Costa Rica’s New International Airport to be Built in the Sierpe Valley – Maybe…

Saturday’s edition – 15th April 2006 – of La Nación newspaper featured a story about the new international airport that may be built in the southern zone of Costa Rica.

The single runway in the Sierpe Valley is planned to be 3.5 kilometers long (1 meter = 3.28 feet so 3,500 x 3.28 = 11,480 feet) and 60 meters wide 196.8 feet which is 500 meters longer and 15 meters wider than the country’s main international airport in San José.

The goal is to have an airport that will allow Boeing 747’s and the largest passenger jet, the Airbus A-380 to land. The hope is also to attract attract significant tourism to Costa Rica from Europe.

Unfortunately as the article mentions, they have not yet determined the costs associated with building a new international airport which will probably be the most expensive project that Costa Rica has ever undertaken.

Some people might say that announcing a project like this without evaluating the enormous costs involved is somewhat irresponsible. So it’s important to remember that a possible “plan” has been announced for a new airport, without having a clue as to how it will be paid for, they certainly can not announce that they are definitely going to be building a new airport.

At the Juan Santa Maria international airport in San José, the second, third and fourth phase of construction has yet to be finished and according to the local Minister of Transportation, this construction is due for completion between 2011 and 2015.

So if this proposed airport in the southern region of the country is bigger than any existing airport in Costa Rica and the intention is that even the widest bodied jets from Europe will be able to use the airport, they will have to build a new international terminal, with all the necessary infrastructure so that the overall costs will be significantly more than anything that has been built in Costa Rica before.

You can see from their ‘Portfolio’ of projects listed on their website that Alterra planned “to invest US$200 million in capital improvements to the airport” in San José which is a substantial sum of money.

Please bear in mind that in the case of San José, these are “improvements,” they are not building a new airport. I think we can safely assume that a new airport would cost significantly more than US$200,000,000.

New ‘International’ Airports Anywhere Cost Lots of Money

1. Port Seattle Airport: “The new runway will cost between $1.1 and $1.2 billion and is expected to be complete in late 2008 at the earliest.”
2. St. Louis Airport Smaller than the one proposed in Costa Rica: “Lambert Airport opened its new runway Thursday, even as critics of the $1.1 billion project called it a waste of money that destroyed a community.”

   On Thursday, a decade’s worth of elected and aviation officials will gather near the 9,000-foot-long ribbon of concrete – the most expensive improvement project in St. Louis history. The runway is 150 feet wide and two feet thick, with 10 inches of crushed rock beneath it…

3. Honduras: They were discussing building a new airport in Tegucigalpa, Honduras which would require at least US$320 million….
4. Ecuador: The new airport in Quito, Ecuador is expected to cost US$585,000,000
5. Colombia: The new international airport in Colombia is estimated to cost US$650,000,000

In most new airport projects, the cost of the land is a big factor but thankfully, since a Costa Rican government agency – Instituto de Desarrollo Agrario (IDA) – already owns much of the land, Costa Rica does not have to worry about the land expense. However, according to the description on the map above, they are worried about a flooding problem in parts of the land that has been chosen which is not always a good thing when you are trying to land a large passenger jet.

No matter where you search, the dollar figure associated with building an international airport capable of accepting the largest passenger jets in existence has many zeros in it! In just these examples, we see estimates starting at US$320,000,000 and going into the billions of dollars.

But even without having to buy the land, where would Costa Rica find the money for what would probably be more expensive than that US$320,000,000 airport in the southern zone?

Let the Passengers Pay?

Admittedly many of these airports receive a lot more traffic than any airport in Costa Rica but that brings up another question, if passengers are expected to help pay for the ongoing costs associated with running an airport, if there aren’t enough of them, who will pay?

Are there enough potential passengers to justify the construction of a new airport? Does this even make economic sense? I don’t think so…

According to the Costa Rican Tourism website: “… it’s estimated that for the end of 2005 the country will have experienced the stay of 1,671,000 visitors.”

Let’s Make Some Rosy & Extremely Simplistic Projections

Forgetting the fact that the southern region could not possibly house this number of people, let’s make a ridiculous assumption and say that 25% of all those “visitors” are tourists and they would prefer to fly into a southern zone airport.

Income: If 417,750 people are flying into the new airport and are paying the same $26 “airport tax” that they are paying in San José’s international airport that would bring in about US$10,861,500 in annual income.

Staff & Standard Operating Costs: But let’s not forget there would be a substantial number of employees to help manage, secure and run the airport, significant technology expenses and utilities of approximately US$4,000,000 per annum.

Borrowing Costs: Even if the Costa Rican government were to successfully borrow the amount associated with the lowest cost airport mentioned above – US$320,000,000 at a very favorable rate of 5% – that would mean interest payments alone would be about US$16,000,000 per annum.

Plus the US$4,000,000 cost of salaries etc., which would bring those total costs and expenses to about $20,000,000 per year.

Remembering that even though we are using very ‘ambitious’ visitor numbers in these projections, when you are spending about US$20 million and only earning about US$11 million per year, that can only end in serious financial problems.

Other Concerns: Over the long-term, most experts agree that the price of oil is only going to go higher meaning that the cost to travel by air will also increase dramatically. Will this help or hinder international travel?

Staffing: Many resorts are already having problems finding skilled and talented employees to help cater to the tourism industry where English is an important talent to have. Where will these staff come from?

Construction: Most Costa Rica real estate developers are also finding it difficult to hire enough workers to help build homes, hotels and other commercial projects. Where will these workers come from and where will they live?

Timeline: “Runway projects routinely take up to ten years to plan and build, with many taking even longer.”

In Costa Rica where road projects can be discussed for 30 years before anything happens, the planning for a new international airport will likely take a very long time and I honestly don’t think we’ll see a new international airport in the Southern zone for at least 25 years – if then!

The mosquito infested mangrove swamp-view salesmen will continue to tout the fact that the value of your land can only increase because of the new international airport announcement but again, you would not be “investing” based on the news of this ‘plan’, you would be speculating.

Our thanks to our friends at La Nacion – Costa Rica’s largest Spanish circulation newspaper for their permission to use their image.

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.