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Remarks on Long-Term Lease of Luis Muñoz Marín Airport 28 Sept 2012

Remarks by Kenneth D. McClintock

Secretary of State of Puerto Rico

on Long-Term Lease of Luis Muñoz Marín Airport

FAA Public Meeting

September 28, 2012

Carolina, Puerto Rico

 

I am Kenneth McClintock and I serve as our Secretary of State, which as in Arizona, Oregon, and Wyoming fulfills the role of Lieutenant Governor.  Among the duties that  Governor Fortuño has delegated to me, I am responsible for the final local approval of public-private partnership projects.

 

I wish to share several considerations that make the proposed long-term lease of Luis Muñoz Marin Airport a favorable transaction for the long-term economic development of Puerto Rico, the place where the United States becomes a Caribbean nation.  

 

The proposed lease is essential in strengthening the United States’ leadership role in the Caribbean, improves our competitiveness and turn Puerto Rico, more than simply an air and maritime transportation hub, into the leader of the Caribbean.

 

While we have the largest economy in the region with a GNP of $64.1 billion in fiscal year 2011, certain segments of our economy that have not realized its needed potential. Our tourism sector merely reaches 5% of our economy.  With a first-class airport, the sky is the limit, literally!  

 

Lacking a first-rate airport operator, in the last decade, Puerto Rico lost ground in tourism to other Caribbean and competing destinations, with Puerto Rico’s market share of traveling seats to the Caribbean declining from 35% in 2005 to 26% in 2009, a million passengers lost to other Caribbean nations.   

 

Neighboring countries such as the Dominican Republic, Jamaica, Bahamas and Curaçao have implemented long-term leases of their airports in order to strengthen their economies.

 

Our services sector has great potential for further development. We’ve increasingly developed professional, technical, and educational services, among others. A large part of the future growth of this sector resides in exporting services. Increased connectivity is critical in delivering services to the rest of the Caribbean or other countries.      

 

Likewise, manufacturing, the cornerstone of our economy for the past 50 years, needs a well connected, updated and efficient airport.

A stronger tourism sector, export of services and more efficient services for our manufacturing base, are all objectives that will be supported by the proposed long-term lease of the  airport.

 

We have made significant recent progress in competitiveness. The most recent World Economic Report on Competitiveness, which incorrectly treats Puerto Rico separate from the rest of our nation, ranked us 31st among 142 nations, an improvement of 4 positions. However, our competitiveness has to improve in order to reach stronger sustained economic growth. Infrastructure plays a major role in improving overall competitiveness.  As an Island, not only the connectivity provided by our main airport is important in order to be competitive, but also the quality, costs and efficiency of developing and managing the main airport.

 

The proposed long-term lease will be a major driver of competitiveness for Puerto Rico. Not only are there strong incentives for improving connectivity but also there will be a robust capital improvement program, and a disciplined commercial program to ensure world-class services to passengers.

 

The airline rate structure contained in the lease enhances competitiveness. Rates and charges for aviation at the airport will be frozen for the first five years. Future revisions will be conducted in accordance to a core consumer price index.  The benefit of this proposed structure is that costs per passengers will decline as passenger volume increases, effectively making Puerto Rico a more competitive destination for all passengers.

 

Good transportation logistics is critical for enhancing competitiveness. More than ever, Puerto Rico needs to be well connected to the rest of the world. Presently, we have a well-developed highway system that together with a strong International Airport, optimal regional airports and well-developed cargo and cruise ship ports can really provide an important boost to competitiveness of Puerto Rico.     

 

Thank you for your attention.