Morningstar | Sureste Begins to Navigate a Flight Path Through a Post-AMLO World
Grupo Aeroportuario del Sureste holds approximately one fourth of Mexican air-passenger market share, and total passengers transported in 2017 increased 9% to more than 31 million. Cancun is a popular tourist destination, and functions as the primary revenue driver for the company. With increased international passengers and commercial offerings at Cancun, commercial revenue per passenger for Sureste is higher than at its Mexican competitors.According to Sureste's government-granted concession, each airport must adhere to regulated fees charged to customers, and rates are adjusted periodically for inflation. Sureste charges airlines, departing passengers, and other third parties for using the airports’ facilities. In addition, the company generates revenue from commercial activities at its airports, including leasing space and taking a percentage of revenue from each tenant. The airport operators must comply with the Master Development Program, or MDP--a plan constructed to lay out maximum rates and required minimum expenditures every five years. In 2013, the company established a 50/50 joint venture with Oaktree Capital, allowing it to operate Luis Munoz Marin Airport, or LMM, in Puerto Rico. A concession arrangement for the airport lasts 40 years, and more than 9 million passengers traveled through the airport in its most recent fiscal year. Recently, Sureste increased its stake in the airport to 60%; one of Canada’s largest pension investment managers owns the remaining 40%. LMM is Puerto Rico’s main airport, with roughly 90% of its passengers traveling to the U.S., and it utilizes two commercial runways. In addition, Sureste acquired a majority interest in two Colombian airport operators in 2017. We believe these acquisitions will help diversify revenue and lessens dependence on Cancun. The Colombian operators have concessions in place for a 15-year minimum. In total, the two operators serve roughly 15 million passengers per year.Grupo Aeroportuario del Sureste holds concessions to operate, maintain and develop nine airports in the southeast region of Mexico. As operators of these airports, Co. charges airlines, passengers and other users fees for the use of the airports' facilities. Co. also derives rental and other income from commercial activities conducted at its airports, such as the leasing of space to restaurants and retailers. Co.'s concessions include the concession for Cancun International Airport, the airports in Cozumel, Huatulco, Merida, Minatitlan, Oaxaca, Tapachula, Veracruz and Villahermosa.
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