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Competition regulator Fair Trading Commission, FTC, is assessing whether travellers are benefiting from price competition at Jamaica’s two major international airports, both managed by Mexico-based Grupo Aeroportuario del Pacífico, GAP, which translates to Pacific Airport Group.
GAP owns and operates the Norman Manley International Airport in Kingston and the Sangster International Airport in Montego Bay under concession from the Jamaican government.
The FTC said it is examining the concessionaire agreements for both airports, saying its “concerns centre around key aspects of competition and consumer protection within the aviation sector” in the latest FTC newsletter released online on Tuesday.
The review comes amid fluctuating air travel patterns since the COVID-19 pandemic and growing concerns from the public about the lack of ideal flight options at their nearest airport. Some travellers have reported driving cross-country to access cheaper flights, raising questions about pricing practices.
In January, Sangster International – Jamaica’s busiest airport – recorded a 7.3 per cent decline in total passengers, compared to a year ago. NMIA, located at Palisadoes, saw a 12.5 per cent increase in passenger flow, according to GAP, which released new financial results on Tuesday.
The FTC review is targeting three main areas: the strategies employed by airport managers to attract new airlines and routes; clarity on the balance between providing incentives for new market entrants without preferential treatment or market distortions; and the mechanisms in place to monitor concessionaire pricing to protect consumers from excessive charges, while ensuring fair profit margins for service providers.
The outcome of the review could lead to changes at the airports.
FTC Executive Director David Miller said a deadline for the completion of the assessment has not been set.
“No timeline has been set as yet. We are in the early stages,” Miller told the Financial Gleaner, adding that the agency was “awaiting info from PACKAL and researching other sources of information on the market”.
PACKAL refers to PAC Kingston Airport Limited, the entity utilised by GAP to operate NMIA. Sangster is operated by a separate entity called MBJ Airports Limited.
For the 2024 calendar year, Sangster and Norman Manley collectively generated 2.96 billion pesos (US$164 million) in revenue from aircraft operations, reflecting a 6.8 per cent gain. The airports earned an additional 1.0 billion pesos (US$55.5 million) from rent and non-aero services, up three per cent relative to 2023.
Representatives from the FTC recently attended separate forums hosted by PACKAL and MBJ Airports, where the airport managers updated the public on airport initiatives, achievements and major projects.
“It was noted at the NMIA forum that the NMIA’s passenger throughput has yet to return to pre-COVID-19 levels, and the number of flights passing through the NMIA has not increased recently,” FTC noted. “This level of demand and other insights from the forums will factor into the FTC’s review of the concessionaires’ agreements.”
Jamaica has three international airports. The third airport, Ian Flemming, based at Boscobel in St Mary, handles low volumes due to its relatively short 1.4 kilometres runway. Its length is about half that of the others.
PACKAL and MBJ Airports both hold 30-year concession agreements, which took effect in 2018 for NMIA and 2003 for Sangster International. Both concession agreements include investments in the development of the airports, funded by GAP. The Jamaican government divested the management of the airports to absolve itself of the capital upkeep costs.
At the recent NMIA forum, PACKAL spoke of its new investment programme, surpassing US$100 million in capital expenditure that will be utilised for upgrades to the airport terminal and the addition of 300 metres to the runway as a safety zone. The runway currently spans 2.7 kilometres and will cost some US$66 million to extend.
Sangster International also extended its runway during years 2019 to 2023, taking it from 2.6 kilometres to 3.0 kilometres at a cost of about US$70 million.
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