Argentina Seeks Airport Concession Renegotiation, Rejects Company's Terms

The Argentine government intends to renegotiate the concession agreement for Aeropuertos Argentina, a company controlled by Eduardo Eurnekian, but has rejected the terms proposed by the operator. While the need for a new agreement is not in question, the government's starting point has shifted from guaranteeing the company's desired profitability.

Aeropuertos Argentina, which began operating the airport network in 1998 under a 30-year concession, is seeking to extend its contract and secure a higher rate of return. A previous preliminary agreement with the former head of the National Airport System Regulatory Body (Orsna) had proposed extending the concession until 2056, with a potential further extension to 2066, and a 14.45% internal rate of return (IRR), though the company aimed for 16.45%.

However, the current administration views the company's demands, particularly a guaranteed return of nearly 17%, as "exorbitant." Government sources argue that such a high rate of return is inconsistent with Argentina's current economic risk profile. They believe that improvements in macroeconomic conditions should allow for a reassessment of both the return rate and the concession's duration.

The government has ruled out increasing airport fees paid by airlines, citing concerns about competitiveness and potential impacts on flight connections. They also deem a reduction in service quality to cut costs as unviable. The core of the dispute stems from the contract's last extension in December 2020, which added 10 years until 2038, based on projections the government now considers overly optimistic.