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Airport concessions

12 Months Ended

Dec. 31, 2023

Disclosure of detailed information about service concession arrangements [abstract]

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 were 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, 2021, 2022 and 2023:


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 SICT. 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 SICT.

–

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. In accordance with the terms of the concessions and Mexican Federal Tax Act, the Mexican Congress may review each year the percentage and criteria upon which this tax is levied. As a result of this review process, in October 2023, an increase in the tax percentage from 5% to 9% was determined, applicable beginning in 2024.

–

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 SICT has applied in two firm sanctions during the period of 10 years.

–

The SICT may modify concession terms and conditions that regulate the Company’s operations in accordance to the General Law on Airports.

–

On October 19, 2023, the AFAC notified to the Company that it modified the Tariff Regulation bases establish in the Appendix 7 of the concession agreement. These bases have an application immediately, however, it respects the MDP and the current maximum tariff, it approved in the last tariff review for the period 2020-2024, so any modification to the tariff would occur as of January 1, 2025, once the ordinary review of the Joint Maximum Rate and MDP for the period 2025-2029 is completed. The main changes were the determination of the discount rate that must be calculated using the methodology of weighted average cost of capital, instead of cost of capital. In addition, the new bases consider an adjustment to the reference value if the actual traffic units of the previous five-year period have been 3% higher than the projected traffic units for those periods, the adjustment will be made under regulated revenues less the concession rights of surplus revenues; this change would be applicable for the period 2025-2029. Other changes exist such as the determination of terminal value, as well as the redistribution of values of reference between the airports, among others.

–

The concession may be renewed in one or more instances for terms that do not exceed an additional 50 years.

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 utilize the airport for a period of 30 years beginning April 12, 2003.

The concession of MBJ contains the following terms and conditions:

–

On April 3, 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 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 tax 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 tax equal to 45% of any revenues earned in excess of the forecast revenues established in the Concession Agreement. This additional concession tax is for over the period from April to March of each year, with payment required annually. For the years ended December 31, 2021, 2022 and 2023 the Company recognized as concession taxes USD$8.5 million (Ps.172.9 millions), USD$14.5 million (Ps.290.9 millions) and USD$44.2 million (Ps.784.8 millions), 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.

Norman Manley International Airport (NMIA)

As disclosed in Note 1.a, 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.

The NMIA Concession contains the following terms and conditions:

–

Through the Concession agreement, PACKAL is obliged to pay the AAJ a monthly concession tax of 62.01% of the total aeronautical and non-aeronautical revenues based on the gross revenues. For the years ended December 31, 2021, 2022 and 2023 the Company recognized USD$19.5 million (Ps.395.5 millions), USD$34.7 million (Ps.697.5 millions) and USD$41.3 million (Ps.733.6 millions), respectively.

–

The concession agreement is governed by Jamaican laws 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).

–

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.

The value of the concessions as of December 31, 2021, 2022 and 2023 is as follows:


	December 31, 2021			December 31, 2022			December 31, 2023
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)		3,624,466			3,409,289			2,974,709
Concession airport NMIA (upfront fees on date of acquisition in USD$7,146,500)		147,100			138,367			120,729
Less - accumulated amortization (2)		(7,263,696	)		(7,699,609	)		(8,137,101	)
	Ps.	10,328,521		Ps.	9,668,698		Ps.	8,778,988

(1)

The other airport concession includes translation effect for an amount of Ps.799,486, Ps.721,260 and Ps.269,042 as of December 31, 2021, 2022 and 2023, respectively.

(2)

Amortization includes translation effect for an amount of Ps.(48,519), Ps.(48,701) and Ps.(21,141) as of December 31, 2021, 2022 and 2023, respectively.

The amortization charge for the years ended December 31, 2021, 2022 and 2023, amounts to Ps.485,533, Ps.483,984 and Ps.458,633, respectively.