  | Ps. |  | 1,063,267 |  |  | Ps. |  | 1,180,132 |  |  | Ps. |  | 6,330,791 |
Puerto Vallarta |  |  |  | 205,956 |  |  |  |  | 450,956 |  |  |  |  | 660,397 |  |  |  |  | 901,625 |  |  |  |  | 807,678 |  |  |  |  | 3,026,612 |
Tijuana |  |  |  | 796,943 |  |  |  |  | 1,465,857 |  |  |  |  | 438,001 |  |  |  |  | 161,784 |  |  |  |  | 118,382 |  |  |  |  | 2,980,967 |
Los Cabos |  |  |  | 395,869 |  |  |  |  | 496,216 |  |  |  |  | 272,952 |  |  |  |  | 236,278 |  |  |  |  | 177,928 |  |  |  |  | 1,579,243 |
Guanajuato |  |  |  | 57,390 |  |  |  |  | 88,614 |  |  |  |  | 33,273 |  |  |  |  | 69,521 |  |  |  |  | 53,081 |  |  |  |  | 301,879 |
La Paz |  |  |  | 115,819 |  |  |  |  | 92,343 |  |  |  |  | 40,968 |  |  |  |  | 24,129 |  |  |  |  | 20,773 |  |  |  |  | 294,032 |
Hermosillo |  |  |  | 57,959 |  |  |  |  | 93,970 |  |  |  |  | 53,066 |  |  |  |  | 29,849 |  |  |  |  | 56,805 |  |  |  |  | 291,649 |
Aguascalientes |  |  |  | 78,883 |  |  |  |  | 98,106 |  |  |  |  | 53,676 |  |  |  |  | 26,339 |  |  |  |  | 23,040 |  |  |  |  | 280,044 |
Mexicali |  |  |  | 32,385 |  |  |  |  | 47,818 |  |  |  |  | 46,077 |  |  |  |  | 57,672 |  |  |  |  | 23,755 |  |  |  |  | 207,708 |
Morelia |  |  |  | 32,716 |  |  |  |  | 51,576 |  |  |  |  | 35,098 |  |  |  |  | 50,682 |  |  |  |  | 19,510 |  |  |  |  | 189,582 |
Los Mochis |  |  |  | 40,426 |  |  |  |  | 40,980 |  |  |  |  | 11,069 |  |  |  |  | 53,338 |  |  |  |  | 31,097 |  |  |  |  | 176,911 |
Manzanillo |  |  |  | 26,439 |  |  |  |  | 48,629 |  |  |  |  | 30,176 |  |  |  |  | 21,757 |  |  |  |  | 15,670 |  |  |  |  | 142,671 |
Total |  | Ps. |  | 2,936,500 |  |  | Ps. |  | 4,123,588 |  |  | Ps. |  | 3,517,909 |  |  | Ps. |  | 2,696,240 |  |  | Ps. |  | 2,527,851 |  |  | Ps. |  | 15,802,088 |

(1) | Figures as adjusted as a result of the Extraordinary Review Process and announced on November 30, 2020.

(2) | Figures expressed in thousands of constant pesos as of December 31, 2017. These amounts are based on investment commitments approved by the SCT. Because the amounts are expressed in constant pesos as of December 31, 2017, the figures for investment periods not yet elapsed are adjusted to take into consideration increases in the Mexican PPI’s construction price index since the date of the Ministry’s approval of the Master Development Programs then in effect.

The following table sets forth our estimated committed investments for 2020 through 2024 by type of investment:

Estimated Committed Investments by Type for our Mexican Airports (2020-2024)(1)

|  | Year ended December 31, |  |  |  |  |  |
|  | 2020 |  |  | 2021 |  |  | 2020 |  |  | 2023 |  |  | 2024 |  |  |  | Total |
|  |  | (thousands of constant pesos as of December 31, 2017) (2) |  |  |  |  |  |
Terminals |  | Ps. |  | 615,871 |  |  | Ps. |  | 1,596,652 |  |  | Ps. |  | 1,108,056 |  |  | Ps. |  | 908,152 |  |  | Ps. |  | 1,030,532 |  |  | Ps. |  | 5,259,263 |
Runways and aprons |  |  |  | 581,160 |  |  |  |  | 872,257 |  |  |  |  | 1,312,920 |  |  |  |  | 901,954 |  |  |  |  | 687,209 |  |  |  |  | 4,355,499 |
Machinery and equipment |  |  |  | 1,049,789 |  |  |  |  | 1,141,268 |  |  |  |  | 196,985 |  |  |  |  | 368,029 |  |  |  |  | 392,687 |  |  |  |  | 3,148,759 |
Other |  |  |  | 689,680 |  |  |  |  | 513,411 |  |  |  |  | 899,948 |  |  |  |  | 518,105 |  |  |  |  | 417,423 |  |  |  |  | 3,038,566 |
Total |  | Ps. |  | 2,936,500 |  |  | Ps. |  | 4,123,588 |  |  | Ps. |  | 3,517,909 |  |  | Ps. |  | 2,696,240 |  |  | Ps. |  | 2,527,851 |  |  | Ps. |  | 15,802,088 |

(1) | Figures as adjusted as a result of the Extraordinary Review Process and announced on November 30, 2020.

(2) | Figures expressed in thousands of constant pesos as of December 31, 2017. These amounts are based on investment commitments approved by the SCT. Because the amounts are expressed in constant pesos as of December 31, 2017, the figures for investment periods not yet elapsed are adjusted to take into consideration increases in the Mexican PPI’s construction price index since the date of the Ministry’s approval of the Master Development Programs then in effect.

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Differences between estimated committed investments and historical capital expenditures sometimes exist due primarily to: (i) the difference between capital expenditures made but unpaid during the prior year and investments made but unpaid during the current year; (ii) adjustments for inflation; and (iii) investmen ts deferred into the first two months following the corresponding fiscal year, among other factors.

We allocated 88.1% of the total amounts committed under our Master Development Program for the 2020–2024 period to four of our airports: Guadalajara, Puerto Vallarta, Tijuana and Los Cabos.

We expect that the remaining portion of our Master Development Program for the 2020-2024 period will be financed primarily through the debt market in Mexico, subject to our leverage levels and market conditions. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Indebtedness.”

Acquisition of DCA

On April 20, 2015, we completed a transaction with Abertis for the acquisition of 100% of the shares of DCA for a total of U.S.$192.0 million. We financed 100% of the acquisition of DCA via bridge loans with external sources provided by Scotiabank Inverlat, S.A. (“Scotiabank”) and BBVA Bancomer, S.A. (“BBVA”), which matured in January and February 2021, respectively. In October 2020, we signed two new long term loans agreements, also with Scotiabank and BBVA, for the refinancing of the loans for U.S.$191.0 million. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Indebtedness.”

DCA Assets

DCA has a 74.5% stake in MBJA, the entity that holds the concession to operate, maintain and utilize the Montego Bay International Airport in Jamaica. Vantage Airport Group Limited (“Vantage”), a Canadian joint venture that operates Vancouver International Airport, owns the remaining 25.5% stake in MBJA. The Montego Bay airport is Jamaica’s main airport, located in the city of Montego Bay, in the center of the tourist corridor between Negril and Ocho Rios, where 88% of the island’s hotel capacity is located. See “Item 3, Key Information – Risk Factors – Risks Related to Jamaica.” Based on our and Vantage’s experience in the airport sector, we believe that this cooperation will strengthen MBJA, benefitting it in terms of both operations and profitability.

DCA also held a 14.77% stake in SCL, the operator of the international terminal in Santiago de Chile until September 30, 2015. Upon expiration of the concession to operate the Santiago de Chile airport, those assets were immediately returned to the Chilean government and the new operator. Pursuant to the concession agreement, there is a one-year period after delivery of the concession assets during which the concessionaire remains responsible for any latent defects in those assets. After this period and a subsequent one-year period, SCL shall be liquidated in accordance with Chilean corporate and tax regulations. During 2016, we received dividends and capital reimbursements of Ps.58.9 million. In 2018, we received a capital reimbursement of Ps.10.0 million. Though SCL will no longer have operations, SCL must remain in existence for an additional year after the transfer. After that first year, SCL will remain in existence until its dissolution in accordance with tax regulations in Chile, in spite of this and due to some legal proceedings still pending, we expect to liquidated this subsidiary in December 2023.

MBJA

On April 3, 2003, MBJA entered into a concession agreement with the AAJ pursuant to which the AAJ granted MBJA the right and obligation to refurbish, develop, operate and maintain the Montego Bay International Airport for 30 years from April 12, 2003 (the “MBJA Concession Agreement”). MBJA, as the approved airport operator, is thereby permitted to undertake the functions of the AAJ with respect to the Montego Bay airport and required to provide the airport services set out therein at the Montego Bay airport. The MBJA Concession Agreement is governed by Jamaican law and MBJA cannot assign its rights or obligations under the agreement except with the prior written consent of the AAJ. Under the terms of the MBJA Concession Agreement, MBJA also has certain other obligations to make capital investments. See “Item 4, Information on the Company – Regulatory Framework – The Montego Bay Airport Concession.”

MBJA made capital investments of U.S.$34.2 million, U.S.$11.7 million and U.S.$9.9 million, in 2018, 2019 and 2020, respectively. In 2020 the capital expenditures were allocated to the expansion of the terminal building and the parking lot, modernization of equipment, such as passengers walkways, fire trucks, among others; as well as the installation of a solar photovoltaic power plant. Estimated committed investments in the Capital Development Program from April 2015 through December 2019 were U.S.$37.9 million. In December 2019, the AAJ approved committed investments of U.S.$111.7 million for MBJA’s Capital Development Program for the 2020-2024 period. In December 2020, as a result of the COVID-19 pandemic and its economic impact, the AAJ granted MBJA a deferral on its committed investments for 2020 so that these investments can begin in June 2021. In the past, MBJA’s investment commitments were funded primarily by bank loans and by cash flows from operations, therefore, MBJA also arranged a U.S.$60.0 million credit facility in 2020 with the Bank of Nova Scotia and Bank of Nova Scotia Jamaica Limited, to partly finance these projects. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Capital Expenditures – Capital Expenditures in Jamaica.”

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The following table sets forth our estimated committed investments for 2020 through 2024 under the new Capital Development Program:

|  | Year ended December 31, |  |  |  |  |  |
|  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  |  | Total |
|  | (million) |  |  |  |  |  |
Montego Bay |  | U.S. |  | 41.9 |  |  | U.S. |  | 34.0 |  |  | U.S. |  | 21.9 |  |  | U.S. |  | 13.0 |  |  | U.S. |  | 0.9 |  |  | U.S. |  | 111.7 |

At its annual general meeting on March 23, 2017, MBJA’s shareholders approved a dividend payment of U.S.$26.0 million to be distributed pro rata amongst the shareholders. Accordingly on January 22, 2018, MBJA paid dividends of approximately U.S.$19.4 million to DCA. At their annual general meeting on June 12, 2018, MBJA’s shareholders approved a dividend payment of U.S.$30.0 million to be distributed pro rata amongst the shareholders. Accordingly on September 26, 2018, MBJA paid dividends of approximately U.S.$22.4 million to DCA. At their annual general meeting on December 4, 2019, MBJA’s shareholders approved a dividend payment of U.S. $30.0 million. Accordingly on December 16, 2019 MBJA paid dividends of approximately U.S. $22.4 million to DCA. No dividends were declared by MBJA’s shareholders in 2020.

According to the rebalancing petition filed in December 2020, these committed investments could change once the AAJ issues a final decision.

PACKAL

On October 10, 2018, PACKAL entered into a concession agreement with AAJ, with which the authority guaranteed to PACKAL the right to refurbish, develop, operate, and maintain NMIA for a period of 25 years, with a possible extension of 5 years, as of October 10, 2019. In accordance with the terms of the concession agreement, We paid U.S. $7.1 million (U.S. $2.1 million to the International Finance Corporation (“IFC”) and U.S. $5.0 million to the AAJ). PACKAL is obliged to pay the AAJ a concession right of 62.01% of the total aeronautical and commercial revenues. All long-lived assets located in the NMIA are owned by AAJ. Upon the expiration of the term of the concessions agreement granted to us, the assets, including all the improvements made to the airport facilities during the term of the concessions, will automatically revert in favor of AAJ. In December 2019, the AAJ approved committed investments of U.S.$101.4 million for PACKAL’s Capital Development Program for the 2020-2024 period. In December 2020, as a result of the COVID-19 pandemic and its economic impact, the AAJ granted PACKAL a deferral on its committed investments for 2020 so that these investments can begin in June 2021. These investments will be funded primarily through bank loans and subordinated debt. The following table sets forth our estimated committed investments for 2020 through 2024 under the new Capital Development Program:

|  | Year ended December 31, |  |  |  |  |  |
|  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  |  | Total |
|  | (million) |  |  |  |  |  |
Kingston |  | U.S. |  | 16.2 |  |  | U.S. |  | 28.9 |  |  | U.S. |  | 34.9 |  |  | U.S. |  | 8.9 |  |  | U.S. |  | 12.5 |  |  | U.S. |  | 101.4 |

According to the rebalancing petition filed in December 2020, these committed investments could change once the AAJ issues a final decision.

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BUSINESS OVERVIEW

Our Operations

We hold concessions to operate twelve international airports in Mexico and two international airports in Jamaica.

Mexican Operations

Our twelve Mexican airports serve two major metropolitan areas (Guadalajara and Tijuana), several tourist destinations (Puerto Vallarta, Los Cabos, La Paz, and Manzanillo), and a number of mid-sized cities (Hermosillo, Guanajuato, Morelia, Aguascalientes, Mexicali and Los Mochis). Our Mexican airports are located in nine of the 32 Mexican states, covering a territory of approximately 566,000 square kilometers, with a population of approximately 31.9 million according to the 2020 national census data from INEGI. All our Mexican airports are designated as international airports under Mexican law, meaning that they are all equipped to receive international flights and maintain customs, refueling and immigration services managed by the Mexican government.

Our Mexican airports handled 40.5 million, 43.6 million and 25.1 million terminal passengers in 2018, 2019 and 2020 respectively, which we believe places us among the largest private airport operators in the Americas. As of December 31, 2020, five of our airports ranked among the top ten busiest airports in Mexico based on commercial aviation passenger traffic, according to data published by the SCT. According to the SCT’s figures, our commercial aviation passenger traffic accounted for approximately 26.9%, 27.2% and 31.9% of all arriving and departing commercial aviation passengers in Mexico in 2018, 2019 and 2020, respectively. In 2020, our Mexican airports recorded total revenues of Ps.10.2 billion, of which Ps.8.2 billion corresponds to the sum of aeronautical and non-aeronautical revenues and Ps.2.0 billion corresponds to the improvements to concession assets.

Our Mexican airports serve several major international routes, including Guadalajara-Los Angeles, which, in 2020, ranked as the busiest international route in Mexico by total number of passengers according to the Federal Civil Aviation Agency. In addition, our airports serve major resort destinations such as Puerto Vallarta and Los Cabos, which are among the most popular destinations in Mexico visited by tourists from the United States. Our airports also serve major domestic routes, including Guadalajara-Mexico City, which was the country’s third busiest route in 2020, according to the Federal Civil Aviation Agency. Other top domestic routes in terms of total passenger traffic include Mexico City-Tijuana and Guadalajara-Tijuana, which ranked fourth and fifth, respectively, among the busiest domestic routes in Mexico in 2020, according to the Federal Civil Aviation Agency.

Mexico and the United States are party to a bilateral aviation agreement, which went into effect on August 21, 2016. The bilateral agreement provides for an increase in airlines servicing existing routes between Mexico and the United States, as well as the addition of new routes and an increase in the frequency of flights on existing routes. The agreement also grants Mexican airlines the ability to further penetrate international markets. We believe that our business has benefited from and will continue to benefit from this amendment as a result of increased service to Mexican airports by U.S. airlines.

Principal Mexican Airports by Passenger Traffic (2020)

|  | Total Aviation Passengers |
|  | (thousands) |
Mexico City (1) |  |  | 21,977 |
Cancun |  |  | 12,259 |
Guadalajara* |  |  | 8,125 |
Monterrey |  |  | 6,317 |
Tijuana* |  |  | 4,994 |
Los Cabos* |  |  | 3,064 |
Puerto Vallarta* |  |  | 2,536 |
Guanajuato* |  |  | 1,388 |
Merida |  |  | 1,378 |
Culiacan |  |  | 1,297 |

Source: SCT and Company data.

* | Indicates airports operated by us.

(1) | Commercial aviation passengers.

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Guadalajara and Tijuana are among Mexico’s most important manufacturing, industrial and commercial centers. Both cities have significant maquiladora industries. A maquiladora plant is a manufacturing facility to which mostly raw materials are imported and from which finished products are exported, with the manufacturer paying tariffs only on the value added in Mexico. Maquiladora plants were originally concentrated along the Mexico-U.S. border, but more recently have moved further south to access lower labor costs and a larger and more diverse labor pool, and to take greater advantage of certain inputs available from Mexican suppliers. In 2020, our Guadalajara and Tijuana airports were Mexico’s third and fourth busiest airports, respectively, in terms of passenger traffic, according to the SCT. In 2018, 2019 and 2020, our Guadalajara and Tijuana airports together represented approximately 54.8%, 54.5% and 57.6% of our Mexican airports’ terminal passenger traffic and 47.4%, 51.4% and 54.3% of our Mexican airports’ total revenues (in 2018, 2019 and 2020 they represented 49.4%, 49.3% and 51.7% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Mexico is one of the main tourist destinations in the world. Mexico has historically ranked in the top fifteen countries worldwide in terms of foreign visitors, ranking seventh with approximately 45 million international tourists in 2019, according to the Mexican Ministry of Tourism. As a result of the Covid-19 pandemic, the tourism industry world-wide was severely affected during 2020 with the Mexican Ministry of Tourism reporting approximately 24.3 million international tourists. The tourism industry is one of the largest generators of foreign exchange in the Mexican economy. Within Mexico, the region bordering the Pacific Ocean (where several of our airports are located) is a principal tourist destination due to its beaches and cultural sites, which are served by numerous hotels and resorts. Four of our airports, the Los Cabos, Puerto Vallarta, La Paz, and Manzanillo airports, serve popular Mexican tourist destinations. Of these tourist destinations, Los Cabos and Puerto Vallarta are the most popular, with Los Cabos constituting Mexico’s third most popular international tourist destination and Puerto Vallarta the fourth, in terms of visitors in 2020, according to the Mexican National Institute of Migration (Instituto Nacional de Migración). The Los Cabos and Puerto Vallarta airports attracted approximately 3.1 million and 2.5 million terminal passengers, respectively, in 2020 (5.6 million and 5.1 million terminal passengers, respectively, in 2019). In 2018, 2019 and 2020 our Los Cabos and Puerto Vallarta airports together represented 24.8%, 24.5% and 20.1% of our Mexican airports’ terminal passengers and 32.9%, 30.0% and 28.3% of our Mexican airports’ total revenues (32.0%, 31.5% and 30.3% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues). In addition, these two airports have general aviation and Fixed Base Operations (“FBO”) terminals, where specialized, full service operations are offered to general aviation aircraft, including refueling, cleaning and catering.

The remaining six Mexican airports in our group serve mid-sized cities—Hermosillo, Leon, Morelia, Aguascalientes, Mexicali, and Los Mochis—with diverse economic activities. These cities are industrial centers (Hermosillo, Leon, Aguascalientes, and Mexicali) and/or serve as the hubs for important agricultural regions (Leon, Morelia and Los Mochis). In 2018, 2019 and 2020, these six airports serving mid-sized cities accounted for approximately 17.7%, 18.3% and 17.5% of our Mexican airports’ terminal passenger traffic and 16.7%, 15.7% and 17.4% of our Mexican airports’ total revenues (16.1%, 16.7% and 18.0% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues). Of these six airports, Guanajuato has the greatest passenger traffic volume. In 2018, 2019 and 2020, Guanajuato accounted for approximately 5.8%, 6.3% and 5.5% of our Mexican airports’ terminal passenger traffic and 5.6%, 5.8% and 4.8% of our Mexican airports’ total revenues (5.9%, 6.4% and 5.5% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Jamaican Operations

Our Montego Bay airport is a full-service international passenger airport, with additional FBO and cargo operations driven by agricultural exports from the island, serving as the primary gateway for international air travel to Jamaica, a major international tourist destination and growing tourism market. In 2020, it was the third busiest airport in the Caribbean region, excluding Cuba, in terms of commercial aviation passenger traffic, according to Airports Council International. Located in the town of Montego Bay, which is in the geographical center of the tourist corridor between the coastal resort areas of Negril and Ocho Rios where, according to the Jamaican Tourist Board, 88.0% of the island’s hotel capacity is located, the Montego Bay airport facilitates the transit of more than 70.0% of the tourists arriving on the island. In 2020, 1.6 million terminal passengers travelled through the Montego Bay airport, a 65.8% decrease over the previous year, of which 99.0% were international passengers. Of the total passengers in 2020, 74.0% came from the United States, 15.0% came from Canada, 9.0% came from Europe and 2.0% from other countries.

In 2018, 2019 and 2020 respectively, the Montego Bay airport served 4.5 million, 4.7 million and 1.6 million terminal passengers. During 2018, MBJA’s total revenues amounted to Ps.2.5 billion, of which Ps.1.4 billion were from aeronautical revenues, Ps.543.9 million were from non-aeronautical revenues and Ps.546.0 million correspond to improvements to concession assets. During 2019, MBJA’s total revenues amounted to Ps.2.2 billion, of which Ps.1.5 billion were from aeronautical revenues, Ps.585.3 million were from non-aeronautical revenues and Ps.136.3 million correspond to improvements to concession assets. During 2020, MBJA’s total revenues amounted to Ps.1.1 billion, of which Ps.695.8 million were from aeronautical revenues, Ps.327.2 million were from non-aeronautical revenues and Ps.138.8 million correspond to improvements to concession assets.

On February 20, 2017, the Government of Jamaica issued a Request for Qualifications inviting interested parties to prepare and submit a prequalification application to participate in a bidding process for a public private partnership to operate the Norman Manley International Airport in Kingston, Jamaica. We timely submitted our prequalification application and, after participating in a competitive bidding process with seven other international airport operators, we were selected for the concession.

On October 10, 2018, we signed a concession agreement with the government of Jamaica for the operation, modernization, and expansion of NMIA for a period of 25 years. We began operating and managing NMIA in the last quarter of 2019. During 2020, NMIA’s total

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revenues amounted to Ps.534.5 m illion, of which Ps.354.4 m illion were from aeronautical revenues, Ps.128.7 million were from non-aeronautical revenues and Ps.51.4 million correspond to improvements to concession assets.

Our Sources of Revenues

All revenue amounts in this “Business Overview” section include revenues from improvements to concession assets; however, in some cases we include discussion surrounding only aeronautical and non-aeronautical revenues or the sum of both. See the introduction to “Item 3, Key Information – Selected Financial and Other Data,” for a discussion of the reasons for using aeronautical and non-aeronautical revenues for certain comparisons. We specifically state when either aeronautical or non-aeronautical revenues are being used. Because aeronautical and non-aeronautical revenues are derived from our business operations, we believe these figures may in some cases be more useful for readers because those revenues stem from the key drivers of our business: passenger traffic and our maximum rates.

Aeronautical Services

Aeronautical services represent the most significant source of our revenues. In 2018, 2019 and 2020, aeronautical services revenues represented approximately 67.3%, 65.0% and 60.9% respectively, of our total revenues (in 2018, 2019 and 2020 aeronautical services represented 74.9%, 73.7% and 74.7% respectively, of the sum of aeronautical and non-aeronautical revenues). Our aeronautical services revenues are principally dependent on the following factors: passenger traffic volume, the number of air traffic movements, the weight of the aircraft, the duration of an aircraft’s stay at the airport and the time of day the aircraft operates at the airport.

In Mexico, all our revenues from aeronautical services are regulated under the maximum-rate price regulation system applicable to our airports. See “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Services Regulation.”

In Jamaica, our revenues from passenger charges, aircraft landing and parking charges, airport security charges and passenger walkway charges are regulated by the JCAA, revenues from car parking charges are set by the MTM and revenues from leasing of space to airlines, complementary services, cargo handling and ground transportation are unregulated. See “Item 4, Information on the Company – Regulatory Framework – Jamaican Aeronautical Services Regulation.”

Passenger Charges

Passenger Charges in Mexico

In Mexico, we collect a passenger charge for each departing passenger on an aircraft (other than diplomats, infants and transit and transfer passengers, if the transfer of the passenger occurs within 24 hours of the passenger’s arrival at the airport). We do not collect passenger charges from arriving passengers. Passenger charges are included in the cost of a passenger’s ticket, and we issue invoices for those charges to each airline on a weekly basis and record an account receivable for the invoice corresponding to a flight during the actual month of the flight.

Before the opening of Mexico’s airports to private investment, all airports in Mexico had entered into agreements with national and foreign airlines under which the airlines were obligated to collect all passenger charges on behalf of the airports in exchange for being given a period of time in which to reimburse those passenger charges to the airports. The length of the reimbursement period was tied to the interest rate on short-term Mexican treasury bills (CETES), to allow airlines to accumulate interest that would compensate them for the costs they incurred in collecting those passenger charges.

Under passenger charges collection agreements negotiated with our airline customers, which took effect as of November 1, 2009, airlines requesting payment period extensions are obligated to: (i) reimburse passenger charges collected on behalf of our airports during a period no greater than 60 days after the “operational average date” (no later than the invoice date) for such charges; and (ii) provide cash, bonds, standby letters of credit or other similar instruments as a guarantee for passenger charges in an amount equal to the highest passenger charges received by the airline on an airport-by-airport basis for the previous year during a period of time equal to the requested payment period plus 30 additional days. Each airline with a payment grace period is obligated to maintain the guarantee at an agreed-upon level, and if it does not do so, it must reimburse the passenger charges on the day the applicable flight departs from our airports without any grace period. If the airline pays our airports on time, the airport is obligated to give the airline an allowance of 3% of the value of each invoice billed no later than seven days after the payment date. The airline can then apply this allowance to cover airport services, leases for ticket counters and back-office and passenger charges. During 2018, 2019 and 2020, under the passenger charges collection agreements, we received payments within an average period of 57, 54 and 67 days, respectively.

Passenger charges vary at each of our Mexican airports and depending on whether the destination is national or international. International passenger charges are currently U.S. dollar-denominated but are invoiced and collected in pesos based on the average exchange rate during the month prior to the flight. Domestic passenger charges are peso denominated. Because passenger charges for international flights are denominated in U.S. dollars, the value of our revenues from those charges is therefore affected by fluctuations in the value of the U.S. dollar as compared to the peso.

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At our Mexican airports in 2018, 2019 and 2020, passenger charges represented approximately 85.4% (domestic passenger charges represented 47.1% and international passenger charges represented 38.3%), 85.5% (domestic passenger charges represented 46.7% and international passenger charges represented 38.9%) and 86.6% (domestic passenger charges represented 47.4% and international passenger charges represented 39.2%), respectively, of our aeronautical services revenues and approximately 59.4% (domestic passenger charges represented 32.8% and international passenger charges represented 26.7%), 55.1% (domestic passenger charges represented 30.1% and international passenger charges represented 25.0%) and 52.6% (domestic passenger charges represented 28.8% and international passenger charges represented 29.6%), respectively, of our total revenues. In 2018, 2019 and 2020 passenger ch arges represented approximately 64.4% (domestic passenger charges represented 35.5% and international passenger charges represented 28.9%), 63.2% (domestic passenger charges represented 34.5% and international passenger charges represented 28.7%) and 65.5% (domestic passenger charges represented 35.9% and international passenger charges represented 29.6%), respectively, of the sum of aeronautical and non-aeronautical revenues.

In June 2018, we published new rates for passenger charges and other specific tariffs for our twelve Mexican airports. In March 2019, we published updated fees for jet bridges and apron buses. In September 2019, we published rates for passenger charges set in U.S. dollars for five airports (Hermosillo, La Paz, Los Mochis, Mexicali, Tijuana) where rates were previously only set in Mexican pesos. These new rates for passenger charges and other specific tariffs did not change materially compared to those of each prior year, because charges are capped by the Maximum Tariff corresponding to each airport in its Master Development Program for the period.

Passenger Charges in Jamaica

In Jamaica, MBJA and NMIA collect a passenger charge for each departing passenger on an aircraft (other than infants and transit and transfer passengers). We do not collect passenger charges from arriving passengers. Passenger charges are included in the cost of a passenger’s ticket, and we issue invoices for those charges to each airline on a weekly basis and record an account receivable for the invoice corresponding to a flight during the actual month of the flight. Passenger charges are invoiced in U.S. dollars for all airlines.

In 2018, 2019 and 2020, passenger charges represented 60.2%, 60.9% and 62.5%, respectively, of MBJA’s aeronautical revenues and 44.0%, 43.9% and 42.5%, respectively, of MBJA’s total revenues.

From October 10, 2019 through December 31, 2019, passenger charges represented 42.3% of NMIA’s aeronautical revenues and 33.3% of NMIA’s total revenues. In 2020, passenger charges represented 49.2% of NMIA’s aeronautical revenues and 30.1% of NMIA’s total revenues.

Aircraft Landing Charges

Aircraft Landing Charges in Mexico

In Mexico, we collect landing charges from carriers for their use of our runways, illumination systems on the runways and other visual landing assistance services. Our landing charges are different for each of our airports and are based on each landing aircraft’s weight (determined as an average of the aircraft’s weight without fuel and maximum takeoff weight), the time of the landing, the origin of the flight and the nationality of the airline or client.

In 2018, 2019 and 2020, aircraft landing charges represented approximately 8.0%, 7.9% and 6.7%, respectively, of our Mexican airports’ aeronautical revenues and 5.5%, 5.1% and 4.1%, respectively, of our Mexican airports’ total revenues (in 2018, 2019 and 2020, aircraft landing charges represented 6.0%, 5.9% and 5.2%, respectively, of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Aircraft Landing Charges in Jamaica

In Jamaica, MBJA and NMIA collect landing charges from aircraft operators for landing at the airport. These landing charges are included in the list of charges regulated by the JCAA. Landing charges are paid by each aircraft operator based on each landing aircraft’s maximum takeoff weight and the origin, destination and purpose of the flight.

In 2018, 2019 and 2020, aircraft landing charges represented 9.9%, 9.8% and 11.0% respectively, of MBJA’s aeronautical revenues and 7.1%, 6.6% and 7.5%, respectively, of MBJA’s total revenues.

From October 10, 2019 through December 31, 2019, aircraft landing charges represented 11.1% of NMIA’s aeronautical revenues and 8.8% of NMIA’s total revenues. In 2020, aircraft landing charges represented 16.1% of NMIA’s aeronautical revenues and 9.9% of total revenues.

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Aircraft Parking Charges

Aircraft Parking Charges in Mexico

In Mexico, we collect various charges from carriers for the use of our facilities by their aircraft and passengers after landing. We collect aircraft parking charges for aircraft that are loading and unloading passengers or cargo as well as for long-term aircraft parking that does not involve the loading or unloading of passengers or cargo. Aircraft parking charges that involve loading and unloading passengers or cargo vary based on the time of day or night that the relevant service is provided (with higher fees generally charged during peak usage periods and at night), the aircraft’s maximum takeoff weight, the origin and destination of the flight and the nationality of the airline or client, while charges for long-term parking vary based on the time of day or night the aircraft is parked at our facilities, the length of time the aircraft is parked at our facilities and the nationality of the airline or client. We collect aircraft parking charges the entire time an aircraft is on our aprons.

During 2018, 2019 and 2020 these charges represented 1.9%, 1.8% and 1.7%, respectively, of our Mexican airports’ aeronautical revenues and 1.3%, 1.2%, and 1.1% respectively, of our Mexican airports’ total revenues (in 2018, 2019 and 2020 aircraft parking charges represented 1.4%, 1.4% and 1.5%, respectively, of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Aircraft Parking Charges in Jamaica

In Jamaica, MBJA and NMIA collect parking charges from aircraft operators in respect of any aircraft remaining on the ground at the airport for a period of five hours or more. Parking charges are calculated based on 24-hour intervals so that any ground stops amounting to five hours or more for the first 24-hour interval may be rounded up to one day. Parking charges are based on aircraft maximum takeoff weights and whether the aircraft is used for commercial, visiting non-commercial or domestic activity.

In 2018, 2019 and 2020, aircraft parking charges represented 0.1%, 0.1% and 0.1%, respectively, of MBJA’s aeronautical revenues and 0.1%, 0.1% and 0.1%, respectively, of MBJA’s total revenues.

From October 10, 2019 through December 31, 2019, aircraft parking charges represented 6.6% of NMIA’s aeronautical revenues and 5.2% of NMIA’s total revenues. In 2020, aircraft parking charges represented 0.5% of NMIA’s aeronautical revenues and 0.3% of NMIA’s total revenues.

Airport Security Charges

Airport Security Charges in Mexico

In Mexico, we also assess an airport security charge, which is collected from each airline, based on the number of its departing terminal passengers (other than diplomats, infants and transit passengers), for use of our x-ray equipment, metal detectors and other security equipment and personnel. These charges are based on the time of day the services are used, the number of departing passengers and the destination of the flight. We provide airport security services at our airports directly.

The AFAC and the Ministry of Public Security (Secretaría de Seguridad Pública) issue guidelines for airport security in Mexico. In response to the September 11, 2001 terrorist attacks in the United States, we took additional steps to increase security at our airports. At the request of the U.S. Federal Aviation Authority, the Mexican civil aviation authority issued directives in October 2001 establishing new rules and procedures to be adopted at our airports. Under these directives, these rules and procedures were implemented immediately and for an indefinite period.

Additional regulations were issued by the AFAC in 2011 established rules and procedures for the inspection of carry-on baggage. See “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Non-Aeronautical Services – Recovery of Costs from Checked Baggage Screening at our Mexican Airports” in this section. To fulfill these requirements, we improved our security by providing new training and operating procedures, adding new equipment and security personnel, most of them from third-party providers, in addition to increasing our coordination with other airports and airlines. However, as security is a primary concern in our industry, the possibility of new threats may require frequent updates to the security measures at our airports.

In 2018, 2019 and 2020, these charges represented approximately 1.2%, 1.2% and 0.8% respectively, of our Mexican airports’ aeronautical services revenues and approximately 0.8%, 0.8% and 0.5% respectively, of our Mexican airports’ total revenues. In 2018, 2019 and 2020, security charges represented 0.9%, 0.9% and 0.6% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues.

Airport Security Charges in Jamaica

In Jamaica, MBJA and NMIA collect a security charge from each airline based on the number of its departing terminal passengers (other than infants and transit and transfer passengers) for use of the x-ray equipment, metal detectors, security personnel services and other related security equipment. These security charges are included in the list of charges regulated by the JCAA. Security charges are billed at a flat rate for all categories of passengers.

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In 2018, 2019 and 2020, airpor t security charges represented 7.9%, 7.9% and 6.9%, respectively, of MBJA’s aeronautical revenues and 5.7%, 5.4% and 4.7% respectively, of MBJA’s total revenues.

From October 10, 2019 through December 31, 2019, airport security charges represented 23.7% of NMIA’s aeronautical revenues and 18.7% of NMIA’s total revenues. In 2020, airport security charges represented 27.6% of NMIA’s aeronautical revenues and 16.9% of NMIA’s total revenues.

Passenger Walkway and Airport Bus Charges

Passenger Walkway and Airport Bus Charges in Mexico

In Mexico, airlines are also assessed charges for the connection of their aircraft to terminals through a passenger walkway and for the transportation of passengers between terminals and aircraft via airport buses and other vehicles. Charges for use of passenger walkways are based on each unit or service rendered, which are limited to a period of 30 minutes each, but charges for the transportation of customers between terminals and aircraft via airport buses and other vehicles are determined based on the number of trips taken between the terminal and the aircraft.

Passenger walkways are only available at our Guadalajara, Tijuana, Los Cabos, Puerto Vallarta, Guanajuato and Hermosillo airports. The operation of our passenger walkways and our airport buses is conducted by an independent third party, which also maintains relationships with the airlines for their use of this equipment. Therefore, we receive only recovery of cost revenues associated with the energy usage of the walkways and a per-unit fee for the use of the walkways and airport buses.

During 2018, passenger walkway and airport bus revenues equaled Ps.4.7 million, or 0.04% of our Mexican airports’ total revenues (0.04% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues). During 2019, passenger walkway and airport bus revenues equaled Ps.5.7 million, or 0.04% of our Mexican airports’ total revenues (0.04% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues). During 2020, passenger walkway and airport bus revenues equaled Ps.3.3 million, or 0.3% of our Mexican airports’ total revenues (0.3% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Passenger Walkway Charges in Jamaica

At MBJA, airlines are also assessed charges for the connection of their aircraft to terminals through a passenger walkway or loading bridge, which are included in the list of charges regulated by the JCAA. Each airline is billed at a flat rate per aircraft connection for the first two hours and at an hourly rate thereafter.

In 2018, 2019 and 2020 passenger walkway charges represented 2.5%, 2.6% and 2.8% respectively, of MBJA’s aeronautical revenues and 1.9%, 1.7% and 1.9% respectively, of MBJA’s total revenues.

NMIA does not assess passenger walkway charges.

Leasing of Space to Airlines

Leasing of Space to Airlines in Mexico

In addition, we receive regulated revenues from leasing space in our Mexican airports to airlines as needed for their operations, such as the leasing of ticket counters, monitors and back offices.

In 2018, 2019 and 2020, leasing of space to airlines represented approximately 1.8%, 1.7% and 1.5% respectively, of our Mexican airports’ aeronautical revenues services, and approximately 1.3%, 1.1% and 0.7%, respectively, of our Mexican airports’ total revenues (in 2018, 2019 and 2020 revenues from leasing of space to airlines represented 1.4%, 1.3% and 1.1% respectively, of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Leasing of Space to Airlines in Jamaica

MBJA and NMIA receive revenues from leasing land and space, such as back offices and ticket offices, storage, vehicle and aircraft maintenance areas and ground handling equipment space. Land and space leasing is not considered a regulated activity by the JCAA.

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Complementary Services

Complementary Services in Mexico

At each of our Mexican airports, we earn revenues from charging access and other fees to third-party providers of baggage handling services, catering services, aircraft maintenance and repair services and fuel services. These fees are included in the revenues that are regulated under our maximum-rate price regulation system and are determined for each third-party service provider based on a percentage of its total revenues.

Under the Mexican Airport Law, we are required to provide complementary services at each of our airports if there are no third parties providing such services. For example, Menzies Aviation, S.A. de C.V., Aveespress, S.A. de C.V. and Administradora Especializada en Negocios, S.A. de C.V. (a subsidiary of Aeroméxico Group), currently provide the majority of the baggage handling services at our Mexican airports. If the third parties currently providing these services ceased to do so, we would be required to provide these services or find other third parties to provide such services.

The Mexican Airport and Auxiliary Services Agency (Aeropuertos y Servicios Auxiliares), or “ASA,” a corporation owned by the federal government, maintains an exclusive contract to sell fuel at all of our Mexican airports, and we charge the agency a nominal access fee. ASA, in turn, is required to purchase all of its fuel from Petróleos Mexicanos (“Pemex”), a decentralized public entity of the Mexican federal government. In the event that the Mexican government privatizes fuel supply activities in the future, the terms of our Mexican concessions provide that it will do so through a competitive bidding process.

We currently maintain contracts with 45 companies that provide the majority of these complementary services at our twelve Mexican airports. In 2018, 2019 and 2020 revenues from complementary service fees represented approximately 1.3%, 1.8% and 1.7%, respectively, of our Mexican airports’ aeronautical revenues services, and approximately 0.9%, 1.1% and 1.1%, respectively of our Mexican airports’ total revenues (in 2018, 2019 and 2020, revenues from complementary service fees represented 1.0%, 1.3%, and 1.3%, respectively, of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Complementary Services in Jamaica

In Jamaica, MBJA and NMIA earn revenues from charging access and other fees to third-party providers of refueling, inflight catering, ground handling and FBO services. Refueling services are provided by a consortium of three companies: Gulf Stream Petroleum SRL (formerly Total), GB Energy and Jamaica Aircraft Refueling Services (JARS). This consortium leases land from MBJA and NMIA on which they constructed an aviation fuel storage facility, and each operator pays MBJA and NMIA a fuel concession fee based on the number of gallons of fuel sold through the airport’s fueling system. Inflight catering is provided by Goddard Catering through an exclusive contract inherited from the AAJ. The three ground handling services companies operating at our Jamaican airports, AJAS, GCG Ground Services (Jamaica) Limited (formerly Jamaica Dispatch) and Eulen America, pay a fee per aircraft and cargo handled as well as a vehicle permit for vehicles accessing the ramp. IAM Jet Centre is the licensed operator for provision of FBO services at MBJA and NMIA. MBJA and NMIA are not required by law to provide complementary services, even if a third party is not providing such services at the airports.

In 2018, 2019 and 2020 revenues from complementary service fees represented 19.4%, 18.7% and 16.7%, respectively, of MBJA’s aeronautical revenues and 14.0%, 12.7% and 11.4%, respectively, of MBJA’s total revenues.

From October 10, 2019 through December 31, 2019, complementary services represented 9.2% of NMIA’s aeronautical revenues and 7.3% of NMIA’s total revenues. In 2020, revenues from complementary service fees represented 18.7% of NMIA’s aeronautical revenues and 11.5% of NMIA’s total revenues.

Cargo Handling

Cargo Handling in Mexico

Cargo-related revenues include revenues from the leasing of space in our airports to handling agents and shippers, landing fees for each arriving aircraft carrying cargo and a portion of the revenues derived from other complementary services for each workload unit of cargo. Cargo-related revenues are largely regulated and therefore subject to maximum rates applicable to regulated revenues sources. Increases in our cargo volume are beneficial to us for purposes of maximum rate calculations, as cargo increases the number of our workload units.

Revenues from cargo handling in our airports historically have represented a negligible portion of our total revenues, but we believe that Mexico has significant potential for growth in the volume of cargo transported by air. A substantial portion of cargo originating in the United States and destined for Latin America is currently handled in the Miami and Los Angeles international airports, and we believe that a portion of this cargo could instead be routed more efficiently through our Guadalajara airport or our Tijuana airport.

In 2018, 2019 and 2020, our Mexican airports handled approximately 213.8 thousand, 214.6 thousand and 213.8 thousand metric tons of cargo, respectively. Guadalajara International Airport represents the most significant portion of our cargo volume, accounting for approximately 76.8%, 75.1% and 77.7% of the cargo handled by our Mexican airports in 2018, 2019 and 2020, respectively.

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Cargo Handling in Jamaica

The majority of cargo in our Jamaican airports is belly cargo, or cargo carried on passenger aircraft; there are only two dedicated cargo carriers at the airports, both of which use small aircraft. There are no significant revenues from cargo handling at either our Montego Bay airport or our Kingston airport.

In 2018, 2019 and 2020 the Montego Bay airport handled approximately 7.5 thousand, 7.2 thousand and 3.9 thousand metric tons of cargo, respectively.

From October 10, 2019 through December 31, 2019, NMIA handled 2.4 thousand metric tons of cargo. In 2020 NMIA handled approximately 11.2 thousand metric tons of cargo.

Ground Transportation

Permanent Ground Transportation in Mexico

In Mexico, we receive revenues from ground transportation vehicles and taxi companies who pay an access fee to operate on our airports’ premises. Our revenues from providers of ground transportation services deemed “permanent” under applicable Mexican law, such as access fees charged to taxis and buses, are subject to price regulation. Taxi rates to passengers are also subject to regulation.

Non-Aeronautical Services

General

Non-aeronautical services historically have generated a significantly smaller portion of our revenues as compared to aeronautical services. The contribution to the sum of our aeronautical and non-aeronautical revenues from non-aeronautical services was 25.1% in 2018, 26.3% in 2019 and 25.3% in 2020. We estimate that this contribution will increase as we continue to focus on growing these revenues. Our revenues from non-aeronautical services are principally derived from commercial activities.

Our strategy to increase our commercial revenue is driven by an in-depth analysis and understanding of our market. This strategy includes leveraging brand and consumer behavior studies, careful selection of the best business operators in every segment based on innovative concepts and brand recognition, layout redesigns and modernizations of terminal spaces and research into potential new projects, all of which led to increased sales per passenger.

In addition, we continue to expand the number of businesses operated directly by us, including conversion from static to digital signage for advertising, opening more VIP lounges and in the medium term, the development of a project for a hotel at our Guadalajara airport, which will be owned by us but operated by an international brand, among others. None of our revenues from non-aeronautical services are regulated under the Mexican price regulation system. In Jamaica, all of our Jamaican airport revenues from non-aeronautical services are unregulated except for revenues from car parking facilities.

Revenues from Commercial Activities

Leading privatized airports generally generate an important portion of their revenues from commercial activities. An airport’s revenues from commercial activities are largely dependent on passenger traffic, its passengers’ level of spending, terminal design, the mix of commercial tenants and the basis of fees charged to businesses operating in the airport. Revenues from commercial activities also depend substantially on the percentage of traffic represented by international passengers, who tend to spend greater amounts at our airports, particularly on duty-free items.

We currently have the following types of commercial activities in each of our airports:

| • | Leasing of space. Revenues that we derive from the leasing of space in our terminals to airlines and complementary service providers for certain non-essential activities, such as first class/VIP lounges, are not subject to price regulation under our maximum rates and are classified by us as non-aeronautical commercial activities. Examples of these first class/VIP lounges operated by third parties include the Salon Beyond Banamex and Aeroméxico’s Club Premier in our Guadalajara airport.

| • | Retail stores. In recent years, we have completed renovation projects to improve the product mix of retail stores in the commercial areas at our Guadalajara, Puerto Vallarta, Los Cabos, Hermosillo, Guanajuato, Tijuana, Manzanillo, Morelia, La Paz and Montego Bay airports. In 2019, we solicited bids for retailers in our Guadalajara and Puerto Vallarta airports. As a result, new retail spaces began operating in those airports in 2019. In the last quarter of 2019, we solicited bids for retailers in our Guadalajara, Los Cabos, Morelia and Aguascalientes airports. The new retail stores began operations in the second quarter of 2020.

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| • | Food and beverage services. In 2019, we opened a VIPS branded restaurant and bar at our Hermosillo airport. Two food and beverage units were added to the commercial space at our Guanajuato airport during the first quarter of 2019. B id s for food and beverage services at the international termi nal of our Los Cabos airport were solicited during the last quarter of 2019. As a result of the bidding process, a single operator will operate 80% of the commercial spaces for which bids were requested in 2021.

| • | Car rentals. In 2019, we solicited bids for the car rental business at our Guanajuato airport. Car rental bids for Aguascalientes, Hermosillo and Tijuana are expected to be conducted in 2021.

| • | Timeshare marketing and sales. We receive revenues from timeshare developers to whom we rent space in our Mexican airports for the purpose of marketing and sales of timeshare units.

| • | Duty-free stores. We currently have duty-free stores at five of our twelve Mexican airports, located at Los Cabos, Puerto Vallarta, Guanajuato, Guadalajara, Tijuana and at our Montego Bay and Kingston airports, where we have a greater number of international passengers. All of the duty-free stores located in our airports are now operated on leases under which rent is structured primarily as a royalty based on tenants’ revenues, subject to minimum fixed amounts related to square footage. Because the duty-free stores are located at the entrance to the airport’s commercial area, our strategy with regards to the duty-free stores is to optimize passengers’ ability to quickly and easily find desired products and complete their purchase with a high level of service that encourages passengers to shop more. During 2020, we redesigned the main duty-free store at our Los Cabos airport.

| • | Communications. We have consolidated all telephone and internet service at our Mexican airports with one provider. We charge the provider a fixed monthly rent in exchange for allowing the provider to install their communications infrastructure in our airports. In Jamaica, two communication companies, Digicel and Flow, provide cellular and fixed line telephone services at our Montego Bay airport and NMIA. Fixed line telephone services have reached maturity and are now starting to decline due to the increasing prevalence of mobile phones. However, there has been an increase in the demand for space outside our terminals to install cellular antennas in order to improve the level of service offered to our passengers. All of our airports offer wireless internet service. Beginning in 2019, we began directly offering the Wi-Fi service for our passengers which has since allowed us to begin selling advertising through our wireless internet as of 2020.

| • | Financial services. In recent years, we have expanded and modernized the spaces we lease to financial services providers, such as currency exchange bureaus. Additionally, we improved our contracts with Globo Cambio, our principal financial services provider. In 2019, two new exchange offices opened at the Puerto Vallarta and Tijuana airports. In 2020, a currency exchange store at our Puerto Vallarta airport was renovated.

| • | Ground transportation. Under applicable Mexican law, our revenues from providers of ground transportation services deemed “non-permanent,” such as access fees charged to charter buses, are not subject to price regulation under our maximum rates and are classified by us as non-aeronautical commercial activities. In Jamaica, MBJA receives revenues from ground transportation vehicles and taxi companies who pay an access fee to operate on the Montego Bay airport’s premises. Ground transportation operators pay monthly fees for each vehicle operated on the airport’s premises and for any commercial space used in the airport. Ground transportation access fees charged to taxis and buses are not regulated and are set by MBJA.

We currently operate the following commercial lines directly:

| • | Parking facilities. We directly operate the car parking facilities at all of our airports. Our main car parking facilities are at Guadalajara International Airport and Tijuana International Airport. Revenues from parking facilities are directly correlated to passenger traffic at our airports. Currently, in Mexico, parking facilities are not regulated under our maximum rates, although they could become regulated upon a finding by the Mexican Antitrust Commission (Comisión Federal de Competencia) that there are no competing alternatives for such parking at certain airports. In Jamaica, car parking facility fees are set by the MTM, however, MBJA has lobbied and continues to press the Jamaican Government to allow car parking fees to be freely set at commercial rates. In recent years, we have invested in the expansion of our parking facilities at several of our airports including our Guanajuato, Mexicali, Guadalajara and Tijuana airports.

| • | Advertising. We directly operate the advertising at all of our Mexican airports. Increased domestic and international traffic in our Mexican airports makes third-party investment in advertising media more attractive. The Cross Border Express, or “CBX,” was the main factor for the growth of advertising revenues in Tijuana, which experienced increased traffic as a result. Advertising at our Tijuana airport is expected to continue to grow due to the installation of new advertising spaces. Similarly, the Guanajuato airport continued to grow due to the investment of car manufacturers in the area, making the airport much more attractive for advertising. During 2020, we continued the expansion of digital advertising projects at some of our most important airports, including our Guadalajara, Los Cabos, Puerto Vallarta and Tijuana airports.

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| • | VIP Lounges. As of the end of 2020, we operated 12 VIP L ounges in nine Mexican airports: one in our Guadalajara airport, two in our Los Cabos airport (Terminal 1 and Terminal 2) and three in our Puerto Vallarta airport (domestic, international and arrivals), and in each of our Aguascalientes, Guanajuato, Hermosillo, La Paz, Tijuana and Mexicali airp orts. In 20 20, we hosted over 3 50,000 users in the VIP lounges at our Mexican airports, a decrease of 58.0% from 201 9. During 2020, our domestic lounge in Guadalajara and our lounges in Aguascalientes, Guanajuato, Los Cabos Terminal 2 and Tijuana increase d their capacity by 69% in order to accommodate the passenger growth experienced during 2019. In our M ontego Bay airport, a third party operates the sole common use lounge in the arrivals and departures areas, and there are five lounges operated by hotels in the arrivals area. In our Kingston airport, a third party operates the VIP Lounge.

| • | Convenience stores. In April 2012, we began operating certain airport convenience stores directly. Due to strong performance, we opened a total of 21 convenience stores across our Mexican airports. In October 2016, we franchised 14 of our Aeromarket stores to Grupo Areas, from which we now receive both a fixed payment and a variable sales-based monthly payment, in addition to a sales-based royalty. This strategic change helped us achieve the same level of profitability with a smaller revenue base as a result of greater operational efficiency. As of December 31, 2020, we operated 11 convenience stores and 55 vending machines across our Mexican airports.

Domestic Passengers in Mexico

Domestic passengers represented approximately 57.8%, 63.9% and 66.9% of our Mexican terminal passenger traffic in 2018, 2019 and 2020, respectively (CBX users at our Tijuana airport were considered international passengers). In addition, we estimate that a significant minority of our international passengers in Mexico are lower-income Mexicans traveling to or from the United States. Based on surveys and studies conducted at our airports to better understand the consumption habits of our passengers, we believe that the spending habits of these Mexican international passengers are more similar to the spending habits of our domestic passengers, who generally purchase fewer products than other international passengers do. In order to increase the consumer spending, we have been increasing the brand recognition of commercial spaces and the products they offer, which, based on the surveys and studies we have conducted, we believe is likely to contribute to increased consumption among our domestic passengers and our Mexican international passengers. Partly as a result of the implementation of these strategies, consumer spending per passenger in our Mexican airports increased by 10.7% during 2019 as compared to 2018. During 2020, despite the COVID-19 pandemic, consumer spending per passenger in our Mexican airports increased 11.8% during 2020 as compared to 2019.

Recovery of Costs from Checked Baggage Screening at our Mexican Airports

In 2005, the Mexican government issued a policy letter (carta de política) calling for all checked baggage on all commercial flights to undergo a new comprehensive screening process. The new screening process required the installation of dedicated screening equipment and the manual inspection of baggage if such equipment alerted to the potential presence of prohibited items. Although the Mexican Airport Law expressly provides that airlines bear the responsibility for baggage screening, the fact that the policy letter was silent as to responsibility caused some of our airline customers to contend that the policy letter’s intent was for airport concessionaires, such as us, to bear responsibility for the new screening process. Since the issuance of the policy letter, the Federal Civil Aviation Agency (Agencia Federal de Aviación Civil), or “AFAC,” has been expected to issue implementing regulations. On November 23, 2012, the Mexican civil aviation authority published a recommendation (circular obligatoria) on the SCT website that, instead of modifying the legal responsibilities set forth in the Mexican Airport Law, attempted to facilitate contracts between parties through certain non-binding recommendations regarding issues of responsibility that have been raised by the policy letter. These non-binding recommendations have no legal effect unless incorporated into a valid contract.

Today eleven of our twelve Mexican airports employ baggage screening equipment and an explosives trace detector system is used in our Los Mochis airport. As of December 31, 2020, we have signed agreements to operate the baggage screening equipment with every airline customer, and 99.3% of the passengers travelling through our Mexican airports were using the baggage screening system.

We incur ongoing expenses to maintain and operate this equipment, which we currently recover from our airline customers. For more information on screening equipment, see “Item 4, Information on the Company – Regulatory Framework – Mexican Airport Concessions – Scope of Concessions.”

Recent Expansion and Development of Commercial Areas

We believe that leading privatized airports typically generate a greater portion of their revenues from commercial activities than we currently do. We typically generate approximately 20% to 30% of total revenues from commercial activities. In 2018, 2019 and 2020, revenues from non-aeronautical services in our airports accounted for 25.1%, 26.3% and 25.3% of our total revenues, respectively. As this is a primary component of our business strategy, we have focused on increasing our revenues from commercial activities in our airports by:

| • | Redesigning and expanding the space available in our airport terminals allocated to commercial activities:

In order to increase our revenues from commercial activities, we have focused on expanding and redesigning the layout of certain terminals in our Mexican airports to allow for the inclusion of more commercial businesses, as well as to redirect the flow of passengers through our airports, increasing their exposure to the commercial areas of our airports. In 2018, we added about 6,500 square meters of commercial area, of which 85% was in our Tijuana and Guadalajara airports. During 2019, we improved the commercial layout of our Los Cabos airport. In 2020, we began the refurbishment and expansion of the international boarding lounge of Los Cabos airport. The first stage

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was to build the food court and the escalator that leads to the remote boarding gates lounge where additional commercial offer ings are available. During 2020, we also started the expansion of the terminal in our Montego Bay airport, this expansion is expected to be concluded during the third quarter of 2021 and will include a new food court and a VIP Loung e.

| • | Renegotiating agreements with terminal tenants to be more consistent with market practices:

We have also continued improving our lease arrangements with existing tenants through the usage of royalty-based lease contracts, whereby lease amounts are based on tenants’ revenues, subject to minimum fixed amounts related to the square footage. We estimate that approximately 89.6% of current commercial revenues could be arranged as royalty-based contracts based on the nature of our tenants’ operations. Approximately 98.2% of the contracts that could be arranged as royalty-based have already been executed under those conditions.

| • | New project development:

In 2016, we hired HVS Consulting & Valuation, a leading consultant in the hospitality industry, to develop proposals for commercial development at our Guadalajara airport. In order to maximize profitability and based on HVS Consulting & Valuation’s study, we plan to develop a 180-room select-service hotel operated by a third party under a fee agreement. In October 2017, our Board of Directors approved the creation of a new subsidiary, ADP, responsible for the construction and operation of the hotel, corporate offices and commercial spaces for rent at the Guadalajara airport. This project is expected to represent an investment of approximately Ps.450 million. With the operation of these facilities at the Guadalajara airport, we will be able to dedicate an additional 549 square meters for retail and other complementary services and 1,564 square meters for food and beverage to increase our commercial revenues. We estimate that the project will begin operations in 2023.

Recognition of Revenues from Improvements to Concession Assets

We recognize revenues and the associated costs of improvements to concession assets that we are obligated to perform as established by the Master Development Programs at our Mexican airports and the Capital Development Program at our Jamaican airports. Revenues represent the value of the exchange between us and the respective governments with respect to the improvements, given that we construct or provide improvements to the airports as obligated under the Master Development Programs and the Capital Development Program, and in exchange, the governments grant us the right to obtain benefits for services provided using those assets, which are recognized as intangible assets. We have determined that our obligations per the Master Development Programs and the Capital Development Program should be considered to be a revenue-earning activity as all expenditures incurred to fulfill the Master Development Programs and the Capital Development Program are included in the maximum tariffs and regulated charges that we charge our customers. Therefore, we recognize the revenue and expense in profit or loss when the expenditures are performed. The cost for such additions and improvements to concession assets is based on actual costs incurred by us in the execution of the additions or improvements, considering the investment requirements in the Master Development Programs and the Capital Development Program. Through bidding processes, we contract third parties to carry out such construction. The amount of revenues for these services is equal to the amount of costs incurred, as we do not obtain any profit margin for these construction services. The amounts paid are set at market value. As a result, revenues from improvements to concession assets do not have a cash impact on our results. Furthermore, they are not directly related to our passenger traffic, which is the main driver of our revenues. See “Item 5, Operating and Financial Review and Prospects – Critical Accounting Policies.”

Marketing Activities

We focus our marketing activities, with respect to aeronautical services, on participation in business conferences organized by public organizations, such as the International Air Transport Association, and private organizations, such as the annual “Routes Americas” and “World Routes” conferences organized by United Business Media. These conferences provide a forum for the exchange of information relating to airlines’ decisions about changes in routes and flights. Additionally, we go through several one-on-one meetings with domestic and international airlines to further discuss specific route opportunities as well as route performance. During 2020, a total of 23 new routes were opened to and from our airports (as compared to 45 new routes during 2019), many of which originated from air service development work during the past decade. The work performed by our commercial department is complemented by several different airline marketing consultants, who provide us with market intelligence and databases in order to better execute our network expansion strategy.

Our Mexican Airports

In 2020, our Mexican airports served a total of approximately 25.1 million terminal passengers. In 2020, our two principal airports that serve important metropolitan areas, Guadalajara International Airport and Tijuana International Airport, together represented approximately 57.6% of our Mexican airports’ total terminal passenger traffic. Puerto Vallarta International Airport and Los Cabos International Airport, our main Mexican airports serving popular tourist destinations, together accounted for approximately 22.3% of our Mexican airports’ total terminal passenger traffic in 2020. Guanajuato International Airport, which is our largest airport serving a mid-sized city, accounted for approximately 5.5% of our Mexican airports’ total terminal passenger traffic in 2020.

All of our Mexican airports are designated as international airports under applicable Mexican law, meaning that they are equipped to receive international flights and maintain customs and immigration facilities operated by the Mexican government.

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The following table shows the sum of aeronautical and non-aeronautical revenues for each of the Mexican airports for the years indicated:

Sum of Aeronautical and Non-Aeronautical Revenues by Mexican Airport

|  | Year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  |  | (thousands of pesos) |
Guadalajara |  | Ps. |  | 3,621,416 |  |  | Ps. |  | 3,917,062 |  |  | Ps. |  | 2,695,364 |
Tijuana |  |  |  | 1,670,337 |  |  |  |  | 2,022,396 |  |  |  |  | 1,527,606 |
Los Cabos |  |  |  | 1,942,997 |  |  |  |  | 2,152,170 |  |  |  |  | 1,431,961 |
Puerto Vallarta |  |  |  | 1,487,844 |  |  |  |  | 1,639,309 |  |  |  |  | 1,042,866 |
Guanajuato |  |  |  | 632,918 |  |  |  |  | 764,976 |  |  |  |  | 452,459 |
Hermosillo |  |  |  | 389,040 |  |  |  |  | 435,076 |  |  |  |  | 269,260 |
Morelia |  |  |  | 188,859 |  |  |  |  | 210,665 |  |  |  |  | 206,285 |
Mexicali |  |  |  | 221,819 |  |  |  |  | 261,502 |  |  |  |  | 171,652 |
La Paz |  |  |  | 216,304 |  |  |  |  | 246,322 |  |  |  |  | 150,579 |
Aguascalientes |  |  |  | 212,212 |  |  |  |  | 236,386 |  |  |  |  | 125,739 |
Los Mochis |  |  |  | 82,006 |  |  |  |  | 98,793 |  |  |  |  | 59,031 |
Manzanillo |  |  |  | 46,558 |  |  |  |  | 50,126 |  |  |  |  | 30,934 |
Total |  | Ps. |  | 10,712,310 |  |  | Ps. |  | 12,034,783 |  |  | Ps. |  | 8,163,736 |

The following tables set forth the passenger traffic volume for each of our Mexican airports for the years indicated:

Passenger Traffic by Mexican Airport

|  | Year Ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  | Terminal (1) |  |  | Transit (2) |  |  | Total |  |  | Terminal (1) |  |  | Transit (2) |  |  | Total |  |  | Terminal (1) |  |  | Transit (2) |  |  | Total |
Total Passengers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Guadalajara |  |  | 14,351,563 |  |  |  | 19,288 |  |  |  | 14,370,851 |  |  |  | 14,846,329 |  |  |  | 15,480 |  |  |  | 14,861,809 |  |  |  | 8,125,606 |  |  |  | 13,018 |  |  |  | 8,138,624 |
Tijuana |  |  | 7,835,064 |  |  |  | 48,794 |  |  |  | 7,883,858 |  |  |  | 8,925,873 |  |  |  | 47,325 |  |  |  | 8,973,198 |  |  |  | 6,316,623 |  |  |  | 2,121 |  |  |  | 6,318,744 |
Los Cabos |  |  | 5,249,039 |  |  |  | 3,223 |  |  |  | 5,252,262 |  |  |  | 5,609,122 |  |  |  | 3,901 |  |  |  | 5,613,023 |  |  |  | 3,064,160 |  |  |  | 3,212 |  |  |  | 3,067,372 |
Puerto Vallarta |  |  | 4,767,060 |  |  |  | 5,940 |  |  |  | 4,773,000 |  |  |  | 5,051,855 |  |  |  | 6,335 |  |  |  | 5,058,190 |  |  |  | 2,536,120 |  |  |  | 2,506 |  |  |  | 2,538,626 |
Guanajuato |  |  | 2,338,752 |  |  |  | 13,853 |  |  |  | 2,352,605 |  |  |  | 2,755,807 |  |  |  | 12,156 |  |  |  | 2,767,963 |  |  |  | 1,387,711 |  |  |  | 3,406 |  |  |  | 1,391,117 |
Hermosillo |  |  | 1,743,754 |  |  |  | 30,942 |  |  |  | 1,774,696 |  |  |  | 1,874,059 |  |  |  | 19,836 |  |  |  | 1,893,895 |  |  |  | 984,225 |  |  |  | 19,541 |  |  |  | 1,003,766 |
Mexicali |  |  | 1,138,467 |  |  |  | 6,968 |  |  |  | 1,145,435 |  |  |  | 1,198,808 |  |  |  | 4,357 |  |  |  | 1,203,165 |  |  |  | 693,214 |  |  |  | 3,173 |  |  |  | 696,387 |
Morelia |  |  | 729,606 |  |  |  | 4,174 |  |  |  | 733,780 |  |  |  | 897,754 |  |  |  | 3,728 |  |  |  | 901,482 |  |  |  | 631,323 |  |  |  | 2,790 |  |  |  | 634,113 |
La Paz |  |  | 926,334 |  |  |  | 1,423 |  |  |  | 927,757 |  |  |  | 1,008,136 |  |  |  | 2,307 |  |  |  | 1,010,443 |  |  |  | 573,137 |  |  |  | 1,431 |  |  |  | 574,568 |
Aguascalientes |  |  | 868,505 |  |  |  | 2,674 |  |  |  | 871,179 |  |  |  | 858,433 |  |  |  | 1,127 |  |  |  | 859,560 |  |  |  | 475,562 |  |  |  | 630 |  |  |  | 476,192 |
Los Mochis |  |  | 344,830 |  |  |  | 8,384 |  |  |  | 353,214 |  |  |  | 391,300 |  |  |  | 9,416 |  |  |  | 400,716 |  |  |  | 213,647 |  |  |  | 6,345 |  |  |  | 219,992 |
Manzanillo |  |  | 172,493 |  |  |  | 1,187 |  |  |  | 173,680 |  |  |  | 174,718 |  |  |  | 392 |  |  |  | 175,110 |  |  |  | 86,247 |  |  |  | 350 |  |  |  | 86,597 |
Total |  |  | 40,465,467 |  |  |  | 146,850 |  |  |  | 40,612,317 |  |  |  | 43,592,194 |  |  |  | 126,360 |  |  |  | 43,718,554 |  |  |  | 25,087,575 |  |  |  | 58,523 |  |  |  | 25,146,098 |

(1) | Includes arriving and departing passengers as well as transfer passengers (passengers who arrive on one aircraft and depart on a different aircraft).

(2) | Terminal passengers who arrive at our airports but generally depart without changing aircraft.

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|  | Year Ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  | Domestic |  |  | International |  |  | Total |  |  | Domestic |  |  | International |  |  | Total |  |  | Domestic |  |  | International |  |  | Total |
Departing Terminal Passengers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Guadalajara |  |  | 5,113,419 |  |  |  | 2,099,518 |  |  |  | 7,212,937 |  |  |  | 5,199,715 |  |  |  | 2,271,994 |  |  |  | 7,471,709 |  |  |  | 2,857,244 |  |  |  | 1,216,066 |  |  |  | 4,073,310 |
Tijuana |  |  | 2,777,045 |  |  |  | 1,061,145 |  |  |  | 3,838,190 |  |  |  | 3,025,408 |  |  |  | 1,357,161 |  |  |  | 4,382,569 |  |  |  | 2,320,083 |  |  |  | 831,615 |  |  |  | 3,151,698 |
Los Cabos |  |  | 818,495 |  |  |  | 1,809,390 |  |  |  | 2,627,885 |  |  |  | 937,323 |  |  |  | 1,869,708 |  |  |  | 2,807,031 |  |  |  | 607,422 |  |  |  | 939,310 |  |  |  | 1,546,732 |
Puerto Vallarta |  |  | 781,798 |  |  |  | 1,609,047 |  |  |  | 2,390,845 |  |  |  | 891,549 |  |  |  | 1,643,729 |  |  |  | 2,535,278 |  |  |  | 470,965 |  |  |  | 823,448 |  |  |  | 1,294,413 |
Guanajuato |  |  | 802,265 |  |  |  | 370,389 |  |  |  | 1,172,654 |  |  |  | 1,015,691 |  |  |  | 372,192 |  |  |  | 1,387,883 |  |  |  | 517,353 |  |  |  | 180,202 |  |  |  | 697,555 |
Hermosillo |  |  | 816,921 |  |  |  | 47,146 |  |  |  | 864,067 |  |  |  | 879,749 |  |  |  | 48,247 |  |  |  | 927,996 |  |  |  | 454,788 |  |  |  | 32,137 |  |  |  | 486,925 |
Mexicali |  |  | 457,359 |  |  |  | 10,042 |  |  |  | 467,401 |  |  |  | 579,307 |  |  |  | 6,067 |  |  |  | 585,374 |  |  |  | 336,291 |  |  |  | 1,874 |  |  |  | 338,165 |
Morelia |  |  | 179,143 |  |  |  | 188,206 |  |  |  | 367,349 |  |  |  | 233,450 |  |  |  | 218,408 |  |  |  | 451,858 |  |  |  | 192,197 |  |  |  | 122,631 |  |  |  | 314,828 |
La Paz |  |  | 549,569 |  |  |  | 4,918 |  |  |  | 554,487 |  |  |  | 497,589 |  |  |  | 11,462 |  |  |  | 509,051 |  |  |  | 282,536 |  |  |  | 5,278 |  |  |  | 287,814 |
Aguascalientes |  |  | 323,741 |  |  |  | 111,871 |  |  |  | 435,612 |  |  |  | 303,023 |  |  |  | 126,612 |  |  |  | 429,635 |  |  |  | 173,290 |  |  |  | 64,007 |  |  |  | 237,297 |
Los Mochis |  |  | 167,691 |  |  |  | 5,925 |  |  |  | 173,616 |  |  |  | 191,012 |  |  |  | 6,584 |  |  |  | 197,596 |  |  |  | 105,911 |  |  |  | 2,151 |  |  |  | 108,062 |
Manzanillo |  |  | 42,874 |  |  |  | 42,778 |  |  |  | 85,652 |  |  |  | 40,931 |  |  |  | 45,562 |  |  |  | 86,493 |  |  |  | 21,323 |  |  |  | 22,962 |  |  |  | 44,285 |
Total |  |  | 12,830,320 |  |  |  | 7,360,375 |  |  |  | 20,190,695 |  |  |  | 13,794,747 |  |  |  | 7,977,726 |  |  |  | 21,772,473 |  |  |  | 8,339,403 |  |  |  | 4,241,681 |  |  |  | 12,581,084 |

|  | Year Ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  | Domestic |  |  | International |  |  | Total |  |  | Domestic |  |  | International |  |  | Total |  |  | Domestic |  |  | International |  |  | Total |
Arriving Terminal Passengers: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Guadalajara |  |  | 5,200,101 |  |  |  | 1,938,525 |  |  |  | 7,138,626 |  |  |  | 5,296,110 |  |  |  | 2,078,510 |  |  |  | 7,374,620 |  |  |  | 2,910,834 |  |  |  | 1,141,462 |  |  |  | 4,052,296 |
Tijuana |  |  | 2,724,709 |  |  |  | 1,272,165 |  |  |  | 3,996,874 |  |  |  | 2,954,316 |  |  |  | 1,588,988 |  |  |  | 4,543,304 |  |  |  | 2,344,275 |  |  |  | 820,650 |  |  |  | 3,164,925 |
Los Cabos |  |  | 853,715 |  |  |  | 1,767,439 |  |  |  | 2,621,154 |  |  |  | 978,406 |  |  |  | 1,823,685 |  |  |  | 2,802,091 |  |  |  | 607,837 |  |  |  | 909,591 |  |  |  | 1,517,428 |
Puerto Vallarta |  |  | 823,538 |  |  |  | 1,552,677 |  |  |  | 2,376,215 |  |  |  | 947,766 |  |  |  | 1,568,811 |  |  |  | 2,516,577 |  |  |  | 480,571 |  |  |  | 761,136 |  |  |  | 1,241,707 |
Guanajuato |  |  | 851,986 |  |  |  | 314,112 |  |  |  | 1,166,098 |  |  |  | 1,041,187 |  |  |  | 326,737 |  |  |  | 1,367,924 |  |  |  | 534,113 |  |  |  | 156,043 |  |  |  | 690,156 |
Hermosillo |  |  | 858,024 |  |  |  | 21,663 |  |  |  | 879,687 |  |  |  | 924,069 |  |  |  | 21,994 |  |  |  | 946,063 |  |  |  | 484,609 |  |  |  | 12,691 |  |  |  | 497,300 |
Mexicali |  |  | 582,997 |  |  |  | 983 |  |  |  | 583,980 |  |  |  | 612,589 |  |  |  | 845 |  |  |  | 613,434 |  |  |  | 354,610 |  |  |  | 439 |  |  |  | 355,049 |
Morelia |  |  | 190,081 |  |  |  | 172,176 |  |  |  | 362,257 |  |  |  | 245,372 |  |  |  | 200,524 |  |  |  | 445,896 |  |  |  | 195,120 |  |  |  | 121,375 |  |  |  | 316,495 |
La Paz |  |  | 457,573 |  |  |  | 1,360 |  |  |  | 458,933 |  |  |  | 497,795 |  |  |  | 1,290 |  |  |  | 499,085 |  |  |  | 284,012 |  |  |  | 1,311 |  |  |  | 285,323 |
Aguascalientes |  |  | 353,067 |  |  |  | 79,826 |  |  |  | 432,893 |  |  |  | 332,207 |  |  |  | 96,591 |  |  |  | 428,798 |  |  |  | 182,752 |  |  |  | 55,513 |  |  |  | 238,265 |
Los Mochis |  |  | 170,853 |  |  |  | 361 |  |  |  | 171,214 |  |  |  | 193,362 |  |  |  | 342 |  |  |  | 193,704 |  |  |  | 105,308 |  |  |  | 277 |  |  |  | 105,585 |
Manzanillo |  |  | 54,335 |  |  |  | 32,506 |  |  |  | 86,841 |  |  |  | 54,413 |  |  |  | 33,812 |  |  |  | 88,225 |  |  |  | 27,815 |  |  |  | 14,147 |  |  |  | 41,962 |
Total |  |  | 13,120,979 |  |  |  | 7,153,793 |  |  |  | 20,274,772 |  |  |  | 14,077,592 |  |  |  | 7,742,129 |  |  |  | 21,819,721 |  |  |  | 8,511,856 |  |  |  | 3,994,635 |  |  |  | 12,506,491 |

The following table shows the passengers who used the CBX facilities to travel from the United States to Mexico and vice versa, who are reported as international passengers in the Tijuana airport.

|  | Year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
CBX/Tijuana |  |  | 1,012,059 |  |  |  | 1,319,275 |  |  |  | 819,352 |
Tijuana/CBX |  |  | 1,249,411 |  |  |  | 1,578,628 |  |  |  | 886,394 |
Total |  |  | 2,261,470 |  |  |  | 2,897,903 |  |  |  | 1,705,746 |

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The following table sets forth the air traffic movement capacity of each of our Mexican airports as of December 31, 2020:

Capacity by Mexican Airport in 2020

|  | Peak air traffic movements per hour (1) |  | Runway capacity (2)
Guadalajara |  | 44 |  | 39
Tijuana |  | 20 |  | 36
Los Cabos |  | 34 |  | 42
Puerto Vallarta |  | 33 |  | 38
Hermosillo |  | 17 |  | 33
Guanajuato |  | 11 |  | 18
La Paz |  | 8 |  | 14
Mexicali |  | 6 |  | 14
Aguascalientes |  | 7 |  | 14
Morelia |  | 7 |  | 13
Los Mochis |  | 7 |  | 16
Manzanillo |  | 5 |  | 17

(1) | Represents the greatest number of air traffic movements in a single hour during the year. Includes commercial and general aviation operations (demand).

(2) | Air traffic movements per hour (capacity).

The following table sets forth the air traffic movements for each of our Mexican airports for the years indicated:

Air Traffic Movements by Mexican Airport (1)

|  | For the year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
Guadalajara |  |  | 180,347 |  |  |  | 179,689 |  |  |  | 123,650 |
Tijuana |  |  | 66,662 |  |  |  | 69,626 |  |  |  | 60,249 |
Los Cabos |  |  | 51,020 |  |  |  | 51,718 |  |  |  | 38,742 |
Puerto Vallarta |  |  | 56,472 |  |  |  | 56,526 |  |  |  | 41,044 |
Guanajuato |  |  | 35,953 |  |  |  | 37,346 |  |  |  | 20,903 |
Hermosillo |  |  | 41,462 |  |  |  | 40,221 |  |  |  | 29,981 |
Mexicali |  |  | 13,333 |  |  |  | 11,793 |  |  |  | 8,315 |
Morelia |  |  | 13,876 |  |  |  | 13,771 |  |  |  | 9,660 |
La Paz |  |  | 18,008 |  |  |  | 17,436 |  |  |  | 13,051 |
Aguascalientes |  |  | 18,133 |  |  |  | 16,433 |  |  |  | 10,008 |
Los Mochis |  |  | 10,639 |  |  |  | 10,991 |  |  |  | 7,847 |
Manzanillo |  |  | 4,923 |  |  |  | 5,435 |  |  |  | 4,275 |
Total |  |  | 510,828 |  |  |  | 510,985 |  |  |  | 367,725 |

(1) | Includes departures and arrivals.

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The following table sets forth the average number of passengers per air traffic movement for each of our Mexican airports for the years indicated:

Average Passengers per Air Traffic Movement by Mexican Airport (1)

|  | Year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
Guadalajara |  |  | 79.58 |  |  |  | 82.62 |  |  |  | 65.71 |
Tijuana |  |  | 117.53 |  |  |  | 128.20 |  |  |  | 104.84 |
Los Cabos |  |  | 102.88 |  |  |  | 108.46 |  |  |  | 79.09 |
Puerto Vallarta |  |  | 84.41 |  |  |  | 89.37 |  |  |  | 61.79 |
Guanajuato |  |  | 65.05 |  |  |  | 73.79 |  |  |  | 66.39 |
Hermosillo |  |  | 42.06 |  |  |  | 46.59 |  |  |  | 32.83 |
Mexicali |  |  | 85.39 |  |  |  | 101.65 |  |  |  | 83.37 |
Morelia |  |  | 52.58 |  |  |  | 65.19 |  |  |  | 65.35 |
La Paz |  |  | 51.44 |  |  |  | 57.82 |  |  |  | 43.92 |
Aguascalientes |  |  | 47.90 |  |  |  | 52.24 |  |  |  | 47.52 |
Los Mochis |  |  | 32.41 |  |  |  | 35.60 |  |  |  | 27.23 |
Manzanillo |  |  | 35.04 |  |  |  | 32.15 |  |  |  | 20.17 |
Average |  |  | 79.22 |  |  |  | 85.31 |  |  |  | 68.22 |

(1) | Includes number of total passengers within the total number of air traffic movements.

The following table sets forth the air traffic movements in our Mexican airports for the years indicated in terms of commercial, charter and general aviation:

Air Traffic Movements in Mexican Airports by Aviation Category (1)

|  | Year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
Commercial aviation |  |  | 382,160 |  |  |  | 381,065 |  |  |  | 257,135 |
Charter aviation |  |  | 19,996 |  |  |  | 20,281 |  |  |  | 18,154 |
General aviation and other |  |  | 108,672 |  |  |  | 109,639 |  |  |  | 92,436 |
Total |  |  | 510,828 |  |  |  | 510,985 |  |  |  | 367,725 |

(1) | Includes departures and landings for all twelve Mexican airports.

Guadalajara International Airport

Guadalajara International Airport is our most important Mexican airport in terms of passenger traffic, air traffic movements and contribution to the sum of aeronautical and non-aeronautical revenues.

In 2020, Guadalajara International Airport was the third busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2020, it served 8.1 million terminal passengers, accounting for approximately 32.4% of our Mexican airports’ terminal passenger traffic. During 2020, approximately 71.0% of the terminal passengers served were domestic passengers and 29.0% were international passengers. Of the airport’s international passengers, we estimate that a significant portion is Mexicans living in the United States visiting Guadalajara. This airport also serves many business travelers traveling to and from Guadalajara. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Guadalajara International Airport is located approximately 20 kilometers from the city of Guadalajara, which has a population (including its suburbs) of approximately 5.2 million inhabitants. Guadalajara is Mexico’s second largest city in terms of population and is the capital of the state of Jalisco, the country’s second largest state in terms of population. As a major hub for the Mexican national highway system, the city of Guadalajara is an important center for both ground and air transportation. Other major cities in the state of Jalisco include Puerto Vallarta and Lagos de Moreno. Jalisco is an important agricultural producer, making Guadalajara an important center for agricultural commerce. The state is an important contributor to Mexico’s maquiladora industry, most notably in the electronic, computer equipment and clothing industries. The maquiladora industry in Jalisco grew significantly in the 1990’s as maquiladoras moved away from the U.S.-Mexico border seeking lower labor costs and a more diverse labor pool.

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A total of fourteen airlines operate at the airport, of which the principal airlines are Volaris, VivaAerobus and Aeromexico Group. The main non-Mexican airlines operating at the airport are United, Alaska, American and Delta. Airlines operating at the airport reach 55 destinations. Of these destinations, Mexico City, Tijuana, Cancun and Los Angeles are the most popular.

Guadalajara International Airport operates 24 hours daily. The airport has two operating runways, one with a length of 4,000 meters and a full parallel taxiway and the other with a length of 1,800 meters, with a threshold displacement of 300 meters at the runway, which permits a landing distance of 1,500 meters. The runway capacity at this airport is 39 air traffic movements per hour. The airport also has an Instrument Landing System (“ILS”) that assists pilots in poor weather. The airport’s facilities include a main commercial terminal with a large parking facility and a general aviation building. The airport’s main commercial terminal has a total area of approximately 73,000 square meters, as well as parking facilities consisting of an additional 68,000 square meters. The general aviation building has an additional 975 square meters. The commercial terminal has 31 gates and 37 remote boarding positions. Of the international gates, four have air bridges, and of the domestic gates, eight have air bridges. In 2020, approximately 161.6 thousand metric tons of cargo were transported through the airport.

In 2020, we began a multi-year air-side infrastructure expansion which includes the construction of a second runway and corresponding taxiways. This expansion will increase our runway capacity for the airport from 39 to 52 movements per hour. The first phase of the plan includes the construction of more than 97,000 square meters of taxiways, including the expansion of taxiway A and additional taxiways to access the new general aviation apron.

We have also continued to take significant steps to modernize and expand Guadalajara International Airport in order to improve its operations and image. These steps have included the improvement of the airport’s main commercial terminal, including the modernization of restrooms, hallways and gate areas. In 2018, approximately 3,000 square meters of new commercial space was added, including 1,200 square meters to be used by Areas, S.A. for its concepts and the rest of the space including brands such as Gandhi, Tous, Swarovski, Charros, Marissa, among others. During 2019, we completed the expansion of the main terminal by adding an additional 3,200 square meters and renovated an additional 3,000 square meters. In 2020, the commercial offerings of the domestic gates were expanded to include domestic brands. During 2020, we also redesigned the layout of the international boarding lounge. This new layout also includes a food and beverage unit located on the terrace, where passengers will be able to be outdoors while they wait to board their flight. This refurbishment will begin during the fourth quarter of the 2021.

We directly operate one VIP lounge in the Guadalajara airport in the domestic departures area. In 2020, we added 783 square meters of space to this VIP lounge.

In 2019 we started the executive design of a new mixed-use development; this new area will include an expansion of the existing terminal building, new commercial areas, an office tower with 9,500 square meters of gross leasable area and a business class hotel with 180 keys. We also began the conceptual design of a new terminal with almost 100,000 square meters.

During 2018, we began expansion of the parking facilities at our Guadalajara airport, increasing capacity by 26%. This expansion was concluded in 2020.

In 2020, approximately 22.0% of the sum of our aeronautical and non-aeronautical revenues generated at Guadalajara International Airport was derived from non-aeronautical revenues.

A portion of the land on which Guadalajara International Airport is located was expropriated by the Mexican federal government in 1975 pursuant to its power of eminent domain and is subject to certain legal proceedings by its former landholders. For a description of these legal proceedings and their potential impact on our operations, see “Item 8, Financial Information – Legal Proceedings – Ejido participants at Tijuana, Guadalajara and Puerto Vallarta airports.”

Tijuana International Airport

Tijuana International Airport is our second most important Mexican airport in terms of passenger traffic and air traffic movements, and third in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Tijuana International Airport was the fourth busiest airport in Mexico in terms of commercial aviation traffic, according to the SCT. In 2020, it served a total of 6.3 million terminal passengers, accounting for approximately 25.2% of our Mexican airports’ terminal passenger traffic. Approximately 99.8% of the terminal passengers served were domestic passengers. Since Tijuana is located near the Mexico-U.S. border and is therefore a popular entry point to the United States for Mexican and American travelers, the airport’s passenger traffic and results of operations are affected by Mexican and U.S. economic conditions.

Tijuana International Airport serves the city of Tijuana and surrounding areas in the State of Baja California, including the municipalities of Ensenada, Tecate and Rosarito. With a population of approximately 1.9 million, Tijuana is the largest city in the state. Currently, the state of Baja California is the second largest maquiladora center in Mexico, according to INEGI data on workforce by industry. A highway connecting the city of Tijuana to the airport also extends directly to the U.S.-Mexico border crossing, providing convenient access to San Diego, California (which is located approximately 30 kilometers from Tijuana International Airport) and other areas of southern California, particularly Los Angeles.

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In December 2015, we inaugurated the international bridge between our Tijuana airport and the U.S. border, or CBX. This bridge allows passengers to cross directly to the United States using a pathway between the airport and the international border, facilitating transfers between the United States and Mexico for travelers holding a boarding pass to all flights departing from or arriving in Tijuana, and reducing connection and waiting times at both the San Isidro and Otay Mesa border crossings. The Mexican border authority’s services are located in the Tijuana airport, and the corresponding U.S. services are located on the premises of the CBX terminal on the north side of the border. The use of this facility is limited to passengers traveling through the airport upon presentation of a boarding pass but is not subject to additional charges as it is part of the services offered by the Tijuana airport, which are included in the passenger charges. Passengers using the bridge from or to Tijuana may also be subject to toll charges levied by Otay-Tijuana Venture, L.L.C. (“OTV”), the bridge operator on the U.S. side. We estimate that up to 45% of Tijuana’s passengers have a final destination or origin in the U.S., and consequently a significant portion of the passengers at the airport are users of the CBX. Due to its convenience for U.S. residents in the area, the CBX is also increasing the overall number of passengers using the airport. During 2020, the CBX served 1.7 million passengers, approximately 27.0% of the Tijuana airport’s total passengers. For more information see “Item 7, Major Shareholders and Related Party Transactions – Related Party Transactions.”

A total of six airlines operate at the airport, of which the principal airlines are Volaris, VivaAerobus and Aeromexico Group. Airlines operating at this airport provide service to 36 destinations. Of these destinations, Mexico City, Guadalajara and Culiacan are the most popular.

Tijuana International Airport currently operates seventeen hours daily between the hours of 7:00 a.m. and 12:00 a.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway with a length of 2,959 meters and a full parallel taxiway. The runway capacity at this airport is 36 air traffic movements per hour. The airport also has an ILS that assists pilots in poor weather. It has 21 gates serving both domestic and international travelers and eight remote boarding positions. Of the 21 gates, twelve have air bridges. In 2020, approximately 28.3 thousand metric tons of cargo were transported through the airport.

During 2019, we began construction of a new terminal processor building with more than 40,000 square meters, which is an increase of 82% as compared to current facilities. This new terminal building will increase the airport’s capacity and facilitate the flow of the Tijuana International Airport passengers who cross the border between United States and Mexico using the CBX. The new terminal has 10 security filters, 32 check-in counters and 2 remote boarding gates. We concluded the expansion of the commercial aviation apron with more than 34,000 square meters (366,000 square feet) representing an increase of 82% and 3 new aircraft parking stands for remote operations (increase of 15%), and pavement renovations of the main taxiway A with more than 60,000 square meters (645,000 square feet). This new terminal has been designed to be easily expandable when capacity increases are required, without causing disruption in day-to-day operations, and will maintain separate passenger flows for domestic and international passengers. This expansion will be executed according to a multi-year plan and is expected to be completed in 2022.

During 2018, we awarded bids for 25 new retail spaces and thirteen food and beverage spaces, totalling 729 and 2,700 square meters, respectively. At the end of 2018, 70% of the new commercial space began operating with brands such as Panda Express, Domino’s Pizza and Johnny Rockets. The rest of this space was in operation by the second quarter of 2019. During 2019 we performed a complete refurbishment of the land side food court and all the commercial units for which bids were received and began operating.

During 2018, we also solicited bids for the rent-a-car modules and obtained a significant revenue increase compared to the previous contracts. A new model office was built in order to standardize the image of the car rental facilities within the terminal.

In addition, during 2020, we began an expansion of the Tijuana airport parking facilities. The expansion began at the pension parking lot and is expected to conclude during the next two years with the public parking lot.

In 2020, approximately 22.0% of the sum of our aeronautical and non-aeronautical revenues generated at Tijuana International Airport was derived from non-aeronautical revenues.

A portion of the land on which Tijuana International Airport is sited was expropriated by the Mexican federal government in 1970 pursuant to its power of eminent domain and is subject to certain legal proceedings by its former landholders. For a description of these legal proceedings and their potential impact on our operations, see “Item 8, Financial Information – Legal Proceedings – Ejido participants at Tijuana, Guadalajara and Puerto Vallarta airports.”

Los Cabos International Airport

Los Cabos International Airport is our third most important Mexican airport in terms of passenger traffic, fourth in terms of air traffic movements and third in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Los Cabos International Airport was the sixth busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2020, it served 3.1 million terminal passengers, accounting for approximately 12.2% of our Mexican airports’ terminal passenger traffic of whom approximately 60.3% were international passengers.

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The airport serves primarily tourists visiting San Jose del Cabo, Cabo San Lucas and other coastal destinations along the Trans-Peninsular highway of the state of Baja California Sur. Los Cabos International Airport is located approximately thirteen kilometers from the city of San Jose del Cabo, in the state of Baja California Sur. According to the Mexican Ministry of Tourism, 1.85 million international tourists visited Los Cabos (San Jose del Cabo and the nearby city of Cabo San Lucas) by air in 20 20. Visitors to this area are generally affluent and include golfers who enjoy world-class courses, as well as sport fishing and diving enthusiasts who are drawn by the rich marine life in the region’s coastal waters.

A total of sixteen airlines operate at the airport, of which the principal airlines are American, Alaska, United, Southwest and Volaris. Airlines operating at this airport provide service to 47 destinations. Of these destinations, Mexico City, Los Angeles, Guadalajara and Dallas are the most popular. In addition to these routes, Los Cabos receives flights from the John F. Kennedy International Airport operated by American Airlines and Delta Airlines.

Los Cabos International Airport currently operates eleven hours daily between 7:00 a.m. and 9:00 p.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 3,004 meters, and a full parallel taxiway to the runway. The runway capacity at this airport is 42 air traffic movements per hour. The existing runway allows us to serve planes flying to any destination in the United States and Canada. The airport has two commercial aviation terminals. Terminal 1 occupies approximately 14,600 square meters and Terminal 2 occupies approximately 38,000 square meters. In addition, the airport has a general aviation and an FBO terminal. The airport has 22 gates (eight in Terminal 1 and fourteen in Terminal 2), including four gates with air bridges, and eighteen remote boarding positions.

During 2020, we continued the renovation and expansion of Terminals 3 and 2. The main objective of this expansion is to consolidate both buildings into one terminal, increasing the airport capacity and maximizing commercial areas. The expansion will increase the terminal area by more than 19,500 square meters which represents an increase of 37.0%, and we will renovate more than 15,000 square meters. We will also add 10 remote boarding gates and 5 new boarding gates with passenger boarding bridges. The expansion plan will also increase space for security filters, boarding lounges, immigration and baggage-claim areas, among other areas of the terminal-building complex. These construction projects are expected to be completed in 2022.

We operate approximately 2,000 square meters of commercial space at the Los Cabos International Airport; this space includes two VIP lounges and five convenience stores. To create a better experience for our domestic passengers, we finished the construction of a 280 square meter beer garden at the domestic terminal. The new bar brings more options to the food and beverage services for this terminal.

During 2019, we redesigned the commercial layout of the international terminal to maximize sales per passenger through a new commercial mix. This process will take until 2021 to complete. During 2019, we solicited bids for ten food and beverage service commercial units with a total surface of 1,941 square meters. As a result of the selection process, brands such as Panda Express, Subway, Sbarro, Carl's Junior, Pacific Grill, Tequila Patron, STK, The Coffee Bean and Starbucks were incorporated, increasing the food and beverage area by 40%. We expect to request retail bids during the second quarter of 2021.

In 2020, approximately 32.2% of the sum of our aeronautical and non-aeronautical revenues generated at Los Cabos International Airport was derived from non-aeronautical revenues (of which 94.1% came from commercial activities, the highest such percentage among our airports).

Puerto Vallarta International Airport

Puerto Vallarta International Airport is our fourth most important Mexican airport in terms of passenger traffic, third in air traffic movements and fourth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Puerto Vallarta International Airport was the seventh busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2020, it served 2.5 million terminal passengers, accounting for 10.1% of our Mexican airports’ terminal passenger traffic. During 2020, 62.5% of these terminal passengers were international passengers and 37.5% were domestic passengers.

Puerto Vallarta International Airport is located on the Pacific coast in the state of Jalisco. The airport primarily serves foreign tourists and is also a popular tourist destination within Mexico. Puerto Vallarta’s tourist attractions include the natural beauty of the Bay of Banderas, the area’s many beaches and abundant marine wildlife. Puerto Vallarta is a mature tourist destination, and the completion of new resort areas including hotels and golf courses in the areas known as Nuevo Vallarta and Punta Mita is expected to bring more tourists to the area in subsequent years.

A total of 16 airlines operate at the airport, of which the principal airlines are American, United, Alaska, Volaris and VivaAerobus. Airlines operating at this airport provide service to 51 destinations. Of these destinations, the most popular are Mexico City, Los Angeles, Monterrey and Dallas.

Puerto Vallarta International Airport operates 24 hours daily. The airport has one runway with a length of 3,105 meters as well as a parallel taxiway. The runway capacity at this airport is 37 air traffic movements per hour. This airport has one main commercial terminal, an

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FBO terminal and a general aviation building. The airport has 19 gates, of which five serve domestic flights and 14 serve international flights, nine remote boarding positions and 11 air bridges.

Puerto Vallarta Airport is undergoing taxiways, runway and apron pavement renovation. This renovation will be completed in accordance with a multi-year plan and is expected to be completed in 2022.

In 2020, approximately 25.5% of the sum of our aeronautical and non-aeronautical revenues generated at our Puerto Vallarta airport was derived from non-aeronautical revenues (of which 91.7% came from commercial activities).

Guanajuato International Airport

Guanajuato International Airport is our fifth most important Mexican airport in terms of passenger traffic, sixth in air traffic movements and fifth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Guanajuato International Airport was the eighth busiest airports in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2020, it served 1.4 million terminal passengers, accounting for approximately 5.5% of our Mexican airports’ terminal passenger traffic. During 2020, approximately 75.8% of the terminal passengers served were domestic passengers.

Guanajuato International Airport is located in the central state of Guanajuato near the cities of Leon, Irapuato, Silao and Guanajuato, approximately 315 kilometers northwest of Mexico City. The state of Guanajuato has a population of approximately 5.9 million people according to the Mexican National Population Council and is located in Mexico’s Bajio region, best known for its rich colonial history, agricultural sector and manufacturing industry. General Motors, Honda, Kia, Mazda and Toyota have assembly plants in Guanajuato. In addition, several automobile parts manufacturers are located in Guanajuato. The local government is developing a “dry dock”, or truck loading service terminal, near the airport that we believe will increase cargo demand.

Approximately 830 metric tons of cargo passed through the airport in 2020.

A total of seven airlines operate at the airport, of which the principal airlines are Volaris, VivaAerobus, Aeromexico Group, and United Airlines operating at this airport provide service to 17 destinations. Of these destinations Tijuana, Mexico City and Cancun are the most popular.

Guanajuato International Airport operates 20 hours daily between 4:00 a.m. and 12:00 midnight. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway with a length of 3,501 meters. The runway capacity at this airport is 16 air traffic movements per hour. It has two terminals (one commercial and one general aviation), with seven gates, seven remote boarding positions and three air bridges.

New commercial areas and an expanded VIP Lounge began operations in 2020.

During 2019, we expanded our Guanajuato airport parking facilities by 35%.

In 2020, approximately 25.2% of the sum of our aeronautical and non-aeronautical revenues generated at Guanajuato International Airport was derived from non-aeronautical revenues.

Hermosillo International Airport

Hermosillo International Airport is our sixth most important Mexican airport in terms of passenger traffic, fifth in terms of air traffic movements and sixth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Hermosillo International Airport was the eleventh busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2020, it served approximately 1.0 million terminal passengers, accounting for approximately 3.9% of our Mexican airports’ terminal passenger traffic. During 2020, approximately 95.4% of the terminal passengers served were domestic passengers. Many of the airport’s passengers use the airport as a hub for connecting flights between other Mexican cities, particularly Mexico City, Tijuana, Guadalajara and Monterrey. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Hermosillo International Airport serves the city of Hermosillo and four other nearby municipalities, which together have a population of approximately 1.0 million, according to the Mexican National Population Council. The city of Hermosillo, which is the capital of the state of Sonora, is located approximately 260 kilometers south of the border town of Nogales and 130 kilometers east of the Gulf of California. The airport is located approximately thirteen kilometers west of the city of Hermosillo. The airport is an important hub in a primarily agricultural and industrial region. Approximately 10.1 thousand metric tons of cargo passed through the airport in 2020. Currently, cargo transport services at this airport primarily serve the nearby Ford factory, which receives components via the airport.

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A total of seven airlines operate at the airport, of which the principal airlines are Volaris, VivaAerobus and Aeromexico Group. Airlines operating at this airport provide service to 15 destinations. Of these destinations, Mexico City, Guadalajara, Monterrey and Tijuana are the most popular.

Hermosillo International Airport operates 18 hours daily between 6:00 a.m. and 12:00 midnight. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has two runways, one with a length of 2,300 meters and the other, a private aircraft runway that is not currently operating due to commercial considerations, with a length of 1,100 meters. Runway capacity at this airport is 33 air traffic movements per hour. The airport has nine gates and ten remote boarding positions and includes both a commercial aviation building and a general aviation building for small private aircraft.

As part of our business strategy, in recent years we changed the profile and category of services of almost all of the stores at Hermosillo International Airport to stores with greater brand recognition. In 2019, we solicited bids for a new restaurant with approximately 200 square meters of surface area located in the waiting lounge, beginning operations in 2019. During 2020, a contract for federal access and a 780 square meter hangar was awarded to the courier company, Estafeta.

In 2020, approximately 24.0% of the sum of our aeronautical and non-aeronautical revenues generated at Hermosillo International Airport was derived from non-aeronautical revenues.

Mexicali International Airport

Mexicali International Airport is our seventh most important Mexican airport in terms of passenger traffic, tenth in terms of air traffic movements and eighth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Mexicali International Airport was the seventeenth busiest airport in Mexico in terms of commercial aviation passenger traffic according to the SCT. In 2020, it served 0.7 million terminal passengers, accounting for approximately 2.8% of our Mexican airports’ terminal passenger traffic.

During 2020, approximately 99.7 % of the terminal passengers served by this airport were domestic passengers. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Mexicali International Airport serves the city of Mexicali, in the Mexican state of Baja California, as well as the U.S. cities of Yuma, Arizona and Calexico, California. The city of Mexicali is located along the U.S.-Mexico border approximately 150 kilometers east of Tijuana and 80 kilometers west of Yuma, Arizona. Manufacturing forms the basis of the area’s economy, most notably in the form of maquiladora factories, which have proliferated along the California-Baja California border.

A total of four airlines operate at the airport, of which the principal airlines are Volaris and Aeromexico Group. Airlines operating at this airport provide service to seven destinations. Of these destinations, Guadalajara, Mexico City, and Culiacan are the most popular.

Mexicali International Airport operates nineteen hours daily between 6:00 a.m. and 1:00 a.m. the following day. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 2,720 meters in length, as well as a main commercial terminal and a smaller general aviation terminal. The runway capacity at this airport is fourteen air traffic movements per hour. The main commercial terminal has four gates and five remote boarding positions.

During 2018, we completed a 1,200 square meters expansion of the terminal building, adding two new boarding gates (increasing from two to four) and, expanding the baggage claim area, including the installation of a new baggage carousel (increasing from two to three). We also completed a 1,600-square-meter renovation in the check-in area and the ambulatory area. A “gastro pub” restaurant (called Gastro Hub) of approximately 185 square meters, began operations. Car rental services began operating at the Mexicali airport during the first quarter of 2019, as a result of the bid release.

During 2019, we concluded the expansion of the parking facilities at our Mexicali airport. The expansion increased existing facilities by 82%.

In 2020, approximately 24.9% of the sum of our aeronautical and non-aeronautical revenues generated at Mexicali International Airport was derived from non-aeronautical revenues.

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Morelia International Airport

Morelia International Airport is our eighth most important Mexican airport in terms of passenger traffic, ninth in terms of air traffic movements and seventh in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Morelia International Airport was the ninth busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2020, it served 631.3 thousand terminal passengers, accounting for approximately 2.5% of our Mexican airports’ terminal passenger traffic. During 2020, approximately 61.4% of the terminal passengers served by this airport were domestic passengers.

Morelia International Airport serves the city of Morelia and ten other municipalities in the immediate vicinity. The city of Morelia is the capital of the state of Michoacan, which has a population of approximately 4.6 million according to the Mexican National Population Council. Michoacan’s principal industry is agriculture, and it has a developing eco-tourism industry (primarily due to the seasonal presence of monarch butterflies).

A total of six airlines operate at the airport, of which the principal airlines are Volaris, VivaAerobus and American. Airlines operating at this airport provide service to twelve destinations. Of these destinations, Tijuana, Chicago Midway and Dallas Fort-Worth are the most popular.

Morelia International Airport operates 24 hours a day. The airport has one runway with a length of 3,408 meters and a single main terminal building. The runway capacity at this airport is 14 air traffic movements per hour. The airport has four gates and eight remote boarding positions.

In 2019, we concluded a terminal expansion and renovation which increased the boarding lounge by 200 square meters, added two boarding gates, and included a renovated and expanded security checkpoint with additional security lines, X-ray equipment and waiting areas. The commercial area grew by 16% in 2019 as compared with 2018. During 2019, bids were requested for the operation of a commercial space at the airport. During the first quarter of 2020, a regional brand that commercializes candies and souvenirs was awarded. The company began operations during the second quarter of 2020. In addition, a food and beverage unit began operations during the first quarter 2020, after being refurbished due to the expansion of the boarding lounge.

In 2020, approximately 14.6% of the sum of our aeronautical and non-aeronautical revenues generated at Morelia International Airport was derived from non-aeronautical revenues.

La Paz International Airport

La Paz International Airport is our ninth most important Mexican airport in terms of passenger traffic, air traffic movements and contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, La Paz International Airport was the twenty first busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2020, it served 573.1 thousand terminal passengers, accounting for approximately 2.3% of our Mexican airports’ terminal passenger traffic. During 2020, approximately 98.9% of the terminal passengers served were domestic passengers. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

La Paz International Airport serves the city of La Paz, located along the coast of the Gulf of California in the state of Baja California Sur, of which La Paz is the capital. Eco-tourism is a growing industry in La Paz due to the abundance of marine life found in the Gulf of California.

A total of five airlines operate at the airport, of which the principal airlines are Volaris, Calafia Airlines and Aeromexico Group. Airlines operating at this airport provide service to 16 destinations. Of these destinations, Mexico City, Guadalajara and Tijuana are the most popular.

La Paz International Airport operates sixteen hours daily between 7:00 a.m. and 11:00 p.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 2,500 meters in length and a single main commercial terminal. The runway capacity at this airport is 15 air traffic movements per hour. It also has four gates and nine remote boarding positions. During 2020, we completed phase 2 of the runway renovation at La Paz International Airport.

During 2019 we opened a new 70 square meter VIP Lounge.

In 2020, approximately 18.4% of the sum of our aeronautical and non-aeronautical revenues generated at La Paz International Airport was derived from non-aeronautical revenues.

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Aguascalientes International Airport

Aguascalientes International Airport is our tenth most important Mexican airport in terms of passenger traffic, eighth in air traffic movements and tenth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Aguascalientes International Airport was the twenty third busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2020, it served 475.6 thousand terminal passengers, accounting for approximately 1.9% of our Mexican airports’ terminal passenger traffic. During 2020, approximately 74.9% of the terminal passengers served were domestic passengers. Because the airport passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Aguascalientes International Airport serves the city of Aguascalientes and eight surrounding municipalities in the central state of Aguascalientes, which is located roughly 513 kilometers northwest of Mexico City. Manufacturing forms the basis of the region’s economy. One of Nissan’s main manufacturing plants in Mexico is located in the city of Aguascalientes.

A total of six airlines operate at the airport, of which the principal airlines are Volaris, Aeromexico Group and American. Airlines operating at this airport provide service to eight destinations. Of these destinations Mexico City, Tijuana, Cancun and Dallas are the most popular.

Aguascalientes International Airport operates eighteen hours daily between 6:00 a.m. and 12:00 a.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. It has two runways, one measuring 3,000 meters in length and the other, a private aircraft runway that is not currently operating as a result of commercial considerations, measuring 1,000 meters, and a single main commercial terminal. The runway capacity at this airport is 12 air traffic movements per hour. The airport has four gates and five remote boarding locations.

In 2019, we concluded the terminal expansion and renovation. The project increased the boarding lounge capacity and surface area, with two additional boarding gates, and included a renovated security checkpoint. In 2020, the commercial area increased by 27% compared with 2019, and we opened a new VIP Lounge with 1,300 square meters of space. During 2020, we completed the runway renovation at Aguascalientes International Airport.

In 2020, approximately 26.5% of the sum of our aeronautical and non-aeronautical revenues generated at Aguascalientes International Airport was derived from non-aeronautical revenues.

Los Mochis International Airport

Los Mochis International Airport is our eleventh most important Mexican airport in terms of passenger traffic, air traffic movements and contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Los Mochis International Airport was the fortieth busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2020, it served 213.6 thousand terminal passengers, accounting for approximately 0.9% of our Mexican airports’ terminal passenger traffic. During 2020, approximately 98.9% of the terminal passengers served were domestic passengers. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Los Mochis International Airport serves the city of Los Mochis, in the Pacific coastal state of Sinaloa, an important agricultural state. The area’s sport fishing and hunting attract both Mexican and foreign visitors.

A total of three airlines operate at the airport: Volaris, Aeromexico Group and Calafia Airlines. Airlines operating at this airport provide service to six destinations, of which Mexico City, Tijuana and Guadalajara are the most popular.

Los Mochis International Airport operates 14 hours daily between 7:00 a.m. and 9:00 p.m. However, it is equipped to operate 24 hours daily if necessary, and we are authorized to charge double our regular passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 2,007 meters in length as well as a single main commercial terminal. The runway capacity at this airport is 16 air traffic movements per hour. The airport has three gates and eight remote boarding positions.

In 2020, approximately 21.0% of the sum of our aeronautical and non-aeronautical revenues generated at Los Mochis International Airport was derived from non-aeronautical revenues.

Manzanillo International Airport

Manzanillo International Airport is our twelfth most important Mexican airport in terms of passenger traffic, air traffic movements and contribution to the sum of aeronautical and non-aeronautical revenues. In 2020, Manzanillo International Airport was the forty fifth busiest airport in Mexico in terms of commercial aviation passenger traffic according to the SCT. During 2020, the airport served 86.2 thousand

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terminal passengers, accounting for approximately 0.3% of our Mexican airports’ termin al passenger traffic. During 2020, approximately 57.0% of the terminal passengers served were domestic passengers and 43.0% were international passengers.

Manzanillo International Airport serves the city of Manzanillo and six surrounding municipalities in the small Pacific coastal state of Colima. The city is located on the coast approximately 230 kilometers southeast of Puerto Vallarta and 520 kilometers northwest of Acapulco. The airport serves primarily tourists visiting coastal resorts in Colima and neighboring Jalisco. In recent years, passenger traffic at Manzanillo International Airport has remained stable despite the increased popularity of Puerto Vallarta and other tourist destinations due to a decline in investments in the tourism sector in Manzanillo.

A total of six airlines operate at this airport, of which the principal airlines are Aeromexico Group and Alaska Airlines. Some of the other airlines operate only during the high tourist season (November to April). The principal destinations served by airlines at this airport are Mexico City and Los Angeles and Calgary.

Manzanillo International Airport operates 12 hours daily between 8:00 a.m. and 8:00 p.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 2,260 meters. The runway capacity at this airport is 16 air traffic movements per hour. The airport has three gates and eight remote boarding positions.

During 2019, in order to improve the passenger experience, we opened a new restaurant in the waiting lounge with approximately 150 square meters of surface area. During 2020, a commercial contract for handcraft and local souvenirs was awarded to an organization of Mexican artisans, increasing the retail/commercial offer of the terminal considerably.

In 2020, approximately 28.9% of the sum of our aeronautical and non-aeronautical revenues generated at Manzanillo International Airport was derived from non-aeronautical revenues.

Montego Bay International Airport

The Montego Bay International Airport is Jamaica’s main tourist airport. In 2020, the Montego Bay airport served 1.6 million terminal passengers, making it the third busiest airport in the Caribbean region, excluding Cuba, in terms of commercial aviation passenger traffic, according to Airports Council International. In 2020, 99.9% of the terminal passengers served were international passengers. Of the total passengers in 2020, 73.8% came from the United States, 15.5% came from Canada, 8.9% came from Europe and 1.9% from other countries.

Montego Bay International Airport serves as the primary gateway for international air travel to Jamaica, a major international tourist destination, by facilitating the transit of more than 70.0% of the tourists arriving on the island. In recent years, passenger traffic at Montego Bay International Airport has grown in conjunction with the increased traffic overall at the Kingston airport, which services mostly business and other traffic. The Jamaican government has discussed plans to build a third international commercial airport, most likely on the southern coast at Vernamfield, to meet the long-term requirements for the growth of air transport, which may impact passenger traffic in the medium and long term at the Montego Bay and Kingston airports. Because the Montego and Kingston airports serve different demands and we do not expect the Jamaican government’s Vernamfield airport plan to be executed in the immediate future, we expect passenger traffic at our Montego Bay airport to grow.

A total of 34 international airlines operate at the airport, providing year-round and seasonal services. Our principal airlines are American Airlines, Southwest Airlines, Delta Airlines, and JetBlue. Airlines serving the Montego Bay airport provide service from over 60 airport destinations. Of these, Toronto, Charlotte, New York, Atlanta and Ft. Lauderdale are the most popular.

Montego Bay International Airport operates eighteen hours daily between 6:00 a.m. and 12:00 midnight. However, it is equipped to operate 24 hours daily if necessary. The airport has one runway measuring 2,662 meters. The runway capacity at this airport is 33 air traffic movements per hour. The airport also has an ILS that assists pilots in poor weather. The airport’s facilities include a main commercial terminal with a large parking facility and a general aviation building. The airport’s main commercial terminal has a total area of approximately 6,000 square meters, as well as an additional 5,657 square meters of parking facilities. The general aviation building has an additional area of 300 square meters. The commercial terminal has 17 gates and 5 remote parking positions.

In July 2017, the main food and beverage operator, Express Catering, finalized a deal with the Starbucks brand pursuant to which it opened a café off-airport. The deal also contemplated construction of three Starbucks locations in the airport to serve all passengers. The main Starbucks is located in the terminal building and opened in March 2018. Additionally, two kiosks were opened in 2019.

During the fourth quarter of 2019, bids for 29 commercial units were requested. The refurbishment represented an increase of 48% over the usable commercial square meters. During 2020, the duty-free contract was renegotiated. The main duty-free store will be expanded and totally refurbished to start operations during the fourth quarter of 2021.

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The following table sets forth revenues, passenger traffic and air traffic movement data for the Montego Bay airport in 2018, 2019 and 2020:

|  | January 1 to December 31, 2018 |  | January 1 to December 31, 2019 |  | January 1 to December 31, 2020
Revenues (in thousands of pesos): |  |  |  |  |  |  |  |  |
Sum of Aeronautical and Non-Aeronautical Revenues |  | Ps. | 1,963,552 |  | Ps. | 2,097,489 |  | Ps. | 1,023,037
Passenger Traffic (in thousands): |  |  |  |  |  |  |  |  |
Terminal passengers |  |  | 4,483 |  |  | 4,690 |  |  | 1,611
International passengers |  |  | 4,474 |  |  | 4,681 |  |  | 1,610
Domestic passengers |  |  | 9 |  |  | 9 |  |  | 1
Transit passengers |  |  | 55 |  |  | 59 |  |  | 14
Air Traffic Movements (1) : |  |  |  |  |  |  |  |  |
Peak air traffic movements per hour (2) |  |  | 21 |  |  | 21 |  |  | 10
Runway capacity (3) |  |  | 33 |  |  | 33 |  |  | 33
Total air traffic movements (in thousands): |  |  | 41 |  |  | 43 |  |  | 19
Commercial aviation |  |  | 30 |  |  | 34 |  |  | 15
Charter aviation |  |  | 2 |  |  | 0 |  |  | 0
General aviation and other |  |  | 9 |  |  | 9 |  |  | 4
Average passengers per air traffic movement |  |  | 109 |  |  | 110 |  |  | 85

(1) | Includes departures and landings.

(2) | Includes commercial and general aviation operations (demand).

(3) | Air traffic movements per hour (capacity).

In 2018, 2019 and 2020, approximately 7.5 thousand, 7.2 thousand and 3.9 thousand metric tons of cargo, respectively, were transported through the airport.

Third parties operate a total of seven lounges in the Montego Bay airport five hotel lounges and one general lounge in the arrivals area and one general lounge in the departures area. In 2018, the general pay per use passenger lounge operated by Club Mobay was expanded by 245 square meters and now covers 1,580 square meters with a capacity of 399 seats.

Kingston International Airport

On October 10, 2019, we took control and began to operate NMIA in the city of Kingston, Jamaica. As a result of our taking over control of NMIA through our subsidiary, PACKAL, our summary consolidated financial and operating information for the fiscal year ended December 31, 2019 includes the consolidation of PACKAL financial and operating information for the period from October 10 to December 31, 2019. Therefore, financial and operating information related to the Kingston airport for the fiscal year ended December 31, 2019 may not be directly comparable with financial and operating information for our Mexican airports for 2019 or for prior and future fiscal years.

The passenger profile of the Kingston International Airport is business and Visiting Friends and Relatives (“VFR”). In 2020, the Kingston airport served 624.9 thousand terminal passengers, making it the seventh busiest airport in the Caribbean region, excluding Cuba, in terms of commercial aviation passenger traffic, according to Airports Council International.

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A total of eight international airlines operate at the airport, providing year-round and seasonal services. Kingston International Airport operates 18 hours daily between 6:00 a.m. and 12:00 midnight. However, it is equipped to operate 24 hours daily if necessary. The airport has one runway measuring 2,662 meters. The runway capacity at this airport is 33 air traffic movements per hour. The airport also has an ILS that assists pilots in poor weather. The airport’s facilities include a main commercial terminal with a large parking facility and a general aviation building.

| October 10 to December 31, 2019 |  |  | January 1 to December 31, 2020 |
Revenues (in thousands of pesos): |  |  |  |  |  |  |  |  |
Sum of Aeronautical and Non-Aeronautical Revenues | Ps. |  | 179,744 |  |  | Ps. |  | 483,133 |
Passenger Traffic (in thousands): |  |  |  |  |  |  |  |  |
Terminal passengers |  |  | 408.7 |  |  |  |  | 629.4 |
International passengers |  |  | 405.5 |  |  |  |  | 628.0 |
Domestic passengers |  |  | 3.2 |  |  |  |  | 1.4 |
Transit passengers |  |  | 2.9 |  |  |  |  | 2.9 |
Air Traffic Movements (1) : |  |  | 4,933 |  |  |  |  | 11,436 |
Peak air traffic movements per hour (2) |  | 13 |  |  |  | 9 |
Runway capacity (3) |  |  | 40 |  |  |  |  | 40 |
Total air traffic movements (in thousands): |  |  |  |  |  |  |  |  |
Commercial aviation |  |  | 3,726 |  |  |  |  | 7,190 |
Charter aviation |  |  | 584 |  |  |  |  | 1,909 |
General aviation and other |  |  | 623 |  |  |  |  | 2,337 |
Average passengers per air traffic movement |  |  | 82.9 |  |  |  |  | 55.0 |

(1) | Includes departures and landings.

(2) | Includes commercial and general aviation operations (demand).

(3) | Air traffic movements per hour (capacity).

Non-Airport Subsidiaries

As a holding company, we manage each of our fourteen airports through an operating subsidiary. In addition to these airport subsidiaries, we also have three employee service companies as operating subsidiaries. Our employee service companies, which provide specialized services for our airports, are (i) Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V. (“SIAP”), (ii) Corporativo de Servicios Aeroportuarios, S.A. de C.V. (“CORSA”) and (iii) Puerta Cero Parking, S.A. de C.V. (“PCP”), and (iv) Aerocomercializadora del Pacífico, S.A. de C.V. (“ADP”). We also have a non-profit foundation, Fundación Grupo Aeroportuario del Pacífico, A.C. (“Fundación GAP”).

SIAP

SIAP was incorporated as a subsidiary in June 1998 to provide technical assistance and corporate services to our airport operating subsidiaries. SIAP was set up as part of the Mexican government’s privatization plan for the airports operated by us. SIAP invoices our airports for three types of services:

| • | SIAP employs the senior management at our corporate headquarters and at our airports, and charges our subsidiaries for the services rendered according to each subsidiary’s individual performance;

| • | As part of the privatization plan that was implemented by the Mexican government in 1998, our strategic shareholder has the right and obligation to enter into various agreements with us and the Mexican government, including a participation agreement and a shareholders’ agreement. As a result of the participation agreement requirement, we entered into a technical assistance agreement with AMP. The agreement which was renewed for an additional five-year period on August 25, 2019. Under this agreement, AMP receives an annual fee to provide SIAP with consulting services and technological and industry knowledge and expertise to manage our airports. SIAP charges our subsidiaries a technical assistance fee, which is then used to pay AMP. The technical assistance fee is a component of our maximum tariffs and is collected through the maximum tariffs charged. See also “Item 5, Operating and Financial Review and Prospects – Operating Costs – Technical Assistance Fee”); and

| • | SIAP employs non-unionized personnel to perform services at our airports according to their capabilities and expertise and collects fees on a monthly basis for the services rendered.

CORSA

CORSA was incorporated as a subsidiary on November 8, 2007 and began operations in January 2008. CORSA employs unionized personnel to perform services at our airports according to their capabilities and expertise and collects fees on a monthly basis for the services rendered.

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PCP

PCP was incorporated as a subsidiary on November 28, 2007 and began operations in January 2008. PCP provides operating and administrative services for airport parking lots. PCP employs both unionized and non-unionized personnel and collects fees on a monthly basis for the services rendered.

ADP

We incorporated ADP as a subsidiary on February 14, 2018 to provide hotel infrastructure and other commercial services.

Fundación GAP

We established this non-profit foundation in May 2013 with the aim of improving social welfare in the communities near our airports. The foundation’s focus is on children’s education, as well as other charitable activities. See “Item 4, Information on the Company – Business Overview – Corporate Social Responsibility – Community Initiatives and Philanthropic Efforts – Fundación GAP.”

Principal Customers

Principal Aeronautical Services Customers

Airline Customers

As of December 31, 2020, 19 international airlines and seven Mexican airlines operated passenger flights at our twelve Mexican airports. Volaris is our principal airline customer in terms of total passengers at our Mexican and airports, with VivaAerobus and Aeromexico Group accounting for the second and third largest number of total passengers. In 2018, 2019 and 2020 revenues from Volaris and the passengers it moved through our airports totaled Ps.2,694.1 million, Ps.3,270.9 million and Ps.2,620.9 million, respectively, of which Ps.2,429.1 million, Ps.2,963.3 million and Ps.2,386.3 million, respectively, were paid to the airports in the form of passenger charges, representing 22.7%, 24.6% and 24.7%, respectively, of the sum of our aeronautical and non-aeronautical revenues for 2018, 2019 and 2020. Revenues from VivaAerobus and the passengers they moved through our airports were Ps.662.6 million, Ps.737.4 million and Ps.721.5 million, in 2018, 2019 and 2020, respectively, of which Ps.605.7 million, Ps.672.3 million and Ps.661.0 million, respectively, were paid to the airports in the form of passenger charges. Such passenger charges represented 5.7%, 5.6% and 8.1%, respectively, of the sum of our aeronautical and non-aeronautical revenues for 2018, 2019 and 2020. Revenues from the Aeromexico Group and the passengers it moved through our airports were Ps.1,161.0 million, Ps.1,095.7 million and Ps.627.9 million, during 2018, 2019 and 2020, respectively, of which Ps.1,028.8 million, Ps.975.5 million and Ps.556.1 million, respectively, were paid to the airports for the passengers they moved in the form of passengers charges, representing 9.6%, 8.1% and 5.7%, respectively, of the sum of our aeronautical and non-aeronautical revenues for 2018, 2019 and 2020.

In 2018, revenues from American Airlines and the passengers it moved through the Montego Bay airport totaled Ps.295.3 million, of which Ps.162.9 million was paid to MBJA in the form of passenger charges. In 2019, revenues from American Airlines and the passengers it moved through the Montego Bay airport totals Ps.275.9 million, of which Ps.186.6 million was paid to MBJA in the form of passenger charges. In 2020, revenues from American Airlines and the passengers it moved through the Montego Bay airport totaled Ps.153.1 million, of which Ps.104.5 million was paid to MBJA in the form of passenger charges. In 2018, 2019 and 2020, revenues from American Airlines and its passengers represented 14.7%, 8.9% and 6.9%, respectively, of the sum of aeronautical and non-aeronautical revenues for the Montego Bay airport. However, passenger charges from American Airlines do not represent a significant portion of our total revenues across all airports. In 2018, 2019 and 2020 passenger charges collected by American Airlines at MBJA accounted for 1.2%, 1.1% and 0.9%, respectively, of total revenues in our airports (1.3%, 1.3% and 1.1% respectively, of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2018, 2019 and 2020).

In 2020, revenues from JetBlue Airways Corporation and the passengers it moved through the Kingston airport totaled Ps.90.5 million, of which Ps.83.4 million was paid to NMIA in the form of passenger charges. In 2020, revenues from JetBlue Airways Corporation and its passengers represented 18.7% of the sum of aeronautical and non-aeronautical revenues for the Kingston airport. However, passenger charges from JetBlue Airways Corporation do not represent a significant portion of our total revenues across all our airports.

See “Item 3, Risk Factors – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations control”, and “Item 5, Recent Developments – Developments related to the outbreak of COVID-19.”

In addition to passenger charges (revenues generated by the services provided by airports to passengers), we also earned revenues from aircraft landing and parking charges and the leasing of space to these airlines.

Mexican Aeronautical Services Agreement

As a result of certain disputes with our airline customers in Mexico, beginning in 2003 we entered into an agreement with the Mexican National Air Transportation Chamber of Commerce and the SCT pursuant to which we resolved certain existing disputes with our airline customers and entered into: (i) contracts governing charges for aeronautical services; (ii) lease contracts for property used by the airlines; and (iii) contracts governing collection of passenger charges. In March 2012, we renewed the agreement, which represented: (i) virtually all of the

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relevant contracts governing the collection of passenger charges; (ii) a substantial majority of the agreements for the leasing of space in our terminals; and (iii) a substantial majority of the contracts governing our aeronautical services. This contract expired on December 31, 2014. We continue to maintain a good relationship with the Mexican National Air Transportation Chamber of Commerce and the SCT following the expiration of the aeronautical services agreement.

Complementary Services Customers

Our principal complementary services clients are our three principal providers of baggage handling services: Aveespress, S.A. de C.V., Menzies Aviation, S.A. de C.V. and Administradora Especializada en Negocios, S.A. de C.V. (a subsidiary of Aeroméxico Group), which provided Ps.26.5 million, Ps.24.1 million and Ps.18.1 million in revenues, respectively, each in the form of access fees, in 2020. Our primary catering clients are Aerococina, S.A. de C.V. and Gate Gourmet & Maasa México, S. de R.L. de C.V., which respectively provided Ps.8.6 million and Ps.2.8 million of revenues in the form of access fees in 2020.

We receive a fee from our complementary services clients equivalent to 10% to 15% of their reported sales.

Principal Non-Aeronautical Services Customers

As of December 31, 2020, we were party to approximately 1,266 contracts – 9% more than the 1,158 contracts we were party to as of December 31, 2019 – with providers of commercial services in the commercial spaces in our Mexican airports, including retail store operators, duty-free store operators, food and beverage providers, timeshare developers, financial services providers, car rental companies, telecommunications providers, VIP lounges, advertising, travel agencies, tourist information and promotion services. The increase in the number of contracts is due to the consolidation of the Kingston airport and the expansion of commercial areas at our Mexican airports, including new segments such as ground transportation and cargo. During 2020, we provided certain discounts and benefits to our tenants due to the pandemic in order to provide them with liquidity to restart their operation after the lockdowns.

In 2020, our largest commercial customers in terms of revenues paid to us were Dufry México, S.A. de C.V. (duty-free stores; Ps.177.7 million in revenues for 2020 compared to Ps.306.7 million in 2019), Priority Pass, Inc. (VIP Lounge; Ps.137.4 million in revenues for 2020 compared to Ps.262.2 million in 2019), Aerocomidas, S.A. de C.V. (food and beverages; Ps.81.5 million in revenues for 2020 compared to Ps.138.7 million in 2019), and Alquiladora de Vehículos Automotores, S.A. de C.V. (car rental Ps.69.7 million in revenues for 2020 compared to Ps.83.9 million in 2019). In Jamaica, MBJA’s largest commercial customer in terms of revenues paid to MBJA were Express Catering (food and beverages; U.S.$4.4 million in revenue for 2020, compared to U.S.$3.4 million in 2019) and VIP Attractions Limited (passenger lounge; U.S.$1.6 million in revenue for 2020, compared to U.S.$0.9 million in 2019). NMIA’s largest commercial customer in terms of revenues paid to NMIA were TM Traders Limited (duty-free; U.S.$1.6 million in revenue for 2020) and Island Car Rental Limited (car rental; U.S.$0.3 million in revenue for 2020).

Seasonality

Our business is subject to seasonal fluctuations. In general, demand for air travel is typically higher during the summer months and during the winter holiday season, particularly in international markets, because there is more vacation travel during these periods. Our results of operations generally reflect this seasonality but have also been impacted by numerous other factors that are not necessarily seasonal, including economic conditions, war or threat of war, terrorism or threat of terrorism, weather, air traffic control delays, health crises and general economic conditions, as well as the other factors discussed above. As a result, our results of operations for a quarterly period are not necessarily indicative of results of operations for an entire year, and historical results of operations are not necessarily indicative of future results of operations.

Competition

Excluding our airports servicing tourist destinations, our airports generally are natural monopolies in the geographic areas that they serve and generally do not face significant competition. However, the Mexican and Jamaican governments could grant additional concessions to operate existing government-managed airports, authorize the construction of new airports or allow existing privately held domestic airports to become international airports and permit them to receive regular domestic and international flights, all of which could lead to increased competition for our airports.

For instance, our Los Cabos airport may experience greater competition in the future from a small private airport near Cabo San Lucas, which received a permit to operate public service in March 2008 from the SCT. On November 4, 2009, this airport received authorization to operate regular commercial routes for domestic and international flights. Consequently, we implemented commercial strategies to improve our level of service to ensure that we remain the best airport option for airlines serving the San Jose del Cabo and Cabo San Lucas corridor. Also, to serve the private aviation market, we started operations at our new state-of-the-art Fixed Base of Operations in the Los Cabos airport. This allowed us to increase our capacity, and we redesigned our fee structure to make our service the most attractive in the region.

In 2014, the federal government announced plans to alleviate congestion at the Mexico City International Airport by building a new international airport in Texcoco with double the capacity of the current airport. In January 2019 it was cancelled the construction of the Texcoco airport project and were announced plans to replace it with two different airport infrastructure projects. Specifically, the Mexican administration announced that it would seek to alleviate congestion at the existing airport by (i) converting a military air force base located in

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San Lucia, approximately 40 kilometers (24.9 miles) outside of Mexico City, into a commercial airport and (ii) expanding the Toluca International Airport, which is approximately 60 kilometers (37.3 miles) outside of Mexico City. There is still uncertainty about whether or when these renovations will be completed and what impact congestion may have on the existing Mexico City International Airport. T he timing and capacity expansion of the airport may impact our operations in the future.

ASA currently operates seven small airports in Mexico’s Pacific and Central regions. We believe that these airports collectively account for only a small fraction of the passenger traffic in these regions.

In recent years, the Jamaican government has discussed plans to build a third international commercial airport in Jamaica, most likely on the southern coast at Vernamfield, to meet long-term requirements for the growth of air transport. We do not expect the Jamaican government’s Vernamfield airport plan to be executed in the near term. Also see “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of our Business – The Mexican and Jamaican governments could grant new concessions that compete with our airports.”

The relative attractiveness of the locations we serve is dependent on many factors, some of which are beyond our control. These factors include the general state of the Mexican economy and the attractiveness of other commercial and industrial centers in Mexico that may affect the attractiveness of Guadalajara, Tijuana and other growing industrial centers in our group, such as Hermosillo, Leon, Aguascalientes and Mexicali.

Because our Puerto Vallarta, Los Cabos, La Paz, Manzanillo and Montego Bay airports are substantially dependent on tourism, these airports face competition from competing tourist destinations. We believe that the main competitors to these airports are those airports serving vacation destinations in Mexico, such as Acapulco and Cancun, and abroad, such as Hawaii, Puerto Rico, Florida, Cuba, the Dominican Republic, other Caribbean islands and Central America. In addition, with respect to Puerto Vallarta, Los Cabos, La Paz, Manzanillo and Montego Bay, factors beyond our control include promotional activities and pricing policies of hotel and resort operators, weather conditions, natural disasters (such as hurricanes and earthquakes), security concerns, health crises and the development of new resorts that may be considered more attractive. There can be no assurance that the locations we serve will continue to attract the same level of passenger traffic in the future.

Corporate Social Responsibility

Sustainability and Environmental Responsibility

Environmental Management in Mexico

We maintain an environmental management system according to ISO 14001:2015 requirements, which provides a reference point for best practices and allows us to measure environmental performance and efficiency. This system is in place and has been independently certified in all of our airports.

All of our airports in Mexico are certified under the ISO 9001:2015.

Additionally, our Master Development Programs approved for the 2020-2024 period included measures prioritizing the reduction of our airports’ environmental impacts through (i) wastewater and sewage separation; (ii) improvements to residual water treatment plants; and (iii) storage of hazardous and other special wastes. In 2018, 2019 and 2020 we invested Ps.37.0 million, Ps.19.2 million and Ps.27.5 million, respectively, in these projects.

In 2015, we established the following objectives for our environmental programs: (i) to reduce consumption of water per passenger; (ii) to increase the use of treated residual water; and (iii) to maintain our electricity consumption levels. The following table sets forth certain performance indicators tracked by our environmental management systems.

Environmental Management Performance Indicators for Mexican Airports

|  | Year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
Water consumption (in liters per passenger) |  | 15.2 |  |  | 16.4 |  |  |  | 22.9 |
Energy consumption (in kilowatt hours per passenger) |  | 1.9 |  |  | 1.9 |  |  |  | 2.7 |
Greenhouse gas (GHG) emissions (in kilograms of CO2 equivalent per passenger) (1) |  |  | 1.01 |  |  |  | 1.03 |  |  |  | 1.38 |
Hazardous waste generation (in kilograms per passenger) |  | 0.0004 |  |  | 0.0003 |  |  |  | 0.0003 |
Special waste generation (in kilograms per passenger) |  | 0.13 |  |  | 0.16 |  |  |  | 0.21 |

(1) | 2020 figures calculated with the Emission Factor published by SEMARNAT for CFE electricity generation in 2015.

| Due to the decrease in passenger traffic, indicators look higher than in previous years on a per passenger basis, we expect these will normalize once passenger traffic increases at our airports in line with previous years.

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Environmental Management in Jamaica

Environmental Management by MBJA: To ensure continuous improvement in environmental performance, and to meet the environmental performance requirements of the MBJA Concession Agreement and the International Finance Corporation (“IFC”) Performance Standards, MBJA has in place an Environmental Management Plan (“EMP”).

MBJA’s EMP guides business planning across departments to facilitate compliance with local regulations, the IFC Performance Standards and industry best practices, and represents MBJA’s commitment to integrating environmental management measures into planning, design, construction and operation of the airport. The EMP prescribes actions for the mitigation of the environmental impacts of MBJA’s operations and includes management plans for fuel and other hazardous materials storage, storm water run-off, ground water, preexisting contaminated sites, solid waste, aviation noise and wildlife hazard. MBJA’s EMP is managed by the Environment, Health and Safety Manager.

MBJA continues to assess its environmental performance through independent audits and investigations with the goal of implementing practical recommendations to ensure continued improvement in its environmental performance and stewardship. MBJA’s EMP was certified by the JCAA in 2017.

Environmental Management by PACKAL: To ensure continuous improvement in environmental performance, and to meet the environmental performance requirements of the PACKAL Concession Agreement, PACKAL has in place an Environmental Policy.

PACKAL’s policy guides business planning across departments to facilitate compliance with local regulations and represents PACKAL’s commitment to integrating environmental management measures into planning, design, construction and operation of the airport. The policy prescribes actions for the mitigation of the environmental impacts of PACKAL’s operations and includes management plans for fuel and other hazardous materials storage, wastewater treatment plant, preexisting contaminated sites, solid waste, aviation noise, air quality and wildlife hazard. PACKAL’s Policy is managed by the Environment and Quality Manager.

PACKAL continues to assess its environmental performance through independent audits and investigations with the goal of implementing practical recommendations to ensure continued improvement in its environmental performance and stewardship.

Solar energy

In 2020, GAP installed 14 “carport” solar systems at parking lots in 11 of our 12 Mexican airports, with a total capacity to produce 14.3 MWH per year for consumption by our airports. This output represents approximately 22% of total consumption of these 11 airports and represents a reduction of approximately 7,000 tons of carbon dioxide (“CO2”) per year. During 2020, four airports (Guadalajara, Guanajuato, Los Mochis and Manzanillo) began producing electricity through these solar systems. We anticipate that during the first quarter of 2021, the other seven airports will start to produce energy. The solar carport systems represent a major sustainable action to benefit the environment.

A 1.0 MWH solar photovoltaic plant has been installed in Montego Bay airport on the rooftop of the terminal and will start generation in early 2021. We also have plans to install carports in our parking lots to add 2.0 MWH during 2021.

We are analyzing the implementation of a solar photovoltaic plant at our Kingston airport, and we expect to begin the project in 2021 and to be able to generate electricity in 2022.

Accreditations

Our Aguascalientes, Guanajuato, Guadalajara, Hermosillo, La Paz, Los Mochis, Manzanillo, Mexicali, Morelia, Los Cabos and Tijuana airports are “Environmental Quality” certified by the Federal Office for the Protection of the Environment (Procuraduría Federal de Protección al Ambiente), or “PROFEPA”. Also, our Aguascalientes, Guadalajara, Los Mochis and Morelia airports are certified on the higher level of “Environmental Performance” by PROFEPA.

Our Puerto Vallarta, Aguascalientes and Guadalajara airports have Level 2 Airport Carbon Accreditation (“ACA”) from the Latin America and Caribbean Region of the Airports Council International (the “ACI-LAC”) and our Tijuana, Guanajuato, Hermosillo, La Paz, Los Mochis and Los Cabos airports have a Level 1 ACA from the ACI-LAC. We plan to have all of our airports enrolled in this program by 2021.

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Employee Health and Safety

With the goal of guaranteeing occupational health and safety, as well as institutionalizing the prevention of occupational hazards, we have begun implementing a self-administered program, promoted by the Ministry of Labor and Social Welfare (Secretaría del Trabajo y Previsión Social), or “STPS,” and based on national and international standards and regulations, to promote the operation of a safe and clean airport network in Mexico. The voluntary compliance program comprises three levels of recognitions: (i) for compliance with health and safety regulations, (ii) for actions that promote continuous improvement in health and safety standards, and (iii) for successful management of health and safety standards. According to this program, we have obtained the following levels of certification: Level 1 (Los Mochis, La Paz and Morelia airports), Level 2 (Manzanillo), and Level 3 (Guadalajara and Puerto Vallarta airports).

A key component of the voluntary compliance program is the Safety and Hygiene Commission, which we have established in each of our airports. These commissions conduct investigations and reviews of the work area, verifying the implementation of the voluntary compliance program and recommending additional improvements to create optimal working conditions depending on the airport’s needs. To accomplish our voluntary compliance program goals and to raise awareness among our workers, our workers also received a Safety and Hygiene course about the importance of preventing occupational hazards to mitigate accidents and occupational diseases, generate healthy environments, and comply with the health and safety regulations of the Ministry of Labor and Social Welfare.

In conjunction with these commissions, we have also formed brigades to help minimize the impact and risk, through evacuation and first aid plans of any kind of natural phenomenon that could negatively affect the safety of our employees or our operations.

In addition, as part of our company policies, we provide an annual general medical review for certain employees. As part of our philosophy of well-being and quality of life, we also allocate approximately Ps.19.2 million per year to organize cultural and sports activities, thus encouraging physical activity. Together, these measures help provide a suitable workplace for our employees, as well as the relevant safety tools and equipment to prevent accidents and diseases to the extent possible.

In 2020, due to the pandemic, we implemented a home office model to work remotely and preserve the health and safety of our employees.

Workplace Culture

Our policy is to provide the same job opportunities to all qualified applicants and to provide employees with a work environment free of harassment or discrimination, where each employee behaves respectfully towards their co-workers, promoting a spirit of collaboration regardless of gender, age, religion or hierarchical level.

We provide financial aid for our employees and scholarships for our employees’ dependents. In 2018, 2019 and 2020, we invested Ps.2.1 million, Ps.2.4 million and Ps.2.6 million, respectively, in these programs.

Since 2009, we have been evaluated by Expansión Magazine as a “Super Company” in Mexico with respect to workplace culture and professional climate. Since 2013, we have been ranked among the top ten companies in Mexico according to this publication’s annual evaluations of workplace culture. On November 24, 2017, we were awarded the highest recognition as a “Safe Company” by the Ministry of Labor and Social Prevention (for registering a rate of 0.21 accidents per 100 workers, that is, 90.4 percent below the national average of 2.2). Likewise, we were awarded with the certification for best corporate practices by the Mexican Institute of Best Corporate Practices, with recognition by the Mexican Stock Exchange.

With respect to labor matters, we have a social policy in place whereby we negotiate contracts and salary increases with our workers’ unions with the aim of increasing the social welfare of each of our workers within the context of equality, productivity and a commitment to merging our workers’ individual objectives with those of our business. Salaries for our non-union workers are reviewed based on their performance evaluation and the degree to which their individual and business objectives are met.

Training programs are available at all levels of our organization. The Management Skills, Leadership and Execution program is available for our senior management. The Succession and Career Development Plan was prepared for our key personnel, which defines specific objectives and promotion requirements. Through this program, we have achieved a turnover rate of less than 3% per year for key personnel. The career professionalization program is a model of professional growth for our operations and maintenance workers at our airports. The objective of the program is to promote the growth and skills of our employees in those areas, thus creating flexibility for the operation of our airports. Our new Workplace Culture program is oriented towards the generation of work habits, productive practices and organizational values, with the goal of developing competencies that allow, in turn, increased productivity and competitiveness within our organization, thus allowing us to raise the level of quality of life for our workers and their families, promoting their integral development.

The company's benefits package is maintained at very competitive levels compared to the labor market in each of the regions where our airports are located, thus reducing turnover.

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Supply Chains and Sourcing

In our bidding process for suppliers, we include our code of ethics as part of the initial information package with the intention that our suppliers comply with our ethical standards. The terms and conditions of our contract with suppliers then include provisions designed to ensure that our suppliers comply with labor laws and regulations, including requirements to monitor legal and regulatory compliance in the areas of employer responsibilities and occupational health and safety.

In our supplier development program, suppliers are strategically selected by us based on the contracting amounts, technical complexity of their work or impact on the quality of the service provided by us. Once the provider is selected, visits and face-to-face monitoring are carried out at its facilities in order to verify, among other things, the supplier’s policies, guidelines and processes comply with legal and regulatory requirements, as well as the management’s approach to staff development and the safety of the work environment. Once a contracted supplier has completed their work, we evaluate their performance to determine whether they should be invited to participate in future bids.

Community Initiatives and Philanthropic Efforts

Fundación GAP

In May 2013, we established a non-profit foundation, Fundación GAP with the aim of improving social welfare in the communities near our airports. The foundation’s focus is education, and it engages in other charitable activities, as well.

In September 2014, we inaugurated the first Fundación GAP School near our Guadalajara airport. The first year began with a class of first-grade students, and we have been adding a new class each consecutive year. In 2016, we opened another school near our Los Cabos airport, which began activities with 60 students. In 2018, we opened a third school near our Guadalajara airport, with 60 students. During 2020, we opened our first secondary class, corresponding to the first generation of our students. In 2020, we had 567 students in Guadalajara and 294 students in Los Cabos.

In 2019, Fundación GAP opened four community centers in Guadalajara, Los Cabos, Aguascalientes, and Puerto Vallarta. The goal of these community centers is to support and promote our employees and their families by helping them gain access to life changing professional and economic opportunities through education. At these centers, our employees have access to free elementary, secondary, and high school educations, as well as to technical training courses designed to strengthen the professional skills and knowledge that they use on the job. In 2020, we taught 1,455 students at these community centers.

From March to December our schools remained closed due to the pandemic, however, we continued supporting the families of our children by delivering monthly food pantries. In total we delivered more than Ps.0.8 million in food pantries during the 10 months. During 2021, we will continue supporting the families.

Our board of directors annually reviews our donation to the foundation. For 2020, our board of directors authorized a Ps.48.5 million donation, and over past five years GAP has authorized more than Ps.122.0 million in donations. The foundation is supervised by a board of trustees, which is presided over by Mrs. Díez Barroso.

Philanthropic Efforts

For the twelfth consecutive year, we obtained the Socially Responsible Company Distinction awarded by the Mexican Center for Philanthropy (Centro Mexicano para la Filantropía), or “CEMEFI,” to companies committed to active and voluntary contribution to social, economic and environmental issues.

Fundación GAP awarded the prize “Premio Emprendedor Social Coparmex Jalisco 2019”, to Grincha, a social entrepreneur company that elaborates protein from crickets, making products high in nutritious with low environmental impact. The award is a recognition of social entrepreneurs and includes a monetary prize that varies by year. A committee from Coparmex (Confederación Patronal de la República Mexicana or the Mexican Employers’ Association) selects the finalists based on social projects. Once the finalists are selected, we select the yearly winner based on the finalists’ ability to affect the greatest social impact.

During 2020, we donated Ps. 7.0 million in medical grade personal protective equipment in the regions where we operate.

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REGULATORY FRAMEWORK

Sources of Mexican Regulation

Principal Laws Governing Our Mexican Operations

The following are the principal laws, regulations and instruments (each as subsequently amended) that govern our business and the operation of our Mexican airports:

| • | The Mexican General Law of Commercial Corporations (Ley General de Sociedades Mercantiles), enacted August 4, 1934;

| • | the Mexican Airport Law (Ley de Aeropuertos), enacted December 22, 1995;

| • | the regulations under the Mexican Airport Law (Reglamento de la Ley de Aeropuertos), enacted February 17, 2000;

| • | the Mexican Communications Law (Ley de Vías Generales de Comunicación), enacted February 19, 1940;

| • | the Mexican Civil Aviation Law (Ley de Aviación Civil), enacted May 12, 1995;

| • | the Mexican Federal Duties Law (Ley Federal de Derechos), enacted December 31, 1981, and revised on an annual basis;

| • | the Mexican National Assets Law (Ley General de Bienes Nacionales), enacted May 20, 2004;

| • | the Mexican Securities Market Law (Ley del Mercado de Valores), enacted December 30, 2005; and

| • | the concessions that entitle our subsidiaries to operate our twelve Mexican airports, which were granted on June 29, 1998, and amended on November 15, 1999.

The Mexican Airport Law and the regulations under the Mexican Airport Law establish the general framework regulating the construction, operation, maintenance and development of Mexican airport facilities. The Mexican Airport Law’s stated intent is to promote the expansion, development and modernization of Mexico’s airport infrastructure by encouraging investment and competition.

Under the Mexican Airport Law, a concession granted by the SCT is required to operate, maintain and develop a public service airport in Mexico. A concession generally must be granted pursuant to a public bidding process, except for: (i) concessions granted to (a) entities considered part of “the federal public administration” as defined under Mexican law and (b) any private company the principal shareholder of which is a state or municipal government; (ii) concessions granted to operators of private airports (that have operated privately for five or more years) wishing to begin operating their facilities as public service airports and complying with certain requirements; and (iii) complementary concessions granted to existing concession holders that comply with certain requirements. Complementary concessions may be granted only under certain limited circumstances, such as where an existing concession holder can demonstrate, among other things, that the award of the complementary concession is necessary to satisfy passenger demand.

On June 29, 1998, the SCT granted twelve concessions to operate, maintain and develop the twelve principal airports in Mexico’s Pacific and Central regions to our subsidiaries. Because our subsidiaries were considered entities of the federal public administration at the time the concessions were granted, the concessions were awarded without a public bidding process. However, our privatization, through which our strategic shareholder acquired 15% of our capital stock, was conducted through a public bidding process. Each of our Mexican concessions was amended on November 15, 1999, in order to, among other things, incorporate each airport’s maximum rates and certain other terms as part of the concession.

On February 17, 2000, the regulations under the Mexican Airport Law were issued. We believe we are currently complying with the material requirements of the Mexican Airport Law and its regulations. Non-compliance with these regulations could result in fines or other sanctions being assessed by the SCT and are among the violations that could result in termination of a concession if they were to occur three or more times.

The Mexican National Assets Law, among other things, establishes regulations relating to concessions granted with respect to property held in the public domain, including the airports that we operate. The Mexican National Assets Law requires concessionaires of real property held in the public domain and used for administrative or non-public purposes to pay a tax and establishes grounds for revocation of concessions for failure to pay applicable taxes, but does not specify which taxes must be paid, including whether certain taxes to municipalities must be paid by a concessionaire.

Under the Mexican Federal Duties Law, each of our subsidiary concession holders is required to pay the Mexican government a concession tax based on its gross annual revenues (excluding revenues from improvements to concession assets) from the use of public domain assets pursuant to the terms of its concession. Currently, this concession tax is set at a rate of 5% and may be revised annually by the Mexican Congress. Our Mexican concessions provide that we may request an amendment of our maximum rates if there is a change in this concession tax.

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Mexican Airport Law and Civil Aviation Law

On November 8, 2017, changes to the Mexican Airport Law took effect, which modified various regulations, primarily impacting airlines. One of the changes contemplated is the payment of indemnification for passengers delayed for longer than two hours. The new law further clarifies that the payment will be made if the airport concessionaire or airline is at fault for the delay. As of the date hereof, there is no process in place to determine who is responsible for delays. See “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – We cannot predict how the laws and regulations governing our business will be applied.”

Federal Economic Competition Commission

The Federal Economic Competition Law (Ley Federal de Competencia Económica),, among other things, extinguished the former Federal Competition Commission and created the Federal Economic Competition Commission (Comisión Federal de Competencia Económica), or “COFECE,” as an autonomous agency to be the competition authority for all industries except telecommunications and broadcasting. The law grants broader powers to COFECE, including the ability to regulate essential facilities, order the divestment of assets and eliminate barriers to competition. The law also sets forth important changes in connection with mergers and anti-competitive behavior, increases liabilities and the number of fines that may be incurred for violations of the law, and limits the availability of legal defenses against the application of the law. If COFECE determines that a specific service or product is an essential facility, it has the ability to regulate access conditions, prices, tariffs or technical conditions for or in connection with the specific service or product. See “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – Changes to Mexican laws, regulations, and decrees applicable to us could have a material adverse impact on our operations.”

Role of the SCT

The SCT is the principal regulator of airports in Mexico and is authorized by the Mexican Airport Law to perform the following functions:

| • | plan, formulate and establish the policies and programs for the development of the national airport system;

| • | construct, administer and operate airports and airport-related services for the public interest;

| • | grant, modify and revoke concessions for the operation of airports;

| • | establish air transit rules and rules regulating take-off and landing schedules through the Mexican Air Traffic Control Authority;

| • | take all necessary action to create an efficient, competitive and non-discriminatory market for airport-related services, and set forth the minimum operating conditions for airports;

| • | establish safety regulations;

| • | close airports entirely or partially when safety requirements are not being satisfied;

| • | monitor airport facilities to determine their compliance with the Mexican Airport Law, other applicable laws and the terms of the concessions;

| • | maintain the Mexican aeronautical registry for registrations relating to airports;

| • | impose penalties for failure to observe and perform the rules under the Mexican Airport Law, the regulations thereunder and the concessions;

| • | approve any transaction or transactions that directly or indirectly may result in a change of control of a concession holder;

| • | approve the Master Development Programs prepared by each concession holder every five years;

| • | determine each airport’s maximum rates;

| • | approve any agreements entered into between a concession holder and a third party providing airport or complementary services at its airport; and

| • | perform any other function specified by the Mexican Airport Law.

In addition, under the Mexican Organic Law of the Federal Public Administration (Ley Orgánica de la Administración Pública Federal), the Mexican Airport Law and the Mexican Civil Aviation Law, the SCT is required to provide air traffic control, radio assistance and aeronautical communications at Mexico’s airports. The SCT provides these services through the Mexican Air Traffic Control Authority, which is a division of the SCT. Since 1978, the Mexican air traffic control authority has provided air traffic control for Mexico’s airports.

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Mexican Airport Concessions

Scope of Concessions

We hold concessions granted to us by the Mexican government to operate, maintain and develop twelve airports in the Pacific and Central regions of Mexico in accordance with the Mexican Airport Law. As authorized under the Mexican Airport Law, each of the concessions is held by our subsidiaries for an initial 50-year term, each of which terms began on November 1, 1998. This initial term of each of our Mexican concessions may be renewed for one or more terms for up to an additional 50 years, subject to the concession holder’s acceptance of any new conditions imposed by the SCT and to its compliance with the terms of its concession. Each of the concessions held by our subsidiary concession holders allows the relevant concession holder, during the term of the concession, to: (i) operate, maintain and develop its airport and carry out any necessary construction in order to render airport, complementary and commercial services as provided under the Mexican Airport Law and the regulations thereunder; and (ii) use and develop the assets that comprise the airport that is the subject of the concession (consisting of the airport’s real estate and improvements but excluding assets used in connection with fuel supply and storage). These assets are government-owned assets, subject to the Mexican National Assets Law. Upon expiration of a concession, these assets, together with any improvements thereto, automatically revert to the Mexican government.

Concession holders are required to provide airport security, which must include contingent and emergency plans in accordance with the regulations under the Mexican Airport Law. The security regulations must be implemented in accordance with the requirements set forth in the National Program for Airport Security (Plan Nacional de Seguridad Aeroportuaria). In addition, the regulations pertaining to the Mexican Airport Law specify that an airport concession holder is responsible for inspecting passengers and their carry-on baggage before they reach the departure gates, while the transporting airline is responsible for the inspection of checked baggage and cargo. If public order or national security is endangered, the responsible federal authorities are authorized to act to protect the safety of aircraft, passengers, cargo, mail, installations and equipment.

The shares of a concession holder and the rights under a concession may be subject to a lien only with the approval of the SCT. No agreement documenting liens approved by the SCT may allow the beneficiary of a pledge to become a concession holder under any circumstances.

A concession holder may not assign any of its rights or obligations under its concession without the authorization of the SCT. The SCT is authorized to consent to an assignment only if the proposed assignee satisfies the requirements to be a concession holder under the Mexican Airport Law, undertakes to comply with the obligations under the relevant concession and agrees to any other conditions that the SCT may require.

General Obligations of Concession Holders

The concessions impose certain obligations on the concession holders, including, among others: (i) the obligation to pay the concession tax described above; (ii) the obligation to deliver concession services in a continuous, public and non-discriminatory manner; (iii) the obligation to maintain the airports in good working condition; and (iv) the obligation to make investments with respect to the infrastructure and equipment in accordance with the Master Development Programs and the concessions.

Each concession holder and any third-party providing services at an airport is required to carry insurance in specified amounts and covering specified risks, such as damage to persons and property at the airport, in each case as specified by the SCT. To date, the SCT has not specified the required amounts of insurance. We may be required to obtain additional insurance once these amounts are specified. We and our subsidiary concession holders are jointly and severally liable to the SCT for the performance of all obligations under the concessions held by our subsidiaries. Each of our subsidiary concession holders is responsible for the performance of the obligations set forth in its concession and in the Master Development Programs, including the obligations arising from third-party contracts, as well as for any damages to the Mexican government-owned assets that they use and to third-party airport users. In the event of a breach of the concession held by any one of our subsidiaries, the SCT is entitled to revoke the concessions held by all of our subsidiaries.

Substantially all of the contracts entered into prior to August 25, 1999, by ASA with respect to each of our airports were assigned to the relevant concession holder for each airport. As part of this assignment, each concession holder agreed to indemnify ASA for any loss suffered by ASA due to the concession holder’s breach of its obligations under an assigned agreement.

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Classification of Services Provided at Airports

The Mexican Airport Law and the regulations thereunder classify the services that may be rendered at an airport into the following three categories:

| • | Airport Services. Airport services may be rendered only by the holder of a concession or a third party that has entered into an agreement with the concession holder to provide such services. These services include the following:

| • | the use of airport runways, taxiways and aprons for landing, aircraft parking and departure;

| • | the use of hangars, passenger walkways, airport buses and car parking facilities;

| • | the provision of airport security services, rescue and firefighting services, ground traffic control, lighting and visual aids;

| • | the general use of terminal space and other infrastructure by aircraft, passengers and cargo; and

| • | the provision of access to an airport to third parties providing complementary services (as defined in the Mexican Airport Law) and third parties providing permanent ground transportation services (such as taxis).

| • | Complementary Service s. Complementary services may be rendered by an airline, by the airport operator or by a third party under agreements with airlines and the airport operator. These services include: ramp and handling services, passenger check-in, aircraft security, catering, cleaning, maintenance, repair and fuel supply and related activities that provide support to air carriers.

| • | Commercial Services. Commercial services are services that are not considered essential to the operation of an airport or aircraft, and include, among other things, retailers, restaurants, banks and advertisers to which we lease space.

A third party providing complementary or commercial services to an airport is required to do so only pursuant to a written agreement with the relevant concession holder. On November 1, 2012, we entered into an agreement with a third party with respect to the provision of airbus and passenger walkway services in all of our airports. Accordingly, we will no longer provide these services directly. As of the date of this report, this is the only agreement with a third party regarding the provision of regulated services. All agreements relating to airport or complementary services are required to be approved by the SCT. The Mexican Airport Law provides that the concession holder is jointly liable with these third parties for compliance with the terms of the relevant concession with respect to the services provided by such third parties. All third-party service providers are required to be corporations incorporated under Mexican law.

Airport and complementary services are required to be provided to all users in a uniform and regular manner, without discrimination as to quality, access or price. Concession holders are required to provide airport and complementary services on a priority basis to military aircraft, disaster support aircraft and aircraft experiencing emergencies. Airport and complementary services are required to be provided at no cost to military aircraft and aircraft performing national security activities. The concession holders have not and do not provide complementary services, as these services are provided by third parties.

In the event of force majeure, the SCT may impose additional regulations governing the provision of services at airports, but only to the extent necessary to address the force majeure event. The Mexican Airport Law allows the airport administrator appointed by a concession holder to suspend the provision of airport services in the event of force majeure. See “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – The Mexican government may terminate or reacquire our Mexican concessions under various circumstances, some of which are beyond our control.”

A concession holder is also required to take all necessary measures to create a competitive market for complementary services. A concession holder may not limit the number of providers of complementary services in its airport, except in instances where space, efficiency and/or safety considerations warrant such limitation. If a concession holder denies entry to any complementary services provider for reasons other than the above, such service provider may file a complaint with the SCT, which shall determine within 60 days of the filing of the complaint whether entry of the service provider into the airport shall be authorized.

Master Development Programs

Each concession holder is required to submit to the SCT a Master Development Program describing, among other things, the concession holder’s construction and maintenance plans.

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Each Master Development Program is required to be updated every five years and resubmitted for approval to the SCT. Upon such approval, the Master Development Program is deemed to constitute a part of the relevant concession. Any major construction, renovation or expansion of an airport may only be made with the approval of the SCT, typically provided pursuant to a concession holder’s Master Development Programs.

Information required to be presented in the Master Development Programs includes:

| • | airport growth and development expectations;

| • | fifteen-year projections for air traffic demand (including passenger, cargo and operations);

| • | construction, conservation, maintenance, expansion and modernization programs for infrastructure, facilities and equipment;

| • | a binding five-year detailed investment program and planned major investments for the following ten years;

| • | descriptive airport plans specifying the distinct uses for the corresponding airport areas;

| • | any financing sources; and

| • | environmental protection measures.

Each concession provides for a 24-month period for the preparation and submission of the concession holder’s Master Development Program and requires the concession holder to engage recognized independent consultants to conduct polls among airport users with respect to current and expected quality standards and to prepare air traffic projections and assess investment requirements. The concession holder must submit a draft of the Master Development Program to an operations committee (Comité de Operación y Horarios), composed of each of the airport’s principal users, for their review and comments six months prior to its submission for approval to the SCT. Further, the concession holder must submit, six months prior to the expiration of the five-year term, the new Master Development Program to the SCT. The SCT may request additional information or clarification as well as seek further comments from airport users. The Ministry of Defense (Secretaría de Defensa Nacional) may also opine on the Master Development Programs.

Any major construction project, renovation or expansion relating to an airport can only be done pursuant to the Master Development Program of the concession holder or with the approval of the SCT. We are required to spend the full amounts set forth in each investment program under our Master Development Programs.

Changes to a Master Development Program, including the related investment program, require the approval of the SCT, except for emergency repairs and minor works that do not adversely affect an airport’s operations.

Once capital expenditures related to the Master Development Programs are established, they are adjusted annually according to increases in the Mexican PPI’s construction price index, and the concessionaire is obligated to meet the adjusted amounts.

On December 12, 2019, the SCT approved new maximum tariffs and Master Development Programs for the five-year period from 2020-2024 for each of our Mexican airports. The combined maximum tariffs are expressed in workload units for each airport and were determined by the SCT based on traffic projections, operating costs and capital investments included in the Master Development Programs, as well as in accordance with pre-determined parameters for the calculation of the maximum tariff set forth in the concession for each airport. This five-year program took effect on January 1, 2020 and was to be in effect through December 31, 2024. Due to the COVID-19 pandemic, we delayed certain non-obligatory capital investments, and during the month of August 2020, we filed a proposal for an Extraordinary Review Process of our Master Development Program with the SCT in response to the impact of the COVID-19 pandemic on our operations. See “Item 3, Risk Factors – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations control”, and “Item 5, Recent Developments – Developments related to the outbreak of COVID-19.” The adjustments to our Master Development Program approved as a result of this Extraordinary Review Process and announced on November 30, 2020, postpone investments by approximately 20 months. As such, certain investments that were scheduled to conclude in 2024 will now conclude in 2026. Our committed investments decreased by 27% for the 2020-2024 period, as a result of the Extraordinary Review Process.

We had initially allocated 86.8% of our committed investments for the 2020-2024 period to our Guadalajara, Puerto Vallarta, Tijuana and Los Cabos airports; however, as a result of the Extraordinary Review Process, the revised Master Development Programs allocates 88.1% of the total amounts committed to these four airports. The investments of the new Master Development Programs for the 2020-2024 period represent the fifth investment period within the terms of our concessions and represents an increase of 288.4% as compared to the 2015-2019 period. These committed investments reflect the highest investment amounts committed to date.

Our Master Development Programs are approved by the SCT for periods of five years, as stated in our Mexican concessions. We are required to comply with the five-year period investment obligations under the Master Development Programs, and the SCT may apply sanctions if we do not so comply. Recently, the SCT has reviewed our compliance on an annual basis. The SCT may choose to do this revision officially and apply sanctions on an annual basis if it determines that we have failed in our investment obligations. In March 2018, 2019 and 2020, the SCT certified our compliance with our Master Development Programs through 2017, 2018 and 2019, respectively, and in March 2020, the SCT also certified our compliance with our Master Development Programs for the five-year period from 2015-2019. On March 26, 2021, it was approved the compliance of the Master Development Program for 2020.

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Mexican Aeronautical Services Regulation

The Mexican Airport Law directs the SCT to establish price regulations for services for which there is no competitive market, as determined by the Mexican Antitrust Commission. In 1999, the Mexican Antitrust Commission issued a ruling stating that competitive markets generally do not exist for airport services and airport access provided to third parties rendering complementary services. This ruling authorized the SCT to establish regulations governing the prices that may be charged for airport services and access fees that may be charged to third parties rendering complementary services in our airports. On November 15, 1999, a new regulation, the Rate Regulation (Regulación Tarifaria), was incorporated within the terms of each of our Mexican concessions. This regulation provides a framework for the setting by the SCT of five-year maximum rates. See “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – Changes to Mexican laws, regulations and decrees applicable to us could have a material adverse impact on our results of operations.”

Regulated Revenues

The majority of our revenues are derived from providing aeronautical services, which generally are related to the use of airport facilities by airlines and passengers and principally consist of a fee for each departing passenger, aircraft landing fees based on an aircraft’s weight and arrival time, an aircraft parking fee, a fee for the transfer of passengers from an aircraft to the terminal building, a security charge for each departing passenger and the leasing of space to, and collection of access fees from, third parties that provide complementary services at our airports.

All of our revenues from aeronautical services are subject to a price regulation system established by the SCT. Under this price regulation system, the SCT establishes a maximum rate for each airport for every year in a five-year period. The maximum rate is the maximum amount of revenues per workload unit that may be earned at an airport each year from regulated revenue sources. Under this regulation, a workload unit is equivalent to one passenger, or 100 kilograms (220 pounds) of cargo, including those transported in passenger airplanes. The combined maximum tariffs are expressed in workload units for each airport and were determined based on: (i) projected workload units; (ii) capital investments; and (iii) the operating expenses authorized for the five-year period in the Master Development Programs.

The maximum tariffs for the 2020-2024 five-year period are expressed in constant pesos as of December 31, 2017 and are adjusted by the rate of inflation according to the Mexican PPI, excluding petroleum, and by the efficiency factor at the end of any given year. Since the inflation rate for each applicable year, as measured in terms of the variation of the Mexican PPI, excluding petroleum, is not known at the beginning of the application of the maximum tariffs negotiated with the Mexican Directorate General of Civil Aviation, the adjustment for inflation is not included in the maximum rates set at the beginning of each five-year period. These adjusted tariffs will be applicable once they are published.

We are able to set the specific prices for each aeronautical service every six months (or more frequently if accumulated inflation since the last adjustment exceeds 5%), as long as the combined revenues from regulated services at an airport do not exceed the maximum rate per workload unit at that airport. Each year, the SCT certifies that our regulated revenues divided by workload units are equal to or below the established maximum rate for the period. The SCT has reviewed our maximum rates and certified that we did not collect revenues in excess of the permitted level in 2018 and 2019. The review for 2020 will take place during the second quarter of 2021. Since our aggregate revenues resulting from regulated services are not otherwise restricted, increases in passenger and cargo traffic permit greater revenues overall within each five-year interval for which maximum rates are established.

In 2018, 2019 and 2020, approximately 69.6%, 65.0% and 60.5%, respectively, of our Mexican airports’ total revenues were earned from aeronautical services subject to price regulation under our maximum rates (75.4%, 74.9% and 75.6%, respectively, of the sum of aeronautical and non-aeronautical revenues).

Our revenues from non-aeronautical services, including revenues that we earn from most commercial activities in our terminals, are not regulated under our maximum-rate price regulation system and are therefore not subject to a ceiling under any regulation. For a description of how we classify our revenues into aeronautical and non-aeronautical services, see “Item 5, Operating and Financial Review and Prospects – Overview – Classification of Revenues.”

Maximum Rates

Each airport’s maximum rate is determined by the SCT based on a general framework established in our Mexican concessions. This framework reflects, among other factors, projections of an airport’s revenues, operating costs and capital expenditures, as well as the estimated cost of capital related to regulated services and projected annual efficiency adjustments determined by the SCT. The schedule of maximum rates for each airport is established every five years.

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Maximum Rates for 2020 through 2024

On December 12, 2019, the SCT set new airport maximum rates for the five-year period from January 1, 2020 through December 31, 2024 expressed in constant pesos as of December 31, 2017. On January 2, 2020, these rates were published in the Official Gazette of the Federation (Diario Oficial de la Federación). These maximum rates are subject to adjustment only as described above or under the limited circumstances described below under “Special Adjustments to Maximum Rates.” The following table sets forth the maximum rates for each of our airports under the Master Development Programs that went into effect as of January 1, 2020:

Current Maximum Rates (1)

|  | Year ended December 31, |
|  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |
Guadalajara |  |  | 196.00 |  |  |  | 194.63 |  |  |  | 193.27 |  |  |  | 191.92 |  |  |  | 190.58 |
Tijuana |  |  | 161.17 |  |  |  | 160.04 |  |  |  | 158.92 |  |  |  | 157.81 |  |  |  | 156.71 |
Los Cabos |  |  | 284.25 |  |  |  | 282.26 |  |  |  | 280.29 |  |  |  | 278.33 |  |  |  | 276.38 |
Puerto Vallarta |  |  | 279.61 |  |  |  | 277.65 |  |  |  | 275.71 |  |  |  | 273.78 |  |  |  | 271.86 |
Guanajuato |  |  | 220.80 |  |  |  | 219.25 |  |  |  | 217.72 |  |  |  | 216.20 |  |  |  | 214.69 |
Hermosillo |  |  | 169.11 |  |  |  | 167.93 |  |  |  | 166.75 |  |  |  | 165.58 |  |  |  | 164.42 |
Mexicali |  |  | 161.62 |  |  |  | 160.49 |  |  |  | 159.37 |  |  |  | 158.25 |  |  |  | 157.14 |
La Paz |  |  | 186.05 |  |  |  | 184.75 |  |  |  | 183.46 |  |  |  | 182.18 |  |  |  | 180.90 |
Morelia |  |  | 258.64 |  |  |  | 256.83 |  |  |  | 255.03 |  |  |  | 253.24 |  |  |  | 251.47 |
Aguascalientes |  |  | 174.90 |  |  |  | 173.68 |  |  |  | 172.46 |  |  |  | 171.25 |  |  |  | 170.05 |
Los Mochis |  |  | 192.07 |  |  |  | 190.73 |  |  |  | 189.39 |  |  |  | 188.06 |  |  |  | 186.74 |
Manzanillo |  |  | 231.12 |  |  |  | 229.50 |  |  |  | 227.89 |  |  |  | 226.29 |  |  |  | 224.71 |

(1) | Expressed in constant pesos as of December 31, 2017 and applying the efficiency factor described below under “Methodology for Determining Future Maximum Rates.”

Due to the COVID-19 pandemic, during the month of August 2020, we filed a proposal for an Extraordinary Review Process of our Master Development Program with the SCT. See “Item 3, Risk Factors – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations control”, and “Item 5, Recent Developments – Developments related to the outbreak of COVID-19.” The adjustments to our Master Development Program approved as a result of this Extraordinary Review Process and was announced on November 30, 2020, included adjustments to the maximum rates for each of our airports. These tariffs went into effect as of January 1, 2021.

Adjusted Current Maximum Rates (1)

|  | Year ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |
Guadalajara |  |  | 216.86 |  |  |  | 215.34 |  |  |  | 213.83 |  |  |  | 212.33 |
Tijuana |  |  | 165.57 |  |  |  | 164.41 |  |  |  | 163.26 |  |  |  | 162.12 |
Los Cabos |  |  | 304.93 |  |  |  | 302.80 |  |  |  | 300.68 |  |  |  | 298.58 |
Puerto Vallarta |  |  | 303.71 |  |  |  | 301.58 |  |  |  | 299.47 |  |  |  | 297.37 |
Guanajuato |  |  | 226.89 |  |  |  | 225.30 |  |  |  | 223.72 |  |  |  | 222.15 |
Hermosillo |  |  | 169.49 |  |  |  | 168.30 |  |  |  | 167.12 |  |  |  | 165.95 |
Mexicali |  |  | 162.06 |  |  |  | 160.93 |  |  |  | 159.80 |  |  |  | 158.68 |
La Paz |  |  | 186.65 |  |  |  | 185.34 |  |  |  | 184.04 |  |  |  | 182.75 |
Morelia |  |  | 265.85 |  |  |  | 263.99 |  |  |  | 262.14 |  |  |  | 260.31 |
Aguascalientes |  |  | 175.50 |  |  |  | 174.27 |  |  |  | 173.05 |  |  |  | 171.84 |
Los Mochis |  |  | 192.76 |  |  |  | 191.41 |  |  |  | 190.07 |  |  |  | 188.74 |
Manzanillo |  |  | 232.02 |  |  |  | 230.40 |  |  |  | 228.79 |  |  |  | 227.19 |

| (1) | Expressed in constant pesos as of December 31, 2017 and applying the efficiency factor described below under “Methodology for Determining Future Maximum Rates.”

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Methodology for Determining Future Maximum Rates

The Rate Regulation provides that each airport’s annual maximum rates are to be determined in five-year intervals based on the following variables:

| • | Projections for the following fifteen years of workload units, operating costs and expenses related to services subject to price regulation and pre-tax earnings from services subject to price regulation. The concessions provide that projections for workload units and expenses related to regulated services are to be derived from the terms of the relevant concession holder’s Master Development Program for the following fifteen years;

| • | Projections for the following fifteen years of capital expenditures related to regulated services, based on air traffic forecasts and quality standards for services to be derived from the Master Development Programs;

| • | Reference values, which initially were established in the concessions and are designed to reflect the net present value of the regulated revenues minus the corresponding regulated operating costs and expenses (excluding amortization and depreciation), and capital expenditures related to the provision of regulated services plus a terminal value;

| • | A discount rate to be determined by the SCT. The concessions provide that the discount rate shall reflect the cost of capital to Mexican and international companies in the airport industry (on a pre-tax basis), as well as Mexican economic conditions. The concessions provide that the discount rate shall be at least equal to the average yield of long-term Mexican government debt securities quoted in the international markets during the 24 months prior to the date of the negotiations plus a risk premium to be determined by the SCT based on the inherent risk of the airport business in Mexico; and

| • | An efficiency factor to be determined by the SCT. The maximum rates applicable to our airports reflect a projected annual efficiency improvement of 0.70% for the five-year period from January 1, 2020, through December 31, 2024.

Our Mexican concessions specify a discounted cash flow formula to be used by the SCT to determine the maximum rates that, given the projected earnings before interest, taxes, depreciation and amortization, capital expenditures and discount rate, would result in a net present value equal to the reference values established in connection with the last determination of maximum rates. The maximum rates ultimately established by the SCT historically have resulted from a negotiation between the SCT and us regarding these variables. Once the maximum rates are established, they must be adjusted each year by the efficiency factor and by the Mexican PPI, excluding petroleum. Also, once the maximum rates are established based in part on the capital expenditures included in our Master Development Programs, the capital expenditures must be adjusted according to the Mexican PPI’s construction price index.

The concessions provide that each airport’s reference values, and discount rate and the other variables used in calculating the maximum rates do not in any manner represent an undertaking by the SCT or the Mexican government as to the profitability of any concession holder. Therefore, whether or not the maximum rates (or the amounts up to the maximum rates that we are able to collect) multiplied by workload units at any airport generate a profit or exceed our profit estimates, or reflect the actual profitability, discount rates, capital expenditures or productivity gains at that airport over the five-year period, we are not entitled to any adjustment to compensate for any shortfall.

To the extent that such aggregate revenues per workload unit exceed the relevant maximum rate, the SCT may proportionately reduce the maximum rate in the immediately subsequent year and assess penalties equivalent to 1,000 to 50,000 times the general minimum wage in Mexico. On January 1, 2021, the daily general minimum wage in Mexico was Ps.141.7. As a result, the maximum penalty at such date could have been approximately Ps.7.0 million (approximately U.S.$357.5 thousand) per airport.

As established by the SCT, the calculation of workload units does not include transit passengers for subsequent years. The current workload unit calculation is therefore equal to one terminal passenger or 100 kilograms (220 pounds) of cargo.

Special Adjustments to Maximum Rates

Once determined, each airport’s maximum rates are subject to special adjustment only under the following circumstances:

| • | Change in law or natural disasters. A concession holder may request an adjustment in its maximum rates if a change in law with respect to quality standards or safety and environmental protection results in operating costs or capital expenditures that were not contemplated when its maximum rates were determined. In addition, a concession holder may also request an adjustment in its maximum rates if a natural disaster affects demand or requires unanticipated capital expenditures. There can be no assurance that any request on these grounds would be approved.

| • | Macroeconomic conditions. A concession holder may request an adjustment in its maximum rates if, as a result of a decrease of at least 5% in Mexican GDP in a twelve-month period, the workload units processed in the concession holder’s airport are less than those projected when its Master Development Program was approved. To grant an adjustment under these circumstances, the SCT must have already allowed the concession holder to decrease its projected capital improvements under its Master Development Program as a result of the decline in passenger traffic volume. There can be no assurance that any request on these grounds would be approved.

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| • | Increase in concession tax under Mexican Federal Duties Law. An increase in duty payable by a concession holder under the Mexican Federal Duties Law entitles the concession holder to request an adjustment in its maximum rates. There can be no assurance that any request on these grounds would be approved.

| • | Failure to make required investments or improvements. The SCT annually reviews each concession holder’s compliance with its Master Development Program (including the provision of services and the making of capital investments). If a concession holder fails to satisfy any of the investment commitments contained in its Master Development Program, the SCT is entitled to decrease the concession holder’s maximum rates and assess penalties.

| • | Excess revenues. In the event that revenues subject to price regulation per workload unit in any year exceed the applicable maximum rate, the maximum rate for the following year will be decreased to compensate airport users for overpayment in the previous year. Under these circumstances, the SCT is also entitled to assess penalties against the concession holder.

Other Regulation of Mexican Concessions and Concession Assets

Ownership Commitments and Restrictions

The Mexican concessions require us to retain a 51% direct ownership interest in each of our twelve Mexican concession holders throughout the term of these concessions. Any acquisition by us or by one of our Mexican concession holders of any additional airport concessions or of a beneficial interest of 30% or more of another concession holder requires the consent of the Mexican Antitrust Commission. In addition, the Mexican concessions prohibit us and our concession holders, collectively or individually, from acquiring more than one concession for the operation of an airport along each of Mexico’s southern and northern borders.

Air carriers are prohibited under the Mexican Airport Law from controlling or beneficially owning 5% or more of the shares of a holder of an airport concession. We, and each of our subsidiaries, are similarly restricted from owning 5% or more of the shares of any air carrier.

Foreign governments acting in a sovereign capacity are prohibited from owning any direct or indirect equity interest in a holder of an airport concession.

Reporting, Information and Consent Requirements

Mexican concession holders and third parties providing services at airports are required to provide the SCT access to all airport facilities and information relating to an airport’s construction, operation, maintenance and development. Each Mexican concession holder is obligated to maintain statistical records of operations and air traffic movements in its airport and to provide the SCT with any information that it may request. Each Mexican concession holder is also required to publish its annual audited financial statements in a principal Mexican newspaper within the first four months of each year.

The Mexican Airport Law provides that any person or group directly or indirectly acquiring control of a concession holder is required to obtain the consent of the SCT for such control acquisition. For purposes of this requirement, control is deemed to be acquired in the following circumstances:

| • | if a person acquires 35% or more of the shares of a concession holder;

| • | if a person has the ability to control the outcome of meetings of the shareholders of a concession holder;

| • | if a person has the ability to appoint a majority of the members of the board of directors of a concession holder; or

| • | if a person by any other means acquires control of an airport.

Pursuant to the regulations under the Mexican Airport Law, any company acquiring control of a Mexican concession holder is deemed to be jointly and severally liable with the concession holder for the performance of the terms and conditions of the concession.

The SCT requires notification upon any change in a concession holder’s chief executive officer, board of directors or management. A concession holder is also required to notify the SCT at least 90 days prior to the adoption of any amendment to its bylaws concerning the dissolution, corporate purpose, merger, transformation or spin-off of the concession holder.

Termination of Concessions

Under the Mexican Airport Law and the terms of the concessions, a concession may be terminated upon any of the following events:

| • | the expiration of its term;

| • | its surrender by the concession holder;

| • | the revocation of the concession by the SCT;

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| • | the reversion (rescate) of the Mexican government-owned assets that are the subject of the concession (principally real estate, improvements and other infrastructure);

| • | the inability to achieve the purpose of the concession, except in the event of force majeure;

| • | the dissolution, liquidation or bankruptcy of the concession holder; or

| • | the failure by the concession holder to satisfy the shareholding obligations set forth in the concession.

Following a concession’s termination, the concession holder remains liable for the performance of its obligations during the term of the concession.

Revocation of Concessions

A concession may be revoked by the SCT under certain conditions, including:

| • | the failure by a concession holder to operate, maintain and develop an airport pursuant to the terms established in the concession;

| • | the failure by a concession holder to maintain insurance as required under the Mexican Airport Law;

| • | the assignment, encumbrance, transfer or sale of a concession, any of the rights thereunder or the assets underlying the concession in violation of the Mexican Airport Law;

| • | any alteration of the nature or condition of an airport’s facilities without the authorization of the SCT;

| • | use, with a concession holder’s consent or without the approval of air traffic control authorities, of an airport by any aircraft that does not comply with the requirements of the Mexican Civil Aviation Law, that has not been authorized by the Mexican Air Traffic Control Authority, or that is involved in the commission of a felony;

| • | knowingly appointing a chief executive officer or board member of a concession holder that is not qualified to perform his functions under the law as a result of having violated criminal laws;

| • | the failure by the concession holder to pay the Mexican government the airport concession tax;

| • | failure to own at least 51% of the capital stock of subsidiary concession holders;

| • | violation of the safety regulations established in the Mexican Airport Law and other applicable laws;

| • | total or partial interruption of the operation of an airport or its airport or complementary services without just cause;

| • | the failure to maintain an airport’s facilities;

| • | the provision of unauthorized services;

| • | the failure to indemnify a third party for damages caused by the provision of services by the concession holder or a third-party service provider;

| • | charging prices higher than those registered with the SCT for regulated services or exceeding the applicable maximum rate;

| • | any act or omission that impedes the ability of other service providers or authorities to carry out their functions within an airport; or

| • | any other failure to comply with the Mexican Airport Law, its regulations and the terms of a concession.

The SCT is entitled to revoke a concession without prior notice as a result of the first six events described above. Regarding the other violations listed above, violations may result in revocation of a concession only if sanctions have been imposed at least three times with respect to the same violation.

Pursuant to the terms of our Mexican concessions, in the event the SCT revokes one of our Mexican concessions, it is entitled to revoke all of our Mexican concessions.

According to the Mexican National Assets Law, the surface area of our airports and improvements on such space are government-owned assets. A concession concerning government-owned assets may be “rescued,” or reverted to the Mexican government prior to the concession’s expiration, when considered necessary for the public interest. In exchange, the Mexican government is required to pay compensation as determined by expert appraisers. Following a declaration of reversion (rescate), the assets that were subject to the concession are automatically returned to the Mexican government.

In the event of war, public disturbances or threats to national security, the Mexican government may assume the operation (requisa) of any airport and any airport assets, as well as any airport and complementary services. Such government action may exist only during the duration of the emergency. Except in the case of war, the Mexican federal government is required to compensate all affected parties for any

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damages or losses suffered as a result of such government action. If the Mexican government and a concession holder cannot agree as to the appropriate amount of damages or losses, the amount of damages must be determined by experts jointly appointed by both parties and the amount of losses must be determined based on the average net income of the concession holder during the previous year.

The Mexican Airport Law provides that a sanction of up to 200,000 times the general daily minimum wage in Mexico may be assessed for a failure to comply with the law or terms of a concession. Such sanction may be duplicated in the event of reiterative failures to comply. As a result, the maximum penalty on January 1, 2021, was Ps.28.3 million (U.S.$1.4 million) for an individual failure to comply.

Consequences of Termination or Revocation of a Concession

Upon termination, whether as a result of expiration or revocation, the real estate and fixtures that were the subject of the concession automatically revert to the Mexican government. In addition, upon termination, the Mexican federal government has a preemptive right to acquire all other assets used by the concession holder to provide services under the concession at prices determined by expert appraisers appointed by the SCT. Alternatively, the Mexican government may elect to lease these assets for up to five years at fair market rates as determined by expert appraisers appointed by the Mexican government and the concession holder. In the event of a discrepancy between appraisals, a third expert appraiser must be jointly appointed by the Mexican government and the concession holder. If the concession holder does not appoint an expert appraiser, or if such appraiser fails to determine a price, the determination of the appraiser appointed by the Mexican government will be conclusive. If the Mexican government chooses to lease the assets, it may thereafter purchase the assets at their fair market value, as determined by an expert appraiser appointed by the Mexican government.

The Mexican Communications Law, however, provides that upon expiration, termination or revocation of a concession, all assets necessary to operate the airports will revert to the Mexican government, at no cost and free of any liens or other encumbrances. There is substantial doubt as to whether the provisions of our Mexican concessions would prevail over those of the Mexican Communications Law. Accordingly, there can be no assurance that upon expiration or termination of our Mexican concessions the assets used by our subsidiary concession holders to provide services at our airports will not revert to the Mexican government, free of charge, together with government-owned assets and improvements permanently attached thereto.

Grants of New Mexican Concessions

The Mexican government may grant new concessions to manage, operate, develop and construct airports. Such concessions may be granted through a public bidding process in which bidders must demonstrate their technical, legal, managerial and financial capabilities. The Federal Competition Commission has the power, under certain circumstances, to prohibit a party from bidding and to cancel an award after the process has concluded. In addition, the government may grant concessions without a public bidding process to the following entities:

| • | any person who holds a permit to operate a civil aerodrome and intends to transform the aerodrome into an airport so long as: (i) the proposed change is consistent with the national airport development programs and policies, (ii) the civil aerodrome has been in continuous operation for the previous five years and (iii) the permit holder complies with all requirements of the concession;

| • | a current concession holder when necessary to meet increased demand so long as: (i) a new airport is necessary to increase existing capacity, (ii) the operation of both airports by a single concession holder is more efficient than other options and (iii) the concession holder complies with all requirements of the concession;

| • | a current concession holder when it is in the public interest for its airport to be relocated;

| • | entities in the federal public administration; and

| • | commercial entities in which local or municipal governments have a majority equity interest if the entities’ corporate purpose is to manage, operate, develop and/or construct airports.

Mexican Environmental Regulation

Legislative Framework

Our operations are subject to Mexican federal, state and municipal laws and regulations relating to the protection of the environment. The major federal environmental laws applicable to our operations are: (i) the General Law of Ecological Balance and Environmental Protection (Ley General de Equilibrio Ecológico y Protección Ambiental, or the “General Environmental Law”) and its regulations, which are administered by the Ministry of the Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales) and enforced by the Ministry’s enforcement branch, the Federal Office for the Protection of the Environment (Procuraduría Federal de Protección al Ambiente); (ii) the General Law for the Prevention and Integral Management of Waste (Ley General para la Prevención y Gestión Integral de los Residuos, or the “Law on Waste”), which is also administered by the Ministry of the Environment and Natural Resources and enforced by the Federal Office for the Protection of the Environment; and (iii) the National Waters Law (Ley de Aguas Nacionales) and its regulations, which are administered and enforced by the National Waters Commission (Comisión Nacional del Agua), also a branch of the Ministry of the Environment and Natural Resources.

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Under the General Environmental Law, regulations have been enacted concerning air pollution, environmental impact, land use, soil contamination, noise control, hazardous waste, environmental audits and natural protected areas. The General Environmental Law also regulates, among other things, vibrations, thermal energy and visual pollution, although the Mexican government has not yet issued enforceable regulation on the majority of these matters. The General Environmental Law also provides that companies that contaminate soils are responsible for their clean-up. Further, according to the Law on Waste, owners and/or possessors of property with soil contamination are jointly and severally liable for the remediation of such contaminated sites, irrespective of any recourse or other actions such owners and/or possessors may have against the contaminating party, and aside from the criminal or administrative liability to which the contaminating party may be subject. Restrictions on the transfer of contaminated sites also exist. The Law on Waste also regulates the generation, handling and final disposal of hazardous waste.

Pursuant to the National Waters Law, companies that discharge waste waters into national water bodies must comply with, among other requirements, maximum permissible contaminant levels in order to preserve water quality. Periodic reports on water quality must be provided to competent authorities. Liability may result from the contamination of underground waters or recipient water bodies. The use of underground waters is subject to restrictions pursuant to our Mexican concessions and the National Waters Commission.

In addition to the foregoing, Mexican Official Norms (Normas Oficiales Mexicanas), or “NOMs,” which are technical standards issued by competent regulatory authorities pursuant to the General Normalization Law (Ley General de Metrología y Normalización) and the General Law of Ecological Balance and Environmental Protection (Ley General del Equilibrio Ecológico y la Protección al Ambiente), establish limits on air emissions, waste water discharges, the generation, handling and disposal of hazardous waste and noise control, among other matters.

The General Environmental Law and Law on Waste establish the main policies for soil remediation. Remediation standards and procedures are gradually beginning to be implemented through NOMs.

Although not enforceable, the internal administrative criteria on soil contamination of the Federal Office for the Protection of the Environment are widely used as guidance in cases where soil remediation, restoration or clean-up is required.

The Ministry of the Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales) and the Federal Office for the Protection of the Environment (Procuraduría Federal de Protección al Ambiente) are the responsible regulators. The Federal Office for the Protection of the Environment can bring administrative, civil and criminal proceedings against companies that violate environmental laws, and it also has the power to close non-complying facilities and impose a variety of sanctions. Companies in Mexico are required to obtain proper authorizations, licenses, concessions or permits from competent environmental authorities for the performance of activities that may have an impact on the environment or that may constitute a source of contamination. Companies in Mexico are also required to comply with a variety of reporting obligations that include, among others, providing the Ministry of the Environment and Natural Resources, the Federal Office for the Protection of the Environment and the National Waters Commission, as applicable, with periodic reports regarding compliance with various environmental laws.

Prior to the opening of Mexico’s airports to private investment, the Federal Office for the Protection of the Environment required that environmental audits had to be performed at each of our airports. Based on the results of these audits, the Federal Office for the Protection of the Environment issued recommendations for improvements and corrective actions to be taken at each of our airports. In connection with the transfer of the management of our airports from our predecessor, we entered into environmental compliance agreements with the Federal Office for the Protection of the Environment on January 1, 1999, and July 12, 2000, pursuant to which we agreed to comply with a specific action plan and adopt specific actions within a determined time frame.

The Federal Office for the Protection of the Environment has confirmed that we have complied with all of the relevant environmental requirements derived from the aforementioned environmental audits and has issued compliance certificates for all of our airports. These certificates, which are known as Environmental Quality Certificates (Certificados de Calidad Ambiental) certify compliance with applicable Mexican environmental laws, regulations and applicable NOMs and must be renewed periodically.

In June 2013, a decree was published in the Official Gazette of the Federation (Diario Oficial de la Federación) issuing the Federal Environmental Responsibility Law (Ley Federal de Responsabilidad Ambiental). As part of the Federal Environmental Responsibility Law, various provisions were amended, added and revoked of the General Law of Ecological Equilibrium and Protection of the Environment, the General Law of Wildlife, the General Law for the Comprehensive Prevention and Waste Management, the General Law for Sustainable Forest Development, the National Water Act and the Federal Criminal Code, among others, to the effect that any person or company whose acts or omissions directly or indirectly causes harm to the natural environment, is obligated to repair the environmental damage, or when reparation is not possible, to compensate for the harm, and undertake any necessary actions to avoid increasing the harm. A second general aspect of this reform is the creation of expanded standing so that individuals, including Mexican environmental non-profits, may initiate lawsuits for the protection of property that they do not directly own.

During 2018, a new carbon dioxide (“CO2”) market commenced operating in Mexico. The market requires that industries that generate above a certain amount of CO2 emissions, including airport concession owners, pay for rights to excess emissions. Commencing in 2019, the legislation requires that companies subject to it report their global emissions as verified by the Mexican Emissions Registry (Registro Nacional

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de Emisiones). We are subject to this legislation and began reporting our emissions in 2018. In 2019, we began submitting our emissions reports for verification by the Mexican Emissions Registry. In addition, new water quality standards are being discussed, which would require greater water quality for all of our wastewater disposal. For more information see “Item 3, Key Information – Risk Factors – Risks Related to Mexico – Increased environmental regulation and enforcement in Mexico may affect us.”

Liability for Environmental Noncompliance

The legal framework of environmental liability applicable to our operations is generally outlined above. Under the terms of our Mexican concessions, the Mexican government has agreed to indemnify us for any environmental liabilities arising prior to November 1, 1998, and for any failure by ASA prior to November 1, 1998, to comply with applicable environmental laws and with its agreements with Mexican environmental authorities. Although there can be no assurance, we believe that we are entitled to indemnification for any liabilities related to the actions our predecessor was required to perform or refrain from performing under applicable environmental laws and under its agreements with environmental authorities. For further information regarding these liabilities, see Note 28 to our audited consolidated financial statements.

The level of environmental regulation in Mexico has significantly increased in recent years, and the enforcement of environmental laws is becoming substantially more stringent. We expect this trend to continue and expect additional norms to be imposed by the North American Agreement on Environmental Cooperation entered into by Canada, the United States and Mexico in the context of USMCA, as well as by other international treaties on environmental matters. We do not expect that compliance with Mexican federal, state or municipal environmental laws currently in effect will have a material adverse effect on our financial condition or results of operations. However, there can be no assurance that environmental regulations or the enforcement thereof will not change in a manner that could have a material adverse effect on our business, results of operations, prospects or financial condition.

Mexican Safety Regulation

Our aeronautical operations are subject to national and international regulations regarding maintaining acceptable safety standards. Compliance with these safety regulations is overseen by the Mexican Directorate General of Civil Aviation, which conducts audits and inspections of each of our Mexican airports.

In 2013, the Mexican Government issued a Mexican Official Standard (Norma Oficial Mexicana), which created an obligation to implement the ICAO’s Safety Management System (“SMS”). The SMS is a systematic approach to managing safety, including the necessary organizational structures, accountabilities, policies and procedures. The ICAO encourages various types of product and service providers that design, manufacture, operate or support the operation of aircrafts to implement this system. The Civil Aviation Authority can bring administrative proceedings against providers that do not comply with SMS regulations, and it also has the power to impose a variety of sanctions or close non-complying facilities.

We began implementing this system as soon as the standard was issued and by 2017 all of our Mexican airports were SMS-certified. Currently, we are the only airport operator in the country with 100% of its airports certified in SMS.

In addition, the ICAO provides certification based on compliance with safety, regulatory and efficiency standards for aircraft operations at aerodromes and ensures that certified aerodromes are in compliance with relevant ICAO standards and recommended Civil Aviation Authority practices. During 2020, our twelve airports maintained their ICAO aerodrome certification.

COVID-19

The COVID-19 pandemic created important challenges for our airports as a result of the health and sanitary measures established by the health authority and necessary to ensure the safety and well-being of our passengers. These requirements led us to adapt the processes and activities of the Safety Management System to maintain compliance with ICAO’s SMS regulations. Some of these actions involved remote audits, remote training, and advisory meetings through digital means, among others.

Meanwhile, during 2020 the Mexican Civil Aviation Authority limited the safety oversight to a single mixed review (on-site and remote) at one of our mexican airports. Therefore, we anticipate that in 2021, reviews will be carried out at all our other airports according to this methodology and will encompass a wide range of points to review given it will cover management of the system during 2019 and 2020. As a result, special attention is being paid to compliance with all activities and processes to avoid any non-conformity.

Measures adopted during 2020 must be maintained, improved, and effective responses must be established for any requirement implemented by the Civil Aviation Authority. Significant challenges in maintaining the SMS during 2021 are expected due to the slow recovery of the aviation sector around the world.

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Sources of Jamaican Regulation

The following are the principal laws, regulations and instruments that govern our business in Jamaica and the operation of our Jamaican airports and the concessionaires:

| • | Civil Aviation Act, enacted June 1, 1966;

| • | Airports Authority Act, enacted July 31, 1974; and

| • | Airports (Economic Regulation) Act, enacted December 31, 2002.

| • | Income Tax Act, enacted January 1, 1955;

| • | Assets Tax (Specified Bodies) Act, enacted January 2, 2003; and

| • | General Consumption Tax Act, enacted October 22, 1991.

| • | The Employment Termination and Redundancy Act, enacted December 9, 1974; and

| • | Holiday with Pay Act, enacted March 27, 1947.

| • | The Natural Resources Conservation Authority Act, enacted July 5, 1991.

| • | Companies Act, enacted February 1, 2005; and

| • | the MBJA Concession Agreement that entitles MBJA to operate the Montego Bay International Airport, which was granted on April 3, 2003 and came into force on April 12, 2003.

| • | the NMIA Concession Agreement that entitles PACKAL to operate the Kingston International Airport, which was granted on October 10, 2018 and came into force on October 10, 2019.

Legislation specifically applicable to the operation of airport concessions and airports in Jamaica are the Civil Aviation Act, the Airports Authority Act and the Airports (Economic Regulation) Act, and each of their respective subsidiary legislation and regulations. In addition, our Jamaican airports are subject to all applicable laws and regulations related to the operation of a private limited liability company in Jamaica.

The Civil Aviation Act and the regulations thereunder provide the general framework regulating air transportation and establish the JCAA, under the authority of the MTM, to oversee safety and security, provide air navigation services and regulate aviation industry prices. The Civil Aviation Act’s stated intent is to promote the development of air transport in Jamaica.

In 1974, the Airports Authority Act transferred to the AAJ, an independent government agency, the concessions for Jamaica’s two international airports – the Montego Bay and Kingston airports. The AAJ continues to own both airports, but has divested operational responsibility for the Montego Bay and Kingston airports through public bidding processes in 2003 and 2017, respectively.

The Airports (Economic Regulation) Act of 2002 establishes the framework for the economic regulation of Jamaica’s airports and governs the provision of services or facilities at the international airports for the purposes of landing, parking, fueling, servicing or taking off of aircraft and handling passengers, baggage and cargo at the airport. The Act allows the MTM to levy airport improvement fees and authorizes the JCAA to regulate airport charges and deal with public interest issues such as anti-competitive behavior and accounting transparency. Airport operators must submit an application for permission to levy airport charges on airlines and passengers to the JCAA. Airport operators permitted to levy airport charges must also routinely provide the JCAA with their annual accounts and schedules of airport charges.

Jamaican Regulatory Agencies

The regulatory agencies overseeing the operation of airports and airport concessions are the MTM, JCAA and the AAJ.

The MTM’s primary responsibility is Jamaica’s land, marine and air transport and their related infrastructure. The MTM has regulatory responsibility for the safety of all modes of transportation, whether publicly or privately operated. This includes airports, aerodromes and airline operators. The following agencies and departments fall under the MTM and oversee the operation of airports and airport concessions:

| • | Jamaica Civil Aviation Authority. The JCAA is a statutory organization under the MTM, which regulates the Jamaican aviation industry, including oversight of safety and security, provision of air navigation services and regulation of aviation industry prices. The JCAA is the agency empowered to grant the Montego Bay and Kingston airports their required annual permits and licenses, except for the Aerodrome License, which is granted by the MTM, and to approve or reject the regulated charges proposed by MBJA and NMIA for the Montego Bay and Kingston airports, respectively.

| • | Airports Authority of Jamaica. The AAJ is an independent statutory body established by the Jamaican Airports Authority Act with responsibility for the nation’s commercial and civil airports. The AAJ owns the airport concession assets of our Jamaican airports and provides contract administration for the Concession Agreements granted to operate and manage the Montego Bay and

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|  | Kingston airports situated on lands owned by it. Under the Concession Agreement s, the AAJ conducts regular performance reviews and other contract administration oversight functions. In addition, the AAJ obligates the concession holders to hold a biannual airport forum to provide the airports’ stakeholders with the opportunity to provide progress reports and issues pertinent to them.

Jamaican Airport Concession Agreements

On April 3, 2003, MBJA entered into a 30-year concession agreement with the AAJ, which began on April 12, 2003, to operate the Montego Bay airport. MBJA pays both monthly and annual concession taxes to the Jamaican government to allow it to use and develop the assets subject to the concession.

On October 10, 2019, PACKAL entered into a 25-year concession agreement with the AAJ, with a single possible five-year extension, to operate the Kingston airport. PACKAL pays a monthly concession fee of 62.01% of total aeronautical and non-aeronautical revenues to the Jamaican government to allow it to use and develop the assets.

At the end of each concession’s term, MBJA and PACKAL, respectively, will transfer these concession assets back to the AAJ. See “Item 5, Operating and Financial Review and Prospects – Overview – Operating Costs – Concession Taxes – Jamaican Concession Taxes.”

MBJA’s and PACKAL’s Obligations as Concessionaires

Under the terms of each of the Concession Agreements, the concession holder is responsible for the maintenance, operation and development of the airport, including the management of day-to-day operations in keeping with specific performance criteria and prescribed international standards, in order to render airport, complementary and commercial services. As such, each of MBJA’s and PACKAL’s general obligations as concession holder are thus to: operate and manage the airport in compliance with applicable law; provide airport, complementary and commercial services; report on accounts, financial records, traffic and performance levels; and carry out the capital investments proposed in the Capital Development Program and maintain and develop the tangible concession assets.

| • | Licensing Requirements. “Material License” in the Concession Agreements means any permission, consent, license or approval that the concession holder must hold or obtain by any applicable law in order to operate and manage the airport and provide airport services, including the Aerodrome License from the MTM, the Aerodrome Certificate from the JCAA and the JCAA’s permission to levy airport charges. A revocation of the JCAA’s permission to levy airport charges for cause attributable to the concession holder, or the failure to renew any other Material License within 30 days of revocation for cause attributable to the concession holder, is considered an event of default under the respective Concession Agreement.

| • | Required Services. The concessions require the concession holder to provide the following airport, complementary and commercial services at the Montego Bay and Kingston airport, respectively:

| • | handling of aircraft on land (including the movement, parking, maintenance and storage of aircraft and the supply of fuel, catering and other provisions to aircraft, but excluding directing aircraft from the landing strip and taxiways to the ramp);

| • | handling of passengers, baggage, cargo, mail and other freight, including transfer to and from aircraft,

| • | emergency and security facilities, equipment, personnel and services;

| • | information services, car parking and refreshments for passengers;

| • | ground transportation and transfer options;

| • | leasing and management of the airport site; and

| • | supply of consumer goods and services (including currency exchange services);

| • | Reporting Requirements. Under the terms of the concessions, the concession holder is obligated to:

| • | monitor and report on service levels achieved in respect of specified service areas;

| • | provide quarterly unaudited financial statements and an annual report and audited financial statements, together with copies of all related directors’ and auditors’ reports;

| • | provide semi-annual (or more frequently if required by and supplied to lenders on a more frequent basis) cash flow statement in respect of the Capital Development Program;

| • | provide preliminary proposals as to yearly financing arrangements and an annual business plan; and

| • | provide records of all passengers and freight using or passing through the airport as frequently as the AAJ may require (monthly for PACKAL).

| • | Capital Investment Requirements. Every five years, the concession holder is entitled to submit to the JCAA its proposal for increases to the maximum regulated charges applicable to their airport as justified by a Capital Development Program, justified by

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|  | five-year estimates for traffic growth and investment commitments (including capital expenditures for capital projects and required maintenance at the respective airport). Under the terms of the Concession Agreement s, upon the JCAA’s approval of a proposal for price increases, the concession holder has a commitment to fulfill the estimated capital expenditures in the Capital Development Program.

The AAJ remains the owner of the land upon which the airport is sited, as well as the physical assets subject to the concession. The concession holder is required to maintain and manage the airport concession with the intent that AAJ or a successor operator would be able to take over the operation and management of the airport business at any time, including through the use of all reasonable endeavors to ensure that the AAJ or such other successor airport operator would have immediate access to all of its airport employees and assets. Following a termination of the concession, the concession holder is obligated to return to the AAJ the facilities and services ordinarily provided or reasonably incidental to the operation of the airport.

AAJ Consent Requirements

Under the Concession Agreements, the concession holder requires the consent of the MTM and the AAJ if it wishes to expand its services into any business, activity, facility or service not permitted by the definition of “core airport services” in the Concession Agreement, which consent shall not be unreasonably withheld.

MBJA and PACKAL also require the consent of AAJ to:

| • | hold any shares, participation or any other ownership interest in any other undertaking (except for investments, including deposits, in the ordinary course of treasury management of the airport business);

| • | enter into contracts or arrangements other than for the purpose of carrying on the airport business or other than on arm’s length terms;

| • | enter into contracts imposing obligations or liabilities upon the concession holder which will not be fully performed or discharged prior to the expiry of the concession period; and

| • | amend, vary or supplement (or grant a waiver in respect of) certain financing documents related to their respective Concession Agreement.

AAJ’s Rights to Step In, Terminate or Grant a New Concession

As owner of the concession assets, the AAJ is entitled, upon seven days’ notice (or sooner in case of emergency) and for so long as may be required, to expel the concession holder from all or part of the airport site or to take over or take steps to carry on the operation and management of the airport or provision of airport services when:

| • | any concession holder event of default has occurred and is continuing and any cure period provided therefor has expired without the event or circumstance being cured;

| • | traffic at the airport will be materially disrupted and the concession holder is unable or unwilling to resolve the disruption promptly;

| • | members of the public are unable to use the airport or its facilities safely and the concession holder is unable or unwilling to resolve the problem promptly; or

| • | there is a material threat to national security or any other national emergency occurs (whether involving hostilities or otherwise).

Upon a step-in by the AAJ, the AAJ will account to the concession holder for any revenues collected during the step-in period. Where the AAJ exercises its right to step in pursuant to any uncured concession holder event of default or because traffic at the airport will be materially disrupted and concession holder is unable or unwilling for any reason to resolve the disruption, the concession holder is required to bear all costs and expenses associated with the AAJ exercise of step-in, but not consequential losses. The concession holder is not liable for costs if there is step-in by the AAJ because of a material threat to national security.

The AAJ may terminate the Concession Agreement with the concession holder upon an event of default on the part of the concession holder, after which the AAJ must provide notice of its intention to serve a written termination notice and conduct up to 30 days of good-faith consultations to avoid termination, during which the concession holder fails to cure the event of default. Regardless of cause for termination, a termination fee is due to the concession holder upon termination or revocation of the concession, and the Concession Agreement limits the AAJ’s liability to such termination fee. However, the payment terms of the termination fee depend upon the cause: upon an event of default on the AAJ’s part, the termination fee is payable by the AAJ within three months, with an option to extend for up to twelve months with default interest, while if the event of default is on the concession holder´s part, the termination fee is payable by the AAJ in installments within twelve months.

The Jamaican government may grant new concessions to manage, operate, develop and construct airports. In the Concession Agreement, the concession holder acknowledges that the AAJ may also wish, at the expiry or termination of the concession period, to invite persons to tender for the right to provide all or some of the airport services at the airports. The concession holder may participate in such tenders, if interested, except to the extent that there has been an event of default attributable to the insolvency of the concession holders shareholders, in

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which case the concession holder would be disqualified from participating. However, in preparation for such tendering process, and regardless of whether the concession holder intends to participate in the tender, the concession holder would be obligated to provide access to employees, assets, books and records related to the airport business, and may not in any way prejudice or frustrate the transfer of the airport business. The Concession Agreement sets out the hand back procedures to be observed as the end of the concession period approaches and the dispute resolution mechanism for addressing objections by either party regarding the hand back. Under the agreement, the concession holder commits to assisting and advising the AAJ or any successor operator (subject to payment of reasonable remuneration and reasonable costs and expenses) in providing and operating the airport for up to six months following completion of the handover and must post a bond equivalent to the cost of the handback works for the six-month period.

Jamaican Aeronautical Services Regulation

In Jamaica, charges levied on airlines and passengers are regulated by the JCAA using a price cap mechanism based on a forecast return on assets. Permission for any increase in the levy of regulated charges, which include passenger charges, aircraft landing and parking charges, passenger walkway charges and airport security charges, must be granted by the JCAA. Regulated aeronautical charges will be reviewed every five years. The following table sets the maximum rates for each of our Jamaican airports from 2020-2024:

|  | Year ended December 31, |
|  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |
Montego Bay |  |  | 15.71 |  |  |  | 15.89 |  |  |  | 16.09 |  |  |  | 16.28 |  |  |  | 16.47 |
Kingston |  |  | 22.47 |  |  |  | 24.06 |  |  |  | 25.72 |  |  |  | 27.51 |  |  |  | 29.41 |

(1) | Expressed in U.S. dollars.

According to the Airport Economic Regulation Act, that governs the tariff, if exceptional circumstances arise during a five-year period which may justify reconsideration of airport charges, the approved airport operator may submit an application to the Authority which shall, after conducting an investigation consider that application, taking into account the provisions in the concession agreement and could adjust the price cap or the capital expenditures.

The Airports (Economic Regulation) Act and the related Airport Expansion Fund Agreement require the airlines operating at the Montego Bay airport to collect the AIF fee of U.S.$5.00 per embarking international passenger, on behalf of the Government of Jamaica and to deposit the fees on a monthly basis in a trust account controlled by the MTM. Subject to the MTM’s approval, MBJA may use these funds for additional capital investments not included in the Capital Development Program, as well as for interest expenses relating to the financing thereof. MBJA is required to commit to such new investments in exchange for the right to use the AIF funds. The MTM approval of collection of AIF funds at the Montego Bay airport was renewed on February 25, 2015 for the period ending April 11, 2030, unless otherwise revoked. Having already completed all projects approved for funding by the AIF to date, MBJA is currently in discussions with MTM for further approval to fund capital investment projects from AIF funds collected after April 11, 2015.

The Airports (Economic Regulation) Act and the related Airport Expansion Fund Agreement require the airlines operating at the Kingston airport to collect the AIF fee of U.S.$10.00 per embarking international passenger, on behalf of the Government of Jamaica and to deposit the fees on a monthly basis in a trust account controlled by the MTM. All AIFs collected and all funds standing to the credit of the Expansion Account shall be the sole property and funds of the Government. The MTM approval of collection of AIF funds at the Kingston airport is valid from October 10, 2019 to December 31, 2030, unless otherwise revoked. PACKAL has no right or power to any funds collected with respect to the Expansion Account or the funds held to the credit thereof.

See “Item 5, Operating and Financial Review and Prospects – Overview – Classification of Revenues – Aeronautical Revenues.”

Other Regulation of Jamaican Concessions and Concession Assets

Jamaican Companies Act Restrictions

MBJA was incorporated as a limited liability company to enter into and carry out the terms of the concession with respect to the development, financing, management and operation of the Montego Bay airport. MBJA’s constitutive documents bar the transfer of shares in MBJA to passenger or cargo airlines or persons broadly connected to them, other than AAJ or the Jamaican government. Under the shareholders’ agreement between DCA and Vantage, any transfer of MBJA shares to non-affiliates is subject to a right of first refusal.

PACKAL was incorporated as a limited liability company to enter into and carry out the terms of the concession with respect to the development, financing, management and operation of the Kingston airport.

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Reporting Requirements

Pursuant to the regulations under the Jamaican Civil Aviation Act, airport operators must report on compliance with operating procedures and safety measures. MBJA and PACKAL, as airports operators, are required to report to the JCAA any changes in conditions or other hazardous circumstances or occurrences at the airport, including: any reduction in the level of service or closure of any part of the movement area; any obstacle, obstruction or hazard; and any other condition that could affect aviation safety, as well as and what precautions are deemed warranted. MBJA and PACKAL are also obligated to provide reports to the JCAA on the results of internal audits of its safety management system, including inspections of the airport facilities and equipment and of the airport operator’s own administrative functions.

Both airports must report to the Jamaican government the number of passengers paying AIF and the amount of each transfer of AIF made during the previous month, as well as the payments related to the concession fee.

As a Jamaican registered company, MBJA and PACKAL are also required to file an annual report with the Companies Office of Jamaica reporting any changes in the ownership or management structure and notifying the registrar of any share transactions and changes in the value of shares during the prior year.

Jamaican Environmental Regulation

Operations at our Jamaican airports are subject to Jamaican laws and regulations relating to the protection of the environment. The major environmental law applicable to these operations is the National Resources Conservation Authority Act, which establishes the National Resources Conservation Authority (now part of the National Environmental Protection Agency) and its subsidiary legislation and regulations. Under the act, regulations have been enacted concerning discharge of pollutants into Marine Park’s waters, the regulating of air emissions, discharge and treatment of wastewater and sludge, safe storage of fuels and responses to industrial emergencies involving hazardous materials.

Other environmental laws of relevance to our Jamaican airports’ operations are the Noise Abatement Act, aimed at controlling noise (but with no specific reference to aeronautical noise), the Beach Control Act, addressing access to the shoreline; the Watersheds Protection Act, addressing water resource and soil conservation practices; and the Wildlife Protection Act, specifying protected species of fauna. Other related regulations are the Town and Country Planning Act, Public Health Act, Garbage Collection and Disposal Regulations, National Solid Waste Management Act and the Water Resources Act and Clean Air Act. In addition, our airports are also subject to common law principles of tort liability in the event of a nuisance claim resulting from environmental factors.

The legal framework of environmental liability applicable to our Jamaican airports’ operations is generally outlined above. The level of environmental regulation in Jamaica has increased in recent years, and the enforcement of environmental laws is becoming more stringent. For example, the National Solid Waste Management Act and the Water Resources Act each carry certain penalties of JMD1 million (approx. U.S.$7,747). We expect this trend to continue, but we do not expect that compliance with Jamaican environmental laws currently in effect will have a material adverse effect on our Jamaican airports’ results of operations or our financial condition. However, there can be no assurance that environmental regulations or the enforcement thereof will not change in a manner that could have a material adverse effect on our business, results of operations, prospects or financial condition.

COVID-19

The COVID-19 pandemic created important challenges for our airports in Jamaica as a result of the health and sanitary measures established by the health authority and necessary to ensure the safety and well-being of our passengers. These requirements led us to adapt the processes and activities of the Safety Management System to maintain compliance with ICAO’s SMS regulations. Some of these actions involved remote audits, remote training, and advisory meetings through digital means, among others.

Measures adopted during 2020 must be maintained, improved, and effective responses must be established for anything that might be required. Significant challenges in maintaining the SMS during 2021 are expected due to the slow recovery of the aviation sector around the world.

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ORGANIZATIONAL STRUCTURE

We have seventeen subsidiaries in Mexico: one operating subsidiary for each of our twelve Mexican airports; two subsidiaries (SIAP and CORSA) that provide administrative and operational services; one subsidiary (PCP) that provides parking services across our twelve Mexican airports; one non-profit foundation (Fundación GAP); and one operating subsidiary, (ADP), for hotel infrastructure and other commercial services such as the installation of solar carport systems within the parking areas of our Mexican airports. We have one Spanish subsidiary (DCA) that holds our 74.5% stake in our Jamaican operating subsidiary (MBJA) for the Montego Bay airport, and one Jamaican subsidiary, PAC Kingston Airport Limited (PACKAL), that holds our concession for the Kingston airport since October 2019. We also have a holding company subsidiary in Brazil, GA del Pacífico Participações do Brasil LTDA, established in 2010 but thus far remaining inactive and with no capital contributions.

The following table sets forth our subsidiaries as of December 31, 2020:

Name of Company |  | Jurisdiction of Organization |  | Percentage Owned (1) |  |  | Description
Aeropuerto de Guadalajara, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Guadalajara International Airport
Aeropuerto de Tijuana, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Tijuana International Airport
Aeropuerto de Puerto Vallarta, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Puerto Vallarta International Airport
Aeropuerto de San José del Cabo, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Los Cabos International Airport
Aeropuerto de Hermosillo, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Hermosillo International Airport
Aeropuerto del Bajío, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Guanajuato International Airport
Aeropuerto de Morelia, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Morelia International Airport
Aeropuerto de La Paz, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for La Paz International Airport
Aeropuerto de Aguascalientes, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Aguascalientes International Airport
Aeropuerto de Mexicali, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Mexicali International Airport
Aeropuerto de Los Mochis, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Los Mochis International Airport
Aeropuerto de Manzanillo, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Holder of concession for Manzanillo International Airport
Desarrollo de Concesiones Aeroportuarias, S.L.U. |  | Spain |  |  | 100 | % |  | Management administration, maintenance, servicing of all types of infrastructure
MBJ Airports Limited |  | Jamaica |  |  | 74.5 | % |  | Holder of concession for Montego Bay International Airport
Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Provider of administrative services to our other subsidiaries
Corporativo de Servicios Aeroportuarios, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Provider of operational services to our other subsidiaries
Puerta Cero Parking, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Provider of car parking administration services to our other subsidiaries
GA del Pacífico Participações do Brasil LTDA |  | Brazil |  |  | 100 | % |  | Holding company for other acquisitions ( incorporated in 2010; not operational through the date of this filing )
Fundación Grupo Aeroportuario del Pacífico, A.C. |  | Mexico |  |  | 100 | % |  | Non-profit company incorporated in 2013 to manage charitable donations and social welfare activities
Aerocomercializadora del Pacífico, S.A. de C.V. |  | Mexico |  |  | 100 | % |  | Hotel infrastructure operation and other commercial services
PAC Kingston Airport Limited |  | Jamaica |  |  | 100 | % |  | Holder of concession for Kingston International Airport

(1) | We directly hold 99.99% of the shares in each of our Mexican operating subsidiaries. The remaining shares of SIAP are held by Aeropuerto de Guadalajara, S.A. de C.V., while the remaining shares of our other Mexican subsidiaries are held by SIAP. As a result, we directly or indirectly hold 100% of the shares of each of our subsidiaries except MBJA.

PROPERTY, PLANT AND EQUIPMENT

Our corporate headquarters are located in Guadalajara, Jalisco. We lease the office space for our corporate headquarters, located on the third, fifth and sixth floors of Torre Pacífico, from Guadalajara World Trade Center. In addition to our corporate offices in Guadalajara, we also lease office space in Colonia Polanco, in Mexico City from third parties.

Pursuant to the Mexican National Assets Law (Ley General de Bienes Nacionales), all real estate and fixtures in our Mexican airports are owned by the Mexican government. Each of our Mexican concessions is scheduled to terminate in 2048, although each concession may be extended one or more times for up to an aggregate of an additional 50 years. The option to extend a concession is subject to our acceptance of any changes to such concession that may be imposed by the SCT and our compliance with the terms of our current concessions. Upon expiration of our Mexican concessions, the concession assets automatically revert to the Mexican government, including improvements we may have made during the terms of the concessions, free and clear of any liens and/or encumbrances, and we will be required to indemnify the Mexican government for damages to these assets, except for those caused by normal wear and tear.

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Pursuant to MBJA’s Concession Agreement, the AAJ remains the owner of the land upon which the Montego Bay airport is sited, as well as the physical assets subject to the concession. MBJA’s concession for the Montego Bay airport is scheduled to terminate in 2033. Upon expiration of the Montego Bay airport concession, MBJA is obligated to hand back to the AAJ the facilities and services ordinarily provided or reasonably incidental to the operation of the airport. There are no options for exten ding the concession in the C oncession A greement.

Pursuant to PACKAL’s Concession Agreement, the AAJ remains the owner of the land upon which the Kingston airport sits, as well as the physical assets subject to the concession. PACKAL’s concession for the Kingston airport is scheduled to terminate in 2044. Upon expiration of the Kingston airport concession, PACKAL is obligated to hand back to the AAJ all the assets, including all the improvements made to the airport facilities during the term of the concessions, will automatically revert in favor of AAJ and the facilities and services ordinarily provided or reasonably incidental to the operation of the airport. The concession can be extended for an additional 5-year period in accordance with the Concession Agreement.

We maintain comprehensive insurance coverage that covers the principal assets of our airports and other property, subject to customary limits, against damage due to natural disasters, accidents, terrorism or similar events. Our Mexican airports carry a general Ps.3.0 billion insurance policy covering damage to our assets and infrastructure and a U.S.$500.0 million insurance policy covering personal and property damages to third parties. Our Mexican airports are covered by a Ps.500.0 million insurance policy covering damage to our property resulting from terrorist acts and a U.S.$150.0 million insurance policy covering personal and property damage to third parties resulting from terrorist acts. The Montego Bay airport carries a U.S.$325.3 million insurance policy covering property damage and business interruptions and losses and a U.S.$100.0 million insurance policy covering damage resulting from any single terrorist event. The Montego Bay airport also carries a U.S.$750.0 million annual insurance policy covering personal and property damage to third parties. The Kingston airport carries a U.S.$500.0 million insurance policy covering property damage and business interruptions and losses bodily injury. The Kingston airport also carries a .JMD 10 million annual insurance policy for loss or damage as a result of the death and/or personal injury suffered by any employee.

Item 4A. | Unresolved Staff Comments

None.

Item 5. | Operating and Financial Review and Prospects

The following discussion should be read in conjunction with, and is entirely qualified by reference to, our audited consolidated financial statements prepared in accordance with IFRS, as issued by IASB, and the notes to those financial statements, which are included elsewhere in this annual report. It does not include all of the information included in our audited consolidated financial statements. You should read our audited consolidated financial statements to gain a better understanding of our business and our historical results of operations.

As a result of our taking over control of NMIA through our subsidiary, PACKAL, on October 10, 2019, our consolidated financial and operating information for the fiscal year ended December 31, 2019 includes the consolidation of PACKAL from October 10, 2019. Therefore, financial and operating information for the fiscal year ended December 31, 2019 may not be directly comparable with financial and operating information for prior or future fiscal years.

OVERVIEW

We operate twelve airports in the Pacific and Central regions of Mexico pursuant to concessions granted by the Mexican government and two airports in Jamaica pursuant to concessions granted by the Jamaican government. The majority of our revenues are derived from providing aeronautical services, which generally are related to the use of our airport facilities by airlines and passengers. For example, in 2018, 2019 and 2020, approximately 67.3%, 65.0% and 60.9%, respectively, of our total revenues were derived from aeronautical services (in 2018, 2019 and 2020 aeronautical services represented 74.9%, 73.7% and 74.7%, respectively, of the sum of our aeronautical and non-aeronautical revenues). Changes in our revenues from aeronautical services are principally driven by the passenger and cargo volumes at our airports. Our revenues from aeronautical services are also affected by the maximum rates we are allowed to charge under the price regulation system established by the SCT and JCAA, respectively. The system of price regulation that applies to our aeronautical revenues allows us to charge up to a maximum rate for each unit of traffic volume (which is measured in workload units) at each airport. Thus, increases in aeronautical services, such as passenger and cargo volume, and therefore the number of workload units that we handle, generate greater revenues.

We also derive revenue from non-aeronautical activities, principally related to the commercial services offered at our airports, such as the leasing of space to restaurants, retailers and service providers. Revenues from non-aeronautical activities are not subject to the system of price regulation established by the SCT and JCAA, respectively. Thus, our non-aeronautical revenues are primarily affected by the passenger volume at our airports and the mix of commercial services offered at our airports, the contracts that we have with the providers of those commercial services and our ability to increase the rates we charge to those service providers. While we expect that aeronautical revenues will continue to represent a majority of our future aeronautical and non-aeronautical revenues, growth of our revenues from commercial activities generally has exceeded, the growth rate of our aeronautical revenues. As a result, in recent years we have completed renovation projects to improve the product mix of retail stores in the commercial areas at our Mexican airports. We also expect to continue renegotiating agreements with terminal tenants to be more consistent with market practices and to recover the rights to certain non-aeronautical businesses at our airports previously or currently operated by third parties and developing new sources of non-aeronautical revenues through the direct operation of certain businesses such as our VIP lounges, advertising, convenience stores and car parking lots, among others. Also, see “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Non-Aeronautical Services – Recent Expansion and Development of Commercial Areas”.

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Traffic at our airports may be adversely aff ected by external events, such as the pandemic, as well as the increased levels of competition as a result of the attractiveness, affordability and accessibility of competing tourist destinations in Mexico, such as Acapulco and Cancun, or elsewhere, such as Hawaii, Puerto Rico, Florida, Cuba, the Dominican Republic and other Caribbean islands and destinations in Central America. In addition, we expect increased competition as a result of the government granting new concessions or amending existing permits for other airports that may compete with our airports. For more information, see “Item 3, Key Information – Risk Factors – Risks Related to Our Operations – Competition from other tourist destinations could adversely affect our business” and “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – The Mexican and Jamaican governments could grant new concessions that compete with our airports.”

Recent Developments

Developments related to the outbreak of the COVID-19

In December 2019, a novel strain of coronavirus, known as COVID-19 was reported to have surfaced in Wuhan, Hubei Province, China. In January 2020, COVID-19 spread to other countries, including the United States, and efforts to contain the spread of COVID-19 intensified. The COVID-19 outbreak has also led to government-imposed travel restrictions, flight cancellations, and a marked decline in passenger demand for air travel. The potential for a period of significantly reduced demand for travel has and will likely continue to result in significant lost revenue. See “Item 3 – Risk Factors – Risks Related to Our Operations – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations control.” As a result of these or other conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change. Accordingly, to manage our liquidity levels, during 2020, we implemented the following measures:

| i) | a service cost-control plan pursuant to which operational areas not currently in use have been temporarily closed and energy use, security services and cleaning and maintenance services have been reduced in accordance with passenger demand, in order to operate at minimum levels without affecting quality of service;

| ii) | delayed non-obligatory capital investments;

| iii) | pursuant to the approval of the Board of Directors, postponed the proposal for shareholder distributions of dividends and capital reductions in 2020 that had been announced on March 11, 2020 as part of the Ordinary and Extraordinary Shareholders’ Meeting scheduled for April 28, 2020, which was postponed; requested and obtained the postponement of investments committed for 2020 under our Master Development Programs and Capital Development Programs from the proper authorities in Mexico and Jamaica, respectively we also obtained the authorization to rebalance our capital expenditures in Mexico for the entire 2020-2024 period. In the case of Jamaica, we filled a petition to revise tariffs, capital expenditures and the terms and conditions of the Concession Agreement, in order to rebalance investments for both airports. Our petition is under review, we expect a final decision in the fourth quarter of 2021.

| iv) | granted some payment deferrals to our customer airlines and implemented a program to incentivize airlines to resume routes and frequencies in line with those existing before the pandemic;

| v) | granted commercial customers discounts on guaranteed minimum rents in accordance with the percentage decrease in passenger traffic at each airport and signed payment deferral agreements to support their liquidity to ensure these customers can continue operating. During the year ended 31 December 2020, we temporally extended the credit terms to up to 180 days for specific customers with liquidity constraints arising as a direct result of the COVID-19 pandemic; however, our allowance for credit losses for 2020 increased as a result; and

| vi) | negotiated with financial institutions the refinancing of credit loans with BBVA and Scotiabank for U.S.$191.0 million. We also obtained two new loans with BBVA and Scotiabank for Ps. 1.0 billion each, the proceeds were used for general corporate purposes.

As a result of these actions, in 2020, we achieved a positive cash flow from business operations, although significantly lower than our 2019 cash flow. Cash and cash equivalents increased by Ps.6,944.4 million, or 92.6%, from Ps.7,500.2 million in 2019 to Ps.14,444.5 million in 2020. As of March 31, 2021, the balance of our cash position was Ps.14,728.4 million, of which 65.9% was dollar-denominated in order to fulfill our commitments with our employees, suppliers and creditors. Likewise, we monitored financial health indicators and performed tests for long-term asset impairment, expected credit losses and recovery of deferred tax assets, concluding that there were no significant impacts on our consolidated financial statements. Consequently, we reasonably anticipate that we will be able to meet all financial and operational obligations with our current cash and equivalents.

In addition, we are complying with the health and safety protocols established by the authorities and agencies of each country in which we operate and are monitoring the developments of the COVID-19 outbreak closely. We have taken steps and implemented policies to safeguard our employees, businesses and communities surrounding our operations from the threats posed by the COVID-19 pandemic. We obtained the “Safe Travels” stamp granted by the World Travel and Tourism Council (WTTC), which certifies our commitment to comply with recommended COVID-19 health and hygiene protocols. Likewise, we were the first airport group in the world to certify all our airports in the Accreditation of Sanitary Measures for Airports (AHA) program by ACI (Airports Council International), this program helps evaluate the new sanitary measures and procedures implemented as a result of the COVID-19 pandemic in accordance with the recommendations issued by the

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ICAO Aviation Recovery Working Group (CART), in line with the sanitary protocols of the European Aviation Safety Agency (EASA) and the European Center for Disease Prevention and Control (ECDC).

While we expect the negative impact to our operational and our financial results due to the COVID-19 outbreak to continue, we do not foresee a risk to the overall continuity of our business. We have carried out a preliminary analysis of the financial results in the short, medium and long term, and we have not identified any significant asset deterioration. Nevertheless, the demand for travel may decrease more than expected, which could magnify the impact of the COVID-19 outbreak. Accordingly, we will continue to monitor and analyze the situation closely. We do not expect interruptions to our business. We have the ability to continue as a going concern and do not foresee the cancellation of our operations at any of our airports.

We are unable to predict with certainty the impact of the COVID-19 outbreak on our business, clients, suppliers and employees, as well as on international air travel generally. We are also unable to predict the degree to which the COVID-19 outbreak may impact air travel demand in the domestic regions in which we operate, or whether continuous travel restrictions, as well as general population fears with respect to air travel, may have a materially adverse effect on our business and on our operating results. The global and domestic impact of the COVID-19 outbreak on our business will depend on its duration and its continuing impact on the world economy.

Fluctuation of the Peso

Because tariffs in U.S. dollars in Mexico are invoiced taking into account the average of the exchange rate for the 30 days prior to the date of a flight, a significant depreciation of the peso during the final two months of any year could result in our exceeding our maximum rates, which would be a violation of our concession and may require us to issue rebates to airline customers to avoid exceeding our maximum rates. As long as we are able to ensure that our revenues do not exceed our maximum rates, a depreciation in the peso has a positive effect on our revenues from a commercial and aeronautical operations perspective while an appreciation in the peso has a negative effect. Tariffs on international passengers and international flights and some of our contracts with commercial services providers are denominated in U.S. dollars, but only in the case of charges for international passengers and international flights are charges invoiced and collected in Mexican pesos. Therefore, depreciation in the peso against the U.S. dollar results in us collecting more pesos than before the depreciation, whereas appreciation of the peso results in us collecting fewer pesos, which may result in lower commercial revenues in the future, especially if the appreciation continues unabated or surpasses historic levels of appreciation. See “Item 3, Key Information – Risk Factors – Risks Related to Mexico – Depreciation or fluctuation of the peso relative to the U.S. dollar could adversely affect our results of operations and financial condition.

During 2018, the peso/U.S. dollar exchange rate fluctuated, but the peso appreciated for the year and was Ps.19.66 per U.S. dollar on December 31, 2018. In 2019, the peso appreciated further to Ps.18.84 per U.S. dollar on December 31, 2019. In 2020, the peso depreciated for the year and closed at Ps.19.95 per U.S. dollar on December 31, 2020. On April 16, 2021, the exchange rate was Ps.19.9120 per U.S. dollar.

Share Repurchase

On July 1, 2020, our shareholders authorized the use of an amount of up to Ps.1,550 million for repurchases of Series B shares until our next Annual Shareholders’ Meeting.

On December 31, 2020, the number of repurchased shares in treasury amounted to 35,424,453. We resumed our share repurchase on March 1, 2021. As of April 16, 2021, we have repurchased 37,713,392 shares at an average price per share of Ps.59.22 for a total of Ps.2,233.4 million. As of April 16, 2021, we have 37,713,392 treasury shares.

Passenger and Cargo Volumes

Volumes in Mexico

The majority of the passenger traffic volume in our Mexican airports is made up of domestic passengers. In 2018, 2019 and 2020 approximately 64.1%, 63.9% and 66.9% of the terminal passengers using our Mexican airports were domestic. The total number of domestic terminal passengers for 2020 decreased 39.8% as compared to 2019, and the total number of domestic terminal passengers in 2019 increased 7.4% as compared to 2018. In addition, of the international passengers traveling through our Mexican airports, approximately 89.6% traveled on flights originating in or departing to the United States during 2020, as compared to 89.7% and 88.1% in 2019 and 2018, respectively. Accordingly, our results of operations are influenced strongly by changes to Mexican economic conditions and to a lesser extent influenced by U.S. economic and other conditions, particularly trends and events affecting leisure travel and consumer spending. Many factors affecting our passenger traffic volume and the mix of passenger traffic in our airports are beyond our control.

In 2020, we had 25.1 million terminal passengers (16.8 million domestic and 8.3 million international), of which 80.6 thousand were on general aviation flights, and an additional 58.5 thousand were transit passengers. Approximately 33.4% of our transit passengers were handled at our Hermosillo airport.

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Volumes in Jamaica

The majority of the passenger traffic volume in Jamaica is made up of international passengers. In 2020, approximately 99.9% of the terminal passengers using our Jamaican airports were international. Additionally, of the international passengers traveling through the Montego Bay and Kingston airport, approximately 74.0% and 72.5%, respectively, traveled on flights originating in or departing to the United States during 2020.

In 2020, MBJA had approximately 1.6 million terminal passengers, of which approximately 8.5 thousand were on general aviation flights and an additional 14.3 thousand were transit passengers.

In 2020, NMIA had approximately 629.4 thousand terminal passengers, of which approximately 2.9 thousand were on general aviation flights and an additional 2.2 thousand were transit passengers.

The following table sets forth certain operating and financial information relating to certain of our revenues and passenger and cargo volumes in Mexico and Jamaica for the years indicated:

Passenger and Cargo Volumes

|  | Year ended December 31, |  |
|  | 2018 |  |  | 2019(1) |  |  | 2020 |  |
Macroeconomic indicators: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in Mexican GDP (2) |  |  |  | 2.0 | % |  |  |  | (0.1 | )% |  |  |  | (8.2 | )% |
Change in Mexican CPI (3) |  |  |  | 4.8 | % |  |  |  | 2.8 | % |  |  |  | 3.2 | % |
Change in U.S. GDP (4) |  |  |  | 2.6 | % |  |  |  | 2.2 | % |  |  |  | (3.5 | )% |
Change in U.S. CPI (5) |  |  |  | 1.9 | % |  |  |  | 2.2 | % |  |  |  | 1.4 | % |
Passenger volumes (thousands of passengers) (6) : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic terminal passengers in Mexico |  |  |  | 25,951.3 |  |  |  |  | 27,872.3 |  |  |  |  | 16,784.2 |  |
International terminal passengers in Mexico |  |  |  | 14,514.2 |  |  |  |  | 15,719.9 |  |  |  |  | 8,303.4 |  |
Mexican total terminal passengers |  |  |  | 40,465.5 |  |  |  |  | 43,592.2 |  |  |  |  | 25,087.6 |  |
Domestic terminal passengers in Jamaica |  |  |  | 8.5 |  |  |  |  | 12.4 |  |  |  |  | 2.3 |  |
International terminal passengers in Jamaica |  |  |  | 4,474.0 |  |  |  |  | 5,104.0 |  |  |  |  | 2,237.6 |  |
Jamaican total terminal passengers |  |  |  | 4,482.5 |  |  |  |  | 5,116.4 |  |  |  |  | 2,239.9 |  |
Total terminal passengers (thousands) |  |  |  | 44,948.0 |  |  |  |  | 48,708.5 |  |  |  |  | 27,327.5 |  |
Cargo volumes (thousands of cargo units) (6) : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cargo units in Mexico |  |  |  | 2,138.2 |  |  |  |  | 2,145.6 |  |  |  |  | 2,080.90 |  |
Cargo units in Jamaica |  |  |  | 74.8 |  |  |  |  | 90.7 |  |  |  | 142.3 |  |
Total workload units |  |  |  | 47,161.0 |  |  |  |  | 50,947.1 |  |  |  |  | 29,550.8 |  |
Other operating and financial information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in total terminal passengers |  |  |  | 10.4 | % |  |  |  | 8.4 | % |  |  |  | (43.9 | )% |
Change in total workload units |  |  |  | 10.2 | % |  |  |  | 8.0 | % |  |  |  | (42.0 | )% |
Aeronautical revenues (millions of pesos) |  | Ps. |  | 9,499.1 |  |  | Ps. |  | 10,547.7 |  |  | Ps. |  | 7,225.7 |  |
Change in aeronautical revenues |  |  |  | 14.7 | % |  |  |  | 11.0 | % |  |  |  | (31.5 | )% |
Aeronautical revenues per workload unit |  | Ps. |  | 201.4 |  |  | Ps. |  | 207.0 |  |  | Ps. |  | 244.5 |  |
Change in aeronautical revenues per workload unit |  |  |  | 4.1 | % |  |  |  | 2.8 | % |  |  |  | 18.1 | % |
Non-aeronautical revenues (millions of pesos) |  | Ps. |  | 3,183.5 |  |  | Ps. |  | 3,771.5 |  |  | Ps. |  | 2,448.1 |  |
Change in non-aeronautical revenues |  |  |  | 14.8 | % |  |  |  | 18.5 | % |  |  |  | (35.1 | )% |
Non-aeronautical revenues per terminal passenger |  | Ps. |  | 70.8 |  |  | Ps. |  | 77.4 |  |  | Ps. |  | 89.6 |  |
Change in non-aeronautical revenues per terminal passenger |  |  |  | 4.0 | % |  |  |  | 9.3 | % |  |  |  | 15.7 | % |

(1) | Includes information for the Kingston airport for the period from October 10 to December 31, 2019.

(2) | In real terms, as reported by INEGI.

(3) | As reported by INEGI.

(4) | In real terms, as reported by the U.S. Bureau of Economic Analysis.

(5) | As reported by the U.S. Bureau of Labor Statistics.

(6) | Under the regulation applicable to our aeronautical revenues, one workload unit is equivalent to one terminal passenger or one cargo unit. One workload unit is equivalent to 100 kilograms (220 pounds) of cargo.

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Classification of Revenues

We classify our revenues into three categories: (i) revenues from aeronautical services; (ii) revenues from non-aeronautical services; and (iii) revenues from improvements to concession assets. Historically, a majority of our revenues have been derived from aeronautical services; however, with the inclusion of revenues from improvements to concession assets, revenues from aeronautical services and from non-aeronautical services will account for a smaller percentage of total revenues. For example, in 2018, 2019 and 2020 with the inclusion of revenues from improvements to concession assets, aeronautical revenues represented 67.3%, 65.0% and 60.9%, respectively, of total revenues. In 2018, 2019 and 2020, with the inclusion of revenues from improvements to concession assets, non-aeronautical revenues represented 22.5%, 23.2% and 20.6%, respectively, of total revenues. Aeronautical revenues and non-aeronautical revenues, however, represented 74.9% and 25.1%, respectively, of the sum of aeronautical and non-aeronautical revenues in 2018, 73.7% and 26.3%, respectively, of the sum of aeronautical and non-aeronautical revenues in 2019 and 74.7% and 25.3%, respectively, of the sum of aeronautical and non-aeronautical revenues in 2020. In 2018, 2019 and 2020, revenues from improvements to concession assets accounted for 10.2%, 11.8% and 18.5%, respectively, of our total revenues.

Our revenues from aeronautical services are subject to price regulation under the applicable maximum rate at each of our airports, and principally consist of passenger charges, aircraft landing and parking charges, airport security charges, passenger walkway charges, leasing of space in our airports to airlines (other than first class/VIP lounges and other similar non-essential activities) and complementary services (i.e., fees from handling and catering providers, permanent ground transportation operators and access fees from fuel providers at our airports).

Our revenues from non-aeronautical services are not subject to price regulation under our maximum rates and generally include revenues earned from car parking, leasing of space in our airports to airlines and complementary service providers (for first class/VIP lounges and similar non-essential activities), rental and royalty payments from third parties operating stores, providing commercial services at our airports (such as car rental agencies, food and beverage providers and retail and duty-free store operators), as well as advertising and fees collected from other miscellaneous sources, such as vending machines and timeshare developers. Additionally, we derive revenues from recovery of costs that are included in our non-aeronautical services.

Our revenues from improvements to concession assets represent the fair value of the additions and upgrades to the concession that we undertake in accordance with our Master Development Programs in Mexico and our Capital Development Programs in Jamaica. In exchange for making those additions and upgrades, the governments of Mexico and Jamaica grant us the right to obtain benefits for services provided using those assets, which are recognized as intangible assets. This represents an exchange of dissimilar goods or services rather than an actual cash exchange since we receive an intangible asset for the construction services we provide. Through a bidding process, we hire third parties to make the additions and upgrades. The amount of revenues for these services is equal to the costs of making the additions and upgrades since those values represent the fair value of the goods or services received as there is no profit margin stemming from these construction services. Although these revenues do not generate actual cash inflows, IFRS requires that they be recorded given that revenue generation is inherent in an exchange of dissimilar services, similar to a barter transaction. These revenues do not have a cash impact on our results.

For a detailed description of the components of our revenue categories, see “Item 4, Information on the Company – Business Overview – Our Sources of Revenues.”

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Aeronautical Revenues

The following table sets forth our revenues from aeronautical services for the years indicated:

Aeronautical Revenues

|  | Year ended December 31, |  |
|  | 2018 |  |  | 2019 (1) |  |  | 2020 |  |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |
|  |  | (millions of pesos, except percentages and workload unit data) |  |
Aeronautical Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Passenger charges |  | Ps. |  | 7,752.8 |  |  |  | 81.6 | % |  | Ps. |  | 8,589.3 |  |  |  | 81.4 | % |  | Ps. |  | 5,929.6 |  |  |  | 82.1 | % |
Aircraft landing charges |  |  |  | 783.1 |  |  |  | 8.2 |  |  |  |  | 862.8 |  |  |  | 8.2 |  |  |  |  | 536.3 |  |  |  | 7.4 |  |
Aircraft parking charges |  |  |  | 155.6 |  |  |  | 1.6 |  |  |  |  | 174.4 |  |  |  | 1.7 |  |  |  |  | 140.6 |  |  |  | 1.9 |  |
Airport security charges |  |  |  | 207.4 |  |  |  | 2.2 |  |  |  |  | 263.4 |  |  |  | 2.5 |  |  |  |  | 193.1 |  |  |  | 2.7 |  |
Passenger walkway charges |  |  |  | 36.7 |  |  |  | 0.4 |  |  |  |  | 38.7 |  |  |  | 0.4 |  |  |  |  | 19.7 |  |  |  | 0.3 |  |
Leasing of space to airlines |  |  |  | 148.9 |  |  |  | 1.6 |  |  |  |  | 164.4 |  |  |  | 1.6 |  |  |  |  | 129.1 |  |  |  | 1.8 |  |
Revenues from complementary service providers (2) |  |  |  | 414.6 |  |  |  | 4.4 |  |  |  |  | 454.8 |  |  |  | 4.3 |  |  |  |  | 277.3 |  |  |  | 3.8 |  |
Total Aeronautical Revenues |  | Ps. |  | 9,499.1 |  |  |  | 100.0 | % |  | Ps. |  | 10,547.7 |  |  |  | 100.0 | % |  | Ps. |  | 7,225.7 |  |  |  | 100.0 | % |
Other Information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total workload units (millions) (3) |  |  |  | 47.2 |  |  |  |  |  |  |  |  | 50.9 |  |  |  |  |  |  |  |  | 29.6 |  |  |  |  |  |
Total aeronautical revenues per workload unit |  | Ps. |  | 201.4 |  |  |  |  |  |  | Ps. |  | 207.0 |  |  |  |  |  |  | Ps. |  | 244.5 |  |  |  |  |  |
Change in aeronautical revenues (4) |  |  |  |  |  |  |  | 14.7 | % |  |  |  |  |  |  |  | 11.0 | % |  |  |  |  |  |  |  | (31.5 | )% |
Change in total aeronautical revenues per workload unit (4) |  |  |  |  |  |  |  | 4.1 | % |  |  |  |  |  |  |  | 2.8 | % |  |  |  |  |  |  |  | 18.1 | % |

(1) | Includes information for the Kingston airport for the period from October 10 to December 31, 2019.

(2) | Revenues from complementary service providers consist of access and other fees charged to third parties providing baggage handling, catering and other services at our airports.

(3) | Under the regulation applicable to our aeronautical revenues, a workload unit is equivalent to one terminal passenger or 100 kilograms (220 pounds) of cargo.

(4) | In each case, as compared to the prior year.

Under the relevant agreements with airlines, our specific tariffs are structured such that the substantial majority of our aeronautical revenues are derived from passenger charges, and we expect that this will continue to be the case in any future agreements. We earn passenger charges from each departing passenger at our airports (except certain exclusions in each of Mexico and Jamaica, described above under “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges”). In 2018, 2019 and 2020, passenger charges represented 81.6%, 81.4% and 82.1%, respectively, of our aeronautical services revenues and 54.9%, 52.9% and 50.0%, respectively, of our total revenues (in 2018, 2019 and 2020 passenger charges represented 61.1%, 60.0% and 61.3%, respectively, of the sum of aeronautical and non-aeronautical revenues).

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The following table sets forth the number of passengers paying passenger charges per airport for the years indicated:

Passengers Paying Passenger Charges per Airport

|  | Year ended December 31, |
Airport: |  | 2018 |  |  | 2019(1) |  |  | 2020 |
|  | Passengers |  |  | % change |  |  | Passengers |  |  | % change |  |  | Passengers |  |  | % change |
|  | (in thousands, except percentages) |
Guadalajara |  |  | 6,604.0 |  |  |  | 11.1 | % |  |  | 6,813.3 |  |  |  | 3.2 | % |  |  | 3,691.6 |  |  |  | (45.8 | )%
Tijuana |  |  | 3,726.4 |  |  |  | 10.3 |  |  |  | 4,263.8 |  |  |  | 14.4 |  |  |  | 3,022.7 |  |  |  | (29.1 | )
Los Cabos |  |  | 2,591.1 |  |  |  | 6.8 |  |  |  | 2,767.8 |  |  |  | 6.8 |  |  |  | 1,525.3 |  |  |  | (44.9 | )
Puerto Vallarta |  |  | 2,334.2 |  |  |  | 5.5 |  |  |  | 2,476.9 |  |  |  | 6.1 |  |  |  | 1,254.8 |  |  |  | (49.3 | )
Montego Bay |  |  | 2,236.2 |  |  |  | 6.2 |  |  |  | 2,347.7 |  |  |  | 5.0 |  |  |  | 824.5 |  |  |  | (64.9 | )
Guanajuato |  |  | 1,140.7 |  |  |  | 19.7 |  |  |  | 1,342.4 |  |  |  | 17.7 |  |  |  | 674.3 |  |  |  | (49.8 | )
Hermosillo |  |  | 836.0 |  |  |  | 7.2 |  |  |  | 897.2 |  |  |  | 7.3 |  |  |  | 468.0 |  |  |  | (47.8 | )
Mexicali |  |  | 543.1 |  |  |  | 42.1 |  |  |  | 574.5 |  |  |  | 5.8 |  |  |  | 331.1 |  |  |  | (42.4 | )
Kingston |  |  | - |  |  |  | - |  |  |  | 187.2 |  |  |  | 100.0 |  |  |  | 315.9 |  |  |  | 68.8 |
Morelia |  |  | 358.7 |  |  |  | 20.1 |  |  |  | 441.9 |  |  |  | 23.2 |  |  |  | 307.0 |  |  |  | (30.5 | )
La Paz |  |  | 449.4 |  |  |  | 8.4 |  |  |  | 492.0 |  |  |  | 9.5 |  |  |  | 279.7 |  |  |  | (43.1 | )
Aguascalientes |  |  | 423.1 |  |  |  | 15.0 |  |  |  | 419.1 |  |  |  | (0.9 | ) |  |  | 230.8 |  |  |  | (44.9 | )
Los Mochis |  |  | 168.1 |  |  |  | (1.2 | ) |  |  | 192.1 |  |  |  | 14.30 |  |  |  | 104.5 |  |  |  | (45.6 | )
Manzanillo |  |  | 83.0 |  |  |  | (6.4 | ) |  |  | 83.8 |  |  |  | 1.10 |  |  |  | 41.8 |  |  |  | (50.1 | )
Total |  |  | 21,494.0 |  |  |  | 10.1 | % |  |  | 23,299.7 |  |  |  | 8.4 | % |  |  | 13,072.0 |  |  |  | (43.9 | )%

(1) | Includes information for the Kingston airport for the period from October 10 to December 31, 2019.

Mexican Aeronautical Revenues

The system of price regulation applicable to our aeronautical revenues in Mexico establishes a maximum rate in pesos for each Mexican airport for each year in a five-year period, which is the maximum annual amount of revenues per workload unit that we may earn at that airport from aeronautical services. As of December 31, 2014, the SCT determined the maximum rates for our airports for each year through December 31, 2019. As of December 12, 2019, the SCT determined the maximum rates for our airports for each year through December 31, 2024, but these rates were adjusted on November 27, 2020, as a result of an Extraordinary Review Process requested by us as a result of the COVID-19 pandemic and its effects on our business. Our aeronautical revenues are determined largely by the number of workload units at each of our airports, which is primarily driven by passenger traffic levels, multiplied by the value of the maximum tariffs approved by the SCT. In addition, aeronautical revenues differ among our airports to the extent passenger traffic levels differ among these airports. See “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Services Regulation” for a description of our maximum rates and the rate-setting procedures for future periods.

Our Mexican concessions provide that our maximum rates must be adjusted on an annual basis as determined by the efficiency factor and by changes in inflation. See “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Revenues Regulation – Methodology for Determining Future Maximum Rates.” Under the regulatory system applicable to our Mexican aeronautical revenues, we can set the specific tariffs for each category of aeronautical services every six months (or more frequently if accumulated inflation since the last adjustment exceeds 5%), as long as the total aeronautical revenues per workload unit each year at each of our airports do not exceed the maximum rate set for such airport for that year. Although the SCT may in some cases authorize an increase in our maximum rates, we must negotiate with our principal airline customers the specific tariffs applicable to each aeronautical activity. As a result, we are not always able to increase prices up to the amount of maximum rates.

Aeronautical revenue per workload unit is an indicator that is calculated by dividing total aeronautical revenues by the workload units for a given period. This indicator is affected annually, except for years in which the new maximum tariffs are set, by:

| • | Adjustment in the maximum rates for the efficiency factor and the Mexican PPI, excluding petroleum;

| • | Increases and decreases in the relative number of workload units at each airport; and

| • | Changes in total workload units per airport.

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For the period from January 1, 2015 until December 31, 2019, the efficiency factor was 0.70%. Our weighted average maximum tariffs, as determined by the SCT (prior to inflation adjustments using the Mexican PPI), decreased 0.7% in 2018 and decreased 0.7% in 2019, mainly as a result of the efficiency factor. At the same time, the Mexican PPI, excluding petroleum, increased by 6.8% and 0.6% in 2018 and 2019, respectively. Our weighted average maximum tariffs as adjusted by the efficiency factor and the Mexican PPI, excluding petroleum, increased 6.2% in 2018 and increased 0.2% in 2019. The total workload units at our Mexican airports were 42.6 million and 45.7 million in 2018 and 2019, respectively, representing an increase of 10.6% in 2018, and an increase of 7.4% in 2019. Accordingly, when calculating aeronautical revenue per workload units, the result will fluctuate depending on the relative changes in the aforementioned factors. During 2018 and 2019, average aeronautical revenues per workload unit were Ps.201.4 and Ps.207.0 respectively, which represented an increase of 4.0% and an increase of 2.8% in 2018 and 2019, respectively. These increases resulted mainly from increases in traffic and tariffs due to adjustments for inflation.

On December 12, 2019, the SCT set new airport maximum rates for the five-year period from January 1, 2020 through December 31, 2024 expressed in constant pesos as of December 31, 2017. On January 2, 2020, these rates were published in the Official Gazette of the Federation (Diario Oficial de la Federación). The maximum rates for each of our airports under the Master Development Programs went into effect as of January 1, 2020 and were adjusted by inflation using the Mexican PPI. These rates were further adjusted on November 27, 2020, as a result of an Extraordinary Review Process requested by us as a result of the COVID-19 pandemic and its effects on our business. See Item 4, “Special Adjustments to Maximum Rates.”

For the period from January 1, 2020 until December 31, 2024, the efficiency factor was 0.70%. Our weighted average maximum tariffs, as determined by the SCT (prior to inflation adjustments using the Mexican PPI), increased 14.9% in 2020 as compared to 2019, mainly as a result of the new airport maximum tariffs since January 1, 2020. At the same time, the Mexican PPI, excluding petroleum, increased by 5.2% in 2020. Our weighted average maximum tariffs as adjusted by the efficiency factor and the Mexican PPI, excluding petroleum, increased 18.1% in 2020. The total workload units at our Mexican airports were 27.2 million in 2020, representing a decrease of 40.6% in 2020. Accordingly, when calculating aeronautical revenue per workload units, the result will fluctuate depending on the relative changes in the aforementioned factors. During 2020, average aeronautical revenues per workload unit were Ps.227.3, which represented an increase of 16.9% in 2020. These increases resulted mainly from increases in tariffs due to adjustments for inflation in our new Master Development Programs.

Historically, we have set our tariffs for regulated services at our Mexican airports as close as possible to the maximum rates allowed in any given year, and we expect to pursue this pricing strategy in the future. However, there can be no assurance that we will be able to collect virtually all of the revenues we are entitled to earn from services subject to price regulation in the future or that we will not be sanctioned in case we exceed our maximum rates. In prior years, in order to ensure our compliance with the maximum rate at a particular Mexican airport when the possibility of exceeding that maximum rate arose, we have taken actions in the latter part of the year, such as reducing our specific prices for aeronautical services and offering discounts or rebates, to ensure our compliance with the applicable maximum rate. For a discussion of risks related to our ability to set specific prices, see “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – We provide a public service regulated by the governments of Mexico and Jamaica, and our flexibility in managing our aeronautical activities is limited by the regulatory environments in which we operate ” and “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – If we exceed the maximum rate at any Mexican airport at the end of any year, we could be subject to sanctions.”

Jamaican Aeronautical Revenues

In Jamaica, revenues from passenger charges, aircraft landing and parking charges, airport security charges and passenger walkway charges are regulated by the JCAA. See “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services.”

The system of price regulation applicable to our Jamaican airports’ aeronautical revenues establishes maximum rates in U.S. dollars for a five-year period for charges levied on airlines and passengers using a price cap mechanism. Permission for any increase in the levy of regulated charges, which include passenger charges, aircraft landing and parking charges, passenger walkway charges and airport security charges, must be granted by the JCAA.

For MBJA, the airport charges were established with the concession on April 12, 2003. The first review period was concluded in November 2014 with the determination of new charges effective April 1, 2015. Thereafter, regulated aeronautical charges will be reviewed every five years. Aeronautical charges were adjusted by 2.2% and 2.1% in 2018 and 2019, respectively. In 2020, the new maximum rates for the five-year period from 2020-2024 went into effect as of January 1, 2020.

For NMIA, maximum rates for the five-year period from 2020-2024 went into effect as of April 1, 2020. Thereafter, regulated aeronautical charges will be reviewed every five years.

We filed a petition to review the tariffs, capital expenditures and the terms and conditions of the Concession Agreement for both airports due to the traffic impact of the COVID-19 pandemic. Our petition is under review, we expect a final decision during the fourth quarter of 2021.

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See “Item 4, Information on the Company – Regulatory Framework – Jamaican Aeronautical Services Regulation” for a description of MBJA’s and PACKAL’s maximum regulated charges and the procedures for setting maximum regulated charges for future periods.

Non-Aeronautical Revenues

Non-aeronautical services historically generate a smaller portion of our total revenues as compared to aeronautical services. Non-aeronautical revenues represented 22.5%, 23.2% and 20.6% of total revenues in 2018, 2019 and 2020, respectively. Non-aeronautical revenues per terminal passenger were Ps.70.9, Ps.77.4 and Ps.89.6 in 2018, 2019 and 2020, respectively. None of our revenues from non-aeronautical services are subject to price regulation under our maximum-rate price regulation systems.

Our revenues from non-aeronautical services are principally derived from commercial activities. We divide non-aeronautical commercial activities into revenues from businesses operated by third parties and revenues from businesses operated directly. Businesses operated by third parties include leasing of space in our airports to airlines and complementary service providers (for first class/VIP lounges and similar non-essential activities) and rental and royalty payments from third parties operating stores and providing commercial services at our airports, such as timeshare developers, retail stores, food and beverage providers, car rental agencies and duty-free store operators, as well as fees collected from other miscellaneous sources, such as vending machines. Businesses operated directly by us include car parking, advertising, VIP lounges and convenience stores. Additionally, we derive revenues from recovery of costs which are included in our non-aeronautical revenues.

The following table sets forth our revenues from non-aeronautical services for the years indicated:

Non-Aeronautical Revenues

|  | Year ended December 31, |  |
|  | 2018 |  |  | 2019(1) |  |  | 2020 |  |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |
|  | (millions of pesos, except percentages and workload unit data) |  |
Non-aeronautical Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Businesses operated by third parties: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Leasing of space (2) |  | Ps. |  | 229.1 |  |  |  | 7.2 | % |  | Ps. |  | 246.1 |  |  |  | 6.5 | % |  | Ps. |  | 207.8 |  |  |  | 8.5 | % |
Car rentals |  |  |  | 310.3 |  |  |  | 9.7 |  |  |  |  | 378.6 |  |  |  | 10.0 |  |  |  |  | 283.3 |  |  |  | 11.6 |  |
Food and beverage operations |  |  |  | 337.0 |  |  |  | 10.6 |  |  |  |  | 482.5 |  |  |  | 12.8 |  |  |  |  | 304.8 |  |  |  | 12.4 |  |
Retail operations |  |  |  | 345.0 |  |  |  | 10.8 |  |  |  |  | 380.9 |  |  |  | 10.1 |  |  |  |  | 253.8 |  |  |  | 10.4 |  |
Duty-free operations |  |  |  | 468.3 |  |  |  | 14.7 |  |  |  |  | 527.3 |  |  |  | 14.0 |  |  |  |  | 312.5 |  |  |  | 12.8 |  |
Timeshare operators |  |  |  | 196.5 |  |  |  | 6.2 |  |  |  |  | 222.4 |  |  |  | 5.9 |  |  |  |  | 102.7 |  |  |  | 4.2 |  |
Ground transportation |  |  |  | 129.5 |  |  |  | 4.1 |  |  |  |  | 143.2 |  |  |  | 3.8 |  |  |  |  | 96.8 |  |  |  | 4.0 |  |
Communications and financial services |  |  |  | 81.7 |  |  |  | 2.6 |  |  |  |  | 87.6 |  |  |  | 2.3 |  |  |  |  | 63.7 |  |  |  | 2.6 |  |
Other |  |  |  | 56.8 |  |  |  | 1.8 |  |  |  |  | 65.8 |  |  |  | 1.8 |  |  |  |  | 78.7 |  |  |  | 3.2 |  |
Total businesses operated by third parties: |  |  |  | 2,154.2 |  |  |  | 67.7 | % |  |  |  | 2,534.4 |  |  |  | 67.2 | % |  |  |  | 1,704.1 |  |  |  | 69.6 | % |
Businesses operated directly by us: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Car parking charges |  |  |  | 320.6 |  |  |  | 10.1 |  |  |  |  | 368.7 |  |  |  | 9.8 |  |  |  |  | 234.5 |  |  |  | 9.6 |  |
VIP lounges |  |  |  | 177.9 |  |  |  | 5.6 |  |  |  |  | 273.1 |  |  |  | 7.2 |  |  |  |  | 144.9 |  |  |  | 5.9 |  |
Advertising |  |  |  | 222.7 |  |  |  | 7.0 |  |  |  |  | 193.7 |  |  |  | 5.1 |  |  |  |  | 88.9 |  |  |  | 3.6 |  |
Convenience stores |  |  |  | 107.2 |  |  |  | 3.4 |  |  |  |  | 165.6 |  |  |  | 4.4 |  |  |  |  | 102.1 |  |  |  | 4.2 |  |
Total businesses operated directly by us: |  |  |  | 828.4 |  |  |  | 26.0 |  |  |  |  | 1,001.1 |  |  |  | 26.5 |  |  |  |  | 570.4 |  |  |  | 23.3 |  |
Recovery of costs (3) |  |  |  | 200.9 |  |  |  | 6.3 |  |  |  |  | 236.0 |  |  |  | 6.3 |  |  |  |  | 173.5 |  |  |  | 7.1 |  |
Total non-aeronautical revenues |  | Ps. |  | 3,183.5 |  |  |  | 100.0 | % |  | Ps. |  | 3,771.5 |  |  |  | 100.0 | % |  | Ps. |  | 2,448.1 |  |  |  | 100.0 | % |
Other Information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total terminal passengers (millions) |  |  |  | 44.9 |  |  |  |  |  |  |  |  | 48.7 |  |  |  |  |  |  |  |  | 27.3 |  |  |  |  |  |
Non-aeronautical revenues per terminal passenger |  | Ps. |  | 70.9 |  |  |  |  |  |  | Ps. |  | 77.4 |  |  |  |  |  |  | Ps. |  | 89.6 |  |  |  |  |  |
Change in non-aeronautical revenues per terminal passenger (year-on-year) |  |  |  |  |  |  |  | 4.1 | % |  |  |  |  |  |  |  | 9.2 | % |  |  |  |  |  |  |  | 15.7 | % |

(1) | Includes information for the Kingston airport for the period from October 10 to December 31, 2019.

(2) | Includes leasing of space in our airports to airlines and complementary service providers (for first class/VIP lounges and other similar non-essential activities).

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(3) | Recovery of costs consists of utility, fuel, maintenance and operation charges that are transferred to airlines and other tenants in our airports.

In 2020, revenues from non-aeronautical services in our airports accounted for 20.6% of the total revenues generated by our airports (in 2020, non-aeronautical revenues represented 25.3% of the sum of aeronautical and non-aeronautical revenues). While we believe that aeronautical revenues will continue to represent a majority of our future revenues, we currently estimate that the growth rate of our revenues from commercial activities will likely exceed the growth rate of our aeronautical revenues, except in the years in which the maximum tariffs are reset. In 2020, non-aeronautical revenues per terminal passenger increased 15.8% (from Ps. 77.4 in 2019 to Ps.89.7 in 2020, during which time the number of terminal passengers decreased 43.9%).

Non-aeronautical revenues per terminal passenger show the average revenue generated by the commercial areas of our airports, and it is calculated by dividing total non-aeronautical revenues by the number of terminal passengers during the same period. Therefore, if non-aeronautical revenues decline proportionately less than the decline in the number of terminal passengers during a period, non-aeronautical revenues per terminal passenger will increase despite the decrease in non-aeronautical revenues. Non-aeronautical revenues per terminal passenger are principally affected by:

| • | recovery of rights to certain businesses that we previously did not operate;

| • | opening of new commercial spaces at our airports;

| • | the level of passenger traffic; and

| • | the exchange rate between the Mexican peso and the U.S. dollar. This exchange rate affects our contracts that are denominated in U.S. dollars, which mainly consist of lease contracts for timeshare developers, car rentals, duty-free operations and certain lease contracts for food and beverages and retail operations.

Certain categories of non-aeronautical revenues are directly impacted by passenger traffic (for example car parking and rental, and food and beverage providers) while others are not (for example leasing of space, on which we earn at least a minimum fixed rent indexed to inflation each year, which may be increased by royalty-based payments as discussed below). Accordingly, non-aeronautical revenues do not always behave in the same manner as passenger traffic or workload units.

Approximately 98.2% of the contracts with third-party tenants that could be arranged as royalty-based have already been executed under those conditions (representing approximately 89.6% of our total non-aeronautical revenues). Under a royalty-based contract the amount tenants must pay is based on tenants’ revenues, subject to minimum guaranteed fixed amounts related to the square footage of the space leased. When the royalty-based amount is lower than the minimum guaranteed amount, the tenant must still pay the latter. Therefore, a decrease in passenger traffic volumes would result in a reduction in non-aeronautical revenues from such tenants only if, prior to such decrease in passenger traffic, the sales of royalty-based tenants were higher than the minimum guaranteed amount. As a result, during periods in which airports experience a reduction in passenger traffic volumes, non-aeronautical revenues may remain stable due to the minimum guaranteed amount received by the airport under the lease contract, thereby resulting in a potential increase in non-aeronautical revenues per workload unit.

During 2018, 2019 and 2020, non-aeronautical revenues were Ps.3,183.5 million, Ps.3,771.5 million and Ps.2,448.1 million, respectively, representing an increase of 14.8% in 2018, an increase of 18.5% in 2019 and a decrease of 35.1% in 2020. During 2020, non-aeronautical revenues decrease less than terminal passengers, which decreased 43.9%. In 2020, non-aeronautical revenues per terminal passenger increased from Ps.77.4 per passenger in 2019 to Ps.89.6 in 2020, representing an increase of 15.7% from 2019 to 2020, primarily due to the opening of new commercial spaces in early 2020, offset by the effects of the COVID-19 pandemic, due to the decrease in passenger traffic and the discounts and other benefits granted to our tenants, in order to provide them with liquidity to restart their operations after the lockdowns.

Recognition of Revenues from Improvements to Concession Assets

IFRIC 12 requires, subject to certain conditions, that the infrastructure of a service concession contract falling within its scope not be recognized as property, plant and equipment. It also requires that revenues obtained when the operator performs both construction or upgrade services and operating services under a single contract be recognized according to each type of service provided, based on the fair value of consideration received at the time the service is rendered. We recognize revenues and the associated costs of improvements to concession assets in relation with the concession’s obligation to perform improvements as established in the Master Development Programs in Mexico and Capital Development Program in Jamaica. Revenues represent the value of the exchange between us and the respective government with respect to the improvements, given that we construct or provide improvements to the airports as obligated under the Master Development Programs in Mexico and Capital Development Program in Jamaica, and in exchange, the respective government grants us the right to obtain benefits for services provided using those assets, which are recognized as intangible assets. We have determined that our obligations per the Master Development Programs in Mexico and Capital Development Program in Jamaica should be considered to be a revenue-earning activity as all expenditures incurred to fulfill the Master Development Programs and Capital Development Program are included in the tariffs. Therefore, we recognize the revenue and expense in profit or loss when the expenditures are performed. The cost for such additions and improvements to concession assets is based on actual costs incurred by us in the execution of the additions or improvements, considering the investment requirements in the Master Development Programs and Capital Development Program.

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Through bidding processes, we contract third parties to carry out such construction. The amount of revenues for these services is equal to the amount of costs incurred, as we do not obtain any profit margin for these construction services. The amounts paid are set at market value. As a result, revenues from improvements to concession assets do not have a cash impact on our results. Furthermore, they are not directly related to our passenger traffic, which is the main driver of our revenues. During 2018, we recognized Ps.1,440.2 million in revenues from improvements to concession assets. This represented an increase of 9.7% as compared to 2017, due to higher investment commitments under our Master Development Programs. In 2019, we recognized Ps.1,906.8 million in revenues from improvements to concession assets. This represented an increase of 32.4% as compared to 2018, due to higher investment commitments under our Master Development Programs. In 2020, we recognized Ps.2,192.6 million in revenues from improvements to concession assets. This represented a n in crease of 15.0% as compared to 2019, which was the last year under the Master Development Programs for the 2015-2019 period.

Operating Costs

The following table sets forth our operating costs and certain other related information for the years indicated:

Operating Costs

|  | Year ended December 31, |  |
|  | 2018 |  |  | 2019(1) |  |  | 2020 |  |
|  | Amount |  |  | Amount |  |  | Amount |  |  | % change |  |
|  | (millions of pesos, except percentages and passenger data) |  |
Operating Costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee costs |  | Ps. |  | 773.6 |  |  | Ps. |  | 877.1 |  |  | Ps. |  | 970.5 |  |  |  | 10.7 |  | %
Maintenance |  |  |  | 528.9 |  |  |  |  | 578.5 |  |  |  |  | 426.5 |  |  |  | (26.3 | ) | %
Safety, security and insurance |  |  |  | 386.1 |  |  |  |  | 428.2 |  |  |  |  | 458.3 |  |  |  | 7.0 |  | %
Utilities |  |  |  | 335.0 |  |  |  |  | 380.4 |  |  |  |  | 355.6 |  |  |  | (6.5 | ) | %
Other |  |  |  | 430.1 |  |  |  |  | 480.7 |  |  |  |  | 457.8 |  |  |  | (4.8 | ) | %
Total cost of services |  |  |  | 2,453.7 |  |  |  |  | 2,744.9 |  |  |  |  | 2,668.7 |  |  |  | (2.8 | ) | %
Technical assistance fees |  |  |  | 411.5 |  |  |  |  | 461.5 |  |  |  |  | 289.1 |  |  |  | (37.4 | ) | %
Concession taxes |  |  |  | 1,076.4 |  |  |  |  | 1,318.2 |  |  |  |  | 908.3 |  |  |  | (31.1 | ) | %
Depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |
Depreciation (2) |  |  |  | 400.2 |  |  |  |  | 446.5 |  |  |  |  | 495.3 |  |  |  | 10.9 |  | %
Amortization (3) |  |  |  | 1,169.4 |  |  |  |  | 1,329.6 |  |  |  |  | 1,505.1 |  |  |  | 13.2 |  | %
Total depreciation and amortization |  |  |  | 1,569.6 |  |  |  |  | 1,776.1 |  |  |  |  | 2,000.4 |  |  |  | 12.6 |  | %
Other (income) expenses - net |  |  |  | (73.2 | ) |  |  |  | 1.2 |  |  |  |  | (12.7 | ) |  |  | (1,150.0 | ) | %
|  |  |  | 5,438.0 |  |  |  |  | 6,302.0 |  |  |  |  | 5,853.8 |  |  |  | (7.1 | ) | %
Cost of improvements to concession assets |  |  |  | 1,440.2 |  |  |  |  | 1,906.8 |  |  |  |  | 2,192.6 |  |  |  | 15.0 |  | %
Total operating costs |  | Ps. |  | 6,878.2 |  |  | Ps. |  | 8,208.8 |  |  | Ps. |  | 8,046.4 |  |  |  | (2.0 | ) | %
Other Information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total workload units (thousands) (4) |  |  |  | 47,160.9 |  |  |  |  | 50,947.1 |  |  |  |  | 29,550.8 |  |  |  | (42.0 | ) | %
Cost of services per workload unit |  | Ps. |  | 52.0 |  |  | Ps. |  | 53.9 |  |  | Ps. |  | 90.3 |  |  |  | 67.6 |  | %
Cost of services / the sum of aeronautical and non-aeronautical revenues (5) |  |  |  | 19.3 | % |  |  |  | 19.2 | % |  |  |  | 27.6 | % |  |  |  |  |

(1) | Includes information for the Kingston airport for the period from October 10 to December 31, 2019.

(2) | Reflects depreciation of machinery, equipment and improvements on leased buildings.

(3) | Reflects amortization of our improvements of concession assets, concessions and other acquired rights.

(4) | Under the regulation applicable to our aeronautical revenues, a workload unit is equivalent to one terminal passenger or 100 kilograms (220 pounds) of cargo.

(5) | Cost of services divided by the sum of aeronautical and non-aeronautical revenues, expressed as a percentage.

Cost of Services

Our cost of services consists primarily of employee costs, maintenance, safety, security and insurance costs, as well as utilities (a portion of which we recover from our tenants) and various other miscellaneous expenses. Cost of services per workload unit is an indicator that is calculated by dividing cost of services by the workload units for a given period. This indicator is affected annually by:

| • | Increases and decreases in the different items included in cost of services; and

| • | Increases and decreases in the relative number of workload units.

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Therefore, if the cost of services increases less in proportion to the increase in workload units, the cost of service per workload unit decreases. Similarly, cost of service per workload units increases in periods in which the costs of service remain stable but workload units declined.

Our cost of services per workload unit was Ps.52.0 in 2018, Ps.53.9 in 2019 and Ps.90.3 in 2020, an increase of 3.7% from 2018 to 2019 and an increase of 68.3% from 2019 to 2020 due to the decrease in workload units. In 2020, cost of services decreased by 2.8% or Ps.76.2 million, while total workload units decreased by 42.0%, the decrease was primarily due to a decrease in maintenance costs of Ps.152.0 million, a Ps.24.8 million decrease in utilities, a Ps. 22.9 million decrease in other costs; partially offset by an increase in employee costs of Ps.93.4 million and a Ps.30.1 million decrease in safety and security costs. Cost of services for 2020 would have decreased more as compared to 2019, but for the fact that for 2019 cost of services includes information for PACKAL for the period from October 10 to December 31, 2019 only; while cost of services for 2020 includes full year information for PACKAL. Cost of services decreased by Ps.216.4 million, or 9.8% for our Mexican airports, which was mainly due to a Ps.155.4 million decrease in maintenance, a Ps.58.7 million decrease in other costs, a Ps.33.6 million decrease in utilities and a Ps. 21.9 million decrease in safety and security costs. These decreases in cost of services were partially offset by a Ps.53.1 million increase in employee costs. Cost of services at the Montego Bay airport decreased by Ps.66.4 million, mainly due to a Ps.6.1 million decrease in employee costs, a Ps.23.4 million decrease in utilities, a Ps.24.7 million decrease in maintenance costs and a Ps.14.5 million decrease in other costs, partially offset by a Ps.2.3 million increase in safety, security and insurance costs. Cost of services for PACKAL increased by Ps.206.7 million due to the consolidation of a full year of results for 2020 as compared to the period from October 1 to December 31, 2019. Our income from operations divided by the sum of aeronautical and non-aeronautical revenues (operating margin) decreased by 1,650 basis points from 56.1% in 2019 to 39.5% in 2020, mainly as a result of the generalized decrease in revenues resulting from the impact of COVID-19 and the consolidation of results for PACKAL for the full year.

Technical Assistance Fees

Technical Assistance Fees in Mexico

Under the technical assistance agreement, AMP provides management and consulting services as well as technical assistance and technological and industry knowledge and experience to us in exchange for a fee. This agreement is more fully described in Item 7 hereof. Since January 1, 2002, the fee has been equal to the greater of U.S.$4.0 million (adjusted annually for U.S. inflation) and 5% of our annual consolidated income from operations, defined as earnings before interest income or expense (calculated prior to deducting the technical assistance fee, income taxes, depreciation and amortization and in each case determined in accordance with MFRS). The technical assistance fee is a component of our maximum tariffs and is collected through the maximum tariffs charged. In 2018, 2019 and 2020, this fee was Ps.411.5 million, Ps.461.5 million and Ps.289.2 million, respectively.

Technical Assistance Fees in Jamaica

Prior to our acquisition of DCA, MBJA had a technical assistance agreement with Vantage, under which Vantage provided management and consulting services as well as technical assistance and technological and industry knowledge and experience to us in exchange for a fee. This technical assistance agreement expired in 2015 and was not renewed.

NMIA does not have a technical assistance agreement with third parties in place.

Concession Taxes

Mexican Concession Tax

We are subject to the Mexican Federal Duties Law, which requires each of our Mexican airports to pay a concession tax to the Mexican government currently equal to 5% of the gross annual revenues (excluding revenues from improvements to concession assets) of each concession holder obtained from the use of public domain assets pursuant to the terms of its concession. The concession tax rate may vary on an annual basis as determined solely by the Mexican Federal Congress, and there can be no assurance that this rate will not increase in the future. If Mexico’s Federal Congress increases the concession tax rate, we are entitled to request an increase in our maximum rates from the SCT; however, there can be no assurance that the SCT would approve our request.

In 2018, 2019 and 2020, this tax amounted Ps.533.5 million, Ps.599.1 million and Ps.406.0 million, respectively.

Jamaican Concession Fees

Under the terms of the Concession Agreement and the relevant tax legislation, MBJA is required to pay a monthly concession fee per workload unit, to the Jamaican government to allow it to use and develop the assets subject to the concession. MBJA is also required to pay an additional concession fee equal to 45% of any revenues earned in excess of the forecast revenues established in the Concession Agreement. This additional concession fee considers the period from April to March of each year, with payment required yearly.

According to the Concession Agreement, once a 25% cumulative annualized internal rate of return hurdle (“IRR Hurdle”) is reached (as measured from the date of the first equity contribution to the concessionaire), any equity distributions above the IRR Hurdle to MBJA’s shareholders must be matched by an equal payment to the AAJ as owner of the concession assets (“Excess Benefit Payment”). Equity distributions include any dividend, capital reduction, interest, fee, loan or other payment to MBJA’s shareholders. To date, MBJA’s IRR Hurdle has not been reached; the aggregate as of December 2020 was 19.0%.

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The concession fee applied in 2018 was U.S.$2.87 per workload unit serviced. In 2018, the sum of these monthly and annual concession fees was Ps.542.9 million. The concession fee applied in 2019 was U.S.$2.93 per workload unit serviced. In 2019, the sum of these monthly and annual concession fees was Ps.611.5 million. The concession fee applied in 2020 was U.S.$2.94 per workload unit serviced. In 2020, the sum of these monthly and annual concession fees was Ps.208.2 million.

The additional concession fee for the concession year ending March 2018, March 2019 and March 2020 was U.S.$15.9 million, U.S.$16.9 million and U.S.$17.2 million, respectively.

Under the terms of the NMIA Concession Agreement and the relevant tax legislation, PACKAL is required to pay a monthly concession fee of 62.01% of the total aeronautical and non-aeronautical revenues based on the gross revenues of NMIA, to the Jamaican government to allow it to use and develop the assets subject to the concession.

From October 10, 2019 through December 31, 2019 PACKAL paid Ps.107.6 million in concession fees. For 2020, PACKAL paid Ps.294.1 million in concession fees.

Depreciation and Amortization

Depreciation and Amortization of Mexican Assets

Our depreciation and amortization expenses primarily reflect the amortization of our investment in our twelve Mexican concessions, which we began amortizing for accounting purposes in August 1999, the date on which the value of our Mexican concessions was determined based on the value assigned by AMP to our Series BB shares as part of its winning bid to acquire its 15% interest in us. In addition, we amortize the value of certain fixed assets we acquire or build at our Mexican airports pursuant to the investment requirements under our Master Development Programs. In 2018 and 2020, we did not write off any amounts. In 2019, these write-offs totaled Ps.46.8 million. For further information regarding depreciation and amortization expenses, refer to Notes 7, 8, 9, 10 and 11 to our audited consolidated financial statements.

Depreciation and Amortization of Jamaican Assets

Our depreciation and amortization expenses in Jamaica primarily reflect the amortization of our investment in our Jamaican airports, the value of certain fixed assets the airports acquired pursuant to the investment requirements under their respective Capital Development Programs and amortization of MBJA concessions’ fair value. For further information regarding depreciation and amortization expenses, refer to Notes 7, 8, 9, 10 and 11 to our audited consolidated financial statements.

Cost of Improvements to Concession Assets

In compliance with our Master Development Programs in Mexico and the Capital Development Program in Jamaica, we invest in additions and upgrades to our concession assets and these investments are reflected according to IFRIC 12. In our case, because we hire third parties to provide construction and upgrade services and we do not recognize a premium on the cost of services, our revenues from improvements to concession assets are equal to the cost of improvements to concession assets such that the application of IFRIC 12 does not have a cash impact on our results.

Taxation

We and each of our subsidiaries pay taxes on an individual (rather than consolidated) basis.

Our effective tax rates in 2018, 2019 and 2020 were 26.6%, 25.8% and 19.6%, respectively.

In 2020, our effective tax rate decreased 610 basis points as compared to 2019, resulting from a Ps.1,333.3 million decrease in our current tax expense due to a 67.6% decrease in our earnings before income taxes as a result of the effects of the COVID-19 pandemic. This decrease was partially offset by a Ps.91.1 million increase in deferred income tax benefits due to higher inflation, which increased from an inflation rate of 2.8% in 2019 to an inflation rate of 3.2% in 2020.

In 2019, our effective tax rate decreased 80 basis points as compared to 2018, resulting from a Ps.61.7 million decrease in our current tax expense mainly due to an exception for airports located along the Mexican border with the United States of America, for which the income tax rate for 2019 was 20%, applying the Decree for Fiscal Incentives in the Northern Border Region (Decreto de Estímulos Fiscales Región Fronteriza Norte) which reduces the applicable income tax by a third and a decrease in deferred income tax of Ps.84.1 million, derived from a lower inflation rate, which went from an inflation rate of 4.8% in 2018 to an inflation rate of 2.8% in 2019, partially offset by an increase in our earnings before income taxes of 4.8%.

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In 2018, our effective tax rate increased 340 basis points as compared to 2017, resulting from a Ps.160.5 million decrease in the deferred tax benefits as a result of 4.8% inflation in 2018, versus 6.8% in 2017. These changes were offset by a decrease in our current tax expense by Ps.267.9 million, resulting from an increase in our earnings before income taxes of 13.5%.

We paid Ps.2,263.4 million, Ps.2,163.1 million and Ps.812.0 million, in corporate taxes in 2018, 2019 and 2020, respectively, representing 32.3%, 29.4% and 34.0% of our earnings before taxes.

Taxation in Mexico

Beginning in 2014, significant changes to tax laws applicable in Mexico came into force, with substantial effects for Mexican taxpayers (as published in the Official Gazette on December 11, 2013, the “2014 Fiscal Reform”).

The principal change to affect our business from the 2014 Fiscal Reform was the effect on our deferred income taxes caused by the reform to the Income Tax Law, by which the income tax rate was prospectively increased from 28% to 30%. The new income tax rate applies to all of our Mexican entities except for those entities with operations located on the Mexican side of the border with the United States, which will be subject to an income tax rate of 20% pursuant to the Decree for Fiscal Incentives in the Northern Border Region (Decreto de Estímulos Fiscales Región Fronteriza Norte). On December 30, 2020, the Mexican government published a decree in the Official Gazette that extends the period during which the 20% income tax rate will apply to December 31, 2024.

We regularly review our deferred tax assets for recoverability, which are reduced as necessary to the extent that a future tax benefit is no longer probable, based on an analysis of historical taxable income, projected future taxable income and the expected timing of the reversals of existing temporary differences. In addition, Mexican tax law allows Mexican companies utilizing tax amortization rates that are lower than the maximum allowable rates to modify their tax amortization rates every five years, without exceeding the maximum allowable rate. Beginning in 2000, we utilized rates lower than the 15% maximum allowable rate to amortize our airport concessions and rights to use airport facilities for tax purposes.

According to the mechanism established to recover existing asset tax credit carryforwards, which ultimately benefit us, we have ten years beginning in 2008 to recover those existing asset tax credits. Every year, we review and adjust, as necessary, our financial projections based on new expectations of revenues, expenses and capital expenditures, whether for our Master Development Programs, for new maximum tariffs or new passenger traffic projections. Based on these changes, which resulted in our ability to recover tax on assets previously determined to be unrecoverable, and our financial projections for 2008 to 2017, we recognized Ps.354.9 million in 2007 associated with a previously paid recoverable tax on assets. During 2018, we recovered Ps.25.3 million of the amount recognized in 2007. In 2019 and 2020, we recovered Ps.18.5 million and Ps. 14.9 million respectively and believe no additional asset tax credit carryforward is recoverable.

Taxation in Jamaica

Jamaican companies, including our Jamaican airports, are required to pay corporate income tax on taxable profit, employer taxes on certain employee costs and a value-added tax on services offered.

Corporate income tax is applicable on taxable profit at a rate of 25%, but taxable profit may be reduced by an employer tax credit of up to the total amount of employer and certain obligatory employee taxes timely paid during any fiscal year. However, this employer tax credit is clawed back if any dividends are paid to shareholders in the subsequent fiscal years, based on a prescribed formula. In 2018, 2019 and 2020, MBJA incurred U.S.$9.4 million (Ps.179.9 million), U.S.$9.7 million (Ps.186.8 million) and U.S.$1.0 million (Ps.20.7 million), respectively, in corporate income tax liabilities. From October 10, 2019 through December 31, 2019 and in the 2020 year, PACKAL did not incur corporate income tax liabilities for the period due to the fact that expenses exceeded income for the period.

Employee Profit Sharing

Employee Profit Sharing in Mexico

We are subject to the statutory employee profit sharing regime established under the Mexican Federal Labor Law (Ley Federal del Trabajo). Under this regime, 10% of each unconsolidated company’s annual profits (as calculated for tax purposes) must be distributed among its employees, other than its chief executive officer. The profit sharing is derived from the taxable income for the year as adjusted by the income tax for the year as modified per certain provisions.

Employee Profit Sharing in Jamaica

Our Jamaican airports are not subject to an employee profit sharing regime.

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Employee Retirement Plans

Employee Retirement Plans in Mexico

Under Mexican legislation, we must make payments equivalent to 2% of our workers’ comprehensive daily salary to a defined contribution plan that is part of the retirement savings system. This expense amounted Ps.7.2 million in 2018, Ps.8.0 million in 2019 and Ps.8.7 million in 2020.

Employee Retirement Plans in Jamaica

MBJA participates in a defined contribution pension scheme, the assets of which are held in a separate fund administered by trustees and a fund Administrator. Under this contribution pension scheme MBJA pays fixed percentage contributions to the fund, which are funded by payments from employees and the company. MBJA’s contributions are charged to the statement of comprehensive income for the year to which they relate.

As of October 10, 2020 PACKAL participates in a defined contribution pension scheme, given that all employees are permanent. The assets of the pension are held in an Approved Retirement Scheme. Under this contribution pension scheme, PACKAL pays fixed percentage contributions to the fund, which are funded by payments from employees and the company. PACKAL’s contributions are charged to the statement of comprehensive income for the year to which they relate.

Effects of Devaluation and Inflation

The following table sets forth, for the periods indicated, the percentage change in the price of the Mexican peso against the U.S. dollar, the Mexican inflation rate, the U.S. inflation rate, and the Mexican GDP, each as compared to the previous period:

|  | Year ended December 31, |  |
|  | 2018 |  |  | 2019 |  |  | 2020 |  |
Depreciation (appreciation) of the Mexican peso as compared to the U.S. dollar (1) |  |  | (0.3 | )% |  |  | (4.3 | )% |  |  | 5.9 | % |
Mexican inflation rate (2) |  |  | 4.8 | % |  |  | 2.8 | % |  |  | 3.2 | % |
U.S. inflation rate (3) |  |  | 1.9 | % |  |  | 2.3 | % |  |  | 1.4 | % |
Increase in Mexican GDP (4) |  |  | 2.0 | % |  |  | (0.1 | )% |  |  | (8.2 | )% |

(1) | Based on changes in the rates for calculating foreign exchange liabilities, as reported by the Mexican Central Bank (Banco de México), at the end of each period, which were as follows: Ps.19.6829 per U.S.$1.00 as of December 31, 2018, Ps.18.8452 per U.S.$1.00 as of December 31, 2019 and Ps.19.9487 per U.S.$1.00 as of December 31, 2020.

(2) | Based on changes in the Mexican CPI from the previous period, as reported by INEGI. The Mexican CPI at year-end was 103.019 in 2018, 105.934 in 2019 and 109.272 in 2020.

(3) | As reported by the U.S. Bureau of Labor Statistics.

(4) | Estimated as reported by INEGI.

The general condition of the Mexican economy, changes in the value of the peso as compared to the U.S. dollar, inflation and high interest rates have in the past adversely affected, and may in the future adversely affect, our:

| • | Depreciation and amortization expense. According to IFRS, if inflation rates over a three-year period approach or exceed 100.0%, the incorporation of inflation in an entity’s financial statements becomes necessary. Therefore, non-monetary assets would be restated, and as a result depreciation and amortization of those assets would be higher, negatively affecting our net income.

| • | Passenger charges. Passenger charges for international passengers are currently denominated in U.S. dollars, but are invoiced and collected in pesos. Meanwhile, passenger charges for domestic passengers are denominated in pesos. Consequently, an appreciation of the peso against the U.S. dollar could cause declines in our revenues from passenger charges for international passengers and consequently our aeronautical revenues. This would also produce a decline in peso-denominated revenues when compared with the previous year, because our tariffs for the services we provide to international flights or international passengers are denominated in U.S. dollars but are generally invoiced and paid for in Mexican pesos based on the average exchange rate for the month prior to each flight on which the charge is incurred.

| • | Finance income (cost). As required by IFRS, our finance income (cost) reflects gains or losses from foreign exchange and gains and losses from interest earned or incurred, and as a consequence a depreciation or appreciation of the peso would impact the finance income (cost).

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| • | Maximum rates in pesos. Our tariffs for the services we provide in our Mexican airports to international flights or international passengers are denominated in U.S. dollars, but are generally invoiced and paid in Mexican pesos based on the average exchange rate for the month prior to each flight. During 2018, 2019 and 2020, we collected passenger charges from airlines within an average period of 57, 54 and 6 7 days, respectively. We intend to charge prices that are as close as possible to the maximum rates that we can charge. Since we are usually only entitled to adjust our specific prices once every six months (or earlier upon a cumulative increase of 5% in the Mexican PPI, excluding petroleum), a depreciation of the peso as compared to the U.S. dollar, particularly late in the year, could cause us to exceed the maximum rates at one or more of our airports, possibly leading to the termination of one of our Mexican concessions if it is repeated and sanctioned by the SCT at least three times. In the event that any one of our Mexican concessions is terminated, our other Mexican concessions may also be terminated. In addition, if the peso appreciates as compared to the U.S. dollar, we may underestimate the specific prices we can charge for regulated services and be unable to adjust our prices upwards to maximize our regulated revenues.

| • | Non-aeronautical revenues. In addition, some of our non-aeronautical revenue contracts are denominated and invoiced in U.S. dollars; however, some of them are collected in Mexican pesos. Consequently, an appreciation of the peso against the U.S. dollar would cause declines in our revenues from these U.S. dollar-denominated contracts.

Results of Operations by Subsidiary

Historically, our most profitable airports have been our Guadalajara, Los Cabos, Montego Bay and Puerto Vallarta international airports, which handle the majority of our international passengers. However, in 2020 due to the impact of the COVID-19 pandemic on our airports in tourist areas, our Tijuana airport was our second airport with the most passenger traffic. In 2020, our Tijuana airport had the lowest percentage decrease in passenger traffic (a decrease of 29.2%).

We determine profitability per airport by dividing income from operations at each airport by total revenues for that airport. Operating margins at our Tijuana airport historically have been lower than at our other principal airports because the maximum rates applicable to aeronautical services provided at our Tijuana airport are lower than those applicable to our other principal airports. This results from the amortization of our concession relative to the level of revenues being much higher at our Tijuana airport than at our other principal airports because the original concession value assigned to Tijuana International Airport was proportionately higher.

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The following table sets forth our results of operations for the years indicated for each of our principal airports and our other subsidiaries:

Results of Operations

|  |  | Year ended December 31, |  |
|  | 2018 |  |  | 2019 |  |  | 2020 |  |
|  |  | (thousands of pesos, except percentages) |  |
Guadalajara: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 2,824,677 |  |  | Ps. |  | 2,978,617 |  |  | Ps. |  | 2,103,574 |  |
Non-aeronautical services |  |  |  | 796,739 |  |  |  |  | 938,445 |  |  |  |  | 591,789 |  |
|  |  |  | 3,621,416 |  |  |  |  | 3,917,062 |  |  |  |  | 2,695,364 |  |
Improvements to concession assets (1) |  |  |  | 110,415 |  |  |  |  | 858,807 |  |  |  |  | 614,479 |  |
Total revenues |  |  |  | 3,731,831 |  |  |  |  | 4,775,868 |  |  |  |  | 3,309,842 |  |
Total costs |  |  |  | 1,277,072 |  |  |  |  | 2,176,553 |  |  |  |  | 1,837,386 |  |
Costs of operations (2) |  |  |  | 769,019 |  |  |  |  | 867,224 |  |  |  |  | 752,508 |  |
Cost of improvements to concession (1) |  |  |  | 110,415 |  |  |  |  | 858,807 |  |  |  |  | 614,479 |  |
Depreciation and amortization |  |  |  | 310,882 |  |  |  |  | 346,587 |  |  |  |  | 368,964 |  |
Other expense |  |  |  | 86,756 |  |  |  |  | 103,935 |  |  |  |  | 101,435 |  |
Income from operations |  |  |  | 2,454,759 |  |  |  |  | 2,599,316 |  |  |  |  | 1,472,456 |  |
Operating margin (3) |  |  |  | 65.78 | % |  |  |  | 54.43 | % |  |  |  | 44.49 | % |
Tijuana: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 1,344,122 |  |  | Ps. |  | 1,568,297 |  |  | Ps. |  | 1,192,187 |  |
Non-aeronautical services |  |  |  | 326,214 |  |  |  |  | 454,098 |  |  |  |  | 335,419 |  |
|  |  |  | 1,670,337 |  |  |  |  | 2,022,396 |  |  |  |  | 1,527,606 |  |
Improvements to concession assets (1) |  |  |  | 100,986 |  |  |  |  | 300,221 |  |  |  |  | 681,755 |  |
Total revenues |  |  |  | 1,771,323 |  |  |  |  | 2,322,617 |  |  |  |  | 2,209,360 |  |
Total costs |  |  |  | 728,956 |  |  |  |  | 1,047,716 |  |  |  |  | 1,407,306 |  |
Costs of operations (2) |  |  |  | 364,605 |  |  |  |  | 447,599 |  |  |  |  | 406,858 |  |
Cost of improvements to concession (1) |  |  |  | 100,986 |  |  |  |  | 300,221 |  |  |  |  | 681,755 |  |
Depreciation and amortization |  |  |  | 180,904 |  |  |  |  | 206,983 |  |  |  |  | 254,634 |  |
Other expense |  |  |  | 82,460 |  |  |  |  | 92,914 |  |  |  |  | 64,059 |  |
Income from operations |  |  |  | 1,042,367 |  |  |  |  | 1,274,901 |  |  |  |  | 802,055 |  |
Operating margin (3) |  |  |  | 58.85 | % |  |  |  | 54.89 | % |  |  |  | 36.30 | % |
Los Cabos: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 1,244,106 |  |  | Ps. |  | 1,364,746 |  |  | Ps. |  | 971,021 |  |
Non-aeronautical services |  |  |  | 698,891 |  |  |  |  | 787,424 |  |  |  |  | 460,939 |  |
|  |  |  | 1,942,997 |  |  |  |  | 2,152,170 |  |  |  |  | 1,431,961 |  |
Improvements to concession assets (1) |  |  |  | 346,956 |  |  |  |  | 299,155 |  |  |  |  | 339,231 |  |
Total revenues |  |  |  | 2,289,954 |  |  |  |  | 2,451,326 |  |  |  |  | 1,771,191 |  |
Total costs |  |  |  | 1,017,773 |  |  |  |  | 1,053,998 |  |  |  |  | 1,014,561 |  |
Costs of operations (2) |  |  |  | 403,660 |  |  |  |  | 475,215 |  |  |  |  | 367,048 |  |
Cost of improvements to concession (1) |  |  |  | 346,956 |  |  |  |  | 299,155 |  |  |  |  | 339,231 |  |
Depreciation and amortization |  |  |  | 217,858 |  |  |  |  | 234,669 |  |  |  |  | 265,581 |  |
Other expense |  |  |  | 49,299 |  |  |  |  | 44,958 |  |  |  |  | 42,702 |  |
Income from operations |  |  |  | 1,272,180 |  |  |  |  | 1,397,328 |  |  |  |  | 756,630 |  |
Operating margin (3) |  |  |  | 55.55 | % |  |  |  | 57.00 | % |  |  |  | 42.72 | % |

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|  | Year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  |  | (thousands of pesos, except percentages) |
Puerto Vallarta: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 1,088,417 |  |  | Ps. |  | 1,183,610 |  |  | Ps. |  | 776,424 |
Non-aeronautical services |  |  |  | 399,427 |  |  |  |  | 455,699 |  |  |  |  | 266,442 |
|  |  |  | 1,487,844 |  |  |  |  | 1,639,309 |  |  |  |  | 1,042,866 |
Improvements to concession assets (1) |  |  |  | 40,330 |  |  |  |  | 57,697 |  |  |  |  | 67,026 |
Total revenues |  |  |  | 1,528,174 |  |  |  |  | 1,697,007 |  |  |  |  | 1,109,892 |
Total costs |  |  |  | 585,623 |  |  |  |  | 645,337 |  |  |  |  | 583,131 |
Costs of operations (2) |  |  |  | 352,589 |  |  |  |  | 357,132 |  |  |  |  | 294,821 |
Cost of improvements to concession (1) |  |  |  | 40,330 |  |  |  |  | 57,697 |  |  |  |  | 67,026 |
Depreciation and amortization |  |  |  | 153,230 |  |  |  |  | 156,383 |  |  |  |  | 168,579 |
Other expense |  |  |  | 39,474 |  |  |  |  | 74,125 |  |  |  |  | 52,705 |
Income from operations |  |  |  | 942,551 |  |  |  |  | 1,051,669 |  |  |  |  | 526,761 |
Operating margin (3) |  |  |  | 61.68 | % |  |  |  | 61.97 | % |  |  |  | 47.46 | %
Montego Bay: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 1,419,674 |  |  | Ps. |  | 1,512,164 |  |  | Ps. |  | 695,879 |
Non-aeronautical services |  |  |  | 543,878 |  |  |  |  | 585,325 |  |  |  |  | 327,158 |
|  |  |  | 1,963,552 |  |  |  |  | 2,097,489 |  |  |  |  | 1,023,037 |
Improvements to concession assets (1) |  |  |  | 545,959 |  |  |  |  | 136,363 |  |  |  |  | 138,768 |
Total revenues |  |  |  | 2,509,511 |  |  |  |  | 2,233,853 |  |  |  |  | 1,161,805 |
Total costs |  |  |  | 1,866,797 |  |  |  |  | 1,604,825 |  |  |  |  | 1,250,706 |
Costs of operations (2) |  |  |  | 986,266 |  |  |  |  | 1,068,338 |  |  |  |  | 598,063 |
Cost of improvements to concession (1) |  |  |  | 545,959 |  |  |  |  | 136,363 |  |  |  |  | 138,768 |
Depreciation and amortization |  |  |  | 354,963 |  |  |  |  | 399,738 |  |  |  |  | 512,098 |
Other expense |  |  |  | (20,391 | ) |  |  |  | 386 |  |  |  |  | 1,777 |
Income from operations |  |  |  | 642,714 |  |  |  |  | 629,027 |  |  |  |  | (88,901 | )
Operating margin (3) |  |  |  | 25.61 | % |  |  |  | 28.16 | % |  |  | (7.65)% |
Guanajuato: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 484,799 |  |  | Ps. |  | 584,650 |  |  | Ps. |  | 338,633 |
Non-aeronautical services |  |  |  | 148,119 |  |  |  |  | 180,327 |  |  |  |  | 113,826 |
|  |  |  | 632,918 |  |  |  |  | 764,976 |  |  |  |  | 452,459 |
Improvements to concession assets (1) |  |  |  | 16,244 |  |  |  |  | 32,853 |  |  |  |  | 36,334 |
Total revenues |  |  |  | 649,162 |  |  |  |  | 797,829 |  |  |  |  | 488,793 |
Total costs |  |  |  | 241,125 |  |  |  |  | 320,512 |  |  |  |  | 272,749 |
Costs of operations (2) |  |  |  | 149,389 |  |  |  |  | 169,099 |  |  |  |  | 137,900 |
Cost of improvements to concession (1) |  |  |  | 16,244 |  |  |  |  | 32,853 |  |  |  |  | 36,334 |
Depreciation and amortization |  |  |  | 61,072 |  |  |  |  | 101,688 |  |  |  |  | 72,362 |
Other expense |  |  |  | 14,419 |  |  |  |  | 16,873 |  |  |  |  | 26,153 |
Income from operations |  |  |  | 408,037 |  |  |  |  | 477,317 |  |  |  |  | 216,044 |
Operating margin (3) |  |  |  | 62.86 | % |  |  |  | 59.83 | % |  |  |  | 44.20 | %

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|  | Year ended December 31, |
|  | 2018 |  |  | 2019(1) |  |  | 2020 |
|  | (thousands of pesos, except percentages) |
Hermosillo: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 306,118 |  |  | Ps. |  | 337,380 |  |  | Ps. |  | 204,650 |
Non-aeronautical services |  |  |  | 82,922 |  |  |  |  | 97,696 |  |  |  |  | 64,609 |
|  |  |  | 389,040 |  |  |  |  | 435,076 |  |  |  |  | 269,260 |
Improvements to concession assets (1) |  |  |  | 47,541 |  |  |  |  | 3,332 |  |  |  |  | 19,329 |
Total revenues |  |  |  | 436,581 |  |  |  |  | 438,408 |  |  |  |  | 288,588 |
Total costs |  |  |  | 283,006 |  |  |  |  | 247,329 |  |  |  |  | 230,818 |
Costs of operations (2) |  |  |  | 142,377 |  |  |  |  | 152,523 |  |  |  |  | 116,891 |
Cost of improvements to concession (1) |  |  |  | 47,541 |  |  |  |  | 3,332 |  |  |  |  | 19,329 |
Depreciation and amortization |  |  |  | 72,635 |  |  |  |  | 75,028 |  |  |  |  | 76,330 |
Other expense |  |  |  | 20,452 |  |  |  |  | 16,446 |  |  |  |  | 18,269 |
Income from operations |  |  |  | 153,575 |  |  |  |  | 191,079 |  |  |  |  | 57,770 |
Operating margin (3) |  |  |  | 35.18 | % |  |  |  | 43.58 | % |  |  |  | 20.02 | %
Other Airport Subsidiaries (4) : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 787,242 |  |  | Ps. |  | 1,018,256 |  |  | Ps. |  | 943,372 |
Non-aeronautical services |  |  |  | 180,517 |  |  |  |  | 265,281 |  |  |  |  | 283,982 |
|  |  |  | 967,759 |  |  |  |  | 1,283,537 |  |  |  |  | 1,227,354 |
Improvements to concession assets (1) |  |  |  | 231,771 |  |  |  |  | 218,371 |  |  |  |  | 295,658 |
Total revenues |  |  |  | 1,199,530 |  |  |  |  | 1,501,910 |  |  |  |  | 1,523,012 |
Total costs |  |  |  | 893,333 |  |  |  |  | 1,151,659 |  |  |  |  | 1,557,645 |
Costs of operations (2) |  |  |  | 409,838 |  |  |  |  | 637,879 |  |  |  |  | 938,431 |
Cost of improvements to concession (1) |  |  |  | 231,771 |  |  |  |  | 218,371 |  |  |  |  | 295,658 |
Depreciation and amortization |  |  |  | 186,996 |  |  |  |  | 210,358 |  |  |  |  | 240,766 |
Other expense |  |  |  | 64,728 |  |  |  |  | 85,051 |  |  |  |  | 82,790 |
Income from operations |  |  |  | 306,197 |  |  |  |  | 350,251 |  |  |  |  | (34,633 | )
Operating margin (3) |  |  |  | 25.53 | % |  |  |  | 23.32 | % |  |  |  | (2.27 | )%
Other Subsidiaries (5) : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-aeronautical services |  | Ps. |  | 6,823 |  |  | Ps. |  | 7,205 |  |  | Ps. |  | 3,889 |
Total revenues |  |  |  | 6,823 |  |  |  |  | 7,205 |  |  |  |  | 3,889 |
Total costs |  |  |  | (15,447 | ) |  |  |  | (37,633 | ) |  |  |  | (107,918 | )
Costs of operations (2) |  |  |  | 363,806 |  |  |  |  | 349,624 |  |  |  |  | 253,651 |
Depreciation and amortization |  |  |  | 31,097 |  |  |  |  | 44,703 |  |  |  |  | 41,046 |
Other (income) |  |  |  | (410,350 | ) |  |  |  | (431,960 | ) |  |  |  | (402,615 | )
Income from operations |  |  |  | 22,270 |  |  |  |  | 44,838 |  |  |  |  | 111,807 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 9,499,154 |  |  | Ps. |  | 10,547,720 |  |  | Ps. |  | 7,225,742 |
Non-aeronautical services |  |  |  | 3,183,532 |  |  |  |  | 3,771,500 |  |  |  |  | 2,448,053 |
|  |  |  | 12,682,686 |  |  |  |  | 14,319,220 |  |  |  |  | 9,673,795 |
Improvements to concession assets (1) |  |  |  | 1,440,204 |  |  |  |  | 1,906,801 |  |  |  |  | 2,192,578 |
Total revenues |  |  |  | 14,122,890 |  |  |  |  | 16,226,021 |  |  |  |  | 11,866,373 |
Total costs |  |  |  | 6,878,237 |  |  |  |  | 8,208,783 |  |  |  |  | 8,046,384 |
Costs of operations (2) |  |  |  | 3,941,549 |  |  |  |  | 4,524,633 |  |  |  |  | 3,866,170 |
Cost of improvements to concession (1) |  |  |  | 1,440,204 |  |  |  |  | 1,906,801 |  |  |  |  | 2,192,578 |
Depreciation and amortization |  |  |  | 1,569,637 |  |  |  |  | 1,776,137 |  |  |  |  | 2,000,361 |
Other (income) expense |  |  |  | (73,152 | ) |  |  |  | 1,212 |  |  |  |  | (12,725 | )
Income from operations |  |  |  | 7,244,652 |  |  |  |  | 8,017,238 |  |  |  |  | 3,819,989 |
Operating margin (3) |  |  |  | 51.30 | % |  |  |  | 49.41 | % |  |  |  | 32.19 | %

(1) | Corresponds to recognition of revenues and costs pursuant to IFRIC 12.

(2) | Cost of operations includes cost of services, technical assistance fees and concession taxes.

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(3) | We determine operating margin per airport by dividing income from operations at each airport or group of airports by total revenues for that airport or group of airports.

(4) | Reflects the results of operations of our Morelia, La Paz, Aguascalientes, Mexicali, Los Mochis and Manzanillo airports. It also includes information for the Kingston airport for the period from October 10 to December 31, 2019 and for the full year in 2020.

(5) | Other subsidiaries data reflects the results of operations of our principal holding company as well as those of our administrative, operating and car parking services providers.

The following table sets forth a summary of our consolidated results of operations for the years indicated:

Summary Consolidated Results of Operations

|  | Year ended December 31, |  |
|  | 2018 |  |  | 2019(1) |  |  | 2020 |  |  | % change |  |
|  | (thousands of pesos, except percentages) |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 9,499,154 |  |  | Ps. |  | 10,547,720 |  |  | Ps. |  | 7,225,742 |  |  |  | (31.5 | ) | %
Non-aeronautical services |  |  |  | 3,183,532 |  |  |  |  | 3,771,500 |  |  |  |  | 2,448,053 |  |  |  | (35.1 | ) | %
|  |  |  | 12,682,686 |  |  |  |  | 14,319,220 |  |  |  |  | 9,673,795 |  |  |  | (32.4 | ) | %
Improvements to concession assets |  |  |  | 1,440,204 |  |  |  |  | 1,906,801 |  |  |  |  | 2,192,578 |  |  |  | 15.0 |  | %
Total revenues |  |  |  | 14,122,890 |  |  |  |  | 16,226,021 |  |  |  |  | 11,866,373 |  |  |  | (26.9 | ) | %
Operating costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of services |  |  |  | 2,453,722 |  |  |  |  | 2,744,864 |  |  |  |  | 2,668,707 |  |  |  | (2.8 | ) | %
Technical assistance fees |  |  |  | 411,477 |  |  |  |  | 461,549 |  |  |  |  | 289,154 |  |  |  | (37.4 | ) | %
Concession taxes |  |  |  | 1,076,350 |  |  |  |  | 1,318,220 |  |  |  |  | 908,310 |  |  |  | (31.1 | ) | %
Depreciation and amortization |  |  |  | 1,569,637 |  |  |  |  | 1,776,137 |  |  |  |  | 2,000,360 |  |  |  | 12.6 |  | %
Other (income) expense |  |  |  | (73,152 | ) |  |  |  | 1,212 |  |  |  |  | (12,726 | ) |  |  | (1,150.0 | ) | %
Cost of improvements to concession assets |  |  |  | 1,440,204 |  |  |  |  | 1,906,801 |  |  |  |  | 2,192,578 |  |  |  | 15.0 |  | %
Total costs |  |  |  | 6,878,238 |  |  |  |  | 8,208,783 |  |  |  |  | 8,046,384 |  |  |  | 2.0 |  | %
Income from operations |  |  |  | 7,244,652 |  |  |  |  | 8,017,238 |  |  |  |  | 3,819,989 |  |  |  | (52.4 | ) | %
Finance cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest cost, net |  |  |  | (435,717 | ) |  |  |  | (759,917 | ) |  |  |  | (1,103,738 | ) |  |  | 45.2 |  | %
Exchange gain, net |  |  |  | 199,684 |  |  |  |  | 88,785 |  |  |  |  | (330,484 | ) |  |  | (472.2 | ) | %
Net finance (cost) income |  |  |  | (236,033 | ) |  |  |  | (671,132 | ) |  |  |  | (1,434,222 | ) |  |  | 113.7 |  | %
Share of (loss) profit of associate |  |  |  | (947 | ) |  |  |  | 79 |  |  |  |  | 3 |  |  |  | (96.2 | ) | %
Income before income taxes |  |  |  | 7,007,672 |  |  |  |  | 7,346,185 |  |  |  |  | 2,385,770 |  |  |  | (67.5 | ) | %
Income tax expense |  |  |  | 1,869,041 |  |  |  |  | 1,891,443 |  |  |  |  | 467,067 |  |  |  | (75.3 | ) | %
Profit for the year |  |  |  | 5,138,631 |  |  |  |  | 5,454,742 |  |  |  |  | 1,918,703 |  |  |  | (64.8 | ) | %
Other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Items that are or may be reclassified subsequently to profit or loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exchange differences on translating foreign operations |  |  |  | (103,569 | ) |  |  |  | (269,440 | ) |  |  |  | 580,308 |  |  |  | (315.4 | ) | %
Cash flow hedges, effective portion of changes in fair value, net of income tax |  |  |  | — |  |  |  |  | (172,094 | ) |  |  |  | (299,013 | ) |  |  | 73.7 |  | %
Items that will not be reclassified to profit or loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Remeasurements of employee benefit – net of income tax |  |  |  | (161 | ) |  |  |  | (1,404 | ) |  |  |  | (16,658 | ) |  |  | 1,086.5 |  | %
Total comprehensive income for the year |  |  |  | 5,034,901 |  |  |  |  | 5,011,804 |  |  |  |  | 2,183,340 |  |  |  | (56.4 | ) | %
Profit for the year attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling interest |  |  |  | 5,037,368 |  |  |  |  | 5,360,152 |  |  |  |  | 1,968,856 |  |  |  | (63.3 | ) | %
Non-controlling interesting |  |  |  | 101,263 |  |  |  |  | 94,590 |  |  |  |  | (50,153 | ) |  |  | (153.0 | ) | %
Profit for the year |  |  |  | 5,138,631 |  |  |  |  | 5,454,742 |  |  |  |  | 1,918,703 |  |  |  | (64.8 | ) | %
Total comprehensive income for the year |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling interest |  |  |  | 4,936,526 |  |  |  |  | 4,937,027 |  |  |  |  | 2,164,639 |  |  |  | (56.2 | ) | %
Non-controlling interesting |  |  |  | 98,375 |  |  |  |  | 74,777 |  |  |  |  | 18,701 |  |  |  | (75.0 | ) | %
Total comprehensive income for the year |  |  |  | 5,034,901 |  |  |  |  | 5,011,804 |  |  |  |  | 2,183,340 |  |  |  | (56.4 | ) | %
Other operating data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating margin (2) |  |  |  | 51.3 | % |  |  |  | 49.4 | % |  |  |  | 32.2 | % |  |  | 34.8 |  | %
Net margin (3) |  |  |  | 36.4 | % |  |  |  | 33.6 | % |  |  |  | 16.2 | % |  |  | (51.9 | ) | %

(1) | Includes information for the Kingston airport for the period from October 10 to December 31, 2019.

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(2) | Income from operations divided by total revenues, expressed as a percentage.

(3) | Profit for the year divided by total revenues, expressed as a percentage.

Results of Operations for the Year ended December 31, 2020 Compared to the Year Ended December 31, 2019

Revenues

Total revenues decreased by Ps.4,359.6 million, or 26.9%, from Ps.16,226.0 million in 2019 to Ps.11,866.4 million in 2020 as a result of the impact of the COVID-19 pandemic. The total revenue decrease comprised a decrease of Ps.3,322.0 million, or 31.5%, in aeronautical services revenues and a decrease of Ps.1,323.4 million, or 35.1%, in non-aeronautical services revenues. This decrease was partially offset by an increase of Ps.285.8 million, or 15.0%, in revenues from improvements to concession assets which increased as a result of the committed investments outlined in our Master Development Programs.

Aeronautical Services Revenues

Aeronautical services revenues decreased by Ps.3,322.0 million, or 31.5%, from Ps.10,547.8 million in 2019 to Ps.7,225.7 million in 2020, mainly due to a decrease of Ps.2,718.4 million, or 30.6%, in revenues at our Mexican airports primarily as a result of a decrease of Ps.2,258.3 million, or 29.7%, in revenues from passenger charges, as a result of the 42.4% decrease in total passenger traffic due to the impact of the COVID-19 pandemic and partially offset by the increase in specific tariffs as of January 1, 2020. Revenues from aircraft landing and parking fees in our Mexican airports decreased by Ps.328.2 million, or 38.0%, while revenues from the leasing of space to airlines for ticket counters, airport security and complementary services decreased by Ps.131.9 million, or 31.2%. Revenues from the Montego Bay airport decreased by Ps.816.3 million, or 54.0%, in 2020 compared to 2019 mainly due to a decrease in passenger traffic of 65.8% as a result of the impact of the COVID-19 pandemic, and partially offset by an increase of the U.S. CPI of 1.4% and increase in specific tariffs as of January 1, 2020. The consolidation of a full year of results for PACKAL contributed Ps.354.5 million in aeronautical services revenues in 2020 (an increase of Ps.212.7 million as compared to the period from October 10 to December 31, 2019).

Non-Aeronautical Services Revenues

Non-aeronautical services revenues decreased by Ps.1,323.4 million, or 35.1%, from Ps.3,771.5 million in 2019 to Ps.2,448.1 million in 2019 as a result of the impact of the COVID-19 pandemic. Non-aeronautical services revenues at our Mexican airports decreased Ps.1,155.9 million, or 36.7%, compared to 2019, driven mainly by a decrease of Ps.649.7 million or 33.2%, in revenues from businesses operated by third parties. The decrease in revenues from businesses operated by third parties was primarily driven by a decrease in revenues from food and beverage services, car rentals, duty-free stores, retail stores, ground transportation, timeshares and commercial spaces, which jointly decreased by Ps.641.5 million. Revenues from businesses operated directly by us decreased by Ps.433.3 million, or 44.0%, mainly due to a decrease in car parking, convenience stores, advertising and VIP lounges revenues. Revenues from the Montego Bay airport decreased by Ps.258.2 million, or 44.1% compared to 2019, mainly as a result of a decrease in revenues from duty-free stores, retail stores, leasing of space and food and beverage operations. The consolidation of a full year of results for PACKAL contributed Ps.128.7 million to non-aeronautical revenues in 2020 (an increase of Ps.90.7 million as compared to the period from October 10 to December 31, 2019).

Revenues from Improvements to Concession Assets

Revenues from improvements to concession assets increased by Ps.285.8 million, or 15.0%, from Ps.1,906.8 million in 2019 to Ps.2,192.6 million in 2020. Revenues from improvements to concession assets are determined by committed investments under our Master Development Programs in Mexico and our Capital Development Programs in Jamaica. During 2020, the main commitments of improvements to concession assets included: (i) rehabilitation and expansion of the terminal building at the Los Cabos airport, (ii) the building of a new processing building at the Tijuana airport, (iii) the building of a new runway and taxiing runway parallel to the main one at the Guadalajara airport (iv) installation and adaptation of solar panels at 12 airports and (v) the expansion of the terminal building at the Montego Bay airport.

Revenues by Airport

Total revenues for the Guadalajara airport decreased by Ps.1,466.0 million, or 30.7%, from Ps.4,775.9 million in 2019 to Ps.3,309.8 million in 2020 (revenues decreased by Ps.1,221.7 million, or 31.2%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues decreased by Ps.875.0 million, or 29.4%, from Ps.2,978.6 million in 2019 to Ps.2,103.6 million in 2020. This decrease in aeronautical services revenues was mainly due to a Ps.697.9 million, or 27.7%, decrease in passenger charges driven by a 45.3% decrease in passenger traffic and partially offset by the increase in specific tariffs as of January 1, 2020. Non-aeronautical services revenues decreased by Ps.346.7 million, or 36.9%, from Ps.938.4 million in 2019 to Ps.591.8 million in 2020, this decrease in non-aeronautical services revenues was primarily due to a Ps.145.1 million decrease in revenues from businesses operated by third parties, such as food and beverage operations, car rentals, retail operations, and duty-free operations. Revenues from business lines operated by us decreased Ps.201.5 million, or 52.1%, principally as a result of a decrease in revenues from car parking, convenience stores, VIP lounges and advertising. Revenues from improvements to concession assets decreased by Ps.224.3 million, or 28.4%, in 2020 as compared to 2019.

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Total revenues for the Tijuana airport de creased by Ps.113.3 million, or 4.9%, from Ps.2,322.6 million in 2019 to Ps.2,209.4 million in 20 20 (revenues de creased by Ps.494.8 million, or 24.5%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues de creased by Ps.376.1 million, or 24.0%, from Ps.1,568.3 million in 2019 to Ps.1,192.2 million in 20 20. This de crease in aeronautical services revenues was mainly due to a de crease in passenger charges of Ps.343.7 million driven by a 29.2% de crease in passenger traffic, as well as de creases in revenues from landing, leasing of space to airlines, aircraft parking charges and airport security charges, which together de creased by Ps.23.6 million and partially offset by the increase in specific tariffs as of January 1, 2020. Non-aeronautical services revenues de creased by Ps.118.7 million, or 26.1%, from Ps.454.1 million in 2019 to Ps.335.4 million in 20 20 primarily due to a de crease of Ps.76.6 million from business lines operated by us, including VIP lounges, car parking, advertising and convenience store s and a de crease of Ps.42.1 million in revenues from business lines operated by third parties, including car rental and food and beverage operations. Revenues from improvements to concession assets in creased by Ps.381.5 million, or 127.1%, in 20 20 as compared to 20 19.

Total revenues for the Los Cabos airport decreased by Ps.680.1 million, or 27.7%, from Ps.2,451.3 million in 2019 to Ps.1,771.2 million in 2020 (revenues decreased by Ps.720.2 million, or 33.5%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues decreased by Ps.393.7 million, or 28.8% from Ps.1,364.7 million in 2019 to Ps.971.0 million in 2020. This decrease in aeronautical services revenues was mainly due to a Ps.308.9 million, or 26.9%, decrease in passenger charges driven by a 45.4% decrease in passenger traffic, as well as decreases in landing charges, airport security charges and complementary service providers totaling Ps.71.8 million and partially offset by the increase in specific tariffs as of January 1, 2020. Non-aeronautical services revenues decreased by Ps.326.5 million, or 41.5%, from Ps.787.4 million in 2019 to Ps.460.9 million in 2020, primarily due to a Ps.264.5 million decrease in revenues from business lines operated by third parties, including duty-free operations, food and beverage operations, retail, timeshare operation, and car rental, as well as a Ps.62.0 million decrease in revenues from business lines operated by us, including car parking, advertising and VIP lounges. Revenues from improvements to concession assets increased by Ps.40.1 million, or 13.4%, in 2020, as compared to 2019.

Total revenues for the Puerto Vallarta airport decreased by Ps.587.1 million, or 34.6%, from Ps.1,697.0 million in 2019 to Ps.1,109.9 million in 2020 (revenues decreased by Ps.596.4 million, or 36.4%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues decreased by Ps.407.2 million, or 34.4%, from Ps.1,183.6 million in 2019 to Ps.776.4 million in 2020. This decrease in aeronautical services revenues was primarily due to a decrease in passenger charges of Ps.337.8 million, caused primarily by a 49.8% decrease in passenger traffic and a decrease in revenues of Ps.62.7 million from landing charges, airport security charges and complementary service providers and partially offset by the increase in specific tariffs as of January 1, 2020. Non-aeronautical services revenues decreased by Ps.189.3 million, or 41.5%, from Ps.455.7 million in 2019 to Ps.266.4 million in 2020, due to a Ps.133.2 million decrease in revenues from businesses operated by third parties, including retail operations, timeshare operation, car rentals, food and beverage operations and duty-free operations, and a decrease in revenues from business lines operated by us of Ps.56.1 million, mainly due to decreases in revenues from convenience stores and VIP lounges. Revenues from improvements to concession assets increased by Ps.9.3 million, or 16.2%, in 2020, as compared to 2019.

Total revenues for the Montego Bay airport decreased by Ps.1,072.0 million, or 48.0%, from Ps.2,233.9 million in 2019 to Ps.1,161.8 million in 2020 (revenues decreased by Ps.1,074.5 million, or 51.2%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues decreased by Ps.816.3 million, or 54.0%, from Ps.1,512.2 million in 2019 to Ps.695.9 million in 2020. This decrease in aeronautical services revenues was mainly due to a Ps.486.1 million, or 52.8%, decrease in passenger charges, as well as a decrease of Ps.143.5 million, or 53.6%, in revenues from airport security charges and landing charges. Non-aeronautical services revenues decreased by Ps.258.2 million, or 44.1%, from Ps.585.3 million in 2019 to Ps.327.2 million in 2020, primarily due to a Ps.238.9 million decrease in revenues from businesses operated by third parties, such as duty-free operations, car rentals, leasing of space and food and beverage operations. Revenues from improvements to concession assets increased by Ps.2.4 million, or 1.8%, in 2020, as compared to 2019.

Total revenues for the Guanajuato airport decreased by Ps.309.0 million, or 38.7%, from Ps.797.8 million in 2019 to Ps.488.8 million in 2020 (revenues decreased Ps.312.5 million, or 40.9%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues decreased by Ps.246.0 million, or 42.1%, from Ps.584.6 million in 2019 to Ps.338.6 million in 2020, mainly due to a decrease in passenger charges of Ps.214.8 million, or 42.3%, driven by a 49.6% decrease in passenger traffic, as well as a Ps.26.2 million decrease in landing charges, airport security charges and complementary service providers and partially offset by the increase in specific tariffs as of January 1, 2020. Non-aeronautical services revenues decreased by Ps.66.5 million, or 36.9%, from Ps.180.3 million in 2019 to Ps.113.8 million in 2020. This decrease in non-aeronautical services revenues is a result of a Ps.23.8 million decrease in revenues from businesses operated by third parties, including retail operations, food and beverage operations, leasing of space and car rentals, as well as a Ps.42.7 million decrease in revenues from businesses operated by us, including revenues related to VIP lounges, car parking charges and convenience stores. Revenues from improvements to concession assets increased by Ps.3.5 million, or 10.6%, in 2020, as compared to 2019.

Total revenues for the Hermosillo airport decreased by Ps.149.8 million, or 34.2%, from Ps.438.4 million in 2019 to Ps.288.6 million in 2020 (revenues decreased Ps.165.8 million, or 38.1%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues decreased by Ps.132.7 million, or 39.3%, from Ps.337.4 million in 2019 to Ps.204.7 million in 2020, mainly due to a decrease in passenger charges of Ps.108.1 million, or 40.1%, caused by a 47.5% decrease in passenger traffic, as well as a decrease of Ps.20.6 million in revenues from complementary service providers, landing charges and aircraft parking charges and partially offset by the increase in specific tariffs as of January 1, 2020. Non-aeronautical services revenues decreased by Ps.33.1 million, or 33.9%, from Ps.97.7 million in 2019 to Ps.64.6 million in 2020, primarily due to a Ps.25.0 million decrease in revenues from business lines operated by us,

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including revenues related to VIP lounges, advertising and car parking services, and a Ps.8.1 million de crease in revenues from business lines operated by third parties, primarily from retail operations, car rentals and food and beverage operations. Revenues from improvements to concession assets increased by Ps.16.0 million, or 480.0%, in 20 20, as compared to 201 9.

Total revenues for our other seven airports increased by Ps.21.1 million, or 1.4%, from Ps.1,501.9 million in 2019 to Ps.1,523.0 million in 2020 (revenues decreased by Ps.56.2 million, or 4.4%, taking into account only revenues from aeronautical and non-aeronautical services). This increase was primarily due to the consolidation of a full year of financial results for PACKAL, which contributed Ps.483.1 million in revenues for the full year. Aeronautical services revenues at these airports decreased by Ps.74.9 million, or 7.4%, from Ps.1,018.3 million in 2019 to Ps.943.4 million in 2020, mainly due to a 9.8% decrease in passenger traffic and partially offset by the consolidation of a full year of financial results for PACKAL which contributed Ps.354.4 million. Non-aeronautical services revenues increased by Ps.18.7 million, or 7.0%, from Ps.265.3 million in 2019 to Ps.284.0 million in 2020, primarily due to a Ps.46.9 million increase in revenues from businesses operated by third parties, including from leasing space retail and duty-free stores. This increase was partially offset by a Ps.28.2 million decrease in revenues from businesses operated by us, including advertising, car parking charges, VIP lounges and convenience stores. The consolidation of a full year of financial results for PACKAL contributed Ps.128.7 million in non-aeronautical services revenues. Revenues from improvements to concession assets increased by Ps.77.3 million or 35.4%, in 2020, as compared to 2019.

Operating Costs

Total operating costs decreased by Ps.162.4 million, or 2.0%, from Ps.8,208.8 million in 2019 to Ps.8,046.5 million in 2020, primarily due to a decrease in operating costs for our Mexican airports of Ps.262.9 million, or 4.1%, from Ps.6,420.2 million in 2019 to Ps.6,157.3 million in 2020. Operating expenses of MBJA decreased by Ps.352.1 million, or 21.9%, from Ps.1,604.8 million in 2019 to Ps.1,252.7 million in 2020. The consolidation of a full year of financial results for PACKAL contributed Ps.636.3 million in operating costs in 2020 (an increase of Ps.452.5 million as compared to the period from October 10 to December 31, 2019).

Cost of Services

Cost of services, which comprises employee costs, maintenance, safety, security and insurance, utilities and other expenses, decreased by Ps.76.2 million, or 2.8%, from Ps.2,744.9 million in 2019 to Ps.2,668.7 million in 2020.

Cost of services for our Mexican airports decreased by Ps.216.4 million, or 9.8%, in 2020 compared to 2019. The change in cost of services for these airports was composed primarily of the following factors:

| • | Maintenance costs decreased by Ps.155.4 million, or 31.8%, compared to 2019, mainly due to the partial closure of operational areas and a reduction in non-essential maintenance beginning in the second quarter of 2020 as a result of the COVID-19 pandemic.

| • | Other operating expenses decreased by Ps.58.6 million, or 14.0%, mainly due to lower professional services fees, a decline in sales costs for the VIP lounges and convenience stores which together decreased by Ps. 121.7 million, or 21.1%, and partially offset by the recognition of an expected credit loss for doubtful accounts as well supplies and donations related to COVID-19, which jointly totaled Ps.59.1 million or 75.5%.

| • | Utility costs decreased by Ps.33.6 million, or 12.9%, compared to 2019, mainly due to a decrease of Ps.45.3 million in electricity consumption as a result of cost saving strategies enacted in an effort to offset the impact of the COVID-19 pandemic on our business and partially offset by an increase in the cost of water consumption of Ps.15.3 million.

| • | Employee costs increased by Ps.53.1 million, or 7.4%, compared to 2019, mainly due to increases in personnel and salaries that took place in the first months of 2020 and partially offset as a result of the voluntary early retirement program offered by us beginning in the third quarter of 2020 which resulted in the early retirement of 104 employees and cost Ps.20.2 million.

Of our Mexican airports, the Guadalajara airport contributed the most to our cost of services in 2020, representing 21.8% of our total cost of services.

The cost of services at our Guadalajara airport increased by Ps.4.2 million, or 0.7%, from Ps.578.6 million in 2019 to Ps.582.8 million in 2020, mainly as a result of an increase of Ps.48.7 million in other operating expenses offset by a decrease of Ps.36.0 million in maintenance expenses and Ps. 10.9 million utility costs.

Costs of services at the Montego Bay airport decreased by Ps.66.4 million, or 14.5%, in 2020 compared to 2019. The change in cost of services for this airport was primarily as a result of decreases of Ps.24.7 million in maintenance expenses, Ps.23.4 million in utilities costs, Ps.14.5 million in other operating expenses, and Ps.6.1 million in employee costs offset by an increase in safety and security expenses of Ps. 8.7 million.

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The consolidation of a full year of financial results for PACKAL as compared to the period from October 1 0 to December 31, 2019, resulted in an increase in the cost of services by Ps.206.6 million, mainly due to other operating expenses of P s.50.3 million, security and insurance costs of Ps.49.7 million, employee costs of Ps.46.4 million, utility costs of Ps.32.2 million and maintenance expenses of Ps.28.1 million.

Technical Assistance Fees

Technical assistance fees decreased by Ps.172.4 million, or 37.4%, from Ps.461.5 million in 2019 to Ps.289.2 million in 2020. This decrease in technical assistance fees was mainly due to a decrease in our consolidated income from operations at our Mexican airports, which is used to calculate the technical assistance fee. See “Item 4, Information on the Company – History and Development of the Company – Investment by AMP.”

Concession Taxes

As a result of the decrease in revenues (excluding revenues from improvements to concession assets, which do not form part of income for purposes of the government concession tax), government concession taxes decreased by Ps.409.9 million, or 31.1%, from Ps.1,318.2 million in 2019 to Ps.908.3 million in 2020.

Depreciation and Amortization

Depreciation and amortization increased by Ps.224.2 million, or 12.6%, from Ps.1,776.1 million in 2019 to Ps.2,000.4 million in 2020, mainly due to the growth in infrastructure, resulting from the fulfillment of our Master Development Programs and Capital Development Programs.

Other (Income) expense

Other income increased by Ps.13.9 million, or 1,150.0%, from an expense of Ps.1.2 million in 2019 to an income of Ps.12.7 million in 2020.

Cost of Improvements to Concession Assets

Cost of improvements to concession assets increased by Ps.285.8 million, or 15.0%, from Ps.1,906.8 million in 2019 to Ps.2,192.6 million in 2020. In Mexico, cost of improvements to concession assets increased Ps.232.0 million or 13.1% in 2020, as compared to 2019. Cost of improvements to concession assets for MBJA and PACKAL also increased as a result of the amounts committed in our Capital Development Program for 2020. In 2020, MBJA and PACKAL recognized Ps.138.8 million and Ps.51.4 million, respectively, in cost of improvements to concession assets, as compared to Ps.136.4 million and Ps.0.0 million, respectively, in 2019.

Operating Costs by Airport

Operating costs for the Guadalajara airport decreased by Ps.339.2 million, or 15.6%, from Ps.2,176.6 million in 2019 to Ps.1,837.4 million in 2020. This decrease was primarily due to a Ps.244.3 million, or 28.4%, decrease in cost of improvements to concession assets from Ps.858.8 million in 2019 to Ps.614.5 million in 2020 and a Ps.114.7 million, or 13.2%, decrease in the cost of operations, mainly driven by decreases in the costs of safety, security and insurance, maintenance, utilities and concession taxes. Depreciation and amortization increased by Ps.22.4 million, or 6.5%, in 2020 as compared to 2019. Operating costs decreased by Ps.94.8 million, or 7.2%, without including the cost of improvements to concession assets.

Operating costs for the Tijuana airport increased by Ps.359.6 million, or 34.3%, from Ps.1,047.7 million in 2019 to Ps.1,407.3 million in 2020. This increase was mainly due to a Ps.381.5 million, or 127.1%, increase in cost of improvements to concession assets from Ps.300.2 million in 2019 to Ps.681.8 million in 2020 and partially offset by a decrease of Ps.40.7 million, or 9.1%, from Ps.447.6 million in 2019 to Ps.406.9 million in 2020 in the cost of operations mainly driven by safety, security and insurance, maintenance and concession taxes. Depreciation and amortization increased Ps.47.7 million, or 23.0% in 2020 as compared to 2019. Operating costs decreased by Ps.21.9 million, or 2.9%, without including the cost of improvements to concession assets.

Operating costs for the Los Cabos airport decreased by Ps.39.4 million, or 3.7%, from Ps.1,054.0 million in 2019 to Ps.1,014.6 million in 2020. This decrease was mainly due to a Ps.108.2 million, or 22.8%, decrease in cost of operations mainly in utilities, maintenance, other operating cost and concession taxes, from Ps.475.2 million in 2019 to Ps.367.0 million in 2020. Depreciation and amortization increased Ps.30.9 million, or 13.2% in 2020 as compared to 2019. The cost of improvements to concession assets increased by a Ps.40.1 million, or 13.4%, from Ps.299.2 million in 2019 to Ps.339.2 million in 2020. Operating costs decreased by Ps.79.5 million, 10.5%, without including the cost of improvements to concession assets.

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Operating costs for the Puerto Vallarta airport decreased by Ps.62.2 million, or 9.6%, from Ps.645.3 million in 2019 to Ps.583.1 million in 2020. This decrease was primarily due to a decrease of Ps.62.3 million, or 17.4%, in the cost of operations, driven by a decrease in maintenance, utilities, safety, security and insurance and concession taxes. These decreases were partially offset by an increase of Ps.9.3 million, or 16.2% in the cost of improvements to concession assets from Ps.57.7 million in 2019 to Ps.67.0 million in 2020. Depreciation and amortization increased by Ps.12.2 million, or 7.8%, in 2020 as compared to 2019. Operating costs decreased by Ps.71.5 million, or 12.2%, without including the cost of improvements to concession assets.

Operating costs for the Montego Bay airport decreased by Ps.354.1 million, or 22.1%, from Ps.1,604.8 million in 2019 to Ps.1,250.7 million in 2020. This decrease was mainly due to a decrease in costs of operations by Ps. 470.3, or 44.0%, from Ps.1,068.3 million in 2019 to Ps.598.1 million in 2020, including employee costs, maintenance costs, utilities and safety, security and insurance and concession taxes. The decreases were partially offset by a Ps.2.4 million, or 1.8%, increase in the cost of improvements to concession assets from Ps.136.4 million in 2019 to Ps.138.8 million in 2020. Depreciation and amortization expenses increased Ps.112.4 million, or 28.1%, from Ps.399.7 million in 2019 to Ps.512.1 million in 2020. Operating costs decreased by Ps.356.5 million, or 24.3%, without including the cost of improvements to concession assets.

Operating costs for the Guanajuato airport decreased by Ps.47.8 million, or 14.9%, from Ps.320.5 million in 2019 to Ps.272.7 million in 2020. This decrease was mainly due to a reduction of Ps.31.2 million, or 18.5%, in the cost of operations, driven by a decrease in maintenance, safety, security and insurance, other expenses costs and concession taxes. These decreases were partially offset by increase of Ps.3.5 million or 10.6%, in the cost of improvements to concession assets from Ps.32.9 million in 2019 to Ps.36.3 million in 2020. Depreciation and amortization decreased by Ps.29.3 million, or 28.8%, in 2020 as compared to 2019. Operating costs decreased by Ps.51.2 million, or 17.8%, without including the cost of improvements to concession assets.

Operating costs for the Hermosillo airport decreased by Ps.16.5 million, or 6.7%, from Ps.247.3 million in 2019 to Ps.230.8 million in 2020. This decrease was due to a decrease of Ps.35.6 million, or 23.4%, in the cost of operations, mainly in costs of maintenance, safety and security, other operating cost and concession taxes. These decreases were partially offset by an increase of Ps.16.0 million, or 480.0%, in the cost of improvements to concession assets from Ps.3.3 million in 2019 to Ps.19.3 million in 2020. Depreciation and amortization increased by Ps.1.3 million, or 1.7%, in 2020 as compared to 2019. Operating costs decreased by Ps.32.5 million, or 13.3%, without including the cost of improvements to concession assets.

Operating costs for our other seven airports increased by Ps.406.0 million, or 35.3%, from Ps.1,151.7 million in 2019 to Ps.1,557.6 million in 2020. This decrease was primarily due to the consolidation of PACKAL for a full fiscal year which contributed Ps.452.5 million to operating costs. The cost of operations increased by Ps.300.6 million, or 47.1%, from Ps.637.9 million in 2019 to Ps.938.4 million in 2020, mainly as a result of increases in the costs of maintenance, utilities, safety and security, concession fees and other expenses. The cost of improvements to concession assets increased by Ps.77.3 million, or 35.4%, from Ps.218.4 million in 2019 to Ps.295.7 million in 2020. Depreciation and amortization increased by Ps.30.4 million, or 14.5%, in 2020 as compared to 2019. Operating costs increased by Ps.328.7 million, or 35.2%, without including the cost of improvements to concession assets.

Income from Operations

Income from operations decreased by Ps.4,197.2 million, or 52.4%, from Ps.8,017.2 million in 2019 to Ps.3,820.0 million in 2020. This decrease was due to a Ps.4,359.6 million decrease in total revenues in 2020, partially offset by a Ps.162.4 million decrease in total costs. Our operating margin decreased by 1722 basis points, from 49.4% in 2019 to 32.2% in 2020 (taking into account only the sum of aeronautical and non-aeronautical services revenues, our operating margin decreased by 1650 basis points in 2020, from 56.0% in 2019 to 39.5% in 2020).

Historically, our most profitable airports have been our Guadalajara, Los Cabos and Puerto Vallarta airports, which handle the majority of our international passengers in Mexico. Historically, operating margins at our Tijuana airport have been lower than at our other principal airports because of a combination of (i) a high initial concession value, and consequently larger amortizations thereof, and (ii) lower revenues due to low maximum rates applicable to aeronautical services. However, in 2020 due to the impact of the COVID-19 pandemic on our airports in tourist areas, our Tijuana airport was our second airport with the highest passenger traffic. In 2020, our Tijuana airport had the lowest percentage decrease in passenger traffic (a decrease of 29.2%) and was consequently of fourth most profitable airport behind our Guadalajara, Los Cabos and MBJ airports (taking into account only the sum of aeronautical and non-aeronautical services revenues).

Income from Operations by Airport

Income from operations for the Guadalajara airport decreased by Ps.1,126.9 million, or 43.4%, from Ps.2,599.3 million in 2019 to Ps.1,472.5 million in 2020, mainly due to a decrease in aeronautical and non-aeronautical services revenues of Ps.1,221.7 million. The operating margin decreased by 994 basis points, from 54.4% in 2019 to 44.5% in 2020 (operating margin decreased by 1,173 basis points, from 66.4% in 2019 to 54.6% in 2020, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Income from operations for the Tijuana airport decreased by Ps.472.8 million, or 37.1%, from Ps.1,274.9 million in 2019 to Ps.802.1 million in 2020, primarily due to a decrease in aeronautical and non-aeronautical services revenues of Ps.494.8 million. The operating

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margin decreased by 1,85 9 basis points from 54.8% in 2019 to 36.3% in 2020 (operating margin de creased by 1,05 4 basis points from 63.0% in 2019 to 52.5% in 2020, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Income from operations for the Los Cabos airport decreased by Ps.640.7 million, or 45.9%, from Ps.1,397.3 million in 2019 to Ps.756.6 million in 2020, primarily due to a decrease in aeronautical and non-aeronautical services revenues of Ps.720.2 million. The operating margin decreased by 1,428 basis points from 57.0% in 2019 to 42.7% in 2020 (operating margin decreased by 1209 basis points, from 64.9% in 2019 to 52.8% in 2020, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Income from operations for the Puerto Vallarta airport decreased by Ps.524.9 million, or 49.9%, from Ps.1,051.7 million in 2019 to Ps.526.8 million in 2020, mainly due to a decrease in aeronautical and non-aeronautical services revenues of Ps.596.4 million. The operating margin decreased by 1,450 basis points from 62.0% in 2019 to 47.5% in 2020 (operating margin decreased by 1,364 basis points from to 64.2% in 2019 to 50.5% in 2020, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Income from operations for the Montego Bay airport changed from income from operations of Ps.629.0 million in 2019 to loss from operations of Ps. (88.9) million in 2020, primarily due to a decrease in aeronautical and non-aeronautical services revenues of Ps.1,074.5 million and partially offset by a decrease in operating costs of Ps.356.5 million. The operating margin decreased by 3,581 basis points from 28.2% in 2019 to (7.7) % in 2020 (operating margin decreased by 3,868 basis points from 30.0% in 2019 to (8.7) % in 2020, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Income from operations income for the Guanajuato airport decreased by Ps.261.3 million, or 54.7%, from Ps.477.1 million in 2019 to Ps.216.0 million in 2020, primarily due to a decrease in aeronautical and non-aeronautical services revenues of Ps.312.5 million. The operating margin decreased by 1,563 basis points, from 59.8% in 2019 to 44.2% in 2020 (operating margin decreased by 1,405 basis points from 62.4% in 2019 to 47.7% in 2020, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Income from operations for the Hermosillo airport decreased by Ps.133.3 million, or 69.8%, from Ps.191.1 million in 2019 to Ps.57.8 million in 2020, primarily due to a decrease in aeronautical and non-aeronautical services revenues of Ps.165.8 million, partially offset by a decrease in operating expenses of Ps.32.5 million. The operating margin decreased by 2357 basis points from 43.6% in 2019 to 20.0% in 2020 (operating margin decreased by 2246 basis points from 43.9% in 2019 to 21.5% in 2020, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Income from operations for our seven other airports changed from income from operations of Ps.350.3 million in 2019 to a loss from operations of Ps. (34.6) million in 2020, primarily due to a decrease in aeronautical and non-aeronautical services revenues of Ps.56.2 million partially offset by the consolidation of PACKAL for a full fiscal year which contributed Ps.483.1 million in aeronautical and non-aeronautical revenues. The operating margin decreased by 2,560 basis points from 23.3% in 2019 to 2.3% in 2020 (operating margin decreased by 3,010 basis points from 27.3% in 2019 to 2.8% in 2020, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Finance Cost

Financial cost in 2020 increased by Ps.763.1 million, or 120.3%, from Ps.651.1 million in 2019 to Ps.1,434.2 million in 2020. This increase was mainly due to a decrease in the foreign exchange rate gain of Ps.419.3 million in 2020, and as a result of a peso depreciation from Ps.18.8452 per U.S. dollar on December 31, 2019 to Ps.19.8920 per U.S. dollar at December 31, 2020. The financial income for foreign exchange rate changed from a foreign exchange rate gain of Ps.88.8 million in 2019 to a foreign exchange rate loss of Ps.330.5 million in 2020. The effect of the foreign exchange rate loss was offset by the recognition of Ps.849.7 million in income from exchange differences on translating foreign operations in 2020, recognized within other comprehensive income, in accordance with applicable norms. Moreover, interest expense increased by Ps.88.5 million in 2020 compared to 2019, mainly due to the issuance of new debt securities, bank loans and the increase in the reference interest rates of those securities. Interest income decreased by Ps.275.3 million in 2020 as compared to 2019 due to lower interest rates.

Income Taxes

Income taxes decreased in 2020 by Ps.1,424.4 million, from Ps.1,891.4 million in 2019 to Ps.467.1 million in 2020. The Mexican airports’ current tax decreased by Ps.1,130.1 million. MBJA’s current tax decreased by Ps.189.7 million, while DCA’s current tax decreased by Ps.13.6 million. Benefit from deferred tax increased by Ps.91.1 million due to a 3.2% inflation rate in 2020 as compared to a 2.8% inflation rate in 2019. Our effective tax rate decreased from 25.7% in 2019 to 19.6% in 2020, primarily due to a 67.6% decrease in our earnings before income taxes from Ps.7,366.2 million to Ps.2,385.8 million as a result of the impact of the COVID-19 pandemic.

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Total Comprehensive Income for the Year Attributable to Controlling Interest

Total comprehensive income for the year decreased by Ps.2,828.5 million, or 56.6%, from Ps.5,011.8 million in 2019 to Ps.2,183.3 million in 2020. Income from operations decreased Ps.4,197.3 million, mainly as a result of a Ps.4,359.6 million decrease in total revenues, and a Ps.783.1 million increase in our financial cost and partially offset by a Ps.1,333.3 million decrease in current taxes and an increase of Ps.91.1 million in the benefit from deferred tax, due to the decline in accumulated inflation, that increased from 2.8% in 2019 to 3.2% inflation in 2020. The exchange rate loss increased by Ps.849.7 million due to exchange differences on translating foreign operations resulting from the depreciation of the peso in 2020 and partially offset by a Ps.126.9 million increase in expense related to changes in fair value of the cash flow hedges. Our net margin decreased from 33.6% in 2019 to 16.2% in 2020 (taking into account only aeronautical and non-aeronautical services revenues, net margin decreased from 38.1% in 2019 to 19.8% in 2020).

Statement of Financial Position

Our financial position as of December 31, 2020 increased by Ps.9,783.4 million, or 23.5%, primarily due to increases in cash and cash equivalents of Ps.6,944.4 million, an increase in improvements to concession assets of Ps.1,700.5 million, other current assets of Ps.747.7 million and deferred taxes of Ps.317.4 million.

Total liabilities as of December 31, 2020 increased by Ps.7,600.0 million, or 36.3%, primarily due to increases of Ps.5,000.0 million in debt securities issued, Ps. 2,918.2 million in bank loans, Ps.485.1 million in derivative financial instruments, partially offset by a decrease in guaranteed deposit of Ps.447.4 million and taxes payable of Ps.122.1 million.

Results of Operations for the Year ended December 31, 2019 Compared to the Year Ended December 31, 2018

For a comparison of the results of operations for the year ended December 31, 2019 as compared to the year ended December 31, 2018, see “Item 5, Operating and Financial Review and Prospects – Results of Operations for the Year ended December 31, 2019 Compared to the Year Ended December 31, 2018” in our Fiscal Year 2019 Form 20-F.

Liquidity and Capital Resources

Historically, the cash flow generated from our operations has generally been used to fund operating costs, and the excess of our cash flow has been added to our accumulated cash and cash equivalents in our consolidated statements of financial position.

As of December 31, 2018, 2019 and 2020 we had Ps.6,151.5 million, Ps.7,500.2 million and Ps.14,444.5 million, respectively, of cash and cash equivalents. We recorded no financial investments held for trading purposes as of December 31, 2018, 2019 and 2020.

Due to the COVID-19 pandemic, we have taken a series of actions that seek to manage our liquidity levels. During 2021, we have two debt maturities coming due, our “GAP 16” debt securities with a maturity payment of Ps.1.5 billion and a loan with Scotiabank for Ps.1.0 billion. We anticipate paying both by July 2021. See “Item 5, Recent Developments –Issuance of GAP Bond Certificates.” We anticipate that we will be able to meet our financial and operational obligations with our current cash and equivalents. See “Item 3, Risk Factors – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations control,” and “Item 5, Recent Developments – Developments related to the outbreak of COVID-19."

Cash Flows

Cash flows for the year ended December 31, 2020 as compared to cash flows for the year ended December 31, 2019

Cash and cash equivalents increased by Ps.6,944.4 million, or 92.6%, from Ps.7,500.2 million in 2019 to Ps.14,444.5 million in 2020, mainly due to an increase of net cash flows provided by financing activities of Ps.10,520.0 million resulting from the issuance of 72 million long-term debt securities for a total Ps.7,200 million and three new bank loan agreements for a total of Ps.2,709.1 million and partially offset by a decrease of Ps.4,597.5 million in net cash flows provided by operating activities in 2020 as compared to 2019 as a result of the impact of the COVID-19 pandemic. Net cash flows used in investing activities increased by Ps.631.6 million. The decrease in net cash provided by operating activities was primarily due to: decreases of (i) Ps.3,536.1 million, or 64.8%, in profit for the year and (ii) Ps.1,425.4 million, or 75.3%, in income taxes paid, which was partially offset by increases of (i) Ps.246.0 million, or 21.5%, in interest expense for financing activity and (ii) Ps.81.3 million, or 1534.2%, in the allowance expected credit loss.

Cash and cash equivalents were mainly used for: (i) purchases of machinery and equipment, improvements on leased buildings and concession assets and advance payments to suppliers of Ps.631.6 million; and (ii) payments of Ps.1,405.1 million, to service the cost of debt. We did not make any dividend or capital stock distribution payments in 2020.

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Cash flows for the year ended December 31, 2019 as compared to cash flows for the year ended December 31, 2018

For a comparison of the cash flows for the year ended December 31, 2019 as compared to the cash flows for the year ended December 31, 2018, see “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Cash Flows – Cash flows for the year ended December 31, 2019 as compared to cash flows for the year ended December 31, 2018” in our Fiscal Year 2019 Form 20-F.

Indebtedness

Indebtedness in Mexico

On March 29, 2019, we issued Ps.3,000 million in new five-year debt securities under the ticker symbol “GAP 19”, on which interest is payable every 28 days at a variable rate of TIIE-28 plus 45 basis points, and the principal will be payable at maturity on March 22, 2024. The proceeds from the issuance were allocated to financing the investments set forth in the Master Development Programs for 2019 and 2020.

On February 13, 2020, we issued Ps.3,000 million in debt securities on the Mexican market, under the ticker symbol “GAP 20”. Proceeds from the issuance were allocated for liability management (on February 14, 2020 we paid our “GAP 15” debt securities with Ps.2,200 million from the proceeds) and to finance investments set forth in our Master Development Programs for 2020. Interest is payable every 28 days at a variable rate of TIIE-28 plus 17 basis points. Principle on these bond certificates will be due at maturity on February 16, 2025.

On April 13, 2020, we entered into a loan agreement with Scotiabank for Ps.1,000.0 million, with a 15-month term and principal payment upon maturity, paying a variable interest rate of 28-day TIIE plus 100 basis points, proceeds were allocated to general corporate purposes.

On May 15, 2020, we entered into a loan agreement with BBVA, S.A. for Ps.1,000.0 million with a 24-month term and principal payment upon maturity, paying a fixed annual interest rate of 6.99%, proceeds were allocated to general corporate purposes.

On June 25, 2020, we issued Ps.4,200 million in new debt securities. The proceeds from the issuance were allocated to financing the investments set forth in the Master Development Programs for 2020 and part of 2021. The issuance was made under the following terms:

| • | We issued 6.02 million bond certificates under the ticker symbol “GAP 20-2”, with a nominal value each of Ps.100, for a total value of Ps.602.0 million. Interest is payable every 28 days at a variable rate of TIIE-28 plus 85 basis points, and the principal will be payable at maturity on June 22, 2023.

| • | We issued 35.98 million bond certificates under the ticker symbol “GAP 20-3”, with a nominal value each of Ps.100, for a total value of Ps.3,598.0 million. Interest is payable every 182 days at a fixed rate of 8.14%, and the principal will be payable at maturity on June 17, 2027.

In addition, to finance the acquisition of DCA in April 2015, we borrowed a total of U.S.$191.0 million through unsecured credit agreements with The Bank of Nova Scotia (U.S.$95.5 million) and BBVA (U.S.$95.5 million), at the variable one-month Libor rate plus 99 and 105 basis points, respectively. The Bank of Nova Scotia and BBVA loans were disbursed on January 19, 2016 and February 15, 2016, respectively, and have a five-year maturity. On October 29, 2020, we announced the successful refinancing of our credit agreements which were to come due in January and February 2021, respectively. Scotiabank credit refinancing was for our US$95.5 million credit due January 2021. The new loan has a 36-month term from the date of disbursement and is due on January 19, 2024. Interest will be payable monthly at an annual fixed rate of 2.063% and principal due at maturity. The BBVA credit refinancing was for our US$95.5 million credit due February 2021. The new loan has a 36-month term from the date of disbursement which will be February 2, 2024. Interest will be payable monthly at an annual fixed rate of 1.97% and principal due at maturity.

As of December 31, 2020, we were in compliance with all covenants stipulated by these credit agreements.

Indebtedness in Jamaica

In September 2007, MBJA entered into a credit facility with the IFC for up to U.S.$20.0 million, with interest at the variable 6-month Libor plus 392 basis points, semi-annual principal and interest payments and final maturity in February 2019. In December 2012, MBJA entered into a second credit facility with the IFC for up to U.S.$13.5 million, with interest at the variable 6-month Libor plus 450 basis points, semi-annual principal and interest payments and final maturity five years from each disbursement. On August 15, 2018, we pre-paid MBJA’s outstanding balance of U.S.$11.2 million (Ps.21.5 million) under both the credit facility with the IFC.

In 2007, MBJA entered into unsecured loans with its shareholder, Vantage, for U.S.$10.9 million and U.S.$0.5 million, in June 2007 and February 2009, respectively. The loans bear annual interest, payable semi-annually, at 14.0% and 8.0%, respectively, without a fixed maturity, and are subject to prepayment restrictions. As of December 31, 2020, the outstanding balance under this facility amounted to U.S.$11.4 million (Ps.228.4 million).

On December 28, 2017, we entered into seven-year unsecured loan agreement with The Bank of Nova Scotia Jamaica Limited and The Bank of Nova Scotia for U.S.$40 million, with interest at a variable rate of one-month Libor plus 280 basis points. Payments will be made on a semi-annual basis after 24 months. As of December 31, 2020, the balance outstanding under this facility amounted to U.S.$36 million (Ps.718.2 million).

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On September 3, 2020, MBJA signed loan agreements with The Bank of Nova Scotia Jamaica Limited and The Bank of Nova Scotia for up to US$60.0 million available for disbursement up to 24 months from the closing date. The loan has a 5-year maturity with a 2-year optional extension for up to US$54.0 million, with a monthly interest rate of Libor plus 310 basis points and principal payments of 10% due on the fifty-fourth month and 90% due at maturity. The disbursement fee was 50 basis points due at closing and a commitment fee of 55 basis points payable quarterly on any undrawn balance. The first drawdown of US$30.0 million was made on September 4, 2020. The loan proceeds will be used to finance the airport’s Capital Development Program, as well as for general corporate purpose. As of December 31, 2020, the balance outstanding under this facility amounted to U.S.$30 million (Ps.598.5 million).

As of December 31, 2020, we were in compliance with all covenants stipulated by these credit agreements.

Capital Expenditures

For the years ended December 31, 2018, 2019 and 2020, we had total capital expenditures of Ps.2,501.7 million, Ps.2,479.0 million and Ps.3,160.1 million, respectively. During 2018, 2019 and 2020, 1.9%, 2.4% and 3.1%, respectively, of our capital expenditures were funded by cash flows from operations, while the remaining balance was funded with bank loans and long-term debt securities issued on the Mexican capital markets. We currently intend to fund the investments and working capital required by our business strategy through cash flows from operations and from the indebtedness described above.

Capital Expenditures in Mexico

Under the terms of our Mexican concessions, each of our Mexican subsidiary concession holders is required to present a Master Development Program for approval by the SCT every five years. Each Master Development Program includes investment commitments (including capital expenditures and improvements) applicable to us as the concession holder for the succeeding five-year period. Once approved by the SCT, these commitments become binding obligations under the terms of our Mexican concessions. In December 2014, the SCT approved our Master Development Programs for each of our Mexican airports for the 2015 to 2019 period. In December 2019, the SCT approved our Master Development Programs for each of our Mexican airports for the 2020 to 2024 period. This five-year program was to be in effect from January 1, 2020 until December 31, 2024.

Due to the COVID-19 pandemic, we delayed certain non-mandatory capital investments and during the month of August 2020, we filed a proposal for an Extraordinary Review Process of our Master Development Program with SCT in response to the impact of the COVID-19 pandemic on our operations. See “Item 3, Risk Factors – Developments relating to the outbreak of COVID-19 have had, and may continue to have, a material adverse impact on our financial conditions or results of operations control”, and “Item 5, Recent Developments – Developments related to the outbreak of COVID-19.” The adjustments to our Master Development Program approved as a result of this Extraordinary Review Process and announced on November 30, 2020, resulted in the postponement of investments by approximately 20 months. As such, certain investments that were scheduled to conclude in 2024 will now conclude in 2026.

The table below sets forth our historical capital expenditures in Mexico. Capital expenditures are calculated on a cash flow basis, meaning that capital expenditures are equal to those investments actually paid for by each airport during a given year and not including investments for which the airport made allocations but did not pay during the given year. The investments shown in the table below therefore reflect our expenditures actually paid for by our airports for the years indicated. In order to be compared with our committed investments for a given year, the investments made in the previous year but paid for in the given year need to be subtracted while the investments allocated but not paid for in the given year need to be added. For 2018, 2019 and 2020, the total of our investments allocated but unpaid were Ps.318.5 million, Ps.286.4 million and Ps.540.8 million, respectively.

Capital Expenditures in Mexico

Year ended December 31, |  | Total Capital Expenditures |
|  | (thousands of pesos) (1) |
2018 |  | Ps. |  | 1,842,350 |
2019 |  |  |  | 2,226,982 |
2020 |  |  |  | 2,904,649 |

(1) | Expressed in nominal pesos.

In 2018, we spent Ps.1,842.4 million on capital expenditures in Mexico primarily for the expansion of the terminal building at the Guanajuato, Guadalajara, Aguascalientes and La Paz airports, improvements to the runways and aprons and extension of the checked baggage review system at the Los Cabos airport and improvements in operational areas and of the terminal building at the Tijuana airport.

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In 2019, we spent Ps.2,226.9 million on capital expenditures in Mexico primarily for the expansion of terminal buildings at the Guadalajara, Los Cabos, Aguascalientes and Morelia airports, improvements to the runways, taxiways and aprons at the Tijuana, La Paz and Los Cabos airports and improvements in operational areas and of the terminal building at the Tijuana airport.

In 2020, we spent Ps.904.6 million on capital expenditures in Mexico, primarily for the rehabilitation and expansion of the terminal building at the Los Cabos airport, the construction of a new processing building at the Tijuana airport, the construction of a new runway and taxiing runway parallel to the main runway at the Guadalajara airport and the installation and adaptation of solar panels at 11 of our Mexican airports.

Capital Expenditures in Jamaica

Every five-year period, MBJA is entitled to submit to the JCAA its proposal for increases to the maximum regulated charges together with investment commitments (including capital expenditures for capital projects and required improvements at the Montego Bay airport under MBJA’s Concession Agreement). Upon the JCAA’s approval of the new maximum regulated charges, these commitments become binding obligations under the terms of MBJA’s concession. On November 18, 2014, the JCAA approved new maximum regulated charges for the Montego Bay airport that assume capital investments (including scheduled maintenance) for the period from April 1, 2015 through December 31, 2019, estimated to cost approximately U.S.$37.9 million. The maximum regulated charges were determined by the JCAA based on traffic projections, operating costs and capital investments included in the new Capital Development Program. Under the terms of the MBJA Concession Agreement with the AAJ, these committed capital investments must be met over the five-year period and not on an annual basis. On September 11, 2019, the JCAA approved new maximum regulated charges for the Montego Bay airport that assume capital investments (including scheduled maintenance) for the period from January 1, 2020 through December 31, 2024, estimated to cost approximately U.S.$111.7 million. In 2020, the new maximum rates for the five-year period from 2020-2024 went into effect as of January 1, 2020. In December 2020, as a result of the COVID-19 pandemic and its economic impact, the AAJ granted MBJA a deferral on its committed investments for 2020 so that these investments can begin in June 2021.

In 2018, MBJA made investments of U.S.$34.3 million in capital expenditures, primarily for the rehabilitation of the taxiways, apron and ticketing area. In 2019, MBJA made investments of U.S.$11.6 million in capital expenditures, primarily for expansion of the terminal building, checked baggage review system and equipment. In 2020, MBJA made investments of U.S.$6.4 million in capital expenditures, primarily for the expansion and remodeling of the terminal and acquisition of equipment.

From October 10, 2019 to December 31, 2019, PACKAL did not make any investments in capital expenditures. On November 6, 2019, the JCAA approved new maximum regulated charges for the Kingston airport that assume capital investments (including scheduled maintenance) for the period from April 1, 2020 through December 31, 2024, estimated to cost approximately U.S.$101.4 million. For NMIA, maximum rates for the five-year period from 2020-2024 went into effect as of April 1, 2020. Thereafter, regulated aeronautical charges will be reviewed every five years. In December 2020, as a result of the COVID-19 pandemic and its economic impact, the AAJ granted PACKAL a deferral on its committed investments for 2020 so that these investments can begin in June 2021.

In 2020, PACKAL made investments of U.S.$2.2 million in capital expenditures, primarily for the expansion and renovation of the terminal, improvements to the runway and acquisition of equipment.

Share Repurchase

We periodically repurchase our shares on the open market using funds authorized by our shareholders specifically for the repurchase of our shares by us at our discretion and in accordance with our policies.

In the aggregate, as of December 31, 2020, we held 35,424,453 shares in our treasury worth approximately Ps.1,733.4 million, at an average price of Ps.48.93 per share; as of April 16, 2021 we held 37,713,392 shares at an average price of Ps.59.22 per share.

At the General Ordinary Shareholder’s Meeting held on April 25, 2018, a share repurchases for Series B shares was approved for up to a maximum amount of Ps.1,250.0 million for the following twelve months. During this period, no shares were purchased by us or on our behalf, or by or on behalf of any of our affiliates.

At the General Ordinary Shareholders’ Meeting held on April 23, 2019, a share repurchases for Series B shares was approved for up to a maximum amount of Ps.1,550.0 million for the following twelve months. During this period, no shares were purchased by us or on our behalf, or by or on behalf of any of our affiliates.

At the General Ordinary Shareholders’ Meeting held on July 1, 2020, a share repurchases for Series B shares was approved for up to a maximum amount of Ps.1,550 million for the following twelve months. In March, 2021 , we begun purchasing our shares. From March 2021 to April 16, 2021, we repurchased 2,288,939 shares at an average price of Ps. 218.44 for Ps. 500.0 million. These shares represent 0.5% of our total outstanding shares..

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As of each of December 31, 2018, 2019 and 2020 there was a total balance of Ps.1,733.4 m illion repurchased shares in each year on our Consolidated Statements of Financial Position.

Critical Accounting Policies

We prepare our audited consolidated financial statements in conformity with IFRS. Our significant accounting policies are described in Note 3 to our audited consolidated financial statements.

The preparation of audited consolidated financial statements in conformity with IFRS requires us to make estimates and assumptions that affect the application of accounting policies relating to the reported amounts of assets, liabilities, income and expenses of the relevant period. We base our estimates and judgments on our historical experience, on technical merits for tax positions, on financial projections and on various other reasonable factors that together form the basis for making judgments about the carrying values of our assets and liabilities. Our actual results may differ from these estimates under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis. Information on the uncertainty in the use of assumptions and estimates that have a significant risk of resulting in a material adjustment within the next financial year are described in Note 2.g to our audited consolidated financial statements.

We believe our most critical accounting policies that result in the application of estimates and/or judgments are the following:

Allowance for Expected Credit Losses

We systematically and periodically review the aging and collection of our accounts receivable and recognize an expected credit loss for doubtful accounts when evidence exists that they will not be fully recoverable, according to our bad debt policy. The measurement of expected credit losses is a function of the probability of default, loss given default (i.e., the magnitude of the loss if there is a default) and the exposure at default. We evaluate of the probability of default and loss given default is based on historical data adjusted by forward-looking information. Moreover, because our accounts receivable are concentrated among a small number of important clients, a change in the liquidity of these clients could have a material adverse impact on the collection of our accounts receivables and our future operating results. We believe such risk is adequately covered by guarantee deposits in cash or other kind of guarantees by clients.

Accounting for the Concession

We believe we have carried out a comprehensive implementation of the standards applicable to the accounting treatment of our concession and have determined that, among others IFRIC 12 is applicable to us. We treat our investments related to improvements and upgrades to be performed in connection with our Master Development Programs and Capital Development Program under the intangible asset model established by IFRIC 12 and do not recognize a provision for maintenance, as all investments required by the Master Development Programs and Capital Development Program, regardless of their nature, directly increase the maximum tariff per traffic unit. Accordingly, all amounts invested under the Master Development Programs and Capital Development Program have a direct correlation to the amount of fees we will be able to charge each passenger or cargo service provider, and thus, a direct correlation to the amount of revenues we will be able to generate. As a result, we define all expenditures associated with investments required by the Master Development Programs and Capital Development Program as revenue-generating activities given that they ultimately provide future benefits, whereby subsequent improvements and upgrades made to the concession are recognized as intangible assets based on the principles of IFRIC 12. Additionally, compliance with the committed investments per the Master Development Programs and Capital Development Program is mandatory, as well as the fulfillment of the maximum tariff and therefore, in case of a failure to meet any one of these obligations (Master Development Programs or Capital Development Program amounts or maximum tariff or maximum regulated charges), we could be subject to sanctions and our Mexican concessions or Jamaican concessions could be revoked. See “Item 4, Information on the Company – Regulatory Framework – Mexican Airport Concessions – General Obligations of Concession Holders.”

Depreciation and Amortization

In light of the nature of our business and our concessions, we make certain assumptions and professional judgments regarding recognition of depreciation and amortization of our tangible and intangible assets. Depreciation of our tangible assets and of improvements to leased assets is calculated under the straight-line method based on the useful lives of the related assets. The estimated useful life and the depreciation method are reviewed at the end of each year, and the effect of any changes in the estimate recorded is recognized on a prospective basis. To determine the amortization period of intangible assets, we focus either on the period over which they will generate future economic benefits or the concession term, whichever is less. We do not determine residual values for machinery, equipment, improvements and leased buildings as they are not considered to be material. As of the date of this filing, we have not made any changes to estimated useful life and depreciation and amortization methods for the years ended as of December 31, 2018, 2019 and 2020. We believe that the decisions made are the most reasonable based on information available, on the judgments made and the way in which we manage our operations.

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Lease Accounting

At execution of a contract, we assess whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, we assesses whether: (i) the contract involves the use of an identified asset, which may be specified explicitly or implicitly, and should be, or represent substantially all of the capacity of, a physically distinct asset (for example, if the supplier has a substantive substitution right, then the asset is not identified); (ii) we have the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and (iii) we have the right to direct the use of the asset, which means we have decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, we have the right to direct the use of the asset if either: (a) we have the right to operate the asset; or (b) we designed the asset in a way that predetermines how and for what purpose it will be used.

Deferred Tax Assets

Under IFRS, we recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. We did not recognize deferred income tax assets for recoverable asset taxes on December 31, 2020. As a result of changes in Mexican tax law (see “Item 5, Operating and Financial Review and Prospects – Overview – Taxation”), the asset tax balance may be recovered through rebates of up to 10% of the total asset tax paid out and pending recovery over the next ten years (starting in 2008), provided that this sum does not exceed the difference between the income tax paid during the period and the asset tax paid during the years 2007, 2006 and 2005, whichever is lower, whenever the income tax exceeds asset tax in any of those years. Additionally, we have recorded a tax loss carryforward, expiring in 2026 as permitted by the Mexican tax authorities. We regularly review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income and related income tax expense compared to future estimated asset tax and the expected timing of the reversals of existing temporary differences. If these estimates and related assumptions change in the future, we may be required to make additional adjustments to our deferred tax assets, which may result in a reduction of, or an increase in, income tax expense. In 2018 and 2020, we did not pay income taxes on dividends, in 2019 we paid Ps.0.3 million in income taxes on dividends. Every year, we review the amount of income taxes paid on dividends according to our financial projections and determine the amount that could be recovered.

Liabilities for Retirement Benefits

We estimate the present value of our obligations under defined benefit pension plans using the projected unit credit method, involving interest risk, longevity risk and salary risk. A decrease in the 30-year interest rate, or in the life expectancies or salaries of plan participants will increase our liability. The discount rate of the projected benefit obligation at present value is determined based on the interest rate curve for 30-year government bonds. We base our assumptions on life expectancy on statistics for the general Mexican population, where the average life expectancy of an individual retiring at age 65 is currently 17 years for men and 19 years for women.

Contingencies and Provisions

We are a party to a number of legal proceedings. Under IFRS, provisions are recognized in the financial statements when: an entity has a present obligation (legal or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. A provision is not recognized for contingent liabilities. Contingent liabilities must be disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.

Capitalization of improvements to concession assets

We are made numerous capital investments to each of its airports, annually in the case of Mexican airports and every five years in Jamaica in accordance with their respective Master Development Plan. Investments considered to be additions or improvements to concession assets are recognized as intangible assets-improvements to concession assets. Disbursements related to the general maintenance of concession assets are recognized as expenses in the consolidated statement of income and other comprehensive income.

Cash flow hedges

We have derivatives designated as a cash flow instrument. Under IFRS, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income (OCI) and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is recognized in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from the inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognized immediately as profit or loss.

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Application of new and revised International Financing Reporting Standards

In 2018, we adopted IFRS 9 and IFRS 15. We also early adopted IFRS 16 from January 1, 2018, as well as other new IFRS interpretations (IFRIC 23) clarifying accounting for transactions that include the receipt or payment of advance consideration in a foreign currency, which did not have significant effect on our consolidated financial statements.

Recently Issued Accounting Standards

The following are new or revised International Financial Reporting Standards that have been issued but are not yet effective:

Standard |  | Effective as of
IFRS 17– Insurance Contracts 1 |  | January 1, 2021
IFRS 10 and IAS 28 (amendments) |  | January 1, 2020
Amendments to IAS 1 |  | January 1, 2020
Amendments to IAS 16 |  | January 1, 2021
Amendments to IAS 37 |  | January 1, 2021
Annual Improvements to IFRS Standards 2018–2020 |  | January 1, 2020

(1) | Effective for annual periods beginning on or after a date to be determined.

The following is a summary of these recently issued accounting standards, our expected adoption methods and timelines for their implementation, as well as our assessments of their impacts on our consolidated financial position and results of operations, if any.

IFRS 17 Insurance Contracts

IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 Insurance Contracts.

This standard outlines a General Model, which is modified for insurance contracts with direct participation features, described as the Variable Fee Approach. The General Model is simplified if certain criteria are met by measuring the liability for remaining coverage using the Premium Allocation Approach.

The General Model will use current assumptions to estimate the amount, timing and uncertainty of future cash flows and it will explicitly measure the cost of that uncertainty, it takes into account market interest rates and the impact of policyholders’ options and guarantees.

The implementation of this standard is likely to bring significant changes to a Company’s processes and systems, and will require much greater co-ordination between many functions of the business, including finance, actuarial and IT.

This standard is effective for annual reporting periods beginning on or after January 1, 2021, with early application permitted. It is applied retrospectively unless impracticable, in which case the modified retrospective approach or the fair value approach is applied.

For the purpose of the transition requirements, the date of initial application is the start if the annual reporting period in which the Company first applies this standard, and the transition date is the beginning of the period immediately preceding the date of initial application.

We anticipate that the application of these amendments will not have an impact on our consolidated financial statements in future periods should such transactions arise.

IFRS 10 Consolidated Financial Statements and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Specifically, the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognized in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognized in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint venture.

We anticipate that the application of these amendments may have an impact on our consolidated financial statements in future periods should such transactions arise.

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Amendments IAS 1 Classification of Liabilities as Current or Non-current

The amendments to IAS 1 affect only the presentation of liabilities as current and non-current in the statement of financial position and not for the amount or time in which any asset, liability, income or expense is recognized, or the information disclosed about of those figures.

The amendments clarify that the classification of liabilities as current and non-current is based on the rights of existence at the end of the reporting period, specifying that the classification is not affected by expectations about whether the entity will exercise the right to defer the cancellation of the liability, explain that there are rights if there are agreements that must be fulfilled at the end of the reporting period, and introduce a definition of the 'agreement' to make it clear that the agreement refers to the transfer of cash from the counterparty , equity instruments, other assets or services.

The amendments apply retrospectively for annual reporting periods beginning on or after 1 January 2023, with early application permitted.

We anticipate that the application of these amendments will not have an impact on our consolidated financial statements in future periods should such transactions arise.

Amendments to IFRS 3 - Reference to the Conceptual Framework

The amendments update IFRS 3 so that it can refer to the 2018 Conceptual Framework rather than the 1989 Framework. They also added a requirement that, for obligations within the scope of IAS 37, a buyer applies IAS 37 to determine whether the acquisition date is a present obligation or exists as a result of a past event. For levies that are within the scope of IFRIC 21 Levies, the buyer applies IFRIC 21 to determine whether the obligation gives rise to a liability to pay the levy that occurred on the acquisition date.

Finally, the amendments add an explicit statement that the buyer will not recognize a contingent asset acquired from a business combination.

The amendments are effective for business combinations whose acquisition date is on or after the initial period of the first annual period beginning on or after January 1, 2022. With the option of early application if the entity also applies all other updated references.

The Company´s management anticipate that the application of these amendments will not have an impact on the Company consolidated financial statements in future periods should such transactions arise.

Amendments to IAS 16 Property, Plant and Equipment: Proceeds before intended

Under the amendments, proceeds from selling items before the related item of Property, Plant and Equipment is available for use should be recognized in profit or loss, together with the costs of producing those items. IAS 2 Inventories should be applied in identifying and measuring these production costs.

Companies will therefore need to distinguish between:

-costs associated with producing and selling items before the item of Property, Plant and Equipment is available for use; and

-costs associated with making the item of Property, Plant and Equipment available for its intended use.

Making this allocation of costs may require significant estimation and judgement. Companies in the extractive industry may need to monitor costs at a more granular level.

The meaning of testing the functioning of Property, Plant and Equipment. The amendments also clarify that testing whether an item of Property, Plant and Equipment is functioning properly means assessing its technical and physical performance rather than assessing its financial performance.

The Company must recognize the cumulative effect of the initial application of the amendments as an adjustment to the consolidated financial statements in retained earnings (or some capital component, as appropriate) at the beginning of the first period to be presented.

The amendments are effective for annual periods beginning on January 1, 2022 with the option of early application.

We anticipate that the application of these amendments will not have an impact on our consolidated financial statements in future periods should such transactions arise.

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Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract

The amendments specify that the ‘costs to fulfill’ a contract include the ‘costs directly related to the contract’. The costs that are directly related to a contract consist of the incremental costs and the costs to fulfill a contract and the allocation of other costs that are directly related to fulfill a contract.

The amendments apply to contracts in which the Company has not yet fulfilled all its obligations at the beginning of the annual reporting period in which the entity applies the amendments for the first time. The comparatives should not be reformulated. Instead, the entity should recognize the cumulative effect of the initial application of the amendments as an adjustment to the consolidated financial statements in retained earnings or some other component of equity, as appropriate, by the date of initial application.

The modifications are effective for annual periods beginning on or after January 1, 2022, with the option of early application.

We anticipate that the application of these amendments will not have an impact on our consolidated financial statements in future periods should such transactions arise.

Annual Improvements to IFRS Standards 2018 – 2020

IFRS 1 First-time Adoption of International Financial Reporting Standards

The amendment simplifies the application of IFRS 1 for a subsidiary that becomes a first-time adopter of IFRS Standards later than its parent – i.e., if a subsidiary adopts IFRS Standards later than its parent and applies IFRS 1.D16 (a), then a subsidiary may elect to measure cumulative translation differences for all foreign operations at amounts included in the consolidated financial statements of the parent, based on the parent’s date of transition to IFRS Standards.

IFRS 9 Financial Instruments

This amendment clarifies that – for the purpose of performing the “10 per cent test” for derecognition of financial liabilities – in determining those fees paid net of fees received, a borrower includes only fees paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf.

IFRS 16 Leases

The amendment removes the illustration of payments from the lessor relating to leasehold improvements. As currently drafted, this example is not clear as to why such payments are not a lease incentive.

We anticipate that the application of these amendments will not have an impact on our consolidated financial statements in future periods should such transactions arise.

Off-Balance Sheet Arrangements

We are not party to any off-balance sheet arrangements.

Tabular Disclosure of Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2020:

|  | Payments due by period |
|  | Total |  |  | Less than 1 year (4) |  |  | 1-3 years |  |  | 3-5 years |  |  |  | More than 5 years |
|  | (in millions of pesos) |
Contractual Obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Master Development Programs (1)(5) |  | Ps. |  | 12,865.6 |  |  | Ps. |  | 4,123.6 |  |  | Ps. |  | 6,214.1 |  |  | Ps. |  | 2,527.9 |  |  | Ps. | n/a |
Capital Development Program (7) |  |  |  | 3,760.5 |  |  |  |  | 1,848.8 |  |  |  |  | 1,630.9 |  |  |  |  | 280.7 |  |  |  | n/a |
Purchase Obligations (2) |  |  |  | 490.4 |  |  |  |  | 124.9 |  |  |  |  | 263.8 |  |  |  |  | 101.7 |  |  |  | n/a |
Debt |  |  |  | 24,355.2 |  |  |  |  | 6,469.8 |  |  |  |  | 5,119.2 |  |  |  |  | 8,939.8 |  |  |  |  | 3,826.3 |
Interest from Debt (6) |  |  |  | 5,059.1 |  |  |  |  | 1,159.8 |  |  |  |  | 1,990.9 |  |  |  |  | 1,240.3 |  |  |  |  | 668.1 |
Operating Lease Obligations (3) |  |  |  | 29.5 |  |  |  |  | 14.0 |  |  |  |  | 15.5 |  |  |  | n/a |  |  |  | n/a |
Total |  | Ps. |  | 46,560.3 |  |  | Ps. |  | 13,741.0 |  |  | Ps. |  | 15,234.4 |  |  | Ps. |  | 13,090.4 |  |  | Ps. |  | 4,494.4 |

(1) | Peso figures are expressed in constant pesos as of December 31, 2017, based on the Mexican PPI’s construction price index.

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(2) | Reflects a minimum fixed annual payment of U.S.$4.0 million required to be paid under our technical assistance agreement. The agreement was automatically renewed for another five-year period on August 25, 2019. For the peso calculation, we assume an average exchange rate of Ps.20.70 per U.S.$1.00 and an annual U.S. inflation rate of 1.5%. The amount ultimately to be paid in any year will depend on our profitability.

(3) | Includes leasing of buildings and vehicles.

(4) | Amount for less than one year corresponds to obligations for 2021.

(5) | Reflects the new Master Development Programs commitments for the subsequent five-year period (2020-2024) as adjusted November 30, 2020.

(6) | For the interest calculations, we determined the interest payments using an average fixed interest rate of 8.22% and an average variable rate of 6.19% for the loans contracted. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Indebtedness.”

(7) | Reflects the new Capital Development Program commitments for the subsequent five-year period (2020-2024) by our Jamaican airports.

Item 6. | Directors, Senior Management and Employees

Directors

The board of directors is responsible for the management of our business. Pursuant to our bylaws, our board of directors generally must consist of eleven members. Under Mexican law, at least 25 percent of our directors must be independent (as determined by our shareholders at each annual General Ordinary Shareholders’ Meeting, applying the provisions of our bylaws and relevant Mexican and other laws); under the Securities Market Law, the National Banking and Securities Commission may object to such designation of independence. Currently, our board of directors comprises eleven members.

Our bylaws provide that the holders of Series BB shares are entitled to elect four members to the board of directors and their alternates. Our remaining directors are elected by the holders of our Series B shares (who do not elect alternates). Under our bylaws, each shareholder or group of shareholders owning 10% of our capital stock in the form of Series B shares is entitled to elect one member to the board of directors. Also, our bylaws prevent any Series B shareholders, individually, or together with related parties, from appointing more than one board member, even if the shareholder owns more than 10% of our outstanding capital stock (because any shares in excess of the 10% maximum do not have any voting rights under our bylaws). The other directors to be elected by the holders of our Series B shares are elected by majority vote of all holders of Series B shares present at the shareholders’ meeting, except for those Series B shareholders that already participated in any 10% board member designation. Selection of independent directors is conducted through an executive search firm tasked with locating individuals with appropriate profiles. Directors are elected for one-year terms at the ordinary shareholders’ meeting.

The composition of our board of directors as of the date of this report is set forth in the following table, which lists the title, date of appointment, age and alternate, as applicable, of each of our current directors. However, this composition could change in the Ordinary Shareholders Meeting to be held on April 27, 2021. In the past, certain of our shareholders have challenged the composition of our board of directors. For more information see “Item 8, Financial Information – Legal Proceedings – Litigation related to Grupo México, S.A.B. de C.V. seeking to void certain resolutions adopted at our corporate shareholders’ meetings.”

Name |  | Title |  | Director since |  | Age |  | Alternate |
Laura Díez Barroso Azcárraga (1) |  | Chairwoman and Director |  | April 21, 2015 |  | 68 |  | Carlos Laviada Ocejo |
María José Cuenda Chamorro (1) |  | Director |  | April 24, 2019 |  | 51 |  | Carlos Manuel Porrón Suárez |
Juan Gallardo Thurlow (1) |  | Director |  | April 26, 2016 |  | 73 |  | Eduardo Sánchez Navarro Redo |
María Ángeles Rubio Alfayate (1) |  | Director |  | April 29, 2020 |  | 46 |  | Carlos Alberto Rohm Campos |
Alfredo Casar Pérez (2) |  | Director |  | April 26, 2016 |  | 67 |  |  | — |
Carlos Cárdenas Guzmán (3) |  | Director |  | September 22, 2011 |  | 70 |  |  | — |
Joaquín Vargas Guajardo (3) |  | Director |  | April 16, 2012 |  | 67 |  |  | — |
Álvaro Fernández Garza (3) |  | Director |  | February 26, 2014 |  | 53 |  |  | — |
Juan Díez-Canedo Ruíz (3) |  | Director |  | April 23, 2014 |  | 70 |  |  | — |
Ángel Losada Moreno (3) |  | Director |  | April 23, 2014 |  | 66 |  |  |  |
Luis Tellez Kuenzler (3) |  | Director |  | April 25, 2018 |  | 62 |  |  | — |

(1) | Elected by AMP as holder of Series BB shares, which represents 15% of our capital stock.

(2) | Director representing Grupo México as shareholder or group of shareholders owning 10% of our capital stock.

(3) | Independent directors elected to comply with the Securities Market Law (Ley del Mercado de Valores).

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Laura Díez Barroso Azcárraga. Mrs. Díez Barroso has been chairwoman of our board of directors since 2015 and chairwoman of Fundación GAP since its establishment in 2013. Besides, she is currently also chairwoman of the board of directors of Grupo Financiero Santander México. Mrs. Díez Barroso began her career in publishing in 1979 as editor of the teen magazine, TU. In 1988, she founded Editorial Eres, and in 1995 Editorial Eres merged with Editorial Televisa, which resulted in the appointment of Mrs. Díez Barroso as the chairwoman of the board and CEO of the company until 2000. She served for 14 years as a board member of Royal Caribbean Cruises and 15 years as a board member of Grupo Financiero Inbursa. Mrs Díez Barroso is currently a board member of Consejo Mexicano de Negocios, Telmex, Medica Sur and Centro Roberto Garza Sada part of “UDEM University”. Mrs. Díez Barroso is also a trustee of several philanthropic initiatives including Museo San Ildefonso and Fideicomiso del Bosque de Chapultepec. She currently invests in both public and private entities through LCA Capital, a family office she co-founded.

María José Cuenda Chamorro. Mrs. Cuenda was elected to our board of directors on April 23, 2019. Mrs. Cuenda currently is the Managing Director of commercial, real estate and international development for AENA. Her most notable achievements include the commercial transformation and modernization of the Spanish airports in the AEA network with a special emphasis on developing retail businesses by incorporating the biggest and best-known perfumery, fashion and food brands in innovative spaces that are designed for the passengers. She has a degree in Economics and Business Administration from the University of Extremadura, an MBA from IE Business School and graduated from the Management Development Program at IESE. She began working for AENA in the commercial and marketing department at the Palma de Mallorca airport in 1996.

Juan Gallardo Thurlow. Mr. Gallardo was elected to our board of directors on April 26, 2016. Mr. Gallardo currently is the chairman of the board of directors of Organización CULTIBA (the holding company for GEPP and Grupo Azucarero México), and the chairman of the board of Grupo Azucarero México, the largest sugar mill group in Mexico and Grupo GEPP, the exclusive bottling company of PepsiCo in Mexico. Mr. Gallardo is also a member of the board of directors of Caterpillar Inc. and Banco Santander (Mexico) S.A., as well as a member of the international advisory councils of Bombardier and Rabobank. Mr. Gallardo is a member of the Consejo Mexicano de Negocios, A.C. and of the Consejo Empresarial de América Latina. He was coordinator of COECE, a special ad-hoc alliance of all Mexican private sector organizations formed to promote increased trade between Mexico, the United States and Canada and the rest of the world, particularly in the context of NAFTA and the Free Trade Agreement with the European Union. Mr. Gallardo has a bachelor’s degree in law from the Escuela Libre de Derecho in Mexico City and completed the AD-II Top Management Course at IPADE in Mexico City.

María Ángeles Rubio Alfayate. Mrs. Rubio Alfayate is an Aeronautical Engineer with a degree from the Polytechnic University of Madrid and a certificate from the Management Development Program (PDD) from IESE, University of Navarra. Throughout her professional career, she has held different management positions in the field of airport management primarily in the areas of services and operations of several companies, including Flightcare, the company dedicated to providing handling services for the FCC Group, the Spanish division of Swissport International Ltd., a multinational airport ground services and air cargo handling company and CLECE, the ACS Group's services company. From 2015 until March 2020, she was Director of Services and Development for Airports at Iberia Líneas Aéreas de España. In April 2020, she joined Aena SME S.A., as director of Aena Internacional.

Alfredo de Jesús Casar Pérez. Mr. Casar holds a bachelor’s degree in economics from the Autonomous Technological Institute of Mexico (ITAM), a degree in industrial engineering from Anahuac University and a master’s degree in economics from the University of Chicago. He has been a member of the board of directors of Grupo México since 1997. He was named Executive President of Grupo Ferroviario Mexicano S.A. de C.V. (“GFM”) and Ferrocarril Mexicano, S.A. de C.V. (“Ferromex”), on March 5, 2008, and he served as President and Chief Executive Officer of GFM and Ferromex since November 16, 1999. Previously, Mr. Casar served as director of development at Grupo Mexico S.A.B. de C.V. for two years after having served as Chief Executive Officer of Compañía Perforadora México, S.A. de C.V. and Méxican Chief Executive Officer of Compañía Constructora, S.A. de C.V., for 7 years. Mr. Casar is also a member of the board of directors of Grupo Mexico, GFM and Southern Copper Corporation (“SCC”).

Carlos Cárdenas Guzmán. Mr. Cárdenas has been a member of our Board of Directors since 2011. He also serves as President of our Audit Committee. He is a Certified Public Accountant from the Universidad Autónoma de Guadalajara and a master’s degree in tax law from the Universidad Panamericana (IPADE). He is a retired partner of Ernst & Young Mexico after 39 years of active service, where he served as the Tax Partner in Charge during many years, and as member of its Executive Committee. Currently, he serves on the Board of Directors and, as member or President of Audit Committees of numerous large Mexican companies, including among others as Independent Board Member and Audit Committee member of Aleatica, S.A. (Subsidiary company of the Australian Fund IFM Investors), Independent Board Member and Audit Committee member of Grupo Farmacias del Ahorro, Independent Board Member and Audit Committee member of Reaseguradora Patria, S.A., Independent Board Member and Audit Committee member of Anteris Capital Venture Lending Fund, Statutory Auditor of Berkley International Seguros Mexico, S.A. de C.V. and Berkley International Finanzas Mexico, S.A. de C.V., and Former Board President of The American British Cowdray Medical Center, I.A.P. (Centro Médico ABC). He is also a member of several business and professional associations; most notably, he served as President of the Mexican Institute of Certified Public Accountants (IMCP) and of the Academy of Tax Studies of Public Accounting (AEF).

Joaquín Vargas Guajardo. Mr. Vargas was elected as an independent director to the Company’s board of directors on April 16, 2012. He is chairman of the board of directors of Grupo MVS, which includes, MVS Radio, MVS Education, MVS Entertainment, as well as DISH

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and MVS TV, satellite television services. He is also chairman of CMR, a public company that has more than 280 restaurants with more than a dozen brands, among others, The Capital Grille, Sushi Itto, Chili’s and Olive Garden. He serves on the boards of directors of publi cly traded companies Vitro, Grupo Financiero Santander and Medica Sur. He is also a member of the boards of directors of El Universal newspaper, and Costamex, among others.

Álvaro Fernández Garza. Mr. Fernández was elected to our board of directors on February 26, 2014 as a provisional director nominee and was ratified as an independent director during the April 23, 2014 Shareholder Meeting. He serves as a CEO of Grupo ALFA and is member of the board of directors of Vitro, ALFA and CYDSA. He is president of the board of the Universidad de Monterrey (UDEM). He holds a bachelor’s degree in economics from the University of Notre Dame, a master’s degree in business administration from the Instituto Tecnológico de Estudios Superiores de Monterrey (ITESM) and an MBA from Georgetown University.

Juan Díez-Canedo Ruíz. Mr. Díez-Canedo Ruíz received a bachelor’s degree in economics from the Instituto Tecnológico Autónomo de Mexico (ITAM) in 1973 and a PhD in economics from the Massachusetts Institute of Technology (MIT) in 1980. In 1978 he began working at Banco de México, holding several positions until becoming head of Macrofinancial Programming and Economic Research, a position he held until 1988. In 1980, he obtained first place in the Banamex National Economics Award. From 1989 to 1992, he was Deputy CEO of Banco Internacional (currently HSBC). From 1992 to 1994 he was Director General of the Banking area of Grupo Financiero Probursa; from 1995 to 1996 he was Executive Vice-president of Grupo Maseca (GRUMA); and from 1995 to 1999 he was Executive Vice-president of Grupo Financiero Banorte. From November 1999 to February 2001, he was CEO of CINTRA, the holding company of Aeroméxico and Mexicana de Aviación; from 2001 to 2009 he was President of Fomento y Desarrollo Comercial, S.A. de C.V.; and from 2009 to date, President and CEO of Financiera Local, S.A. de C.V. SOFOM ENR. He has been a professor at several institutions (ITAM and El Colegio de México, among others) and has published articles in specialized academic magazines in Mexico and the United States. He has been a member of the board of directors of companies such as Telmex, Alcatel, Banorte, Grupo Maseca, Grupo Gimsa, Deportes Martí, Fondo de Cultura Económica, among others. He is also member of the board of TDA (Titulización de Activos, Madrid España) and the Regional Metropolitan Board of Grupo Financiero Banorte.

Ángel Losada Moreno. Mr. Losada was elected as an independent director to the Company’s board of directors on April 23, 2014. He is currently executive president and chairman of the board of directors and CEO of Grupo Gigante, S.A.B. de C.V. He is a member of the boards of directors of Banco Nacional de México, S.A. (Citi Banamex Group), the Federico Gómez Children’s Hospital and Laboratorios Novag. He has also served as chairman of the board of directors of the Mexican National Association of Retailers (Asociación Nacional de Tiendas de Autoservicio y Departamentales, A.C., or ANTAD), as a director and member of the board of directors of the Food Marketing Institute of the United States and as member of the board of Mexico City’s National Chamber of Commerce. Mr. Losada holds a bachelor’s degree in business administration from Universidad Anáhuac.

Luis Tellez Kuenzler. Mr. Téllez is a Mexican economist and politician. He was Secretary of Energy during the government of President Ernesto Zedillo and Secretary of Communications and Transportation under President Felipe Calderon Hinojosa government. In 2009, he took the position of Chairman of the Board and General Director of the Bolsa Mexicana de Valores Group. He is currently Chairman of the Mexican subsidiary of Kohlberg Kravis Roberts & Co (KKR), a United States multinational corporation that manages investment funds and venture capital. He also serves special advisor to NTT-Data. He is the co-chair at the Mexican Woodrow Wilson Institute in Washington D.C.

During 2020, the attendance by board members of meetings of the Board of Directors or Board Committees was 100%.

Executive Officers

Pursuant to our bylaws, the directors appointed by the holders of Series BB shares are entitled to appoint and remove our top-level executive officers.

The following table lists our top-level executive officers, their current positions and their dates of appointment as executive officers:

Name |  | Current position |  | Executive officer since |  | Age
Raúl Revuelta Musalem |  | Chief Executive Officer |  | April 26, 2018 |  | 44
Saúl Villarreal García |  | Chief Financial Officer |  | February 25, 2015 |  | 50
Sergio Enrique Flores Ochoa |  | General Counsel |  | February 8, 2002 |  | 68
Juan Francisco Martínez Mira |  | Director of Quality, Innovation and IT |  | August 1, 2018 |  | 55
José Ángel Martínez Sánchez |  | Chief of Airports and Regulated Revenues |  | May 7, 2016 |  | 45
Alejandro Vallarino Marusich |  | Director of Infrastructure |  | September 10, 2018 |  | 52
Alejandro Guillermo Mañón Hernández |  | Director of Culture & Human Capital |  | April 15, 2019 |  | 55

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Raúl Revuelta Musalem. Mr. Revuelta was named our CEO in April 2018. Mr. Revuelta has more than 18 years of experience in the infrastructure sector and is an expert in the airport sector. From 2005 to 2015, he worked at Grupo Aeroportuario del Pacífico (GAP), serving as CFO and Commercial Director (CCO). During his professional career, he has also served as General Director of Cross Border Xpress (CBX) and as Deputy Director of Finance of the Ministry of Communications and Transportation (SCT). In his six years as Deputy Director of the SCT, Mr. Revuelta participated in different privatization processes in the transportation sector, obtaining extensive experience in federal concessions. Mr. Revuelta has a degree in economics from the Instituto Tecnológico de Estudios Superiores de Monterrey (ITESM).

Saúl Villarreal García. Mr. Villarreal was named our CFO effective on February 25, 2015. He has been responsible for overseeing corporate administration at GAP since 2003; as a result, he has vast experience and knowledge of the administrative and financial management aspects of our business. In 2006, he participated in the initial public offering process and more recently participated in the issuance of debt securities on the local market. Mr. Villarreal is a public accountant from the University of Guadalajara, with an MBA from the same university and a master’s degree in finance with a concentration in international accounting from the Universidad Panamericana.

Sergio Enrique Flores Ochoa. Mr. Flores was named our General Counsel in February 2002. Previously, he was the manager of legal matters for the ASA and an Assistant District Attorney for Mexico City. In addition, he was head of the legal department of INFONAVIT and legal manager for NAFIN. Mr. Flores received a degree in law, as well as a master’s degree in law, from the Universidad Nacional Autónoma de México (UNAM).

Juan Francisco Martínez Mira. Mr. Martínez was named our Director of Quality, Innovation and IT in August 2018. He has worked in the aeronautical industry for over 29 years. Previously, he worked for AENA in several airports and performing different functions. He joined GAP in June 2007 and performed several functions, including Operational Systems Manager, IT Subdirector and Director of the Guadalajara International Airport. Mr. Martínez is a systems engineer and also obtained a degree in music, publicity and RRPP, a master’s degree in pedagogy and in airport and aeronautics management and direction, and obtained postgraduate diplomas in innovation, strategic planning and airports. He completed his studies at Conservatorio Superior de Música de Murcia, Universidad de Murcia and Universidad Complutense de Madrid.

José Ángel Martínez Sánchez. Mr. Martínez was named our Chief of Airports and Regulated Revenues in May 2016. Previously, he worked at AENA in several capacities within airport engineering and maintenance. Most recently, as part of AENA Internacional, he was Manager of Technical Operations for five years in Colombia, supporting the Cartagena de Indias, Cali and Barranquilla airports. He was also the AENA manager responsible for the takeover of the London-Luton Airport in the United Kingdom. Mr. Martínez holds a degree in aeronautical engineering with a specialization in airports and air transport. He also holds an MBA from the Universidad Rey Juan Carlos in Madrid, and a master’s degree in infrastructures, equipment and services management from the Universidad Politécnica in Madrid.

Alejandro Vallarino Marusich. Mr. Vallarino was appointed as Infrastructure Director in November 2018. In this role, he has planned, developed and built approximately one million square meters of projects. Mr. Vallarino is a civil engineer with a bachelor’s degree in engineering from University of Mexico (UNAM), an MBA from ITAM, a master’s degree in real estate and construction companies’ executive management from Polytechnic University of Madrid and a Master’s degree in airport infrastructure planning from Polytechnic University of Madrid. For 23 years of his professional career, Mr. Vallarino worked for large construction and real estate development companies, including Dine, Gicsa, ICA and Citelis.

Alejandro Guillermo Mañón Hernández. Mr. Mañón was appointed as Director of Culture & Human Capital in April 2019. Mr. Mañón has almost 30 years of professional experience in human resources in different industries including technology, consumer goods, pharmaceutical and electronics. Mr. Mañón has a strong background in complex operations including manufacturing and corporate areas in Mexico and in other countries in Latin America. Mr. Mañón holds a bachelor’s degree in Industrial Relations from the Universidad Panamericana.

The business address of our directors and executive officers is our principal executive headquarters.

Compensation of Directors and Executives

Under the technical assistance agreement with AMP, the four directors and four alternates elected by AMP do not receive compensation from us for serving on our board of directors.

For 2020, the aggregate compensation paid to our directors designated by our Series B shareholders was approximately Ps.8.0 million. The compensation paid to the director appointed by Grupo México was of approximately Ps.1.2 million. We have not established any pension, retirement or similar benefits or arrangements for these individuals. These directors receive a base annual compensation of approximately U.S.$44,100 for their service on our board of directors. Additionally, for their services to our corporate governance committees, certain directors receive supplemental compensation: the president of our Audit Committee receives an additional U.S.$7,717; members of our Audit Committee receive U.S.$4,410; members of our Acquisition Committee receive U.S.$4,410 and members of our Compensation Committee receive U.S.$2,205.

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The compensation paid to our seven executive officers amounted to Ps.39.4 million in 20 20, of which 73% was salary, 25% was bonuses and 2% was other compensation. We have not established any pension, retirement or similar benefits or arrangements for these individuals through 20 20. However, in 2016 we established a new long-term cash bonus incentives plan for our executives, which seeks to encourage the retention and development of key management within the Company. The executive officers’ rights to exercise this compensation plan will vest at the end of 2019, after the approval of the financial statements in the Shareholders’ Meeting, subject to achieving certain performance and profitability targets for the Company, including share price, distributions to shareholders, operating profitability, net income and capital expenditures. A fter determining that the objectives under the long-term cash bonus incentive plan had been achieved fo r the period from 2016 to 2019, in March 2021, we authorized and paid in the aggregate Ps.13.2 million to our seven executives.

None of our directors, alternate directors or executive officers is the beneficial owner of more than 1% of any class of our capital stock, except as described in “Item 7, Major Shareholders and Related Party Transactions – Major Shareholders.” None of our directors or executive officers is entitled to benefits upon termination under their service contracts with us, except for what is due to them according to the Mexican Federal Labor Law. Additionally, we have not made personal loans to our directors or executive officers and do not have a stock option plan or any equivalent plan.

Board Committees

Our bylaws provide for four committees to assist the board of directors with the management of our business: an Operating Committee, an Audit and Corporate Practices Committee, an Acquisitions Committee and a Nominations and Compensation Committee. The Audit Committee, to which our bylaws have granted the duties provided for in the Securities Market Law for Mexican corporate practices committees, is the only legally required committee. The other committees have been established to assist the board of directors. The board of directors may establish further committees from time to time.

Operating Committee

The Operating Committee, which, pursuant to our bylaws, shall have six members and three alternates, is responsible for, among other matters, proposing and approving certain plans and policies relating to our business, investments and administration, including approval of the Master Development Programs of our subsidiary concession holders, our dividend policy and investments of less than U.S.$3.0 million that are not provided for in our annual budget. Pursuant to our bylaws, the board of directors is authorized to appoint the six members of the Operating Committee. Board members elected by the holders of Series BB shares have the right to appoint three of the committee members. As of the date of this report, the members of the Operating Committee are Raúl Revuelta Musalem, CEO, who chairs the committee; Carlos Alberto Rohm Campos; Juan Gallardo Thurlow; Saúl Villarreal García, Chief Financial Officer; José Ángel Martínez Sánchez, Chief of Airports and Regulated Revenues and Alejandro Vallarino Marusich, Director of Infrastructure. Carlos Manuel Porrón Suarez, Santiago Riveroll and Alejandro Cortina Gallardo serve as alternates for Raúl Revuelta Musalem, Carlos Alberto Rohm Campos and Juan Gallardo Thurlow, respectively.

Audit and Corporate Practices Committee

The Audit and Corporate Practices Committee, which must have a minimum of three members, the majority of whom must be members of our board of directors, is responsible, among other things, for: (i) monitoring the compliance of our directors, officers and employees (and those of our subsidiaries) with our (and their) bylaws (estatutos sociales) and applicable law, (ii) naming, and supervising the work of, our independent auditors and (iii) receiving and investigating internal complaints or other information concerning our systems of internal control and other such matters. The Audit and Corporate Practices Committee is also responsible for reviewing our corporate governance and all related-party transactions (according to the requirements of our bylaws and the Mexican Market Law), including transactions with AMP. The members of the board of directors elected by the holders of Series BB shares are entitled to propose the appointment to the Audit and Corporate Practices Committee of the number of members representing 20% of the committee’s total members, but at least one member who must also fulfill applicable independence requirements. The president of this committee is elected at the annual shareholders’ meeting. The composition of the Audit and Corporate Practices Committee must at all times be compliant with all applicable laws and regulations, including independence requirements, for every jurisdiction in which our securities are listed or quoted. As of the date of this report, the Audit and Corporate Practices Committee comprises the following directors: Carlos Cárdenas Guzmán serves as president and Juan Díez-Canedo Ruíz and Ángel Losada Moreno serve as members.

Acquisitions Committee

The Acquisitions Committee is responsible for ensuring compliance with our procurement policies set forth in our bylaws. Among other things, these policies require that the Acquisitions Committee approve any transaction or series of related transactions between us and a third-party involving consideration in excess of U.S.$400,000 and that any contract between us, on the one hand, and AMP or any of its related parties, on the other hand, be awarded pursuant to a bidding process, which, in the case of AMP, must involve at least three other bidders. In the case of a proposed transaction between us and AMP or any related party, we are required to invite, pursuant to the bylaws, at least three contractors to bid on the transaction and, in the case that a third-party contractor’s bid is equal to or less than AMP’s bid, the transaction is awarded to the third-party contractor.

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Our bylaws provide that a shareholders’ meeting will determine the number of members of the Acquisitions Committee, which must be composed primarily of members of the board of directors. The members of the board of directors elected by the holders of Series BB shares are entitled to appoint to the committee the number of members representing 20% of its total members but at a minimum, one member. As of the date of this report, the Acquisitions Committee consists of proprietary members Carlos Alberto Rohm Campos and Joaquin Vargas Guajardo. Alejandro Cortina Gallardo was elected to serve as an alternate member to Carlos Alberto Rohm Campos. A secretary has also been appointed who is not a member of the committee.

Nominations and Compensation Committee

The Nominations and Compensation Committee is responsible for nominating candidates for election to our board of directors and making recommendations regarding the compensation of our directors and officers. The committee also serves in a corporate governance role within the scope of its subject matter. Our bylaws provide that a shareholders’ meeting will determine the number of members of the committee. The holders of the Series B and Series BB shares, each acting as a class, are each entitled to name one member of the Nominations and Compensation Committee. The remaining members of the committee, if any, are designated by the two members who were selected by the Series B and Series BB shareholders. If these two members are unable to reach agreement, the remaining members of the committee will be designated by the majority of the votes in the shareholders’ meeting, provided that, in such case, holders of the Series BB Shares will be entitled to appoint 20% of the members but at a minimum, one member. Members of the committee serve for a term of one year. At each annual shareholders’ meeting, the Nominations and Compensation Committee is required to present a list of candidates for election as directors for the vote of the Series B shareholders. As of the date of this report, the members of the Nominations and Compensation Committee are Laura Díez Barroso Azcárraga and Álvaro Fernández Garza. María Ángeles Rubio Alfayate was elected to serve as an alternate member to Laura Díez Barroso Azcárraga.

Employees

Employees in Mexico

The following table sets forth the number of employees and a breakdown of employees by main category of activity and geographic location as of the end of each year indicated:

Employees in Mexico

|  | December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 (2) |
By category of activity: |  |  |  |  |  |  |  |  |  |  |  |
Airport operations |  | 601 |  |  | 621 |  |  | 541 |
Airport maintenance |  | 214 |  |  | 223 |  |  | 227 |
Administration (1) |  | 322 |  |  | 348 |  |  | 573 |
Fundación GAP |  | 35 |  |  | 51 |  |  | 61 |
By geographic location: |  |  |  |  |  |  |  |  |  |  |  |
Guadalajara |  | 207 |  |  | 230 |  |  | 284 |
Tijuana |  | 115 |  |  | 120 |  |  | 146 |
Los Cabos |  | 113 |  |  | 127 |  |  | 168 |
Puerto Vallarta |  | 114 |  |  | 119 |  |  | 143 |
Guanajuato |  | 67 |  |  | 72 |  |  | 88 |
Hermosillo |  | 68 |  |  | 66 |  |  | 71 |
Mexicali |  | 53 |  |  | 56 |  |  | 62 |
La Paz |  | 52 |  |  | 49 |  |  | 53 |
Aguascalientes |  | 54 |  |  | 57 |  |  | 64 |
Morelia |  | 51 |  |  | 52 |  |  | 48 |
Los Mochis |  | 45 |  |  | 46 |  |  | 49 |
Manzanillo |  | 39 |  |  | 40 |  |  | 34 |
Total (1) |  |  | 1,172 |  |  |  | 1,243 |  |  |  | 1,402 |

(1) | Total at December 31, 2018, 2019 and 2020, includes 191, 209 and 192 employees, respectively, of SIAP, our administrative services subsidiary located in Guadalajara.

(2) | As of December 31, 2020, CORSA employed 489 people, SIAP employed 542 people, PCP employed 311 people and Fundación GAP employed 61 people.

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As of December 31, 2020, 65.0% of our employees were non-unionized employees. The remaining 35.0% employees were unionized. All of our unionized employees are members of local chapters of the Mexican National Union of Airport Workers (Sindicato Nacional de Trabajadores de la Industria Aeroportuaria y Servicios Similares y Conexos de la República Mexicana), an organization formed in 1998 whose members include employees of ASA as well as of the three other airport groups (the Southeast Group, the Mexico City Group and the Central-North Group) operating in Mexico. Labor relations with our employees are governed by one collective bargaining agreement relating to each one of our twelve airport subsidiaries, which is negotiated by the respective local chapter of the union. As is typical in Mexico, wages are renegotiated every year, while other terms and conditions of employment are renegotiated every two years. In 2019, we successfully renegotiated our collective bargaining agreements, thereby securing a favorable and productive work environment for our employees for 2020 and 2021. We believe that our relations with our employees are good, and the wages we pay our employees are similar to those paid to employees of similar airport operating companies in Mexico. During 2020, because we agreed with the union to postpone the renegotiation of our collective bargaining agreements until March 2021 due to the effects of the global COVID-19 pandemic, a general salary increase of 3.5% was applied.

We offer a savings plan available to all of our Mexican employees pursuant to which our employees may make bi-weekly contributions of up to 13% of their pre-tax salaries. We make bi-weekly contributions matching each employee’s contribution. Employees are entitled to withdraw funds from their accounts on an annual basis. In 2018, 2019 and 2020, we made a total of Ps.26.4 million, Ps.29.3 million and Ps.30.6 million, respectively, in payments to employees’ accounts pursuant to the savings plan.

Funds in the savings plan may be used to make loans to employees and are otherwise invested in securities listed on the Mexican Stock Exchange or in treasury bills issued by the Mexican Treasury Department.

In July 2020, due to the economic impact of the COVID-19 pandemic, we made available to our employees an early retirement program. As a result of the program, 104 employees retired early.

In August 2020, we decided to insource some of our services. As a result, we hired 185 employees, these employees help operate the VIP lounges, convenience stores, commercial areas, among other services.

Employees in Jamaica

Montego Bay Airport Employees

The following table sets forth the number of employees and a breakdown of employees by main category of activity as of the end of each year indicated:

Employees at Montego Bay Airport

|  | December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
By category of activity: |  |  |  |  |  |  |  |  |  |  |  |
Airport operations |  |  | 81 |  |  |  | 86 |  |  |  | 83 |
Airport maintenance (1) |  |  | 52 |  |  |  | 53 |  |  |  | 47 |
Administration |  |  | 32 |  |  |  | 33 |  |  |  | 25 |
Total |  |  | 165 |  |  |  | 172 |  |  |  | 155 |

(1) | Total at December 31, 2020, includes 155 employees representing contractors in maintenance assigned to work on landscaping, runway maintenance, drainages and general labor tasks.

As of December 31, 2020, 34.2% of MBJA’s employees, comprising management and contract staff, were non-unionized employees and the remaining 65.8% of employees were unionized. The unionized employees are members of two local trade unions: the Trade Union Congress (“TUC”) and Union of Technical, Administrative, and Supervisory Personnel (“UTASP”).

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On November 2, 20 20, MBJA and the TUC amicably agreed and executed the current collective bargaining agreement covering the period from March 1, 20 20 to February 28, 202 1. Forty-five employees from MBJA’s maintenance, engineering and emergency response service teams are members of the TUC. MBJA has received the Salary and Fringe Benefits Claim document from the TUC Bargaining unit for the period from March 1, 202 1 to February 28, 2022. Negotiations have not yet commenced.

On December 7, 2020, MBJA and the UTASP amicably agreed and executed the current collective bargaining agreement covering the period from April 1, 2020 to March 31, 2021. Fifty-nine employees from MBJA’s supervisory and administrative personnel across different departments are members of the UTASP. We await the submission of the Salary and Fringe Benefits Claim from the UTASP Bargaining unit for the period April 1, 2021 to March 31, 2022.

MBJA continues to maintain a good relationship with both unions. Further, to our knowledge, MBJA pays comparable salaries and benefits to similar enterprises in Jamaica. MBJA also facilitates voluntary employee salary deductions for personal savings.

Kingston Airport Employees

The following table sets forth the number of employees and a breakdown of employees by main category of activity as of the end of each year indicated:

Employees at Kingston Airport

| December 31, |
| 2019 |  |  | 2020 |
By category of activity: |  |  |  |  |  |  |
Airport operations |  | 92 |  |  |  | 70 |
Airport maintenance |  | 22 |  |  |  | 14 |
Administration |  | 16 |  |  |  | 15 |
Total |  | 130 |  |  |  | 99 |

As of December 31, 2020, all of NMIA’s employees, comprising management and contract staff, were non-unionized employees.

PACKAL has formally recognized two trade unions which were previously recognized by NMIA Airports Limited, namely, the TUC and the UTASP; however no claims have been made by either union and no negotiations have been held or are pending.

PACKAL intends to maintain good relations with the recognized unions through timely sharing of relevant information and consultation as appropriate.

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Item 7. | Major Shareholders an d Related Party Transaction s

MAJOR SHAREHOLDERS

Prior to our initial public offering in 2006, the Mexican government owned 476,850,000 Series B shares, representing 85% of our issued capital stock. After the offering, the Mexican government ceased to be a shareholder.

The following table sets forth the current ownership of outstanding shares (523,286,608) as of April 16, 2021, to the extent of our knowledge:

Major Shareholders

|  | Number of Shares |  |  | Percentage of Outstanding Capital Stock |
Identity of shareholder |  | B Shares |  |  | BB Shares |  |  | B Shares |  |  | BB Shares |
AMP |  |  | 13,269,900 |  |  |  | 84,150,000 |  |  |  | 2.5 | % |  |  | 16.1 | %
Grupo México, S.A.B. de C.V. (1) |  |  | 45,221,756 |  |  |  | — |  |  |  | 8.6 | % |  |  | 0.0 | %
Weston Hill Equity Holdings, LP (2) |  |  | 23,794,815 |  |  |  | — |  |  |  | 4.5 | % |  |  | 0.0 | %
Public (3) (4) |  |  | 356,850,137 |  |  |  | — |  |  |  | 68.3 | % |  |  | 0.0 | %

(1) | Based on the Schedule 13D (Amendment 41) filed on February 19, 2021 by Grupo México.

(2) | Based on the Schedule 13D (Amendment No. 5) filed on May 5, 2020 by Weston Hill Equity Holdings, LP (“Weston”), on May 5, 2020, Mrs. Díez Barroso and Mr. Laviada Ocejo disposed of the following Series B and Series BB shares through a series of transfers, in each case for no consideration, to various adult family members, which resulted in each of Mrs. Díez Barroso and Mr. Laviada Ocejo and such transferees owning less than 5% of our Series B outstanding shares:

| • | Mrs. Díez Barroso and Mr. Laviada Ocejo transferred to various transferees all of their interest in PAP. See “Item 4, Information on the Company —History and Development of the Company – Investment by AMP.”

| • | Mrs. Díez Barroso, as majority owner of Weston, caused the transfer of (i) 18,264,638 Series B shares held by Weston to various transferees, including 1,250,048 Series B shares directly to herself, and subsequently transferred (ii) 100% ownership of Weston to various other transferees. In connection with such transfers, Mr. Laviada Ocejo was replaced as the general partner of Weston.

| • | Subsequent to these series of transfers, Weston beneficially owns 23,794,815 Series B shares (5.4% of our outstanding Series B shares). Mr. Laviada Ocejo directly beneficially owns 356,924 Series B shares. Mrs. Díez Barroso directly beneficially owns 2,695,811 Series B shares. Mr. Laviada Ocejo and Mrs. Díez Barroso are husband and wife. Therefore, Mrs. Díez Barroso may also be deemed to be a beneficial owner of 356,924 Series B shares directly beneficially owned by Mr. Laviada Ocejo and Mr. Laviada Ocejo may be deemed a beneficial owner of 2,695,811 Series B shares directly beneficially owned by Mrs. Díez Barroso.

(3) | As of December 31, 2020, we held an additional 35,424,453 shares in treasury as a result of our Share Repurchase Programs, which are not included in the number of shares outstanding. During our next Shareholders’ Meeting to be held on April 27, 2021, one of the agenda items proposes the cancellation of any treasury shares held as of December 31, 2020.

(4) | In March 2021, we begun purchasing shares of the Company. As of April 16, 2021, we have repurchased 2,288,939 shares, which are not included in the number of shares outstanding.

AMP holds all of our Series BB shares, representing 15% of our total capital stock. Special rights and restrictions attached to our Series BB shares are described under “Item 4, Information on the Company – History and Development of the Company” and “Item 10, Additional Information – Corporate Governance – Voting Rights and Shareholders’ Meetings.”

As of April 16, 2021, approximately 15.8% of our Series B shares were held in the form of ADSs, and 87.0% of the holders of our ADSs (66 holders, including The Depository Trust Company) had registered addresses in the United States.

AMP Trust, Bylaws and Shareholders’ Agreement

The rules governing the sale of our Series BB shares to AMP required that AMP place all of its Series BB shares in trust in order to guarantee AMP’s performance of its obligations under the technical assistance agreement and AMP’s commitment to maintain its interest in us for a specified period. Accordingly, AMP has placed its shares in trust with Bancomext. This trust provides that AMP may instruct Bancomext with respect to the voting of the shares held in trust that represent up to 10% of our capital stock; the remaining 5% is required to be voted in the same manner as the majority of all shares voted at the relevant shareholders’ meeting. The terms of the trust will be extended for an

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additional fifteen years if, at the end of the initial fifteen-year term, AMP holds shares representing more than 10% of our capital stock. AMP may terminate the trust before the second fifteen-year term begins if (i) AMP holds less than 10% of our capital stock at the end of the initial term, and (ii) the technical services agreement has been terminated. AMP is required to deposit in the trust any additional shares of our capital stock that it acquires.

On November 19, 2014, CMA purchased from DCA 792,800,000 shares, representative of 33.33% of the capital stock of AMP. As a result of the transaction, CMA became 66.66% owner of the capital stock of AMP. AMP’s shareholders (CMA and AENA) have entered into a shareholders’ agreement that provides that AENA will have the right to appoint our director of technical operations, meanwhile (i) the appointment of AMP’s representatives to our board of directors and board committees shall be made on a rotating basis, and (ii) any right of AMP regarding the appointment of our chief executive officer, chief financial officer, director of investor relations, general counsel, director of human resources, director of commercial activities, the secretary of our board of directors and most other matters relating to AMP’s participation in us, must be made, in principle, pursuant to the unanimous consent of AMP’s shareholders. When unanimous consent is not obtained, other mechanisms exist to avoid the resulting deadlocks. However, such deadlocks might still occur, which may affect our operations. See “Item 3, Key Information – Risk Factors – Risks Related to our Strategic Shareholder – Disputes among AMP’s shareholders may affect our shareholders’ meetings or management.”

RELATED PARTY TRANSACTIONS

Arrangements with AMP and its Affiliates

The rules for the sale of the Series BB shares required AMP, us and the SCT to enter into a participation agreement, which established the framework for the technical assistance agreement and the Banco Nacional de Comercio Exterior, S.N.C., or Bancomext, trust agreement.

Since the time our concessions were granted and pursuant to the technical assistance agreement and the participation agreement, AMP and its shareholders agreed to provide management and consulting services and transfer to us technical assistance and technical and industry expertise related to the operation of airports, thereby helping us develop and improve our airports and the services they provide. Under the technical assistance agreement and the participation agreement, we have obtained a variety of services from AMP, including airport operating and security advice, direction on the development of commercial projects, identification of new investment opportunities and assessments of different international projects, including the acquisition of the Sangster International Airport in Jamaica. The active participation of AMP in our operations as a result of the technical assistance agreement and the participation agreement is a competitive advantage that has become an essential part of our operations and results growth as can be seen in the financial information. See “Item 5, Operating and Financial Review and Prospects – Overview.”

The agreement has an initial term of fifteen years, but automatically renews for successive five-year terms unless one party provides the other a notice of termination at least 60 days prior to a scheduled expiration date. The agreement was most recently automatically renewed on August 25, 2019, for an additional five-year term, in accordance with Clause 5.2 of the agreement.

A decision by us to renew or cancel the technical assistance agreement is subject to the approval of 51% of Series B shareholders other than AMP or any related party of AMP (to the extent that AMP or any such related party holds Series B shares). The agreement will only remain in effect if AMP continues to hold at least 7.65% of our capital stock. If the agreement does not remain in place, our management could change and due to the lack of technical assistance, our operations could be adversely and significantly affected.

The technical assistance fee is equal to the greater of U.S.$4.0 million adjusted annually for inflation (measured by the U.S. CPI) or 5% of our annual consolidated income from operations (calculated prior to deducting the technical assistance fee and depreciation and amortization in accordance with MFRS). We believe that this structure creates an incentive for AMP to increase our annual consolidated earnings.

The technical assistance agreement allows AMP, its shareholders and their affiliates to render additional services to us only if our Acquisitions Committee determines that these related parties have submitted the most favorable bid in a bidding process with at least three unrelated parties. This process is described in “Item 6, Directors, Senior Management and Employees – Board Committees.”

In 2018 and 2020, we did not recognize any expenses paid to AMP. In 2019, we recognized Ps.5.6 million (U.S.$296 thousand) in expenses. Pursuant to the technical assistance agreement, the fee paid to AMP and its affiliates was approximately Ps.411.5 million (U.S.$20.9 million), Ps.461.5 million (U.S.$24.5 million) and Ps.289.1 million (U.S.$14.6 million), for 2018, 2019 and 2020, respectively.

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Tijuana cross-border walkway

The Tijuana airport has a commercial agreement with OTV for the construction, operation, maintenance and use of a cross-border walkway (the “CBX”), with each party responsible for the section of walkway corresponding to such party’s side of the U.S.-Mexico border. The CBX aims to facilitate the flow of passengers in both directions across the border with the presentation of a valid boarding pass. The contract, in effect since April 8, 2013 and expiring with the expiration of the Tijuana airport concession, establishes that OTV must pay the Tijuana airport a fixed fee (“access rights”) for every passenger that uses the CBX as compensation for the reduction in non-aeronautical services revenues from parking, taxi, bus, retail, car rental and money exchange services until December 2017. The CBX began operations on December 9, 2015. During the years ended December 31, 2018, 2019 and 2020 respectively, the CBX was used by approximately 2.3 million, 2.9 million and 1.7 million passengers. The Tijuana airport received Ps.3.7 million in access rights during 2018, corresponding to the last 15 days of 2017. Since 2018 no additional payments for access rights are payable. For more information, see Note 31 of our audited consolidated financial statements.

OTV is a private company incorporated in the United States and wholly owned by Otay-Tj Holdings, L.L.C. The holding company has two shareholders, 25% is held by a U.S. company, and 75% is held by a Mexican company. The shareholders of the Mexican company, also own 66.66% of AMP, our strategic shareholder. Consequently, this agreement is considered an operation between related parties. OTV obtained the presidential permits in the U.S. to provide border-crossing services and is responsible for all obligations with the U.S. government. It is also the owner of the property along the U.S. border which it acquired prior to obtaining the presidential permit on which the CBX terminal was subsequently constructed. For this reason, this business opportunity could only be conducted with OTV.

The agreement with OTV was negotiated at arm’s length and reported to our Audit and Corporate Practices Committee. It was approved by a majority of our independent directors at a board of directors meeting on February 26, 2013, and our Series BB directors appointed by AMP abstained from the vote.

Accounts receivable (payable) with other related parties

As of December 31, 2018, 2019 and 2020, the following balances receivable (payable) with other related parties that are in the consolidated statement of financial position, are integrated as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Accounts receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Especialistas en Alta Cocina, S.A. de C.V. (Independent director) |  | Ps. |  | 93 |  |  | Ps. |  | 3,523 |  |  | Ps. |  | 1,698 |
Mayo 13, S.A. de C.V. (Independent director) |  | Ps. |  | — |  |  | Ps. |  | 729 |  |  | Ps. |  | — |
Fly by Wings, S.A. de C.V. (Independent director) |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 5,955 |
Las Nuevas Delicias Gastronómicas, S. de R.L. de C.V. (Independent director) |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 549 |

|  | 2018 |  | 2019 |  |  | 2020 |
Accounts payable: |  |  |  |  |  |  |  |  |  |  |  |  |
Ingeniería y Economía del Transporte, S.A. (Shareholder) |  | Ps. | (7,698) |  | Ps. |  | (3,079 | ) |  | Ps. |  | - |
OTV (Shareholder) |  | Ps. | (465) |  | Ps. |  | - |  |  | Ps. |  | - |

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Other operations with other related parties

During the years ended December 31, 2018, 2019 and 2020, the following operations were carried out with other related parties that are included in the consolidated statement of profit or loss and other comprehensive income, are as follows:

(thousands of pesos)

|  | 2018 |  |  | 2019 |  |  | 2020 |
Commercial revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Especialistas en Alta Cocina, S.A. de C.V. (Independent Director) |  | Ps. |  | 32,236 |  |  | Ps. |  | 34,039 |  |  | Ps. |  | — |
Mayo 13, S.A. de C.V. (Independent Director) |  | Ps. |  | 9,443 |  |  | Ps. |  | 5,549 |  |  | Ps. |  | — |
Otayconnect, S. de R. L. de C.V. (Shareholder) |  | Ps. |  | 300 |  |  | Ps. |  | 1,253 |  |  | Ps. |  | 1,313 |
Promotora Cabo Real, S.A. de C.V. (Shareholder) |  | Ps. |  | 21,059 |  |  | Ps. |  | 28,910 |  |  | Ps. |  | 14,291 |
Las Nuevas Delicias Gastronómicas, S. de R. L. de C.V. (Independent director) |  | Ps. |  | — |  |  | Ps. |  | 4,886 |  |  | Ps. |  | 5,524 |
Fly by Wings, S.A. de C.V. (Independent director) |  |  |  | — |  |  |  |  | — |  |  |  |  | 24,093 |
Beer Factory de México, S.A. de C.V. (Independent director) |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,389 |
Operadora y Administradora de Restaurantes Gigante, S.A. de C.V. (Independent director) |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,004 |
Diseños Pantera, S.A. de C.V. (Shareholder) |  | Ps. |  | — |  |  | Ps. |  | 298 |  |  | Ps. |  | 62 |

|  | 2018 |  |  | 2019 |  |  | 2020 |
Technical advisory: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ingeniería y Economía del Transporte, S.A. (Shareholder) |  | Ps. |  | 8,896 |  |  | Ps. |  | 8,626 |  |  | Ps. |  | — |
Other service: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diseños Pantera, S.A. de C.V. (Shareholder) |  | Ps. |  | — |  |  | Ps. |  | 279 |  |  | Ps. |  | — |

Item 8.Financial Information

See “Item 18, Financial Statements” and our consolidated financial statements beginning on page F-1. Since the date of the financial statements, no significant change has occurred.

LEGAL PROCEEDINGS

General

We are periodically involved in certain legal proceedings that are incidental to the normal conduct of our business, none of which is expected to have a material or adverse effect on our business. In addition to those legal proceedings in the ordinary course of our businesses, in recent years, we have also been subject, directly and indirectly, to the litigation proceedings that are summarized below.

Litigation related to Grupo México, S.A.B. de C.V. seeking to void certain of our bylaws

Articles X and XII of our bylaws, among others, limit the ability of Series B shareholders, directly or with related parties, other than AMP, to hold more than 10% of our capital stock, and any shares held in excess of that amount must be sold in a public offering. In accordance with our bylaws, until the public offering of such shares takes place, such excess shares have no voting power and cannot be represented in any shareholders’ meeting.

On June 13, 2011, Grupo México announced that it intended to acquire more than 30% and up to 100% of our shares outstanding at that time, excluding treasury shares. Grupo México and certain of its subsidiaries commenced legal proceedings, among others, seeking (i) to modify our bylaws to eliminate the foregoing limitations and (ii) to terminate AMP’s special rights that stem from AMP’s ownership of our Series BB shares.

In October 2010, a legal proceeding was filed against us in a civil court in Mexico City. The complaint sought to have the court grant relief by, among others, declaring Articles X and XII of our bylaws void. The plaintiffs are Grupo México and its subsidiary ITM. On February 19, 2014, the Mexican Supreme Court agreed to review the legal proceeding regarding ownership limits contained in our bylaws that impose a 10% ownership threshold, stating that it considered this issue a matter of national interest and significance, and referred the proceeding to the second chamber of the Supreme Court. On June 17, 2015, the Mexican Supreme Court issued an amparo ruling upholding

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the validity of Articles X and XII of our bylaws under Article 48, Section III of the Mexican Securities Law and remanded the case to the intermediate appellate court. Consequently, the challenge initiated by Grupo México and ITM against these articles ha s been definitively concluded, with the ruling confirming the validity and effectiveness of these articles. accordance with the decision of the Mexican Supreme Court, the Superior Court of Mexico City: (i) declared that Grupo México and ITM are in violation of our bylaws, resulting from the fact that together they hold more than the 10% of our capital stock; (ii) ordered the sale by Grupo México and ITM of the Series B shares held in excess of 10% of our capital stock; and (iii) instructed that the sale should be conducted through a public offer (Oferta Pública de Venta) in accordance with the laws of Mexico and Article XII of our bylaws.Grupo México filed an appeal looking for clarification regarding the ruling. On November 9, 2016, the Grupo México complaint was declared unfounded. We filed a complaint seeking fees and expenses. On May 8, 2019, a civil court in Mexico City granted Grupo Mexico´s request for an amparo challeng ing the constitutionality of Article 48, Section III of the Mexican Securities Law. We then filed a direct amparo appeal. On March 2 6, 2021, the civil court in Mexico City uph e ld the validity of Article 48, Section III of the Mexican Securities Law and confirmed the validity of Articles X and XII of our bylaws. As of the date of this filing, and according to the last Schedule 13D filed wit h the SEC, Grupo México owns 8.1% of our total shares. See “Item 3, Key Information – Risk Factors – Risks Related to Our Strategic Shareholder – Certain actions by Grupo México, S.A.B. de C.V. may affect our management, financial condition or results of operations.”

Grupo México, S.A.B. de C.V. and certain of its subsidiaries challenge our participation agreement with AMP

ITM, a subsidiary of Grupo México, filed a legal proceeding against us on November 4, 2011, seeking to void AMP’s ownership of our Series BB shares as granted by the participation agreement between AMP and us, which would result in the termination of AMP’s veto, appointment of executives and other special rights. Additionally, ITM’s suit sought the repayment of all economic benefits conferred by us upon AMP during the period in which AMP has held our shares. We filed an initial reply in this proceeding on November 25, 2011. On March 7, 2012, we were notified by our external legal counsel that a ruling was issued in our favor, which found a lack of jurisdiction by the civil court due to the administrative nature of the claim. Although we received notice that this proceeding had concluded, a federal court later granted a direct amparo appeal that had been filed by Grupo México on June 6, 2012. Therefore, on July 13, 2012, the legal proceeding was recommenced in the appropriate federal civil court. On October 22, 2013, we filed briefs responding to the plaintiff’s arguments. On October 31, 2017, a ruling was issued in our favor finding ITM’s claim without standing. ITM filed an appeal, and consequently, we also appealed, seeking to strengthen certain decisions made in the ruling in our favor. ITM’s appeal was declared unfounded, and ITM then filed a direct amparo appeal. We then filed an appeal for a joint application for judicial review (revisión adhesiva). On October 9, 2019, ITM’s amparo was denied, however, ITM then proceeded to file for judicial review (revision). The request for review is pending.

Ejido participants at Tijuana, Guadalajara and Puerto Vallarta airports

A portion of the lands constituting some of our airports were expropriated by the Mexican government under its power of eminent domain. Prior to their expropriation, some of these lands had been held by groups of individuals through a system of communal ownership of rural land known as an ejido. Certain of these former ejidos’ participants have asserted indemnity claims against the Mexican government challenging the expropriation decrees.

Tijuana

In the case of our Tijuana airport, our airport subsidiary has been joined as an interested third party in the proceedings challenging the 1970 expropriation decree. During 2008, the ejido received an unfavorable ruling, which it appealed, and subsequently, it received a judgment in its favor from the agrarian court calling for the restitution of 320 hectares of land. On October 20, 2016, we filed an amparo against the decision. On November 26, 2020, the amparo was resolved in our favor. The ruling leaves without effect the prior ruling by the agrarian court calling for the restitution of land and further rules that the conditions for restitution as laid out in Article 98 of the Agrarian Law (Ley Agraria) were not met. We expect the ejido to appeal this ruling. If we are not successful in defending this ruling, although the precise area affected has yet to be determined, depending on which particular land parcel an adverse ruling applies to, the decision could affect the airport’s perimeter and could materially disrupt the airport’s current operations.

In addition, certain of the former ejidos’ participants are currently occupying portions of the property on which we operate Tijuana International Airport. Although the currently occupied portions are not at present essential to the airport’s operations and these former ejidos’ participants are not currently interfering with the airport’s operations, their presence could limit our ability to expand the airport into the areas they occupy, and they may seek to disrupt the airport’s operations if their legal claims against the Mexican government are not resolved to their satisfaction.

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Guadalajara

Similarly, in the case of Guadalajara International Airport, in 2009 two different ejidos commenced proceedings before an agrarian court (Tribunal Superior Agrario) against the SCT, seeking to void the expropriation decree of 1975. The case was transferred to the federal justice system, and in a November 2010 ruling in favor of the ejidos, the district court ordered the return of all expropriated property to the ejidos and thus voided the specific concession granted to us on expropriated land. Although our Guadalajara airport has been joined only as an interested third party in the proceedings, we appealed this decision. On July 10, 2012, the appellate court reversed and remanded the decision, and on July 31, 2014, the district court issued a new judgment in favor of one of the ejidos, El Zapote, which both our Guadalajara airport and the federal authorities again appealed. On April 14, 2016, an appellate court issued a definitive decision on the matter declaring that although the rights of the ejido to challenge the appraised value of their land were violated, the land could not be returned to them. Furthermore, the court concluded that our concession was valid. The decision is now in the enforcement phase. On January 13, 2017, the Department of Agrarian, Territorial and Urban Development (Secretaría de Desarrollo Agrario, Territorial y Urbano (SEDATU)) issued an appraisal for the value of a portion of the land on which Guadalajara airport is located, related to the appeal previously mentioned. This appraisal was made based on the expropriation decree of 1975. This proceeding was challenged by the ejido group and accepted by the court. In response to the above, the district judge began a proceeding for restitution through financial compensation on August 10, 2018, which is pending resolution.

On February 17, 2017, we were notified of a new legal proceeding before an agrarian court instituted by El Zapote against the federal government. This proceeding alleges similar facts to the initial case and claims the same disputed property that was the subject of the initial case. This legal proceeding is in its initial phases, and we have joined as an interested third party.

In addition to the legal proceedings, during various periods since 2016, members of the ejido blocked access to commercial areas of Guadalajara Airport, specifically the parking facilities, which resulted in commercial revenue losses during those years. Although we recovered control of these areas on February 12, 2020, if these persons occupy the area again in the future, their presence could have an adverse impact on our operations, revenues and security, and could restrict our ability to expand our operations, at the Guadalajara airport.

Puerto Vallarta

In October 2013, Puerto Vallarta International Airport received notification of lawsuits related to the ejido Valle de Banderas, which claimed the invalidity of the expropriation by the Mexican government of the land on which the airport is located. Participants of the ejido commenced four proceedings against us, our Puerto Vallarta airport and various federal authorities for restitution or compensation with respect to 154 hectares of land comprising this airport. The claimants seek, among other things, to invalidate the expropriation decree issued on October 9, 1957 and, in two of the proceedings, are also seeking restitution of the land as they were not part of the expropriation decrees of October 9, 1957, August 20, 1990, November 24, 1993, and April 24, 1997. These lawsuits are also seeking, in part, to void the concession granted to the airport. We challenged the lawsuits on the basis of a lack of jurisdiction, as the claims were brought in the courts of the State of Nayarit, while our Puerto Vallarta airport is located in the State of Jalisco. The superior agrarian court agreed with our appeal and removed the case to Guadalajara. This proceeding is in process and remains pending.

The terms of our concession require the Mexican government to provide us restitution for any loss of our use of the land provided for in our Mexican concessions. Although no assurance can be given, we believe that the Mexican government would be liable for any operational disruption caused by the proceedings with the ejidos and would have to restore our rights of use for the public property assigned to us under the concessions if we were to lose our appeals.

Property tax claims by certain municipalities

We remain subject to ongoing property tax claims that have been asserted against us by various municipalities for the payment of property taxes with respect to the property on which we operate our airports in those cities.

Tijuana

Of these, the most relevant case regards our Tijuana airport, where the municipal authority issued a second property tax claim against the airport on June 8, 2005. On March 25, 2008, the Tijuana airport received an initial ruling declaring the tax claim by the municipal authority void but upholding the right of the municipal authorities to assess property taxes over commercial areas. We appealed the ruling with respect to the assessment of property taxes over commercial areas. Our challenge to this request is still pending.

On October 20, 2010, the municipal authority of Tijuana issued a separate request for the repayment of property taxes for 2000 through 2010. We and our legal counsel believe that this request for payment of taxes is not valid since local courts had already ruled the tax claims for the years 2005 and 2006 invalid. Because we and our legal counsel believe that this request for repayment is also invalid, we commenced legal proceedings against the municipal authority. The legal proceeding is currently pending.

On February 7, 2013, the Tijuana municipal authority filed a property tax claim for the period from 2008 to 2012 against the Tijuana airport in the amount of Ps.15.2 million, demanding payment within three business days. On February 28, 2013, we began an annulment

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proceeding against the claim. On March 5, 2013 the authority established the amount to be guaranteed, and on March 8, 2013 we presented a bond to guarantee the amount claimed. As of the date of this report, this proceeding is still pending.

On November 26, 2014, the Tijuana municipal authority issued a requirement for payment of Ps.234.8 million in property taxes for the period from 2000 to 2014, which we challenged on December 19, 2014. With respect to the municipal authority’s request for us to post a collateral bond guaranteeing the entire amount in question, the court granted judgment in our favor and suspended the requirement, which we had challenged on the grounds that we have already guaranteed part of the amount in previous proceedings. On October 6, 2020, the lower court issued a ruling against us. We immediately filed for judicial review (revision). The request for review is pending.

Hermosillo

On October 28, 2019, the municipality of Hermosillo notified us regarding seven property tax claims for a total of Ps.10.2 million. We challenged the claims by commencing an annulment proceeding on December 12, 2019. On November 11, 2020, the lower court issued a ruling in our favor declaring the tax claims null.

We do not believe that liabilities related to any claims or proceedings against us are likely to have, individually or in the aggregate, a material adverse effect on our consolidated financial condition or results of operations should a court determine that these property taxes must be paid in response to any future proceedings.

DIVIDENDS

The declaration, amount and payment of dividends are determined by a majority vote of our shareholders present at a shareholders’ meeting and generally, but not necessarily, on the recommendation of the board of directors, which is empowered by Article 18 of our bylaws to set our dividend policies. So long as the Series BB shares represent at least 7.65% of our capital stock, the declaration and payment of dividends will require the approval of the holders of a majority of the Series BB shares.

Mexican law requires that at least 5% of a company’s net income each year (after profit sharing and other deductions required by Mexican law) be allocated to a legal reserve fund until such fund reaches an amount equal to at least 20% of the company’s capital stock from time to time (without adjustment for inflation). Our legal reserve fund was Ps.1.6 billion (historical value) on December 31, 2020 (excluding reserve amounts corresponding to 2020 net income).

Mexican companies may pay dividends only out of earnings (including retained earnings after all losses have been absorbed or paid up) and only after such allocation to the legal reserve fund. The reserve fund is required to be funded on a stand-alone basis for each company, rather than on a consolidated basis. The level of earnings available for the payment of dividends is determined under MFRS. Our subsidiaries, which prepare and report financial information under MFRS, are required to allocate earnings to their respective legal reserve funds prior to paying dividends to Grupo Aeroportuario del Pacífico, S.A.B. de C.V. We are also required to allocate earnings to our legal reserve fund prior to distributing any dividend payments to our shareholders.

As a result of the 2014 Fiscal Reform, dividends paid to Mexican individuals or any foreign residents with respect to our Series B shares and ADSs are subject to a 10% withholding tax. The definition of dividend for this purpose includes, among others, in addition to declared dividends: (i) interest paid on preferred shares; (ii) loans to shareholders and partners unless the loan is established for less than one year, incurred in the operations of the business and meets certain requirements; (iii) payments that are considered non-deductible and benefit the shareholders; (iv) amounts not recognized as a result of omissions of income or unrealized purchases; and (v) transfer pricing adjustments to income or expenses as a result of assessments by the tax authorities for related party transactions. The 10% distribution tax would also apply on distributions from a branch to the home office. A transitory provision limits the withholding tax on dividends to earnings generated in 2014 and subsequent years. For this purpose, the transitory provision refers to distributions from accumulated previously taxed earnings (CUFIN) as of 2013, being free of tax. Taxpayers are currently required to maintain a separate CUFIN account for earnings. Because this withholding tax would be a tax on the shareholders under the Mexican Income Tax Law, treaty benefits should be available.

Dividends that are paid from a company’s distributable earnings that have not been subject to corporate income tax will be subject to a corporate-level dividend tax (retained against cumulative net income and payable by us) calculated on a gross-up basis by applying a factor of 1.4286 for 2013 and subsequent years. For 2013 and thereafter, the corporate tax rate is 30%. This corporate-level dividend income tax on the distribution of earnings may be applied as a credit against Mexican corporate income tax corresponding to the fiscal year in which the dividend was paid or against the Mexican corporate income tax of the two fiscal years following the date on which the dividend was paid.

Distributions made by us to our shareholders other than as dividends (in the manner described above), including capital reductions, amortization of shares or otherwise, would be subject to taxation in Mexico, including withholding taxes. The tax rates applicable and the method of assessing and paying taxes applicable to any such non-dividend distributions will vary depending on the nature of the distributions.

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Under our dividend policy adopted at the Extraordinary Shareholders’ Meeting held on April 15, 2005, our annual dividend consist s of two components. The first component is a fixed amount, which was Ps.450 million for 2005 (for the dividend paid in 2006) and is intended to increase gradually each year. The dividend policy also contemplates that our annual dividend will include any cash and cash equivalents we hold (as reflected in our balance sheet as of the month-end prior to the dividend payment, after deducting the fixed component) in excess of our “minimum cash balance.” For purposes of our policy, the “minimum cash balance” is the amount of cash and cash equivalents that our board of directors determines is necessary to cover the minimum amount of expenses and investments expected to be incurred in the fiscal year during which the dividend payment is made and the subsequent fiscal year. Dividends are expected to be made payable in cash and in one or more payments as determined in the relevant ordinary shareholders’ meeting approving dividends.

We paid aggregate dividends of Ps.4,004.9 million in 2018 and Ps.4,425.4 million in 2019. In 2020, no dividend was proposed at our General Ordinary Shareholders’ Meeting.

The declaration, amount and payment of dividends pursuant to the policy described above are subject to (i) compliance with applicable law regarding the declaration and payment of dividends with respect to any year including the establishment of the statutory legal reserve fund and (ii) the absence of any adverse effect on our business plan for the current or subsequent fiscal year as a result of the payment of any dividend. We cannot provide assurance that we will continue to pay dividends or that future dividends will be comparable to our previous dividends. Our ability to pay dividends may be further restricted if we fail to make timely interest payments under our credit agreements. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources.” Our dividend policy may also be amended at any time by our shareholders.

As of December 31, 2020, we had accumulated approximately Ps.6.8 billion of distributable earnings that had been subject to the corporate income tax and that could be declared at the relevant shareholders’ meeting and paid to shareholders free of the corporate level dividend tax, but a 10% withholding tax may apply to Mexican individuals or any foreign residents.

We pay dividends in pesos. In the case of Series B shares represented by ADSs, the cash dividends are paid to the depositary and, subject to the terms of the Deposit Agreement, converted into and paid in U.S. dollars at the prevailing rate of exchange, net of conversion expenses of the depositary and applicable Mexican withholding tax. Fluctuations in exchange rates will affect the amount of dividends that ADS holders receive.

Item 9. | The Offer and Listing

TRADING MARKETS

Our publicly traded share capital consists of our Series B common shares without par value, which are publicly traded in Mexico on the Mexican Stock Exchange under the ticker symbol “GAP B.” The Bolsa Institucional de Valores, or the “Institutional Stock Exchange,” launched operations on July 25, 2018. The Institutional Stock Exchange competes with the Mexican Stock Exchange for trades, and all shares traded on the Mexican Stock Exchange, including our Series B common shares, are now trading on the Institutional Stock Exchange, as well. Both stock exchanges operate a system of automatic suspension of trading in shares of a particular issuer as a means of controlling excessive price volatility, but under current regulations this system does not apply to securities such as the Series B common shares represented by common ADSs that are directly or indirectly quoted on a stock exchange outside of Mexico. Most securities traded on the Mexican Stock Exchange and on the Institutional Stock Exchange, including our Series B common shares, are on deposit with Indeval, a privately owned securities depositary that acts as a clearinghouse for transactions on the Mexican Stock Exchange and on the Institutional Stock Exchange.

Our common ADSs, each representing 10 Series B common shares, are traded on the NYSE under the ticker symbol “PAC”. The Bank of New York Mellon serves as the depositary for our common ADSs. On April 16, 2021, there were 75,348,020 common ADSs outstanding, representing 13.4% of our total share capital.

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Item 10. | Additio nal Information

CORPORATE GOVERNANCE

Organization and Register

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. is a corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico under the Mexican General Law of Commercial Corporations (Ley General de Sociedades Mercantiles) and the Mexican Securities Market Law. It is registered with the Public Registry of Commerce of Mexico City under the number 238,578.

Purpose

Our main corporate purpose is to operate airports pursuant to airport concessions.

Bylaws

This section summarizes certain provisions of Mexican law and our bylaws (estatutos sociales).

Board of Directors

Our bylaws provide that our board of directors will generally have eleven members (increasing to twelve or thirteen members only when necessary to preserve minority shareholders’ voting rights in cases of multiple appointments by persons with 10% interests (as described below)).

At each shareholders’ meeting for the election of directors, the holders of Series BB shares are entitled to elect four directors. The remaining members of the board of directors are to be elected by the holders of the Series B shares.

Each person (or group of persons acting together) holding 10% of our capital stock in the form of Series B shares is entitled to appoint one director. The remaining positions on the board of directors will be filled based on the vote of all holders of Series B shares that have not elected to appoint a director by virtue of owning 10% of our capital stock. The candidates to be considered for election as directors by the Series B shareholders are proposed to the shareholders by the Nominations and Compensation Committee. All directors are elected based on a simple majority of the votes cast at the relevant shareholders’ meeting. Our bylaws do not currently require mandatory retirement of directors after they reach a certain age. The compensation of our directors is proposed by the Nominations and Compensation Committee to all of our shareholders at shareholders’ meetings for their approval. Pursuant to the Securities Market Law, 25% of our directors must be independent within the definition of that term specified therein.

Authority of the Board of Directors

The board of directors is our legal representative. The powers of the board include, among others, the following:

| • | to define our strategic planning decisions and approve our annual business plans and investment budgets;

| • | to approve our Master Development Programs and modifications thereto;

| • | to call shareholders’ meetings and act upon shareholders’ resolutions; and

| • | to create special committees and grant them the powers and authority as it sees fit, provided that said committees will not be vested with the authorities which by law or under our bylaws are expressly reserved for the shareholders or the board of directors.

Meetings of the board of directors will be validly convened and held if a majority of the members are present. Resolutions at said meetings will be valid if approved by a majority of the members of the board of directors, unless our bylaws require a higher number. Notwithstanding the board’s authority, under general principles of Mexican law, our shareholders, pursuant to a decision validly taken at a shareholders’ meeting, may at any time override the board.

Powers of Series BB Directors

The Series BB directors are entitled to: (i) appoint and remove our chief executive officer and our other top-level executive officers (upon consultation with our Nominations and Compensation Committee); (ii) appoint three members of the Operating Committee and their respective alternates; (iii) appoint 20% of the total members of the Audit Committee, the Acquisitions Committee and the Nominations and Compensation Committee (a minimum of one member per committee), and their respective alternatives; and (iv) consent to the appointment of individuals appointed to the Operating Committee who are not members of our board of directors or our officers.

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In addition to the foregoing, each of the following actions of our board of directors, among certain others, may only occur with the approval of the Series BB directors:

| • | approval of our airports’ five-year Master Development Programs or amendments thereto;

| • | approval of our annual business and investment plans;

| • | approval of capital expenditures outside of our annual investment plans;

| • | approval of any sale of our fixed assets, individually or jointly, in an amount exceeding U.S$3.0 million;

| • | approval for us to enter into any type of loan or credit agreement, other than for certain loans granted by us to our subsidiaries;

| • | approval of the granting by us of guarantees (avales) or other security interests other than for the benefit of our subsidiaries;

| • | proposing to increase our capital stock or that of our subsidiaries;

| • | approval of sales of shares in our subsidiaries;

| • | approval of our dividend policies; and

| • | proposing individuals to join our Audit Committee or our Nominations and Compensation Committee.

Our Capital Stock

The following table sets forth our authorized capital stock and our issued and outstanding capital stock as of April 16, 2021:

Capital Stock

Capital Stock |  | Authorized |  |  | Issued and Outstanding |
Series B shares |  |  | 476,850,000 |  |  |  | 439,136,608 |
Series BB shares |  |  | 84,150,000 |  |  |  | 84,150,000 |
Total |  |  | 561,000,000 |  |  |  | 523,286,608 |

Our bylaws provide that our shares have the following characteristics:

| • | Series B: Series B shares currently represent 85% of our capital stock and may represent up to 100% of our share capital. Series B shares may be held by any Mexican or foreign natural person, company or entity, except for foreign governments.

| • | Series BB: Series BB shares currently represent 15% of our capital stock and may not represent a greater percentage of our capital stock. Like Series B shares, Series BB shares may be held by any Mexican or foreign natural person, company or entity, except for foreign governments and subject to the other requirements of our bylaws.

Under the Mexican Airport Law and the Mexican Foreign Investments Law (Ley de Inversión Extranjera), foreign persons may not directly or indirectly own more than 49% of the capital stock of a holder of an airport concession unless an authorization from the Mexican Commission of Foreign Investments is obtained. We have obtained this authorization, and as a consequence these restrictions do not apply to our Series B or Series BB shares.

All ordinary shares confer equal rights and obligations to holders within each series. Series BB shares are subject to transfer restrictions under our bylaws and generally must be converted to Series B shares before they can be transferred. On or after August 25, 2014, all of the Series BB shares may be converted into Series B shares if (i) the Technical Assistance Agreement between AMP and us has not been renewed; and (ii) the Series BB shareholders so request. Notwithstanding the foregoing, if at any time after August 25, 2014, Series BB shares represent less than 7.65% of our share capital, those shares will be mandatorily converted into Series B shares and the Technical Assistance Agreement will be terminated.

Voting Rights and Shareholders’ Meetings

Each Series B share, and Series BB share entitles the holder to one vote at any general meeting of our shareholders. Holders of Series BB shares are entitled to elect four members of our board of directors and holders of Series B shares are entitled to elect the remaining members of the board of directors.

Under Mexican law and our bylaws, we may hold three types of shareholders’ meetings: ordinary, extraordinary, and special. Ordinary shareholders’ meetings are those called to discuss any issue not reserved for extraordinary shareholders’ meeting. An annual ordinary shareholders’ meeting (our “General Ordinary Shareholders’ Meeting”) must be convened and held within the first four months following the end of each fiscal year to discuss, among other things, the report prepared by the board on our financial statements, the appointment of members of the board of directors, the declaration of dividends and the determination of compensation for members of the board.

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Extraordinary shareholders’ meetings (our “Extraordinary Shareholders’ Meeting”) are those called to consider any of the following matters:

| • | the extension of our duration or our voluntary dissolution;

| • | an increase or decrease in our minimum fixed capital;

| • | a change in corporate purpose or nationality;

| • | any transformation, merger or spin-off involving the company;

| • | any stock redemption or issuance of preferred stock or bonds;

| • | the cancellation of the listing of our shares with the National Securities Registry or on any stock exchange;

| • | amendments to our company’s bylaws; and

| • | any other matters for which applicable Mexican law or the bylaws specifically require an extraordinary meeting.

Special shareholders’ meetings are those called and held by shareholders of the same series or class to consider any matter particularly affecting the relevant series or class of shares.

Shareholders’ meetings are required to be held in our corporate domicile, which is the city of Guadalajara, in the state of Jalisco. Calls for shareholders’ meetings must be made by the board of directors or the Audit Committee. Any shareholder or group of shareholders representing at least 10% of our capital stock has the right to request that the board of directors or the Audit Committee call a shareholders’ meeting to discuss the matters indicated in the relevant request. In certain circumstances specified in Mexican law, any individual shareholder may also make such a request. If the board of directors or the Audit Committee fails to call a meeting within fifteen calendar days following receipt of the request, the shareholder or group of shareholders may request that the call be made by a competent court.

Calls for shareholders’ meetings must be published in the Mexican Federal Gazette or in one newspaper of general circulation in Mexico at least fifteen calendar days prior to the date of the meeting. Each call must set forth the place, date and time of the meeting and the matters to be addressed. Shareholders’ meetings will be validly held and convened without the need for a prior call or publication whenever all the shares representing our capital are duly represented.

To be admitted to any shareholders’ meeting, shareholders must be registered in our share registry and comply with the requirements set forth in our bylaws. Shareholders may be represented at any shareholders’ meeting by one or more attorneys-in-fact who may not be our directors.

At or prior to the time of the publication of any call for a shareholders’ meeting, we will provide copies of the publication to the depositary for distribution to the holders of ADSs. Holders of ADSs are entitled to instruct the depositary as to the exercise of voting rights pertaining to the Series B shares.

Quorums

Ordinary shareholders’ meetings are regarded as legally convened pursuant to a first call when more than 50% of the shares representing our capital are present or duly represented. Resolutions at ordinary shareholders’ meetings are valid when approved by a majority of the shares present or duly represented at the meeting. Any number of shares represented at an ordinary shareholders’ meeting convened pursuant to a second or subsequent call constitutes a quorum. Resolutions at ordinary shareholders’ meetings convened in this manner are valid when approved by a majority of the shares represented at the meeting.

Extraordinary and special shareholders’ meetings are regarded as legally convened pursuant to a first or subsequent call when at least 75% of the shares representing our capital (or 75% of the relevant series) are present or duly represented. Resolutions at extraordinary shareholders’ meetings are valid if taken by the favorable vote of shares representing more than 50% of our capital (or 50% of the relevant series).

Notwithstanding the foregoing, resolutions at extraordinary shareholders’ meetings called to discuss any of the issues listed below are valid only if approved by a vote of shares representing at least 75% of our capital:

| • | any amendment to our bylaws that: (i) changes or deletes the authorities of our committees; or (ii) changes or deletes the rights of minority shareholders;

| • | any actions resulting in the cancellation of the concessions granted to us or our subsidiaries by the Mexican government or any assignment of rights arising therefrom;

| • | termination of the participation agreement between us and AMP;

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| • | the cancellation of registration of our shares with the National Securities Registry (Registro Nacional de Valores), with the Mexican Stock Exchange (BMV) or with any other domestic or foreign stock exchanges in which they are registered;

| • | a merger by us with an entity the business of which is not directly related to our business or that of our subsidiaries; or

| • | a spin-off, dissolution or liquidation of our business.

Our bylaws also establish the following voting requirements:

| • | the amendment of the restrictions in our bylaws on ownership of shares of our capital stock requires the vote of holders of 85% of our capital stock;

| • | a delisting of our shares requires the vote of holders of 95% of our capital stock; and

| • | the amendment of the provisions in our bylaws requiring that a shareholder exceeding our share ownership limits conduct a public sale of his excess shares requires the vote of holders of 85% of our capital stock.

Veto Rights of Holders of Series BB Shares

So long as the Series BB shares represent at least 7.65% of our capital stock, resolutions adopted at shareholders’ meetings with respect to any of the issues listed below will only be valid if approved by a vote of a majority of the Series BB shares:

| • | approval of our financial statements;

| • | liquidation or dissolution;

| • | capital increases or decreases;

| • | declaration and payment of dividends;

| • | amendment to our bylaws;

| • | mergers, spin-offs or share-splits;

| • | grant or amendment of special rights to any series of shares; and

| • | any decision amending or nullifying a resolution validly taken by the board of directors with respect to: (i) appointment of our top-level executive officers; (ii) appointment of the three members of our Operating Committee and of the members of the Audit, Acquisitions and Nominations and Compensation committees to be designated by the directors elected by the holders of the Series BB shares; and (iii) appointment of the members of the Operating Committee whose appointment requires the consent of the directors elected by the holders of the Series BB shares, and decisions of the board of directors that require the affirmative vote of the directors elected by the holders of our Series BB shares.

Dividends and Distributions

At our General Ordinary Shareholders’ Meeting, the board of directors will submit to the shareholders for their approval our audited consolidated financial statements for the preceding fiscal year. Five percent of our net income (after profit sharing and other deductions required by Mexican law) must be allocated to a legal reserve fund until the legal reserve fund reaches an amount equal to at least 20% of our capital stock (without adjustment for inflation). Additional amounts may be allocated to other reserve funds as the shareholders may from time to time determine including a reserve to repurchase shares. The remaining balance, if any, of net earnings may be distributed as dividends on the shares of common stock. A full discussion of our dividend policy may be found in “Item 8, Financial Information – Dividends.”

At the General Ordinary Shareholders’ Meeting held on April 25, 2018, we declared a dividend of Ps.4,004.9 million, or Ps.7.62 per common share outstanding. The first payment for that dividend in the amount of Ps.2,002.4 million was made on August 21, 2018, and the remaining Ps.2,002.4 million was paid on November 20, 2018. In an Extraordinary Shareholders’ Meeting also held on April 25, 2018, our shareholders approved an additional capital distribution of Ps.1,250.9 million, or Ps.2.38 per outstanding share. The payment was made on May 11, 2018.

At the General Ordinary Shareholders’ Meeting held on April 23, 2019, we declared a dividend of Ps.4,425.4 million, or Ps.4.21 per common shares outstanding. The first payment for that dividend in the amount of Ps.2,212.7 million was made on August 29, 2019, and the remaining Ps.2,212.7 million was paid on November 20, 2019. In an Extraordinary Shareholders’ Meeting also held on April 23, 2019, our shareholders approved an additional capital distribution of Ps.1,592.5 million, or Ps.3.03 per outstanding share. The payment was made on May 8, 2019.

At the General Ordinary Shareholders’ Meeting held on July 1, 2020, we did not declare a dividend.

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Regis tration

Our shares have been registered with the National Securities Registry, as required under the Securities Market Law and regulations issued by the Mexican National Banking and Securities Commission. If we wish to cancel our registration, or if it is cancelled by the Mexican National Banking and Securities Commission, we will be required to make a public offer to purchase all outstanding shares, prior to such cancellation. Unless the Mexican National Banking and Securities Commission authorizes otherwise, the price of the offer to purchase will be the higher of: (i) the average of the trading price of our shares during the prior thirty trading days (during a period of no more than six months); or (ii) the book value of the shares in accordance with the most recent quarterly report submitted to the Mexican National Banking and Securities Commission and to the Mexican Stock Exchange. Any waiver to the foregoing provisions included in our bylaws requires the prior approval of the Mexican National Banking and Securities Commission and the approval, at an extraordinary shareholders’ meeting, of 95% of our outstanding capital stock.

Shareholder Ownership Restrictions and Antitakeover Protection

Holders of our shares are subject to the following restrictions:

| • | holders of Series B shares, either individually or together with their related parties, may not directly or indirectly own more than 10% of our Series B shares;

| • | although there is no limit on individual holdings of Series BB shares, Series BB shares may represent no more than 15% of our capital stock;

| • | holders of Series BB shares may also own Series B shares;

| • | no shareholder may vote more than 10% of our capital stock. Shares in excess of this threshold will be voted in the same manner as the majority of our shares;

| • | the aforementioned limits may not be circumvented by means of any special trust; collective ownership or voting agreement or any other scheme that could confer a higher percentage of share ownership or voting powers; and

| • | foreign governments acting in a sovereign capacity may not directly or indirectly own any portion of our capital stock.

A person exceeding the 10% threshold described above with respect to our Series B shares must conduct a public offer of his excess shares.

Any amendment to the ownership restrictions described above requires the vote of shares representing 85% of our capital stock.

Changes in Capital Stock

Increases and reductions of our minimum fixed capital must be approved at an extraordinary shareholders’ meeting, subject to the provisions of our bylaws and the Mexican General Law of Business Corporations. Increases or reductions of the variable capital must be approved at an ordinary shareholders’ meeting in compliance with the voting requirements of our bylaws.

Pursuant to Article 53 of the Securities Market Law, we may issue unsubscribed shares that will be kept in treasury, to be subsequently subscribed by the investing public, provided that

| • | an extraordinary shareholders’ meeting approves the maximum amount of the capital increase and the conditions upon which the corresponding placement of shares shall be made,

| • | the subscription of issued shares is made through a public offer following registration in the National Securities Registry and complying with the provisions of the Securities Market Law and other applicable law, and

| • | the amount of the subscribed and paid-in capital of the company is announced when the company makes the authorized capital increase public.

The preferential subscription right provided under Article 132 of the General Law of Commercial Corporations (Ley General de Sociedades Mercantiles) is not applicable to capital increases through public offers.

Subject to the individual ownership limitations set forth in our bylaws, in the event of an increase of our capital stock our shareholders will have a preemptive right to subscribe and pay for new stock issued as a result of such increase in proportion to their shareholder interest at that time, unless: the capital increase is made under the provisions of Article 53 of the Securities Market Law. Said preemptive right shall be exercised by any method provided in Section 132 of the Mexican General Corporations Law, by subscription and payment of the relevant stock within fifteen business days after the date of publication of the corresponding notice to our shareholders in the Mexican Federal Gazette and in one of the newspapers of greater circulation in Mexico, provided that if at the corresponding meeting all of our shares are duly represented, the fifteen business day period shall commence on the date of the meeting.

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Our capital stock may be reduced by resolution of a shareholders’ meeting taken generally pursuant to the rules applicable to capital increases. Our capital stock may also be reduced upon repurchase of our own stock in accordance with the Securities Market Law. See “Item 10, Additional Information – Corporate Governance – Share Repurchases” below.

Share Repurchases

We may choose to acquire our own shares or negotiable instruments representing such shares through the Mexican Stock Exchange on the following terms and conditions:

| • | The acquisition and sale on the Mexican Stock Exchange is made at market price (except when dealing with public offerings or auctions authorized by the National Banking and Securities Commission).

| • | If the acquisition is charged against shareholder’s equity, the shares may be kept by us without the need to make a reduction in our capital stock. Otherwise, if the acquisition is charged against our capital stock, the shares will be converted into unsubscribed shares kept in our treasury, without need for a resolution by our shareholders’ at a shareholders’ meeting.

| • | The company must announce the amount of the subscribed and paid-in capital when the amount of the authorized capital represented by the issued and unsubscribed shares is publicly announced.

| • | The ordinary shareholders’ meeting will expressly determine for each fiscal year the maximum amount of resources that we may use to purchase our own shares or negotiable instruments that represent such shares, with the only limitation that the sum or total of the resources that may be used for such purpose may not exceed, at any time, the total balance of the net profits of the company, including retained profits.

| • | We must be up to date in the payment of obligations under debt instruments issued and registered in the National Securities Registry that we may have issued.

Shares of the company belonging to us may not be represented or voted in shareholders’ meetings, nor may corporate or economic rights of any kind be exercised, nor will the shares be considered as outstanding for the purpose of determining the quorum or voting in shareholders’ meetings.

See “Item 16E, Purchases of Equity Securities by the Issuer and Affiliated Purchasers.”

Ownership of Capital Stock by Subsidiaries

Our subsidiaries may not, directly or indirectly, invest in our shares, except for shares of our capital stock acquired as part of any employee stock option plan, which may not exceed 25% of our capital stock, or through asset managers (Sociedades de Inversión).

Liquidation

Upon our dissolution, one or more liquidators must be appointed at an extraordinary shareholders’ meeting to wind up our affairs. All fully paid and outstanding shares will be entitled to participate equally in any distribution upon liquidation. Partially paid shares participate in any distribution in the same proportion that such shares have been paid at the time of the distribution.

Other Provisions

Liabilities of the members of the Board of Directors

As in any other Mexican corporation, and due to the provisions contained in Article 38 of the Securities Market Law, any shareholder or group of shareholders holding at least 5% of our capital stock may directly exercise a civil liability action under Mexican law against the members of the board of directors.

In addition to the foregoing, our bylaws provide that, a member of the board of directors will be liable to us and our shareholders for breaching his or her duties, as provided under articles 29 to 37 of the Securities Market Law.

Our bylaws provide that the members of the board of directors, or the board committees, and the secretary shall be indemnified by us in case of violations of their duty of care (deber de diligencia), as long as they did not act in bad faith, violate their duty of loyalty or commit an illicit act under the Securities Market Law or other applicable law. Additionally, our bylaws provide that we shall indemnify the members of the board of directors and the secretary for any indemnification liability which they may incur as long as they have not acted in bad faith, violated their duty of loyalty or committed an illicit act under the Securities Market Law or other applicable law.

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Information to Shareholders

The Securities Market Law establishes that we, acting through our boards of directors, must annually present a report at a shareholders’ meeting that includes the following:

| • | A report prepared by the chairman of our Audit Committee, as required by Article 43 of the Securities Market Law, which must cover, among other things: (i) the performance of our top-level officers; (ii) transactions with related parties; (iii) the compensation packages for our directors and officers; (iv) waivers granted by the board of directors regarding corporate opportunities; (v) the situation of our, and our subsidiaries’ internal controls and internal auditing; (vi) preventive and corrective measures adopted in connection with non-compliance with operational and accounting guidelines; (vii) the performance of our external auditor; (viii) additional services provided by our external auditor and independent experts; (ix) the main results of the review of our and our subsidiaries’ financial statements; and (x) the effects of changes to our accounting policies.

| • | The report prepared by the chief executive officer under article 44, paragraph XI of the Securities Market Law. This report must be accompanied by the report (dictamen) of the external auditor, and should include, among other things: (i) a report of the directors on the operations of the company during the preceding year, as well as on the policies followed by the directors and on the principal existing projects of the company, (ii) a statement of the financial condition of the company at the end of the fiscal year, (iii) a statement regarding the results of operations of the company during the preceding year, as well as changes in the company’s financial condition and capital stock during the preceding year, and (iv) the notes which are required to complete or clarify the foregoing information.

| • | The board’s opinion on the contents of the report prepared by the chief executive officer and mentioned in the preceding paragraph.

| • | A report explaining the principal accounting and information policies and criteria followed in the preparation of the financial information.

| • | A report regarding the operations and activities in which the board participated, as provided under the Securities Market Law.

In addition to the foregoing, our bylaws specify additional information obligations of the board of directors, including that the board of directors should also prepare the information referred to in Article 172 of the General Law on Business Entities with respect to any subsidiary that represents at least 20% of our net worth (based on the financial statements most recently available).

Duration

The duration of our corporate existence has been set at 100 years, expiring in 2098.

Shareholders’ Conflict of Interest

Under Mexican law, any shareholder that has a conflict of interest with respect to any transaction must abstain from voting thereon at the relevant shareholders’ meeting. A shareholder that votes on a transaction in which its interest conflicts with ours may be liable for damages in the event the relevant transaction would not have been approved without such shareholder’s vote.

Directors’ Conflict of Interest

Under Mexican law, any director who has a conflict of interest in any transaction must disclose such fact to the other directors and abstain from voting on such transaction. Any director who violates such provision will be liable to us for any resulting damages or losses. Additionally, under our bylaws, certain conflicts of interest will have the effect of disqualifying a person from serving on our board of directors.

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MATERIAL CONTRACTS

Our Mexican subsidiaries are parties to the airport concessions granted by the SCT under which we are required to construct, operate, maintain and develop the airports in exchange for certain benefits. See “Item 4, Information on the Company – Regulatory Framework – Sources of Mexican Regulation,” “Item 4, Information on the Company – Regulatory Framework – Mexican Airport Concessions – Scope of Concessions” and “Item 4, Information on the Company – Regulatory Framework – Mexican Airport Concessions – General Obligations of Concession Holders.”

MBJA and PACKAL are parties to airport concessions granted by the AAJ under which MBJA and PACKAL are required to operate, maintain and develop the Montego Bay and Kingston airports, respectively, in exchange for certain benefits. See “Item 4, Information on the Company – Regulatory Framework –Sources of Jamaican Regulation,” “Item 4, Information on the Company – Regulatory Framework – Jamaican Airport Concession Agreements.” See “Item 5, Recent Developments – Kingston Airport Concession."

We are a party to a participation agreement with AMP and the SCT which establishes the framework for several other agreements to which we are a party. See “Item 7, Major Shareholders and Related Party Transactions – Related Party Transactions.”

We have entered into a Technical Assistance Agreement with AMP providing for management and consulting services. See “Item 7, Major Shareholders and Related Party Transactions – Related Party Transactions.”

TAXATION

The following summary contains a description of the material U.S. and Mexican federal income tax consequences of the purchase, ownership and disposition of our Series B shares or ADSs by a beneficial holder that is a citizen or resident of the United States or a U.S. domestic corporation or that otherwise is subject to U.S. federal income tax on a net income basis in respect of our Series B shares or ADSs, and that is a “non-Mexican holder” (as defined below), (a “U.S. holder”), but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase, hold or dispose of our Series B shares or ADSs. In particular, the summary of U.S. tax considerations deals only with U.S. holders that hold our Series B shares or ADSs as capital assets and does not address the tax treatment of special classes of U.S. holders such as entities treated as a partnership for U.S. federal income tax purposes or a partner in such partnership, dealers in securities or currencies, U.S. holders whose functional currency is not the U.S. dollar, U.S. holders that own or are treated as owning 10% or more of our outstanding shares by vote or value, tax-exempt organizations, financial institutions, U.S. holders liable for the alternative minimum tax or net investment income tax, securities traders who elect to account for their investment in Series B shares or ADSs on a mark-to-market basis and investors holding Series B shares or ADSs in a hedging transaction or as part of a straddle, conversion or other integrated transaction for U.S. federal income tax purposes. The summary of Mexican tax considerations does not purport to be a comprehensive description of all the Mexican tax considerations that may be relevant to a decision to purchase, own or dispose of the Series B shares or ADSs and does not address all of the Mexican tax consequences that may be applicable to specific holders of the Series B shares or ADSs (including a holder that controls the Company, an investor that holds 10% or more of the Series B shares or ADSs by vote or value or holders that constitute a group of persons for purposes of Mexican law that controls the Company or that holds 10% or more of the Series B shares or ADSs by vote or value, or a holder that is a resident of Mexico or that is a corporation resident in a tax haven (as defined in the Mexican Income Tax Law)). In addition, the summary does not address any U.S. or Mexican state or local tax considerations that may be relevant to a U.S. holder.

The summary is based upon the federal income tax laws of the United States of America (hereinafter “United States”) and the United Mexican States (hereinafter “Mexico”) as in effect on the date of this annual report on Form 20-F, including the provisions of The Convention between the Government of the United States of America and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, together with related Protocols and Competent Authority Agreements (hereinafter “Tax Treaty”), all of which are subject to change, possibly with retroactive effect in the case of U.S. federal income tax law. Prospective investors in our Series B shares or ADSs should consult their own tax advisors as to the U.S., Mexican or other tax consequences of the purchase, ownership and disposition of the Series B shares or ADSs, including, in particular, the effect of any foreign, state or local tax laws and their entitlement to the benefits, if any, afforded by the Tax Treaty.

For purposes of this summary, the term “non-Mexican holder” shall mean a holder that is not a resident of Mexico for federal tax purposes and that does not hold the Series B shares or ADSs or a beneficial interest therein in connection with the conduct of a trade or business through a permanent establishment or fixed base in Mexico.

For purposes of Mexican taxation, the definition of residency is highly technical and residency results in several situations. Generally, an individual is a resident of Mexico if he or she has established his or her home in Mexico, and a corporation is a resident if it has its place of effective management or center of interests in Mexico. An individual who has a home in Mexico and another country will be considered to be a resident of Mexico if Mexico is the individual’s significant center of interest. However, any determination of residence should take into account the particular situation of each person or legal entity. If a legal entity or an individual is deemed to have a permanent establishment in Mexico for Mexican tax purposes, all income attributable to that permanent establishment will be subject to Mexican income taxes, in accordance with applicable tax laws.

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In general, for U.S. federal income tax purposes, holders of ADSs are treated as the beneficial owners of the Series B shares represented by those ADSs. Accordingly, deposits and withdrawals of Series B shares by U.S. holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.

Taxation of Dividends

Mexican Tax Considerations

Under the Mexican Income Tax Law, dividends paid to Mexican individuals or any foreign residents are subject to a 10% withholding tax if paid from earnings generated during and after 2014 but are not subject to Mexican withholding tax if paid from earnings generated before 2014. Non-Mexican holders may be subject to withholding tax at reduced rates if they are eligible for benefits under an applicable tax treaty with Mexico.

There is a tax incentive for Mexican individuals to claim a credit for dividends generated in 2014, 2015 and 2016 that are reinvested in our Company. This credit applies as follows: (i) if the dividends are paid in 2017, a net 9% tax would be withheld (comprising the 10% withholding tax less a 1% credit), such that 10% of the 10% withholding tax would be credited under the incentive; (ii) if the dividends are paid in 2018, a net 8% tax would be withheld (comprising the 10% withholding tax less a 2% credit), such that 20% of the 10% withholding tax would be credited under the incentive; or (iii) if the dividends are paid in 2019 or thereafter, a net 5% tax would be withheld (comprising the 10% withholding tax less a 5% credit), such that 50% of the 10% withholding tax would be credited under the incentive.

U.S. Federal Income Tax Considerations

The gross amount of any distributions paid with respect to the Series B shares or ADSs, to the extent paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, generally are includible in the gross income of a U.S. holder as ordinary income on the date on which the distributions are received by the depositary and are not eligible for the dividends received deduction allowed to certain corporations under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). To the extent that a distribution exceeds our current and accumulated earnings and profits, it is treated as a non-taxable return of basis to the extent thereof, and thereafter as capital gain from the sale of Series B shares or ADSs. We do not expect to maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles. U.S. Holders therefore should expect that distributions generally will be treated as dividends for U.S. federal income tax purposes. Distributions, which are made in pesos, are includible in the income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date they are received by the depositary whether or not they are converted into U.S. dollars on the date of receipt. If such distributions are converted into U.S. dollars on the date of receipt, a U.S. holder generally should not be required to recognize foreign currency gain or loss in respect of the distributions. Any gain or loss on a subsequent conversion or other disposition of the pesos generally will be treated as ordinary income or loss to such U.S. holder and generally will be income or loss from sources within the United States for U.S. foreign tax credit purposes.

Subject to certain exceptions for short-term and hedged positions, so long as certain holding period and other requirements are met, the U.S. dollar amount of dividends received by certain non-corporate U.S. holders with respect to the Series B shares or ADSs will be subject to taxation at preferential rates if the dividends are “qualified dividends.” Dividends paid on the ADSs will be treated as qualified dividends if: (i) we are eligible for the benefits of a comprehensive income tax treaty with the United States that the Internal Revenue Service (“IRS”) has approved for the purpose of the qualified dividend rules; and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company (“PFIC”). The Tax Treaty has been approved for the purposes of the qualified dividend rule. In addition, based on our audited consolidated financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2020 taxable year. In addition, based on our audited consolidated financial statements and our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our 2021 taxable year.

Subject to certain exceptions for short-term and hedged positions, Mexican withholding tax imposed on distributions with respect to Series B shares or ADSs will generally give rise to a foreign tax credit or deduction against U.S. federal income tax liability. For purposes of applying the foreign tax credit limitation, dividend distributions generally constitute foreign-source, passive category income (or in the case of certain U.S. holders, general category income). The use of foreign tax credits is subject to complex rules and limitations. U.S. holders are urged to consult their tax advisors whether, and to what extent, a foreign tax credit will be available in light of their particular circumstances.

Taxation of Dispositions of Shares or ADSs

Mexican Tax Considerations

Subject to applicable tax treaties, any gain on the sale of our Series B shares by any holder is subject to a 10% withholding tax in Mexico on the net gain from the sale if the transaction is carried out through the Mexican Stock Exchange. These taxes are paid through withholdings made by the financial intermediary. However, these withholdings will not be applicable to a non-resident holder that demonstrates (before the relevant financial intermediary) residence in a country with which Mexico holds a tax treaty to avoid double taxation.

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In accordance with current Mexican tax law, any gain on the sale or transfer of ADSs through a securities market recognized by the Mexican Tax Code (Codigo Fiscal de la Federacion), including the NYSE, by any non-resident holder who resides in a country with which Mexico holds a tax treaty is exempt from income tax payment in Mexico. However, the current Mexican tax law is not clear with respect to the treatment of sales of ADSs by non-resident holders who also do not reside in a country with which Mexico has a tax treaty.

The sale or transfer of shares not in the form of ADSs outside of the Mexican Stock Exchange will give rise to a 25% Mexican withholding tax on the gross proceeds realized from the transaction. Subject to certain exceptions, a non-Mexican holder may elect to pay taxes on the gains realized from the sale of shares on a net basis at a rate of 35.0%.

U.S. Federal Income Tax Considerations

Upon the sale or other disposition of the Series B shares or ADSs, a U.S. holder will generally recognize gain or loss in an amount equal to the difference between the amount realized and such U.S. holder’s tax basis in the Series B shares or ADSs (in U.S. dollars). Such gain or loss will generally be capital gain or loss. Gain or loss recognized by a U.S. holder on such sale or other disposition generally is treated as long-term capital gain or loss if, at the time of the sale or other disposition, the Series B shares or ADSs had been held for more than one year. Long-term capital gain recognized by a non-corporate U.S. holder is taxable at reduced rates. The deduction of a capital loss is subject to limitations. A U.S. holder that receives non-U.S. currency from a sale or other disposition of the Series B shares or ADSs generally will recognize an amount equal to the U.S. dollar value of such non-U.S. currency on the date the Series B shares or ADSs are disposed of. A cash basis or electing accrual basis taxpayer will determine the U.S. dollar value of the amount realized by translating such amount at the spot rate on the settlement date of the sale. If an accrual basis U.S. holder makes the election described above, it must be applied consistently from year to year and cannot be revoked without the consent of the IRS. A U.S. holder will have a tax basis in any non-U.S. currency received in respect of the sale or other disposition of its Series B shares or ADSs equal to its U.S. dollar value calculated at the exchange rate in effect on the date of such sale or other disposition (or in the case of a cash basis or electing accrual basis taxpayer the exchange rate in effect on the date of the receipt).

Gain, if any, realized by a U.S. holder on the sale or other disposition of the Series B shares or ADSs generally will be treated as U.S. source income for U.S. foreign tax credit purposes. Consequently, if a Mexican withholding tax is imposed on the sale or disposition of the Series B shares or ADSs, a U.S. holder that does not receive significant foreign source income from other sources may not be able to derive effective U.S. foreign tax credit benefits in respect of these Mexican taxes. U.S. holders should consult their own tax advisors regarding the application of the foreign tax credit rules to their investment in, and disposition of, Series B shares or ADSs.

Other Taxes

Other Mexican Taxes

There are no Mexican inheritance, gift, succession or value-added taxes applicable to the ownership, transfer or disposition of the Series B shares or ADSs by non-Mexican holders; provided, however, that gratuitous transfers of the Series B shares or ADSs may in certain circumstances causes a Mexican federal tax to be imposed upon the recipient. There are no Mexican stamp, issue, registration or similar taxes or duties payable by non-Mexican holders of the Series B shares or ADSs.

U.S. Backup Withholding Tax and Information Reporting Requirements

Dividends paid on, and proceeds from the sale or other disposition of, the Series B shares or ADSs to a U.S. holder generally may be subject to the information reporting requirements of the Code and may be subject to backup withholding unless the U.S. holder provides an accurate taxpayer identification number and makes any other required certification or otherwise establishes an exemption. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a refund or credit against the U.S. holder’s U.S. federal income tax liability, provided the required information is furnished to the U.S. Internal Revenue Service in a timely manner.

U.S. Foreign Financial Asset Reporting

Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 on the last day of the taxable year or U.S.$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. The understatement of income attributable to “specified foreign financial assets” in excess of U.S.$5,000 extends the statute of limitations with respect to the tax return to six years after the return was filed. U.S. holders who fail to report the required information could be subject to substantial penalties. Prospective investors are encouraged to consult with their own tax advisors regarding the possible application of these rules, including the application of the rules to their particular circumstances.

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DOCUMENTS ON DISPLAY

We file reports, including annual reports on Form 20-F, and other information electronically with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. Any materials filed with the SEC are available to the public over the Internet at the SEC’s website at http://www.sec.gov/ and at our website at https://www.aeropuertosgap.com.mx/en/financial-information.html. (This URL is intended to be an inactive textual reference only. It is not intended to be an active hyperlink to our website. The information on our website, which might be accessible through a hyperlink resulting from this URL, is not and shall not be deemed to be incorporated into this annual report.)

Item 11. | Quantitative and Qualitative Disclosures About Market Risk

Market Risk

See Note 4 to our audited consolidated financial statements for disclosure about market risk.

Foreign Currency Exchange Rate Risk

Our principal exchange rate risk involves changes in the value of the Mexican peso relative to the U.S. dollar. Historically, a significant portion of the revenues generated by our Mexican airports (principally derived from passenger charges for international passengers) has been denominated in or linked to the U.S. dollar but collected in pesos based on the average exchange rate for the prior month. In 2018, 2019 and 2020, approximately 28.0%, 27.4% and 25.3%, respectively, of our total revenues were derived from passenger charges for international passengers (in 2018, 2019 and 2020, 31.1%, 31.0% and 31.0%, respectively, of the sum of our aeronautical and non-aeronautical revenues were derived from passenger charges for international passengers). A depreciation of the peso as compared to the U.S. dollar, particularly late in the year, could cause us to exceed the maximum rates at one or more of our airports, in which case, we may provide discounts to passenger charges or to the airlines. In addition, if the peso appreciates as compared to the U.S. dollar, we may underestimate the specific prices we can charge for regulated services and be unable to adjust our prices upwards to maximize our regulated revenues. Approximately 21.9% of our 2020 aeronautical and non-aeronautical revenues were denominated in U.S. dollars. We estimate that approximately 24.0% of our consolidated costs and expenses are denominated in U.S. dollars. Based upon a 10% annual depreciation of the peso compared to the U.S. dollar as of December 31, 2020, we estimate that our revenues would have increased by approximately Ps.212.0 million, and our costs and expenses would have increased approximately Ps.92.5 million.

As of December 31, 2018, 2019 and 2020, respectively, 59.6%, 55.2% and 60.5% of our cash and marketable securities were denominated in U.S. dollars and 0.0%, 0.01% and 0.01% were denominated in euros.

In 2018, we obtained U.S.$28.0 million in loans and prepaid U.S.$9.1 million. In 2019, we obtained U.S.$5.0 million in loans. We had a total of U.S.$235.4 million in U.S. dollar-denominated debt as of December 31, 2019. In 2020, we obtained U.S.$37.0 million in additional U.S. dollar indebtedness, and as of December 31, 2020, we had U.S.$268.5 million in U.S. dollar-denominated debt. Future decreases in the value of the peso relative to the U.S. dollar will increase the cost in pesos of servicing such indebtedness.

At December 31, 2018, 2019 and 2020, we did not have any outstanding forward foreign exchange contracts.

Interest Rate Risk

Historically, we have funded the majority of our capital expenditures with bank loans. However, due to a strategic shift, we now fund the most significant portion of our capital investments through debt issuances on the Mexican capital markets. We expect to continue to do so, subject to market conditions. For more information regarding our funding and liquidity strategies, see “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Indebtedness.”

As of December 31, 2020, we had approximately Ps.16.1 billion in variable rate debt, in 2017, 2019 and 2020 we contracted interest rate swaps covering Ps.9.8 billion worth of risk for increased interest rates related to the issuance of our GAP 17, GAP 17-2, GAP 19 and GAP 20 long-term debt securities. As of December 31, 2020, we have Ps. 8.3 billion in fixed rate debt, for a total debt of Ps.24.4 billion.

In addition, on September 24, 2015, we signed two unsecured credit agreements for the refinancing of the bridge loans obtained for the acquisition of DCA. The loans, from Bank of Nova Scotia and BBVA, for U.S.$95.5 million each, generate interest at the variable one-month Libor rate plus 99 and 105 basis points, respectively. The Bank of Nova Scotia and BBVA loans were disbursed on January 19, 2016 and February 15, 2016, respectively, and have a five-year maturity. On October 29, 2020, we announced the successful refinancing of our Bank of Nova Scotia and BBVA loans which were to come due in January and February 2021, respectively. The Scotiabank credit refinancing was for our US$95.5 million credit due January 2021. The new loan has a 36-month term from the date of disbursement which will be January 19, 2021. Interest will be payable monthly at an annual fixed rate of 2.063% with a structuring fee of 30 basis points and principal due at maturity. The BBVA credit refinancing was for our US$95.5 million credit due February 2021. The new loan has a 36-month term from the date of disbursement which will be February 2, 2021. Interest will be payable monthly at an annual fixed rate of 1.97% with an upfront fee of 60 basis points and principal due at maturity.

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On September 3, 2020, MBJA signed loan agreements with The Bank of Nova Scotia Jamaica Limited and The Bank of Nova Scotia for up to US$60.0 million available for disbursement up to 24 months from the closing date. The loan has a 5-year maturity with a 2-year optional extension for up to US$54.0 million, with a monthly interest rate of Libor plus 310 basis points and principal payments of 10% due on the fifty-fourth month and 90% due at maturity. The disbursement fee was 50 basis points due at closing and a commitment fee of 55 basis points payable quarterly on any undrawn balance. The first drawdown of US$30.0 million was made on September 4, 2020. The loan proceeds will be used to finance the airport’s Capital Development Program, as well as for general corporate purposes.

On February 26, 2019, we contracted Scotiabank for a derivative financial transaction by exchange of interest rates (swap) in order to cover the risk derived from the tranche of the GAP 17-2 long-term debt securities. The contract is for a value of Ps.2.3 billion and pays a fixed interest rate of 8.0315% at the maturity of the long-term debt securities.

On February 27, 2019, we contracted Scotiabank for a derivative financial transaction by exchange of interest rates (swap) in order to cover the risk derived from the tranche of the GAP 19 long-term debt securities. The contract is for a value of Ps.3.0 billion and pays a fixed interest rate of 8.03% at the maturity of the long-term debt securities.

On March 2, 2020, we contracted Scotiabank for a derivative financial transaction by exchange of interest rates (swap) in order to cover the risk derived from the tranche of the GAP 20 long-term debt securities. The contract is for a value of Ps.3.0 billion and pays a fixed interest rate of 6.332% at the maturity of the long-term debt securities.

Changes in fair value are recognized temporarily through other comprehensive income within equity and profit and loss as hedging reserve and are recycled to financial expenses as the interest of the debt securities is recognized.

During 2018, we paid (i) Ps.765.6 million of interest expense under variable interest rate loans, with an average TIIE-28 rate of 7.78% plus a contractual fixed spread and average Libor rate of 1.45%, plus a contractual fixed spread and (ii) Ps.138.1 million of interest expense under fixed-rate loans.

During 2019, we paid (i) Ps.989.8 million of interest expense under variable interest rate loans, with an average TIIE-28 rate of 7.78% plus a contractual fixed spread and average Libor rate of 1.5%, plus a contractual fixed spread and (ii) Ps.153.5 million of interest expense under fixed-rate loans.

During 2020, we paid (i) Ps.1,405.1 million of interest expense under variable interest rate loans, with an average TIIE-28 rate of 5.87% plus a contractual fixed spread and average Libor rate of 0.49%, plus a contractual fixed spread and (ii) Ps.307.5 million of interest expense under fixed-rate loans. Based upon a 100 basis points increase of the TIIE-28 and the Libor rate as of December 30, 2020, we estimate that our interest expense would have increased by Ps.111.5 million.

Because both our U.S. dollar loans and our peso bond debt have variable interest rates, an increase without interest rate hedges would reduce our cash flows. To reduce our exposure, we have contracted interest rate hedges with HSBC and Scotiabank. These financial instruments with HSBC and Scotiabank to cover our GAP 15 debt securities for Ps. 2,200,000 were not entered into for speculative purposes but were also not formally designated and therefore did not qualify as hedging instruments for accounting purposes. As a result, changes in their fair value are recognized in the profit or loss within finance cost. The financial instruments with Scotiabank to cover the GAP 17-2, GAP 19 and GAP 20 long-term debt securities were entered into for speculative purposes and were formally designated. Therefore, these instruments qualify as hedging instruments for accounting purposes, and as a result, changes in their fair value are recognized in other comprehensive income and profit or loss in the cash flow hedges reserve.

|  | Notional amount |  |  | Coverage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Market value at December 31, 2020 |
|  | (millions) |  |  | start date |  | Rate |  | Floor |  |  | CAP 1 |  |  | CAP 2 |  |  | Due date |  | (in millions) |
HSBC |  | U.S.$ |  | 95.5 |  |  | March 2016 |  | Libor 30 |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | January 2021 |  | Ps. |  | (0.5 | )
HSBC |  | U.S.$ |  | 95.5 |  |  | March 2016 |  | Libor 30 |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | February 2021 |  |  |  | (0.9 | )
HSBC |  | Ps. |  | 1,500.0 |  |  | May 2017 |  | 7.21% |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2022 |  |  |  | (57.1 | )
Derivatives designated as hedge financial instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Scotiabank |  | Ps. |  | 2,300.0 |  |  | February 2019 |  | 8.0315% |  |  | — |  |  |  | — |  |  |  | — |  |  | November 2022 |  |  |  | (154.7 | )
Scotiabank |  | Ps. |  | 3,000.0 |  |  | February 2019 |  | 8.03% |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2024 |  |  |  | (335.7 | )
Scotiabank |  | Ps. |  | 3,000.0 |  |  | March 2020 |  | 6.332% |  |  | — |  |  |  | — |  |  |  | — |  |  | February 2025 |  |  |  | (201.8 | )
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. |  | (750.7 | )

For the year ended December 31, 2020, we recognized a gain of Ps.29.6 million within finance cost as expense of the period, due to the value of the premium paid, for the effect of the intrinsic value of these hedges. In 2019 and 2020, we recognized Ps.149.8 million and Ps.41.8 million, respectively, in the reserve for the loss of fair value of the coverage for cash flow hedges of the GAP 17-2, GAP 19 and GAP 20 debt securities.

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On February 26, 2019, we entered into a hedge of the variable interest rate generated by the debt securities issued in November 2017. These debt securities were issued at a 28-day TIIE variable rate plus 44 basis points, so a swap was contracted to convert it to a fixed rate of 8.0315%. As of December 31, 2020 we recognized Ps.51.3 million as finance cost as a result of the application of the hedge because the fixed rate contracted in the swap was higher than the TIIE.

On February 27, 2019, we entered into a hedge of the variable interest rate generated by the debt securities issued in March 2019; These debt securities were issued at a 28-day TIIE variable rate plus 45 basis points, so a swap was contracted to convert it to a fixed rate of 8.03%. As of December 31, 2020 we recognized Ps.67.1 million as finance cost as a result of the application of the hedge because the fixed rate contracted in the swap was lower than the TIIE.

On March 2, 2020, we entered into a hedge of the variable interest rate generated by the debt securities issued in February 2020; These debt securities were issued at a 28-day TIIE variable rate plus 17 basis points, so a swap was contracted to convert it to a fixed rate of 6.332%. As of December 31, 2020 we recognized Ps.5.6 million as finance income and Ps.24.5 million as finance cost as a result of the application of the hedge because the fixed rate contracted in the swap was higher than the TIIE.

Item 12. | Description of Securities Other Than Equity Securities

Not applicable.

Item 12A. | Debt Securities

Not applicable.

Item 12B. | Warrants and Rights

Not applicable.

Item 12C. | Other Securities

Not applicable.

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Item 12D. | American Depositary Shares

Deposit Agreement

The Bank of New York Mellon serves as the depositary for our ADSs. ADS holders are required to pay various fees to the depositary. The following is a summary of the fees payable by holders of our ADRs. For more complete information regarding ADRs, you should read the entire deposit agreement and the form of ADR.

Service |  | Fee or Charge Amount |  | Payee
Execution and delivery of ADRs |  | U.S.$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) |  | Bank of New York Mellon
Surrender of ADRs |  | U.S.$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) |  | Bank of New York Mellon
Any cash distribution to ADR registered holders |  | U.S.$0.02 (or less) per ADS |  | Bank of New York Mellon
Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADR registered holders |  | A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs |  | Bank of New York Mellon
Registration of transfers of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares |  | Registration or transfer fees |  | Bank of New York Mellon
Cable, telex and facsimile transmissions (as expressly provided in the deposit agreement) |  | Expenses of the depositary |  | Bank of New York Mellon
Converting foreign currency to U.S. dollars |  | Expenses of the depositary |  | Bank of New York Mellon
Taxes and other governmental charges the Bank of New York Mellon or the custodian has to pay on any ADR or share underlying an ADR, for example, stock transfer taxes, stamp duty or withholding taxes |  | As necessary |  | Bank of New York Mellon
Other fees, as necessary |  | Any charges incurred by Bank of New York Mellon or its agents for servicing the deposited securities |  | Bank of New York Mellon

The depositary of our ADSs, The Bank of New York Mellon, collects its fees directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal, or from intermediaries acting for them, by deducting the fees from the amounts distributed or by selling a portion of distributable property to pay the fees. For example, the depositary may deduct from cash distributions, directly bill investors or charge the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for these services are paid.

Reimbursements by the Depositary

The Bank of New York Mellon, as depositary of our ADSs, pays us an agreed amount, which includes expenses related to the administration and maintenance of the ADS facility including, but not limited to, investor relations expenses, the annual NYSE listing fees (as invoiced in the reimbursement request to the depositary) or any other program related expenses. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount of reimbursement available to us is not necessarily tied to the amount of fees the depositary collects from investors. In 2018, we received U.S.$74.0 thousand in reimbursements from the depositary for expenses corresponding to 2017. In 2019, we received U.S.$36.9 thousand in reimbursements from the depository for expenses corresponding to 2018. In 2020, we received U.S.$20.9 thousand in reimbursements from the depositary for expenses corresponding to 2019.

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PART II

Item 13. | Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15. | Controls and Procedures

| a) | Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as a result of the material weakness in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of December 31, 2020.

| b) | Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with international financial reporting standards. Our internal control over financial reporting includes those policies and procedures that:

| (1) | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

| (2) | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with international financial reporting standards, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

| (3) | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected on a timely basis.

Under the oversight of our Board of Directors and with the supervision of our Chief Executive Officer and Chief Financial Officer, our management assessed the design and effectiveness of our internal control over financial reporting as of December 31, 2020. In making its assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control — Integrated Framework (2013).

Based on this assessment, our management concluded that, as of December 31, 2020, our internal control over financial reporting was not effective because of the material weakness described below.

| c) | Material Weakness and Risk Assessment

Based on our management’s evaluation, we identified a material weakness in internal control over financial reporting as of December 31, 2020, related to ineffective general information technology controls (“GITCs”) resulting from deficiencies in control environment and inadequate periodic risk assessments. This material weakness related to user access and program modifications over certain IT systems and their underlying databases was the result of the following control deficiencies: (i) not maintaining effective controls over certain segregation of duties within IT environments, including certain individuals with the ability to manage systems and their underlying databases across key financial systems without an independent review performed by someone other than the preparer, (ii) not appropriately performing a periodic IT configuration risk assessment over a certain IT system used for reviewing user accesses and program modifications to key financial systems,

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(iii) not designing and maintaining effective monitoring controls over certain key financial systems and databases’ administrators, (iv) and ineffective controls with regards to certain IT service desk activities, including maintaining proper documentation of such requests. As a result, our business process automated and manual controls that are dependent on the ineffective GITCs could have been adversely impacted.

This material weakness did not result in any identified misstatements to the consolidated financial statements and there were no changes to previously released financial results. However, these control deficiencies described above, created a reasonable possibility that a material misstatement to our consolidated financial statements would not be prevented or detected on a timely basis. Therefore, we concluded that our internal control over financial reporting was not effective as of December 31, 2020.

Our independent registered public accounting firm KPMG Cárdenas Dosal, S.C. who audited the consolidated financial statements included in this annual report, issued an adverse report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, which is included on page 151 of this annual report.

| d) | Changes in Internal Control Over Financial Reporting

Other than the material weakness described above and the remediation activities described below, we have not identified changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the year ended December 31, 2020, that would have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

| e) | Remediation Plan and Activities

Our management is engaged in remediation activities to address the material weakness described above. At the corporate and business segment level at which we identified the material weakness, we have begun strengthening the internal control environment, as well as designing and adopting new internal controls, including: (i) segregation of duties and user account recertification controls, (ii) IT risk assessment protocols in response to changes in our IT environments, (iii) improved monitoring control of system’s user administrators accesses and system modifications, (iv) access management protocols (granting, changing or revoking access), and (v) service desk protocols (request lines and proper supporting documentation).

Our program includes activities to be performed throughout the financial reporting cycle at all levels of the Company and at various stages within business processes. These revised procedures encompass a range of supplementary automated and manual activities such as risk assessment procedures and monitoring activities, as well as an appropriate segregation of duties when applicable. The Audit Committee have reviewed and discussed these matters with management. The Audit Committee will oversee management efforts to remediate the identified material weakness.

The material weakness will be considered remediated when management concludes that, through testing, the applicable remediated controls are designed, implemented and operating effectively. We expect remediation of this material weakness will be completed during fiscal year 2021.

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| f) | Report of Independent Registered Public Accounting Firm on Internal Controls

Opinion on Internal Control Over Financial Reporting

We have audited Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and subsidiaries (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2020, 2019 and 2018 and the related consolidated statements of profit or loss and other comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated April 22, 2021 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness related to ineffective general information technology controls (“GITCs”) resulting from deficiencies in control environment and inadequate periodic risk assessments has been identified and included in management assessment. This material weakness related to user access and program modifications over certain IT systems and their underlying databases and was the result of the following control deficiencies: (i) not maintaining effective controls over certain segregation of duties within IT environments, including certain individuals with the ability to manage systems and their underlying databases across key financial systems without an independent review performed by someone other than the preparer, (ii) not appropriately performing a periodic IT configuration risk assessment over a certain IT system used for reviewing user accesses and program modifications to key financial systems, (iii) not designing and maintaining effective monitoring controls over certain key financial systems and databases’ administrators, (iv) and ineffective controls with regards to certain IT service desk activities, including maintaining proper documentation of such requests. As a result, the business process automated and manual controls that are dependent on the ineffective GITCs could have been adversely impacted.

The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2020 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors

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of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG Cárdenas Dosal, S.C.
Guadalajara, Jalisco, Mexico
April 22, 2021

Item 16. | Reserved

Item 16A. | Audit Committee Financial Expert

Carlos Cárdenas Guzmán, an independent director under NYSE listing standards, joined our board of directors and our Audit Committee in 2011, and we believe that he is qualified to serve as our “audit committee financial expert” as defined in Item 16A of Form 20-F under the Securities and Exchange Act of 1934. Our board of directors appointed Mr. Cárdenas as President of the Audit Committee and also as the financial expert of that Committee. For a discussion of Mr. Cárdenas qualifications, see “Item 6, Directors, Senior Management and Employees – Directors.”

Item 16B. | Code of Ethics

We have adopted a code of ethics, as defined in Item 16B of Form 20-F under the Securities Exchange Act of 1934, as amended. Our code of ethics applies to our chief executive officer and chief financial officer, and personnel performing similar functions as well as to our other officers and employees. Our code of ethics is an exhibit to this annual report on Form 20-F and is available on our website at www.aeropuertosgap.com.mx. If we amend the provisions of our code of ethics that apply to our chief executive officer and chief financial officer, and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address. The information found on our website, other than as specifically incorporated by reference into this annual report on Form 20-F, is not part of this annual report on Form 20-F.

Item 16C. | Principal Accountant Fees and Services

Audit and Non-Audit Fees

The following table sets forth the fees billed to us by our independent auditors, KPMG Cárdenas Dosal S.C. (“KPMG Mexico”), during the fiscal years ended December 31, 2018, 2019 and 2020:

|  | Year ended December 31, |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  | (thousands of pesos) |
Audit fees |  | Ps. |  | 9,799 |  |  | Ps. |  | 9,856 |  |  | Ps. |  | 11,434 |
Audit-related fees |  |  |  | 2,197 |  |  |  |  | 2,526 |  |  |  |  | 2,143 |
Other fees |  |  |  | 562 |  |  |  |  | 458 |  |  |  |  | 2,104 |
Total fees |  | Ps. |  | 12,558 |  |  | Ps. |  | 12,840 |  |  | Ps. |  | 15,681 |

Audit fees in the above tables are the aggregate fees billed by our independent auditors in connection with the audit of our annual consolidated financial statements, the audit of the financial statements of certain subsidiaries and other statutory audit reports.

Audit-related fees in the above table are fees billed by our independent auditors for services related to the Sarbanes-Oxley Act of 2002 and other audit related-services.

We have not engaged our independent auditors for tax compliance, tax advice or tax planning services in the fiscal years ended December 31, 2018, 2019 and 2020.

Other fees in the above table are fees billed by our independent auditors for transfer pricing services, services related to the issuance of debt securities and other services contracts.

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Audit Committee Pre-Approval Policies and Procedures

Our audit committee has not established pre-approval policies and procedures for the engagement of our independent auditors for services. Our audit committee expressly approves on a case-by-case basis any engagement of our independent auditors for audit and non-audit services provided to our subsidiaries or to us.

Item 16D. | Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

Item 16F. | Change in Registrant’s Certifying Accountant.

Not applicable.

Item 16G. | Corporate Governance

Pursuant to Section 303A.11 of the Listed Company Manual of the NYSE, we are required to provide a summary of the significant ways in which our corporate governance practices differ from those required for U.S. companies under the NYSE listing standards. We are a Mexican corporation with shares listed on the Mexican Stock Exchange. Our corporate governance practices are governed by our bylaws, the Securities Market Law and the regulations issued by the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores). We also generally comply on a voluntary basis with the Mexican Code of Best Corporate Practices (Código de Mejores Prácticas Corporativas), which was created in January 2001 by a group of Mexican business leaders and was endorsed by the Mexican Banking and Securities Commission. On an annual basis, we file a report with the Mexican Banking and Securities Commission and the Mexican Stock Exchange regarding our compliance with the Mexican Code of Best Corporate Practices.

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The table below discloses the significant differences between our corporate governance practices and the NYSE standards:

NYSE Corporate Governance Rule for U.S. Domestic Issuers |  | Our Corporate Governance Practices
Director Independence. |  |
§303A.01 specifies that listed companies must have a majority of independent directors. To qualify as independent, a director must satisfy the criteria set forth in §303A.02. In particular, a director is not independent if such director is: (i) not a person who the board affirmatively determines has no material direct or indirect relationship with the company, its parent or a consolidated subsidiary; (ii) an employee, or an immediate family member of an executive officer, of the company, its parent or a consolidated subsidiary, other than employment as interim chair or CEO; (iii) a person who receives, or whose immediate family member receives, more than $120,000 during any twelve-month period within the last three years in direct compensation from the company, its parent or a consolidated subsidiary, other than director and committee fees or deferred compensation for prior services only (and other than compensation for service as interim chair or CEO or received by an immediate family member for service as a non-executive employee); (iv) a person who is affiliated with or employed, or whose immediate family member is affiliated with or employed in a professional capacity, by a present or former internal or external auditor of the company, its parent or a consolidated subsidiary; (v) an executive officer, or an immediate family member of an executive officer, of another company whose compensation committee’s membership includes an executive officer of the listed company, its parent or a consolidated subsidiary; or (vi) an executive officer or employee of a company, or an immediate family member of an executive officer of a company, that makes payments to, or receives payments from, the listed company, its parent or a consolidated subsidiary for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues (charities are not included, but any such payments must be disclosed in the company’s proxy (or, if no proxy is prepared, its Form 10-K / annual report)). |  | Pursuant to the Securities Market Law and Article 15 of our bylaws, at least 25% of the members of our board of directors must be independent. Determinations regarding independence must be made by our shareholders applying the provisions of the Securities Market Law and our bylaws (which incorporate Section 10A-3 of the Exchange Act). The determination of independence under the Securities Market Law differs in certain respect from the provisions of §303A.02. Under Article 26 of the Securities Market Law, a director is not independent if such director is: (i) an employee or officer of the company or of another company that is a member of the same corporate group ( consorcio o grupo empresarial ) as the company (or a person who has been so within the prior year); (ii) a person that, without being an employee or officer of the company, has influence or authority over the company or its officers, or over another company that is a member of the same corporate group as the company; (iii) an important client, supplier, debtor or creditor (or a partner, director or employee thereof). A client or supplier is considered important if its sales to or purchases from the company represent more than 10% of its total sales or purchases within the prior year. A debtor or creditor is considered important if the aggregate amount of the relevant loan represents more than 15% of its or the company’s aggregate assets; (iv) a shareholder that is a part of the control group of the company; or (v) a family member, spouse or concubine of any of the persons mentioned in (i) through (iv) above. Currently, our board of directors consists of eleven directors. Six of such directors qualify as independent in accordance with the Securities Market Law and our bylaws, and one director has been designated by a holder of 10% of our capital stock in the form of Series B shares in accordance with our bylaws.
Executive Sessions. |  |
§303A.03 specifies that non-management directors must meet at regularly scheduled executive sessions without management. Independent directors should meet alone in an executive session at least once a year. |  | Mexican law, our bylaws and the Mexican Code of Best Corporate Practices, which we adhere to, do not provide for non-management executive sessions. None of our managers are members of either our board of directors or our other committees, except that our chief executive officer is the chair of our Operating Committee, as provided for in Article 27 of our bylaws.

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Committees for Director Nominations and Compensation and for Corporate Governance.
§303A.04 (a) specifies that listed companies must have a nominating/corporate governance committee composed entirely of independent directors. §303A.05 (a) specifies that listed companies must have a compensation committee composed entirely of independent directors. |  | We have a “Nominations and Compensation Committee.” We also have an Audit Committee, which, pursuant to Article 31 of our bylaws, has been assigned certain corporate governance ( prácticas societarias ) oversight obligations mandated by the Securities Market Law. Under Mexican corporate law, a corporation’s “board committees,” except for audit and corporate governance committees need not be composed only of members of the corporation’s board of directors. Article 28 of our bylaws provides that at least a majority of the members of our Nominations and Compensation Committee must be members of our board of directors. No express independence requirements apply to this committee. Currently, the committee consists of 2 members, both of whom are members of our board of directors, and one of whom is independent as defined under the Securities Market Law and Section 10A-3 of the Exchange Act.
Audit Committee. |  |
§303A.06 specifies that listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act. §303A.07 specifies other requirements for audit committees, including a minimum of three members who satisfy the independence requirements of Section 3003A.02. |  | Foreign private issuers, such as us, are subject to §303A.06 and thus must comply with Rule 10A-3. We are in compliance with Rule 10A-3 and, as such, our Audit Committee consists entirely of members of our board of directors who meet the independence requirements prescribed in that rule. (The Securities Market Law likewise contains a requirement that our Audit Committee be entirely independent.) We are not subject to §303A.07. As such, our Audit Committee charter (contained in Article 32 of our bylaws) does not make provision for every one of the specific duties required by §303A.07. See above for a description of the composition of our Audit Committee.
Corporate Governance Guidelines. |  |
§303A.09 specifies that listed companies must adopt and disclose corporate governance guidelines. |  | Mexican law does not require us to disclose corporate governance guidelines and we have not done so. However, pursuant to the Securities Market Law, we have adopted board guidelines covering corporate governance matters such as the use of corporate assets, certain transactions with related parties (including loans to officers), repurchases of shares, communications with shareholders, managers and directors, and other matters.
Code of Ethics. |  |
§303A.10 specifies that corporate governance guidelines and a code of business conduct and ethics is required, with disclosure of any waiver for directors or executive officers. |  | We have adopted a code of ethics, which has been accepted by all of our directors and executive officers and other personnel. A copy of our code of ethics is available on our website: www.aeropuertosgap.com.mx.
Equity Compensation Plans. |  |
§303A.08 & 312.03 specify that equity compensation plans require shareholder approval, subject to limited exemptions. |  | No equity-compensation plans have been approved by our shareholders. Shareholders’ approval is not expressly required under our bylaws for the adoption and amendment of an equity-compensation plan.

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Shareholder Approval for Issuance of Securities. |  |
§§312.03(b)-(d) specify that issuances of securities (1) that will result in a change of control of the issuer, (2) that are to a related party or someone closely related to a related party, (3) that have voting power equal to at least 20% of the outstanding common stock voting power before such issuance or (4) that will increase the number of shares of common stock by at least 20% of the number of outstanding shares before such issuance require shareholder approval. |  | Mexican law and our bylaws require us to obtain shareholder approval of the issuance of new equity securities.
Conflicts of Interest. |  |
§314.00 specifies that the determination of how to review and oversee related party transactions is left to the listed company. The audit committee or comparable body, however, could be considered the forum for such review and oversight. §312.03(b) specifies that certain issuances of common stock to a related party require shareholder approval. |  | Pursuant to Mexican law, our bylaws and applicable internal guidelines, provided that the corporate practices committee of our board of directors has opined favorably, our board of directors must vote on whether or not to grant approval of certain transactions with a related party that (i) are outside the ordinary course of our business; or (ii) are at non-market prices. A director with an interest in the transaction is not permitted to vote on its approval.
Solicitation of Proxies. |  |
§§402.01 & 402.04 specifies that the solicitation of proxies and provision of proxy materials is required for all meetings of shareholders. Copies of such proxy solicitations are to be provided to NYSE. |  | We are not required to distribute proxy materials to, or solicit the return of proxies from, our shareholders. In accordance with Mexican law and our bylaws, we inform shareholders of all meetings by public notice, which states the requirements for admission to the meeting and provides a mechanism by which shareholders can vote through a representative using a power of attorney. Under the new Mexican Securities Market Law, we have to make power of attorney forms available to shareholders at their request. Under the deposit agreements relating to our ADSs, holders of our ADSs receive notices of shareholders’ meetings and, where applicable, instructions on how to vote at the shareholders’ meeting through the depositary.

(1) | Reference to sections are references to sections of the NYSE Listed Company Manual. Pursuant to Section 303A.00, foreign private issuers, such as us, are exempt from the corporate governance standards of the exchange, with certain exceptions.

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PART III

Item 17. | Financial Statements

Not applicable.

Item 18. | Financial Statements

Our consolidated financial statements are included in this filing beginning on page F-1. The following is an index to the consolidated financial statements:

Consolidated Financial Statements for Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

|  | Page
Report of Independent Registered Public Accounting Firm for the Years Ended December 31, 2018, 2019 and 2020 |  | F-1
Consolidated Statements of Financial Position as of December 31, 2018, 2019 and 2020 |  | F-3
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the Years Ended December 31, 2018, 2019 and 2020 |  | F-5
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 2019 and 2020 |  | F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2019 and 2020 |  | F-8
Notes to Consolidated Financial Statements |  | F-9

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Item 19. | Exhibits

Documents filed as exhibits to this annual report:

Exhibit No. |  | Description
1.1 |  | An English translation of the Amended and Restated Bylaws (Estatutos Sociales) of the Company.*
2.1 |  | Deposit Agreement among the Company, The Bank of New York Mellon (formerly The Bank of New York) and all registered holders from time to time of any American Depositary Receipts, including the form of American Depositary Receipt (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).
2.d |  | Description of the registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.*
3.1 |  | Trust Agreement among the Company, AMP and Bancomext, together with an English translation (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).
4.1 |  | Amended and Restated Guadalajara Airport Concession Agreement and annexes thereto, together with an English translation and a schedule highlighting the differences between this concession and the Company’s other concessions (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).
4.2 |  | Participation Agreement and Amendment No. 1 thereto among the Registrant, the Mexican Federal Government through the SCT, Nacional Financiera, S.N.C., the Company, Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V., Aeropuerto de Aguascalientes, S.A. de C.V., Aeropuerto del Bajío, S.A. de C.V., Aeropuerto de Guadalajara, S.A. de C.V., Aeropuerto de Hermosillo, S.A. de C.V., Aeropuerto de La Paz, S.A. de C.V., Aeropuerto de Los Mochis, S.A. de C.V., Aeropuerto de Manzanillo, S.A. de C.V., Aeropuerto de Mexicali, S.A. de C.V., Aeropuerto de Morelia, S.A. de C.V., Aeropuerto de Puerto Vallarta, S.A. de C.V., Aeropuerto de San José del Cabo, S.A. de C.V., Aeropuerto de Tijuana, S.A. de C.V., AMP, AENA, Aeropuerto del Pacífico Ángeles, S.A. de C.V., Inversora del Noroeste, S.A. de C.V., Grupo Dragados, S.A., Grupo Empresarial Ángeles, S.A. de C.V., Bancomext and the ASA, together with an English translation (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).
4.3 |  | Technical Assistance and Technology Transfer Agreement among the Registrant, Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V., Aeropuerto de Aguascalientes, S.A. de C.V., Aeropuerto del Bajío, S.A. de C.V., Aeropuerto de Guadalajara, S.A. de C.V., Aeropuerto de Hermosillo, S.A. de C.V., Aeropuerto de La Paz, S.A. de C.V., Aeropuerto de Los Mochis, S.A. de C.V., Aeropuerto de Manzanillo, S.A. de C.V., Aeropuerto de Mexicali, S.A. de C.V., Aeropuerto de Los Mochis, S.A. de C.V., Aeropuerto de Puerto Vallarta, S.A. de C.V., Aeropuerto de San José del Cabo, S.A. de C.V., Aeropuerto de Tijuana, S.A. de C.V., AMP, AENA, Aeropuerto del Pacífico Ángeles, S.A. de C.V., Inversora del Noroeste, S.A. de C.V., Grupo Dragados, S.A., and Grupo Empresarial Ángeles, S.A. de C.V., together with an English translation (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).
4.4 |  | Professional Services Agreement between Aeropuerto de Guadalajara, S.A. de C.V. and AENA Desarrollo Internacional, S.A. dated as of August 4, 2008 (English translation) and a schedule highlighting the differences between this agreement and similar agreements with the Company’s other airport operating subsidiaries (incorporated by reference to our Form 20-F filed on June 29, 2010).
8.1 |  | List of subsidiaries of the Company. *
11.1 |  | Code of Ethics of the Company.*
12.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
12.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
13.1 |  | Certifications of Chief Financial Officer and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101. INS |  | XBRL Instance Document.
101. SCH |  | XBRL Taxonomy Extension Schema Document.
101. CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document.
101. LAB |  | XBRL Taxonomy Extension Label Linkbase Document.
101. PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document.
101. DEF |  | XBRL Taxonomy Extension Definition Document.

* | Filed herewith.

Omitted from the exhibits filed with this annual report are certain instruments and agreements with respect to our long-term debt, none of which authorizes securities or results in an incurrence of debt in a total amount that exceeds 10% of our total assets. We hereby agree to furnish to the SEC copies of any such omitted instruments or agreements as the SEC requests.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

Grupo Aeroportuario del Pacífico, S.A.B. de C.V.
By: |  | /s/ Saúl Villarreal García
Name: |  | Saúl Villarreal García
Title: |  | Chief Financial Officer

Dated: April 22, 2021

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Grupo Aeroportuario del Pacífico,

S.A.B. de C.V. and Subsidiaries

Consolidated Financial Statements as of

December 31, 2018, 2019 and 2020 and for the

Years Ended December 31, 2018, 2019 and 2020

and Report of Independent Registered Public

Accounting Firms Dated April 22, 2021

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Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Report of Independent Auditors and 2018, 2019 and 2020 Consolidated Financial Statements

Contents |  | Page
Report of Independent Auditor |  | F-1
Consolidated Statements of Financial Position as of December 31, 2018, 2019 and 2020 |  | F-3
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the Years Ended December 31, 2018, 2019 and 2020 |  | F-5
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2018, 2019 and 2020 |  | F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2019 and 2020 |  | F-8
Notes to Consolidated Financial Statements |  | F-9

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Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Grupo Aeroportuario del Pacífico, S.A.B. de C.V.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and subsidiaries (the Company) as of December 31, 2020, 2019 and 2018, and the related consolidated statements of profit or loss and other comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated April 22, 2021 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of classification of certain expenditures as improvements to concession assets or maintenance costs

As discussed in the notes 3d and 8 to the consolidated financial statements, the Company has a net balance of Ps. 13,764 million of improvements to concession assets as of December 31, 2020. The Company is committed to carry-out numerous expenditures to each of its airports on an annual basis, in the case of Mexican airports, and every five years in Jamaica, under the Master Development Programs. Expenditures which are considered to be upgrades on, or improvements to, concession assets are recognized as “intangible assets - improvements to concession assets”. Additionally, the Company recognizes revenue and an expense of equal value for these expenditures. Expenditures in relation to general maintenance of the concession assets are recognized as an expense in the consolidated statement of profit and loss and other comprehensive income.

We identified the assessment of the classification of certain items of expenditure, such as those related to infrastructure, as either improvements to concession assets or as maintenance expenses as a critical audit matter. The Company’s management applied significant judgment to classify certain items of expenditure which, in turn, required subjective auditor judgment to evaluate.

The following are the primary procedures we performed to address this critical audit matter. We read the Master Development Programs and evaluated the Company’s policy for classifying expenditures as either improvements to concession assets or as maintenance expenses, considering

F-1

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the relevant accounting literature. We checked that the Company’s policy was applied to a sample of expenditures recognized as intangible assets during the year ended December 31, 2020, and to a sample of maintenance expenses recognized during the year ended December 31, 2020.

/s/ KPMG CÁRDENAS DOSAL S.C.

We have served as the Company’s auditor since 2016

KPMG CÁRDENAS DOSAL S.C
Guadalajara, Jalisco, México
April, 22, 2021

F-2

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Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Financial Position

As of December 31, 2018, 2019 and 2020

(In thousands of Mexican Pesos)

Assets

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents (Note 5) |  | Ps. |  | 6,151,457 |  |  | Ps. |  | 7,500,193 |  |  | Ps. |  | 14,444,549 |
Trade accounts receivable – net (Note 6) |  |  |  | 1,395,362 |  |  |  |  | 1,479,410 |  |  |  |  | 1,266,005 |
Recoverable taxes and tax payments in excess (Note 12.b) |  |  |  | 220,144 |  |  |  |  | 291,575 |  |  |  |  | 1,072,855 |
Other current assets |  |  |  | 73,244 |  |  |  |  | 96,306 |  |  |  |  | 62,700 |
Total current assets |  |  |  | 7,840,207 |  |  |  |  | 9,367,484 |  |  |  |  | 16,846,109 |
Advanced payments to suppliers |  |  |  | 226,548 |  |  |  |  | 241,231 |  |  |  |  | 464,675 |
Machinery, equipment and improvements on leased assets – net (Note 7) |  |  |  | 1,906,233 |  |  |  |  | 1,905,684 |  |  |  |  | 2,146,232 |
Improvements to concession assets – net (Note 8) |  |  |  | 10,982,860 |  |  |  |  | 12,063,383 |  |  |  |  | 13,763,840 |
Airport concessions – net (Note 9) |  |  |  | 11,412,118 |  |  |  |  | 10,821,596 |  |  |  |  | 10,649,220 |
Rights to use airport facilities – net (Note 10) |  |  |  | 930,296 |  |  |  |  | 873,598 |  |  |  |  | 816,898 |
Other acquired rights – net (Note 11) |  |  |  | 498,296 |  |  |  |  | 481,600 |  |  |  |  | 464,903 |
Derivative financial instruments (Note 15) |  |  |  | 136,457 |  |  |  |  | 4,686 |  |  |  |  | - |
Deferred income taxes – net (Note 12.e) |  |  |  | 5,472,279 |  |  |  |  | 5,648,944 |  |  |  |  | 5,966,363 |
Right-of-use assets |  |  |  | 46,696 |  |  |  |  | 34,628 |  |  |  |  | 23,626 |
Other assets – net |  |  |  | 98,512 |  |  |  |  | 134,970 |  |  |  |  | 219,307 |
Total |  | Ps. |  | 39,550,502 |  |  | Ps. |  | 41,577,804 |  |  | Ps. |  | 51,361,173 |

See accompanying notes to consolidated financial statements.

(Continued)

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Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Financial Position

As of December 31, 2018, 2019 and 2020

(In thousands of Mexican Pesos)

Liabilities and Equity

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Banks loans, debt securities and current portion of the debt (Note 16.a and b) |  | Ps. |  | - |  |  | Ps. |  | 2,200,000 |  |  | Ps. |  | 2,659,590 |
Concession taxes payable |  |  |  | 347,972 |  |  |  |  | 394,422 |  |  |  |  | 155,744 |
Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V. (Note 31.a) |  |  |  | 298,376 |  |  |  |  | 355,361 |  |  |  |  | 157,003 |
Accounts payable (Note 13) |  |  |  | 1,015,136 |  |  |  |  | 1,021,729 |  |  |  |  | 1,194,350 |
Advance payments from clients |  |  |  | 139,576 |  |  |  |  | 142,044 |  |  |  |  | 128,200 |
Taxes payable |  |  |  | 165,156 |  |  |  |  | 131,511 |  |  |  |  | 175,543 |
Liabilities for assets in lease (Note 14.b) |  |  |  | 14,510 |  |  |  |  | 12,577 |  |  |  |  | 10,717 |
Derivative financial instruments (Note 15) |  |  |  | — |  |  |  |  | 265,979 |  |  |  |  | 750,704 |
Income taxes payable (Note 12) |  |  |  | 191,797 |  |  |  |  | 152,943 |  |  |  |  | 30,824 |
Total current liabilities |  |  |  | 2,172,523 |  |  |  |  | 4,676,566 |  |  |  |  | 5,262,675 |
Deposits received in guarantee (Note 4) |  |  |  | 1,130,740 |  |  |  |  | 1,143,485 |  |  |  |  | 696,059 |
Liabilities for assets in lease (Note 14.b) |  |  |  | 33,689 |  |  |  |  | 24,615 |  |  |  |  | 15,476 |
Deferred income taxes (Note 12.e) |  |  |  | 784,931 |  |  |  |  | 681,909 |  |  |  |  | 655,479 |
Retirement employee benefits (Note 17) |  |  |  | 120,606 |  |  |  |  | 144,743 |  |  |  |  | 183,125 |
Long-term borrowings (Note 16.a) |  |  |  | 4,535,863 |  |  |  |  | 4,437,043 |  |  |  |  | 6,195,576 |
Debt securities (Note 16.b) |  |  |  | 9,000,000 |  |  |  |  | 9,800,000 |  |  |  |  | 15,500,000 |
Total long-term liabilities |  |  |  | 15,605,829 |  |  |  |  | 16,231,795 |  |  |  |  | 23,245,715 |
Total liabilities |  |  |  | 17,778,352 |  |  |  |  | 20,908,361 |  |  |  |  | 28,508,390 |
Equity (Note 18): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  |  |  | 7,777,576 |  |  |  |  | 6,185,082 |  |  |  |  | 6,185,082 |
Repurchased shares |  |  |  | (1,733,374 | ) |  |  |  | (1,733,374 | ) |  |  |  | (1,733,374 | )
Legal reserve |  |  |  | 1,345,709 |  |  |  |  | 1,592,551 |  |  |  |  | 1,592,551 |
Reserve for repurchase of shares |  |  |  | 2,983,374 |  |  |  |  | 3,283,374 |  |  |  |  | 3,283,374 |
Retained earnings |  |  |  | 9,552,071 |  |  |  |  | 9,940,035 |  |  |  |  | 11,908,891 |
Foreign currency translation reserve |  |  |  | 775,619 |  |  |  |  | 525,992 |  |  |  |  | 1,037,446 |
Remeasurements of employee benefits – Net of income tax |  |  |  | 8,010 |  |  |  |  | 6,606 |  |  |  |  | (10,052 | )
Reserve for financial instruments of cash flow hedges – Net of income tax |  |  |  | — |  |  |  |  | (172,094 | ) |  |  |  | (471,107 | )
Total equity attributable to controlling interest |  |  |  | 20,708,985 |  |  |  |  | 19,628,172 |  |  |  |  | 21,792,811 |
Non-controlling interest (Note 19) |  |  |  | 1,063,165 |  |  |  |  | 1,041,271 |  |  |  |  | 1,059,972 |
Total equity |  |  |  | 21,772,150 |  |  |  |  | 20,669,443 |  |  |  |  | 22,852,783 |
Total |  | Ps. |  | 39,550,502 |  |  | Ps. |  | 41,577,804 |  |  | Ps. |  | 51,361,173 |

See accompanying notes to consolidated financial statements.

(Concluded)

F-4

Table of Contents

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the years ended December 31, 2018, 2019 and 2020

(In thousands of Mexican Pesos, except per share amounts)

|  | 2018 |  |  | 2019 |  |  | 2020 |
Revenues (Note 20): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Aeronautical services |  | Ps. |  | 9,499,154 |  |  | Ps. |  | 10,547,720 |  |  | Ps. |  | 7,225,742 |
Non-aeronautical services |  |  |  | 3,183,532 |  |  |  |  | 3,771,500 |  |  |  |  | 2,448,053 |
Improvements to concession assets |  |  |  | 1,440,204 |  |  |  |  | 1,906,801 |  |  |  |  | 2,192,578 |
|  |  |  | 14,122,890 |  |  |  |  | 16,226,021 |  |  |  |  | 11,866,373 |
Operating costs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of services (Note 21) |  |  |  | 2,453,722 |  |  |  |  | 2,744,864 |  |  |  |  | 2,668,707 |
Technical assistance fees (Note 31) |  |  |  | 411,477 |  |  |  |  | 461,549 |  |  |  |  | 289,154 |
Concession taxes (Note 9) |  |  |  | 1,076,350 |  |  |  |  | 1,318,220 |  |  |  |  | 908,310 |
Depreciation and amortization (Note 22) |  |  |  | 1,569,637 |  |  |  |  | 1,776,137 |  |  |  |  | 2,000,361 |
Cost of improvements to concession assets (Note 24) |  |  |  | 1,440,204 |  |  |  |  | 1,906,801 |  |  |  |  | 2,192,578 |
Other (income) expense – net (Note 25) |  |  |  | (73,152 | ) |  |  |  | 1,212 |  |  |  |  | (12,726 | )
|  |  |  | 6,878,238 |  |  |  |  | 8,208,783 |  |  |  |  | 8,046,384 |
Income from operations |  |  |  | 7,244,652 |  |  |  |  | 8,017,238 |  |  |  |  | 3,819,989 |
Finance cost – net (Note 26): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance income |  |  |  | 576,694 |  |  |  |  | 665,829 |  |  |  |  | 410,512 |
Finance cost |  |  |  | (1,012,411 | ) |  |  |  | (1,425,746 | ) |  |  |  | (1,514,250 | )
Exchange gain (loss) – net |  |  |  | 199,684 |  |  |  |  | 88,785 |  |  |  |  | (330,484 | )
|  |  |  | (236,033 | ) |  |  |  | (671,132 | ) |  |  |  | (1,434,222 | )
Share of (loss) profit of associate |  |  |  | (947 | ) |  |  |  | 79 |  |  |  |  | 3 |
Income before income taxes |  |  |  | 7,007,672 |  |  |  |  | 7,346,185 |  |  |  |  | 2,385,770 |
Income tax (Note 12.c): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  |  | 2,117,491 |  |  |  |  | 2,055,783 |  |  |  |  | 722,474 |
Deferred |  |  |  | (248,450 | ) |  |  |  | (164,340 | ) |  |  |  | (255,407 | )
|  |  |  | 1,869,041 |  |  |  |  | 1,891,443 |  |  |  |  | 467,067 |
Profit for the year |  |  |  | 5,138,631 |  |  |  |  | 5,454,742 |  |  |  |  | 1,918,703 |
Other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Items that are or may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations |  |  |  | (103,569 | ) |  |  |  | (269,440 | ) |  |  |  | 580,308 |
Cash flow hedges, effective portion of changes in fair value, net of income tax |  |  |  | - |  |  |  |  | (172,094 | ) |  |  |  | (299,013 | )
Items that will not be reclassified to profit or loss Remeasurements of employee benefit – net of income tax |  |  |  | (161 | ) |  |  |  | (1,404 | ) |  |  |  | (16,658 | )
Total comprehensive income for the year |  | Ps. |  | 5,034,901 |  |  | Ps. |  | 5,011,804 |  |  | Ps. |  | 2,183,340 |
Profit for the year attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling interest |  | Ps. |  | 5,037,368 |  |  | Ps. |  | 5,360,152 |  |  | Ps. |  | 1,968,856 |
Non-controlling interest |  |  |  | 101,263 |  |  |  |  | 94,590 |  |  |  |  | (50,153 | )
|  | Ps. |  | 5,138,631 |  |  | Ps. |  | 5,454,742 |  |  | Ps. |  | 1,918,703 |
Total comprehensive income for the year attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling interest |  | Ps. |  | 4,936,526 |  |  | Ps. |  | 4,937,027 |  |  | Ps. |  | 2,164,639 |
Non-controlling interest |  |  |  | 98,375 |  |  |  |  | 74,777 |  |  |  |  | 18,701 |
|  | Ps. |  | 5,034,901 |  |  | Ps. |  | 5,011,804 |  |  | Ps. |  | 2,183,340 |
Weighted average number of common shares outstanding |  |  |  | 525,575,547 |  |  |  |  | 525,575,547 |  |  |  |  | 525,575,547 |
Basic and diluted earnings per share (in Mexican Pesos, Note 3.s) |  | Ps. |  | 9.5844 |  |  | Ps. |  | 10.1986 |  |  | Ps. |  | 3.7461 |

(Continued)

See accompanying notes to consolidated financial statements.

F-5

Table of Contents

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Changes in Equity

For the years ended December 31, 2018, 2019 and 2020

(In thousands of Mexican Pesos)

|  | Number of Shares |  |  | Common stock |  |  | Repurchased shares |  |  | Legal reserve |  |  | Reserve for repurchase of shares |  |  | Retained earnings |  |  | Foreign currency translation reserve |  |  | Remeasurements of employee benefits – Net of income tax |  |  | Reserve for financial instruments of cash flow hedges – Net of income tax |  |  | Total equity attributable to controlling interest |  |  | Non-controlling interest |  |  | Total equity |
Balances as of January 1, 2018 |  |  | 561,000,000 |  |  | Ps. |  | 9,028,446 |  |  | Ps. |  | (1,733,374 | ) |  | Ps. |  | 1,119,029 |  |  | Ps. |  | 2,728,374 |  |  | Ps. |  | 9,001,269 |  |  | Ps. |  | 876,300 |  |  | Ps. |  | 8,171 |  |  | Ps. |  | — |  |  | Ps. |  | 21,028,215 |  |  | Ps. |  | 1,048,554 |  |  | Ps. |  | 22,076,769 |
Dividends declared non-controlling interest (Note 19) |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (83,764 | ) |  |  |  | (83,764 | )
Transfer of earnings to legal reserve (Note 18.g) |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 226,680 |  |  |  |  | — |  |  |  |  | (226,680 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |
Dividends paid, Ps. 7.62 pesos per share (Note 18.b) |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (4,004,886 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (4,004,886 | ) |  |  |  | — |  |  |  |  | (4,004,886 | )
Capital distribution Ps. 2.38 pesos per share (Note 18.c) |  |  | — |  |  |  |  | (1,250,870 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (1,250,870 | ) |  |  |  | — |  |  |  |  | (1,250,870 | )
Reserve for repurchase of shares (Note 18.b) |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 255,000 |  |  |  |  | (255,000 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Profit of the year |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 5,037,368 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 5,037,368 |  |  |  |  | 101,263 |  |  |  |  | 5,138,631 |
Other comprehensive income for the year |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (100,681 | ) |  |  |  | (161 | ) |  |  |  | — |  |  |  |  | (100,842 | ) |  |  |  | (2,888 | ) |  |  |  | (103,730 | )
Total comprehensive income for the year |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 5,037,368 |  |  |  |  | (100,681 | ) |  |  |  | (161 | ) |  |  |  | — |  |  |  |  | 4,936,526 |  |  |  |  | 98,375 |  |  |  |  | 5,034,901 |
Balances as of December 31, 2018 |  |  | 561,000,000 |  |  |  |  | 7,777,576 |  |  |  |  | (1,733,374 | ) |  |  |  | 1,345,709 |  |  |  |  | 2,983,374 |  |  |  |  | 9,552,071 |  |  |  |  | 775,619 |  |  |  |  | 8,010 |  |  |  |  | — |  |  |  |  | 20,708,985 |  |  |  |  | 1,063,165 |  |  |  |  | 21,772,150 |
Dividends declared non-controlling interest (Note 19) |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (96,671 | ) |  |  |  | (96,671 | )
Transfer of earnings to legal reserve (Note 18.g) |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 246,842 |  |  |  |  | — |  |  |  |  | (246,842 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |
Dividends paid, Ps. 8.42 pesos per share (Note 18.d) |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (4,425,346 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (4,425,346 | ) |  |  |  | — |  |  |  |  | (4,425,346 | )
Capital distribution Ps. 3.03 pesos per share (Note 18.e) |  |  | — |  |  |  |  | (1,592,494 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (1,592,494 | ) |  |  |  | — |  |  |  |  | (1,592,494 | )
Reserve for repurchase of shares (Note 18.d) |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 300,000 |  |  |  |  | (300,000 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Profit of the year |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 5,360,152 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 5,360,152 |  |  |  |  | 94,590 |  |  |  |  | 5,454,742 |
Other comprehensive income for the year |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (249,627 | ) |  |  |  | (1,404 | ) |  |  |  | (172,094 | ) |  |  |  | (423,125 | ) |  |  |  | (19,813 | ) |  |  |  | (442,938 | )
Total comprehensive income for the year |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 5,360,152 |  |  |  |  | (249,627 | ) |  |  |  | (1,404 | ) |  |  |  | (172,094 | ) |  |  |  | 4,937,027 |  |  |  |  | 74,777 |  |  |  |  | 5,011,804 |
Balances as of December 31, 2019 |  |  | 561,000,000 |  |  | Ps. |  | 6,185,082 |  |  | Ps. |  | (1,733,374 | ) |  | Ps. |  | 1,592,551 |  |  | Ps. |  | 3,283,374 |  |  | Ps. |  | 9,940,035 |  |  | Ps. |  | 525,992 |  |  | Ps. |  | 6,606 |  |  | Ps. |  | (172,094 | ) |  | Ps. |  | 19,628,172 |  |  | Ps. |  | 1,041,271 |  |  | Ps. |  | 20,669,443 |

(Continued)

See accompanying notes to consolidated financial statements.

F-6

Table of Contents

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Changes in Equity

For the years ended December 31, 2018, 2019 and 2020

(In thousands of Mexican Pesos)

|  | Number of Shares |  |  | Common stock |  |  | Repurchased shares |  |  | Legal reserve |  |  | Reserve for repurchase of shares |  |  | Retained earnings |  |  | Foreign currency translation reserve |  |  | Remeasurements of employee benefits – Net of income tax |  |  | Reserve for financial instruments of cash flow hedges – Net of income tax |  |  | Total equity attributable to controlling interest |  |  | Non-controlling interest |  |  | Total equity |
Balances as of January 1, 2020 |  |  | 561,000,000 |  |  | Ps. |  | 6,185,082 |  |  | Ps. |  | (1,733,374 | ) |  | Ps. |  | 1,592,551 |  |  | Ps. |  | 3,283,374 |  |  | Ps. |  | 9,940,035 |  |  | Ps. |  | 525,992 |  |  | Ps. |  | 6,606 |  |  | Ps. |  | (172,094 | ) |  | Ps. |  | 19,628,172 |  |  | Ps. |  | 1,041,271 |  |  | Ps. |  | 20,669,443 |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Profit of the year |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,968,856 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,968,856 |  |  |  |  | (50,153 | ) |  |  |  | 1,918,703 |
Other comprehensive income for the year |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 511,454 |  |  |  |  | (16,658 | ) |  |  |  | (299,013 | ) |  |  |  | 195,783 |  |  |  |  | 68,854 |  |  |  |  | 264,637 |
Total comprehensive income for the year |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,968,856 |  |  |  |  | 511,454 |  |  |  |  | (16,658 | ) |  |  |  | (299,013 | ) |  |  |  | 2,164,639 |  |  |  |  | 18,701 |  |  |  |  | 2,183,340 |
Balances as of December 31, 2020 |  |  | 561,000,000 |  |  | Ps. |  | 6,185,082 |  |  | Ps. |  | (1,733,374 | ) |  | Ps. |  | 1,592,551 |  |  | Ps. |  | 3,283,374 |  |  | Ps. |  | 11,908,891 |  |  | Ps. |  | 1,037,446 |  |  | Ps. |  | (10,052 | ) |  | Ps. |  | (471,107 | ) |  | Ps. |  | 21,792,811 |  |  | Ps. |  | 1,059,972 |  |  | Ps. |  | 22,852,783 |

(Concluded)

See accompanying notes to consolidated financial statements.

F-7

Table of Contents

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Cash Flows

For the years ended December 31, 2018, 2019 and 2020

(In thousands of Mexican Pesos)

|  | 2018 |  |  | 2019 |  |  | 2020 |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Profit for the year |  | Ps. |  | 5,138,631 |  |  | Ps. |  | 5,454,742 |  |  | Ps. |  | 1,918,703 |
Adjustments for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee benefits |  |  |  | 7,465 |  |  |  |  | 22,733 |  |  |  |  | 31,382 |
Allowance expected credit loss |  |  |  | (15,131 | ) |  |  |  | 5,299 |  |  |  |  | 86,596 |
Depreciation and amortization |  |  |  | 1,569,637 |  |  |  |  | 1,776,137 |  |  |  |  | 2,000,361 |
Loss (gain) on sale of machinery, equipment and improvements to leased assets |  |  |  | 5,554 |  |  |  |  | 586 |  |  |  |  | (14,375 | )
Share of loss (profit) of associate |  |  |  | 947 |  |  |  |  | (79 | ) |  |  |  | (3 | )
Net (gain) loss on derivative financial instruments |  |  |  | (29,643 | ) |  |  |  | 149,770 |  |  |  |  | 43,778 |
Interest expense for financing activity |  |  |  | 896,165 |  |  |  |  | 1,142,086 |  |  |  |  | 1,388,072 |
Unrealized exchange (gain) loss |  |  |  | 10,827 |  |  |  |  | (111,544 | ) |  |  |  | 57,780 |
Provisions |  |  |  | (2,650 | ) |  |  |  | 6,930 |  |  |  |  | 428 |
Income tax expense |  |  |  | 1,869,041 |  |  |  |  | 1,891,443 |  |  |  |  | 467,067 |
|  |  |  | 9,450,843 |  |  |  |  | 10,338,103 |  |  |  |  | 5,979,789 |
Changes in: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade accounts receivable |  |  |  | (383,361 | ) |  |  |  | (101,537 | ) |  |  |  | 164,258 |
Recoverable income tax and other current assets |  |  |  | 93,827 |  |  |  |  | (28,591 | ) |  |  |  | (814,271 | )
Concession taxes payable |  |  |  | 43,672 |  |  |  |  | 57,378 |  |  |  |  | (253,633 | )
Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V. |  |  |  | 45,754 |  |  |  |  | 56,985 |  |  |  |  | (198,358 | )
Accounts payable |  |  |  | 114,384 |  |  |  |  | 11,642 |  |  |  |  | (85,718 | )
Taxes payable |  |  |  | 90,811 |  |  |  |  | (33,539 | ) |  |  |  | 43,252 |
Deposits received in guarantee |  |  |  | 43,121 |  |  |  |  | 26,673 |  |  |  |  | (456,787 | )
Cash generated by operating activities |  |  |  | 9,499,051 |  |  |  |  | 10,327,114 |  |  |  |  | 4,378,532 |
Income taxes paid |  |  |  | (2,263,432 | ) |  |  |  | (2,163,057 | ) |  |  |  | (811,965 | )
Net cash provided by operating activities |  |  |  | 7,235,619 |  |  |  |  | 8,164,057 |  |  |  |  | 3,566,567 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchases of machinery, equipment, improvements on leased assets, improvements to concession assets and advance payments to suppliers |  |  |  | (2,501,656 | ) |  |  |  | (2,478,988 | ) |  |  |  | (3,160,111 | )
Proceeds from sales of machinery and equipment |  |  |  | 6,604 |  |  |  |  | 4,186 |  |  |  |  | 6,248 |
Equity reimbursement from associate |  |  |  | 10,034 |  |  |  |  | — |  |  |  |  | — |
Cash flows by concession right |  |  |  | (50,354 | ) |  |  |  | (97,628 | ) |  |  |  | — |
Other investment activities |  |  |  | (15,039 | ) |  |  |  | (13,665 | ) |  |  |  | (63,828 | )
Net cash used in investing activities |  |  |  | (2,550,411 | ) |  |  |  | (2,586,095 | ) |  |  |  | (3,217,691 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Dividends declared and paid |  |  |  | (4,004,886 | ) |  |  |  | (4,425,346 | ) |  |  |  | — |
Dividends paid to non-controlling interest |  |  |  | (274,685 | ) |  |  |  | (146,715 | ) |  |  |  | — |
Capital distribution |  |  |  | (1,250,870 | ) |  |  |  | (1,592,494 | ) |  |  |  | — |
Proceeds from issuance of debt securities |  |  |  | - |  |  |  |  | 3,000,000 |  |  |  |  | 7,200,000 |
Proceeds from bank loans |  |  |  | 534,807 |  |  |  |  | 96,308 |  |  |  |  | 2,709,125 |
Repayments on bank loans |  |  |  | (252,095 | ) |  |  |  | - |  |  |  |  | — |
Payment of debt securities |  |  |  |  |  |  |  |  |  |  |  |  |  | (2,200,000 | )
Interest paid on leasing |  |  |  | (3,733 | ) |  |  |  | (3,703 | ) |  |  |  | (2,582 | )
Payment of obligations for leases |  |  |  | (11,504 | ) |  |  |  | (16,261 | ) |  |  |  | (12,977 | )
Interest paid on financial loans |  |  |  | (903,728 | ) |  |  |  | (1,143,318 | ) |  |  |  | (1,405,139 | )
Net cash (used in) generated by financing activities |  |  |  | (6,166,694 | ) |  |  |  | (4,231,529 | ) |  |  |  | 6,288,427 |
Effects of exchange rate changes on cash held: |  |  |  | (97,200 | ) |  |  |  | 2,303 |  |  |  |  | 307,053 |
(Decrease) increase in cash and cash equivalents |  |  |  | (1,578,686 | ) |  |  |  | 1,348,736 |  |  |  |  | 6,944,356 |
Cash and cash equivalents at beginning of year |  |  |  | 7,730,143 |  |  |  |  | 6,151,457 |  |  |  |  | 7,500,193 |
Cash and cash equivalents at the end of year |  | Ps. |  | 6,151,457 |  |  | Ps. |  | 7,500,193 |  |  | Ps. |  | 14,444,549 |
Non-cash investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchases of machinery, equipment, improvements on leased assets and improvements to concession assets |  | Ps. |  | 318,519 |  |  | Ps. |  | 286,409 |  |  | Ps. |  | 540,854 |

See accompanying notes to consolidated financial statements.

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Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Notes to Consolidated Financial Statements

For the years ended December 31, 2018, 2019 and 2020

(In thousands of Mexican Pesos)

1. | Activities of the Company and significant events

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and subsidiaries (the “Company” or “GAP”) was incorporated in May 1998 as a state-owned entity to manage, operate and develop 12 airport facilities, mainly in Mexico’s Pacific region. The airports are located in the following cities: Guadalajara, Puerto Vallarta, Tijuana, San José del Cabo, Guanajuato (Bajío), Hermosillo, Mexicali, Los Mochis, La Paz, Manzanillo, Morelia and Aguascalientes. Moreover the Company operates, maintains and utilizes two airports in Jamaica, starting in April 2015, the Sangster International Airport in Montego Bay, Jamaica by the subsidiary MBJ Airports Limited (MBJA), and on October 2019 the Norman Manley International Airport (NMIA) by the subsidiary PAC Kingston Airport Limited (PACKAL). The Company’s principal address is Mariano Otero Avenue 1249 B, six floor, Rinconada del Bosque, zip code 44530, Guadalajara, Jalisco, Mexico.

| a. | Activities

The Company began operations on November 1, 1998. Prior to that date, the Company’s activities were carried out by Aeropuertos y Servicios Auxiliares (ASA), a Mexican Governmental agency, which was responsible for the operation of all public airports in Mexico.

In June 1998, the subsidiaries of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. were granted concessions by the Ministry of Communications and Transportation (SCT) to manage, operate and develop each of the Pacific Group’s 12 airports and benefit from the use of the airport facilities, for a 50-year term beginning November 1, 1998 (The Concession or Concessions). The cost of the concessions, which totaled Ps.15,938,359, was determined by the Mexican Government in August 1999, based upon the price paid by Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V. (AMP, the strategic shareholder of the Company) for its interests in GAP. On August 20, 1999, GAP entered into a Liabilities Assumption Agreement with each of its subsidiaries, whereby it assumed the liabilities incurred by each subsidiary derived from obtaining the concession. Such liabilities were capitalized by GAP as equity in favor of the Mexican Government on the same date.

The term of the concession is 50 years as of November 1, 1998 and may be extended by the SCT on one or more occasions for up to 50 additional years under certain circumstances. Beginning on November 1, 1998, the Company is required to pay an annual tax to the Mexican Government, through the SCT, for use of the public property, equivalent to 5% of each concessionaire’s annual gross revenues, according to the concession terms and the Mexican Federal Duties Law.

Title to all of the long-term fixed assets within the airports is retained by the Mexican Government. Accordingly, upon expiration of the term of the concessions granted to the Company, the assets, including all of the improvements made to the airport facilities during the term of the concessions, shall automatically revert to the Mexican Government. Additionally, ASA and other agencies of the Mexican Government maintain the rights to provide certain services such as air traffic control, fuel supply and immigration control.

On February 24, 2006, the Company made an initial public offering of its Series B shares, under which the Mexican Government, which held 85% of the voting common stock of the Company sold its 100% shares participation, both in the United States of America, via the New York Stock Exchange (NYSE) and in Mexico, via the Mexican Stock Exchange (BMV). Consequently, as of this date, the Company became a public entity in both Mexico and in the United States of America and is required to meet various legal obligations and regulations for public entities applicable in each country.

On April 20, 2015, the Company carried out a transaction for the acquisition of 100% of the shares of the Spanish company Desarrollo de Concesiones Aeroportuarias, S.L. (DCA). The transaction was fully paid on the same date. The acquisition was the result of a private and confidential bidding process among various participants, which concluded in favor of GAP. The total amount of the transaction was USD$192 million.

DCA has a 74.5% stake in MBJA, the entity that operates Sangster International airport in Montego Bay in Jamaica. MBJA holds the concession to operate, maintain and utilize the airport for a period of 30 years, beginning April 2, 2003. Vantage Airport Group Limited (Vantage) owns the remaining 25.5% stake in MBJA.

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DCA also has a 14.77% stake in SCL Terminal Aéreo Santiago, S.A. (SCL), the operator of the int ernational terminal in Santiago, Chile until September 30, 2015. On September 30, 2015, the con cession to operate the Santiago de Chile airport expired, consequently, those assets were immediately returned to the Chilean government and the new operator without any significant incidents. Though SCL will no longer have operations, SCL must remain in effect for an additional year after the transfer. After that first year, SCL will remain in effect until its dissolution in accordance with tax regulations in Chile.

On October 10, 2018, the Company through its subsidiary PACKAL, entered into a concession agreement with Airport Authority of Jamaica (AAJ), with which the authority guaranteed to PACKAL the right to rehabilitate, develop, operate and maintain NMIA for a period of 25 years with a possible extension of 5 years, as of October 10, 2019. In accordance with the terms of the concession agreement, the Company paid USD $7.1 million (USD $2.1 million to the International Finance Corporation (IFC) and USD $5.0 million to the AAJ). Once the operation begins, PACKAL is obliged to pay the AAJ a concession right of 62.01% of the total aeronautical and commercial revenues. All long-lived assets located in the NMIA are owned by AAJ. Upon the expiration of the term of the concession’s agreement granted to the Company, the assets, including all the improvements made to the airport facilities during the term of the concessions, will automatically revert in favor of AAJ.

| b. | Significant events

| – | On February 13, 2020, the Company issued 30 million long-term debt securities for a total Ps. 3,000,000 which are unsecured and payment of principal at maturity corresponding to the tranche of GAP 20. Interest will be payable every 28 days at a variable rate of TIIE-28 plus 17 basis points, and the principal payment will be made upon maturity, on February 6, 2025. Proceeds from the issuance were allocated for principal payment of the maturity of the issuance for GAP 15 and to Mexico´s capital investment.

| – | On February 14, 2020, the Company made the payment of the maturity of the issuance for GAP 15, equivalent to 22 million long-term debt securities for a total Ps. 2,200,000.

| – | On March 11, 2020, the World Health Organization (WHO) declared that the COVID-19 outbreak was a pandemic, which caused a gradual cancellation of international flights from Canada, United States and Europe, this has caused significant drop in passenger flow in Mexico and Jamaica. During the period from March to December 2020, the demand for domestic and international passenger decreased, causing a slowdown in passenger traffic at the Company's airports, causing an adverse effect in operations, income and results for this year. As mentioned in following paragraphs the Company took measures to cost control plan, negotiations with clients, suppliers, financial institutions and Aeronautical Authorities, in order to maintain liquidity and guarantee business continuity. Likewise, the Company monitored the indicators and tests for long-term asset impairment, expected credit losses and recovery of deferred tax assets, concluding that there were no significant impacts on its consolidated financial statements.

The Company measured the risk that the portfolio represents with airlines and commercial clients in terms of liquidity. During 2020 the Company provided support to airlines and commercial clients. An incentive program was implemented with the airlines in accordance with the reactivation of the routes and frequencies that were in place prior to the pandemic. In the case of commercial contracts, the Company granted discounts on the guaranteed minimum rents in accordance with the percentage decrease in passenger traffic at each airport and payment deferral agreements were signed.

In 2020, the Company generated a positive cash flow in business activities operation, although significantly lower than 2019 cash flow. The Company reported at the end of 2020, the balance of cash and cash equivalents as of December 31, 2020 was Ps. 14,444,549 (92.6% higher than the balance of 2019).

| – | On April 13, 2020, the Company entered into loan agreements with Scotiabank Inverlat, S.A. (Scotiabank) for Ps. 1,000,000, with a 15-month term and principal payment upon maturity, paying a variable interest rate, 28-day TIIE plus 100 basis points, resources were allocated for corporate purposes.

| – | On May 15, 2020, the Company entered into loan agreements BBVA Bancomer, S.A. (BBVA) for Ps. 1,000,000, with a 24-month term and principal payment upon maturity, paying a fixed annual interest rate of 6.99%, resources were allocated for corporate purposes.

| – | On June 25, 2020, the Company issued 42 million long-term debt securities for a total Ps. 4,200,000, which are unsecured and payment of principal at maturity, under the modality of communicating vessels: i) Ps. 602,000 of these bonds at a variable rate of TIIE-28 plus 85 basis points, payment of principal on June 22, 2023 and ii) Ps. 3,598,000 that will pay interest every 182 days at a fixed annual rate of 8.14%, with payment of principal on June 17, 2027. The resources will be allocated to fulfilling investments in Mexico for 2020 and part of 2021.

| – | In Ordinary General Shareholders' Meeting held on July 1, 2020, was approved the cancellation of the remainder of the repurchase fund for Ps. 1,550,000 which was approved at the Ordinary General Shareholders' Meeting held on April 23, 2019 and simultaneously the stockholders approved a maximum amount of Ps. 1,550,000 for the reserve for repurchase of shares to be executed in the next twelve-month period, in case that this will be determinate convenient or necessary by the management of the Company.

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| – | On September 3, 2020, the Company entered into loan agreements with The Bank of Nova Scotia Jamaica Limited and The Bank of Nova Scotia for USD$60.0 million, of which USD$30.0 million were disposed. The loan has a term of 5 years with an optional extension of 2 years for up to USD$ 54.0 million, with a monthly interest rate of Libor plus 310 basis points and payment of 10% of the principal in month 54, at 90% maturity.

| – | On October 19, 2020, the Company signed agreed with Scotiabank the refinancing of the loan maturing on January 19, 2021 for USD$95.5 million. The new loan has a term of 36 months from its disposition, with interest payable monthly at a fixed annual rate of 2.063% and payment of the principal upon maturity.

| – | On October 22, 2020, the Company signed agreed with BBVA the refinancing of the loan maturing on February 2, 2021 for USD$95.5 million. The new loan has a term of 36 months from its disposal, with interest payable on a monthly basis at a fixed annual rate of 1.97% and payment of the principal upon maturity.

| – | On November 27, 2020, the Company concluded the Extraordinary Review of the Master Development Programs (MDP) for the airports of Mexico for the period 2020-2024. In August 2020, the Company presented to the Aeronautical Authority a proposal to adjust the Master Development Programs, postponing investments for approximately 20 months, that is, some investments that were scheduled to conclude in 2024 will now end in 2026 (Note 27).

2. | Basis of presentation

| a. | Statement of Compliance – These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), its amendments and interpretations issued by the International Accounting Standards Board (IASB) issued and outstanding or issued and adopted early on the date of preparation of these consolidated financial statements.

| b. | Translation into English – The accompanying consolidated financial statements have been translated from Spanish into English for use outside of Mexico.

| c. | Basis of preparation – The consolidated financial statements have been prepared on the historical cost basis except for assets and liabilities assumed in the business combinations on the date of purchase, which were recorded at fair value, derivative financial instruments and non-derivative financial instruments with changes in profit and loss and the liabilities for defined benefits are recognized at present value.

| – | Historical cost – Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

| – | Fair value – Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability on the measurement date. When there are no market and/or market participants willing to create a market, IFRS establishes a fair value hierarchy that gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements).

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The levels of fair value hierarchy are as follows:

| • | Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity can access on the measurement date;

| • | Level 2 inputs are other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

| • | Level 3 inputs are unobservable inputs for the asset or liability.

| d. | Consolidation of financial statements – The consolidated financial statements include those of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and its subsidiaries in which the Company has control, for the years ended December 31, 2018, 2019 and 2020. The consolidated subsidiaries are as follows:

Company |  | % participation |  |  | Location |  | Activity
Aeropuerto de Aguascalientes, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto del Bajío, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de Guadalajara, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de Hermosillo, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de La Paz, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de Los Mochis, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de Manzanillo, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de Mexicali, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de Morelia, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de Puerto Vallarta, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de San José del Cabo, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Aeropuerto de Tijuana, S.A. de C.V. |  |  | 99.99 | % |  | Mexico |  | Operation of airport
Corporativo de Servicios Aeroportuarios, S.A. de C.V. (CORSA) |  |  | 99.99 | % |  | Mexico |  | Provides personnel services
Fundación Grupo Aeroportuario del Pacífico, A.C. (Fundación GAP) |  |  | 99.99 | % |  | Mexico |  | Non-profit Organization dedicated to social orientation and infrastructure support of educational institutions
Puerta Cero Parking, S.A. de C.V. (PCP) |  |  | 99.99 | % |  | Mexico |  | Operation of parking lot
Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V. (SIAP) |  |  | 99.99 | % |  | Mexico |  | Administrative services
Aerocomercializadora del Pacifico, S.A. de C.V. (ADP) |  |  | 99.99 | % |  | Mexico |  | Operation of hotel infrastructure and other commercial services
Desarrollo de Concesiones Aeroportuarias, S.L. (DCA) |  |  | 100 | % |  | Spain |  | Management administration, maintenance, servicing of all types of infrastructure
MBJ Airports Limited (MBJA) |  |  | 74.50 | % |  | Jamaica |  | Operation of airport
PAC Kingston Airport Limited (PACKAL) |  |  | 100 | % |  | Jamaica |  | Operation of airport
GA del Pacífico es do Brasil, LTDA |  |  | 99.99 | % |  | Brazil |  | No operation

Control is achieved when the Company:

| • | Has power over the investee;

| • | Is exposed, or has rights, to variable returns from its involvement with the investee; and

| • | Has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

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Profit and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the consolidated financial statements of subsidiaries to bring their accounting policies into line with the Company's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Company are eliminated in full on consolidation. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

| e. | Application of new and revised International Financing Reporting Standards.

Modification of International Financing Reporting Standards (“IFRSs” or “IAS”) and new interpretations that are mandatorily effective from 2020

The Company has initially adopted Definition of a Business (amendments to IFRS 3) and Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) from January 1, 2020. A number of other new standards and amendments are also effective from January 1, 2020 however they do not have a material effect on the Company’s consolidated financial statements.

In the current year, the Company has applied the amendments and interpretations to IFRS mentioned previously issued by the Committee that are effective for the reporting period beginning on January 1, 2020. However, the adoption has not had any material impact on the disclosures or amounts in these consolidated financial statements.

| f. | Functional and presentation currency – The consolidated financial statements and notes as of December 31, 2018, 2019 and 2020, and for the years then ended, are prepared in pesos, which is both, the functional and reporting currency of the Company and are presented in thousands of pesos.

The assets and liabilities of foreign operations, including the fair value of assets arising on acquisition, are translated at the exchange rates as of year–end for each period.

Income and expenses of foreign operations are translated at the average exchange rate for the period of transactions. During 2018, 2019 and 2020, were as follows:

Currency |  | 2018 |  |  | 2019 |  |  | 2020 |
Pesos / USD |  | Ps. |  | 19.2357 |  |  | Ps. |  | 19.2616 |  |  | Ps. |  | 21.4886 |
USD / Euros |  |  | USD$1.1815 |  |  |  | USD$1.1196 |  |  |  | USD$1.1413 |

| g. | Use of estimates and critical judgments in preparing the consolidated financial statements – The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of accounting policies relating to the reported amounts of assets, liabilities and income and expenses of the relevant period. Actual results could differ from these estimates. Information on the uncertainty in the use of assumptions and estimates that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

| – | Expected credit loss (Note 6)

| – | Definition of useful lives and depreciation and amortization periods (Notes 3.c. and 3.d.)

| – | Capitalization of improvements to concession assets (Notes 3.d and 8)

| – | Cash flow hedges (Notes 3.h and 15)

| – | Identification and classification of leases (Note 13)

| – | Probability of recovery of deferred income tax from tax loss carryforwards (Note 12.g)

| – | Assumptions used to determine liabilities for retirement benefits (Note 17)

| – | Contingent liabilities (Note 28)

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In addition to the estimates, the Company makes critical judgments in applying its accounting policies, which have a material effect on the amounts recognized in the consolidated financial statements. Management believes that the decisions made are the most reasonable based on the information available, on the judgments made and the way it manages the operation of the Company. Critical judgments relate to the following:

| - | Accounting for the Concession – Management believes it has carried out a comprehensive implementation of the standards applicable to the accounting treatment of its concessions in Mexico and Jamaica and it determined that, among others, International Financial Reporting Interpretation (IFRIC) 12 Service Concession Arrangements is applicable to the Company. The Company treats its investments related to improvements and upgrades to be performed in connection with the MDP for Mexican and Jamaican Entities under the intangible asset model established by IFRIC 12 and does not recognize a provision for maintenance, as all investments required by the MDP, regardless of their nature, directly increase the Maximum Tariff per traffic unit (MT). Accordingly, all amounts invested under the MDP have a direct correlation to the amount of fees the Company will be able to charge each passenger or cargo service provider, and thus, a direct correlation to the amount of revenues the Company will be able to generate. As result, management defines all expenditures associated with investments required by the MDP as revenue generating activities given that they ultimately provide future benefits, whereby subsequent improvements and upgrades made ​​to the concession are recognized as intangible assets based on the principles of IFRIC 12. Additionally, compliance with the committed investments per the MDP is mandatory, as well as the fulfillment of the MT and therefore, in case of default in any of these obligations (MDP or MT), the Company could be subject to sanctions and even its concession could be revoked. To determine the amortization period of the intangible associated with the improvements and upgrades made to comply with the MDP, the Company focuses on the period in which it will generate future economic benefits or the concession term, whichever is less.

| h. | Income from operations – This line item is comprised of total revenues less the operating costs, including other income, net, Note 25. Although the presentation of income from operations is not required by nor is it defined under IFRS, it is included in the consolidated statements of profit or loss and other comprehensive income because management believes it represents a useful and reliable measure of the economic and financial performance of the Company.

| i. | Comprehensive income – Comprehensive income comprised the net income of the period, plus other comprehensive income (loss) items of the same period. For the years ended December 31, 2018, 2019 and 2020, other comprehensive income is represented by the effects of translation of foreign subsidiaries, actuarial remeasurements and the reserve of cash flow hedges of financial instruments. At the moment the assets and liabilities giving rise to other comprehensive income are realized, the latter are recognized in the income statement as long as permitted under IFRS.

| j. | Classification of cost and expenses – Costs and expenses presented in the consolidated statements of profit or loss and other comprehensive income were classified according to their nature.

3. | Significant accounting policies

The consolidated financial statements comply with the IFRS as issued by the IASB. Its preparation requires management to make certain estimates and use certain assumptions that affect certain items of the consolidated financial statements and their related disclosures required therein. However, actual results could differ from those estimates. The Company's management, upon applying professional judgment, considers that estimates and assumptions used were adequate under the circumstances (Note 2.g). The significant accounting policies of the Company are as follows:

| a. | Financial instruments

i. Recognition and initial measurement

All other financial assets and financial liabilities are initially recognized when the Company becomes party to the contractual provisions of the instrument. Trade account receivables are initially recognized when they are originated.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at Fair Value Through Profit or Loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price. A commercial debtor without a significant financing component is initially measured at the transaction price.

ii. Classification and subsequent measurement financial assets and liabilities.

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Financial assets –

All regular way purchases or regular incomes of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

All recognized financial assets are measured subsequently in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.

Financial asset that meets the following conditions is subsequently measured at amortized cost:

| • | the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

| • | the contractual terms of the financial asset give rise to specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments that meet the following conditions are measured subsequently at Fair Value Trough Other Comprehensive Income (FVTOCI):

| • | the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and

| • | the contractual terms of the financial asset give rise to specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

By default, all other financial assets are measured subsequently at fair value through profit or loss. This election is made on an investment-by-investment basis.

| – | Financial assets – Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset a level of trade account receivables because this best reflects the way the business is managed and information is provided to management. The information considered includes:

| • | the stated policies and objectives for the trade account receivables and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

| • | how the performance of the trade account is evaluated and reported to key management personnel;

| • | the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

| • | how managers of the business are compensated; and

| • | the frequency, volume and timing of the sale of financial assets in prior periods, the reasons for such sales and the expectations regarding future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose and is consistent with the Company continuing recognition of the assets.

Financial assets are held for trading and are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

| - | Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative costs), as well as profit margin.

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In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument.

This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

| • | contingent events that would change the amount or timing of cash flows;

| • | terms that may adjust the contractual coupon rate, including variable-rate features;

| • | prepayment and extension features; and

| • | terms that limit the Group’s claim to cash flows from specified assets (e.g., non-recourse features).

A prepayment feature is consistent with the sole payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or Premium to its contractual per amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

| - | Subsequent measurement and gains and losses

Amortized cost and effective interest method

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period.

For financial assets other than purchased or originated credit-impaired financial assets, the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortized cost of the debt instrument on initial recognition.

The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortized cost of a financial asset before adjusting for any loss provision.

Interest income is recognized using the effective interest method for debt instruments measured subsequently at amortized cost and at FVTOCI. For financial assets other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired. For financial assets that have subsequently become credit-impaired, interest income is recognized by applying the effective interest rate to the amortized cost of the financial asset. If, in subsequent reporting periods, the credit risk of the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognized by applying the effective interest rate to the gross carrying amount of the financial asset.

For purchased or originated credit-impaired financial assets, the Company recognizes interest income by applying the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition. The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit-impaired.

Interest income is recognized in profit or loss and is included in the net finance income and in other comprehensive income – Finance income line item (Note 26).

| - | Debt securities measured at FVTOCI

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Financial instruments held by the Company are classified at FVTOCI. The fair value is determined in the manner as is described in Note 15. Financial instruments are specifically measured at a fair value plus transaction costs. Subsequently, changes in the carrying amount of these financial instruments as a result of foreign exchange gains and losses, changes in profit or loss, and interest income affected through the effective interest method are recognized in the consolidated statements of profit or loss and other comprehensive income. The amounts that are recognized as profit or loss are the same as the amounts that would have been recognized as profit or loss if they had been measured at amortized cost. All other changes in book value are at amortized cost. All other changes in the carrying amount of these financial instruments are recognized in other comprehensive income or accumulated under the reserve of the cash flow hedges of the financial instruments. When these debt securities are written off, the accumulated gains or losses previously recognized in other comprehensive income are reclassified as profit or loss in the finance cost.

| - | Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortized cost or FVTOCI are measured at FVTPL.

Specifically:

| • | Investments in equity instruments are classified as at FVTPL, unless the Entity designates an equity investment that is neither held for trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition.

| • | Debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria are classified as at FVTPL. In addition, debt instruments that meet either the amortized cost criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency (so called ‘accounting mismatch’) that would arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. The Entity has not designated any debt instruments as at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognized in profit or loss to the extent that they are not part of a designated hedging relationship. The net gain or loss recognized in profit or loss includes any interest earned on the financial asset and is included in the finance cost.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Interest are recognized in profit or loss unless the interest clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

| - | Foreign exchange gains and losses

The carrying amount of financial assets that is denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.

Specifically:

| • | for financial assets measured at amortized cost that are not part of a designated hedging relationship, exchange differences are recognized in profit or loss in the line of finance cost;

| • | for debt instruments measured at FVTOCI that are not part of a designated hedging relationship, exchange differences on the amortized cost of the debt instrument are recognized in profit or loss in the line of finance cost. Other exchange differences are recognized as changes in fair value in profit or loss and other comprehensive income.

| • | for financial assets measured at FVTPL that are not part of a designated hedging relationship, exchange differences are recognized in profit or loss in the line of finance cost; and

| • | for equity instruments measured at FVTOCI, exchange differences are recognized in other comprehensive income in foreign currency translation reserve.

| - | Write-off policy

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The Company writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Company recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognized in profit or loss.

| - | Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e., the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Company understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the expected credit loss (ECL) is estimated as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate. For a lease receivable, the cash flows used for determining the expected credit losses is consistent with the cash flows used in measuring the lease receivable in accordance with IFRS 16 Leases. Revenue recognition for commercial leases contracts is detailed in Note 20.

If the Company has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Company measures the loss allowance at an amount equal to 12-month ECL at the current reporting date, except for assets for which simplified approach was used.

The Company recognizes a loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and accumulated in the investment revaluation reserve, and does not reduce the carrying amount of the financial asset in the statement of financial position.

| - | Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another Company. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset measured at amortized cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. In addition, on derecognition of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in an equity instrument which the Entity has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.

Financial liabilities –

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss.

| – | Derecognition of financial liabilities

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The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

Financial liabilities and equity instruments – Debt and equity instruments are classified as financial liability or equity liabilities according to the content of the contractual agreements and the definitions of a financial liability and an equity instrument.

| – | Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the resources received, that is, the net of direct costs from the emission.

Repurchase of the Company’s common stock is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss at the purchase, sale, issue or cancellation of the Company’s own equity instruments.

| – | Offsetting

Even when the Company has the right, in certain cases, for a compensation of financial assets and liabilities, as of the date of this consolidated financial statements, the Company does not have the intention of compensating a liability with an asset, nor expect in the short term to require it. Therefore, deposits received in guarantee are presented separately from accounts receivable.

| b. | Cash and cash equivalents – Cash and cash equivalents consist mainly of bank deposits in checking accounts and readily available daily investments of cash surpluses with immediate availability as well as cash equivalents designates for expenditure, held in trust (See Note 5). Cash is stated at nominal value and cash equivalents are valued at fair value that does not exceed their market value; the yields, which are recognized as interest income as it accrues.

| c. | Machinery, equipment and improvements on leased assets

| – | Recognition and valuation – Machinery, equipment and improvements to leased assets are recognized at acquisition cost less accumulated depreciation and any accumulated impairment losses. The acquisition cost includes expenses directly attributable to the acquisition of the asset.

When significant parts of an asset of machinery, equipment and improvements to leased assets have different useful lives, they are accounted for separately as a component of the asset.

Gains and losses from sales or retirements of machinery, equipment and improvements to leased assets are determined comparing the proceeds from the sale or retirement against the net amount of machinery, equipment and improvements to leased assets and are recognized net in other income in the consolidated statement of profit and loss and other comprehensive income.

| – | Subsequent costs – The cost to replace a part or item of machinery, equipment and improvements to leased assets are recognized in the value of the asset when it is probable that future economic benefits associated with that part will flow to the Company and its cost can be measured reliably. The net value of the replaced item is derecognized at its net book value. Minor maintenance costs are recognized in the consolidated statement of profit and loss and other comprehensive income.

| – | Depreciation – Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other substitute value of that cost based on the straight-line method, this is the value that reflects more certainty the expected pattern of consumption of future economic benefits implicit in the active. The Company does not determine residual values ​​for machinery, equipment, improvements and leased assets as they are not considered to be material.

| – | Depreciation of machinery and equipment is recognized in the consolidated statement of profit and loss and other comprehensive income and is calculated under the straight-line method based on the useful lives of the related assets. Also, improvements to leased assets are amortized by the straight-line method based on the remaining useful life of the improvements or the lease term, whichever is less. The estimated useful life and the depreciation method are reviewed at the end of each year, and the effect of any changes in the recorded estimate is recognized on a prospective basis.

Lands are not depreciated.

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The estimated useful lives for the current period and comparative period are as follows:

|  | Useful life (years) |  |  | Annual depreciation rate |
Machinery and equipment |  |  | 10 |  |  | 10% |
Office furniture and equipment |  |  | 10 |  |  | 10% |
Computer equipment |  | 4 – 3.3 |  |  | 25% - 30% |
Transportation equipment |  | 5 – 4 |  |  | 20% - 25% |
Communication equipment |  | 10 – 4 – 3.3 |  |  | 10% - 25% - 30% |
Improvements on leased assets |  |  | 10 |  |  | 10% |

| d. | Intangible Assets

| – | Improvements to concession assets – Improvements to concession assets are accounted for the improvements that are made pursuant to the MDP and improvements carried out by the daily operation of the Company’s airports. All infrastructure investments made ​​by the airports will be delivered to the Mexican government or the government of Jamaica as corresponds at the end of the term of the Concession. Under the Company’s concession agreements, through the MDP agreed with each government every five years, the Company is committed to carry out various improvements, upgrades and additions to each of its airports on an annual basis in the case of Mexican airports and every five years in Jamaica. In exchange for investing in those additions and upgrades, each government grants the Company the right to obtain benefits for services provided using those assets. The Company, as the operator of the concession assets, recognizes an intangible asset as it receives a right granted by each government to charge users for the public service associated with the use of its airports. Minor maintenance costs are recognized in the consolidated statement of profit and loss and other comprehensive income.

| – | Airport concessions – The Company recognized an intangible asset of the Concession granted by the SCT to manage and operate each of the airports in Mexico for 50 years since its acquisition. As regards to MBJA, the Company recognized an intangible asset at the fair value of the concession to operate and develop that airport until 2033 according to the determination of fair values resulting from the acquisition of DCA and MBJA accordance IFRS 3 Business Combinations. Likewise, PACKAL recognized an intangible asset for the amount specified in the contract with the AAJ for the right to operate the airport at the time of taking control and for a period of 25 years.

| – | Rights to use airport facilities – Rights to use airport facilities in Mexico are recorded through the acquisition cost of the assets recorded by ASA and transferred to the Company according to the Concession granted, in order to manage, operate and develop them during the Concession term. At MBJA and PACKAL no rights to use airport facilities were identified.

| – | Other acquired rights – These rights correspond to payments made by the Company after the date the Mexican concessions were granted, in order to early-terminate certain long-term leases contracts that existed at that time between ASA and third-party leaseholders, these rights are recorded through their acquisition cost. In MBJA and PACKAL there are no other acquired rights.

| – | Amortization – After its initial recognition, intangible assets are valued at acquisition cost plus capitalized borrowing costs, less accumulated amortization and accumulated impairment losses. Amortization is recognized in the consolidated statement of comprehensive income under the straight line method applied to the shorter of the estimated period of future economic benefits the intangible assets will generate, or the concession period, from the date they are available for use.

Amortization periods for the current and comparative period are as follows:

|  | Period (years) |  | Annual amortization rate |
Improvements to concession assets |  | 20 – 12.5 |  | 5% - 8% |
Airport concessions |  | 49 – 25 – 18 |  | 2% - 4% - 5.5% |
Rights to use airport facilities |  | 49 – 10 |  | 2% - 10% |
Other acquired rights |  | 44 – 48 |  | 2% |

The amortization method and useful lives are reviewed at each year end date and adjusted prospectively if necessary.

| e. | Capitalized borrowing costs – Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

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| f. | Impairment of financial and non-financial assets (Tangible and intangible)

| – | Financial assets –

The Company recognizes a loss allowance for expected credit losses on investments in debt instruments that are measured at amortized cost or at FVTOCI, lease receivables, trade receivables and contract assets, as well as on financial guarantee contracts. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Company always recognizes lifetime ECL for trade receivables, contract assets and lease receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Company recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

| – | Definition of default

The Company considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that financial assets that meet either of the following criteria are generally not recoverable:

| • | when there is a breach of financial covenants by the debtor; or

| • | information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Company, in full (without taking into account any collateral held by the Company).

Irrespective of the above analysis, the Company considers that default has occurred when a financial asset is more than 90 days past due unless the Company has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

| – | Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

| (a) | significant financial difficulty of the issuer or the borrower;

| (b) | a breach of contract, such as a default or past due event;

| (c) | the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

| (d) | it is becoming increasingly probable that the borrower will enter bankruptcy or other financial reorganization; or

| (e) | the disappearance of an active market for that financial asset because of financial difficulties.

| – | Non-financial assets – Non-financial assets of the Company are assessed at each period end date to determine whether there is any indication of impairment. If there is such an indication of impairment, management estimates the recoverable amount.

The recoverable amount of an asset or cash-generating unit is the higher of the asset´s value in use and fair value less costs of disposal. To determine the asset’s value in use, the estimated future cash flows are discounted to present value using an appropriate discount rate before tax that reflects current market conditions in relation to the time value of money and the risks specific to the asset. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating unit or CGU). An impairment loss is recognized immediately in profit and loss.

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The individual airports of the Company in Mexico cannot be considered as separate cash-generating units, as the bidding process, in which it decided to sell up to 15% of the shares representing the capital stock of the holding company Shares of the companies that were received for the concession, and made by the Mexican Federal Government that included the package of twelve airports, and therefore the Company is required to operate and maintain all 12 airports independently of the results they generate individually. Considering the above, if there are indicators of impairment that exist, the Company performs an impairment assessment on a consolidated basis with Mexican companies. Moreover, the value of the assets of MBJA and PACKAL are individually valued at the end of each period to determine whether there are indications of impairment to be single separate cash-generating units.

When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimated recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of depreciation) had an impairment loss not been recognized for the asset (or CGU) in prior years. A reversal of an impairment loss is recognized immediately in profit and loss, unless the relevant asset is recognized on a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

The CGU´s are tested for impairment annually or more frequently when there are indications that the CGU may be impaired. If the recoverable amount of a CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill, if it exists, and is allocated to the CGU and then to the other assets of the CGU pro rata basis and based on the book value of each asset within the CGU. Any impairment loss of goodwill is recognized directly in profit and loss.

| g. | Investment in associate – An associate is an entity in which control is not exercised over, but which the Company has significant influence. Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Entity’s share of the profit or loss and other comprehensive income of the associate.

Significant influence is the power to participate in decisions about the financial and operating policies of the entity in which it is investee, but does not imply joint control or control over those policies.

The Company discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment is classified as held for sale.

When the Company transacts with an associate of the Company, profits and losses resulting from the transactions with the associate are recognized in the Company’s consolidated financial statements only to the extent of interests in the associate that are not related to the Company.

| h. | Derivative financial instruments and hedge accounting – The Company occasionally uses derivative financial instruments, specifically interest rate CAPS and SWAPS, to hedge its exposure to the risk of an increase in the interest rate arising primarily from debt instruments.

Derivatives are initially recognized at fair value at the date the derivative contract is entered into and subsequently valued at fair value at the end of each reporting period. The gain or loss is recognized in profit or loss and other comprehensive income immediately, unless the derivative is designated as a hedging instrument and is considered to be effective. The timing of the recognition of the hedging instrument in earnings will depend on the nature of the hedge.

The Company may designate certain instruments as hedges for accounting purposes if at inception of the hedge, it documents the relationship between the hedging instrument and the hedged item, as well as the risk management and management strategy objectives for undertaking various hedging transactions.

Additionally, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting the exposure to changes in fair value or changes in cash flows of the hedged item attributable to the hedged risk, which is when the hedges meet all of the following hedge accounting requirements:

| • | There is an economic relationship between the hedging instrument and the hedged item;

| • | The effect of credit risk does not dominate the value of the changes that were related to the economic relationship; and

| • | The coverage ratio of the hedges is the same as the result of the amount of the hedged item that the Company actually covers and the amount of the hedging instrument that the Company actually uses to cover that amount of the hedged item.

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If a hedge fails to meet the coverage effectiveness requirement related to the hedging relationship, but the risk management objective for that designated hedging relationship remains the same, the Company adjusts the hedging relationship (i.e. rebalance coverage) to meet the qualification criteria again.

Cash flow hedges

The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the financial instrument of cash flow hedge reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss, and is included in the ‘financial cost’ line item.

Amounts previously recognized in OCI and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognized in other comprehensive income and accumulated in equity are removed from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. This transfer does not affect other comprehensive income. Furthermore, if the Company expects that some or all of the loss accumulated in the cash flow hedge reserve will not be recovered in the future, that amount is immediately reclassified to profit or loss.

The Company discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognized in other comprehensive income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in cash flow hedge reserve is reclassified immediately to profit or loss.

The Company designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in cash flow hedging relationships.

| i. | Business combinations – Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interests issued by the Company in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss and other comprehensive income as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, with the exception of:

| • | Deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee benefits respectively;

| • | Liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Company entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based payment at the acquisition date.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquire (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.

Non-controlling interests are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation, and may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis.

When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its fair value on the acquisition-date and

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included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates, with the corresponding gain or loss being recognized in profit or loss.

Transaction costs, different from those associated with the issuance of debt or capital, and incurred by the Company in connection with a business combination are expensed as incurred.

| j. | Other intangible assets – Costs incurred in the development phase, as well as other intangible assets that meet certain requirements and which the Company has determined will have future economic benefits, are capitalized and amortized based on the straight-line method. Expenditures that do not meet such requirements, as well as research costs, are recorded in the results of the period in which they are incurred.

| k. | Leases – The Company has consistently applied the accounting policies to all periods presented in these consolidated financial statements. The Company recognizes the right-of-use assets and lease liabilities for most leases, that is, these leases are in the consolidated statement of financial position in the short and long term, except for short leases term (12 months or less) and those of low value assets, for these leases, the Company recognizes rent payments as an operating expense under the straight-line method through the term of the lease, unless another method is more representative of the pattern of time in which the economic benefits from the consumption of the leased assets.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease contract.

Lease payments included in the measurement of the lease liability comprise the following:

| • | fixed payments, including in-substance fixed payments;

| • | variable lease payments that depend on an index or a rate, initially measured using the index or;

| • | amounts expected to be payable under a residual value guarantee; and

| • | the exercise price under a purchase option that the Company is reasonably certain to exercise, and

| • | lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option.

Amortization of assets by right of use – After initial recognition, amortization is recognized in the consolidated statements of profit or loss and other comprehensive income in accordance with the straight-line method applied to the period of the lease contract from the moment in which possession is held of the leased asset.

Lease payments are distributed between financial expenses and the reduction of lease obligations in order to achieve a constant interest rate on the remaining balance of the liability. Financial expenses are charged directly to income for the year.

| – | As a lessor

When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

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The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term. The initial direct costs incurred in the negotiation and arrangement of the operating lease are added to the book value of the leased asset and recognized under a straight line through the term of the lease.

The outstanding amounts of financial leases are recognized as receivable leases for the amount of the net investment in the leases. Income from financial leases is allocated to accounting periods to reflects a constant periodic rate of return on net insoluble investment with respect to leases.

If an arrangement contains lease and non-lease components, then the Company applies the policy to allocate the consideration in the contract.

| l. | Provisions and contingent liabilities – Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, an account receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Provisions are classified as current or noncurrent based on the period of time estimated to meet the obligations covered.

A contingent liability is a possible obligation that arises from a past event and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Company, or a present obligation that arises from a past event but 1) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or 2) the amount of the obligation cannot be measured with sufficient reliability. A contingent liability is not recognized in the consolidated financial statements, but rather is disclosed unless the probability of an outflow of resources embodying economic benefits is remote.

| m. | Direct employee benefits – The Company provides its employees in Mexico and abroad different types of benefits. In Mexico, the liabilities for direct employee benefits are recognized based on the services rendered by employees, considering their most recent salaries. These benefits primarily include statutory employee profit sharing (PTU) payable, compensated absences, a vacation and vacation premium and incentives. The PTU is recorded in the income year in which it is incurred and presented under cost of services in the consolidated statements of profit or loss and other comprehensive income.

| n. | Employee benefits – The seniority premium liability is calculated by independent actuaries at the projected unit credit method using nominal interest rates. The measurements of the defined benefit liability, which includes actuarial gains and losses and the effect of the asset ceiling, are recognized immediately in other comprehensive income. The Company has determined the net interest income for the defined benefit liability net of the period applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset), considering any change in the liability (asset) for net defined benefit during the period as a result of contributions and benefits payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit and loss in the year.

The past service cost is recognized in the profit or loss in the year of the plan amendment. Interest is calculated using the discount rate at the beginning of the period the balance of the defined benefit obligation. Defined benefit costs are classified as follows:

| – | Cost of service (including current service cost, past service cost and gains and losses on reductions and compensations).

| – | Interest expenses.

| – | Remeasurements.

The Company present the first two components of defined benefit cost as an expense in the cost of services. The reduction and early liquidation of obligations are recognized as past service costs.

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Contributions to benefit plans to defined contribution retirement are recognized as expenses at the time the employees render services that give them the right to contributions.

Remeasurements of the net defined benefit liability, which comprises actuarial gains and losses and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in Other Comprehensive Income.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Any liability for compensation is recognized when the Company can no longer withdraw the offer of compensation and / or when the Company recognizes related restructuring costs.

| o. | Revenue recognition –Aeronautical and non-aeronautical revenues are recognized at their fair value, in the same period subsequent to the time passengers depart, planes land or other services are provided, as the case may be, considering that the events that occur and services that are rendered in any given month are invoiced and recognized within that same month.

| – | Aeronautical services – The majority of the revenues in México are derived from rendering aeronautical services, related to the use of airport facilities by airlines and passengers. These revenues are regulated by the SCT through a “maximum rate” per “workload unit.” The maximum rate is the maximum amount of revenues per workload unit that may be earned at an airport each year from regulated revenue sources. A workload unit is currently equivalent to one terminal passenger (excluding passengers in transit) or 100 kilograms (220 pounds) of cargo. Moreover, in MBJA and PACKAL aeronautical revenues correspond to the fee for passengers and security, which are collected by airlines who also invoice other charges for landing and parking aircraft.

| – | Revenues from non-aeronautical services – Revenues from non-aeronautical services consist mainly of the leasing of commercial space at the airport terminals (other than space deemed essential to airline operations), car parking, access fees charged to third parties providing food catering and other services at the airports, other miscellaneous revenues and royalties for the use of Company´s brands.

Commercial space within the terminals is leased through operating lease agreements, based on either a monthly fixed rent or a charge based on the higher of a minimum monthly rent or a percentage of the lessee’s monthly revenues. Rental income from the Company’s leases is recognized on a straight-line basis over the term of the relevant lease.

| – | Revenues and cost of improvements to concession assets – In conformity with IFRIC 12, the Company recognizes revenues and the associated costs of improvements to concession assets which it is obligated to perform at the airports as established by the MDP. Revenues represent the value of the exchange between the Company and the government with respect to the improvements, given that the Company constructs or provides improvements to the airports as obligated under the MDP and in exchange, the government grants the Company the right to obtain benefits for services provided using those assets. The Company has determined that its obligations per the MDP should be considered to be a revenue-earning activity as all expenditures incurred to fulfill the MDP are included in the maximum tariff it charges its customers and therefore it recognizes the revenue and expense in profit or loss when the expenditures are performed. The cost for such additions and improvements to concession assets is based on actual costs incurred by the Company in the execution of the additions or improvements, considering the investment requirements in the MDP. Through bidding processes, the Company contracts third parties to carry out such construction.

The amount of revenues for these services are equal to the amount of costs incurred, as the Company does not obtain any profit margin for these construction services. The amounts paid are set at market value.

| p. | Foreign currency transactions – Transactions in currencies other than the functional currency of the Company (foreign currencies) are recognized using exchange rates prevailing on the dates in which the transactions are made. At the end of each reporting period, monetary items denominated in foreign currencies are converted at the exchange rates prevailing at that time.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rates prevailing at the date of the consolidated financial statements. Exchange fluctuations are recorded in the results of the period within the financial costs and presented as exchange gain or loss, on a net basis in the consolidated profit or loss and other comprehensive income.

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Non-monetary items that are valued at historical cost in a foreign currency are converted at the exchange rate at the date of the transaction.

Foreign currency differences are generally recognized in profit or loss and presented within finance costs.

However, currency translation reserve arising from the translation of the following items are recognized in OCI:

| – | an investment in equity securities designated as at FVOCI;

| – | a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective;

| – | and qualifying cash flow hedges to the extent that the hedges are effective.

| q. | Conversion of foreign operations – The assets and liabilities of foreign operations and the fair value adjustments arising from the acquisition, are translated at the exchange rates prevailing at the reporting date. Revenues and expenses of foreign operations are translated at the average exchange rate for the period of transactions.

The differences associated with foreign currency translation of foreign operations to the presentation currency (pesos) are recognized in other comprehensive income and presented in the foreign currency translation reserve in equity.

| r. | Income taxes – Current income tax is recorded in the income statement of the year in which it is incurred. The expense for income taxes includes both the tax assessed and deferred tax. Deferred and current tax are recognized in the consolidated statement of profit or loss, except when they are related to items recognized in other comprehensive income, or directly in equity, in which case the deferred and current tax are also recognized in other comprehensive income or directly in equity, respectively.

Current tax expense is the tax payable that is determined for the year, using tax rates enacted or substantially enacted at the reporting date, plus any adjustment to tax payable in respect of previous years. Taxable income differs from income before income taxes reported in the consolidated statements of comprehensive income because there are items of income or expense that are taxable or deductible in other years and items that will never be taxable or deductible.

Deferred income tax is calculated by applying the statutory rate for temporary differences, resulting from comparing the accounting and tax assets and liabilities, and when applicable, the benefits from tax loss carryforwards and certain tax credits that are paid in previous years and expected to be recovered in future periods in accordance with the rules established in the tax laws, to the extent that it is probable the existence of future taxable profit that can be applied against such tax benefits. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the tax benefit can be recognized.

The rates applied to determine the deferred tax are those that correspond to the year in which it is expected the reversal of the temporary difference is expected.

The Company did not recognize deferred taxes for the following items:

| – | Initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor tax results.

| – | Differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future and where the Company has the power to control the reversal date.

| s. | Earnings per share – Basic earnings per common share are calculated by dividing consolidated net income by the weighted average number of outstanding shares during the period, adjusted by repurchased shares retained in treasury. The Company does not have any potentially diluted shares; and therefore, basic and diluted earnings per share are the same.

| t. | Finance cost and finance income – Finance income comprises interest income from investments in debt securities, changes in the market value of financial assets at FVTPL and gains on hedging instruments that are recognized in the consolidated statement of comprehensive income, among other concepts. Interest income is recognized when it is probable that the economic benefits will flow to the Company and the amount can be reliably measured. Interest income is recorded on a regular basis, with reference to the capital invested and the effective interest rate.

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Finance cost comprise interest costs of loans net of interest cost capitalized on qualifying assets, changes in the market value of financial assets at FVTPL, losses on hedging instruments that are recognized in the consolidated statement of comprehensive income, interest paid to the tax authorities, among other items. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in the consolidated statement of comprehensive income, using the effective interest method.

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

| – | the gross carrying amount of the financial asset; or

| – | the amortized cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

| u. | Operating segments – An operating segment is a component of the Company:1) that is engaged in business activities from which it may earn revenue and incur expenses, including revenues and expenses relating to transactions with other components of the Company, 2) whose operating results are regularly reviewed by Company’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance, and 3) for which discrete financial information is available. Each of the airports of the Company represents an operating segment. The Company has determined that its reportable segment, based on quantitative thresholding testing, to be the Guadalajara, Tijuana, Puerto Vallarta, San José del Cabo, Montego Bay, Hermosillo and Guanajuato airports. The operating segment information relating to the remaining seven airports are combined and reported under “Other airports”. The corresponding information related with SIAP (a company that provides technical assistance and highly-qualified professional services), CORSA (a company that provides specialized operational services in aeronautical industry), PCP (a company that manages the parking lot operation), Fundación GAP, ADP, DCA, as well as the Company’s own operation (including investments in subsidiaries), was combined and included under “Other Companies”. Segment profit and loss is determined based on income before income taxes. Segment assets represent total assets and segment liabilities represent total liabilities. The accounting policies used in reporting segment information are the same as those used in the preparation of these consolidated financial statements, except for those investments in subsidiaries that are accounted for under the equity method for the purposes of determining segment assets and segment profit and loss for purposes of what is reported for “Other Companies”. Intersegment transactions are based on prices available to third parties.

| v. | Cash flow statement – The Company presents cash flows from operating activities using the indirect method, in which the net income is adjusted for the effects of transactions that do not require cash flows including those associated with investing and financing activities. Additionally, the Company has elected to present cash paid for interest as part of the financing activities and cash received from interest income as part of its operating activities.

4. | Financial risk management

The Company is exposed to the following risks from the use of financial instruments:

| - | Credit risk

| - | Liquidity risk

| - | Market risk

This note presents information about the Company’s exposure to each of the above risks, the objectives, policies and processes of measuring and risk management of the Company. In different sections of these consolidated financial statements, the Company has included additional in-depth disclosures.

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As of December 31, 2018, 2019 and 2020, financial instruments held by the Company are comprised of the following:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | Ps. |  | 6,151,457 |  |  | Ps. |  | 7,500,193 |  |  | Ps. |  | 14,444,549 |
Trade accounts receivables |  |  |  | 1,395,362 |  |  |  |  | 1,479,410 |  |  |  |  | 1,266,005 |
Derivative financial instruments |  |  |  | 136,457 |  |  |  |  | 4,686 |  |  |  |  | - |
Financial liabilities at amortized cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short and long-term debt securities |  | Ps. |  | 9,000,000 |  |  | Ps. |  | 12,000,000 |  |  | Ps. |  | 17,000,000 |
Current and long-term bank loans |  |  |  | 4,535,863 |  |  |  |  | 4,437,043 |  |  |  |  | 7,355,166 |
Accounts payable |  |  |  | 1,181,049 |  |  |  |  | 1,215,264 |  |  |  |  | 1,172,044 |
Financial liabilities at Fair Value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative financial instruments |  |  |  | - |  |  |  |  | 265,979 |  |  |  |  | 750,704 |
Liabilities for assets in lease |  |  |  | 48,199 |  |  |  |  | 37,192 |  |  |  |  | 26,193 |

Financial risk management objectives – The Board of Directors is responsible for developing and monitoring the Company’s risk management policies.

The Company’s risk management policies are established for identifying and analyzing potential risks, to set appropriate limits and controls, and for monitoring such risk on an ongoing basis. Policies and risk management systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to develop an environment of disciplined and constructive control in which all employees understand their roles and obligations.

The Audit Committee of the Company supervises how management monitors compliance with policies and procedures of risk management, and reviews what is appropriate to the risk management framework in relation to the risks faced by the Company. The Audit Committee is supported in its oversight role by the Company's Internal Audit Function. Internal Audits perform routine and special reviews of controls and risk management procedures, and report their results directly to the Audit Committee.

Credit risk – Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company and arises primarily from trade accounts receivable and the Company’s investments, including investment funds and derivative financial instruments.

| – | Accounts receivable and others – The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographic characteristics of its customers, including the default risk of the industry and country in which its customers operate, as these factors could also affect credit risk, particularly considering the recent economic downturn. The main source of income for the Company is the Passenger Charge Fees (TUA) and leasing revenues from commercial areas in its airports. The TUA is charged to each departing passenger (except diplomat, infant or transit passenger), and is collected by the airlines and subsequently refunded to the airports. For the years ended December 31, 2018, 2019 and 2020 the revenues for TUA represented 54.9%, 52.9% and 50.0% of the total revenues, respectively. The leasing revenues from commercial areas are collected from other clients, which are not airline customers. The 28.9%, 29.2% and 33.5% of the Company’s revenues in 2018, 2019 and 2020 are derived from the TUA collected by three major client airlines, which collect the TUA and remit it to the airports. However, geographically there is no credit risk concentration because airports are located in different cities in Mexico and Jamaica, and therefore if one airport has an operating problem the other airports would not be affected. The 28.6%, 27.4% and 27.9% of aeronautical and non-aeronautical revenues earned during the periods ended December 31, 2018, 2019 and 2020 were generated by the Guadalajara airport. In addition, 92.3%, 91.0% and 87.3% of aeronautical and non-aeronautical revenues earned during the periods ended December 31, 2018, 2019 and 2020, respectively, were generated by seven of the Company's airports (Guadalajara, Tijuana, San José del Cabo, Puerto Vallarta, Montego Bay, Guanajuato and Hermosillo).

The Company has a credit policy under which each new customer is analyzed individually for creditworthiness before offering the standard terms and conditions of payment and delivery of the services provided by the Company. The review of the Company includes external ratings, when they are available, and in some cases bank references. Every customer has established credit limits, which must be approved by the Company's management and are reviewed periodically.

The Company has entered into agreements with all its airline customers to collect the TUA in Mexico, by who receive the payment for the use of the airport services on behalf of the airports. According to these agreements, each customer airline could have a grace period of up to a maximum of 60 days to reimburse the airport for the TUA paid by passengers. If an airline customer needed a credit term of up to 60 days, it must provide a guarantee to the airport covering this period, bond, or cash equivalent of 30 days more than the estimated consumption for the credit period requested by that airline. In the event of insolvency of any airline or a notice by the authorities on

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suspension of operations, the Company may recover the pending amounts regarding TUA up to the value of the guarantee. In order to mitigate credit risk with its customers, mainly TUA, airlines have granted ​​cash guaranties, which are reported as deposits received, in the consolidated statements of financial position, in addition to the cash guaranties of other commercial customers. As of December 31, 2018, 2019 and 2020, the Company has customer deposits received in guarantee of Ps.1,130,740, Ps.1,1 4 3,4 85 and Ps.696,059, respectively. These deposits are considered long-term based on the duration of the contracts signed with these airlines and the expectation that they will maintain long-term operations at the Company’s airports.

When reviewing credit risk, management groups the Company’s clients according to their credit characteristics that include whether the customer is an individual or a corporation, if they are airline customers, commercial customers, age and the existence of previous financial difficulties.

The Company systematically and periodically reviews the aging and collection of trade accounts receivable and recognizes a change in credit loss according to the average loss rated (Note 6).

Credit risk:

The Company determines the expected credit losses in these items using a provision matrix, estimated based on the historical experience of credit losses based on the past due status of customers and adjusted as appropriate to reflect current conditions and estimates of future economic conditions. As a result, the credit risk profile of these assets is presented based on their matured status in terms of the provision matrix. Note 6 includes additional details on the provision for losses for these assets respectively.

The following tables presents information on the exposure to credit risk and expected credit losses for accounts receivable from customers as of December 31, 2018, 2019 and 2020.

Balance of the trade account receivables as of December 31, 2018 |  | Weighted average loss rate |  |  | Current balance of the Trade account |  |  | Amount of credit loss |  |  | Credit impairment
Current (not past due) |  | 0.00% |  |  | Ps. |  | 1,304,274 |  |  | Ps. |  | - |  |  | No
1 to 30 days past due |  | 4.48% |  |  |  |  | 70,073 |  |  |  |  | 3,141 |  |  | No
31 to 60 days past due |  | 17.91% |  |  |  |  | 25,934 |  |  |  |  | 4,645 |  |  | No
61 to 90 days past due |  | 80.20% |  |  |  |  | 14,482 |  |  |  |  | 11,615 |  |  | No
More than 90 days past due |  | 100% |  |  |  |  | 15,494 |  |  |  |  | 15,494 |  |  | Yes
Legal |  | 100% |  |  |  |  | 13,780 |  |  |  |  | 13,780 |  |  | Yes
|  |  |  |  |  | Ps. |  | 1,444,037 |  |  | Ps. |  | 48,675 |  |  |

Balance of the trade account receivables as of December 31, 2019 |  | Weighted average loss rate |  |  | Current balance of the Trade account |  |  | Amount of credit loss |  |  | Credit impairment
Current (not past due) |  | 0% |  |  | Ps. |  | 1,258,569 |  |  | Ps. |  | - |  |  | No
1 to 30 days past due |  | 5.97% |  |  |  |  | 133,533 |  |  |  |  | 7,978 |  |  | No
31 to 60 days past due |  | 13.69% |  |  |  |  | 91,640 |  |  |  |  | 12,546 |  |  | No
61 to 90 days past due |  | 47.48% |  |  |  |  | 30,832 |  |  |  |  | 14,640 |  |  | No
More than 90 days past due |  | 100% |  |  |  |  | 2,693 |  |  |  |  | 2,693 |  |  | Yes
Legal |  | 100% |  |  |  |  | 13,165 |  |  |  |  | 13,165 |  |  | Yes
|  |  |  |  |  | Ps. |  | 1,530,432 |  |  | Ps. |  | 51,022 |  |  |

Balance of the trade account receivables as of December 31, 2020 |  | Weighted average loss rate |  |  | Current balance of the Trade account |  |  | Amount of credit loss |  |  | Credit impairment
Current (not past due) |  | 0% |  |  | Ps. |  | 1,192,643 |  |  | Ps. |  | - |  |  | No
1 to 30 days past due |  | 8.31% |  |  |  |  | 55,461 |  |  |  |  | 4,611 |  |  | No
31 to 60 days past due |  | 19.14% |  |  |  |  | 25,223 |  |  |  |  | 4,827 |  |  | No
61 to 90 days past due |  | 86.54% |  |  |  |  | 15,736 |  |  |  |  | 13,619 |  |  | No
More than 90 days past due |  | 100% |  |  |  |  | 109,759 |  |  |  |  | 109,759 |  |  | Yes
Legal |  | 100% |  |  |  |  | 14,136 |  |  |  |  | 14,136 |  |  | Yes
|  |  |  |  |  | Ps. |  | 1,412,958 |  |  | Ps. |  | 146,952 |  |  |

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Loss rates are based on actual credit loss experience over the past three years. These rates are multiplied by scaling factors to reflect differences between economic conditions during the period in which the historical data has been collected, the current conditions and the Company’s view of economic conditions over the expected life of the trade account receivables.

| – | Financial instruments held for trading purposes – The Company limits its exposure to credit risk by investing in government-backed securities. Management constantly monitors credit ratings to anticipate any counterparty defaults.

| – | Liquid funds and derivative financial instruments – The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by recognized rating agencies.

Liquidity Risk – The risk of liquidity means the possibility that the Company will have difficulty to fulfill its obligations related to its financial liabilities that will be paid in cash or another financial asset. The Company focuses its liquidity management to ensure, as much as possible, that it will have sufficient liquidity to comply with its obligations at their maturity date, both in normal and in extraordinary conditions, without incurring in unacceptable losses or risking the reputation of the Company.

The Company utilizes its budget, prepared at a cost center level, to allocate resources to render its services, which helps to monitor cash flow requirements and to optimize the performance of its investments. Generally, the Company ensures availability of sufficient cash flows to cover operating expenses for a period of 60 days, including payment of its financial debt, the aforementioned excludes the possible impact of extreme circumstances that are not reasonably predictable, such as natural disasters. The Company has external financing as described in Note 16 for compliance with its obligations under the MDP, whereas for other obligations it uses cash flows from operating activities and resources received at the maturity of its financial investments. As of December 31, 2018, 2019 and 2020 the Company has credit lines for USD$12.0 million, USD$7.0 million and USD$30.0 million, respectively.

The following is a table with a summary of the Company’s contractual maturities for its financial liabilities, including the interest to be paid, as of December 31, 2018, 2019 and 2020:

|  | December 31, 2018 |
|  | Weighted average of effective interest rate |  |  | Less than 1 month |  |  | From 1 to 3 months |  |  | From 3 months to 1 year |  |  | From 1 year to 5 years |  |  | More than 5 years |  |  | Total |
Long-term debt securities (fixed rate) |  |  |  |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 1,500,000 |  |  | Ps. |  | 1,500,000 |
Long-term debt securities (variable rate) |  |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 7,500,000 |  |  |  |  | — |  |  |  |  | 7,500,000 |
Fixed rate loans |  |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 225,307 |  |  |  |  | 225,307 |
Variable rate bank loans |  |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 4,200,331 |  |  |  |  | 110,225 |  |  |  |  | 4,310,556 |
Fixed rate interest |  |  | 7.92 | % |  |  |  | 2,664 |  |  |  |  | 56,198 |  |  |  |  | 79,990 |  |  |  |  | 555,088 |  |  |  |  | 391,014 |  |  |  |  | 1,084,954 |
Variable rate interest |  |  | 6.91 | % |  |  |  | 64,301 |  |  |  |  | 127,822 |  |  |  |  | 618,198 |  |  |  |  | 1,352,594 |  |  |  |  | 3,031 |  |  |  |  | 2,165,946 |
Trade accounts payable and other payables |  | N/A |  |  |  |  | 188,659 |  |  |  |  | 694,015 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 882,674 |
Liabilities for assets in lease |  | N/A |  |  |  |  | 1,235 |  |  |  |  | 2,594 |  |  |  |  | 10,684 |  |  |  |  | 33,689 |  |  |  |  | — |  |  |  |  | 48,199 |
AMP |  | N/A |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 298,376 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 298,376 |
|  |  |  |  |  | Ps. |  | 256,859 |  |  | Ps. |  | 880,628 |  |  | Ps. |  | 1,007,245 |  |  | Ps. |  | 13,641,702 |  |  | Ps. |  | 2,229,577 |  |  | Ps. |  | 18,016,011 |

|  | December 31, 2019 |
|  | Weighted average of effective interest rate |  |  | Less than 1 month |  |  | From 1 to 3 months |  |  | From 3 months to 1 year |  |  | From 1 year to 5 years |  |  | More than 5 years |  |  | Total |
Long-term debt securities (fixed rate) |  |  |  |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 1,500,000 |  |  | Ps |  | 1,500,000 |
Long-term debt securities (variable rate) |  |  |  |  |  |  |  | — |  |  |  |  | 2,200,000 |  |  |  |  | — |  |  |  |  | 8,300,000 |  |  |  |  | — |  |  |  |  | 10,500,000 |
Fixed rate loans |  |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 215,718 |  |  |  |  | 215,718 |
Variable rate bank loans |  |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 124,379 |  |  |  |  | 4,096,946 |  |  |  |  | — |  |  |  |  | 4,221,325 |
Fixed rate interest |  |  | 7.92 | % |  |  |  | 2,551 |  |  |  |  | 7,425 |  |  |  |  | 129,976 |  |  |  |  | 538,534 |  |  |  |  | 305,422 |  |  |  |  | 983,908 |
Variable rate interest |  |  | 6.55 | % |  |  |  | 77,908 |  |  |  |  | 190,603 |  |  |  |  | 526,134 |  |  |  |  | 1,278,134 |  |  |  |  | — |  |  |  |  | 2,072,779 |
Trade accounts payable and other payables |  | N/A |  |  |  |  | 190,230 |  |  |  |  | 670,124 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 860,354 |
AMP |  | N/A |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 355,361 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 355,361 |
Liabilities for assets in lease |  | N/A |  |  |  |  | 1,060 |  |  |  |  | 2,226 |  |  |  |  | 9,291 |  |  |  |  | 24,615 |  |  |  |  | — |  |  |  |  | 37,192 |
|  |  |  |  |  | Ps. |  | 271,749 |  |  | Ps. |  | 3,070,378 |  |  | Ps. |  | 1,145,141 |  |  | Ps. |  | 14,238,229 |  |  | Ps. |  | 2,021,140 |  |  | Ps. |  | 20,746,637 |

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|  | December 31, 2020 |
|  | Weighted average of effective interest rate |  |  | Less than 1 month |  |  | From 1 to 3 months |  |  | From 3 months to 1 year |  |  | From 1 year to 5 years |  |  | More than 5 years |  |  | Total |
Long-term debt securities (fixed rate) |  |  |  |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 1,500,000 |  |  | Ps. |  | 3,598,000 |  |  | Ps |  | 5,098,000 |
Long-term debt securities (variable rate) |  |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,500,000 |  |  |  |  | 10,402,000 |  |  |  |  | — |  |  |  |  | 11,902,000 |
Fixed rate loans |  |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,000,000 |  |  |  |  | 228,350 |  |  |  |  | 1,228,350 |
Variable rate bank loans |  |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 4,969,791 |  |  |  |  | 1,157,025 |  |  |  |  | — |  |  |  |  | 6,126,816 |
Fixed rate interest |  |  | 7.92 | % |  |  |  | 2,700 |  |  |  |  | 7,770 |  |  |  |  | 131,334 |  |  |  |  | 503,128 |  |  |  |  | 223,856 |  |  |  |  | 868,788 |
Variable rate interest |  |  | 6.55 | % |  |  |  | 64,453 |  |  |  |  | 180,141 |  |  |  |  | 773,412 |  |  |  |  | 2,224,948 |  |  |  |  | 444,197 |  |  |  |  | 3,687,151 |
Cash flow hedges |  |  | 7.46 | % |  |  |  | 29,485 |  |  |  |  | 50,189 |  |  |  |  | 150,566 |  |  |  |  | 462,043 |  |  |  |  |  |  |  |  |  | 692,283 |
Trade accounts payable and other payables |  | N/A |  |  |  |  | 247,757 |  |  |  |  | 767,284 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,015,041 |
AMP |  | N/A |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 157,003 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 157,003 |
Liabilities for assets in lease |  | N/A |  |  |  |  | 904 |  |  |  |  | 1,896 |  |  |  |  | 7,918 |  |  |  |  | 15,475 |  |  |  |  | — |  |  |  |  | 26,193 |
|  |  |  |  |  | Ps. |  | 345,299 |  |  | Ps. |  | 1,007,280 |  |  | Ps. |  | 7,690,024 |  |  | Ps. |  | 17,264,619 |  |  | Ps. |  | 4,494,403 |  |  | Ps. |  | 30,801,625 |

The interest payable from loans with variable interest rates was determined based on projected interest rates, plus the basis point adjustment corresponding to each bank loan.

The Company has bank loans, which include, among other obligations, restrictions that limit the destination of the resources, in addition to maintaining some financial ratios, as described in Note 16.

Market risk – Is the risk that changes in market prices, such as exchange rates, interest rates and prices of equity instruments that may affect the amount of the Company’s financial instruments. The Company’s market risk management objectives include controlling the risk exposures between acceptable parameters, while optimizing profits.

The Company in certain cases enters into derivatives instrument contracts to manage market risks. These transactions are in-line within the policies established by management. The Company also applies hedge accounting to minimize the volatility in profit or loss associated with certain financial instruments.

| – | Foreign exchange risk – The Company is exposed to currency risk for its revenues and trade accounts receivable denominated in a currency other than the functional currency of the Company. The foreign currencies in which transactions are primarily denominated is the U.S. dollar (USD) (Note 30).

In Mexico, the tariffs to be charged to international passengers and international flights are published in the Official Gazette of the Federation (Diario Oficial de la Federación) in USD, however, in accordance with Mexican law these tariffs are billed and collected in Mexican pesos. A significant depreciation of the peso during the last two months in each year could lead to an increase in aeronautical revenues that could lead to exceeding the maximum tariff per traffic unit allowed, which may be a breach of compliance with the Concession’s maximum rates of each airport. If a significant appreciation of the peso occurs, the Company may be required to provide discounts to avoid exceeding the maximum tariffs. On the other hand, a significant appreciation of the peso could lead to our rates substantially decreasing. The Company has no way to recover the lost revenue if it charges less than the maximum rate as a result of a significant appreciation of the peso.

In MBJ, the tariffs are billed and charged to domestic and international passengers in USD, which are assimilated into a fixed amount for 12 months (from April to March), and then updated for inflation in the United States. In January 2020, the new tariffs approved by the Jamaican Civil Aviation Authority (JCAA) in December 2019 came into effect, where the increase in the rate for international passengers was USD$19.34 to USD$24.74 per person and domestic passengers tariffs remained USD$5.52 per person. Therefore, the Company’s revenues would not be exposed to a possible devaluation or appreciation of the Jamaican dollar against the US dollar.

In PACKAL, the tariffs are billed and charged to domestic and international passengers in USD, which they are assimilated into a fixed amount for 12 months (from April to March), and then updated for inflation in the United States. In April 2020, the new tariffs approved by the Jamaican Civil Aviation Authority (JCAA) in December 2019 came into effect, where the increase in the rate for international passengers was USD$16.81 to USD$28.80 per person and increase in domestic passengers tariffs was USD$5.83 to USD$9.99 per person, therefore, the Company’s revenues would not be exposed to a possible devaluation or appreciation of the Jamaican dollar against the US dollar.

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While the Company can ensure that it does not exceed the maximum rates in Mexico as mentioned above, the depreciation of the Mexican peso can have a positive effect on commercial revenues and aeronautical revenues, while that appreciation of the Mexican peso generally has a negative effect. The rates applied to international passengers, international flights and some of our commercial contracts are denominated in USD and are billed and collected in Mexican pesos translated at the average exchange rate of the previous month. Therefore, the depreciation of the Mexican peso against the dollar results in the Company obtaining more Mexican pesos than before the depreciation, while the appreciation of the Mexican peso against the USD results in the Company obtaining less Mexican pesos. As the Mexican peso appreciates against the USD, the Company obtains fewer Mexican pesos which could result in a decrease in profit, especially if the appreciation continues or exceeds historical levels. In addition, although most of our operating costs are denominated in pesos, we cannot predict whether our cost of services will increase as a consequence of the depreciation of the peso, or as a result of other factors.

In MBJA and PACKAL, expenses are comprised 70% in USD, with the rest payable in Jamaican dollars. An appreciation of the Jamaican dollar would therefore increase expenses in USD terms.

The following is a sensitivity analysis of the Company financial assets and liabilities denominated in USD, if the peso were to depreciate or appreciate by 10%, which is the amount management considers reasonably possible of occurring at year end:

|  | USD amounts on December 31, 2020 |  |  |  | Peso amounts at exchange rate of Ps. 19.9487 on December 31, 2020 |  |  |  | Peso amounts if exchange rate depreciated 10% |  |  |  | Peso amounts if exchange rate appreciated 10% |
Thousands of U.S. dollars: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 489,939 |  |  | Ps. |  | 9,773,654 |  |  | Ps. |  | 8,885,140 |  |  | Ps. |  | 10,751,019 |
Trade accounts receivable |  |  | 8,906 |  |  |  |  | 177,656 |  |  |  |  | 161,506 |  |  |  |  | 195,422 |
|  |  | 498,845 |  |  |  |  | 9,951,310 |  |  |  |  | 9,046,646 |  |  |  |  | 10,946,441 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  |  | 25,369 |  |  |  |  | 506,077 |  |  |  |  | 460,070 |  |  |  |  | 556,685 |
Bank loans |  |  | (268,447 | ) |  |  |  | (5,355,166 | ) |  |  |  | (4,868,332 | ) |  |  |  | (5,890,682 | )
|  |  | (293,816 | ) |  | Ps. |  | 5,861,243 |  |  | Ps. |  | (5,328,402 | ) |  | Ps. |  | 6,447,367 |
Net liability position |  |  | 205,029 |  |  | Ps. |  | 4,090,067 |  |  | Ps. |  | 3,718,244 |  |  | Ps. |  | 4,499,074 |

Interest rate risk – The Company is exposed to fluctuations in interest rates on financial instruments, such as investments, loans and debt issuances. The Company monitors its interest rate risk and when bank loans are entered into with variable interest rates, it determines whether it should enter into derivative financial instruments, in order to reduce its exposure to the risk of volatility in interest rates type CAP and SWAPS. The negotiation with derivative financial instruments is only entered into with institutions of high repute and credit rating. The Company does not enter into financial instruments for speculative purposes.

The Company is exposed to LIBOR reference interest rate, which is subject to the reference interest rate reform. As indicated in Note 16, the loans include debt contracted at a variable rate in US dollars. The Company is monitoring the market that is managing the transition to new benchmark interest rates, this includes announcements made by regulators of LIBOR on the transition.

As a result of this, the Company determined that LIBOR exposure will allow an easy transition to alternative reference rates and will be launched in 2021, from the LIBOR rate to the reference rate that is defined, the Company´s derivative instruments only hedge the positions at a variable rate in pesos (Note 15).

Fluctuations in interest rates impact primarily loans, changing either their fair value (fixed rate debt) or their future cash flows (variable rate debt). Management does not have a formal policy to determining how much exposure the Company should have to fixed or variable rates. However, when getting new loans, management uses its judgment to decide if it believes that a fixed or variable rate would be more favorable during the term of the loan.

The following sensitivity analysis has been determined based on the exposure to interest rates for both derivatives and non-derivative financial instruments at the end of the reporting period. For loans with variable interest rates, an analysis is prepared assuming the amount of outstanding liability at the end of the reporting period under review has been the current liability for the year. The sensitivity analysis used assumes an increase or decrease of 100 basis points, which is the change management considers reasonably possible of occurring at year end.

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The Company has financial debt denominated in pesos and U.S. dollars, which accrues interest at a variable rate based on TIIE 28-days and LIBOR 28-days, respective ly. If on the 20 20 of year-end closing date the variable interest rates to which the Company is exposed had been 100 basis points (higher) or lower than the interest rate at year-end with the other variables remaining constant, the effect on net income and stockholders’ equity for t he years ended December 31, 2018, 2019 and 2020 would have been as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Effect in case of interest rate increase in 100 basis points |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Variable rate long term debt |  | Ps. |  | (121,747 | ) |  | Ps. |  | (84,251 | ) |  | Ps. |  | (111,492 | )
Effect in case of interest rate decrease in 100 basis points |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Variable rate long term debt |  | Ps. |  | 121,747 |  |  | Ps. |  | 84,251 |  |  | Ps. |  | 111,492 |

In 2016, the Company contracted hedges of derivative financial instrument interest rate caps (CAP), whereby it agreed to exchange the difference between the amounts of the variable interest rate calculated over the principal amounts of the hedged items associated with its variable rate debt instruments. These contracts allow the Company to hedge the cash flow exposures on debt contracted at variable interest rates. The fair value at the end of the period of the interest rate CAP is determined at fair value.

On May 2, 2017, the Company contracted HSBC México, S.A. (HSBC) for a derivative financial transaction by exchange of interest rates (SWAPS) in order to hedge the risk of increasing the TIIE rate, the tranche of the “GAP 17” debt securities for a value of Ps.1,500,000 that accrues an interest rate TIIE and is swapped for 7.21%, until the end of the debt securities, the derivative is only for TIIE rate.

On February 26, 2019, the Company contracted Scotiabank for a derivative financial transaction by exchange of interest rates (SWAPS) in order to hedge the risk of increasing the TIIE rate the tranche of the “GAP 17-2” debt securities for a value of Ps.2,300,000 that accrues an interest rate TIIE and is swapped for 8.0315%, until the expiration of the debt securities. Changes in fair value are recognized temporarily through other comprehensive income within equity and profit and loss as hedging reserve and are recycled to financial expenses as the interest of the debt securities are recognized, the derivative is only for TIIE rate.

On February 27, 2019, the Company contracted Scotiabank for a derivative financial transaction by exchange of interest rates (SWAPS) in order to hedge the risk of increasing the TIIE rate the tranche of the “GAP 19” debt securities for a value of Ps.3,000,000 that accrues an interest rate TIIE and is swapped for 8.03%, until the expiration of the debt securities. Changes in fair value are recognized temporarily through other comprehensive income within equity and profit and loss as hedging reserve and are recycled to financial expenses as the interest of the debt securities are recognized , the derivative is only for TIIE rate.

On March 2, 2020, the Company contracted Scotiabank for a derivative financial transaction by exchange of interest rates (SWAPS) in order to hedge the risk of increasing the TIIE rate the tranche of the “GAP 20” debt securities for a value of Ps. 3,000,000 that accrues an interest rate TIIE and is swapped for 6.33%, until the expiration of the debt securities. Changes in fair value are recognized temporarily through other comprehensive income within equity and profit and loss as hedging reserve and are recycled to financial expenses as the interest of the debt securities are recognized, the derivative is only for TIIE rate.

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The interest rate profile of the Company interest-bearing financial instruments as of December 31, 2018, 2019 and 2020 is as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Fixed-rate instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial liabilities |  | Ps. |  | (1,500,000 | ) |  | Ps. |  | (1,500,000 | ) |  | Ps. |  | (6,326,350 | )
Effect of interest rate swaps |  |  |  | (1,500,000 | ) |  |  |  | (6,800,000 | ) |  |  |  | (9,800,000 | )
|  | Ps. |  | (3,000,000 | ) |  | Ps. |  | (8,300,000 | ) |  | Ps. |  | (16,126,350 | )
Variable-rate instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial liabilities |  |  |  | (12,035,863 | ) |  |  |  | (14,937,043 | ) |  |  |  | (18,028,816 | )
Effect of interest rate swaps |  |  |  | 1,500,000 |  |  |  |  | 6,800,000 |  |  |  |  | 9,800,000 |
|  | Ps. |  | (10,535,863 | ) |  | Ps. |  | (8,137,043 | ) |  | Ps. |  | (8,228,816 | )

As of December 31, 2019 and 2020, the amounts at the reporting date relating to items designated as hedged items were as follows:

Interest rate risk |  | Change in value used for calculating hedge ineffectiveness |  |  | Cash flow hedge reserve |  |  | Costs of hedging hedge reserve |  |  | Balances remaining in the cash flow hedge reserve from hedging relationships for which hedge accounting is no longer applied |
Variable-rate instruments |  | Ps. |  | (247,981 | ) |  | Ps. |  | (247,981 | ) |  | Ps. |  | - |  |  | Ps. |  | - |

Interest rate risk |  | Change in value used for calculating hedge ineffectiveness |  |  | Cash flow hedge reserve |  |  | Costs of hedging hedge reserve |  |  | Balances remaining in the cash flow hedge reserve from hedging relationships for which hedge accounting is no longer applied |
Variable-rate instruments |  | Ps. |  | (661,653 | ) |  | Ps. |  | 471,107 |  |  | Ps. |  | - |  |  | Ps. |  | - |

The amounts relating to items designated as hedging instruments and hedge ineffectiveness as of December 31, 2019 and 2020, were as follows:

Interest rate risk |  | Nominal amount |  |  | Carrying amount (Liabilities) |  |  | Line item in the statement of financial position where the hedging instrument is included |  | Changes in the value of the hedging instrument recognized in OCI |  |  | Amount reclassified from costs of hedging reserve to profit or loss |  |  | Line item in profit or loss affected by the reclassification
Interest rate swaps |  | Ps. |  | 5,300,000 |  |  | Ps. |  | (247,981 | ) |  | Derivative financial instruments (liabilities) |  | Ps. |  | (247,981 | ) |  | Ps. |  | (1,045 | ) |  | Finance costs

Interest rate risk |  | Nominal amount |  |  | Carrying amount (Liabilities) |  |  | Line item in the statement of financial position where the hedging instrument is included |  | Changes in the value of the hedging instrument recognized in OCI |  |  | Amount reclassified from costs of hedging reserve to profit or loss |  |  | Line item in profit or loss affected by the reclassification
Interest rate swaps |  | Ps. |  | 8,300,000 |  |  | Ps. |  | (676,188 | ) |  | Derivative financial instruments (liabilities) |  | Ps. |  | (413,672 | ) |  | Ps. |  | (13,490 | ) |  | Finance costs

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The following tables provides a reconciliation by risk category of components of equity and analysis of OCI items and net of tax, resulting from cash flow hedge accounting as of December 31, 2019 and 2020:

|  | 2019 |
Cash flow hedges |  |  | Hedge Reserve |
Balance on January 1, 2019 |  | Ps. |  | — |
Changes in fair value |  |  |  | (247,981 | )
Amount reclassified to profit or loss |  |  |  | (1,045 | )
Changes in deferred tax asset |  |  |  | 76,931 |
Balance at December 31, 2019 |  | Ps. |  | (172,094 | )
|  | 2020 |
Balance on January 1, 2020 |  | Ps. |  | (172,094 | )
Changes in fair value |  |  |  | (413,672 | )
Amount reclassified to profit or loss |  |  |  | (13,490 | )
Changes in deferred tax asset |  |  |  | 128,149 |
Balance at December 31, 2020 |  | Ps. |  | (471,107 | )

| – | Sensitivity analysis for hedge accounting - The methodology used was a sensitivity analysis calculating the estimated fair value based on variations in each of the reference variables individually (keeping the other variables fixed). We emphasize that the sensitivities in the market value consider the change to international standards (IFRS), therefore, it is included in the counterparty risk in the valuation process and in the respective measurement of sensitivities in the fair market value. In the case of sensitivity to reference interbank interest rates, the three scenarios analyzed are:

| - | Likely: decrease over the entire curve of 25 basis points (0.25%)

| - | Possible: decrease over the entire 50 basis point curve (0.50%)

| - | Stress: decrease over the entire curve of 100 basis points (1.00%)

During 2019, GAP entered into SWAPS interest rate contracts to cover the interest payments of the “GAP 17-2” and “GAP 19” debt securities and “GAP 20” during 2020, referenced to floating interbank interest rates. With these instruments, GAP will pay amounts based on a fixed rate and will receive amounts based on the TIIE reference rate at the valuation date. For accounting purposes under IFRS, the Company has documented these contracts as cash flow hedges, so changes in fair value will be recognized through other comprehensive income. The fair value of these instruments is exposed to decreases in interbank interest rates, such exposure is included in the sensitivity table of derivative financial instruments. The Company estimates that an increase in the reference rates would have similar exposures but opposite.

Decrease in interbank interest rates (basis points) |
|  |  |  | Likely |  |  | Possible |  |  | Stress |
Type of derivative, value or contract |  | Hedge type |  | (25 bps) |  |  | (50 bps) |  |  | (100 bps) |
Hedge accounting derivatives |  | Cash flow |  | Ps. |  | (55,514 | ) |  | Ps. |  | (83,271 | ) |  | Ps. |  | (210,953 | )
Total effect on fair value |  |  |  | Ps. |  | (55,514 | ) |  | Ps. |  | (83,271 | ) |  | Ps. |  | (210,953 | )

Capital Management – The policy of the Board of Directors of the Company is to maintain a strong capital position to provide confidence to its investors, creditors, and the market and to sustain future development of the business. The Board of Directors monitors the return on equity, which the Company defines as the net profit divided by the total Shareholders' equity.

The Board of Directors seeks to maintain the optimal balance for the ratio between total liabilities and the Shareholders' equity, which may result from increased levels of bank loans up to the financial structure that it deems optimal, therefore, management seeks authorization from the Board of Directors for any additional debt issuances or for the prepayment of debt. While total liabilities grow in relation to equity and net profit continues to increase, the Company will generate higher returns on capital. The Company has no obligation to maintain a ratio of equity to total liabilities in particular.

The following is the ratio of stockholders’ equity to total liabilities of the Company at the end of the reporting period:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Shareholders’ equity –controlling interest |  | Ps. |  | 20,708,985 |  |  | Ps. |  | 19,628,172 |  |  | Ps. |  | 21,792,811 |
Total liabilities |  |  |  | 17,778,352 |  |  |  |  | 20,908,361 |  |  |  |  | 28,508,390 |
Ratio of total Shareholders’ equity – controlling interest to liabilities |  |  |  | 1.2 |  |  |  |  | 0.9 |  |  |  |  | 0.8 |

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The Company may elect to repurchase its own shares in the stock market, under the following terms and conditions:

| – | The acquisition has to be previously approved at a Stockholders Meeting and be at market price (except in the case of public offerings or auctions authorized by the stock market).

| – | If the acquisition is made against the Company´s stockholders equity and reflects the acquisition within the repurchased shares account. If the Company decides to cancel the shares it reduces common stock accordingly.

| – | Announcing the amount of common stock issued and paid when determining the authorized stock for repurchase. The Ordinary ShareholdersMeeting shall expressly agree, for each year, the maximum amount of funds that may be used for the repurchase of the Company’s shares, with the only limitation that the sum of the resources that can be used for this purpose, in no event shall exceed the total balance of retained earnings of the Company.

As long the shares belongs to the Company, they are not subject to vote at the Company’s ShareholdersMeeting, nor do they provide rights or economic benefits and are also not considered when determining a quorum to vote.

During the year, there was no change in the Company’s capital management policy. The Company is not subject to external equity requirements, except for those corresponding to the minimum common stock required by Mexican Companies Law (Ley General de Sociedades Mercantiles).

Fair value of the financial instruments – Except for loans and debt securities, management believes the carrying amounts of financial assets and financial liabilities, recognized at amortized cost in the consolidated financial statements, approximate their fair value due to their short-term maturities.

As of December 31, 2018, 2019 and 2020, the fair value of financial liabilities recognized at amortized cost was Ps.13,712,401, Ps.16,648,280 and Ps.24,280,945, respectively, while their book value is Ps.13,620,087 , Ps.16,535,925 and Ps.24,445,925, respectively.

The fair value of loans is determined in accordance with generally accepted pricing models based on discounted cash flow analysis determined in accordance with Level 2 of fair value.

The fair value of financial assets and liabilities is determined as follows:

| – | Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

| – | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e., derived from prices) (Level 2); and

| – | Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3)

The fair value of the derivative financial instruments is determined based on the effect of the relevant economic variables in the future, according to the market valuation curves as of the reporting date and is analyzed with the total exposure in which the Company assigns to variations in the interest rates.

Financial instruments recognized at fair value are categorized according to the fair value hierarchy into levels 1 to 3, and are based on the degree to which their fair value is objectively observable, are:

| – | Financial instruments classified as fair value – Are classified within Level 2 of the fair value hierarchy.

| – | Derivative financial instruments – Are classified within Level 2 of the fair value hierarchy.

5. | Cash and cash equivalents

As of December 31, 2018, 2019 and 2020, the balances are comprised of the following:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Cash |  | Ps. |  | 1,912,047 |  |  | Ps. |  | 3,593,756 |  |  | Ps. |  | 6,068,555 |
Investments of cash surpluses |  |  |  | 3,894,166 |  |  |  |  | 3,897,894 |  |  |  |  | 7,840,689 |
Cash equivalents designated for expenditure, held in trust |  |  |  | 345,244 |  |  |  |  | 8,543 |  |  |  |  | 535,305 |
Total |  | Ps. |  | 6,151,457 |  |  | Ps. |  | 7,500,193 |  |  | Ps. |  | 14,444,549 |

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On December 29, 2017 the Company signed an agreement with Casa de Bolsa Banorte S.A. de C.V., Grupo Financiero Banorte (Banorte) in the Guadalajara airport, Puerto Vallarta airport and San José del Cabo airport. During 2018 and 2019 the investments were made and paid for the trusts entirety, as of December 31, 2020 there is no balance for this extension

On December 28, 2018 the Company signed an agreement with Banorte for the expansion of the trusts with the Guadalajara airport including the contributed funds and interest earned for a total amount of Ps.115,000. The resources must be invested in government securities denominated in local currency or bonds guaranteed by the Mexican Government, as instructed by the Company, and should be immediately available. The length of the trust is for the period in which the contracts with the airports are in force. The Company paid investments during 2019 for the trusts entirety, as of December 31, 2020 there is no balance for this extension.

On December 10, 2020 the Company established twelve trusts for investment and administration with Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, División Fiduciaria, which acts as a trustee, while the airports of the Company are trustors and beneficiaries. The trusts are controlled by a Technical Committee consisting solely of executives of the Company, these trusts are revocable and can only be allocated for the to pay the execution of MDP on the Mexican Airports, the total amount of the trusts is amounted of Ps. 535,305.

6. | Trade accounts receivable

As of December 31, 2018, 2019 and 2020, the trade accounts receivable was comprised of the following:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Trade accounts receivable |  | Ps. |  | 1,444,037 |  |  | Ps. |  | 1,530,432 |  |  | Ps. |  | 1,412,958 |
Allowance for expected credit loss |  |  |  | (48,675 | ) |  |  |  | (51,022 | ) |  |  |  | (146,953 | )
|  | Ps. |  | 1,395,362 |  |  | Ps. |  | 1,479,410 |  |  | Ps. |  | 1,266,005 |

The accounts receivable includes balances to be reimbursed to the Company by domestic and international airlines for passenger charges fees (TUA) of Ps.995,929, Ps.979,037 and Ps.1,032,800 as of December 31, 2018, 2019 and 2020, respectively. Passenger charges are payable for each passenger (other than diplomats, infants, transfer and transit passengers) departing from the airport terminals operated by the Company and are collected by the airlines and subsequently remitted to the Company.

The movements for bad debt expense in the expected credit loss are recognized under cost of services in the consolidated statement of profit or loss and other comprehensive income.

|  | 2018 |  |  | 2019 |  |  | 2020 |
Beginning balance |  | Ps. |  | (31,528 | ) |  | Ps. |  | (48,675 | ) |  | Ps. |  | (51,022 | )
Bad debt expense |  |  |  | (25,289 | ) |  |  |  | (22,125 | ) |  |  |  | (160,537 | )
Reversal of bad debts |  |  |  | 8,142 |  |  |  |  | 19,778 |  |  |  |  | 64,607 |
Ending balance |  | Ps. |  | (48,675 | ) |  | Ps. |  | (51,022 | ) |  | Ps. |  | (146,953 | )

The allowance for expected credit loss is comprised of customer balances that are in litigation or bankruptcy procedure and legal proceedings, which at the date of the consolidated financial statements are not yet completed. As of December 31, 2018, 2019 and 2020 these balances amounted to Ps.17,145, Ps.16,626 and Ps.14,136, respectively. The allowance also includes customer balances in arrears in their payments and in a process of regularization; therefore, they have not been sued. As of December 31, 2018, 2019 and 2020 the amount of these balances amounted to Ps.31,530, Ps.34,396 and Ps.132,817, respectively. During 2018, 2019 and 2020, the Company recognized reversals of bad debt of the balances that were in a legal process with an unfavorable outcome for the Company. The amount of these bad debt expense totaled Ps.8,142, Ps.19,778 and Ps.53,011 , respectively also decreasing the balance of accounts receivable. The reversal of bad debts had no effect on the operating results of the Company during 2018, 2019 and 2020. In 2018 and 2019 no cancellations of allowance were carried out, while 2020 cancellations were for Ps. 11,595.

The allowance for expected credit loss of trade accounts receivable and asset by contracts are based on assumptions about the probability and severity of expected loss. The Company uses judgement to make these assumptions, selecting key and input data for the calculation of the said affirmation prospective at the end of each reporting period.

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The following are past due balances of accounts receivable, for which there has not been a provision of allowance for doubtful accounts, according to the Company’s policy and their maturity date:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Accounts receivables past due from 1 to 30 days |  | Ps. |  | 70,073 |  |  | Ps. |  | 133,533 |  |  | Ps. |  | 55,461 |
Accounts receivables past due 31 to 60 days |  |  |  | 25,934 |  |  |  |  | 91,640 |  |  |  |  | 25,223 |
Accounts receivables past due 61 to 90 days |  |  |  | 14,482 |  |  |  |  | 30,832 |  |  |  |  | 15,736 |
Accounts receivables past due more than 90 days |  |  |  | 93 |  |  |  |  | 24 |  |  |  |  | 4 |
|  | Ps. |  | 110,582 |  |  | Ps. |  | 256,029 |  |  | Ps. |  | 96,424 |

The following is the percentage of the main clients of the Company with relation to the total of the trade accounts receivable, segregating the accounts receivable of airport services (SAE) and the passengers charges (TUA) that correspond to the amounts that airlines recover from passengers on behalf of the Company and subsequently pay:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
|  | % receivable of TUA |  |  | % receivable of SAE |  |  | % receivable of TUA |  |  | % receivable of SAE |  |  | % receivable of TUA |  |  | % receivable of SAE |
Concesionaria Vuela Compañía de Aviación, S.A.P.I. de C.V. |  |  | 22.5 | % |  |  | 3.6 | % |  |  | 17.8 | % |  |  | 3.8 | % |  |  | 32.5 | % |  |  | 4.2 | %
Aeroenlaces Nacionales, S.A. de C.V. |  |  | 11.4 | % |  |  | 1.1 | % |  |  | 8.7 | % |  |  | 1.4 | % |  |  | 19.2 | % |  |  | 1.7 | %
American Airlines |  |  | 3.9 | % |  |  | 0.4 | % |  |  | 4.1 | % |  |  | 0.3 | % |  |  | 3.4 | % |  |  | 0.8 | %
Aerovías de México, S.A. de C.V. |  |  | 6.3 | % |  |  | 0.6 | % |  |  | 5.9 | % |  |  | 0.8 | % |  |  | 5.1 | % |  |  | 0.5 | %

The Company has cash, bonds and goods that guarantee certain amounts from TUA as well as accounts receivable from clients as of December 31, 2018, 2019 and 2020. These guarantees could be applied to any unpaid balance in the event of a breach from clients and under certain circumstances.

The Company limits its exposure to credit risk from Trade accounts receivable by establishing a maximum payment period (30 and 45 days) for airlines and commercial customers. During the year ended 31 December 2020, the Company temporarily extended the credit terms to up to 180 days for specific customers with liquidity constraints arising as a direct result of the COVID-19 pandemic. All extensions were granted within current revenues limits after careful consideration of the impact of the COVID-19 pandemic on the creditworthiness of the customer and each customer that was granted an extension is closely monitored for credit deterioration.

7. | Machinery, equipment and improvements on leased assets

As of December 31, 2018, 2019 and 2020, the machinery, equipment and improvements on leased assets are comprised as follows:

|  | Balance as of January 1, 2018 |  |  | Additions |  |  | Disposals |  |  | Currency translation effect |  |  | Balance as of December 31, 2018 |
Investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Machinery and equipment |  | Ps. |  | 2,268,920 |  |  | Ps. |  | 444,495 |  |  | Ps. |  | (62,642 | ) |  | Ps. |  | 15,759 |  |  | Ps. |  | 2,666,532 |
Office furniture and equipment |  |  |  | 240,898 |  |  |  |  | 61,414 |  |  |  |  | (1,455 | ) |  |  |  | 469 |  |  |  |  | 301,326 |
Computer equipment |  |  |  | 710,584 |  |  |  |  | 107,381 |  |  |  |  | (9,104 | ) |  |  |  | 5,602 |  |  |  |  | 814,463 |
Transportation equipment |  |  |  | 47,068 |  |  |  |  | 13,537 |  |  |  |  | (3,072 | ) |  |  |  | 562 |  |  |  |  | 58,095 |
Communication equipment |  |  |  | 30,432 |  |  |  |  | 1,633 |  |  |  |  | (911 | ) |  |  |  | — |  |  |  |  | 31,154 |
Improvements on leased assets |  |  |  | 71,598 |  |  |  |  | 3,995 |  |  |  |  | (4,010 | ) |  |  |  | — |  |  |  |  | 71,583 |
Total investment |  |  |  | 3,369,500 |  |  |  |  | 632,455 |  |  |  |  | (81,194 | ) |  |  |  | 22,392 |  |  |  |  | 3,943,153 |
Accumulated depreciation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Machinery and equipment |  |  |  | (1,071,571 | ) |  |  |  | (221,674 | ) |  |  |  | 55,770 |  |  |  |  | (2,229 | ) |  |  |  | (1,239,704 | )
Office furniture and equipment |  |  |  | (117,093 | ) |  |  |  | (20,839 | ) |  |  |  | 1,864 |  |  |  |  | (197 | ) |  |  |  | (136,265 | )
Computer equipment |  |  |  | (459,513 | ) |  |  |  | (135,272 | ) |  |  |  | 9,054 |  |  |  |  | (305 | ) |  |  |  | (586,036 | )
Transportation equipment |  |  |  | (34,558 | ) |  |  |  | (8,177 | ) |  |  |  | 3,066 |  |  |  |  | (190 | ) |  |  |  | (39,859 | )
Communication equipment |  |  |  | (16,776 | ) |  |  |  | (2,354 | ) |  |  |  | 786 |  |  |  |  | — |  |  |  |  | (18,344 | )
Improvements on leased assets |  |  |  | (14,301 | ) |  |  |  | (3,328 | ) |  |  |  | 917 |  |  |  |  | — |  |  |  |  | (16,712 | )
Total accumulated depreciation |  |  |  | (1,713,812 | ) |  |  |  | (391,644 | ) |  |  |  | 71,457 |  |  |  |  | (2,921 | ) |  |  |  | (2,036,920 | )
Net amounts |  | Ps. |  | 1,655,688 |  |  | Ps. |  | 240,811 |  |  | Ps. |  | (9,737 | ) |  | Ps. |  | 19,471 |  |  | Ps. |  | 1,906,233 |

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|  | Balance as of January 1, 2019 |  |  | Additions |  |  | Disposals |  |  | Currency translation effect |  |  | Balance as of December 31, 2019 |
Investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Machinery and equipment |  | Ps. |  | 2,666,532 |  |  | Ps. |  | 224,218 |  |  | Ps. |  | (39,546 | ) |  | Ps. |  | (12,481 | ) |  | Ps. |  | 2,838,723 |
Office furniture and equipment |  |  |  | 301,326 |  |  |  |  | 60,415 |  |  |  |  | (12,209 | ) |  |  |  | (1,965 | ) |  |  |  | 347,567 |
Computer equipment |  |  |  | 814,463 |  |  |  |  | 133,162 |  |  |  |  | (30,576 | ) |  |  |  | (6,301 | ) |  |  |  | 910,748 |
Transportation equipment |  |  |  | 58,095 |  |  |  |  | 17,585 |  |  |  |  | (1,178 | ) |  |  |  | (785 | ) |  |  |  | 73,717 |
Communication equipment |  |  |  | 31,154 |  |  |  |  | 1,261 |  |  |  |  | (2,823 | ) |  |  |  | — |  |  |  |  | 29,592 |
Improvements on leased assets |  |  |  | 71,583 |  |  |  |  | 764 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 72,347 |
Total investment |  |  |  | 3,943,153 |  |  |  |  | 437,405 |  |  |  |  | (86,332 | ) |  |  |  | (21,532 | ) |  |  |  | 4,272,694 |
Accumulated depreciation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Machinery and equipment |  |  |  | (1,239,704 | ) |  |  |  | (260,223 | ) |  |  |  | 37,221 |  |  |  |  | 17,968 |  |  |  |  | (1,444,738 | )
Office furniture and equipment |  |  |  | (136,265 | ) |  |  |  | (26,821 | ) |  |  |  | 11,059 |  |  |  |  | 1,388 |  |  |  |  | (150,639 | )
Computer equipment |  |  |  | (586,036 | ) |  |  |  | (136,589 | ) |  |  |  | 26,949 |  |  |  |  | 10,912 |  |  |  |  | (684,764 | )
Transportation equipment |  |  |  | (39,859 | ) |  |  |  | (10,210 | ) |  |  |  | 1,023 |  |  |  |  | 387 |  |  |  |  | (48,659 | )
Communication equipment |  |  |  | (18,344 | ) |  |  |  | (2,274 | ) |  |  |  | 2,663 |  |  |  |  | — |  |  |  |  | (17,955 | )
Improvements on leased assets |  |  |  | (16,712 | ) |  |  |  | (3,543 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | (20,255 | )
Total accumulated depreciation |  |  |  | (2,036,920 | ) |  |  |  | (439,660 | ) |  |  |  | 78,915 |  |  |  |  | 30,655 |  |  |  |  | (2,367,010 | )
Net amounts |  | Ps. |  | 1,906,233 |  |  | Ps. |  | (2,255 | ) |  | Ps. |  | (7,417 | ) |  | Ps. |  | 9,123 |  |  | Ps. |  | 1,905,684 |

|  | Balance as of January 1, 2020 |  |  | Additions |  |  | Disposals |  |  | Currency translation effect |  |  | Balance as of December 31, 2020 |
Investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Machinery and equipment |  | Ps. |  | 2,838,723 |  |  | Ps. |  | 596,729 |  |  | Ps. |  | (156,335 | ) |  | Ps. |  | (12,481 | ) |  | Ps. |  | 3,341,641 |
Office furniture and equipment |  |  |  | 347,567 |  |  |  |  | 19,308 |  |  |  |  | (900 | ) |  |  |  | 2,991 |  |  |  |  | 368,966 |
Computer equipment |  |  |  | 910,748 |  |  |  |  | 160,764 |  |  |  |  | (12,237 | ) |  |  |  | 20,326 |  |  |  |  | 1,079,601 |
Transportation equipment |  |  |  | 73,717 |  |  |  |  | 36,226 |  |  |  |  | (7,715 | ) |  |  |  | 1,573 |  |  |  |  | 103,801 |
Communication equipment |  |  |  | 29,592 |  |  |  |  | 530 |  |  |  |  | (428 | ) |  |  |  | — |  |  |  |  | 29,694 |
Improvements on leased assets |  |  |  | 72,347 |  |  |  |  | — |  |  |  |  | (14,393 | ) |  |  |  | — |  |  |  |  | 57,954 |
Total investment |  |  |  | 4,272,694 |  |  |  |  | 813,557 |  |  |  |  | (192,008 | ) |  |  |  | 87,414 |  |  |  |  | 4,981,657 |
Accumulated depreciation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Machinery and equipment |  |  |  | (1,444,738 | ) |  |  |  | (298,406 | ) |  |  |  | 32,604 |  |  |  |  | (28,336 | ) |  |  |  | (1,738,876 | )
Office furniture and equipment |  |  |  | (150,639 | ) |  |  |  | (28,847 | ) |  |  |  | 866 |  |  |  |  | (1,579 | ) |  |  |  | (180,199 | )
Computer equipment |  |  |  | (684,764 | ) |  |  |  | (141,593 | ) |  |  |  | 12,236 |  |  |  |  | (843 | ) |  |  |  | (814,964 | )
Transportation equipment |  |  |  | (48,659 | ) |  |  |  | (15,464 | ) |  |  |  | 6,727 |  |  |  |  | (413 | ) |  |  |  | (57,809 | )
Communication equipment |  |  |  | (17,955 | ) |  |  |  | (2,116 | ) |  |  |  | 424 |  |  |  |  | — |  |  |  |  | (19,647 | )
Improvements on leased assets |  |  |  | (20,255 | ) |  |  |  | (3,675 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | (23,930 | )
Total accumulated depreciation |  |  |  | (2,367,010 | ) |  |  |  | (490,101 | ) |  |  |  | 52,857 |  |  |  |  | 31,171 |  |  |  |  | (2,835,425 | )
Net amounts |  | Ps. |  | 1,905,684 |  |  | Ps. |  | 323,456 |  |  | Ps. |  | (139,151 | ) |  | Ps. |  | 56,243 |  |  | Ps. |  | 2,146,232 |

As of December 31, 2018, 2019 and 2020, the net balances of machinery, equipment and improvements on leased assets are:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Net amounts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Machinery and equipment |  | Ps. |  | 1,426,828 |  |  | Ps. |  | 1,393,985 |  |  | Ps. |  | 1,602,765 |
Office furniture and equipment |  |  |  | 165,061 |  |  |  |  | 196,928 |  |  |  |  | 188,767 |
Computer equipment |  |  |  | 228,427 |  |  |  |  | 225,984 |  |  |  |  | 264,637 |
Transportation equipment |  |  |  | 18,236 |  |  |  |  | 25,058 |  |  |  |  | 45,992 |
Communication equipment |  |  |  | 12,810 |  |  |  |  | 11,637 |  |  |  |  | 10,047 |
Improvements on leased assets |  | 54,871 |  |  |  |  | 52,092 |  |  |  |  | 34,024 |
Total amounts |  | Ps. |  | 1,906,233 |  |  | Ps. |  | 1,905,684 |  |  | Ps. |  | 2,146,232 |

The Company has several buildings under operating leases for office use. In Note 32, the costs and obligations under these leases are disclosed.

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8. | Improvements to concession assets

As of December 31, 2018, 2019 and 2020, the improvements to concession assets are comprised as follows:

|  | Balance as of January 1, 2018 |  |  | Additions |  |  | Divestitures |  |  | Transfers |  |  | Currency translation effect |  |  | Balance as of December 31, 2018 |
Investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Improvements to concession assets |  | Ps. |  | 11,779,768 |  |  | Ps. |  | 6,366 |  |  | Ps. |  | (7,919 | ) |  | Ps. |  | 1,669,128 |  |  | Ps. |  | (5,694 | ) |  | Ps. |  | 13,441,649 |
Construction in-progress |  |  |  | 2,376,483 |  |  |  |  | 1,661,060 |  |  |  |  | — |  |  |  |  | (1,669,128 | ) |  |  |  | 13,703 |  |  |  |  | 2,382,118 |
Total investment |  |  |  | 14,156,251 |  |  |  |  | 1,667,426 |  |  |  |  | (7,919 | ) |  |  |  | — |  |  |  |  | 8,009 |  |  |  |  | 15,823,767 |
Accumulated amortization |  |  |  | (4,212,229 | ) |  |  |  | (634,115 | ) |  |  |  | 7,517 |  |  |  |  | — |  |  |  |  | (2,080 | ) |  |  |  | (4,840,907 | )
Net amounts |  | Ps. |  | 9,944,022 |  |  | Ps. |  | 1,033,311 |  |  | Ps. |  | (402 | ) |  | Ps. |  | — |  |  | Ps. |  | 5,929 |  |  | Ps. |  | 10,982,860 |

|  | Balance as of January 1, 2019 |  |  | Additions |  |  | Divestitures |  |  | Transfers |  |  | Currency translation effect |  |  | Balance as of December 31, 2019 |
Investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Improvements to concession assets |  | Ps. |  | 13,441,649 |  |  | Ps. |  | 760,726 |  |  | Ps. |  | (21,977 | ) |  | Ps. |  | 2,804,400 |  |  | Ps. |  | (141,702 | ) |  | Ps. |  | 16,843,096 |
Construction in-progress |  |  |  | 2,382,118 |  |  |  |  | 1,218,757 |  |  |  |  | — |  |  |  |  | (2,804,400 | ) |  |  |  | (14,470 | ) |  |  |  | 782,005 |
Total investment |  |  |  | 15,823,767 |  |  |  |  | 1,979,483 |  |  |  |  | (21,977 | ) |  |  |  | — |  |  |  |  | (156,172 | ) |  |  |  | 17,625,101 |
Accumulated amortization |  |  |  | (4,840,907 | ) |  |  |  | (784,680 | ) |  |  |  | 21,977 |  |  |  |  | — |  |  |  |  | 41,892 |  |  |  |  | (5,561,718 | )
Net amounts |  | Ps. |  | 10,982,860 |  |  | Ps. |  | 1,194,803 |  |  | Ps. |  | - |  |  | Ps. |  | — |  |  | Ps. |  | (114,280 | ) |  | Ps. |  | 12,063,383 |

|  | Balance as of January 1, 2020 |  |  | Additions |  |  | Divestitures |  |  | Transfers |  |  | Currency translation effect |  |  | Balance as of December 31, 2020 |
Investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Improvements to concession assets |  | Ps. |  | 16,843,096 |  |  | Ps. |  | 321,758 |  |  | Ps. |  | — |  |  | Ps. |  | 259,621 |  |  | Ps. |  | 202,739 |  |  | Ps. |  | 17,627,214 |
Construction in-progress |  |  |  | 782,005 |  |  |  |  | 2,153,038 |  |  |  |  | — |  |  |  |  | (259,621 | ) |  |  |  | 9,207 |  |  |  |  | 2,684,629 |
Total investment |  |  |  | 17,625,101 |  |  |  |  | 2,474,796 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 211,946 |  |  |  |  | 20,311,843 |
Accumulated amortization |  |  |  | (5,561,718 | ) |  |  |  | (939,336 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | (46,949 | ) |  |  |  | (6,548,003 | )
Net amounts |  | Ps. |  | 12,063,383 |  |  | Ps. |  | 1,535,460 |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 164,997 |  |  | Ps. |  | 13,763,840 |

As of December 31, 2018, 2019 and 2020, the net amounts of improvements to concession assets are:

|  | Total balance as of |
|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Net amounts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Improvements to concession assets |  | Ps. |  | 8,600,742 |  |  | Ps. |  | 11,281,378 |  |  | Ps. |  | 11,079,211 |
Construction in-progress |  |  |  | 2,382,118 |  |  |  |  | 782,005 |  |  |  |  | 2,684,629 |
Total amounts |  | Ps. |  | 10,982,860 |  |  | Ps. |  | 12,063,383 |  |  | Ps. |  | 13,763,840 |

Improvements to concession assets are comprised by intangible assets from additions and improvements to such assets in accordance with IFRIC 12, as well as other investments that have been carried out to the infrastructure of the airports qualifying as intangible assets, even though they are not in committed investments in the MDP.

As of December 31, 2018, 2019 and 2020, the balance of machinery, equipment, improvements on leased assets and improvements to concession assets includes investments pending to be paid in Mexican airports of Ps. 318,519, Ps. 286,409 and Ps. 540,854, respectively. Construction in-progress relates mainly to the rehabilitation of the expansion of the terminal building at the San José del Cabo airport, the building of a new processing building at the Tijuana airport, the building of a new runway and taxiing runway parallel to the main runway at the Guadalajara airport, installation and adaptation of solar panels in 12 airports and the expansion of the terminal building at the Montego Bay airport.

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9. | Airport concessions

| a. | Mexican Concessions

As described in Note 1.a, the Mexican Government granted concessions to manage, operate and develop 12 airports, and benefit from the use of the airport facilities over a 50-year term beginning November 1, 1998. The value of airport concessions and rights to use airport facilities was determined as explained in Note 1.a, and paid by GAP through the issuance of shares to the Mexican Government.

The table below shows the values of airport concessions and rights to use airport facilities as of December 31, 2018, 2019 and 2020:

Acquisition cost |  | Ps. |  | 15,938,359 |
assigned to: |  |  |  |  |
Rights to use airport facilities (Note 10): |  |  |  |  |
Runways, aprons, platforms |  | Ps. |  | 519,057 |
Buildings |  |  |  | 577,270 |
Other facilities |  |  |  | 91,241 |
Land |  |  |  | 930,140 |
|  |  |  | 2,117,708 |
Airport concessions |  |  |  | 13,820,651 |
|  | Ps. |  | 15,938,359 |

The original amortization term for the concessions is 49 years. As mentioned in Note 1.a, the concession value was assigned in August 1999, the date in which the amortization term began, and will run through November 2048.

Each airport concession agreement contains the following terms and basic conditions:

| – | The concessionaire has the right to manage, operate, maintain and use the airport facilities and carry out any construction, improvements, or maintenance of facilities in accordance with its MDP, and to provide airport, complementary and commercial services. The Company’s investment plans under the MDP must be updated every five years starting from 2000 and approved by the SCT. Each concessionaire is required to make minimum investments at each airport under the terms of its MDP.

| – | The concessionaire will use the airport facilities only for the purposes specified in the concession, will provide services in conformity with the law and applicable regulations, and be subject to inspections by the SCT.

| – | The concessionaire must pay a tax for the use of the assets under concession (currently 5% of the concessionaire’s annual gross revenues derived from the use of public property), in conformity with the Mexican Federal Tax Act. As of December 31, 2018, 2019 and 2020 the Company recognized Ps. 533,492, Ps. 599,053 and Ps. 405,976 , respectively for this tax.

| – | The concessionaire assumed ASA’s rights and obligations derived from airport-related agreements with third parties.

| – | ASA has the exclusive right to supply fuel for consumption at the airport.

| – | The concessionaire must grant free access to specific airport areas to certain Mexican Government agencies (such as customs and immigration) so that they may carry out their activities within the airport.

| – | According to Article 27 of the General Law on Airports, the concession may be revoked if the concessionaire breaches any of its obligations established therein or falls under any of the causes for revocation referred to in Article 26 of the law and in the concession agreement. The breach of certain concession terms may be cause for revocation if the SCT has applied sanctions in three different instances with respect to the same concession term.

| – | The SCT may modify concession terms and conditions that regulate the Company’s operations in accordance to the General Law on Airports.

| – | The concession may be renewed in one or more instances for terms that do not exceed an additional 50 years.

| b. | Sangster International Airport (MBJ)

As disclosed in Note 1.a, the Company acquired DCA in 2015, which holds a 74.5% stake in MBJA in 2015, located in Montego Bay, Jamaica. MBJA has a concession to operate, maintain and operate of the airport for a period of 30 years as of April 12, 2003.

The concession of MBJ contains the following terms and conditions:

| – | On April 2003, MBJ entered into a concession agreement with AAJ in pursuant to which Authority granted MBJA the right to rehabilitate, develop, operate and maintain MBJ. The MBJA is thereby designated as the approved airport operator and permitted

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|  | to undertake the functions of AAJ, regarding MBJ. The agreement was amended on December 16, 2005 and further amended on April 12, 2006.

| – | The concession agreement requires MBJA to provide the airport services set out therein at MBJ.

| – | Through its concession agreement, MBJA is obliged to pay AAJ a monthly concession fee on the basis of traffic units (passengers) multiplied by the rate established in the concession. The rate is subject to an annual adjustment according to the National Consumer Price Index in the United States (CPI). MBJA is also required to pay an additional concession fee equal to 45% of any revenues earned in excess of the forecast revenues established in the Concession Agreement. This additional concession fee is for over the period from April to March of each year, with payment required annually. For the years ended December 31, 2018, 2019 and 2020 the Company recognized USD$28.2 million, USD$31.7 million and USD$9.7 million, respectively.

| – | The concession agreement is governed by Jamaican laws and MBJA cannot assign its rights or obligations under the agreement (except by way of security for indebtedness, and without the prior written consent of AAJ).

| – | AAJ can terminate the concession agreement in the event of default of MBJA including insolvency of MBJA or its shareholders (if the latter had a material adverse effect on MBJA), cessation of business, material breach by MBJA of the concession agreement including non-payment of any amount due within 60 days after the due date, change of control, bribery or corruption or failure by the shareholders to provide equity funding required by applicable documents. In addition, the MBJA may terminate the concession agreement in the event of a material breach by the AAJ which has a material adverse effect on the business of the MBJ or expropriation or other material adverse action by the Jamaican Government.

| c. | Norman Manley International Airport (NMIA)

After a competitive public bidding process among various bidders the Company was selected by the Government of Jamaica to operate, modernize and expand the NMIA, located in the city of Kingston, through a 25-year concession agreement.

The NMIA Concession contains the following terms and conditions:

| – | On October 10, 2018, PACKAL entered into a concession agreement the NMIA with AAJ through which the Authorities granted to PACKAL the right to operate, modernize and expand NMIA, therefore, PACKAL is designated as the approved airport operator and permitted to undertake the functions of AAJ with respect to NMIA, and took over control on October 10, 2019.

| – | Through the Concession agreement, PACKAL is obliged to pay the AAJ a monthly concession fee of 62.01% of the total aeronautical and non-aeronautical revenues based on the gross revenues. As of December 31, 2019 and 2020 the Company recognized USD$5.6 million and USD13.7 million, respectively.

| – | The concession agreement is governed by Jamaican laws and under the IFRS and PACKAL cannot assign its rights or obligations under the agreement (except by way of security for indebtedness, without the prior written consent of AAJ).

| – | On November 7, 2018 PACKAL paid to the IFC the fees of USD $2.1 million for the public bidding process.

| – | On October 8, 2019 PACKAL paid to the Authority of USD $5.0 million as an upfront payment before taking control of NMIA.

| – | The AAJ can terminate the concession agreement in the event of a default of PACKAL including insolvency of PACKAL or its shareholders, cessation of business, material breach by NMIA of the concession agreement including non-payment of any amount due within 60 days after the due date, change of control, bribery or corruption or failure by the shareholders to provide equity funding required by applicable documents. Furthermore, PACKAL may terminate the concession agreement in the event of a material breach by AAJ which has a material adverse effect on the business of NMIA or expropriation or other material adverse action by the Jamaican Government.

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The value of the concessions as of December 31, 2018, 2019 and 2020 is as follows:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Mexican airport concessions |  | Ps. |  | 13,820,651 |  |  | Ps. |  | 13,820,651 |  |  | Ps. |  | 13,820,651 |
Concession airport MBJA (fair value on date of acquisition in USD$176,086,000) (1) |  |  |  | 3,465,882 |  |  |  |  | 3,318,376 |  |  |  |  | 3,512,687 |
Concession airport NMIA (upfront fees on date of acquisition in USD$7,146,500) |  |  |  | 140,664 |  |  |  |  | 134,677 |  |  |  |  | 142,564 |
Less - accumulated amortization (2) |  |  |  | (6,015,079 | ) |  |  |  | (6,452,108 | ) |  |  |  | (6,826,682 | )
|  | Ps. |  | 11,412,118 |  |  | Ps. |  | 10,821,596 |  |  | Ps. |  | 10,649,220 |

(1) | The other airport concession includes translation effect for an amount of Ps. 781,857, Ps. 634,350 and Ps. 828,854 as of December 31, 2018, 2019 and 2020, respectively.

(2) | Amortization includes translation effect for an amount of Ps. 4,315, Ps. (38,776) and Ps. (122,953) as of December 2018, 2019 and 2020, respectively.

The amortization charge for the years ended December 31, 2018, 2019 and 2020, amounts to Ps. 469,646, Ps.475,805 and Ps. 497,527, respectively.

10. | Rights to use airport facilities

The value of the rights to use airport facilities as of December 31, 2018, 2019 and 2020 was as follows (only Mexican airports):

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Rights to use airport facilities |  | Ps. |  | 2,117,708 |  |  | Ps. |  | 2,117,708 |  |  | Ps. |  | 2,117,708 |
Less - accumulated amortization |  |  |  | (1,187,412 | ) |  |  |  | (1,244,110 | ) |  |  |  | (1,300,810 | )
|  | Ps. |  | 930,296 |  |  | Ps. |  | 873,598 |  |  | Ps. |  | 816,898 |

The amortization charge for the years ended December 31, 2018, 2019 and 2020 amounts to Ps. 56,699, Ps. 56,698 and Ps. 56,700, respectively.

11. | Other acquired rights

As of December 31, 2018, 2019 and 2020 the other acquired rights correspond to payments made by the Company after the date the concessions were granted, in order to early-terminate certain long-term lease contracts that existed at that time between ASA and third-party leaseholders in Mexican airports. The rights acquired are comprised as follows:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Right to operate the charter and general aviation terminal and FBO at San José del Cabo airport terminal |  | Ps. |  | 344,443 |  |  | Ps. |  | 344,443 |  |  | Ps. |  | 344,443 |
Right to operate commercial space at Tijuana airport |  |  |  | 15,935 |  |  |  |  | 15,935 |  |  |  |  | 15,935 |
Right to operate various space at Puerto Vallarta airport |  |  |  | 309,616 |  |  |  |  | 309,616 |  |  |  |  | 309,616 |
Right to operate commercial space at Guadalajara airport |  |  |  | 93,560 |  |  |  |  | 93,560 |  |  |  |  | 93,560 |
Right to operate various parking lots |  |  |  | 5,673 |  |  |  |  | 5,673 |  |  |  |  | 5,673 |
|  |  |  | 769,227 |  |  |  |  | 769,227 |  |  |  |  | 769,227 |
Less – accumulated amortization |  |  |  | (270,931 | ) |  |  |  | (287,627 | ) |  |  |  | (304,324 | )
|  | Ps. |  | 498,296 |  |  | Ps. |  | 481,600 |  |  | Ps. |  | 464,903 |

Amortization recognized for the years ended December 31, 2018, 2019 and 2020 amounted to Ps. 16,696, Ps. 16,696 and Ps. 16,697, respectively. These assets have a useful life until the end of the concession, as their use and operation will continue until the term expires.

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12. | Income taxes

The Company is subject to income taxes, in accordance with the tax laws in Mexico, Spain and Jamaica.

Current income taxes – The income tax rate for the Mexican entities is 30%. With the exception of the airports of Mexicali and Tijuana located in the Border of Mexico with the United States of America, which for year 2020 will be 20%, applying the “Decreto de Estímulos Fiscales Región Fronteriza Norte” in which one third of the income tax will be applied and according to the decree published by the Government of Mexico in December 2020, the decree is extended until 2024. The tax rate for MBJA and PACKAL is 25% in Jamaica, while for DCA in Spain the tax rate is 25%.

To determine deferred income taxes as of December 31, 2018, 2019 and 2020 the Company applied the applicable tax rates to temporary differences based on their estimated reversal dates in Entities of the Company.

| a. | Recoverable income taxes paid on dividends – Dividends paid to Shareholders which are not derived from the net tax income account (CUFIN) generate current income taxes and can be credited against the taxes of the Company during the year of the dividend payment and the two subsequent years in the Mexican entities.

| b. | Recoverable taxes – In the regular course of operations, the Company generates receivable balances by the overpayment of taxes payable, according to the calculation mechanism established in the Tax Law, which are recoverable through tax returns or offsetting. The main recoverable taxes are Income Tax (ISR), the Asset Tax (IMPAC) and the Value Added Tax (IVA).

The balances of recoverable taxes are comprised as follows:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Recoverable taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
IMPAC |  | Ps. |  | 57,759 |  |  | Ps. |  | 39,186 |  |  | Ps. |  | 24,338 |
ISR |  |  |  | 40,492 |  |  |  |  | 98,742 |  |  |  |  | 479,032 |
IVA |  |  |  | 28,729 |  |  |  |  | 35,508 |  |  |  |  | 350,536 |
Business flat tax (IETU) |  |  |  | 3,399 |  |  |  |  | 1,929 |  |  |  |  | 1,929 |
Withholding taxes |  |  |  | 22,362 |  |  |  |  | 43,130 |  |  |  |  | 200,393 |
Corporation taxes |  |  |  | 66,338 |  |  |  |  | 71,599 |  |  |  |  | 15,329 |
Other |  |  |  | 1,065 |  |  |  |  | 1,481 |  |  |  |  | 1,298 |
|  | Ps. |  | 220,144 |  |  | Ps. |  | 291,575 |  |  | Ps. |  | 1,072,855 |

| c. | Income Tax – Income tax expense (benefit) for the years ended December 31, 2018, 2019 and 2020 consists of the following:

|  | 2018 |  |  | 2019 |  |  | 2020 |
ISR: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  | Ps. |  | 2,117,491 |  |  | Ps. |  | 2,055,783 |  |  | Ps. |  | 722,474 |
Deferred |  |  |  | (248,450 | ) |  |  |  | (164,340 | ) |  |  |  | (255,407 | )
|  | Ps. |  | 1,869,041 |  |  | Ps. |  | 1,891,443 |  |  | Ps. |  | 467,067 |

| d. | Effective tax rate – The reconciliation of the statutory income tax rate and the actual effective income tax rate as a percentage of income before income taxes for the years ended December 31, 2018, 2019 and 2020 is shown below:

|  | % |  |  | 2018 |  |  | % |  |  |  | 2019 |  |  | % |  |  | 2020 |
Income before income taxes |  |  |  |  |  | Ps. |  | 7,007,672 |  |  |  |  |  |  | Ps. |  | 7,346,185 |  |  |  |  |  |  | Ps. |  | 2,385,770 |
Income tax by applying the weighted average statutory rate (1) |  |  | 30.0 | % |  |  |  | 2,102,302 |  |  |  | 30.0 | % |  |  |  | 2,203,856 |  |  |  | 30.0 | % |  |  |  | 715,731 |
Effects of inflation over monetary assets |  |  | (3.9 | )% |  |  |  | (271,601 | ) |  |  | (3.5 | )% |  |  |  | (260,249 | ) |  |  | (3.5 | )% |  |  |  | (255,946 | )
(Unrecognized) applied tax loss carryforwards |  |  | 0.8 | % |  |  |  | 57,733 |  |  |  | 0.8 | % |  |  |  | 61,953 |  |  |  | 0.8 | % |  |  |  | 48,041 |
Derecognition of deferred tax asset |  |  | 0.9 | % |  |  |  | 60,115 |  |  |  | — |  |  |  |  | — |  |  |  | — |  |  |  |  | — |
Tax rate change in border area |  |  | 0.3 | % |  |  |  | 19,391 |  |  |  | (0.1 | )% |  |  |  | (10,332 | ) |  |  | (0.1 | )% |  |  |  | 45,220 |
Employee benefits |  |  | (0.1 | %) |  |  |  | (603 | ) |  |  | (0.1 | %) |  |  |  | (9,586 | ) |  |  | (0.1 | %) |  |  |  | (3,127 | )
Cancellation of recoverable tax on assets - undue payments |  |  | (0.8 | )% |  |  |  | (54,444 | ) |  |  | — |  |  |  |  | — |  |  |  | — |  |  |  |  | — |
Other |  |  | (0.6 | )% |  |  |  | (43,852 | ) |  |  | (1.3 | )% |  |  |  | (94,199 | ) |  |  | (1.3 | )% |  |  |  | (82,852 | )
Effective tax rate |  |  | 26.6 | % |  | Ps. |  | 1,869,041 |  |  |  | 25.8 | % |  | Ps. |  | 1,891,443 |  |  |  | 25.8 | % |  | Ps. |  | 467,067 |

(1) | The tax rate used for the 2018, 2019 and 2020 previous reconciliations above is the average corporate tax rate, respectively payable by corporate entities in Mexico, Jamaica and Spain on taxable profits in accordance with tax laws in these jurisdictions.

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| e. | Assets and liabilities Deferred income tax recognized –

Deferred taxes are presented according to the origin of the operations of the individual subsidiaries of the Company as IAS - 12 Income taxes does not allow the offsetting of taxes in accordance with the following:

An entity must offset deferred tax assets with tax deferred tax liabilities if, and only if:

| (a) | It has a legally enforceable right to offset before the tax authorities the amounts recognized in these items; and

| (b) | deferred tax assets and deferred tax liabilities arising from a tax on profits corresponding to the same fiscal authority, which fall under:

| (i) | the same company or taxable entity; or

| (ii) | different companies or individuals for tax purposes that seek to either liquidate assets and current tax liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which expected to be settled or recovered significant amounts of assets or liabilities for deferred taxes.

The assets for deferred taxes belong to Mexico subsidiaries:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Deferred ISR asset (liability): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expected credit loss |  | Ps. |  | 10,636 |  |  | Ps. |  | 10,831 |  |  | Ps. |  | 29,478 |
Machinery and equipment |  |  |  | 46,723 |  |  |  |  | 50,590 |  |  |  |  | 56,298 |
Improvements to concession assets |  |  |  | 567,497 |  |  |  |  | 605,052 |  |  |  |  | 657,472 |
Airport concessions and rights to use airport facilities |  |  |  | 4,592,116 |  |  |  |  | 4,654,502 |  |  |  |  | 4,691,382 |
Other acquired rights |  |  |  | 139,268 |  |  |  |  | 143,596 |  |  |  |  | 146,980 |
Derivative financial instruments |  |  |  | (39,492 | ) |  |  |  | 82,370 |  |  |  |  | 225,548 |
Other assets |  |  |  | 445 |  |  |  |  | 449 |  |  |  |  | 315 |
Tax loss carryforwards |  |  |  | 113,257 |  |  |  |  | 51,304 |  |  |  |  | 95,886 |
Employee benefits |  |  |  | 27,805 |  |  |  |  | 30,373 |  |  |  |  | 41,447 |
Accruals |  |  |  | 14,024 |  |  |  |  | 19,877 |  |  |  |  | 21,557 |
Deferred income tax asset |  | Ps. |  | 5,472,279 |  |  | Ps. |  | 5,648,944 |  |  | Ps. |  | 5,966,363 |

The net deferred income tax liability corresponds to the subsidiaries in Jamaica:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Deferred tax (liability) asset: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade receivables |  | Ps. |  | (820 | ) |  | Ps. |  | (1,169 | ) |  | Ps. |  | (881 | )
Machinery, equipment and improvements on leased assets |  |  |  | (96,496 | ) |  |  |  | (76,881 | ) |  |  |  | (75,262 | )
Improvements to concession assets |  |  |  | (1,905 | ) |  |  |  | (1,712 | ) |  |  |  | (1,731 | )
Airport concessions |  |  |  | (700,168 | ) |  |  |  | (615,751 | ) |  |  |  | (590,401 | )
Accruals |  |  |  | 14,458 |  |  |  |  | 13,604 |  |  |  |  | 12,796 |
Deferred tax liability |  | Ps. |  | (784,931 | ) |  | Ps. |  | (681,909 | ) |  | Ps. |  | (655,479 | )

| f. | Unrecognized deferred income tax assets – Unrecognized deferred income tax assets in the consolidated statement of financial position are comprised of the following items of the Mexican Companies:

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Tax loss carryforwards |  | Ps. |  | 235,475 |  |  | Ps. |  | 269,898 |  |  | Ps. |  | 306,332 |
Deductible tax temporary difference |  |  |  | 98,929 |  |  |  |  | 102,342 |  |  |  |  | 106,187 |
|  | Ps. |  | 334,404 |  |  | Ps. |  | 372,240 |  |  | Ps. |  | 412,519 |

The Company does not recognize deferred tax assets on tax loss carryforwards for which it is not probable to generate future taxable profits to utilize such tax losses.

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The Company does not recognize deferred tax assets relating to temporary differences between the accounting and tax value of investments in subsidiaries, as it has the power to control the reversal date of those temporary differences, and does not expect them to reverse in the foreseeable future.

| g. | Deferred income tax from tax loss carryforwards – The Company generated tax loss carryforwards in the airports of Aguascalientes, Los Mochis, Morelia, Manzanillo, and at Grupo Aeroportuario del Pacífico, S.A.B. de C.V. The Company estimates tax loss carryforwards will be recoverable in Grupo Aeroportuario del Pacífico, S.A.B. de C.V. With respect to tax legislation relating to concessions, such losses will expire in 2048, except for the tax losses of Grupo Aeroportuario del Pacífico, S.A.B. de C.V., which expire in 2026. Tax losses that can be recovered based on management’s financial projections are recognized as part of the deferred tax asset.

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Tax loss carryforwards |  | Ps. |  | 1,162,441 |  |  | Ps. |  | 1,070,673 |  |  | Ps. |  | 1,340,729 |
Unrecognized tax loss carryforwards |  |  |  | (784,917 | ) |  |  |  | (899,659 | ) |  |  |  | (1,021,106 | )
Recognized tax loss carryforwards |  | Ps. |  | 377,524 |  |  | Ps. |  | 171,014 |  |  | Ps. |  | 319,623 |

| h. | Balances and movements of deferred taxes during the period.

|  | Balance as of January 1, 2018 |  |  | Effects of profit and loss |  |  | Allocation to recoverable taxes |  |  | Other comprehensive income |  |  | Balance as of December 31, 2018 |
Temporary differences for the deferred tax asset: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expected credit loss |  | Ps. |  | 7,209 |  |  | Ps. |  | 3,427 |  |  | Ps. | — |  |  | Ps. | — |  |  | Ps. |  | 10,636 |
Machinery, equipment and improvements on leased assets |  |  |  | 37,645 |  |  |  |  | 9,078 |  |  |  | — |  |  |  | — |  |  |  |  | 46,723 |
Improvements to concession assets |  |  |  | 511,166 |  |  |  |  | 56,331 |  |  |  |  | — |  |  |  | — |  |  |  |  | 567,497 |
Airport concessions and rights to use airport facilities |  |  |  | 4,461,211 |  |  |  |  | 130,905 |  |  |  | — |  |  |  | — |  |  |  |  | 4,592,116 |
Other acquired rights |  |  |  | 130,776 |  |  |  |  | 8,492 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 139,268 |
Derivative financial instruments |  |  |  | (30,667 | ) |  |  |  | (8,825 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | (39,492 | )
Other assets |  |  |  | 387 |  |  |  |  | 58 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 445 |
Tax loss carryforwards |  |  |  | 170,990 |  |  |  |  | (57,733 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | 113,257 |
Employee benefits |  |  |  | 27,257 |  |  |  |  | (5,236 | ) |  |  |  | — |  |  |  |  | 5,784 |  |  |  |  | 27,805 |
Accruals |  |  |  | 12,966 |  |  |  |  | 1,058 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 14,024 |
Recoverable tax on assets |  |  |  | 25,342 |  |  |  |  | 54,444 |  |  |  |  | (79,786 | ) |  |  |  | — |  |  |  |  | — |
Total deferred tax asset |  | Ps. |  | 5,354,282 |  |  | Ps. |  | 191,999 |  |  | Ps. |  | (79,786 | ) |  | Ps. |  | 5,784 |  |  | Ps. |  | 5,472,279 |

|  | Balance as of January 1, 2019 |  |  | Effects of profit and loss |  |  | Other comprehensive income |  |  | Balance as of December 31, 2019 |
Temporary differences for the deferred tax asset: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expected credit loss |  | Ps. |  | 10,636 |  |  | Ps. |  | 195 |  |  | Ps. | — |  |  | Ps. |  | 10,831 |
Machinery, equipment and improvements on leased assets |  |  |  | 46,723 |  |  |  |  | 3,867 |  |  |  | — |  |  |  |  | 50,590 |
Improvements to concession assets |  |  |  | 567,497 |  |  |  |  | 37,554 |  |  |  | — |  |  |  |  | 605,051 |
Airport concessions and rights to use airport facilities |  |  |  | 4,592,116 |  |  |  |  | 62,386 |  |  |  | — |  |  |  |  | 4,654,502 |
Other acquired rights |  |  |  | 139,268 |  |  |  |  | 4,328 |  |  |  |  | — |  |  |  |  | 143,596 |
Derivative financial instruments |  |  |  | (39,492 | ) |  |  |  | 44,931 |  |  |  |  | 76,931 |  |  |  |  | 82,370 |
Other assets |  |  |  | 445 |  |  |  |  | 4 |  |  |  |  | — |  |  |  |  | 449 |
Tax loss carryforwards |  |  |  | 113,257 |  |  |  |  | (61,953 | ) |  |  |  | — |  |  |  |  | 51,304 |
Employee benefits |  |  |  | 27,805 |  |  |  |  | 4,901 |  |  |  |  | (2,333 | ) |  |  |  | 30,373 |
Accruals |  |  |  | 14,024 |  |  |  |  | 5,854 |  |  |  |  | — |  |  |  |  | 19,878 |
Total deferred tax asset |  | Ps. |  | 5,472,279 |  |  | Ps. |  | 102,067 |  |  | Ps. |  | 74,598 |  |  | Ps. |  | 5,648,944 |

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|  | Balance as of January 1, 2020 |  |  | Effects of profit and loss |  |  | Other comprehensive income |  |  | Balance as of December 31, 2020 |
Temporary differences for the deferred tax asset: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expected credit loss |  | Ps. |  | 10,831 |  |  | Ps. |  | 18,647 |  |  | Ps. |  | — |  |  | Ps. |  | 29,478 |
Machinery, equipment and improvements on leased assets |  |  |  | 50,590 |  |  |  |  | 5,708 |  |  |  |  | — |  |  |  |  | 56,298 |
Improvements to concession assets |  |  |  | 605,051 |  |  |  |  | 52,421 |  |  |  |  | — |  |  |  |  | 657,472 |
Airport concessions and rights to use airport facilities |  |  |  | 4,654,502 |  |  |  |  | 36,880 |  |  |  |  | — |  |  |  |  | 4,691,382 |
Other acquired rights |  |  |  | 143,596 |  |  |  |  | 3,384 |  |  |  |  | — |  |  |  |  | 146,980 |
Derivative financial instruments |  |  |  | 82,370 |  |  |  |  | 15,030 |  |  |  |  | 128,148 |  |  |  |  | 225,548 |
Other assets |  |  |  | 449 |  |  |  |  | (134 | ) |  |  |  | — |  |  |  |  | 315 |
Tax loss carryforwards |  |  |  | 51,304 |  |  |  |  | 44,582 |  |  |  |  | — |  |  |  |  | 95,886 |
Employee benefits |  |  |  | 30,373 |  |  |  |  | (1,487 | ) |  |  |  | 12,561 |  |  |  |  | 41,447 |
Accruals |  |  |  | 19,878 |  |  |  |  | 1,679 |  |  |  |  | — |  |  |  |  | 21,557 |
Total deferred tax asset |  | Ps. |  | 5,648,944 |  |  | Ps. |  | 176,710 |  |  | Ps. |  | 140,709 |  |  | Ps. |  | 5,966,363 |

|  | Balance as of January 1, 2018 |  |  | Effects of profit and loss |  |  | Other comprehensive income |  |  | Balance as of December 31, 2018 |
Temporary differences for the deferred tax liability: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade accounts receivable |  | Ps. |  | (822 | ) |  | Ps. |  | 5,220 |  |  | Ps. |  | (5,218 | ) |  | Ps. |  | (820 | )
Machinery, equipment and improvements on leased assets |  |  |  | (103,782 | ) |  |  |  | 6,998 |  |  |  |  | 288 |  |  |  |  | (96,496 | )
Improvements to concession assets |  |  |  | (2,008 | ) |  |  |  | 97 |  |  |  |  | 6 |  |  |  |  | (1,905 | )
Airport concessions |  |  |  | (748,879 | ) |  |  |  | 46,399 |  |  |  |  | 2,312 |  |  |  |  | (700,168 | )
Accruals |  |  |  | 16,238 |  |  |  |  | (2,263 | ) |  |  |  | 483 |  |  |  |  | 14,458 |
Total deferred tax liability |  | Ps. |  | (839,253 | ) |  | Ps. |  | 56,451 |  |  | Ps. |  | (2,129 | ) |  | Ps. |  | (784,931 | )

|  | Balance as of January 1, 2019 |  |  | Effects of profit and loss |  |  | Other comprehensive income |  |  | Balance as of December 31, 2019 |
Temporary differences for the deferred tax liability: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade accounts receivable |  | Ps. |  | (820 | ) |  | Ps. |  | - |  |  | Ps. |  | (349 | ) |  | Ps. |  | (1,169 | )
Machinery, equipment and improvements on leased assets |  |  |  | (96,496 | ) |  |  |  | (74,659 | ) |  |  |  | 94,274 |  |  |  |  | (76,881 | )
Improvements to concession assets |  |  |  | (1,905 | ) |  |  |  | 97 |  |  |  |  | 96 |  |  |  |  | (1,712 | )
Airport concessions |  |  |  | (700,168 | ) |  |  |  | 46,461 |  |  |  |  | 37,956 |  |  |  |  | (615,751 | )
Accruals |  |  |  | 14,458 |  |  |  |  | 90,374 |  |  |  |  | (91,228 | ) |  |  |  | 13,604 |
Total deferred tax liability |  | Ps. |  | (784,931 | ) |  | Ps. |  | 62,273 |  |  | Ps. |  | 40,749 |  |  | Ps. |  | (681,909 | )

|  | Balance as of January 1, 2020 |  |  | Effects of profit and loss |  |  | Other comprehensive income |  |  | Balance as of December 31, 2020 |
Temporary differences for the deferred tax liability: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade accounts receivable |  | Ps. |  | (1,169 | ) |  | Ps. |  | (3,525 | ) |  | Ps. |  | 3,813 |  |  | Ps. |  | (881 | )
Machinery, equipment and improvements on leased assets |  |  |  | (76,881 | ) |  |  |  | 32,937 |  |  |  |  | (31,318 | ) |  |  |  | (75,262 | )
Improvements to concession assets |  |  |  | (1,712 | ) |  |  |  | 107 |  |  |  |  | (126 | ) |  |  |  | (1,731 | )
Airport concessions |  |  |  | (615,751 | ) |  |  |  | 51,834 |  |  |  |  | (26,484 | ) |  |  |  | (590,401 | )
Accruals |  |  |  | 13,604 |  |  |  |  | (2,656 | ) |  |  |  | 1,848 |  |  |  |  | 12,796 |
Total deferred tax liability |  | Ps. |  | (681,909 | ) |  | Ps. |  | 78,697 |  |  | Ps. |  | (52,267 | ) |  | Ps. |  | (655,479 | )

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1 3. | Accounts payable

The Company receives credit from its suppliers for 30 and 45 days without charging interest, whereby the provider payment policy is to pay the maximum term granted. As of the date of these consolidated financial statements there is no supplier that represents more than 10% of its investments in productive assets and/or the total operating costs.

|  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2020 |
Suppliers |  | Ps. |  | 730,361 |  |  | Ps. |  | 735,729 |  |  | Ps. |  | 952,912 |
Interest payable |  |  |  | 84,224 |  |  |  |  | 98,882 |  |  |  |  | 90,759 |
Direct employee benefits |  |  |  | 48,239 |  |  |  |  | 62,494 |  |  |  |  | 88,567 |
Others suppliers |  |  |  | 141,380 |  |  |  |  | 112,635 |  |  |  |  | 56,353 |
Others |  |  |  | 10,932 |  |  |  |  | 11,989 |  |  |  |  | 5,759 |
Total |  | Ps. |  | 1,154,712 |  |  | Ps. |  | 1,163,773 |  |  | Ps. |  | 1,194,350 |

The balance of direct employee benefits corresponding principally of provisions of vacation pay, bonuses and other employee benefits.

1 4. | Leases Obligations

| a. | Lease contracts

The Company leased space for its corporate offices and the lease of utility vehicles and operating vehicles, under a lease agreement. The average lease term is from 2 to 4 years in 2020 and there are options to buy the equipment for a nominal amount at the end of the terms of the lease.

The obligations of the Company stem from financial leases that are guaranteed by the title of the lessors to the leased assets.

| b. | Future minimum lease payment

The amount of future minimum lease payments as of December 31, 2020 were as follows:

|  | Future minimum lease payments |  |  | Interest |  |  | Present value of minimum lease payments |
Less than one year |  | Ps. |  | 12,243 |  |  | Ps. |  | (1,526 | ) |  | Ps. |  | 10,717 |
Less than two years |  | Ps. |  | 14,410 |  |  | Ps. |  | (612 | ) |  | Ps. |  | 13,798 |
Less than three years |  |  |  | 1,717 |  |  |  |  | (39 | ) |  |  |  | 1,678 |
Liabilities for assets in lease long term |  |  |  | 16,127 |  |  |  |  | (651 | ) |  |  |  | 15,476 |
Total liabilities for leased assets |  | Ps. |  | 28,370 |  |  | Ps. |  | (2,177 | ) |  | Ps. |  | 26,193 |

As of December 31, 2018, 2019 and 2020 the Company recognized Ps. 13,118, Ps. 16,261 and Ps. 12,977 respectively for the amortization of assets for the rights of use.

The interest rates that underlie all obligations under lease agreements are fixed by an average discount interest of 8.23% as of January 1°, 2018, and 8.38%, 7.99% and 7.95% during the year 2018, 2019 and 2020. As of December 31, 2018, 2019 and 2020 Ps. 3,733, Ps. 3,703 and Ps. 2,582, respectively was recognized as interest on the liability for lease in the consolidated statement of income and other comprehensive income.

1 5. | Derivative financial instruments

The Company has borrowings denominated in US dollars and debt securities at variable interest rates in pesos, which in case of an increase in interest rates, would reduce the Company’s cash flows. Through the contracting of the CAP´s and SWAP´s with HSBC and Scotiabank, in some of these borrowings, the Company seeks to limit the risk of interest rate increases. In 2016 the Company contracted some hedges in which it has a floor and two collars to the increase in interest rates, so that if the relevant rate surpasses the level established (strike) in the contract, the CAP generates positive cash flows to the Company, which offsets the negative effects of the increase in the interest rates from the underlying loans.

The Company’s derivative financial instruments are negotiated in the market Over The Counter (OTC), through national and international counter parties.

The issuance of debt securities “GAP 15” in February 2015 for Ps. 1,100,000 and the second tranche of the same debt securities “GAP 15” in January 2016 for Ps. 1,100,000, generates interest at a variable rate of TIIE-28 plus 24 basis points with a term of 5 years. This

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credit has a hedge of the interest rate Collar category with floor of 4.05%, CAP 1 5.75% and a second CAP of 6.75%, which ended on February 14, 2020 with the maturity and paid of the debt securities.

During January and February 2016, the Company entered into unsecured credit agreement with Scotiabank and BBVA for USD$95.5 million with each institution, for a total of USD$191.0 million. The loans generate interest at Libor 1M plus 99 and 105 basis points, respectively, with monthly interest payments, for a term of 5 years. For this credit an interest rate hedge Collar category was contracted, with floor of 0.42%, CAP 1 1.75% and a second CAP of 2.75%.

On May 2, 2017, the Company contracted an interest rate SWAP with HSBC, in order to cover the risk of an increased interest rate, related to the issuance of the “GAP 17” with a value of Ps.1,500,000, which were issued at an interest rate TIIE and was swapped to 7.21% fixed rate, until the end of the debt securities certificates.

On February 26, 2019, the Company contracted an interest rate SWAP with Scotiabank, in order to cover the risk of an increased interest rate, related to the issuance of the “GAP 17-2” with a value of Ps. 2,300,000 which were issued at an interest rate TIIE and was swapped to 8.0315% fixed rate, until the end of the debt certificates. Changes in fair value are recognized in other comprehensive income in the statement of income and other comprehensive income and are presented in the hedge reserve and are recycled to financial expenses to the extent that the interest of the associated debt is recognized.

On February 27, 2019, the Company contracted an interest rate SWAP with Scotiabank, in order to cover the risk of an increased interest rate, related to the issuance of the “GAP-19” with a value of Ps. 3,000,000 which were issued at an interest rate TIIE and was swapped to 8.03% fixed rate, until the end of the debt certificates. Changes in fair value are recognized in other comprehensive income in the statement of income and other comprehensive income and are presented in the hedge reserve and are recycled to financial expenses to the extent that the interest of the associated debt is recognized.

On March 2, 2020, the Company contracted an interest rate SWAP with Scotiabank, in order to cover the risk of an increased interest rate, related to the issuance of the “GAP 20” with a value of Ps. 3,000,000 which were issued at an interest rate TIIE and was swapped to 6.33% fixed rate, until the end of the debt certificates. Changes in fair value are recognized in other comprehensive income in the statement of income and other comprehensive income and are presented in the hedge reserve and are recycled to financial expenses to the extent that the interest of the associated debt is recognized.

These financial instruments with HSBC and the financial instrument of Scotiabank to cover the debt security “GAP 15” for Ps. 2,200,000 were not entered into for speculative purposes, but neither were formally designated and therefore did not qualify as hedging instruments for accounting purposes and as a result changes in their fair value and are recognized in profit or loss within finance cost. The financial instruments with Scotiabank to cover the debt securities “GAP 17-2”, “GAP 19” and “GAP 20” and were entered into for speculative purposes and were formally designated and therefore did qualify as hedging instruments for accounting purposes and as a result changes in their fair value are recognized in OCI and profit or loss in the financial instrument of cash flow hedges reserve.

The main characteristics and the fair value of these derivatives as of December 31, 2018, 2019 and 2020 are as follows:

|  | Notional amount (millions) |  |  | Hedge start date |  | Rate |  |  | Floor |  |  | CAP 1 |  |  | CAP 2 |  |  | Due date |  | Fair value as of December 31, 2018 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | January 2021 |  | Ps. |  | 25,572 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | February 2021 |  |  |  | 26,369 |
Scotiabank |  | Ps. |  | 2,200.0 |  |  | April 2016 |  | TIIE 28 |  |  |  | 4.05 | % |  |  | 5.75 | % |  |  | 6.75 | % |  | February 2021 |  |  |  | 24,257 |
HSBC |  | Ps. |  | 1,500.0 |  |  | May 2017 |  | 7.21% |  |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2022 |  |  |  | 60,259 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. |  | 136,457 |
|  | Notional amount (millions) |  |  | Hedge start date |  | Rate |  | Floor |  |  | CAP 1 |  |  | CAP 2 |  |  | Due date |  | Fair value as of December 31, 2018 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | January 2021 |  | Ps. |  | 667 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | February 2021 |  |  |  | 619 |
Scotiabank |  | Ps. | $ | 2,200.0 |  |  | April 2016 |  | TIIE 28 |  |  | 4.05 | % |  |  | 5.75 | % |  |  | 6.75 | % |  | February 2020 |  |  |  | 3,400 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. |  | 4,686 |
HSBC |  | Ps. |  | 1,500.0 |  |  | May 2017 |  | 7.21% |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  | March 2022 |  | Ps. |  | (17,998 | )
Scotiabank |  | Ps. |  | 2,300.0 |  |  | February 2019 |  | 8.0315% |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  | November 2022 |  |  |  | (86,998 | )
Scotiabank |  | Ps. |  | 3,000.0 |  |  | February 2019 |  | 8.03% |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2024 |  |  |  | (160,983 | )
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. |  | (265,979 | )

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|  | Notional amount (millions) |  |  | Hedge start date |  | Rate |  | Floor |  |  | CAP 1 |  |  | CAP 2 |  |  | Due date |  | Fair value as of December 31, 2020 |
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | January 2021 |  | Ps. |  | (476 | )
HSBC |  | USD | $ | 95.5 |  |  | March 2016 |  | Libor 30 |  |  | 0.42 | % |  |  | 1.75 | % |  |  | 2.75 | % |  | February 2021 |  |  |  | (857 | )
HSBC |  | Ps. |  | 1,500.0 |  |  | May 2017 |  | 7.21% |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2022 |  |  |  | (57,090 | )
Derivatives designated as hedge financial instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Scotiabank |  | Ps. |  | 2,300.0 |  |  | February 2019 |  | 8.0315% |  |  | — |  |  |  | — |  |  |  | — |  |  | November 2022 |  | Ps. |  | 154,741 |
Scotiabank |  | Ps. |  | 3,000.0 |  |  | February 2019 |  | 8.03% |  |  | — |  |  |  | — |  |  |  | — |  |  | March 2024 |  |  |  | (335,752 | )
Scotiabank |  | Ps. |  | 3,000.0 |  |  | March 2020 |  | 6.332 |  |  | — |  |  |  | — |  |  |  | — |  |  | February 2025 |  |  |  | (201,788 | )
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Ps. |  | 750,704 |

For the years ended December 31, 2018 a gain of Ps. 29,642, were recognized within finance income as income of the period, due to the net income of the period for its extrinsic value presented net within the finance cost line and on December 31, 2019 and 2020, an amount of Ps. 149,770 and Ps. 43,778, respectively was recognized, as a net expense of the period for the extrinsic value, being presented net within the finance cost line. No amount has been recognized within other comprehensive income items during the year ended December 31, 2018, due to the intrinsic value of the coverage. As of December 31, 2019 and 2020, Ps. 172,094 and Ps. 471,107 respectively have been recognized in the reserve for the loss of the fair value of the coverage for cash flow hedges of the “GAP 17-2”, “GAP 19” and “GAP 20” certificates.

On March 4, 2016, started the hedge of the variable interest rate generated. During 2019, coverage was used because the 30-day Libor exceeded the CAP 1 of 1.75%. As of December 31, 2018, 2019 and 2020 the Company recognized an income of Ps. 9,919, Ps. 19,275 and Ps. 6,376 respectively, for the application of coverage in the comprehensive financing result in the interest line.

On April 1, 2016, started the hedge of the variable interest rate generated. During 2019, coverage was used because the 28-day TIIE rate exceeded the CAP 1 of 5.75%. As of December 31, 2018, 2019 and 2020, the Company recognized an income of Ps. 22,856, Ps. 22,305 and Ps. 2,750, respectively, in favor of the Company for the application of the coverage because the fixed rate agreed in the SWAP was lower than the TIIE.

On May 4, 2017, started the hedge of the variable interest rate generated by the debt securities issued in April 2017; These debt securities were placed at a 28-day TIIE variable rate plus 49 basis points, so a SWAP was contracted to convert it to a fixed rate of 7.21%. As of December 31, 2018, 2019 and 2020 an amount of Ps. 11,517, Ps. 17,300 and Ps. 963, respectively, was recognized a finance income in favor of the Company for the application of the hedge and Ps. 21,934, to financial expense in 2020, due to the variation of the TIIE according to the fixed rate agreed in the SWAP.

On February 26, 2019, started the hedge of the variable interest rate generated by the debt securities issued in November 2017; These debt securities were placed at a 28-day TIIE variable rate plus 44 basis points, so a SWAP was contracted to convert it to a fixed rate of 8.0315%. As of December 31, 2019 an amount of Ps. 6,450 was recognized as a finance income in favor of the Company and as of December 31, 2019 and 2020 Ps. 559 and Ps. 51,032, respectively were recognized to finance cost, for the variation of the TIIE according to the agreed fixed rate of the SWAP.

On February 27, 2019, started the hedge of the variable interest rate generated by the debt securities issued in March 2019; These debt securities were placed at a 28-day TIIE variable rate plus 45 basis points, so a SWAP was contracted to convert it to a fixed rate of 8.03%. As of December 31, 2019 an amount of Ps.6,828 was recognized as a finance income in favor of the Company and as of December 31, 2019 and 2020 Ps. 725 and Ps. 67,027, respectively, were recognized to finance cost for the application of the hedge, because the fixed rate contracted in the SWAP was lower than the TIIE.

On March 2, 2020, started the hedge of the variable interest rate generated by the debt securities issued in February 2020; these debt securities certificates were placed at a 28-day TIIE variable rate plus 17 basis points, so a SWAP was contracted to convert it to a fixed rate of 6.332%. As of December 31, 2020 an amount of Ps. 5,567 was recognized as a finance income in favor of the Company and Ps. 24,513 were recognized to finance cost, for the variation of the TIIE according to the agreed fixed rate of the SWAP.

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1 6. | Bank Loans and issuance of Debt Securities

| a. | Bank Loans

During 2015, the Company obtained loans to finance the acquisition of 100% of the shares of the DCA Company with BBVA and Bank of Nova Scotia, which were refinanced later. With the acquisition of MBJA, the Company assumed loans previously hired by MBJA. All the loans contracted with banking institutions and third parties are described below with the unpaid balance at each date.

|  | December 31 2018 |  |  | December 31 2019 |  |  | December 31 2020 |
MBJA signed a simple unsecured loan with its shareholder Vantage in June 2007 for USD$10,936,000, which is repayable at the same maturity date as the IFC´s loans but are subject to restrictions. Interest is accrued at an interest rate of 14% per annum. The loan does not have an expiration date nor an amortization schedule. |  | Ps. |  | 215,269 |  |  | Ps. |  | 206,107 |  |  | Ps. |  | 218,176 |
In February 2009, MBJA signed a simple unsecured loan with its shareholder Vantage for USD$510,000 to finance expenses related to a construction project of MBJA. The interest rate was set at 8%. The loan does not have an expiration date nor an amortization schedule. |  |  |  | 10,038 |  |  |  |  | 9,610 |  |  |  |  | 10,174 |
On January 19, 2016, GAP refinanced with Bank of Nova Scotia the simple unsecured loan contracted previously in the short term for amount of USD $95.5 million, with a five-year maturity. The loan bears interest at Libor 1M plus 99 basis points. |  |  |  | 1,879,717 |  |  |  |  | 1,799,717 |  |  |  |  | 1,905,101 |
On February 15, 2016, GAP refinanced with BBVA Bancomer the simple unsecured loan contracted previously in the short term for amount of USD $95.5 million, with a five-year maturity. The loan bears interest at Libor 1M plus 105 basis points. |  |  |  | 1,879,717 |  |  |  |  | 1,799,717 |  |  |  |  | 1,905,101 |
On December 28, 2017, MBJA signed a simple unsecured loan with The Bank of Nova Scotia Jamaica Limited for USD$40,000,000. The loan bears interest at Libor 1M plus 280 basis points for a period of 7 years from this disposition and semi-annual instalments. As of December 31, 2019 the balance amounted to USD$33.0 million. |  |  |  | 551,122 |  |  |  |  | 621,891 |  |  |  |  | 718,153 |
On April 13, 2020, GAP signed a simple unsecured loan with Scotiabank for Ps. 1,000,000 for a period of 15 months an interest rate 28 days TIIE variable plus 100 basis points. |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,000,000 |
On May 15, 2020, GAP signed a simple unsecured loan with BBVA Bancomer Ps. 1,000,000. The loan bears interest at a fixed annual interest rate of 6.99% over a period of 2 years. |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,000,000 |
On September 3, 2020, MBJA signed a simple unsecured loan with The Bank of Nova Scotia Jamaica Limited for USD$60,000,000. The loan bears interest at LIBOR plus 310 basis points for a period of 7 years from this disposition and semi-annual instalments. As of December 31, 2020 the balance amounted to USD$30,000,000. |  |  |  |  |  |  |  |  |  |  |  |  |  | 598,461 |
Total unpaid balance of bank loans and long-term debt |  |  |  | 4,535,863 |  |  |  |  | 4,437,043 |  |  |  |  | 7,355,166 |
Less - Current portion |  |  |  | — |  |  |  |  | — |  |  |  |  | (1,159,590 | )
Long-term portion |  | Ps. |  | 4,535,863 |  |  | Ps. |  | 4,437,043 |  |  | Ps. |  | 6,195,576 |

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| b) | Issuance of Debt Securities

|  | December 31 2018 |  |  | December 31 2019 |  |  | December 31 2020 |
Unsecured debt securities issued in the Mexican market on February 20, 2015, for Ps. 1,100,000 under the "GAP 15" name, at a variable interest rate of 28-day TIIE plus 24 basis points for a period of five years, maturing on February 14, 2020. On January 29, 2016, the first reopening was made the long-term debt securities GAP 15 for the total Ps. 1,100,000. It has the same maturity as the originally and accrue the same interest rate. As of December 31, 2020, the TIIE rate is 4.4882% |  | Ps. |  | 2,200,000 |  |  | Ps. |  | 2,200,000 |  |  | Ps. |  | — |
Unsecured debt securities issued in the Mexican market on February 20, 2015, for Ps. 1,500,000 under the name "GAP 15-2" at a fixed annual interest rate of 7.08% over a period of 10 years, maturing on February 7, 2025. |  |  |  | 1,500,000 |  |  |  |  | 1,500,000 |  |  |  |  | 1,500,000 |
Unsecured debt securities issued in the Mexican market on July 8, 2016, for Ps. 1,500,000 under the "GAP 16" name, at a variable interest rate of 28-day TIIE plus 49 basis points for a period of five years. As of December 31, 2020, the TIIE rate is 4.4882% |  |  |  | 1,500,000 |  |  |  |  | 1,500,000 |  |  |  |  | 1,500,000 |
Unsecured debt securities issued in the Mexican market on April 6, 2017, for Ps. 1,500,000 under the "GAP 17" name, at a variable interest rate of 28-day TIIE plus 49 basis points for a period of five years. As of December 31, 2020, the TIIE rate is 4.4882% |  |  |  | 1,500,000 |  |  |  |  | 1,500,000 |  |  |  |  | 1,500,000 |
Unsecured debt securities issued in the Mexican market on November 9, 2017, for Ps. 2,300,000 under the "GAP 17-2" name, at a variable interest rate of 28-day TIIE plus 44 basis points for a period of five years. As of December 31, 2020, the TIIE rate is 4.4882% |  |  |  | 2,300,000 |  |  |  |  | 2,300,000 |  |  |  |  | 2,300,000 |
Unsecured debt securities issued in the Mexican market on March 29, 2019, for Ps. 3,000,000 under the "GAP 19" name, at a variable interest rate of 28-day TIIE plus 44 basis points for a period of five years. As of December 31, 2020, the TIIE rate is 4.4882% |  |  |  | — |  |  |  |  | 3,000,000 |  |  |  |  | 3,000,000 |
Unsecured debt securities issued in the Mexican market on February 13, 2020, for Ps. 3,000,000 under the "GAP 20" name, at a variable interest rate of 28-day TIIE plus 17 basis points for a period of five years. As of December 31, 2020, the TIIE rate is 4.4882% |  |  |  | — |  |  |  |  | — |  |  |  |  | 3,000,000 |
Unsecured debt securities issued in the Mexican market on June 25, 2020, for Ps. 602,000 under the "GAP 20-2" name, at a variable interest rate of 28-day TIIE plus 85 basis points for a period of three years. As of December 31, 2020, the TIIE rate is 4.4882% |  |  |  | — |  |  |  |  | — |  |  |  |  | 602,000 |
Unsecured debt securities issued in the Mexican market on June 25, 2020, for Ps. 3,598,000 under the "GAP 20-3" name, at a fixed interest rate of 8.14% for a period of seven years. |  |  |  | — |  |  |  |  | — |  |  |  |  | 3,598,000 |
Total unpaid balance of long-term debt |  |  |  | 9,000,000 |  |  | Ps. |  | 12,000,000 |  |  | Ps. |  | 17,000,000 |
Less - Current portion |  |  |  | — |  |  | Ps. |  | (2,200,000 | ) |  | Ps. |  | (1,500,000 | )
Long-term portion |  | Ps. |  | 9,000,000 |  |  | Ps. |  | 9,800,000 |  |  | Ps. |  | 15,500,000 |

The proceeds in February and June 2020 from the issuance of the long-term debt securities were allocated to finance capital investments set forth in the Master Development Program for the Mexican Airports of Ps. 4,992,993 and Ps. 2,200,000 for the payment of principal of the stock certificates “GAP 15”. Issuance on February 14, 2020. Issuance expenses of Ps.15,398 were recognized.

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The long-term debt previously described, matures as follows:

Year |  | Amount |
2021 |  | Ps. |  | 2,659,590 |
2022 |  |  |  | 4,959,590 |
2023 |  |  |  | 4,571,791 |
2024 |  |  |  | 3,159,590 |
2025 |  |  |  | 4,687,518 |
Thereafter |  |  |  | 4,317,087 |
|  | Ps. |  | 24,355,166 |

As of December 31, 2018, 2019 and 2020, debts are payable by the following companies:

|  | At December 31, 2018 |
Company |  | Current |  |  | Long-Term |  |  | Total |
GAP |  | Ps. |  | — |  |  | Ps. |  | 12,759,435 |  |  | Ps. |  | 12,759,435 |
MBJA |  |  |  | - |  |  |  |  | 776,428 |  |  |  |  | 776,428 |
Total |  | Ps. |  | - |  |  | Ps. |  | 13,535,863 |  |  | Ps. |  | 13,535,863 |

|  | At December 31, 2019 |
Company |  | Current |  |  | Long-Term |  |  | Total |
GAP |  | Ps. |  | 2,200,000 |  |  | Ps. |  | 13,399,433 |  |  | Ps. |  | 15,599,433 |
MBJA |  |  |  | — |  |  |  |  | 837,610 |  |  |  |  | 837,610 |
Total |  | Ps. |  | 2,200,000 |  |  | Ps. |  | 14,237,043 |  |  | Ps. |  | 16,437,043 |

|  | At December 31, 2020 |
Company |  | Current |  |  | Long-Term |  |  | Total |
GAP |  | Ps. |  | 2,500,000 |  |  | Ps. |  | 20,310,202 |  |  | Ps. |  | 22,810,202 |
MBJA |  |  |  | 159,590 |  |  |  |  | 1,385,374 |  |  |  |  | 1,544,964 |
Total |  | Ps. |  | 2,659,590 |  |  | Ps. |  | 21,695,576 |  |  | Ps. |  | 24,355,166 |

The loan agreements limit the Company’s use of proceeds for the financing of capital expenditures, working capital and prepayments of loans, in addition to prohibiting the merger of the airport creditors with any other entity, as well as the prohibition of sales or transfers of assets in an amount greater than Ps. 1,000, without previous authorization from the creditors. In the event of non-compliance with any of the contracts, dividends from the legal entity may not be decreed. The obligation to maintain certain financial ratios is also established, with the refinancing of the loans some modifications were made and have been fulfilled.

As a result of the issuance of the debt securities, the Company has covenants which have been fulfilled during 2018, 2019 and 2020. The principal payment of the debt securities will be made at the end of the contractual term. Direct costs incurred in the issuance or incurrence of debt are deferred and amortized as part of interest expense, using the effective interest rate over the term of each transaction. These costs include commissions and professional fees.

| c) | Reconciliation of liabilities arising from financing activities

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Non-cash changes |  |  |  |  |  |
|  | Balance as of January 1, 2020 |  |  | Repayments on bank loans |  |  | Proceeds from issuance of Debt securities |  |  | Proceeds from Debt long-term |  |  | Exchange effects |  |  | Long-term reclassification |  |  | Fair value adjustments in P&L |  |  | Hedges fair value adjustments |  |  | Balance as of December 31, 2020 |
Debt securities current portion |  | Ps. |  | 2,200,000 |  |  | Ps. |  | (2,200,000 | ) |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 9,170 |  |  | Ps. |  | 2,650,420 |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 2,659,590 |
Long-term borrowings |  |  |  | 4,437,043 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 2,709,125 |  |  |  |  | 199,828 |  |  |  |  | (1,150,420 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | 6,195,576 |
Debt securities |  |  |  | 9,800,000 |  |  |  |  | — |  |  |  |  | 7,200,000 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (1,500,000 | ) |  |  |  | — |  |  |  |  | — |  |  |  |  | 15,500,000 |
Derivative financial instruments (Note 15) |  |  |  | 261,293 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 62,249 |  |  |  |  | 427,162 |  |  |  |  | 750,704 |
Total |  | Ps. |  | 16,698,336 |  |  | Ps. |  | (2,200,000 | ) |  | Ps. |  | 7,200,000 |  |  | Ps. |  | 2,709,125 |  |  | Ps. |  | 208,998 |  |  | Ps. |  | — |  |  | Ps. |  | 62,249 |  |  | Ps. |  | 427,162 |  |  | Ps. |  | 25,105,870 |

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1 7. | Retirement employee benefits

| a. | Defined contribution plans – Under Mexican legislation, the Company makes payments equivalent to 2% of its workers’ daily comprehensive salary to a defined contribution plan that is part of the retirement savings system. The expense was Ps. 7,162, Ps. 8,016 and Ps. 8,669 in 2018, 2019 and 2020, respectively.

In Jamaica, the Company operates a defined contribution pension plan, which is managed by an independent trust. The Company has no further obligation other than its contribution mandated under the plan. The pension plan is financed primarily by payments from employees and the Company.

| b. | Defined benefit plans – According to the Federal Labor Law in Article 162, the Company is required to pay in Mexico a seniority premium as postemployment benefits if an employee leaves and if have at least 15 years of service, which consist of a payment of 12 days per worked year based on the last salary, not to exceed twice the legal minimum wage established by law. The present value of the retirement benefit obligation and the current service cost and past service costs were calculated by independent experts using the projected unit credit method.

The defined benefit plans in Mexico usually expose the Company to actuarial risks such as: interest rate risk, longevity risk and salary risk.

Interest risk |  | A decrease in the interest rate bond will increase the plan liability.
Longevity risk |  | The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of the plan participants, during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.
Salary risk |  | The present value of the defined benefit plan liability is calculated by reference to the future salaries of the plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

The amount included in the statement of financial position arising from the obligation of the entity for defined benefit plans on December 31, 2018, 2019 and 2020 is as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Present value of defined benefit obligations |  | Ps. |  | 120,606 |  |  | Ps. |  | 144,743 |  |  | Ps. |  | 183,125 |

The table below shows the movements in the present value of defined benefit obligations:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Opening defined benefit obligation |  | Ps. |  | 112,980 |  |  | Ps. |  | 120,606 |  |  | Ps. |  | 144,743 |
Plan modifications |  |  |  | — |  |  |  |  | 956 |  |  |  | - |
Current service cost |  |  |  | 12,775 |  |  |  |  | 13,152 |  |  |  |  | 18,745 |
Interest cost |  |  |  | 8,907 |  |  |  |  | 12,048 |  |  |  |  | 13,245 |
Actuarial gains |  |  |  | (3,359 | ) |  |  |  | (115 | ) |  |  |  | (607 | )
Cost per service passed for modification or reduction |  |  |  | (10,858 | ) |  |  |  | — |  |  |  | - |
New measurement (gains) / losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Actuarial losses resulting from changes in financial and demographic assumptions |  |  |  | 161 |  |  |  |  | 1,404 |  |  |  |  | 23,797 |
Benefits paid |  |  |  | — |  |  |  |  | (3,308 | ) |  |  |  | (16,798 | )
Ending defined benefit obligation |  | Ps. |  | 120,606 |  |  | Ps. |  | 144,743 |  |  | Ps. |  | 183,125 |

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Below are the amounts for the years ended December 31, 2018, 2019 and 2020 that were recognized in the consolidated statements of profit or loss and other comprehensive income:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Current service labor cost |  | Ps. |  | 12,775 |  |  | Ps. |  | 13,152 |  |  | Ps. |  | 18,745 |
Interest cost |  |  |  | 8,907 |  |  |  |  | 12,048 |  |  |  |  | 13,245 |
Actuarial gains |  |  |  | (3,359 | ) |  |  |  | (115 | ) |  |  |  | (607 | )
Cost per service passed for modification or reduction |  |  |  | (10,858 | ) |  |  |  | — |  |  |  |  | — |
Cost per service for plan modification |  |  |  | — |  |  |  |  | 956 |  |  |  |  | — |
Benefits paid |  |  |  | — |  |  |  |  | (3,308 | ) |  |  |  | (16,798 | )
Components of defined benefit costs recognized in net income (Note 24) |  |  |  | 7,465 |  |  |  |  | 22,735 |  |  |  |  | 14,585 |
Measurement of net defined benefit liability: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Actuarial losses arising from changes in financial and demographic assumptions recognized in other comprehensive income |  |  |  | 161 |  |  |  |  | 1,404 |  |  |  |  | 23,797 |
Total recognized as employee benefit cost |  | Ps. |  | 7,626 |  |  | Ps. |  | 24,139 |  |  | Ps. |  | 38,382 |

The main actuarial assumptions at the reporting date (expressed as weighted average nominal rates) are shown below:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Discount of the projected benefit obligation at present value |  | 9.2% |  |  | 7.4% |  |  | 7.1% |
Salary increase |  | 6.0% |  |  | 6.8% |  |  | 6.8% |
Remaining labor life |  | 18.6 years |  |  | 17.6 years |  |  | 17.7 years |
Inflation |  | 6.7% |  |  | 6.0% |  |  | 6.75% |

The discount rate is determined based on the structure of the interest rate curve of government bonds for 30 years. The net interest cost on the retirement benefit obligation is recorded in profit and loss within the cost of services, in conjunction with the other components of liabilities for retirement benefits.

If the discount rate had a variation of 100 basis points upward or downward, the effect on the liability for retirement benefits would be impacted by Ps. 19,109.

Assumptions related to expected mortality are based on statistics and experience of the Mexican population. The average life expectancy of an individual retiring at age 65 is 17 years for men and 19 years for women (Demographic Mortality Experience for Active people, EMSSA 2009).

1 8. | Equity

| a. | As of December 31, 2018, common stock consists of the following:

|  | Number of shares |  |  | Nominal value |
Fixed Capital |  |  |  |  |  |  |  |  |
Series B |  |  | 476,850,000 |  |  | Ps. |  | 6,610,939 |
Series BB |  |  | 84,150,000 |  |  |  |  | 1,166,637 |
Total |  |  | 561,000,000 |  |  | Ps. |  | 7,777,576 |

As of December 31, 2019 and 2020, common stock consists of the following:

|  | Number of shares |  |  | Nominal value |
Fixed Capital |  |  |  |  |  |  |  |  |
Series B |  |  | 476,850,000 |  |  | Ps. |  | 5,257,319 |
Series BB |  |  | 84,150,000 |  |  |  |  | 927,763 |
Total |  |  | 561,000,000 |  |  | Ps. |  | 6,185,082 |

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As of December 31, 2020, all shares are fully subscribed and paid. The Company’s shares are represented by common ordinary shares and without nominal value. Series “BB” shares, which may represent up to 15% of common stock, may only be transferred upon prior conversion into Series “B” shares, based on certain time restrictions.

Each share of Series “B” and “BB” gives the holder the right to one vote at any Ordinary Shareholders’ Meeting. According to the Company’s bylaws, shareholders of Series “B” shares either individually or jointly with their related parties, cannot hold more than 10% of the total outstanding common stock of the Company, and therefore are prohibited from exceeding such limits by participating through trusts, agreements, social pacts or bylaws, pyramid schemes or any other mechanism that provides a larger share than legally allowed. Additionally, the Company’s bylaws provide that if a person individually or jointly with its related parties, acquires a percentage of shares exceeding the limits of participation previously mentioned, the person or group of persons will be required to sell the excess over what is allowed through a public offering, during which time, the shares owned over the 10% threshold by such individuals will not have voting rights and cannot be represented in any Stockholder Meeting. Furthermore, the shareholders of Series “BB” shares, either individually or jointly with their related parties, may also be owners of shares of Series “B” shares, regardless of the shares they hold in the aggregate of Series “B” and Series “BB”. However, for those shareholders of the Series “BB” shares, their votes will be limited to no more than 10% of the voting common stock, and any additional participation is required to vote in the same way of the majority of the votes in any Stockholder Meeting.

Shareholders of Series “BB” shares are entitled to elect four members to the board of directors and their alternates, whereas shareholders of Series “B” shares with rights to vote, even limited or restricted, that individually or together owning 10% or more of the Company’s capital stock is entitled to elect one member to the board of directors at a Shareholders’ Meeting, and in such instances, such a shareholder or group of shareholders may not exercise the right to vote for the board members corresponding to the majority. If any shareholder or group of shareholders representing at least 10% of the common shares of which the common stock is comprised, exercises the right to appoint a board member, such a shareholder will not have the right to vote in the designation of the board members that correspond to appointment by the majority of Series “B” shareholders. The total number of members of the Board of Directors of the Company is 11, therefore holders of Series “B” shares have the right to appoint only seven members.

The members of the Board of Directors appointed by the Shareholders of the Series “BB” will have the ability to make the following valid designations: (i) upon consultation with the Company’s Nomination and Compensation Committee, appointment and dismissal of the Chief Executive Officer and the top-level executive officers; (ii) appointment of three of the six members of the Operating Committee and three alternates, and the number of members and their alternates to the Audit Committee, including the acquisition, nominations and compensation corresponding to 20% (twenty percent) of the total members, with the understanding that there will be at least one member and alternate, for each of them, iii) in the creation and determination of the Operating Committee whom are not part of the Company, members of the Board of Directors or the Company's officers.

For the Audit Committee, is complying with the legal restrictions of independence.

| a. | In an Ordinary Shareholders’ Meeting held on April 25, 2018, the Shareholders approved a dividend payment of Ps. 7.62 per outstanding shares at the date of each payment, excluding shares repurchased in accordance with Article 56 of the Securities Market Law. The first payment for Ps. 3.81 per outstanding share was made on August 21, 2018 of Ps. 2,002,443 and the second payment for Ps. 3.81 per outstanding share was on November 20, 2018 of Ps. 2,002,443. In the same Shareholders’ meeting the reserve for repurchase of shares approved at the Shareholders´ Meeting held on April 25, 2017 of Ps. 995,000 was canceled, and simultaneously the Shareholders approved a maximum amount of Ps. 1,250,000 for the reserve for repurchase of shares to be executed in the next twelve-month period, in case that this will be determinate convenient or necessary by the management of the Company.

| b. | In a General Extraordinary Shareholders’ Meeting held on April 25, 2018, the Shareholders approved a capital reduction of Ps. 2.38 per outstanding shares for the total of Ps. 1,250,870. The payment was made on May 11, 2018.

| c. | In an Ordinary Shareholders’ Meeting held on April 23, 2019, the shareholders approved a dividend payment of Ps. 8.42 per outstanding shares at the date of each payment, excluding shares repurchased in accordance with Article 56 of the Securities Market Law. The first payment for Ps. 4.21 per outstanding share was made on August 29, 2019 of Ps. 2,212,673 and the second payment for Ps. 4.21 per outstanding share was on November 20, 2019 of Ps. 2,212,673. In the same Shareholders´ meeting the reserve for repurchase of shares approved at the Shareholders´ Meeting held on April 25, 2018 of Ps. 1,250,000 was canceled, and simultaneously the Shareholders approved a maximum amount of Ps. 1,550,000 for the reserve for repurchase of shares to be executed in the next twelve-month period, in case that this will be determinate convenient or necessary by the management of the Company.

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| d. | In a General Extraordinary Shareholders’ Meeting held on April 23, 2019, the shareholders approved a capital reduction of Ps. 3.03 per outstanding shares for the total of Ps. 1,592,494. The payment was made on May 17, 2019.

| e. | In an Ordinary Stockholders’ Meeting held on July 1, 2020, was approved the cancellation of the reserve for repurchase of shares approved at the Stockholders´ Meeting held on April 23, 2019 of Ps. 1,550,000, and simultaneously the stockholders approved a maximum amount of Ps. 1,550,000 for the reserve for repurchase of shares to be executed in the next twelve-month period, in case that this will be determinate convenient or necessary by the management of the Company.

| g. | General Corporate Law requires that at least 5% of the unconsolidated net income of the year, be transferred to the legal reserve until the reserve equals 20% of capital stock at par value (nominal pesos). The legal reserve may be capitalized but may not be distributed, except in the form of stock dividends, until the entity is dissolved. The legal reserve must be replenished if it is reduced for any reason. As of December 31, 2018, 2019 and 2020, the legal reserve, in nominal pesos, was Ps. 1,345,709, Ps. 1,592,551 and Ps. 1,592,551, corresponding to 17.3%, 25.7% and 25.7%, of the common stock, respectively.

| h. | As of December 31, 2020, the Company has a maximum amount of funds approved to repurchase shares of the Company for Ps. 3,283,374. From the approved amount, 35,424,453 shares have been repurchased for a total of Ps. 1,733,374, corresponding to repurchases made from September 2010 to February 2014. The remaining balance of Ps. 1,550,000 is available to repurchase shares. During 2020 no repurchase of shares was carried out.

| i. | Shareholders’ equity distribution, except for the restatement amounts of the common stock contributed and the Net tax income account, will be subject to an ISR tax, calculated at the tax rate applicable to the distribution year. This corporate level dividend income tax on the distribution of earnings may be applied as a credit against ISR corresponds to the fiscal year in which the dividend was paid and the subsequent two fiscal years following the date in which the dividend was paid. Starting in 2014, dividends distributed to shareholders that originate from tax retained earnings generated from 2014 and later, will generate an additional withholding tax of 10% that is directly attributable to non-Mexican and individual shareholders receiving the dividend.

| j. | The balances of Shareholders’ equity tax accounts as of December 31, 2018, 2019 and 2020 were as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Contributed capital account |  | Ps. |  | 26,503,103 |  |  | Ps. |  | 25,621,413 |  |  | Ps. |  | 26,428,488 |
Net tax income account |  |  |  | 4,548,882 |  |  |  |  | 4,840,176 |  |  |  |  | 6,826,301 |
Stockholders equity tax account |  | Ps. |  | 31,051,985 |  |  | Ps. |  | 30,461,589 |  |  | Ps. |  | 33,254,789 |

| k. | In years 2018, 2019 and 2020 the balance of other comprehensive income consists of the reserve for foreign currency translation of DCA, MBJA and PACKAL from functional currency (euro and US dollar respectively) to the reporting currency (Mexican peso), the effects of the remeasurements of the employee benefit, the net income tax and the reserve for cash flow hedges financial instruments.

19. | Non-controlling interest (NCI)

On April 20, 2015 the Company acquired 100% of the shares of DCA, which owns 74.5% of the shares of MBJA and the remaining 25.5% is hold by Vantage, as a non-controlling shareholder.

On March 23, 2017, the Board of Directors of MBJA approved to declare dividends from retained earnings in the amount of USD$26.0 million, which was distributed to DCA USD$19.37 million (Ps. 377,603 an exchange rate of Ps. 19.4942) and Vantage USD$6.63 million (Ps. 129,247 an exchange rate Ps. 19.4942), which were paid on January 22, 2018. The payment of this dividend corresponds to the dividends payable as of December 31, 2017 in the consolidated statement of financial position.

On June 12, 2018, the Board of Directors of MBJA approved to declare dividends from retained earnings in the amount of USD$30.0 million, which was distributed to DCA USD$22.35 million (Ps. 424,907 an exchange rate of Ps. 19.0115) and Vantage USD$7.65 million (Ps. 145,438 an exchange rate Ps. 19.0115) and were paid on September 27, 2018.

On December 4, 2019, the Board of Directors of MBJA approved to declare dividends from retained earnings in the amount of USD$30.0 million, which was distributed to DCA USD$22.35 million (Ps. 428,639 an exchange rate of Ps. 19.1785) and Vantage USD$7.65 million (Ps. 146,715 an exchange rate Ps. 19.1785) and were paid on December 16, 2019.

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The following table summarizes the information relating to DCA that has material NCI, before any intra-group elimination as of December 31:

|  | 2018 |  |  | 2019 |  |  | 2020 |
NCI percentage |  | 25.5% |  |  | 25.5% |  |  | 25.5% |
Non-current assets |  | Ps. |  | 5,924,963 |  |  | Ps. |  | 5,683,939 |  |  | Ps. |  | 6,118,680 |
Current assets |  |  |  | 784,583 |  |  |  |  | 746,038 |  |  |  |  | 1,134,440 |
Non-current liabilities |  |  |  | (2,041,456 | ) |  |  |  | (1,847,337 | ) |  |  |  | (2,867,469 | )
Current liabilities |  |  |  | (498,817 | ) |  |  |  | (499,225 | ) |  |  |  | (228,897 | )
Net assets |  |  |  | 4,169,273 |  |  |  |  | 4,083,415 |  |  |  |  | 4,156,754 |
Net assets attributable to NCI |  | Ps. |  | 1,063,165 |  |  | Ps. |  | 1,041,271 |  |  | Ps. |  | 1,059,972 |

|  | 2018 |  |  | 2019 |  |  | 2020 |
Revenues |  | Ps. |  | 2,509,511 |  |  | Ps. |  | 2,413,596 |  |  | Ps. |  | 1,161,805 |
Profit |  |  |  | 397,110 |  |  |  |  | 370,943 |  |  |  |  | (196,677 | )
OCI |  |  |  | (103,569 | ) |  |  |  | (260,464 | ) |  |  |  | 368,848 |
Total comprehensive income |  |  |  | 293,541 |  |  |  |  | 110,479 |  |  |  |  | 172,171 |
Profit allocated to NCI |  |  |  | 101,263 |  |  |  |  | 94,590 |  |  |  |  | (50,153 | )
OCI allocated to NCI |  | Ps. |  | (2,889 | ) |  | Ps. |  | (19,813 | ) |  | Ps. |  | 68,854 |

|  | 2018 |  |  | 2019 |  |  | 2020 |
Net cash provided by operating activities |  |  |  | 772,358 |  |  |  |  | 673,696 |  |  |  |  | (38,123 | )
Net cash provided by investment activities |  |  |  | (642,014 | ) |  |  |  | (69,268 | ) |  |  |  | (245,271 | )
Net cash used in financing activities |  |  |  | (137,040 | ) |  |  |  | (124,059 | ) |  |  |  | 944,221 |
Net increase (decrease) in cash and cash equivalents |  | Ps. |  | (6,696 | ) |  | Ps. |  | 480,368 |  |  | Ps. |  | 660,827 |

2 0. | Revenues

According to the General Law on Airports and its regulations in Mexico, certain of the Company’s revenue are classified as airport, complementary and commercial services. Airport services generally include the use of airport runways, taxiways and parking areas for arriving and departing planes, use of passenger walkways, security services, hangars, and, in general, use of the space inside the terminal and other infrastructure by aircraft, passengers and cargo services. These services include rental of space that is vital for the operation of airlines and complementary service suppliers. Complementary services are ramps and handling services, catering, maintenance and repairs, and traffic and dispatch services. Commercial services include services that are not essential for the operation of an airport; therefore, these revenues are not regulated by MT, such as car parking services, lease of space to retailers, restaurants and banks, among others. The revenues of the subsidiaries MBJA and PACKAL have the same classification, therefore consolidated in the area that correspond to the numbers of airports in Mexico.

A price regulation system establishes in Mexico a MT rate for airport services and complementary services for each airport for each year in a five-year period. The maximum rate is the maximum amount of revenues per “workload unit” that may be earned at an airport each year from regulated sources. Under this regulation, a workload unit is equivalent to one passenger (excluding transit passengers) or 100 kilograms (220 pounds) of cargo. As of December 2019, SCT authorized the Company’s maximum rates applicable for the period 2020-2024. In August 2020, the Company presented to the Aeronautical Authority a proposal for adjustment to the Master Development Programs, which was authorized in November 2020, so the investment figures were adjusted and from 2021 new TM will apply for the 2021-2024 period.

The maximum rates of the Jamaican Airports, were approved in November 2019 and are applicable from the period 2020-2024.

During the periods ended December 31, 2018, 2019 and 2020, compliance with the TM by the Company’s Mexican airports were 100.0%, 100% and 99.1%, respectively.

The table below presents a summary for the years ended December 31, 2018, 2019 and 2020, of the Company’s revenues (these do not include revenues related to improvements to concession assets under IFRIC 12). Using the Airports Law classification, the information is sent to the SCT to comply with the Company’s reporting obligations with respect to regulated and unregulated revenues, which are

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classified as either aeronautical or non-aeronautical revenues. For this presentation, access fees charged to third parties for complementary services are classified as airport services.

|  | 2018 |  |  | 2019 |  |  | 2020 |
Regulated revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Airport operating services to airlines: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Landing |  | Ps. |  | 783,098 |  |  | Ps. |  | 862,759 |  |  | Ps. |  | 536,336 |
Charges for not canceling extended stay reservations |  |  |  | 9,605 |  |  |  |  | 9,065 |  |  |  |  | 6,469 |
Parking on embarking/disembarking platform |  |  |  | 83,326 |  |  |  |  | 87,740 |  |  |  |  | 58,126 |
Parking on extended stay or overnight platform |  |  |  | 72,313 |  |  |  |  | 86,693 |  |  |  |  | 82,517 |
Passenger walkways and shuttle buses |  |  |  | 36,688 |  |  |  |  | 38,745 |  |  |  |  | 19,711 |
Airport security charges |  |  |  | 207,449 |  |  |  |  | 263,436 |  |  |  |  | 193,144 |
Airport real estate services to airlines: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Leasing of hangars to airlines |  |  |  | 30,228 |  |  |  |  | 28,230 |  |  |  |  | 22,793 |
Leasing of shops, warehouses and stockrooms to airlines (operating) |  |  |  | 4,229 |  |  |  |  | 5,962 |  |  |  |  | 4,107 |
Leasing of space and other terminal facilities to airlines within the terminal (operating) |  |  |  | 58,893 |  |  |  |  | 63,545 |  |  |  |  | 42,129 |
Leasing of land and other surfaces to airlines outside the terminal (operating) |  |  |  | 7,734 |  |  |  |  | 12,254 |  |  |  |  | 5,246 |
Leasing of check-in desks and other terminal space |  |  |  | 445 |  |  |  |  | 1,794 |  |  |  |  | 3,829 |
Leasing of desks and other terminal space for ticket sale |  |  |  | 9,063 |  |  |  |  | 7,817 |  |  |  |  | 3,261 |
Airport passenger services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic passenger charges |  |  |  | 3,802,763 |  |  |  |  | 4,151,565 |  |  |  |  | 2,929,963 |
International passenger charges |  |  |  | 3,950,085 |  |  |  |  | 4,437,701 |  |  |  |  | 2,999,583 |
Airport real estate services and rights of access to other operators |  |  |  | 38,330 |  |  |  |  | 44,768 |  |  |  |  | 47,724 |
Complementary services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Catering services |  |  |  | 31,733 |  |  |  |  | 26,110 |  |  |  |  | 12,947 |
Other third-party ramp services rendered to airlines |  |  |  | 68,244 |  |  |  |  | 99,694 |  |  |  |  | 83,717 |
Traffic and/or dispatch |  |  |  | 57,276 |  |  |  |  | 51,769 |  |  |  |  | 29,941 |
Fuel supply or removal |  |  |  | 238,178 |  |  |  |  | 257,774 |  |  |  |  | 135,598 |
Third-party airplane maintenance and repair |  |  |  | 9,474 |  |  |  |  | 10,299 |  |  |  |  | 8,601 |
Total regulated revenues included in the maximum rate |  |  |  | 9,499,154 |  |  |  |  | 10,547,720 |  |  |  |  | 7,225,742 |
Regulated revenues not included in the maximum rate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Car parking charges |  |  |  | 320,448 |  |  |  |  | 368,750 |  |  |  |  | 234,553 |
Recovery of cost over aeronautical services |  |  |  | 153,409 |  |  |  |  | 175,028 |  |  |  |  | 102,048 |
Recovery of cost over non-aeronautical services |  |  |  | 47,480 |  |  |  |  | 60,947 |  |  |  |  | 71,581 |
Total regulated revenues not included in the maximum rate |  |  |  | 521,337 |  |  |  |  | 604,725 |  |  |  |  | 408,182 |
Total regulated revenues |  |  |  | 10,020,491 |  |  |  |  | 11,152,445 |  |  |  |  | 7,633,881 |

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|  | 2018 |  |  | 2019 |  |  | 2020 |
Unregulated revenues(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial concessions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail operations |  |  |  | 221,860 |  |  |  |  | 265,249 |  |  |  |  | 171,720 |
Food and beverages |  |  |  | 193,971 |  |  |  |  | 316,310 |  |  |  |  | 197,441 |
Duty free |  |  |  | 423,904 |  |  |  |  | 501,252 |  |  |  |  | 255,468 |
VIP lounges |  |  |  | 39,884 |  |  |  |  | 53,610 |  |  |  |  | 27,218 |
Financial services |  |  |  | 47,618 |  |  |  |  | 49,302 |  |  |  |  | 37,304 |
Communications and networks |  |  |  | 14,479 |  |  |  |  | 16,045 |  |  |  |  | 13,167 |
Car rentals |  |  |  | 270,698 |  |  |  |  | 346,503 |  |  |  |  | 248,755 |
Commercial leasing |  |  |  | 12,338 |  |  |  |  | 11,677 |  |  |  |  | 15,592 |
Advertising |  |  |  | 193,656 |  |  |  |  | 211,856 |  |  |  |  | 99,242 |
Time sharing developers |  |  |  | 196,152 |  |  |  |  | 221,928 |  |  |  |  | 102,428 |
Leasing of space to airlines and other complementary service providers (non-operating) |  |  |  | 126,791 |  |  |  |  | 136,633 |  |  |  |  | 125,606 |
Lease outside the terminal |  |  |  | 58,259 |  |  |  |  | 59,959 |  |  |  |  | 63,762 |
Convenience store |  |  |  | 100,325 |  |  |  |  | 158,262 |  |  |  |  | 98,164 |
VIP Lounges operated directly |  |  |  | 222,736 |  |  |  |  | 273,354 |  |  |  |  | 144,897 |
Royalties |  |  |  | 6,823 |  |  |  |  | 7,203 |  |  |  |  | 3,889 |
Revenues from sharing of commercial activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail operations |  |  |  | 123,134 |  |  |  |  | 115,630 |  |  |  |  | 82,060 |
Food and beverages |  |  |  | 142,991 |  |  |  |  | 166,198 |  |  |  |  | 107,317 |
Duty free |  |  |  | 44,407 |  |  |  |  | 26,085 |  |  |  |  | 57,006 |
Financial services |  |  |  | 19,650 |  |  |  |  | 22,267 |  |  |  |  | 13,184 |
Car rentals |  |  |  | 39,556 |  |  |  |  | 32,080 |  |  |  |  | 34,528 |
Access fee for ground transportation |  |  |  | 82,730 |  |  |  |  | 92,833 |  |  |  |  | 56,697 |
Non-airport access fees |  |  |  | 37,067 |  |  |  |  | 36,270 |  |  |  |  | 29,644 |
Other leases |  |  |  | 24,445 |  |  |  |  | 23,285 |  |  |  |  | 9,062 |
Services rendered to ASA |  |  |  | 93 |  |  |  |  | 132 |  |  |  |  | 701 |
Various commercial-related revenues |  |  |  | 18,628 |  |  |  |  | 22,852 |  |  |  |  | 45,062 |
Total unregulated revenues |  |  |  | 2,662,195 |  |  |  |  | 3,166,775 |  |  |  |  | 2,039,914 |
Total aeronautical and non-aeronautical services |  | Ps. |  | 12,682,686 |  |  | Ps. |  | 14,319,220 |  |  | Ps. |  | 9,673,795 |

(1) | Unregulated revenues are earned based on the terms of the Company’s operating lease agreements. Lease agreements are based on either a monthly rent (which generally increases each year based on the National Consumer Price Index (INPC) in Mexico and based on the CPI or the greater of a monthly minimum guaranteed rent or a percentage of the lessee’s monthly revenues. Monthly rent and minimum guaranteed rent earned on the Company’s operating lease agreements are included under the caption “Commercial concessions” above. Revenues earned in excess of the minimum guaranteed rent are included in the “Revenues from sharing of commercial activities” caption above (Note 33).

Revenues from improvements to concession assets are recognized with respect to the additions and improvements made for the Company, which are committed under the MDP, and is a requirement of fulfillment. Revenues for the years ended as of December 31, 2018, 2019 and 2020 accounted for Ps. 1,440,204, Ps. 1,906,801 and Ps. 2,192,578, respectively.

The revenues of the Company recognized as of December 31, 2018, 2019 and 2020 transferred at a point in time was Ps. 9,265,776, Ps. 10,306,453 and Ps. 7,060,402, respectively and the revenues for services transferred over time was Ps. 3,416,910, Ps4,012,766 and Ps. 2,613,393, respectively, which originated from the leasing of commercial spaces.

The revenues of the Company are measured based on the consideration specified in a contract with a client. The trade account receivable from clients corresponds to the total revenue of the Company of this note. The following table presents information on the nature and timing of satisfaction of performance obligations in contracts with customers, including significant payment terms, and the corresponding revenue recognition policy.

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Advanced payments from clients represent payments for future services that have not yet been provided and if they are not performed, the Company has the obligation to reimburse their customers for such.

Type Contract | Nature and timing of service | Revenue recognition according IFRS 15
Aeronautical contracts with Airlines | The Company provides the facilities to serve the passengers and the price is determined based on Maximum Rates approved by the SCT and the JCAA in Jamaica and is assigned based on the service category (TUA, operational airport services, and real estate services to airlines and car parking). | Revenue is recognized monthly as the service is provided, based on the movement of passengers and aircraft associated with the type of service.
Complementary services | The Company provides the facilities to the client in order to render service and ground support to the airlines, based on the specific rates according to the aircraft and tariff for cargo volume. | Revenue assigned according to the type of service provided monthly when the service is performed over time.
Commercial concessions | The Company provides spaces within its terminal buildings that consist of the rental of the space in the airport terminals (different from the spaces occupied by the airlines that are essential for its operation), income from car parking, access fees to third parties that provide catering services and other services at airports, other miscellaneous income and royalties for the use of trademarks of the Company. | Revenues are recognized through operating lease agreements, and either with monthly fixed rent or a percentage of the lessee´s monthly revenues, whichever is higher. Rental income from the Company´s leases is recognized using a straight-line basis over the term of the relevant lease.

2 1. | Cost of services

Cost of services for the years ended December 31, 2018, 2019 and 2020 were comprised of the following:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Employee cost (Note 23) |  | Ps. |  | 773,630 |  |  | Ps. |  | 877,068 |  |  | Ps. |  | 970,481 |
Maintenance |  |  |  | 528,929 |  |  |  |  | 578,510 |  |  |  |  | 426,523 |
Safety, security and insurance |  |  |  | 386,079 |  |  |  |  | 428,208 |  |  |  |  | 458,316 |
Utilities |  |  |  | 334,994 |  |  |  |  | 380,370 |  |  |  |  | 355,562 |
Allowance for expected credit loss |  |  |  | (15,131 | ) |  |  |  | 5,299 |  |  |  |  | 86,596 |
Other |  |  |  | 445,221 |  |  |  |  | 475,409 |  |  |  |  | 371,229 |
|  | Ps. |  | 2,453,722 |  |  | Ps. |  | 2,744,864 |  |  | Ps. |  | 2,668,707 |

2 2. | Depreciation and amortization

Depreciation and amortization for the years ended December 31, 2018, 2019 and 2020 were comprised of the following:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Depreciation |  | Ps. |  | 400,205 |  |  | Ps. |  | 446,517 |  |  | Ps. |  | 495,292 |
Amortization |  |  |  | 1,169,432 |  |  |  |  | 1,329,620 |  |  |  |  | 1,505,069 |
|  | Ps. |  | 1,569,637 |  |  | Ps. |  | 1,776,137 |  |  | Ps. |  | 2,000,361 |

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2 3. | Employee Cost

Employee Cost for the years ended December 31, 2018, 2019 and 2020 was comprised of the following:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Wages and salaries |  | Ps. |  | 541,186 |  |  | Ps. |  | 605,708 |  |  | Ps. |  | 664,619 |
Other remunerations |  |  |  | 73,031 |  |  |  |  | 83,984 |  |  |  |  | 100,638 |
Social benefits |  |  |  | 64,934 |  |  |  |  | 72,733 |  |  |  |  | 81,073 |
Severance payments |  |  |  | 13,132 |  |  |  |  | 8,877 |  |  |  |  | 19,030 |
Labor union fees |  |  |  | 17,673 |  |  |  |  | 18,420 |  |  |  |  | 19,217 |
Taxes on employee benefits |  |  |  | 9,383 |  |  |  |  | 10,886 |  |  |  |  | 12,360 |
PTU |  |  |  | 7,804 |  |  |  |  | 7,900 |  |  |  |  | 2,647 |
Retirement employee benefits |  |  |  | 7,465 |  |  |  |  | 22,735 |  |  |  |  | 31,382 |
Others |  |  |  | 39,022 |  |  |  |  | 45,825 |  |  |  |  | 39,515 |
|  | Ps. |  | 773,630 |  |  | Ps. |  | 877,068 |  |  | Ps. |  | 970,481 |

2 4. | Cost of improvements to concession assets

As disclosed in Note 3.o, in conformity with IFRIC 12, the Company must recognize the revenues and costs of additions and improvements to concession assets, which they are obligated to perform at the airports as established by the MDP. The cost for such additions and improvements to concession assets is based on actual costs incurred by the Company in the execution of the additions or improvements, considering the investment requirements in the MDP, through bidding processes, the Company contracts third parties to carry out such construction. The amount of revenues for these services are equal to the amount of costs incurred, as the Company does not obtain any profit margin for these construction services. The amounts paid are set at market value.

Cost of improvements to concession assets are comprised of the following as of December 31, 2018, 2019 and 2020:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Cost of improvements to concession assets |  | Ps. |  | 1,440,204 |  |  | Ps. |  | 1,906,801 |  |  | Ps. |  | 2,192,578 |

2 5. | Other (income) expense – net

Other (incomes) expenses are comprised of the following as of December 31, 2018, 2019 and 2020:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Recovery insurance |  | Ps. |  | (22,454 | ) |  | Ps. |  | (9,799 | ) |  | Ps. |  | (9,063 | )
Sale of fixed assets |  |  |  | (6,604 | ) |  |  |  | (3,927 | ) |  |  |  | (5,842 | )
Cancellation of non-exigible liabilities and provisions |  |  |  | (36,949 | ) |  |  |  | - |  |  |  | - |
Other income |  |  |  | (21,727 | ) |  |  |  | (26,803 | ) |  |  |  | (21,149 | )
Total other income |  |  |  | (87,734 | ) |  |  |  | (40,529 | ) |  |  |  | (36,054 | )

Repair of damage from natural disasters |  |  |  | 771 |  |  |  |  | 3,536 |  |  |  | - |
Cost of retirement and disposal of fixed assets |  |  |  | 12,158 |  |  |  |  | 4,513 |  |  |  |  | 2,942 |
Donation |  |  |  | — |  |  |  |  | 5,000 |  |  |  |  | 4,000 |
Other expenses |  |  |  | 1,653 |  |  |  |  | 28,692 |  |  |  |  | 16,386 |
Total other expenses |  |  |  | 14,582 |  |  |  |  | 41,741 |  |  |  |  | 23,328 |
Other (income) expense – Net |  | Ps. |  | (73,152 | ) |  | Ps. |  | 1,212 |  |  | Ps. |  | (12,726 | )

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2 6. | Finance cost – Net

The net finance (cost) income is comprised of the following for the years ended December 31, 2018, 2019 and 2020:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Interest income from cash equivalents |  | Ps. |  | 393,529 |  |  | Ps. |  | 464,499 |  |  | Ps. |  | 313,837 |
Interest on recovered taxes |  |  |  | 1,472 |  |  |  |  | 22,691 |  |  |  |  | 19,236 |
Gain on derivative financial instruments |  |  |  | 115,938 |  |  |  |  | 97,449 |  |  |  |  | 29,100 |
Interests in favor of hedge |  |  |  | 44,292 |  |  |  |  | 71,854 |  |  |  |  | 9,173 |
Other |  |  |  | 21,463 |  |  |  |  | 9,336 |  |  |  |  | 39,166 |
Total finance income |  |  |  | 576,694 |  |  |  |  | 665,829 |  |  |  |  | 410,512 |
Interest cost from bank loans |  |  |  | (151,971 | ) |  |  |  | (177,504 | ) |  |  |  | (228,689 | )
Interest cost from hedges |  |  |  | — |  |  |  |  | (1,284 | ) |  |  |  | (171,353 | )
Loss in market value |  |  |  | (86,295 | ) |  |  |  | (247,219 | ) |  |  |  | (72,878 | )
Other financing costs |  |  |  | (29,891 | ) |  |  |  | (23,967 | ) |  |  |  | (52,109 | )
Interest cost for debt securities |  |  |  | (744,254 | ) |  |  |  | (975,772 | ) |  |  |  | (989,221 | )
Total finance cost |  |  |  | (1,012,411 | ) |  |  |  | (1,425,746 | ) |  |  |  | (1,514,250 | )
Exchange gain |  |  |  | 1,422,685 |  |  |  |  | 1,187,240 |  |  |  |  | 3,048,706 |
Exchange loss |  |  |  | (1,223,001 | ) |  |  |  | (1,098,455 | ) |  |  |  | (3,379,190 | )
Exchange gain - Net |  |  |  | 199,684 |  |  |  |  | 88,785 |  |  |  |  | (330,484 | )
Finance cost - Net |  | Ps. |  | (236,033 | ) |  | Ps. |  | (671,132 | ) |  | Ps. |  | (1,434,222 | )

28. | Commitments

| a. | On March 2020, the Federal Civil Aviation Agency (FCAA) authorized 100% compliance with the MDP for the five-year period from 2015-2019.

| b. | On November 2014, the airport authority in Jamaica, approved capital investments to be made of USD$ 37,940,000 for the period April 2015 to March 2020. Compliance with MBJA capital investments must be made for the period rather than annually. During 2018 and 2019 capital investments were USD$28,382,604 and USD$7,079,559, respectively. For PACKAL no capital investments were made during 2019.

| c. | On December 12, 2019, for Mexico´s airports, the SCT approved to the Company the MDP for the period 2020-2024. In August 2020, the company presented to the Aeronautical Authority an adjustment proposal for the extraordinary review of the Master Development Programs due to the negative effects of the Covid-19 pandemic, postponing investment that were scheduled to conclude in 2024, now will end in 2026, which was authorized by authority in November 2020. Below are shown the investments committed thru the period:

Year |  | Amount committed |
2020 |  | Ps. |  | 2,936,500 |
2021 |  |  |  | 4,123,588 |
2022 |  |  |  | 3,517,909 |
2023 |  |  |  | 2,696,240 |
2024 |  |  |  | 2,527,851 |
|  | Ps. |  | 15,802,088 |

The amounts committed above are expressed in pesos of purchasing power as of December 31, 2017.

| d. | In the same way AAJ approved the committed investments of the MDP for USD$111.7 million for MBJA and USD$101.4 million for PACKAL, through the 2020-2024 period. In December 2020, the AAJ granted MBJA and PACKAL the capital investment differentiation for 2020 so it can start in June 2021. During 2020 MBJA made investment for USD$ 6.4 million and PACKAL for USD$ 2.2 million.

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2 8. | Contingencies

| a. | Several municipalities have filed real estate tax claims against some airports in Mexico related to the land where the airports operate. Based on the opinion of its external legal counsel, the Company believes that there are no legal grounds for such claims. Therefore, the Company has initiated legal proceedings to invalidate the claims, and, where applicable, related foreclosures or other actions. Although no assurance can be given, the Company does not expect the resolutions to have any adverse effects on its financial position or profit or loss and other comprehensive income.

On November 26, 2014, the Tijuana municipal authority issued a requirement for payment of property tax for the period from 2000 to 2014 in the amount of Ps. 234,780, which was challenged again by the Company on December 19, 2014. A jurisdictional court granted the Company the suspension against acts of municipal authority establishing the amount of Ps.234,780 for a bond as collateral, which has been challenged by judgment of invalidity as the Company believes that in previous proceedings it is already guaranteed part of the amount set by the Court, on June 19, 2018 the bond was exhibited before the Municipal Authority of Tijuana, Baja California for the amount of Ps. 122,926. In October 2020, the Court issued a judgment adverse to the interests of the Company, for which an appeal for review was filed, which was admitted by the Superior Court of Justice on January 14, 2021. At the date of the consolidated financial statements, the judgment is currently to dictate the final sentence.

On October 28, 2019, Hermosillo municipal authority notified the Company of seven requirements for the payment of property tax, which together totals Ps.10,197, six of those are committed to ASA, even though were concession lands. The Company filled a proceeding for annulment, which was admitted on December 12, 2019 by the “State Court Administrative Justice”. In November 2020, the State Court issued a ruling favorable to the interests of the Company, declaring the nullity of the requirements.

As the Company and its legal counsel believe that these tax claims are not in accordance with the law, the Company proceeded to file an annulment against the municipal authorities, which is pending resolution. Because, previous judgments in this and other airports have been resolved favorably for the Company, the Management and its legal counsel believe that no present obligation currently exist, therefore the Company has not recognized any provision regarding these matters.

| b. | In 1970, the Mexican Government expropriated a portion of land occupied by the Tijuana Airport, whereas in Guadalajara airport it occurred in 1975. Before such expropriations, a group of farmers called Ejido, one in Tijuana and others different in Guadalajara, owned these lands. The members of the Ejido have raised claims against the indemnity payments received from the Mexican Government and in Tijuana airport requested the reversion of the expropriation. During 2008, the Ejido Tampico in the Tijuana airport received an unfavorable resolution, which was appealed. Subsequently the Ejido received a favorable resolution, which may affect the perimeter of the airport, due to the lack of information about the shape of the surface reverted in favor of the Ejido. During the month of November 2020, the Constitutional Court issued a resolution favorable to the interests of the Company, ordering the Agrarian Court to declare the reversal action inadmissible as the elements of the appeal for review requested by the Ejido were not proven. To date of these consolidated financial statements, the judgment is still pending to be resolved.

In the case of the Guadalajara airport, the Ejido El Zapote and Santa Cruz del Valle presented an appeal with jurisdictional authorities against the SCT and the Reforma Agraria, regarding the expropriation decrees issued to build the airport.

In November 2010, the Court granted the protection of the federal justice to the Ejido El Zapote, in the Guadalajara airport, instructing to replace the administrative procedure of expropriation due to a lack of notification to these Ejidos and declared the ineligibility of the Concession granted to the Guadalajara airport in 1998, in reference to managing, operating and developing the airport facilities. On July 10, 2012, the Court revoked this resolution and ordered the reinstatement of the actions in order to obtain more documentary evidence, for the trial with the Ejido El Zapote. On July 31, 2014, the court issued a favorable ruling for the Ejido El Zapote, which was challenged by the Company. On April 14, 2016, the appellate Court determined conclusively that, while it was true that the right of the Ejido to contest the appraisal with which it was compensated had been violated, it also determined that the land could not be returned to the complainant Ejido, as "incongruous" the declaration of invalidity of the concession granted to the Guadalajara airport. On January 13, 2017 the la Secretaría de Desarrollo Agrario, Territorial y Urbano issued an appraisal for the value of a portion of the land in which Guadalajara airport is based, related to the appeal previously mentioned. This appraisal was made based on the expropriation decree of 1975. On June 30, 2017, the Court determined that the appeal was accomplished once the Ejido group was informed of the appraisal made by the competent authorities.

This proceeding was challenged by the Ejido group and accepted by the Court which was instructed to review the appeal in order to state the possibility of achieving the final resolution and if this is not the case to refer the matter to the Supreme Court of Justice of the Nation (SCJN) for a resolution. The resolution is still pending. This being the case, on June 20, 2018, the Second Chamber of the SCJN resolved that on the basis of a regulatory instrument who should resolve the possibility or impossibility of complying with the writ of appeal is the Court itself, the Court thus ordered the return of the file. In response to the above, the District Judge opened the substitute compliance incident on August 10, 2018, which is pending resolution.

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In 2016, members of the Ejido Zapote blocked the access to the Guadalajara airport parking lot, representing a loss of commercial revenues of approximately Ps. 19,200. In 2017 and 2018 the Company had a loss in commercial revenues in the amount of Ps. 9,000 and Ps. 8,100 respectively, due to new blockades made by members of the Ejido Zapote. On November 17, 2019, members of the Ejido Zapote once again took over the parking lot, which was recovered on February 12, 2020, generating an additional loss of commercial revenues of approximately Ps. 28,500 in 2019 and Ps. 16,700 in 2020, approximately, plus the damage to the parking lot.

On February 17, 2017, the Company was notified of a new legal proceeding before an agrarian court instituted by El Zapote against the federal government. This proceeding alleges similar facts to the initial case and claims the same disputed property that was the subject of the initial case. This legal proceeding is in its initial phases, and the Company has joined as an interested third party.

As of the date of issuance of the consolidated financial statements, these procedures are still pending resolution.

On October 1, 2013, the Company received four summonses for Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Puerto Vallarta airport and various Federal Authorities in connection with four legal proceedings filed by the participants in the Ejido Valle de Banderas. The Ejido is claiming restitution or payment as compensation in respect of 154 hectares of land comprising this airport, besides the partial cancellation of the concession granted to the Puerto Vallarta airport. On January 24, 2014, the first audience was held where the Ejido ratified the lawsuit and the Company demanded the suspension of this process due to the incompetence of jurisdiction, as a result, the audience was delayed for three days, in order to give time to the Ejido to provide a rebuttal. The Company estimates that the court involved in this proceeding, located in the State of Nayarit, does not have jurisdiction, because the airport is located in the State of Jalisco, besides, this court is not competent to nullify an administrative act, as it is related to the concession's title. The Court declared competent the Agrarian Court of Nayarit, a sentence which was favorable but currently challenged by the Federal Court. As a result of the objection, the Federal Superior Court declared the court of Guadalajara, Jalisco, as competent in three of them. Two of the three procedures are before the agrarian court of Jalisco pending to resolve, the incompetence by subject. The third procedure is awaiting the referral of the proceedings to the Guadalajara Court procedure and a fourth is still awaiting of the Agrarian Court of Nayarit for the last instance regarding jurisdiction over territory. During 2020, the jurisdiction was issued for their transfer to the Guadalajara Court and they are in their initial testing stage, so as of the date of issuance of the consolidated financial statements, these procedures are still pending resolution.

If the legal proceedings are resolved in such a way that adversely impact any of our airports, the Company´s management has other legal resources to challenge such resolutions. Additionally, under the Concession agreement, the Company has guarantees providing it with access to the airport's land, and the Mexican government would be liable for any operational disruption caused by the Ejidos and would have to restore to the concessionaire the rights to use public property and compensate any economic damage to the airport. Thus, in the opinion of the Company and its legal counsel, no present obligation currently exists, therefore the Company has not recognized any provision regarding this matter.

| c. | Federal, state and environmental protection laws regulate the Company’s operations. According to these laws, the passing of regulations relating to air and water pollution, environmental impact studies, noise control and disposal of dangerous and non-dangerous material has been considered. The Federal Environmental Protection Agency has the power to impose administrative, civil and criminal penalties against companies violating environmental laws. It is also entitled to close any facilities that do not meet legal requirements. As the date of the consolidated financial statements, the Company does not have any knowledge about sanctions against it.

| d. | On June 17, 2015, the SCJN issued an amparo to the Company upholding the validity of Articles X and XII of the Company´s bylaws regarding the limitations on ownership of its capital stock. Consequently, the challenge initiated by Grupo México and ITM against these articles has been definitively concluded, with the ruling confirming the validity and effectiveness of these articles. On December 11, 2015, both parties were notified of the final judgment, ordering them to refer to the collegiate court of origin to the effect that the Second Civil Chamber of the High Court of Mexico City, who is ordered to confirm articles X and XII of the bylaws of the Company are valid based on Article 48, section III of the Mexican Securities Market Law. In February 2016, the Company was notified of the resolution issued by the Superior Court of Justice of Mexico City, pursuant to the judgment of the SCJN, which declared the validity of the Company's bylaws, which states that Grupo México, S.A.B. de C.V. and Infraestructura y Transportes México, S.A. de C.V. violate the bylaws by maintaining jointly a percentage higher than 10% allowed in Article X of the Company's bylaws, therefore, is ordering to Grupo México, S.A.B. de C.V. and Infraestructura y Transportes México, S.A. de C.V. the sale of the Series "B" shares which exceed 10% of the capital stock and instructs that the sale must be made through a procedure called "Initial Public Offering", under the terms of the law and in accordance with Article XII of the Company´s bylaws.

In February 2016, the Company, Grupo México, S.A.B. de C.V. and Infraestructura y Transportes México, S.A. de C.V. filed claims of direct amparo against the ruling of the Superior Court of Justice, the essence of both claims for amparo concerns the following; Grupo México, S.A.B. de C.V. argues that a proceeding was not granted for the sale of the excess shares, the Company argues that Grupo México, S.A.B. de C.V. should be liable for the payment of costs in favor of the Company, however both claims of appeal have not been resolved, and are pending resolution in the Eighth Collegiate Court in Civil Matters of the First Circuit. Thus, in the opinion of the Company and its legal counsel, no present obligation currently exists, therefore the Company has not recognized any provision regarding this matter. As of December 31, 2020, Grupo México, S.A.B. de C.V., and its subsidiary Infraestructura y Transportes México, S.A. de C.V., have 10.6% of the Company shares.

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29. | Operating segment and geographic information

All airports provide similar services to their customers as described in Note 20.

The elimination of the investment of the Company in its subsidiaries is included under “Eliminations” along with any intersegment revenues and other significant intercompany operations.

The following are the results, assets and liabilities by segments for the years ended December 31, 2018, 2019 and 2020:

December 31, 2018 |  | Guadalajara |  |  | Tijuana |  |  | Puerto Vallarta |  |  | San José del Cabo |  |  | Montego Bay |  |  | Hermosillo |  |  | Guanajuato |  |  | Other Airports |  |  | Total reportable segments |  |  | Other Companies |  |  | Eliminations |  |  | Total |
Aeronautical services |  | Ps. |  | 2,824,677 |  |  | Ps. |  | 1,344,122 |  |  | Ps. |  | 1,088,417 |  |  | Ps. |  | 1,244,106 |  |  | Ps. |  | 1,419,674 |  |  | Ps. |  | 306,118 |  |  | Ps. |  | 484,798 |  |  | Ps. |  | 787,242 |  |  | Ps. |  | 9,499,154 |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 9,499,154 |
Non-aeronautical services |  |  |  | 796,739 |  |  |  |  | 326,214 |  |  |  |  | 399,427 |  |  |  |  | 698,891 |  |  |  |  | 543,878 |  |  |  |  | 82,922 |  |  |  |  | 148,119 |  |  |  |  | 180,517 |  |  |  |  | 3,176,708 |  |  |  |  | 6,823 |  |  |  |  | — |  |  |  |  | 3,183,532 |
Improvements to concession assets |  |  |  | 110,415 |  |  |  |  | 100,986 |  |  |  |  | 40,330 |  |  |  |  | 346,956 |  |  |  |  | 545,959 |  |  |  |  | 47,541 |  |  |  |  | 16,244 |  |  |  |  | 231,771 |  |  |  |  | 1,440,204 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,440,204 |
Total revenues |  |  |  | 3,731,830 |  |  |  |  | 1,771,323 |  |  |  |  | 1,528,174 |  |  |  |  | 2,289,954 |  |  |  |  | 2,509,511 |  |  |  |  | 436,581 |  |  |  |  | 649,162 |  |  |  |  | 1,199,530 |  |  |  |  | 14,116,066 |  |  |  |  | 6,823 |  |  |  |  | — |  |  |  |  | 14,122,890 |
Total intersegment revenues |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 4,805,223 |  |  |  |  | (4,805,223 | ) |  |  |  | — |
Income from operations |  |  |  | 2,454,759 |  |  |  |  | 1,042,368 |  |  |  |  | 942,551 |  |  |  |  | 1,272,180 |  |  |  |  | 646,677 |  |  |  |  | 153,576 |  |  |  |  | 408,037 |  |  |  |  | 306,197 |  |  |  |  | 7,226,345 |  |  |  |  | 4,783,428 |  |  |  |  | (4,765,120 | ) |  |  |  | 7,244,652 |
Interest income |  |  |  | 112,569 |  |  |  |  | 44,954 |  |  |  |  | 43,471 |  |  |  |  | 54,836 |  |  |  |  | 6,431 |  |  |  |  | 13,722 |  |  |  |  | 19,502 |  |  |  |  | 51,327 |  |  |  |  | 346,813 |  |  |  |  | 1,065,159 |  |  |  |  | (835,278 | ) |  |  |  | 576,694 |
Interest expense |  |  |  | (230,458 | ) |  |  |  | (136,453 | ) |  |  |  | (65,407 | ) |  |  |  | (136,914 | ) |  |  |  | (135,740 | ) |  |  |  | (50,927 | ) |  |  |  | (47,099 | ) |  |  |  | (93,929 | ) |  |  |  | (896,927 | ) |  |  |  | (950,762 | ) |  |  |  | 835,278 |  |  |  |  | (1,012,411 | )
Gain on financial investment held for coverage |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 29,643 |  |  |  |  | — |  |  |  |  | 29,643 |
Depreciation and amortization for the year |  |  |  | (310,882 | ) |  |  |  | (180,904 | ) |  |  |  | (153,230 | ) |  |  |  | (217,858 | ) |  |  |  | (354,963 | ) |  |  |  | (72,635 | ) |  |  |  | (61,073 | ) |  |  |  | (186,997 | ) |  |  |  | (1,538,542 | ) |  |  |  | (31,095 | ) |  |  |  | — |  |  |  |  | (1,569,637 | )
Share of loss of associate |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (947 | ) |  |  |  | — |  |  |  |  | (947 | )
Income before income taxes |  |  |  | 2,394,213 |  |  |  |  | 979,156 |  |  |  |  | 952,241 |  |  |  |  | 1,218,028 |  |  |  |  | 525,351 |  |  |  |  | 124,243 |  |  |  |  | 386,323 |  |  |  |  | 263,776 |  |  |  |  | 6,843,329 |  |  |  |  | 4,929,463 |  |  |  |  | (4,765,120 | ) |  |  |  | 7,007,672 |
Income taxes expense |  |  |  | (584,439 | ) |  |  |  | (210,874 | ) |  |  |  | (225,833 | ) |  |  |  | (336,560 | ) |  |  |  | (128,246 | ) |  |  |  | (19,098 | ) |  |  |  | (99,963 | ) |  |  |  | (114,118 | ) |  |  |  | (1,719,131 | ) |  |  |  | (149,910 | ) |  |  |  | — |  |  |  |  | (1,869,041 | )
Total assets |  |  |  | 9,773,884 |  |  |  |  | 5,729,156 |  |  |  |  | 3,918,644 |  |  |  |  | 4,166,561 |  |  |  |  | 3,039,158 |  |  |  |  | 1,747,518 |  |  |  |  | 1,632,722 |  |  |  |  | 3,033,967 |  |  |  |  | 33,041,609 |  |  |  |  | 38,884,387 |  |  |  |  | (32,375,494 | ) |  |  |  | 39,550,502 |
Total liabilities |  |  |  | 3,519,318 |  |  |  |  | 1,858,474 |  |  |  |  | 1,158,586 |  |  |  |  | 2,228,807 |  |  |  |  | 2,123,946 |  |  |  |  | 735,487 |  |  |  |  | 701,735 |  |  |  |  | 1,405,884 |  |  |  |  | 13,732,236 |  |  |  |  | 13,911,464 |  |  |  |  | (9,865,348 | ) |  |  |  | 17,778,352 |
Investments in associates |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  | - |  |  |  |  | 35 |  |  |  |  | — |  |  |  |  | 35 |
Net cash flows provided by operations activities |  |  |  | 2,233,357 |  |  |  |  | 1,376,334 |  |  |  |  | 797,800 |  |  |  |  | 1,063,923 |  |  |  |  | 860,399 |  |  |  |  | 173,726 |  |  |  |  | 357,455 |  |  |  |  | 448,702 |  |  |  |  | 7,311,697 |  |  |  |  | 810,779 |  |  |  |  | (886,857 | ) |  |  |  | 7,235,619 |
Net cash flow used in investing activities |  |  |  | (284,319 | ) |  |  |  | (378,328 | ) |  |  |  | (90,743 | ) |  |  |  | (418,407 | ) |  |  |  | (652,469 | ) |  |  |  | (61,374 | ) |  |  |  | (113,388 | ) |  |  |  | (255,707 | ) |  |  |  | (2,254,734 | ) |  |  |  | 4,959,209 |  |  |  |  | (5,254,886 | ) |  |  |  | (2,550,411 | )
Net cash flow used in financing activities |  |  |  | (1,552,530 | ) |  |  |  | (681,179 | ) |  |  |  | (739,684 | ) |  |  |  | (942,796 | ) |  |  |  | (931,248 | ) |  |  |  | (107,021 | ) |  |  |  | (155,344 | ) |  |  |  | (6,374 | ) |  |  |  | (5,116,178 | ) |  |  |  | (6,305,402 | ) |  |  |  | 5,254,886 |  |  |  |  | (6,166,694 | )
Additions to non-current as assets |  |  |  | 5,665,570 |  |  |  |  | 3,729,013 |  |  |  |  | 2,356,638 |  |  |  |  | 2,976,072 |  |  |  |  | 5,924,992 |  |  |  |  | 1,128,854 |  |  |  |  | 990,782 |  |  |  |  | 2,600,342 |  |  |  |  | 25,372,263 |  |  |  |  | 729,295 |  |  |  |  | — |  |  |  |  | 26,101,558 |

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December 31, 2019 |  | Guadalajara |  |  | Tijuana |  |  | Puerto Vallarta |  |  | San José del Cabo |  |  | Montego Bay |  |  | Hermosillo |  |  | Guanajuato |  |  | Other Airports |  |  | Total reportable segments |  |  | Other Companies |  |  | Eliminations |  |  | Total |
Aeronautical services |  | Ps. |  | 2,978,617 |  |  | Ps. |  | 1,568,297 |  |  | Ps. |  | 1,183,610 |  |  | Ps. |  | 1,364,746 |  |  | Ps. |  | 1,512,164 |  |  | Ps. |  | 337,380 |  |  | Ps. |  | 584,650 |  |  | Ps. |  | 1,018,256 |  |  | Ps. |  | 10,547,720 |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 10,547,720 |
Non-aeronautical services |  |  |  | 938,445 |  |  |  |  | 454,098 |  |  |  |  | 455,699 |  |  |  |  | 787,424 |  |  |  |  | 585,325 |  |  |  |  | 97,696 |  |  |  |  | 180,327 |  |  |  |  | 265,282 |  |  |  |  | 3,764,296 |  |  |  |  | 7,203 |  |  |  |  | — |  |  |  |  | 3,771,500 |
Improvements to concession assets |  |  |  | 858,807 |  |  |  |  | 300,221 |  |  |  |  | 57,697 |  |  |  |  | 299,155 |  |  |  |  | 136,363 |  |  |  |  | 3,332 |  |  |  |  | 32,853 |  |  |  |  | 218,371 |  |  |  |  | 1,906,801 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,906,801 |
Total revenues |  |  |  | 4,775,869 |  |  |  |  | 2,322,617 |  |  |  |  | 1,697,007 |  |  |  |  | 2,451,326 |  |  |  |  | 2,233,853 |  |  |  |  | 438,408 |  |  |  |  | 797,829 |  |  |  |  | 1,501,910 |  |  |  |  | 16,218,818 |  |  |  |  | 7,203 |  |  |  |  | — |  |  |  |  | 16,226,021 |
Total intersegment revenues |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 5,262,241 |  |  |  |  | (5,262,241 | ) |  |  |  | — |
Income from operations |  |  |  | 2,599,316 |  |  |  |  | 1,274,902 |  |  |  |  | 1,051,669 |  |  |  |  | 1,397,328 |  |  |  |  | 629,027 |  |  |  |  | 191,079 |  |  |  |  | 477,123 |  |  |  |  | 350,253 |  |  |  |  | 7,970,697 |  |  |  |  | 5,282,882 |  |  |  |  | (5,236,341 | ) |  |  |  | 8,017,238 |
Interest income |  |  |  | 113,495 |  |  |  |  | 53,684 |  |  |  |  | 47,959 |  |  |  |  | 45,703 |  |  |  |  | 13,191 |  |  |  |  | 12,090 |  |  |  |  | 21,019 |  |  |  |  | 56,800 |  |  |  |  | 363,942 |  |  |  |  | 1,292,797 |  |  |  |  | (990,910 | ) |  |  |  | 665,829 |
Interest expense |  |  |  | (274,257 | ) |  |  |  | (162,628 | ) |  |  |  | (75,298 | ) |  |  |  | (173,132 | ) |  |  |  | (145,597 | ) |  |  |  | (57,245 | ) |  |  |  | (54,132 | ) |  |  |  | (111,549 | ) |  |  |  | (1,053,838 | ) |  |  |  | (1,362,817 | ) |  |  |  | 990,910 |  |  |  |  | (1,425,746 | )
Loss on financial investment held for coverage |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (149,770 | ) |  |  |  | — |  |  |  |  | (149,770 | )
Depreciation and amortization for the year |  |  |  | (346,586 | ) |  |  |  | (206,982 | ) |  |  |  | (156,383 | ) |  |  |  | (234,670 | ) |  |  |  | (85,851 | ) |  |  |  | (100,403 | ) |  |  |  | (390,394 | ) |  |  |  | (210,357 | ) |  |  |  | (1,731,627 | ) |  |  |  | (44,511 | ) |  |  |  | — |  |  |  |  | (1,776,137 | )
Share of gain of associate |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 79 |  |  |  |  | — |  |  |  |  | 79 |
Income before income taxes |  |  |  | 2,423,349 |  |  |  |  | 1,159,190 |  |  |  |  | 1,010,897 |  |  |  |  | 1,261,254 |  |  |  |  | 495,171 |  |  |  |  | 140,027 |  |  |  |  | 440,450 |  |  |  |  | 294,655 |  |  |  |  | 7,224,994 |  |  |  |  | 5,357,532 |  |  |  |  | (5,236,341 | ) |  |  |  | 7,346,185 |
Income taxes expense |  |  |  | (649,761 | ) |  |  |  | (185,555 | ) |  |  |  | (273,431 | ) |  |  |  | (359,996 | ) |  |  |  | (124,228 | ) |  |  |  | (26,013 | ) |  |  |  | (132,118 | ) |  |  |  | (72,356 | ) |  |  |  | (1,823,460 | ) |  |  |  | (67,983 | ) |  |  |  | — |  |  |  |  | (1,891,443 | )
Total assets |  |  |  | 10,038,163 |  |  |  |  | 6,155,593 |  |  |  |  | 3,941,917 |  |  |  |  | 4,445,521 |  |  |  |  | 2,372,006 |  |  |  |  | 1,707,357 |  |  |  |  | 1,653,964 |  |  |  |  | 4,759,366 |  |  |  |  | 35,073,888 |  |  |  |  | 39,969,627 |  |  |  |  | (33,465,711 | ) |  |  |  | 41,577,804 |
Total liabilities |  |  |  | 4,091,482 |  |  |  |  | 2,261,268 |  |  |  |  | 1,334,263 |  |  |  |  | 2,706,406 |  |  |  |  | 2,102,386 |  |  |  |  | 767,297 |  |  |  |  | 774,619 |  |  |  |  | 1,809,866 |  |  |  |  | 15,847,585 |  |  |  |  | 16,927,461 |  |  |  |  | (11,866,923 | ) |  |  |  | 20,908,361 |
Investments in associates |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 114 |  |  |  |  | — |  |  |  |  | 114 |
Net cash flows provided by operations activities |  |  |  | 2,295,782 |  |  |  |  | 1,322,659 |  |  |  |  | 984,410 |  |  |  |  | 1,299,232 |  |  |  |  | 841,232 |  |  |  |  | 248,261 |  |  |  |  | 490,864 |  |  |  |  | 469,505 |  |  |  |  | 7,951,945 |  |  |  |  | 301,883 |  |  |  |  | (89,772 | ) |  |  |  | 8,164,057 |
Net cash flow used in investing activities |  |  |  | (986,532 | ) |  |  |  | (341,155 | ) |  |  |  | (69,382 | ) |  |  |  | (343,198 | ) |  |  |  | (211,385 | ) |  |  |  | (42,913 | ) |  |  |  | (69,230 | ) |  |  |  | (156,943 | ) |  |  |  | (2,220,737 | ) |  |  |  | 3,624,786 |  |  |  |  | (3,990,143 | ) |  |  |  | (2,586,095 | )
Net cash flow used in financing activities |  |  |  | (1,750,155 | ) |  |  |  | (703,256 | ) |  |  |  | (824,218 | ) |  |  |  | (802,640 | ) |  |  |  | (633,251 | ) |  |  |  | (197,367 | ) |  |  |  | (352,970 | ) |  |  |  | (63,433 | ) |  |  |  | (5,327,291 | ) |  |  |  | (2,894,381 | ) |  |  |  | 3,990,143 |  |  |  |  | (4,231,529 | )
Additions to non-current as assets |  |  |  | 6,252,492 |  |  |  |  | 3,845,105 |  |  |  |  | 2,263,519 |  |  |  |  | 3,052,248 |  |  |  |  | 5,548,992 |  |  |  |  | 1,051,047 |  |  |  |  | 942,924 |  |  |  |  | 2,676,181 |  |  |  |  | 25,632,508 |  |  |  |  | 924,182 |  |  |  |  | — |  |  |  |  | 26,556,690 |

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December 31, 2020 |  | Guadalajara |  |  | Tijuana |  |  | Puerto Vallarta |  |  | San José del Cabo |  |  | Montego Bay |  |  | Hermosillo |  |  | Guanajuato |  |  | Other Airports |  |  | Total reportable segments |  |  | Other Companies |  |  | Eliminations |  |  | Total |
Aeronautical services |  | Ps. |  | 2,103,574 |  |  | Ps. |  | 1,192,187 |  |  | Ps. |  | 776,424 |  |  | Ps. |  | 970,979 |  |  | Ps. |  | 695,879 |  |  | Ps. |  | 204,650 |  |  | Ps. |  | 338,633 |  |  | Ps. |  | 943,416 |  |  | Ps. |  | 7,225,742 |  |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 7,225,742 |
Non-aeronautical services |  |  |  | 591,789 |  |  |  |  | 335,419 |  |  |  |  | 266,442 |  |  |  |  | 460,981 |  |  |  |  | 327,158 |  |  |  |  | 64,609 |  |  |  |  | 113,826 |  |  |  |  | 283,941 |  |  |  |  | 2,444,164 |  |  |  |  | 3,889 |  |  |  |  | — |  |  |  |  | 2,448,053 |
Improvements to concession assets |  |  |  | 614,479 |  |  |  |  | 681,755 |  |  |  |  | 67,026 |  |  |  |  | 339,231 |  |  |  |  | 138,768 |  |  |  |  | 19,329 |  |  |  |  | 36,334 |  |  |  |  | 295,656 |  |  |  |  | 2,192,578 |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 2,192,578 |
Total revenues |  |  |  | 3,309,842 |  |  |  |  | 2,209,361 |  |  |  |  | 1,109,892 |  |  |  |  | 1,771,191 |  |  |  |  | 1,161,805 |  |  |  |  | 288,588 |  |  |  |  | 488,793 |  |  |  |  | 1,523,013 |  |  |  |  | 11,862,484 |  |  |  |  | 3,889 |  |  |  |  | — |  |  |  |  | 11,866,373 |
Total intersegment revenues |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 2,310,159 |  |  |  |  | (2,310,159 | ) |  |  |  | — |
Income from operations |  |  |  | 1,472,456 |  |  |  |  | 802,056 |  |  |  |  | 526,761 |  |  |  |  | 756,630 |  |  |  |  | (88,901 | ) |  |  |  | 57,770 |  |  |  |  | 216,044 |  |  |  |  | (34,634 | ) |  |  |  | 3,708,182 |  |  |  |  | 2,242,786 |  |  |  |  | (2,130,979 | ) |  |  |  | 3,819,989 |
Interest income |  |  |  | 82,881 |  |  |  |  | 59,945 |  |  |  |  | 32,073 |  |  |  |  | 40,141 |  |  |  |  | 3,515 |  |  |  |  | 8,056 |  |  |  |  | 13,801 |  |  |  |  | 42,052 |  |  |  |  | 282,465 |  |  |  |  | 1,307,727 |  |  |  |  | (1,179,680 | ) |  |  |  | 410,512 |
Interest expense |  |  |  | (360,772 | ) |  |  |  | (242,125 | ) |  |  |  | (95,133 | ) |  |  |  | (210,825 | ) |  |  |  | (172,033 | ) |  |  |  | (52,001 | ) |  |  |  | (57,199 | ) |  |  |  | (432,582 | ) |  |  |  | (1,622,670 | ) |  |  |  | (1,071,260 | ) |  |  |  | 1,179,680 |  |  |  |  | (1,514,250 | )
Loss on financial investment held for coverage |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | (41,808 | ) |  |  |  | — |  |  |  |  | (41,808 | )
Depreciation and amortization for the year |  |  |  | (368,964 | ) |  |  |  | (254,634 | ) |  |  |  | (168,580 | ) |  |  |  | (265,581 | ) |  |  |  | (82,736 | ) |  |  |  | (71,971 | ) |  |  |  | (502,568 | ) |  |  |  | (229,764 | ) |  |  |  | (1,944,799 | ) |  |  |  | (55,562 | ) |  |  |  | — |  |  |  |  | (2,000,361 | )
Share of gain of associate |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 3 |  |  |  |  | — |  |  |  |  | 3 |
Income before income taxes |  |  |  | 1,166,564 |  |  |  |  | 738,185 |  |  |  |  | 461,532 |  |  |  |  | 573,594 |  |  |  |  | 472,986 |  |  |  |  | 25,433 |  |  |  |  | 167,981 |  |  |  |  | (72,311 | ) |  |  |  | 3,533,964 |  |  |  |  | 982,786 |  |  |  |  | (2,130,980 | ) |  |  |  | 2,385,770 |
Income taxes expense |  |  |  | (231,777 | ) |  |  |  | (118,685 | ) |  |  |  | (88,272 | ) |  |  |  | (129,196 | ) |  |  |  | 112,801 |  |  |  |  | 12,801 |  |  |  |  | (20,990 | ) |  |  |  | 19,005 |  |  |  |  | (444,314 | ) |  |  |  | (22,753 | ) |  |  |  | — |  |  |  |  | (467,067 | )
Total assets |  |  |  | 13,416,487 |  |  |  |  | 8,588,502 |  |  |  |  | 4,960,588 |  |  |  |  | 6,081,823 |  |  |  |  | 2,780,014 |  |  |  |  | 1,803,045 |  |  |  |  | 2,072,069 |  |  |  |  | 5,318,795 |  |  |  |  | 45,021,323 |  |  |  |  | 51,516,861 |  |  |  |  | (45,177,011 | ) |  |  |  | 51,361,173 |
Total liabilities |  |  |  | 6,535,424 |  |  |  |  | 4,074,668 |  |  |  |  | 1,979,551 |  |  |  |  | 3,898,207 |  |  |  |  | 2,508,470 |  |  |  |  | 824,734 |  |  |  |  | 1,045,571 |  |  |  |  | 1,070,885 |  |  |  |  | 21,937,510 |  |  |  |  | 26,911,814 |  |  |  |  | (20,340,934 | ) |  |  |  | 28,508,390 |
Investments in associates |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | 35 |  |  |  |  | — |  |  |  |  | 35 |
Net cash flows provided by operations activities |  |  |  | 828,257 |  |  |  |  | (1,627,427 | ) |  |  |  | 332,206 |  |  |  |  | 447,952 |  |  |  |  | 182,849 |  |  |  |  | 5,988 |  |  |  |  | 102,755 |  |  |  |  | 181,454 |  |  |  |  | 454,034 |  |  |  |  | 3,180,663 |  |  |  |  | (68,130 | ) |  |  |  | 3,566,567 |
Net cash flow used in investing activities |  |  |  | (892,866 | ) |  |  |  | (764,151 | ) |  |  |  | (215,636 | ) |  |  |  | (424,313 | ) |  |  |  | (209,415 | ) |  |  |  | (34,166 | ) |  |  |  | (86,038 | ) |  |  |  | (447,570 | ) |  |  |  | (3,074,155 | ) |  |  |  | (1,455,336 | ) |  |  |  | 1,311,800 |  |  |  |  | (3,217,691 | )
Net cash flow used in financing activities |  |  |  | 2,615,782 |  |  |  |  | 1,854,276 |  |  |  |  | 790,233 |  |  |  |  | 1,337,678 |  |  |  |  | 534,214 |  |  |  |  | 97,698 |  |  |  |  | 334,391 |  |  |  |  | 618,594 |  |  |  |  | 8,182,866 |  |  |  |  | (582,639 | ) |  |  |  | (1,311,800 | ) |  |  |  | 6,288,427 |
Additions to non-current as assets |  |  |  | 6,796,625 |  |  |  |  | 4,394,890 |  |  |  |  | 2,335,994 |  |  |  |  | 3,245,723 |  |  |  |  | 5,700,583 |  |  |  |  | 1,040,121 |  |  |  |  | 968,483 |  |  |  |  | 3,054,931 |  |  |  |  | 27,537,350 |  |  |  |  | 16,065,198 |  |  |  |  | — |  |  |  |  | 43,602,548 |

Non-current assets are comprised of Machinery, equipment, Improvements to leased assets, Improvements to concession assets, Airport concessions, Rights of use of airport facilities, Other acquired rights, Right-of-use assets and Other assets.

The unrealized exchange loss, net amounts (a non-cash item) disclosed in the consolidated statements of cash flow relates mainly to Other Companies segments, and comes from bank loans denominated in foreign currency.

The amounts shown in the eliminations column relates to the intercompany transactions and balances being eliminated to arrive at consolidated figures, such as, personnel services, parking operations, income and financial expenses, equity method, investments in subsidiaries, amongst the most important.

| - | Geographic information – All business units of the Company are operating in Mexico and Jamaica. The financial information presented above covers the different regions in which these airports operate. Segment revenue has been based on the geographic location of the customers and non-current segment assets were based on the location of the assets. Montego Bay and Kingston airports corresponds to the Region of Jamaica with geographic revenue of Ps. 2,509,511, Ps. 2,413,596 and Ps. 1,696,338 during the years ended December 31, 2018, 2019 and 2020 respectively and non-current assets of Ps. 5,924,992, Ps. 5,725,684 and Ps. 5,864,748 as of December 31, 2018, 2019 and 2020 respectively. Geographic revenue from customers located in Mexico amounted to Ps. 11,613,379, Ps.13,812,424 and Ps. 10,170,035 for the years ended December 31, 2018, 2019 and 2020 and non-current assets physically located in Mexico totaled Ps. 20,176,566, Ps. 20,831,006 and Ps. 37,554,817 as of December 31, 2018, 2019 and 2020 respectively. There are no revenues generated from and no non-current assets located in Spain.

| - | Major Customers – The Company has no dependence on a particular customer, as 54.9%, 52.9% and 50.0% of the total revenues for 2018, 2019 and 2020, respectively, corresponds to the passenger charges that are paid by passengers upon use of the Company’s airport facilities, that is collected by the airlines to be subsequently reimbursed to the airports, and are covered by the airlines through guarantees issued in favor of the airports. Without the revenues from passenger charges that airlines collect on behalf of the Company, no one customer represents more than 10.0% of the consolidated revenues.

| - | Major suppliers – The Company has no dependence on a specific supplier, due to, no one supplier represents more than 10% of its capital investments in productive assets and/or of the total operating costs.

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3 0. | Foreign currency transactions

| a. | Transactions denominated in foreign currency for the years ended December 31, 2018, 2019 and 2020 were as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
|  | (In thousands of U.S. dollars) |
Revenues from aeronautical and non-aeronautical services |  |  | 150,488 |  |  |  | 172,780 |  |  |  | 98,668 |
Revenues for recovery expenses |  |  | 1,820 |  |  |  | 2,281 |  |  |  | 701 |
Technical assistance fees |  |  | 5,859 |  |  |  | 5,971 |  |  |  | 6,108 |
Other expenses (1) |  |  | 61,078 |  |  |  | 75,868 |  |  |  | 83,710 |

(1) Includes interest for the years ended December 31, 2018, 2019 and 2020 by USD $ 6.5 million, USD $ 6.4 million and USD.$ 7.7 million, respectively.

| b. | The exchange rates in effect on the dates of the consolidated financial statements and it’s issuance date were as follows:

|  | December 31, |  |  | Feb 24, |
|  | 2017 |  |  | 2018 |  |  | 2019 |  |  | 2021 |
Mexican pesos per one U.S. dollar (Note 3.p) |  | Ps. |  | 19.6829 |  |  | Ps. |  | 18.8452 |  |  | Ps. |  | 19.9487 |  |  | Ps. |  | 20.6783 |

3 1. | Transactions with related parties

According to the definitions of control established in IFRS, the Company does not have a company controlling its operations, however, according to these definitions, the following companies are considered related parties:

| a. | Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V.

AMP represents an entity with significant influence over the operation of the Company, since it has representation on the Board of Directors, participates in the policy-making processes, maintains material transactions, appoints officers and provides essential technical information, but without exercising control over the Company. No other Stockholder fulfills this definition.

Transactions with AMP, were entered into at prices comparable to those for transactions with independent parties and were as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
AMP, entity with significant influence |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Technical assistance fees |  | Ps. |  | 411,477 |  |  | Ps. |  | 461,549 |  |  | Ps. |  | 289,154 |
Services received |  | Ps. |  | — |  |  | Ps. |  | 5,558 |  |  | Ps. |  | — |

In 1999, GAP and AMP entered into a technical assistance and transfer-of-technology agreement whereby AMP and its stockholders agreed to render administrative and advisory services and transfer industry technology and know-how to GAP in Mexico in exchange for consideration. The agreement’s original 15-year term may be automatically renewed for successive five-year terms, with the approval of the stockholders, unless one party gives a termination notice to the other at least 60 days prior to the effective termination date. Only the Stockholders’ Meeting has the authority to decide the non-renewal or deny the renewal of the agreement. If GAP decides to cancel or renew the agreement, GAP needs the approval of at least 51% of the holders of Series B shares other than AMP or any party related to AMP, according to the definition of the participation agreement signed on August 25, 1999 among the SCT, GAP in Mexico, its strategic partner and the Stockholders of the strategic partner. On August 25, 2014, the initial term was renewed for five additional years.

On August 25, 2019, the initial term of the Technical Assistance agreement between the Company and AMP expired and in the same date it was automatically renewed for an additional five years, in accordance with Clause 5.2 of the agreement.

According to the agreement, as of January 1, 2000, the Company committed to pay AMP annual consideration of USD$7,000,000 for the years 2000 and 2001 and, beginning in 2002, the greater of USD$4,000,000 (these amounts are subject to adjustment based on the CPI) or 5% of GAP’s consolidated operating income only for the Mexican airports, defined as earnings before interest income or expense, calculated prior to deducting the technical assistance fee, income taxes, depreciation and amortization.

AMP is also entitled to the refund of expenses incurred in the rendering of services provided for in the agreement.

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| b. | Otay-Tijuana Venture, L.L.C. (OTV)

On December 9, 2015 the access to the new border crossing between Otay, USA and Tijuana, Mexico began operating at the airport in Tijuana. The facilities at CBX terminal on the side of the United States of America, are operated by OTV, a related company, which is temporarily paying compensation for the loss of non-aeronautical revenue at the airport. According to the clauses of the contract, this compensation will cease to be collected as of 2018, however the operation contract will remain in force. Transactions were made as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Non-airport access rights |  | Ps. |  | 3,737 |  |  | Ps. |  | - |  |  | Ps. |  | - |

| c. | Accounts receivable (payable) with other related parties that are in the consolidated statement of financial position as of December 31, 2018, 2019 and 2020, are integrated as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Accounts receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Especialistas en Alta Cocina, S.A. de C.V. (Independent director) |  | Ps. |  | 93 |  |  | Ps. |  | 3,523 |  |  | Ps. |  | 1,698 |
Mayo 13, S.A. de C.V. (Independent director) |  | Ps. |  | — |  |  | Ps. |  | 729 |  |  | Ps. |  | — |
Fly by Wings, S.A. de C.V. (Independent director) |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 5,955 |
Las Nuevas Delicias Gastronómicas, S. de R.L. de C.V. (Independent director) |  | Ps. |  | — |  |  | Ps. |  | — |  |  | Ps. |  | 549 |

|  | 2018 |  |  | 2019 |  |  | 2020 |
Accounts payable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ingeniería y Economía del Transporte, S.A. (Shareholder) |  | Ps. |  | (7,698 | ) |  | Ps. |  | (3,079 | ) |  | Ps. |  | - |
OTV (Shareholder) |  | Ps. |  | (465 | ) |  | Ps. |  | - |  |  | Ps. |  | - |

| d. | Transactions with other related parties that are included in the consolidated statement of profit or loss and other comprehensive income as of December 31, 2018, 2019 and 2020, are as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Commercial revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Especialistas en Alta Cocina, S.A. de C.V. (Independent Director) |  | Ps. |  | 32,236 |  |  | Ps. |  | 34,039 |  |  | Ps. |  | — |
Mayo 13, S.A. de C.V. (Independent Director) |  | Ps. |  | 9,443 |  |  | Ps. |  | 5,549 |  |  | Ps. |  | — |
Otayconnect, S. de R. L. de C.V. (Shareholder) |  | Ps. |  | 300 |  |  | Ps. |  | 1,253 |  |  | Ps. |  | 1,313 |
Promotora Cabo Real, S.A. de C.V. (Shareholder) |  | Ps. |  | 21,059 |  |  | Ps. |  | 28,910 |  |  | Ps. |  | 14,291 |
Las Nuevas Delicias Gastronómicas, S. de R. L. de C.V. (Independent director) |  | Ps. |  | — |  |  | Ps. |  | 4,886 |  |  | Ps. |  | 5,524 |
Fly by Wings, S.A. de C.V. (Independent director) |  |  |  | — |  |  |  |  | — |  |  |  |  | 24,093 |
Beer Factory de México, S.A. de C.V. (Independent director) |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,389 |
Operadora y Administradora de Restaurantes Gigante, S.A. de C.V. (Independent director) |  |  |  | — |  |  |  |  | — |  |  |  |  | 1,004 |
Diseños Pantera, S.A. de C.V. (Shareholder) |  | Ps. |  | — |  |  | Ps. |  | 298 |  |  | Ps. |  | 62 |

|  | 2018 |  |  | 2019 |  |  | 2020 |
Technical advisory: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ingeniería y Economía del Transporte, S.A. (Shareholder) |  | Ps. |  | 8,896 |  |  | Ps. |  | 8,626 |  |  | Ps. |  | — |
Other service: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diseños Pantera, S.A. de C.V. (Shareholder) |  | Ps. |  | — |  |  | Ps. |  | 279 |  |  | Ps. |  | — |

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| e. | The total amounts paid to key management personnel or directors, for the years ended December 31, 2018, 2019 and 2020 were as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Management |  | Ps. |  | 28,961 |  |  | Ps. |  | 37,226 |  |  | Ps. |  | 39,435 |
Independent directors (7) |  | Ps. |  | 8,140 |  |  | Ps. |  | 8,523 |  |  | Ps. |  | 9,216 |

3 2. | Leases

The Company leases space for its corporate offices under renewed operating lease agreements for a term of three and five years, counted as of February 2018 and May 2020, and the first one ended in January 2023 and the second one will be end in April 2023, respectively. The monthly rent to pay was USD $42,523. Base rent is subject to increases in accordance with the CPI and the CPI.

The expense in pesos for income amounted to Ps. 9,044, Ps. 12,004 and Ps. 12,250 for the years ended December 31, 2018, 2019 and 2020 respectively.

In addition to the rent described above, the Company has entered into other contracts for the rental of other assets, the amounts of which are not material.

| – | Leases as lessor

| a) | The Company receives payments from the leasing of spaces inside the commercial area of the airports, which have been classified as operating leases. The future minimum lease payments associated with such non-cancelable in Mexico leases is as follows:

|  | 2018 |  |  | 2019 |  |  | 2020 |
Less than one year |  | Ps. | 1,162,457 |  |  | Ps. |  | 1,331,301 |  |  | Ps. |  | 1,368,927 |
One to two years |  |  |  | 835,157 |  |  |  |  | 1,074,436 |  |  |  |  | 1,109,585 |
Two to three years |  |  |  | 665,499 |  |  |  |  | 875,768 |  |  |  |  | 768,681 |
Three to four years |  |  |  | 524,911 |  |  |  |  | 592,384 |  |  |  |  | 390,332 |
Four to five years |  |  |  | 316,356 |  |  |  |  | 299,145 |  |  |  |  | 105,303 |
More than five years |  |  |  | 203,288 |  |  |  |  | 96,704 |  |  |  |  | 70,242 |
|  | Ps. | 3,707,668 |  |  | Ps. |  | 4,269,738 |  |  | Ps. |  | 3,813,070 |

| b) | Future minimum rental payments under non-cancellable leases in MBJA and PACKAL are as shown in the following table (in thousands of USD Dollars):

|  | 2018 |  |  | 2019 |  |  | 2020 |
Less than one year |  | USD$ |  | 12,175 |  |  | USD$ |  | 8,692 |  |  | USD$ |  | 9,491 |
One to two years |  |  |  | 6,122 |  |  |  |  | 4,935 |  |  |  |  | 5,514 |
Two to three years |  |  |  | 3,577 |  |  |  |  | 4,731 |  |  |  |  | 4,267 |
Three to four years |  |  |  | 3,395 |  |  |  |  | 3,506 |  |  |  |  | 3,686 |
Four to five years |  |  |  | 2,723 |  |  |  |  | 3,032 |  |  |  |  | 3,548 |
More than five years |  |  |  | 22,177 |  |  |  |  | 19,398 |  |  |  |  | 3,780 |
|  | USD$ |  | 50,169 |  |  | USD$ |  | 44,294 |  |  | USD$ |  | 30,287 |

During the years ended December 31, 2018, 2019 and 2020, the Company recognized income from leasing activities of Ps. 2,376,820, Ps. 2,859,958 and Ps. 1,748,493, as part of the non-regulated revenues in the consolidated statements of profit or loss and other comprehensive income, respectively.

Future minimum rentals do not include the contingent rentals that may be paid under certain commercial leases on the basis of a percentage of the lessee’s monthly revenues in excess of the monthly minimum guaranteed rent. Contingent rentals for the years ended December 31, 2018, 2019 and 2020 are disclosed under the caption “Revenues from sharing of commercial activities” in Note 20.

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3 3. | New accounting standards not yet in effect

The Entity has not applied the following new and revised IFRSs that have been issued but are not yet effective:

Standard |  | Effective as of
IFRS 17– Insurance Contracts 1 |  | January 1, 2021
IFRS 10 and IAS 28 (amendments) |  | January 1, 2020
Amendments IAS 1 |  | January 1, 2020
Amendments IFRS 3 |  | January 1, 2022
Amendments IAS 16 |  | January 1, 2021
Amendments IAS 37 |  | January 1, 2021
Annual Improvements to IFRS Standards 2018–2020 |  | January 1, 2020

Company’s management anticipate that the application of these amendments will not have an impact on the Company's consolidated financial statements in future periods should such transactions arise.

IFRS 17 Insurance Contracts

The IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 Insurance Contracts.

This standard outlines a General Model, which is modified for insurance contracts with direct participation features, described as the Variable Fee Approach. The General Model is simplified if certain criteria are met by measuring the liability for remaining coverage using the Premium Allocation Approach.

The General Model will use current assumptions to estimate the amount, timing and uncertainty of future cash flows and it will explicitly measure the cost of that uncertainty, it takes into account market interest rates and the impact of policyholders’ options and guarantees.

The implementation of this standard is likely to bring significant changes to an Company’s processes and systems, and will require much greater co-ordination between many functions of the business, including finance, actuarial and IT.

This standard is effective for annual reporting periods beginning on or after January 1, 2021, with early application permitted. It is applied retrospectively unless impracticable, in which case the modified retrospective approach or the fair value approach is applied. For the purpose of the transition requirements, the date of initial application is the start if the annual reporting period in which the Company first applies this standard, and the transition date is the beginning of the period immediately preceding the date of initial application.

The Company’s management anticipate that the application of these amendments will not have an impact on the Company's consolidated financial statements in future periods should such transactions arise.

IFRS 10 Consolidated Financial Statements and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Specifically, the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognized in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognized in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint venture.

The Company´s management anticipate that the application of these amendments will not have an impact on the Company consolidated financial statements in future periods should such transactions arise.

Amendments IAS 1 Classification of Liabilities as Current or Non-current

The amendments to IAS 1 affect only the presentation of liabilities as current and non-current in the statement of financial position and not for the amount or time in which any asset, liability, income or expense is recognized, or the information disclosed about of those figures.

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The amendments clarify that the classification of liabilities as current and non-current is based on the rights of existence at the end of the reporting period, specifying that the classification is not affected by expectations about whether the entity will exercise the right to defer the cancellation of the liability, explain that there are rights if there are agreements that must be fulfilled at the end of the reporting period, and introduce a definition of the 'agreement' to make it clear that the agreement refers to the transfer of cash from the counterparty , equity instruments, other assets or services.

The amendments apply retrospectively for annual reporting periods beginning on or after 1 January 2023, with early application permitted.

The Company´s management anticipate that the application of these amendments will not have an impact on the Company consolidated financial statements in future periods should such transactions arise.

Amendments to IFRS 3 - Reference to the Conceptual Framework

The amendments update IFRS 3 so that it can refer to the 2018 Conceptual Framework rather than the 1989 Framework. They also added a requirement that, for obligations within the scope of IAS 37, a buyer applies IAS 37 to determine whether the acquisition date is a present obligation or exists as a result of a past event. For levies that are within the scope of IFRIC 21 Levies, the buyer applies IFRIC 21 to determine whether the obligation gives rise to a liability to pay the levy that occurred on the acquisition date.

Finally, the amendments add an explicit statement that the buyer will not recognize a contingent asset acquired from a business combination.

The amendments are effective for business combinations whose acquisition date is on or after the initial period of the first annual period beginning on or after January 1, 2022. With the option of early application if the entity also applies all other updated references.

The Company´s management anticipate that the application of these amendments will not have an impact on the Company consolidated financial statements in future periods should such transactions arise.

Amendments IAS 16 Property, Plant and Equipment: Proceeds before intended

Under the amendments, proceeds from selling items before the related item of Property, Plant and Equipment is available for use should be recognized in profit or loss, together with the costs of producing those items. IAS 2 Inventories should be applied in identifying and measuring these production costs.

Companies will therefore need to distinguish between:

-costs associated with producing and selling items before the item of Property, Plant and Equipment is available for use; and

-costs associated with making the item of Property, Plant and Equipment available for its intended use.

Making this allocation of costs may require significant estimation and judgement. Companies in the extractive industry may need to monitor costs at a more granular level.

The meaning of testing the functioning of Property, Plant and Equipment. The amendments also clarify that testing whether an item of Property, Plant and Equipment is functioning properly means assessing its technical and physical performance rather than assessing its financial performance.

The Company must recognize the cumulative effect of the initial application of the amendments as an adjustment to the consolidated financial statements in retained earnings (or some capital component, as appropriate) at the beginning of the first period to be presented.

The amendments are effective for annual periods beginning on January 1, 2022 with the option of early application.

The Company´s management anticipate that the application of these amendments will not have an impact on the Company consolidated financial statements in future periods should such transactions arise.

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Amendments IAS 37 Onerous Contracts – Cost of Fulfilling a Contract

The amendments specify that the ‘costs to fulfill’ a contract include the ‘costs directly related to the contract’. The costs that are directly related to a contract consist of the incremental costs and the costs to fulfill a contract and the allocation of other costs that are directly related to fulfill a contract.

The amendments apply to contracts in which the Company has not yet fulfilled all its obligations at the beginning of the annual reporting period in which the entity applies the amendments for the first time. The comparatives should not be reformulated. Instead, the entity should recognize the cumulative effect of the initial application of the amendments as an adjustment to the consolidated financial statements in retained earnings or some other component of equity, as appropriate, by the date of initial application.

The modifications are effective for annual periods beginning on or after January 1, 2022, with the option of early application.

The Company´s management anticipate that the application of these amendments will not have an impact on the Company consolidated financial statements in future periods should such transactions arise.

Annual Improvements to IFRS Standards 2018 – 2020

IFRS 1 First-time Adoption of International Financial Reporting Standards

The amendment simplifies the application of IFRS 1 for a subsidiary that becomes a first-time adopter of IFRS Standards later than its parent – i.e., if a subsidiary adopts IFRS Standards later than its parent and applies IFRS 1.D16 (a), then a subsidiary may elect to measure cumulative translation differences for all foreign operations at amounts included in the consolidated financial statements of the parent, based on the parent’s date of transition to IFRS Standards.

IFRS 9 Financial Instruments

This amendment clarifies that – for the purpose of performing the ‘’10 per cent test’ for derecognition of financial liabilities – in determining those fees paid net of fees received, a borrower includes only fees paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf.

IFRS 16 Leases

The amendment removes the illustration of payments from the lessor relating to leasehold improvements. As currently drafted, this example is not clear as to why such payments are not a lease incentive.

The Company´s management anticipate that the application of these amendments will not have an impact on the Company consolidated financial statements in future periods should such transactions arise.

| 34. | Subsequent events

| a. | On January 19, 2021, the Company made the payment of the loan with Scotiabank for USD $ 95.5 million, through the loan described in Note 1.b.

| b. | On February 2, 2021, the Company made the payment of the loan with BBVA for USD$ 95.5 million, through the loan described in Note 1b.

| c. | During the first months of 2021, the COVID-19 pandemic continued to affect the Company's results, mainly due to the decrease in domestic and international passenger traffic compared to the same period in the 2020 fiscal year. Containment steps, such as those taken by the United States government, which expanded the requirement for negative COVID-19 testing for all air passengers entering the United States beginning January 26, 2021, also affect passenger traffic. As of January 7, 2021, there were similar testing requirements for air passengers traveling to Canada, and subsequently, the Canadian government suspended flights between Mexico and the Caribbean until April 30, 2021, further contributing to a decrease in passenger traffic levels compared to the first quarter of 2021.

As previously mentioned, the degree of recovery of the Company's operations and results will depend on the duration and containment of the pandemic by the Mexican and Jamaican governments and the U.S. government, as the main origin-destination. Due to the nature of the pandemic, the Company cannot fully estimate the impact on its financial situation or operating results in the short, medium or long term. However, the rate of vaccination of its population by the U.S. government, combined with the size of its population, may aid in a sooner than expected recovery in international traffic, mainly at the Company's airports in tourist destinations.

During 2021, the Company will continue evaluating the possible adverse impacts of the pandemic on its financial condition and operating results. The Company will also review key indicators and perform impairment tests of significant long-term assets, expected credit losses and recovery of deferred taxes. The Company has reviewed financial results for the short, medium, and long term,

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concluding that a significant deterioration of the Company’s assets is not expected. As such, the Company does not foresee a business interruption or closing operations at any of its airports.

The accompanying consolidated financial statements were authorized for issuance in the Company´s annual report on Form 20-F, by the Chief Executive Officer and the Chief Financial Officer of Grupo Aeroportuario del Pacífico S.A.B. de C.V. on April 22, 2021, hereby updated for subsequent events, to be filed with the United States Securities and Exchange Commission.

3 5. | Authorization to issue the consolidated financial statements

On February 24, 2021 the issuance of these consolidated financial statements was authorized by Lic. Raúl Revuelta Musalem, Chief Executive Officer, and by Lic. Saúl Villarreal García, Chief Financial Officer. Consequently, these consolidated financial statements do not reflect events after this date and are subject to approval at the Ordinary General Stockholders’ Meeting, where they may be modified based on provision set forth by the Mexican General Corporate Law.

* * * * * *

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