The Company has concessions to operate, maintain and develop 13 airports in Mexico, which are concentrated in central and northern regions of the country. Each concession is for 50 years from November 1, 1998. The term of each of the Company’s concessions may be extended by the Ministry of Communications and Transportation under certain circumstances for a period not exceeding 50 years. As operators of 13 airports the Company earns revenue from airlines, passengers, and other users for using the airport facilities. The Company also earns revenues for commercial activities carried out at the airports, such as leasing of space to restaurants and other shops.
Each airport concession agreement contains the following terms and basic conditions:
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a. |
The concessionaire has the right to manage, operate, maintain and use the airport facilities and carry out any construction, improvements or maintenance of the related facilities in accordance with its five-year period master development program, and to provide airport, complementary and commercial services. |
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b. |
The concessionaire will use the airport facilities only for the purposes specified in the concession agreement, will provide services in conformity with the law and applicable regulations and will be subject to inspections by the Ministry of Communications and Transportation. |
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c. |
The concessionaire must pay a concession tax for the right to use airport facilities (currently 5% of the concessionaire’s annual gross revenues derived from the use of public property), in conformity with the Mexican Federal Duties Law. |
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d. |
The Mexican Airport and Auxiliary Services agency (Aeropuertos y Servicios Auxiliares) has the exclusive right to supply fuel at the concessionaire’s airports. |
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e. |
The concessionaire must grant free access to specific airport areas to certain Mexican government agencies, so that they may carry out their activities within the airports. |
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f. |
The concession may be revoked if the concessionaire breaches any of its obligations established in the concession title, as established in Article 26 and 27 of the General Airports Law and in the concession title. The breach of certain concession terms may be cause for revocation if the Ministry of Communications and Transportation has applied sanctions in three different instances with respect to the same concession term. |
The terms and conditions of each concession contract have been fulfilled in all important aspects during the years ended December 31, 2017, 2016 and 2015.
Investments in airport concessions include: improvements to concessioned assets, rights to use airport facilities, and airport concessions. The total cost of the concession was assigned proportionally to rights to use airport facilities on the basis of the fair value of the assets determined by an independent appraiser. At any airport concession where the cost exceeded the fair value, the excess was recognized within the airport concessions line item.
As of December 31, 2017, 2016 and 2015, the carrying value of the right to use airport facilities, airport concessions and improvement to concessioned assets classified as intangible assets are as follows:
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December 31, |
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2017 |
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2016 |
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2015 |
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Projects completed and in operation: |
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Airport concessions |
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Ps. |
605,643 |
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Ps. |
605,643 |
|
Ps. |
605,643 |
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Rights to use airport facilities |
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|
3,356,762 |
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|
3,356,762 |
|
|
3,356,762 |
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Improvements to concessioned assets (note 15) |
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|
5,859,174 |
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|
4,532,716 |
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|
4,187,944 |
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Accumulated amortization |
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|
(2,173,162) |
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|
(1,981,607) |
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|
(1,801,744) |
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|
|
Ps. |
7,648,417 |
|
Ps. |
6,513,514 |
|
Ps. |
6,348,605 |
The changes in investment in concessions are as follows:
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December 31, |
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2017 |
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2016 |
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2015 |
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Investment in airport concessions |
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|
|
|
|
|
|
|
|
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Beginning balance |
|
Ps. |
8,495,121 |
|
Ps. |
8,150,349 |
|
Ps. |
7,807,228 |
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Increase |
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|
1,326,458 |
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|
344,772 |
|
|
347,988 |
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Disposals |
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|
- |
|
|
— |
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|
(4,867) |
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Ending balance |
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|
9,821,579 |
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|
8,495,121 |
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|
8,150,349 |
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Amortization of airport concessions: |
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|
|
|
|
|
|
|
|
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Beginning balance |
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|
(1,981,607) |
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|
(1,801,744) |
|
|
(1,626,951) |
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Increase |
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|
(191,555) |
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|
(179,863) |
|
|
(175,106) |
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Disposals |
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|
— |
|
|
— |
|
|
313 |
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Ending balance |
|
|
(2,173,162) |
|
|
(1,981,607) |
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|
(1,801,744) |
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Net investment in airport concessions |
|
Ps. |
7,648,417 |
|
Ps. |
6,513,514 |
|
Ps. |
6,348,605 |