Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. FEDERAL AVIATION ADMINISTRATION

AIRPORT PRIVATIZATION PILOT PROGRAM PERMIT

SAN JUAN, PUERTO RICO

DATE: SEPTEMBER 28 th , 2012, 8:00am

- 6:00pm

PLACE: VERDANZA HOTEL ISLA VERDE, PUERTO RICO
ENGLISH VERSION OF MORNING SESSION

Chairman: RANDALL F I ERTZ Transcription: Aledawi Figueroa MartínezUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Participant PAGE

Randall Fiertz

-------------------------------- -------------------------------- --------- 3 Elizabeth Newman

-------------------------------- -------------------------------- -- 4 Randall Fiertz

-------------------------------- -------------------------------- --------- 7 Emmet McCann

-------------------------------- -------------------------------- ------ 9 Adolfo Castro

-------------------------------- -------------------------------- -------- 12 Agustín Arellano

-------------------------------- -------------------------------- ---- 14 Kenneth McClintock

-------------------------------- -------------------------------- 16 Luis Rivera Marín

-------------------------------- -------------------------------- --- 18 Juan Carlos Batlle

-------------------------------- -------------------------------- -- 21 Hector Ivan Santos

-------------------------------- -------------------------------- - 23 Anthony Tirri

-------------------------------- -------------------------------- --------- 26 David Alvarez

-------------------------------- -------------------------------- -------- 29 Juan Comulada

-------------------------------- -------------------------------- ---- 32 Arnaldo Deleo

-------------------------------- -------------------------------- ------- 35 Jaime López

-------------------------------- -------------------------------- --------- 37 Mario González

-------------------------------- -------------------------------- ----- 40 Ruben Hernández Gregorate

-------------------------------- -------------------- 42 José Pérez Riera

-------------------------------- -------------------------------- --- 45 Luis Vega Ramos

-------------------------------- -------------------------------- --- 49 Juan de León

-------------------------------- -------------------------------- -------- 52 Edgar Sierra

-------------------------------- -------------------------------- --------- 53 Jaime Perelló

-------------------------------- -------------------------------- -------- 55 Mario Pabón

-------------------------------- -------------------------------- --------- 58 Charlie Hernández

-------------------------------- -------------------------------- - 61 Alejandro Alvelo

-------------------------------- -------------------------------- ----- 63 Pedro Pierluisi

-------------------------------- -------------------------------- ------- 65 Astrid Rosario Ortíz

-------------------------------- -------------------------------- 71 Armando Montero González

-------------------------------- --------------------- 76 Alfonso Fernández

-------------------------------- -------------------------------- - 79 Benjamín Acosta Badke

-------------------------------- -------------------------- 82 Kevin Costello

-------------------------------- -------------------------------- ------- 84 Pablo Figueroa

-------------------------------- -------------------------------- ------ 86 Randall Fiertz

-------------------------------- -------------------------------- -------- 89 Carlee Cellar

-------------------------------- -------------------------------- --------- 89Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. (8:01am)

Randall Fiertz: All right. We’re going to get started in five minutes. Evidently, there’s a bit of a line outside so we’ll give people five more minutes. Ah, in the meantime just if people need the headsets, I mean we will have simultaneous translation, ah obviously dep ending on the language of the speaker. But the headsets are available at the front, if you want to
make use of them.
(8:06am)
We’re gonna get started. For our close to on

- time departure. Good morning, ladies and gentlemen I’d like to welcome all of yo u to the public meeting, concerning the Puerto Rico Ports Authority’s application for participation of the Luis Muñoz Marín International Airport in the FAA’s Airport Privatization Program. The program was established by Congress in 1996 to permit the sal e and lease of publicly own airports to private

- own operators. The law may be found in the US code 49 USC Section 47134. The objective of the program is to determine if private investment and capital can be attracted to airport development through innova tive financial arrangements. The administrator may grant exemptions from certain federal statutory and regulatory requirements for up to ten airports to encourage privatization on a limited number of airports as a test of the benefits of private sector op eration of airports. The purpose of this meeting is to solicit public comment on the final application. Because the final application is presently before the Federal Aviation Administration for a decision, we will not be able to discuss the application o r the pending agency decision at this time. I’d like to introduce the members of the panel;Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. to my immediate left is James Cole, Deputy General Counsel Office of the General Counsel Department of Transportation. On my right is Elizabeth Newman, Attorney A dvisor Office of the Chief Counsel FAA. On her right is Nancy Kessler, Office of Assistant General Counsel for Environmental Civil Rights and General Law Department of Transportation and on the far left is Mr. José Baquero the Federal Security Director fo r Luis Muñoz Marín International Airport Transportation Security Administration Department of Home Land Security. We also have Mr. Kevin Willis standing, he is Manager Airport Compliance Division at FAA and Kevin will be filling in if anyone of us needs t o step off the panel for a moment to ensure that we have a full participation. My name is Randy Fiertz and Director of the Office of Airport Compliance and Management Analysis at FAA and I will serve as the chairperson of this meeting. And at this time I ’d like to call on Elizabeth Newman, the FAA Attorney Advisor for the FAA to provide a brief description of the program.

Elizabeth Newman: Thank you Randy. Good Morning.
The Airport Privatization Pilot Program permits the sale or lease of public

use airports to the private sector with some restrictions. Air Carrier airports cannot be sold. General aviation airports can be sold or leased. The
Federal Aviation Administrati on’s Reauthorization expanded the program to 10 airports but only one large hub can participate. Title 49 of the United States Code, section 47134, authorizes the Federal Aviation Administration to permit the public sponsor to

– permits the FAA to grant an exemption to airport sponsor from federal requirements to permit the public sponsor

-- to retain and use proceeds from the sale or lease of the airport for other than airport purposes, to grant an exemption to the public sponsor to waive anyUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. obligation of the public sponsor to repay grant funds, and grant an exemption to the purchaser or lessee from the revenue use requirements to permit the private operator to earn compensation from the operation of the airport. The private operator is subject to all fede ral requirements and obligations currently imposed on the exiting public owner and must continue to operate the airport as a public use airport. Private operator must demonstrate how they will comply with nine statutory conditions
outlined in the statute to the satisfaction of the Secretary. The nine
conditions must also be included in the lease. These conditions are: The airport will continue to be available for public use on reasonable terms and conditions and without unjust discrimination. The operat ion of the airport will not be interrupted in the event of a private operator’s financial difficulty, insolvency or bankruptcy. The private operator will maintain, improve, and modernize the airport facilities through capital investments and will maintain a capital improvement plan for carrying out airport maintenance, improvements and modernization. Charges to air carriers will not increase faster than the rate of inflation unless a higher amount is approved by 65 percent of the air carriers using the air port. Fee increases for general aviation aircraft owners will not exceed those imposed on air carriers. The private operator will maintain safety and security at the airport at the highest possible levels. The private operator will mitigate noise impact s to the same extent as at a public airport. The private operator will mitigate adverse environmental impacts to the same extent as at a public airport. The transaction will not abrogate by sale or lease any collective bargaining agreement that covers ai rport employees and is in effect on the date of the sale or lease of the airport. FAA must also ensure that the interests of general aviation users of the airport are not adversely affected, and mustUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. find that the approval of the application will not resu lt in unfair and deceptive practices or unfair methods of competition. As a part of the application process, the private operator must provide a description of its financial resources for operating the airport, its airport management experience, and its c apability of complying with the public sponsor’s existing grant assurances. FAA will review a private operator’s request to be the exclusive provider of commercial aeronautical services on a case

by

- case basis. If the exemption is issued approving the t ransfer of the airport to private control, the private operator must file annual financial statements with the FAA. Federal Regulations require commercial service airports having passenger service to apply for and comply with the requirements for an airpo rt security program from the Transportation Security Administration and an airport operating certificate from the FAA. Private operators leasing airports serving air carriers can apply to collect Passenger Facility Charges and will continue to receive Air port Improvement Program entitlement funds at the 75% rate in accordance with 49 USC 47109(a)(1); however, AIP discretionary funds for all airports in the pilot program are reduced to 70 percent Federal participation in accordance with 47109(a)(4). To as sure that the statutory requirements will be met, FAA requires the sale or lease agreements to include provisions explicitly granting third party beneficiary rights to the FAA. The third party beneficiary rights grant the FAA the right to enforce complian ce with the grant assurances directly against the private operator. As the operator of a federally obligated airport, the private operator as sponsor is obligated to the requirements of the FAA’s Airport Compliance Program. Any enforcement action would b e conducted under 49 CFR Part 16, Rules of Practice for Federally Assisted Airport Enforcement Proceedings. FAAUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. also retains its authority to revoke any exemption should the private operator violate any of the nine statutory conditions. When the FAA is

s atisfied that the application meets the requirements of the statute, it issues a Record of Decision that summarizes the application and the agency’s findings. The lease, the agency’s response to public comments, and the Final Application become a part of the Record of the Decision. The Record of Decision also identifies and summarizes the exemptions granted by the FAA on behalf of the Secretary of Transportation regarding Federal law, regulations and grant assurance. Requirements are further outlined in the program’s application procedures in the Federal Register at Volume 62 page 48693, which is dated September 16, 1997. The FAA considers airport ownership and control a local issue, and has no policy preference for the public or private operations of pu blic

- use airports. Participation in the program is at the sole discretion of the public owner.
Thanks Randy

Randall Fiertz : All right. Thank you, Beth. Now just gonna quickly go through some of the meeting procedures. Anybody who wishes to speak needs to sign in at the speakers’ registration table. We have tried to ask speakers, or we’ve asked speakers in general to spea k in certain categories but, there is obviously some flexibility between the categories, as people can only make certain times etcetera. So we’re gonna begin by asking Aerostar people to address the panel, then airport officials, and government officials, airport employees, airport businesses, general aviation and then the general public. And, we will try to take a breakUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. between about noon and 1:30, that’s the plan anyway. Once recognized and before beginning comments we ask that each speaker come forwar d and address the panel at one of the two microphones, there’s one in the middle and then there’s one up here, to my left. We’d like people to alternate speak from either one of these just to help things go through a little more smoothly and a little more quickly. So, we would ask each speaker to identify themselves and their association or organization that they’re representing for the court reporter. Any comments made on the application are being made on the record. For your information, a court
repor ter will be preparing a verbatim transcript of the meeting and copies of that transcript once it has been transcribed will be placed in a public docket. If there are any additional speakers requesting time to make a presentation for the public record, ple ase inform the staff at the registration table and if there is any time available, will block time at the end of today’s session. We have a lot of speakers who have pre

- registered, over 60 of them. So, there are, there unfortunately are not a lot of extr a available slots. We ask that each speaker keep their comments to five minutes and there is a clock up front here with the amount of time on it and a series of light, and unfortunately we’re gonna have to cut people off after five
minutes because we have so many speakers today. We’ll also up on the board here where just people will be able to see who the next, the next numbered speaker so they can prepare and perhaps step forward to the microphone in advanced and just save a little more time. After each presentation the panel may have some follow

- up questions. Questions from the panel are intended to clarify or focus on particular elements or concepts expressed in the presentation and to offer the speaker further opportunity to elaborate on those areas. So, we’re not going to beUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. engaged in a debate, it’s just we’re here to listen to comments, concerns, support, for the propose transaction and to receive information from you. In addition to providing oral comments, there is an opportunity to provide
wri tten comments, in addition to or instead of providing oral comments, and we will be accepting those in the docket through November 19. And uh... the, let’s see, copies of the application are available in the docket as well as locally, at the Puerto Rico Dep artment of State One Stop Service Center in Old San Juan and the ... yes, the docket number for the final application
is 2009

- 1144. So with that, unless there are any procedural questions about this meeting ... ok, I’d like to call in the first speaker, pleas e.

Emmett McCann: Mr. Chairman, ladies and gentlemen. My name is Emmett McCann, I’m the managing director of Highstar Capital and I also serve under the board of directors for the Aerostar Airport Holdings. I’ve been leading Highstar’s investment in the Luis Muñoz Marín Airport for the past two years. Highstar is here today and is very proud to be a 50/50 joint
venture partner with ASUR and Aerostar, the company who’s seeking the opportunity to serve Puerto Rico through the management and operation of
the Luis Muñoz Marí n Airport. With me today is the ASUR CEO, Adolfo Castro, who you’ll hear from in a moment, followed by Agustin Arellano, the CEO of Aerostar. We are thrilled to be here today and we look forward to hearing and learning from the great citizens of Puerto R ico. At the outset let me assure you of our commitment. If we are honored with the approval of this Public Private Partnership, safety, security and efficiency are our top priorities and we will bring a customer first orientation to all that we do here. We will honor the legacy of Puerto Rico’s first democratically electedUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. governor and the recipient of the presidential Medal of Freedom, Luis Muñoz Marín, by transforming the airport to a world

- class level. We respectfully submit that this project is a wi n
- win for Puerto Rico, the PRPA, Aerostar, and most importantly the traveling public. The PRPA will receive an upfront payment from Aerostar, 615 million dollars and over the course of the agreement the PRPA will receive an estimated total of 550 million dollars in annual payments and revenue sharing, which can be used to support the other regional airports, managed by the PRPA. Just as importantly the airport will see the benefit of an estimated 1.4 billion in capital expenditures and the community will see the creation of jobs in Puerto Rico and experience first

- hand the benefits that a basting class airport can bring to tourism based economy. The airlines can look forward to a reduction in their current fees, more attractive terminals and
concessions a nd a professional partner in expanding air service. Before I turn in the microphone to Adolfo I wanted to give you some more color on Highstar. Who we are, what we do, and how we have successfully worked with the public sector on several other investment s. Highstar has been a proven, disciplined and successful infrastructure investor since 1998. Over
that time we’ve invested more than 6 billion dollars on behalf of our investors, who include some of the largest pension and retirement funds in
the world . But we’re more than just investors; we’re hands

- on managers of the development and operations of the business in which we invest. Let me give you just a few examples. Today we manage London City Airport, where I sit on the board, one of the United Kin gdom’s leading business airports. We have directed the implementation of a successful capital improvement program of nearly 100 million dollars to upgrade and expand the airport, we’ve optimize the terminal space, and we have reduce theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. security wait time s by 30 percent. We’ve also successfully fostered the development of innovative and important new routes and services, most prominently British airway services to JFK in New York. Another example is our ports business, thorough a 100 percent owned compan y Ports America we operate 83 marine terminals and 42 ports across the United States. We’re the largest independent tri

- costal port operator in the United States, and we employ more than 11,000 people on a daily basis, including more than 10,000 union job s. As part of this investment we have successfully entered into two landmark fifty year Public Private Partnerships just like this one at Muñoz Marín; one in the port of Baltimore and one in the port of Oakland. Both these investments have been
resounded successes not only for Ports America, but also for the public. In Baltimore I’m happy to say that we just completed the construction of a 105 million dollars new berth and delivered 4 new super Post

- Panamax cranes that will give the port a strong competi tive advantage on the east coast once the Panama Canal widens in 2014. Notably this project was completed under budget and two years ahead of schedule. The Baltimore project is a significant driver for the local economy and has created 3,000
construction jobs and 2,700 direct jobs at the port. Ladies and gentlemen, I hope these examples provide you with some insight of who we are, what our goals and objectives will be and how we will serve the people of Puerto Rico in the years to come. In our world we only succeed if we deliver improved infrastructure, job creation and true partnership to the communities in which we operate. With that I’d like to turn the microphone over to our partner and friend, Adolfo Castro who will tell you a little bit
about ASUR and our vision for Luis Muñoz Marín. Thank you very much.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Randall Fiertz: Thank you.

Adolfo Castro : Thank you Emmet. Good morning everybody. My name is Adolfo Castro, I’m ASUR’s CEO and if you’ll excuse me I would like to speak in Englis h, in Spanish, sorry. Good morning everyone, I am honored to have the opportunity to address you today, and express its commitment
in the event that Aerostar’s application is approved. This commitment is with the authorities, Puerto Ricans, who work at th e airport and of course
with our investors. In ASUR we decided to invest in Puerto Rico today, and for the next 40 years, because we believe in its people and we believe in its develop ment and want to be part of this promising future, which we know
can be achieved with the hard work of the whole airport community and
federal and state authorities. ASUR is a company that operates nine airports in Mexico and is the result of opening to private investment in the Mexican airport system. This happened 13 years a go, it was the first company airport in the world. Its shares were quoted on the stock market of New York and Mexico. Today 92% of its stocks are traded on these markets with a market capitalization of more than $ 2.7 billion
dollars. Today I want to share with you some of what we have achieved with the daily work and effort of the Cancun airport community and
authorities. This airport, after 8 years of passion and commitment was recognized by passengers as the best in Latin America, a situation that prevai ls to this day. After three years of having achieved this, it was also recognized as the second best in the world in the range of 5 to 15 million
passengers. This award was presented by the Airports ’ International Council, an institution that groups airpor ts from over 170 countries in the
world. 13 years ago we were at the point where we are here today in SanUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Juan, a point full of uncertainty in which we think and wonder what will happen in the future. As we did at that time, the recommendation is
dedicati on, perseverance and work, always thinking that passenger service
will be our best asset. Airports
, like everything
, are not just bricks, but the most important thing is the people and the work that is behind them. The
smile and kindness of Puerto Ricans i s the essential difference. Our Latin heritage will give us the strength to change and transform the airport for the
sake of a better future. AS UR's commitment will be the safety and security of the facilities, their passengers and all who collaborate in t he Luis Muñoz Marín Airport. The work focused on the development of this great city so that each day the airport gets more passengers generate decent , fair, stable, well

- paid jobs , where we can all grow and develop as human beings responsive to the needs o f others. Comply with the fiduciary duty of those who have trusted a portion of their assets for them to have the certainty that we will do everything possible to preserve it and make it grow. We
would like the Luis Munoz Marin Airport to be recognized for the identity, roots, va lues and joy of Puerto Ricans; a space that we can be proud of
and that transmits the commitment of everybody who works there and the
warmth of the Puerto Ricans. In case the Aerostar application is approved, Luis Muñoz Marín, whi ch is owned by Puerto Ricans and is the main entrance and exit of this island, will be a source of pride for those who work there, for their families, those returning home or those who come to visit
their relatives. Today I invite you all, airlines, office rs, employees, shop

owners , to create what will be the source of inspiration for others in the
future. I know this will be possible with a united, strong, efficient and fair airport community. Thanks for listening and I pass the microphone over to Agustin Arellano, President of Aerostar.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Randall Fiertz: Thank you.
Augustín Arellano: Good morning. My name is Agustin Arellano, and I’m the CEO of Aerostar. On behalf of Aerostar, I would like to thank members of the DOT, FAA, TSA, PRPA, and other distinguished government officials for their presence here today for this significant milest one in the public

private partnership for the Luis Muñoz Marín Airport. In addition, we recognize the presence of our airline customers here today, but most importantly the employees, members of the traveling public and general public. We appreciate each o f your contributions to the competitive process that has attracted the world's best airport operators and businesses. Let me begin by saying that Luis Muñoz International Airport is and will be the airport of the people of Puerto Rico. If approved, we hum bly pledge to be responsible stewards of the public trust, serving not only of airline customers and the traveling public, but also building a respectful and cooperative relationship with airport employees and the local and regional community. Now with yo ur indulgence I would like to switch to Spanish.

. I appreciate the opportunity to present Aerostar Airport Holdings. Aerostar is a registered operator of airports in Puerto Rico and whose partners are equally Highstar Capital and ASUR. Aerostar has signe d a long

- term lease for 40 years from the Luis Munoz Marin International Airport with the Port Authority, who will continue as owner and custodian of the airport facility. As part of the aeronautical facility, Aerostar agrees with the Port Authority
to car ry out the refurbishment work at the airport with an estimated investment of 1,400 million dollars. Let me talk a little about my background. Before assuming the position of director of Aerostar, I served as director of infrastructure and regulation of ASU R. AZUR Before I joined,Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. I was CEO of navigation services and air traffic control in Mexico, an organization equivalent to Federal Aviation Administration in the United States. During my 30 years of aviation experience I have participated in the process of opening to private investment the Mexican airport systems in Brazil and Puerto Rico. It will be my responsibility to lead the team of experts who will be responsible for the operation of the Luis Munoz Marin International Airport, and will be in addition to professional custom moving my residence to San Juan in order to fully integrate into the life of the island. Our philosophy is committed to the integration of Puerto Rican professionals in our team to ensure a successful transition and transparent
to al l users. We will be a socially responsible and pro

- labor. We recognize that the airport is a valuable source of skilled and well paid jobs. Airport employees have the opportunity also to maintain employment, either with the Port Authority or Aerostar. In c losing, we believe that Aerostar can enhance the airport's service to the local community and the world. This public

- private partnership is good for local employees, is good for the airlines, and is good for local businesses, and it's good for the tax paye rs. If approved by the FAA, we are excited to improve the Luis Muñoz Marín International Airport to better serve the people of Puerto Rico. And we would like and be committed to serve as an active community partner in Puerto Rico for the many years to com e. Thank you very much.

Randall Fiertz: Thank you.

Kenneth McClintock : Good morning. My name is 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 localUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. approval of public

- private partnership projects. I wish to share several considerations that make the proposed long

- term lease of our airport a
favorable transaction fo r 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 turns Puerto Rico, more than simply an air and maritime transportation hub, into the leader, the capital of the Caribbean. While we have the largest economy in the region with a GNP of 64 billion dollar in 2011, certain segments of our economy have not yet rea lized its full potential. Our tourism sector merely reaches 5% of our economy. With a first

- class airport, the sky is literally, the limit. Lacking a first

- rate airport operator, in the last decade, we lost ground in tourism to other Caribbean and competi tive, competing destinations, with Puerto Rico's market share of traveling seats to the Caribbean declining from 35% share in 2005 to 26% in 2009, a million passengers lost to other Caribbean nations. Neighboring countries such as the Dominican Republic, Jamaica, Bahamas and Curacao 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
educationa l 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, the rest of our nation and the rest of the world. Likewise, manufacturing is the cornerstone of our economy for the past 50 years, and it 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 t hat will beUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. 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; very significant. However, our competitiveness has to improve in order to reach stronger sustained economic growth. Infrastructure plays a major role in improving overall competitive ness. 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 our airport. The proposed long

- term lease will be a major driver of c ompetitiveness 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 our 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 pro posed 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 boost to competitiveness. So thank you all for being here, and for hearing everybody out today. Thank you very much.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Randall Fiertz: Thank you.

Luis Rivera Marín : Good morning and thank you for allowing me to speak to you this morning. My name is Luis R ivera Marín and I am the executive director of the Puerto Rico Tourism Company, a government agency responsible for promoting tourism on the island. Puerto Rico's Luis Muñoz Marín International Airport is by far the most important port of entry to the
isla nd, not only for our own population but also for the millions of tourists that visit Puerto Rico. The airport is key to maintaining and developing our travel and tourism industry, which represents closet o 6% of Puerto Rico's GDP. The airport brings touri sts that stay at our hotels and sponsor our restaurants and attractions, and also a large number of cruise ship passengers that commence their cruises in San Juan, the Caribbean's largest home for, port for cruises. While the largest number of visitors t o Puerto Rico comes from the U.S. mainland, we are growing our share of tourists from other markets, including Europe and Latin America. This growth, however, has been limited by the number of airlines that serve the island and by the consequent limitation of tourism source markets that have air service to Puerto Rico. For this to change, and for Puerto Rico to reach its full potential as a tourism destination in the Americas, it is imperative that the airport is transformed into a greater source of busines s for our industry. For all intents and purposes, the airport has not grown in the last, past 20 years. Its outgoing passenger base has remained unchanged, at approximately 4.7 million passengers departing per year. In order for us to change that number , Puerto Rico needs a world class airport that can attract more airlines, increase the numbers of flights and other, and offer better services to our own residents and our visitors. If, for example, weUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. were to increase traveler visits by 10%, it would repr esent an additional 276 million dollars to our gross domestic product, creating in excess 3,770 jobs and increasing government revenue by more than 4 million dollars. If we consider the change that has come to different airports that have leased their oper ations to private companies, the effect of, on our economy would be enormous. Cancun, for one example, increased its share of passengers served, from 7.7 million to 12.4 million in less than ten years. The international airport in Lima, Peru, an airport which compares to ours, doubled the number of passengers it serves, from 4.1 million to 8.8 million between 2001 and 2009. And the international airport in Sydney, Australia, increased passenger volume by more than 25.3 million in 2000, to 35.6
million in 2010. All these examples speak volumes on the benefits of leasing the operations of an airport such as ours. Other important airports throughout the world have entered into lease agreements, including Singapore's Airport, currently considered the best a irport in the world. Heathrow, in London, one of the world’s busiest airports, is also operated by a public private partnership, as well as the Charles De Gaulle in Paris. All the airports in Argentina have been leased; most of the international airports i n the Dominican Republic, and those in the Bahamas, Chile, Jamaica and Costa Rica, among many other notable examples. The reality is that our airport's deterioration is such that we must invest an enormous amount of money and resources to improve its facil ities, but we don't have the financial capacity to do so. Given this situation, in which the Puerto Rico Ports Authority doesn't have the ability to make improvements, and in which Puerto Rico's position as a destination has weakened, we must make a major transformation of the airport in order for us to reposition Puerto Rico as a point of global aerial connectivity, even as we reestablishUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. the Ports Authority's financial capabilities. We firmly believe that leasing the Luis Muñoz Marín Airport to a public private partnership such as the one being proposed will increase passenger volume; at the same time it will strengthen the Ports Authority's ability to improve our regional airports. The partnership's development plan will increase the number of airlines a nd flights that serve this market, thus increasing the number of tourists and broadening the options for Puerto Ricans who reside elsewhere to visit the island. By bringing more airlines, we'll also increase competition among them, which would then result in lower prices for consumers. Airlines will also benefit with an improved infrastructure and better services, and they will be better able to plan because there will be more transparency and reliability in the fees they pay for using the airport. For th e public at large, the change will represent easy and quick access and fewer delays in leaving the airport facilities. Travelers will be able to see flight information on large screens throughout the airport and enjoy larger, more comfortable
and modern t erminals, with more access to seating and comfortable waiting areas. The airport will also substantially increase its retail space, providing users with a broader array of shopping, food and entertainment options.

Randall Fiertz: Sir, I’m sorry. We’re ou t of time, if you could finish please.

Luis Rivera Marín: In short, we are convinced that by establishing this public private partnership we will see greater growth of the travel and tourism industry in Puerto Rico; and that is Puerto Rico’s best interes t. Thank you very much.

Randall Fiertz: Thank you.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Juan Carlos Batlle: Good morning. My name is Juan Carlos Batlle. I am the President of the Government Development Bank for Puerto Rico and Chairman of the Board of the Public Private Partnership Au thority. I am here today to talk about the Puerto Rico Ports Authority's financial condition and how important the long

- term lease of the Luis Muñoz Marín International Airport is for the economic development of our Island. However, as Chairman of the Bo ard of the Public Private Partnership Authority I have the obligation to first set the record straight on a related matter. Unfortunately, certain political personalities on the Island, some of whom you will hear from today, have been using this transacti on to promote their personal political agendas, and have ignored the real, important facts and attributes that are fundamental for the economic development of Puerto Rico. They have put their personal interests ahead of the best interests of the good peopl e of Puerto Rico. You will hear unfounded accusations and lack, about lack of transparency and merits of this long

- term lease. This administration has been characterized by many outside the political arena as one that has restored credibility and transpar ency to our governmental institutions. This has been widely discussed and accepted by rating agencies and investors, and it is an indisputable fact that we expect to maintain into the future. Since day one, we have published all documents related to the l ong
- term lease on our website. The documents are there and have been there all along, but some seem obsessed with trying to make you and the people of Puerto Rico believe that we are hiding information. Well, the facts are that we are
not and the documen ts are there to prove it. The Puerto Rico Ports Authority has not been able, and will not be able, to maintain this airport to the standards that we as Puerto Ricans deserve, to the standards that ourUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. competitors in the region and worldwide have already t aken their respective airports, to the standards that our visitors expect and, more importantly, to the standards that you, the Federal Aviation Administration, demand and require. The Authority simply does not have the financial capability to do
so. The Bank has a direct involvement and interest in this transaction, not only because of its importance for our economic development, but because of the involvement and financial support that we have historically provided the Authority. Doing nothing and allow ing our airport to continue its current course is simply too big a risk for our financial well being and economic development. I have no doubt that we have an outstanding group of professionals at the Authority and we will protect all employees. However, we just don't have a financially healthy institution to carry on its obligations as it stands today. Over the past nine years, the Authority has had to restructure its debt several times. On all occasions the Bank has provided support through lines of c redit, letters of credit and loan guarantees. In a scenario where the proposed long

- term lease of the Airport is not approved by the FAA, the Authority would continue to be under financial distress and would add a financial burden on the Bank and the Gove rnment of Puerto Rico. The current financial condition of the Authority and its high level of debt would continue to impede its ability to expand operations, improve services, pay for capital improvements, and continue the development of
the aviation netw ork in Puerto Rico. On the other hand, the approval of this long

- term lease will allow the Authority to reduce its debt burden by almost 45%, establish funds to support the development and capital improvements of regional airports, and restructure its rem aining debt. The long

- term lease of the Airport will not only strengthen the aviation industry, but will allow Puerto Rico and its citizens to enjoy a world class international airportUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. that will be an important driver of economic development on all fronts , as we get the benefit of more airlines, more passengers and more global recognition as a destination where business and investment is welcome and respected under the rule of law, without intimidation tactics from some politicians trying to make a name fo r themselves at the expense of the well being of our people and our future. Most importantly, this long

- term lease would have, would leave the Authority in a better financial position. Finally, some have tried to make the people of Puerto Rico believe we are selling or privatizing this important asset while nothing can be further from the truth. This is a long

- term lease, not a sale of an asset. At the end of the
40

- year lease, the people of Puerto Rico will receive a world class facility, transformed by over 1.4 billion dollars in new investment and worthy of being Puerto Rico's international airport. Thank you very much.

Randall Fiertz: Thank you. We have a next speaker. Ok, please, please.

Héctor Iván Santos : Good morning to the federal panel. I’m Héctor Iván Santos, legal counsel of the Ports Authority Employees Association and its president Vivian González. The Managerial Association is an employee association within the meaning and scope of Puerto Rico's Public Law. The majority of the 400 Puerto Rico Ports Authority managerial employees are members of the Association, and work at the Luis Muñoz Marín International Airport, the regional airports and the central offices as administrators, supervisors, eng ineers, and others. I have provided enough copies for the panel, so I think the

... We appear before you to let you know about our comments and concerns in connection with the privatization of the airport by lease to a private party. We will focus on the

c lause concerning the regional airports. Among the four objectives theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. transaction seeks to achieve, we will focus on the following: Operation of the Puerto Rico Ports and the regional airports that are an important part of the overall transportation syst em. According to the Puerto Rico Regional Airports Operation Plan, submitted to the Federal Aviation Administration on September 2012, the Public Private Partnership project for the international airport and quote "is directed at ensuring a maximization o f the international airport and re

- focusing attention on regional airports." The Ports Authority intends to give priority to the need of the regional airports. However, we want to question what are the real intentions concerning the development of the re gional airports. During 2008 the Ports Authority received the Roosevelt Roads Naval Station Airport at Ceiba to develop it as a civilian commercial airport. This airport contains the second largest runway in Puerto Rico, after the Aguadilla Airport. In order to get it transferred, the Ports Authority prepared the Master Plan and the Airport Layout Plan for the Roosevelt Roads Airport and entered into agreement with the federal government. One of the main justifications included in the
Master Plan for th e transfer was the following, and quote: Goal No. 1 "To develop an airport facility that will provide adequate capacity to fill the role as commercial and general aviation reliever to Luis Muñoz Marín International Airport." The Airport Layout Plan was ap proved by the FAA on September 17, 2007. The goal was to prepare this airport to provide commercial service and alleviate the congestion at the Luis Muñoz Marín International Airport. Since then, the Ports Authority has invested a
considerable amount of FAA and own funds to convert the facility from a military to a civil use. The amount of money invested is 35 million dollars. In spite of all this, the lease agreement includes specific provisions and/or clauses that will limit and negatively impact the P orts Authority capacity andUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. desires to fulfill the goal and compromises established with the FAA and other federal agencies for the next 20 years. The new operator of the International Airport may be entitled to a Leasehold Compensation if he
demonstrates a decrease in net income as a result of such commercial schedule passenger service. The regional airports transported one million passengers in 2011; this represents 11% of the total Ports of Authority passengers. This contract provision, this specific contract provision, is illegal because it is contrary to the concept of competition in a free enterprise economic system. There are five generally accepted elements to free enterprise: competition, profit, private property, freedom of business,
and consum er control. The clear result of this contract provision will have the effect of creating a monopoly on the commercial flight services in Puerto Rico for the next 20 years. Federal agencies exist to regulate this behavior; laws are in place to prevent a b usiness owner from harming or deceiving customers. The federal agencies gathered here have the task of enforcing the public policy of the United States government related to the free enterprise system, specifically the element of competition. Not doing

s o will imposed an "imprimatum" or approval on an illegal practice named monopoly, which is contrary to the American economic system, regulations and laws. Such is the task and challenge that you face with this public meeting. Thank you very much for the o pportunity to address this honorable federal panel. There is enough copy of my position statement and have a good day.

Randall Fiertz: Thank you very much. Thank you.
Anthony Tirri: Good morning. My name is Anthony Tirri and I represent
Caribbea n Airport Facilities. I would like to thank the FAA and theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Government of Puerto Rico for the opportunity to present my views of my company in this public comment session. The docket also reflects that on May 29, 2012 our legal counsel entered a notice t o the FAA regarding our concerns with the public private partnership, but I wanted to take this opportunity to review our position. In addition, there are also several ongoing litigations regarding this matter in the expropriation court of San Juan, the Su perior Court of Carolina, and the United States District court. My company has operated at the airport since 1986 and on October 24, 1988, we entered into our first Ground Lease Agreement with the Puerto Rico Ports Authority. That agreement allowed us to develop raw swamp land, actually four feet of swamp and convert that into our first hangar, office and warehouse complex. CAF 1 is the only transport category hangar in the Caribbean and also includes a multistory airline catering facility, warehouses, of fices, a gas station, aircraft parking ramps, underground fuel lines and a package sort facility leased to United Parcel. Since the original 1988 agreement, as a result of a Federal law suit and subsequent stipulation, we have entered into amendments with the Ports Authority in 1991, 1994, 1997 and 2004. These agreements will not expire until the year 2029 and we then have the right to renew, under our contract. As mentioned, CAF was first granted a lease on raw swamp land. The transition of that swamp i nto useable airport property entailed making an investment in the tens of millions of dollars. As a result of that investment, which the Ports Authority was incapable of making, just as they are incapable today of developing the airport; CAF was given a r ent credit as compensation for improvements which would allow for the growth of LMM airports' cargo capacity. I want to make a point that exactly what is happening today, that you’re giving a lease to Aerostar, was pretty muchUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. the same you did to me. You gave me credits twenty years ago; you’re giving these folks the opportunity to run the airport. You have to honor their lease, you can’t come to them in twenty years and say “I’m sorry, your lease is over with, we’re going to get into a new situation”. I need my lease protected that was arranged twenty years ago. That credit ... The credit we’re talking about, as mentioned we were granted this lease, we transitioned it, we have about 46 million dollars invested in our property.
The credit still has a sub stantial balance and will need to be addressed in the transition from Ports Authority control to Aerostar control. The credit, as I’ve said, has an accumulated value of approximately 46 million dollars and is nowhere addressed in this agreement between PRP A and Aerostar. In addition to the credits issue, the agreements referred to before also gave CAF the rights to build CAF 2 which is a complex of 4 warehouses, a bus depot, car rental facility, restaurants and offices. We also are the leaseholder of CAF 3 which is the only undeveloped land at the airport. CAF has already invested in mitigation, and infrastructure, concrete ramps, underground utilities, fuel lines, etc. at the CAF 3. We are also the leaseholders of the Airport Hotel which, according to th e documents we have read, is excluded from the proposed lease between the Ports and Aerostar. The proposed lease agreement between the government and Aerostar does state that the CAF properties are not included in the agreement, but it does not speak to h ow our rights and our tenants rights, including IFC, are protected under the new operator. In addition the actual property description is not clear, as there are several references made to the parcels of land that are leased to us. CAF's agreements with the Ports Authority specifically allow us to provide terminal services throughout the airport, including but not limited to ticket sales and services, passenger andUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. baggage check in, passenger boarding handicap assistance, etc. We also have the right to p rovide ramp services, which include but are not limited to meeting and departing aircraft, operation of ground support equipment, baggage, cargo and mail loading, aircraft cleaning etc. CAF also has the right to perform aircraft dispatch and maintenance, preflight inspections and other mechanical services. We also have the right to provide fueling. Under our current agreement, CAF has these rights within our leased premises and throughout the entire airport. And yet, none of our rights are
addressed wit hin the proposed agreement between Ports and Aerostar. These contractual rights are an important and valuable part of our existing agreement with PRPA and we believe that they must be addressed prior to any transfer. We have sent letters to Aerostar on Au gust 20 and August 29, and have not received any response. We would like to have a dialogue. We are currently involved with litigation with the Ports Authority to protect some of these contractual rights but neither Aerostar nor the FAA is a party to the se lawsuits. Failure to address the rights we’re talking about at this point will only insure amendments to the outstanding litigation to include both Aerostar and the FAA. While we understand probably better than anyone, that the airport needs more qual ified management and continuity in the operations, we cannot allow our substantial investment of over 50 million dollars in private funds to be ignored and cannot allow our contractual rights to provide ground handling, fueling and catering to be
interfere d with. To summarize my position, and the position of all my companies, we approve the present lease to Aerostar. Ford God sakes we’ve seen twenty different administrations and the last four we’ve seen, four different Ports Authority directors. There is no continuity at this airport is a horrible mess, and has been for the 27 years I’ve been there. We needUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. continuity of a new management, we really do. So again, summarizing that, we need to have the FAA and the Ports Authority address our
concerns. At the beginning of this discussion mentioned that there are 9 statutory provisions that Aerostar has to comply with, I suggest we have a tenth one added. The tenth one should be that you protect the proprietary and contractual obligations of leaseholders o n the airport. So, the nine that you have refined but none of those address my concerns, the fact that we
are a contractual lease holder and we have 50 million dollars invested and is not protected, you need to protect it. Thank you.

Randall Fiertz: Thank you.

David Alvarez: Good morning to the Federal Panel. My name is David
Alvarez. I am the Executive Director of the Puerto Rico Public

- Private Partnerships Authority. Thank you for letting me share my remarks. After two years of evaluation, we are confident that the lease, that the proposed long

- term lease for the Airport is the most effective way of ensuring the long

- term development of the Luis Muñoz Marín Airport into a world

- class facility that will benefit the people of Puerto Rico. I n this Public Meeting, I would like to highlight and clarify several key points regarding the proposed long

- term lease for the Airport. Point number one: The Government of Puerto Rico does not lose ownership or control of the Airport. This is
established , this is not a sale of the asset and this is established in the Section 2.1 of the Lease Agreement, which reads that the Lease Agreement states that the PRPA is not assigning, transferring or conveying title of the LMM, or the Luis Muñoz Marín Airport, to the selected consortium. In addition, Section 3.12 of the Lease Agreement provides PRPA, together with airlines and the selected consortium, will have theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. right to participate in an Executive Committee that will be established for the review of the ongoi ng operations and policies at the Airport or any other proposed changes. Second point that I would like to clarify is that the Lease Agreement does not represent a loss of value for the Government, as it establishes the framework to maximize the potential development of the airport. Presently the net operating income after depreciation of the airport as fiscal 2012 was a negative 27 million dollars. In the, under the proposed Lease Agreement, there is an alignment, an alignment of
interests between all t he stakeholders that will enhance the value of the Airport. Third point that I would like to provide clarification is that proposed lease does not represent labor instability. Lease Agreement for the Airport, as per Section 3.4, does not abrogate the col lective bargaining agreement of the HEO labor union at presently at PRPA. The Lease Agreement for the Airport allows for employees to retain their jobs in the PRPA and/or explore new employment opportunities with the selected private consortium
on a volun tary basis. The selected consortium will also interview all Airport employees who apply for a job. The fourth point that I would like to provide further clarification is that the Lease Agreement does not prohibit the development of regional airports. The Lease Agreement does not contain a protection against competition or a prohibition of development of regional airports. Section 3.22 of the Lease Agreement represents a reasonable
restitution in case of deliberate action of the Government that causes a

r eduction in the net income of the Luis Muñoz Marín. This is a very remote situation. Moreover, there should be the following clarifications: Section 3.22 does not apply, in any way, to the governments,

-- to the airports

-- of Aguadilla, Ponce and Vieques , which are 139 Certified Airports. Section 3.22 does not apply when non

- Part 139 Airports, such as Ceiba, increaseUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. activity related to cargo, charters and increase frequency of present offering. Section 3.22 does not prohibit non

- Part 139 Airports from obtaining 139 Certifications and beginning servicing scheduling flights of more than ten, of nine passengers. Also, Section 3.22 is fully consistent with development plans of non

- Part 139 Certified airports, which can be designated, can be developed for a "destination within a destination" or niche markets. Also, Section 3.22 is fully consistent with the reports conducted by 2007, completed in 2007, 2009 that indicate that the development of the Roosevelt Roads airport to an international scale would
take two decades and over 400 million dollars of investment. Next point that I would like to provide clarification is that the plan that there has been developed,

-- that we have established a plan for a development

-- to facilitate greater attention to regiona l airports. Since its inception PRPA has jointly applied revenues to all the, to all the, of all this facilities, Maritime and Aviation, towards meeting its operational expenses and debt services requirements. This comingling of funds means that all PRPA facilities, Luis Muñoz Marín, Maritime and Regional Airports, all contribute to the operations of PRPA and LMM revenues are not, have not been specifically applied to the Regional Airports. In other words it is important to clarify that Luis Muñoz Marín not solely subsidizes the regional airports. The last point that I would like to present to the panel is the, that the propose Lease does not generate any increase in tariffs and that’s established in the Lease Agreement clearly with a new rates entirely structured and that the proposed long term lease of the private investment airport provides a way of increasing value for the airport. Thank you for your time.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Randall Fiertz: Thank you.

Juan Comulada: Good morning, distinguished federal panel. My council Liza Ortiz registered IMC for this presentation. My name is Juan Comulada and I am the Country Manager for Airport Shoppes Corporation and its five subsidiaries. We are a Puerto Rican corporations that serve as the Regional Headquarters of Interna tional Meal Company for its operations in all of the Caribbean and Central America. IMC is the fastest growing company in the food and beverage business in Latin America, operating in Brazil, Mexico, Panama, Colombia, the Dominican Republic and Puerto
Ric o, and employing more than 11,000 men and women. Our companies have operated for more than 30 years in Puerto Rico, creating jobs and helping our economy. Presently, we operate 26 restaurants and food
concessions at the Luis Muñoz Marin International Air port and provide in

flight catering to all commercial airlines with the only FDA approved kitchen in the Caribbean. We also provide maintenance services to corporate and private aircraft, and fuel services to the U.S. Department of Defense, and operate th e largest cargo area. We employ over 500 people just in Puerto Rico. I want to thank the FAA for holding this hearing, because we truly believe that there are a number of issues that need to be carefully reviewed before the Ports Authority turns over the operation of the Airport to a private foreign company that has never operated an airport in the United States. These include the actual impact of jobs at the Airport and the creation of new ones, as well as security issues within the Airport. If I may, I 'll change to my native language since I want to express myself clearly so that the FAA and everyone in Puerto Rico can understand my concerns.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. I was born and raised and raised in Puerto Rico, and here is where I’ve raised my two children. As a Puerto Ri can I am concerned about our jobs and the possibility of a better future. Today, both are being threatened by the way this privatization process has been handled locally.
On February of this year, we announced an investment of $22 million and the creation of almost 1,200 new jobs, with the opening of approximately 12

– 15 new restaurants inside and outside of the airport.
Today, both the investment and the creation of job opportunities are at risk by the way this process is being handled. IMC has invested about 100
million dollars in Puerto Rico since 2008. Even when the number of passengers decreased by 50% with the reduction of flights of American Airlines, we remodeled all of our restaurants and opened new ones. In only one restaurant in Terminal D, Margaritaville, we invested $3.2 million an had to incur an additional $1.4 million in infrastructure arrangements
because Ports didn’t have the funds.

However, Ports Authori ty:

 First cancelled the spaces of Terminal A previously granted in our contract, signed and ratified by Ports, putting in reason the fact that they were in the middle of the privatization process.

 On top of this, the operator chosen by the government, ann ounced that the first action would be to close Terminals D and E, which represent the immediate closing of 10 of our establishments, leaving on the streets about 150 family men and woman that work in our businesses, this without counting the other Commerci al Entities that also operate in these terminals.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Ask an employee of 25 years of service, that his only job has been working in one of these restaurants or kitchens that they want to close, and that his income is the only one his family of 5 depends on, wh ere in his 60 years of age and in this economy is he going to find a job? Of those 150 people that are going to be left jobless, one out of four has worked in the airport for more than a decade or is more than 50 years old.

IMC has a commitment with their employees, with Puerto Rico and with the creation of new employees, but before these actions, we have no other alternative than to denounce and ask the FAA to see and analyze this application carefully, even more, when similar efforts of privatization
hav en’t had the expected results in the United States. If you want a successful privatization, then you have to do it fairly and responsibly. That
isn’t what we have seen until now.
This airport is the bridge that connects us to everyone else and it is
essent ial for tourism, one of the most important industries, for which our economy is highly dependent of the reliability of which we manage this operation.
We trust that you will weigh determinedly this process to assure that these jobs remain, that committed companies to the airport, such as IMC, invest more in Puerto Rico so we can keep our word for more and better jobs. I ask this agency, would it not be better to evaluate this process so it can be a fair and responsible one?
Respectfully submitted

Randall Fiertz: Thank you.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Arnaldo Deleo : Good morning, Mr. Chairman, ladies and gentlemen. My name is Arnaldo Deleo I’m the general manager of the Luis Muñoz Marín International Airport. I have been the General Manager of the Luis Muñoz
Marín since March o f 2009. As such, I am responsible for the day

- to

- day management and operations of the airport. I have been in Puerto Rico for the last 40 years and I have worked at Miami and Chicago. Since I began working at Luis Muñoz Marín Airport in 1972, I have wit nessed first

- hand the physical deterioration of the Airport, as well as the many missed opportunities to bring it to its full growth potential. Managing and operating an airport is a highly technical and complex task. Dealing with airlines is only a smal l part of the job. An airport is part shopping mall and part property developer. Our tenants include not only airlines but restaurants, businesses, hotels, and nearly a dozen government agencies. Four decades into my career in aviation, I have come to und erstand that efficient management of an airport requires leadership and its consistent knowledge and committed to long

- term success. Unfortunately, we have experienced the opposite during the long history of the Airport. Since its inception, it has
been managed ineffective by people who come and go with election terms. In the last 10 years, the Ports Authority has had ten Executive Directors. Although competent, capable and hard

- working, they have few; they had little or no aviation experience. I can s peak to this because for nearly 20 years I was the general manager for Eastern Airlines in Puerto Rico, at the time the largest airline operating in the airport. As an Eastern Airlines executive, I witnessed how resources destined to improve the airport w ere allocated inefficiently and how decisions were made to the detriment of the facility and the Ports Authority. Over the past several decades, politically motivated decisions, as well as bad business judgment has culminated in aUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Ports Authority that is unable to finance even the mere tasks, improvements. This substandard management is a trend that I witnessed as an outsider during many years of involvement at this airport and one that
was destined to continue. This is one of the reasons that led me to t ake the position of general manager and try to restore this once proud facility to again be the jewel of the Caribbean. Now, under my leadership, we have made strides in shifting the balance towards providing a better airport but, in the end, given the in herent lack of funds going forward, there is no guarantee that the improvements made to date by the entire airport team can continue medium and long term. There is no way to implement a long term vision and business plan for this airport, the nature of bu reaucracy would not allow it. The only way to guarantee short, medium and long term improvement is through continuity, which will be afforded to the airport through the proposed public

- private partnership. The current
administration has the vision to see k an opportunity to get the airport away
from the four

- year political cycle by entering into a long

- term lease agreement with a partner that will maximize the Airport's potential for the benefit of all stakeholders. The key asset will continue to be owned by Puerto Rico and I fully support the granting of this lease to a new operator. In the very near future, airlines, visitors to the island, and all Puerto Ricans will again have the benefit of a first class airport that we both need, that we
both need and deserve. The private partner selected to operate the airport has the experience and know

- how necessary to deliver a world

- class airport for the benefit of Puerto Rico. I am particularly convinced of this because I have actively participated in the selec tion process and our team has worked with the airport, over the 2 years that we have had dozens of meetings with the major airlines serving LMM and they are unanimous inUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. their support of this agreement. As a former airline manager, I can attest that growt h, prosperity and excellence in airports are strongly driven by airlines. I believe that the lease will result in much needed improvement of our airport's infrastructure, economic growth for Puerto Rico, and enhanced opportunities for airlines, airport em ployees, service companies, and passengers of the Luis Muñoz Marín International Airport. Thank you.

Randall Fiertz: Thank you.
Jaime López: Good morning. My name is Jaime López and I am the Acting Executive Director of the Puerto Rico Ports Authority. We are meeting today to discuss the benefits of establishing a private public partnership for the management and operation of the Luis Muñoz Ma rín International Airport, something that we see as essential for one of the most important elements of the island's infrastructure, for the growth of our economy, and for growing Puerto Rico's tourism industry. Our current reality can be described in thr ee simple ways: the airport's development has been inconsistent and erratic; Puerto Rico's position as a destination has been weakened by not having a world class facility for travelers; and the Ports Authority does not have the financial means to make the much needed improvements. The proposed transaction's benefits are many. First, it allows for the airport to be improved, maintained and operated by an experienced private partner. It calls for the partner to bring the airport
to world

- class standards a s defined by the International Air Transport Association and the Federal Aviation Administration. For example, there will be an immediate capital investment of 195 million dollars to repair and improve signage; lighting; boarding ports; the airport's elec trical systems
and Wi

- Fi access; water leaks in all terminals; new air conditioningUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. systems; repairs to the stairways and security systems in the parking garage; to the drainage systems; and landscaping. While there has been much public discussion on the transaction in Puerto Rico's media, a number of mistaken perceptions have been created by some of the project's opponents. Some have argued that the contract will limit the growth of our regional airports and will decrease government support for, of
these airports. Once again, this is far from the truth. This agreement does not forbid or limit development for regional airports. Passenger and cargo growth at the Luis Muñoz Marín International Airport and regional airports are not mutually exclusive goals . To suggest that one cannibalizes the other, as unfortunately some local politicians have suggested, demonstrates a total lack of knowledge of airport economics. In other jurisdictions around the World and in the continental United States we see every d ay primary airports and secondary,

-- primary airports increasing passenger demand,

-- while secondary airports within the same geographical region continue to build on their competitive advantages like cargo, private aviation and niche travel and leisure de mand. Exactly the same situation is expected from airports like Aguadilla, with their recently designated Free Trade Zone, Ponce with the economic activity related to the Ports of the Americas, and the tourism potential of destinations like Ceiba, Vieques and Culebra. All in all, under the proposed lease agreement, every component of the airport system in Puerto Rico will complement each other, as is the case in similar transactions and markets like New Delhi, Mumbai, Bangalore, Seoul, Tokyo, Chicago: O’ Hare, Midway, New York City: JFK, La Guardia and Newark, Dallas: Fort Worth and Love Field, and Washington DC with Dulles and the Washington National Reagan. Again, no clause or condition of the proposed lease willUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. limit our ability to implement this airp ort system vision for the Island of Puerto Rico. On the labor side, once the transaction is closed, current Ports Authority jobs, as has been said, will continue under the Authority, although employees can certainly explore employment opportunities with
t he private operator should they choose to, should they choose to do so. Those employees that are offered job opportunities can either continue their careers with the private company or keep their jobs at the Ports Authority. Overall, the proposed lease should yield concrete benefits for all the parties involved. Puerto Rico will reinforce its position as a preferred Caribbean destination and increase its global air connectivity. The island's economy will benefit from an increase in passengers, in the n umber of airlines that serve the destination and in greater amounts of air cargo. The agreement will also guarantee a much needed sense of continuity in the long term investment in the airport's facilities and commercial viability. And to the agency I repr esent, it will continue ...

-- it will contribute

-- positively to the restructuring of the Ports Authority's fiscal situation, allowing us to improve services to regional airports and other facilities under our jurisdiction. The public at large will see gre at improvements in their travel experience, resulting from the airport's efficiency, convenience, safety and high quality services. Passengers will truly see the Luis Muñoz Marín Airport as a world class facility. By bringing in additional flights and air lines, travelers will also benefit from greater competition, which will naturally lead to lower prices, better service and greater convenience. I firmly believe that the people of Puerto Rico will be well served by this public private partnership. Global ization and economic interdependence make it imperative that we have a modern, updated and improved internationalUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. airport in order to compete on the world stage. This is precisely what this public private partnership seeks to achieve. Thank you very much

.
Randall Fiertz: Thank you.

Mario González : Good morning. My name is Mario González. I’m the executive director of the Local Redevelopment Authority for the former naval base Roosevelt Roads, also known as the LRA. On the behalf of the LRA we appreci ate the opportunity provided by the FAA, to express our perspective regarding the importance of the referenced Public Private Partnership transaction of the redevelopment effort of the former Navy base at Roosevelt Roads. As a matter of background both in 2004 Re

- use plan and in 2010 addendum to the Re

- use plan, serve as a basis for the economic development conveyance that we sent to the department of the Navy for the transfer of 1,370 acres of lands and facilities. The project would motivate people from all over the world to travel to Ceiba and enjoy one of the most interesting multi

- use projects in the Caribbean. Stimulating economic growth in the eastern region, which was severely impacted by the base’s closure. Thus, fulfilling the mission and object ives that were part of the EDC application. The redevelopment project that Roosevelt is part of the government’s economic development strategy aimed at attracting private investments, creating jobs and spurring economic growth in the eastern region of the island. Located at the former Navy station Roosevelt Roads its area is apprised of 8,696 acres of high economic, ecological, historical and cultural value. This project is considered one of Puerto Rico’s foremost and sustainable economic development ini tiative. Our goal is to attract private investment and companies to the area in a manner that will drive a robust economic growth, so that together with efforts from theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. community a sustainable project will develop. The project’s impact will be significa nt island wide and in particular on the towns of Ceiba, Naguabo, Vieques and Culebra. We estimate that the total investment in the project in 20 to 25 years will be approximately 2.6 billion dollars, creating 24,700 direct and indirect jobs. Altogether, the economic activity that will be generated is certain to bring back hope for better quality of life and prosperity to the residents of the area. The redevelopment project represents an opportunity to transform the region into a unique eco

tourism, enter tainment, commercial, recreational, institutional and services destination in the Caribbean. Additionally, the new strategic vision also contemplates a sustainable development, avoiding urban sprawl and fomenting environmental protection that are unique i n the Caribbean region. The redevelopment project maximizes a national eco

- tourist attractions found within the property and that are unique to the world, forming a green triangle with new eco

- tourism developments in Vieques and Culebra, and the island’s eastern region, el Yunque tropical rainforest adjacent to the towns of Ceiba and Naguabo and the 3,320 acres of conservation lands located at Roosevelt Roads and managed by the conservation Trust. On January 2012 the Department of the Navy
transferred the local,

-- transferred to the LRA 1,370 acres of land and facilities located primarily in Parcel III, better known as Forrestal. Currently the LRA and the Department of the Navy have agreed to terms and conditions for the transfer of the Government of Puer to Rico to the remaining 2,000 acres. Clearly, the background provided shows the great potential of the Roosevelt Roads property and we’re confident that the Public Private Partnership under your consideration is a key ally in this effort, which complemen ts the development of the José Aponte de la TorreUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. airport in Ceiba. We strongly believe that the Public Private Partnership will greatly improve the chances of maximizing the long

- term development potential of Roosevelt Roads. This Public Private Partner ship provides Puerto Rico with a partner that has a required expertise and a business plan geared towards increasing passenger traffic in Puerto Rico. Roosevelt Roads being a mere 45 minutes away from the Luis Muñoz Marín Airport can greatly benefit from the increased traffic to be generated by the Public Private Partnership. In addition and after careful consideration, and after careful reviewing article 3.22 of the proposed Public Private Partnership agreement it is the LRA’s opinion that it will not hi nder the development of Roosevelt Roads, but quite the contrary. The Public Private Partnership as contemplated under the signed lease agreement will serve as a step in the right direction towards improving the feasibility of developing Roosevelt
Roads an d under article 3.22 we will be able to carry out the phased development of the José Aponte de la Torre airport in Ceiba. Thank you very much.

Randall Fiertz: Thank you.
Rubén Hernández Gregorate: Good morning to the Federal Panel and all
the attenda nts and participants of this Public Meeting. My name is Rubén Henández Gregorate and I am the Chairman of the Board of Directors of the Ports Authority. First I would like to talk about the importance of the airport for transportation and aviation. As a n island it is critical for Puerto Rico to have ample access to air transportation and that is cost effective and up to date. Ensuring the development of the international airport is crucial for transportation in Puerto Rico. The airport receives nine ou t of every ten passengers coming into Puerto Rico and processes over 80% ofUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. their air cargo that is exported from or imported to Puerto Rico. Additionally, the International Airport is the main venue that connects us to
the rest of the world and enables a transportation and connection between 3.7 million Puerto Rico residents and 4.2 million puertoricans in the United States. Ensuring the transformation of the International Airport into a world class infrastructure agency is key to a transportation sector of Puerto Rico. In recent years, the aviation sector in Puerto Rico has been in decline. The resulting outcome is that Puerto Rico is now less connected to the rest of the world. A long term concession to operate the International Airport will
allow it to develop into an airport that is more widely connected and better prepared to face the changes in the airline industry as well as one with strengthened complementary air services for cargo and general private aviation. We know that the experience of lo ng
- term concessions in airport has been beneficial to aviation, both internationally, in places like Lima, Perú, London, Sidney and in United States, at John F. Kennedy and Sanford, Orlando, among others. Looking at the future for the Ports Authority, if the proposed project is approved the Ports Authority will continue to exercise its right to develop, manage and supervise the air transportation facilities in Puerto Rico. The propose concessioning of the airport addresses several challenges that the airp ort is facing, including but not limited to: the long

- term stagnation in the volume of passengers, the scarcity of resources to carry out a wide ranging program of capital improvements, limited commercial development, lack of continuity in development plans and the reduction of the Ports Authority public debt.
The Ports Au thority and the Public Private Partnership Authority have forged an operational plan to be implemented once the long

- term concession of the international airport is approved. This comprehensiveUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. plan is based on a combination of measures such as enhancing the monitory of federal and other funding opportunities, s upporting measures for the establishment of a fund for the regional airports and expansion of capital improvement plans for regional airports, and measures to reduce a necessary cost, among others. Considering that the development of the international airport will be ensured without any cost to the Ports Authority and the public debt will be reduced as a result of the proposed deal. If the Federal Aviation Administration were to deem this plan acce ptable the Ports Authority will be able to maintain its other operations. It is important to implement these measures effectively. The Ports Authority will continue to pursue its goal and mission, having ensured a world

- class facility for the majority of passengers that come to Puerto Rico. The proposed agreement aligns the interest of the Ports Authority and the selected partner. Under this agreement the Ports Authority will receive a share of revenue of the international airport. This will incentiviz e the Ports Authority to work in a collaborative manner to maximize the development of the international airport. In addition, this provides a recurring source of revenue to the Ports Authority. This is a concept that we consider provides financial incom e without any expense attached to it. Although the income is fixed for the first 5 years, we think this income will benefit the Ports Authority as it increases its later years. A conservative estimate puts this amount at 550
million dollars accumulative throughout the term of the concession. In terms of the regional airports, Puerto Rico has become a smaller place due to investment in its road and highway system. Today, Puerto Rico is an arrival destination where one can go anywhere on the island by roa d. This makes us believe that Puerto Rico could very well profit from having a
world

- class airport, besides 3 commercial airports and 3 general aviationUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. airports with specialized air services and regional importance. This does not mean that any operation must cease but rather that Puerto Rico is well served by existing airport pull.

Randall Fiertz: Sir, we’re out of time, if you could please finish.

Rubén Hernández: In conclusion, Puerto Rico will be in better shape
when it has a world

- class airport that strengthens its connections. We have presented an operational plan that if acceptable for the FAA and implemented with discipline, will not only reduce debt, but will put Ports Authority in a better position. Thank you very much.

Randall Fiertz: Thank you.

José Pérez Riera: Good morning to all, and thank you for providing me with the time and the space to express my request for you agency’s approval of the propose Luis Muñoz Marín International Airport private partnership transaction. My name i s José Pérez Riera, Secretary of the Department of Economic Development and Commerce, Executive Director of the Corporation for Trade and Commerce and Executive Director of the Puerto Rico Industrial Development Company of Puerto Rico. I will be presentin g to you today the benefits of establishing a Public Private Partnership for the management, development and operation of the Luis Muñoz Marín International Airport with the expectation that this partnership will position our airport amongst the best in th e world. An essential element in any economy that is seeking to promote tourism and business growth is air access. Even more so, in the case of an archipelago like Puerto Rico that depends on air access to connect to the rest of the world. The
governmen t of Puerto Rico recognizes that air access is a criticalUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. component to economic development and essential to foster international commerce and that it is crucial to maintain it and strengthen Puerto Rico’s position as tourism and trade hub of the Caribbean . This administration has also recognized that providing excellence, excellent customer service to our visitors from the moment that they touch our soil for the first time is of the outmost importance for Puerto Rico’s development. The Luis Muñoz
Marín I nternational Airport is the point of entry for over 80% of our approximately 5 million visitors and it is therefore an essential part of our infrastructure. Our economic development achievements have resulted in improved global competitiveness rankings fo r Puerto Rico. Puerto Rico has scaled up 4 notches, to the 31 st position out of 144 jurisdictions
evaluated in the 2012

- 2013 edition of The World Economic Forum Global Competitiveness Report. This is the highest ranking that Puerto Rico has obtained in this report in its history and has surpassed Chile as the most

co mpetitive economy in Latin America. One of the indicators that was evaluated as part of this ranking was the available airline seats, which scaled up eleven positions thanks to the promotional efforts of the government of Puerto Rico and to an air access incentive program. Since the year 2009 Puerto Rico has gained 3 new airlines that include British Airways, with twice a week service from Gatwick, Condor with twice a week service from Frankfurt and Westjet with twice a week service from Toronto. Also, w e have negotiated new flights from key domestic cities, like Washington D.C., Jacksonville and West Palm Beach, as well as increase frequencies to New York City, Philadelphia, Miami, Atlanta, Baltimore, Fort Lauderdale, Tampa and Hartford. Without a doubt Puerto Rico has advanced its economy and is today in a better position than 4 years ago in many areas. However, there is still work to be done, and we understandUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. that this Public Private Partnership will have a very significant contribution
to our future economic growth. Primarily, this partnership will generate jobs, according to an economic study realized by Estudios Técnicos, which is a local consulting firm, it is estimated that Aerostar’s execution of their plan for the airport will provide signific ant economic benefits. These benefits include the creation of 3,500 jobs direct and indirect as well as induced, an addition of 13,000 jobs by the year 2022 and a stimulus of 10 billion dollars in total economic activity to Puerto Rico. Additionally, job s will be created as part of a capitals improvement plan and new services which will be offered. For example, each million dollar investment will generate 23 direct, indirect and induced jobs, while at the same time actual jobs at the Ports Authority will be maintained and employees can explore job opportunity with the new operator should they wish to do so. This Public Private Partnership will also generate immediate economic benefits for Puerto Rico. As part of the partnership the Aerostar group will i nvest a total 2.5 billion dollars that will result in an improved airport, better customer
service for all of us that live here in Puerto Rico and those that come to visit us. Asides from generating immediate economic benefits for Puerto Rico
this Public Private Partnership will improve our air access. As part of the agreement it is required that the operator develop a plan to increase air seat capacity by bringing in more flights to Puerto Rico. For the last 20 year the Luis Muñoz Marín International Ai rport has managed on average 4 million embarking passengers whereas capacity of the airport is much larger than that. With this partnership Puerto Rico will have more airlines, more flights and better connections to key cities in the continental United St ates and to international destinations, especially in Latin America, Europe and in the Caribbean. The economic impact of increase volume, of theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. increase volume of flights, is very significant for Puerto Rico. For example, new domestic flight contributes 77 million dollars to the local economy on the island and a new international flight contributes 105 million dollars per year. Each year it is expected that the volume of passengers will increase by over 200,000 passengers which translates to an injectio n to approximately 140 million dollars to our economy. These incremental passengers include tourists which results in more jobs and increased activities in hotels, paradores, restaurants and artisans among many other sectors. Improved air access to Puert o Rico allows us to be better integrated into the global economy, better connectivity to main cities, makes Puerto Rico more attractive to national and international companies that are evaluating whether or not to establish their business in Puerto
Rico. This administration has implemented a set of economic incentives to foster investment and attract more companies to the island. These incentives have proven to be successful, but we also need to improve other areas, like connectivity in order to be able t o continue to make Puerto Rico an attractive destination for companies that want to establish themselves on the island. The potential to increase air access with the partnership represents a critical component in achieving this objective, the improved

con nectivity that the Public Private Partnership ...

Kevin Williams: Sir, we’re going to need you to wrap it up.

José Pérez Riera: In conclusion Puerto Rico has a first

- class legal framework, unmatched incentives, renovated infrastructure and soon, if this transaction is approved by the FAA, we will have a world

- class airport so that our visitors have a first impression of our island and so that they can experience that Puerto Rico does in fact do it better and will allow for theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. economic development of Puer to Rico that we are pushing forward to continue for generations to come.

Kevin Williams: Thank you.
Luis Vega Ramos: Good Morning. My name is Luis Vega

- Ramos and I
am an At

- Large Member of the Puerto Rico House of Representatives. I guess that makes me a local politician. Since the proposed transaction is one of the utmost importance and could entail serious long term consequences for the quality of life, the economy and even the security of the people of Puerto Rico, I have decided to present my comments in English so that I make sure that you understand the concerns this proposed privatization raises for me and many o f my constituents. First, I must address the alleged transparency of the process from the government of Puerto Rico’s part. I am the ranking member of my party's delegation in House Ways and Means Committee. In our committee, the budgetary concerns, the sources of revenue of economic commitments of the government of Puerto Rico are discussed and overseen. Yet, to this moment, we have not been presented by any Government official of Puerto Rico the details of the proposed transaction for our consideration

. If the ranking member of the House Ways and Means Committee, has not have
the chance to discuss the transaction and see the details with the government’s officials of Puerto Rico, imagine what the common puertorican on the street will know about this tr ansaction. I will be submitting via e

- mail a longer, more detailed, version of my testimony sometime during the next fourteen days. Yet I will summarize my objections and concerns in the following six (6) statements: 1. Puerto Rico's SJU Airport is and th rough the life of the proposed contract, willUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. continue to be, our main facility for air traffic to and from Puerto Rico. The reality of Puerto Rico being a group of islands makes the prospect of having our most important entrance and exit port in private hands for some four decades a very risky proposition indeed. As a matter of federal policy, the U.S. Government has decided that the private management of International Airports be a very scrutinized exception, a pilot program, if you will, and not the gen eral norm. Puerto Rico's SJU Airport is an extremely bad candidate to be the guinea pig for the never before conducted experiment of having an International Airport of a jurisdiction under the FAA's authority to be put in private hands. 2. The financial structure of the proposed transaction between the Aerostar Airport Holdings group and the Government of Puerto Rico is one that is set mainly to augment the effective value of the winnings made by the private entity and to, inversely
reduce the effective v alue of the amounts to be paid to the Government of
Puerto Rico. One of Puerto Rico's leading economists, whose study will be presented and discussed throughout this hearing, and the statement will be put in the official record, has said that in effective real terms Puerto Rico would lose over $1 billion of the real and present value o f the operation of
the Luis Muño z Marín Airport through the effective dates or the effective functioning of this contract. Simply, this deal privatizes earnings for
Aerostar and leaves the enterprise's risk and loses for the people of Puerto Rico to burden. 3. On that regard, the Puerto Rico Ports Authority will incur in a $669 million bond issue to re move current debt from Luis Muño z Marín’s books so that it may transfer th e facility free of any major economic obligations. Furthermore, the way this bond issue is going to be paid back also favors the private partner substantially for the very same reasons that were previously stated. Simply put this bond issue, which I have here withUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. me, and which will be made part of the record, has not been discussed not even by the Ports Authority Director who is issuing that bond issue. He didn’t say anything about it in his statement. 4. Also, we have to
understand that the FAA should not be led to believe what common sense
dictates to be untrue. The upfront gains for Aerostar are directly dependent
on the concentration o f passenger flights on Luis Muño z Marín Airport. Plain and simple, that concentration of passenger traffic on SJU will have direct effects and dire effects on the regional airports' strategic development plans and their role as stimulants of economic growth on the areas they serve. Effect of regional tourism and economic industries will be great. Also, we are seeing concrete examples of this right now, as this is being discussed the Government of Puerto Rico, the Governor himself in a letter misrepresented the state of flights from San Juan to Culebra in order
to concen trate those flights in Luis Muño z Marín’s Airport and to get out of the way three local providers who currently are giving those types of services and in order to favor an out of Puerto Rico private entrepreneur. So that is already happening, this is not theory. Already the Government of
Puerto Rico is acting to get out of the way local airlines and local businesses as part of the deal to concentrate all pa ssenger traffic in the
Luis Muño z Marín Airport. There are also ongoing legal suits to try to throw
out of their leases tenants in the Isla Grande Ai rport, which is an airport
whic h is very close to the Luis Muño z Marín. 5. Actually, Today's press also reports that they have been put pressure on private sectors. Finally, I want to stress two brief points, this administration has said that under th e Public Private Partnership program it would have created some 99,000 jobs. It has not created one, so we cannot expect to accept those proposed
estimates. And lastly, I want to stress the fact, that Puerto Rico hasUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. general elections in little more than a month. This transaction being as complex and controversial as it is, we strongly urge that the final consideration by the Federal Aviation Administration, of that transaction, be withheld until the inauguration of the next governmental period that
start s on January 2, 2013

. The mere possibility of an outgoing
administrat ion making a forty year commitment on our most important airport facility on its last very d ays must not, and I stress must not, be allowed by you. If you choose to greenlight or stop this deal, it should be left to the next Puerto Rican government, whichever it turns out to be, whichever wins the next election, to have the complete responsibili ty and authority to strike thru or strike down this current deal. Thank you very
much.

Juan de León: Good morning and thank you for allowing me to speak in this forum. My name is Juan de Leon and I represent de Taxi Drivers ’
Federation of Puerto Rico.
As a taxi driver, I endorse any project that is in favor of increasing the tourism in our Country. As a syndicalist, I am in favor of improving the working conditions of our union members.

In regards of what is being evaluated here, about changing the

man agement of the international airport to a public

- private alliance with the government, we support everything that will improve our tourism and our
economy.
I understand that the company that is being evaluated for this has already
gone through a scrutiny process with the government and others. I alsoUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. know that the company Aerostar Airport Holdings is one of various who were evaluated and that it was chosen because it had the capacity to perform the work and to achieve the changes needed by the airport and to offer more and better services to the passengers of the Luis Munoz Marin.

On the other hand, I have to clearly tell you that we reject any imposition against the tourist s that visit us, from which we benefit . Anything that is
done and that threatens ou r job and the tourist, who are our source of income, and who make great contributions to the economy of Puerto Rico will be rejected.
We understand that this change in the airport must come with benefits to all the sectors that depend on tourism. So any im provement to the working
conditions of the taxi drivers will be welcome.

As a union, and as individuals
, we want to be part of the touristic and economic development of the Country.
Thank you very much.

Randall Fiertz: Thank you. Edgar Sierra : Good morning to the Federal Panel and to all the participants and attendants of this Public Meeting. I will be reading my remarks in Spanish.
Good morning. My name is Edgar Sierra. I am the manager of Airport Operations at Luis Muñoz Marín International Airport . I’ve been in this industry for over 27 years, including my experience as a private pilot. I ’ve served 10 years in the Air F orce in the areas of Air Transportation, dispatcher for cargo planes, as a Fixed

- Based Operator (FBO) and as anUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Administrator of a General Aviation Airport. At the moment, I am certified by the Federal Aviation Agency (FAA) as plane dispatcher and I have a private pilot’s license. I am also qualified for Flight by Instrument and Multi

- Motor. I also have a Bachelors’ degree in Liberal Studies and a Mayor in Management.
Through the years I have experienced different businesses cultures and
have witnessed success and failure as results. I must tell you , that the way the Authority of Airports manages the Luis Muñoz Marín Airport as of to day limits their development. This is because most of the decision s are made based on political convenience s and not on the short and long term necessities and benefits of the airport.
For example, personnel without the required skills in aviation are

con tracted for key positions considering only political party affiliation of current government. Here we make two irresponsible acts: hiring nonqualified personnel for critical positions and limiting the growth and development of a professional of the Aviatio n Industry.
It would have been ideal to carry out these views in a non

- election period, with the purpose to avoid political agendas that disguise the very purpose of the audience we have today. Unfortunately some politicians use this
form to move their causes forward that have nothing to do with the welfare and security of the airport employees.
In conclusion, this transaction is good for Puerto Rico because it establishes an alliance with a qualified business to take airport operations at its opti mal level. For the first time in Puerto Rico we will have as a partner in the aviation industry a business expert in innovation andUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. development in all areas of the operation of an airport that seeks to grow together with their human capital and believes th at Puerto Rico deserves a world class airport.

Thank You

Randall Fiertz: Thank you.

Jaime Perelló: Good Morning and thank you for this opportunity, my name is Jaime Perelló. I am an at large representative of Puerto Rico, the high ranking member of my delegation in the Government Committee. On behalf of the people of Puerto Rico thank you for this opportunity to hear
about our concerns and debts...

-- and doubts

-- of this privatization process in Puerto Rico. I want to read my presentation in Spanish, s o it’s more easy for the people of Puerto Rico to understand this conflict we have here but we have copy of our presentation in English that you can read it and it is more easy for you. I am opposed to the granting of the management of
the Luis Muñoz Marín Airport to a private operator for a period of forty years. A transaction like this, for such a long a period of time, is undoubtedly an act of alienation for Puerto Rico and limits its power in the near future, to take the necessary measu res and make critical decisions in the economic field, which should not only depend on private interests. This forum is the only chance Puerto Rican citizens actually have to present their positions. We emphasize this opportunity to underline the importan ce of this public hearing for many citizens of Puerto Rico who are optimistic that the Federal Aviation Administration does not approve the request for privatization. There are multiple reasons why we are oppose d to this transaction, but due to time const rains I will limit my presentation to someUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. fundamental aspects. First, contrary to what Puerto Rico Ports Authority
states in the final application filed before you, the process conducted by the local Government to generate the privatization proposal did not have a community consultation process

. The legal scheme that was created to make possible this type of public

- private partnership excluded such community consultation. Second, there would be a conflict of interest if we let ASUR manage our airport at the same time that it manages the one in Cancún. Studies conducted by the economist José Israel Alameda and planner Carlos A. González Valle, have established a regression equation which clearly shows a relationship between an increase in tourists to Can cún, Bahamas, and Jamaica and a decrease in tourists coming to the island. Certainly, the Cancún International Airport, because of the tourist zone in which it is positioned, is a critical competition for Puerto Rico. Statistics show that the American tou rist represents for Puerto Rico 90% and for Cancún the 78.2%. In addition, the income generated from Cancún International Airport to ASUR, the associate of the consortium who won the
bid , is 283 million of their total income versus a third of that, 80 mil lion that would signify Puerto Rico. With this background, it is hard to expect that the selected private operator isn’t in a position to fully respond to the best
interests of the island. Third; W hat is the real investment of the private partner during the term of the contract, knowing that airports in the United States have a source of funds to make improvements and infrastructure projects such as PFC and federal grants? Th e same f unds this private partner specifies in the contract that they must have the control and management of them

. It is clear that the proposed transaction will have an impact on the regional airports, especially when our airport has provided financial support to the operations of these airports. Similarly, there ar eUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. restrictions in the contract which destine to failure the prospective efforts to economically develop our regional airports, since the private operator is guaranteed no emergence of new competition. Our island condition requires that any promotional pol icy of an international airport be linked to a national development model that integrates the regions. This requirement is only met if we maintain , the Puerto Rican Government together with the United States Government, the total control of the administration of Luis Muñoz Marín Airport, and we conceive regional airports as allies for regional development and not as competition. The actual proposal will result in the stagnation of our regio nal airports and of the initiatives that were tied to the growth of those airports, because the proposal does not respond to a comprehensive planning effort. For example, according to the study mentioned above, the impact of this transaction in the region s in which are located the airports of Aguadilla and Ponce would suffer a loss of 4,700...

-- excuse me, 4,736

-- jobs and a negative impact to the economy of
337 million dollars. We have even evaluated the measures that the Ports Authority proposes in the fi nal application to the FAA for the regional airports, and it is evident that there is no intention in managing or increasing the flow of passengers, nor routes, nor airl ines. And with this I
conclude... T his contrasts with the economic strategies that as re cently as
in 2010 put forward the actual government, just like others from the federal government, to promote the development of regional airports not only from the point of view of the cargo load, but also in the aspect of passengers. But the granting o f this privatization contract marks a complete break away from these recommendations to develop our regional airports. Because of all that has been stated we oppose this transaction and we request that it isUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. not approved, because it is not beneficial neit her for Puerto Rico or for the United States. Thank you very much.

Randall Fiertz: Thank you.

Mario Pabón: Good morning my name is Mario Pabón, and I’m an attorney and I appear today as a member of the general public. I have prepared a study of whatever I’m going to speak about. It’s 21 pages long, so obviously I cannot read it but I’ll present a copy to th e panel and I’ll ask that it will be published in the website as part of my public comments, and I’ll summarize the contents of my study. Basically, the deal we have before here is a very bad deal, not only for the people of Puerto Rico but for the people , the taxpayers of the United States. First of all, throughout the the history of this transaction there have been a denunciation of the many conflicts in this process. Including the fact that Highstar Capital, which ended up winning this bidding process , should have never been allowed to participate according to the request for qualifications issued by the P3A Authority . Furthermore, the entire basis of this project which is delineated in a desirability and convenience study is totally suspect if you ev aluate that study as I did in my paper, you can read read it, you will realize that the entire basis, the entire foundation for undertaking this transaction is absolutely false. This transaction, when you evaluate it in economic terms,
and it has been eva luated not only by economist Alameda but by economist José Antonio Herrero, causes a loss to Puerto Rico people and to the Puerto Rico Ports Authority of over a billion dollars over the life of this contract. How can the Puerto Rico Ports Authority surviv e and become viable if you’re going to take this amount of money out of its funds? Removing the Muñoz Marín airport from the Puerto Rico Ports Authority isUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. the equivalent of removing the locomotive out of the train. You may have
the rest of the train but it’s certainly not going to move. This becomes even worse when you realize the the P3A Authority and the Ports Authority have sold this transaction to the people of Puerto Rico as a transaction where, whereby they were going to eliminate most of the debt of the Puerto Rico Ports Authority. Today we hear, first it was most of the debt, in the process it became almost all the debt and now we hear the president of the GDB saying that it is only going to eliminate 45% of the debt. So not only are we going t o end up with a Ports Authority with no airport but it’s going to end up with 45% of its debt, how do they expect it to operate? I don’t know. Furthermore, the P3A Authority has been doubting the operating standards that are going to be adopted pursuant to this contract. Well those operating standards are so much a paper tiger when you realize there are absolutely no functional mechanisms to put them in place. The day the governor
announced the choice of Highstar Capital one of his biggest selling point s was that the bathrooms in the airport were going to be cleaned 16 times a day. Well, guess what? There is absolutely nowhere in the more of a thousand of this final application that says what will happen if they are not cleaned 16 times a day. And the re is no absolutely no mechanism to keep in place the operating standards and the only mechanism is a yearly review by a private engineer that is going to be paid by the private contractor. That doesn’t sound like something that will make the airport bett er for Puerto Rico. There is also some issues regarding environmental liabilities that the Puerto Rico Ports Authority are, is not ... is keeping after thi s. Puerto Rico Ports Authority in documents that are filed within the final application admits that t he way they handle the environmental liabilities today is through charging the airlines. But now, what is going when theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Ports Authority keeps the liabilities without having the airlines to charge them to? Furthermore, the regional airports are doomed to die under this agreement, not only because of section 3.22 which is in fact eliminates competition, but if you review the regional airport plan submitted as part of the final application, you’ll realize that every single aspect of this transaction is gear ed toward moving all of the passenger traffic from the regional airports to the San Juan airport. Every single aspect, increase in fees at the regional airport, incentives for increase passenger traffic in San Juan etcetera, everything is moved towards m oving passenger traffic to San Juan . Finally, there’s an issue that is important to the FAA and has not been addressed in this application in an effective manner, which is the effect of bankruptcy of the private operator. There is only a ... what should
h ave been a very extensive opinion from the major ground firm regarding bankruptcy, which is totally, totally ineffective given that it does not address the issues, particularly the issue that this lease agreement allows in the event of bankruptcy, not that the Puerto Rico Ports Authority can take over, but that a lease hold mortgagee who we don’t know who it is, we don’t know who this entity is, has a right to take over the airport in case of bankruptcy and in case of default. Basically, the FAA will be al lowing a party that is totally unknown, that we don’t know how long they, it will take for them to obtain a certificate to operate the airport to have the power to control the entrance and exit of Puerto Ricans to this country. For those
reasons and all t he ones that are stated in my report I oppose the privatization of the San Juan airport. Thank you.

Randall Fiertz: Thank you.

Mario Pabón: Who can I give this to? You?Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Randall Fiertz: You can give it to me if you want. Excuse me, before you begin, I’ve just been asked to remind the speakers about the lights up in front. There’s a ... I don’t know if you hopefully can see it from there it’s clock winding down the 5 minutes and it gives a warning light, eventually moving to a red, in which point I ask you to wrap up. Thank you. Go

Charlie Hernández: Yes, good afternoon to you all, the representative Charlie Hernandez addresses you; one of those local politicians like the Governor of Puerto Rico. I am a member of the House of Rep resentatives since 2001. First of all, I would like to thank the Federal Agenc y for the opportunity given to us to express ourselves on the privatization of the Munoz Marin Airport. By doing so, the Federal Agency, challenges Republican Congressman, John Mica; whom behind the people of Puerto Rico’s backs and probably as a petition fr om people with no good interest for Puerto Rico in mind, requested that these hearings b e carried out in an expeditious way and out of Puerto Rico’s jurisdiction. Here is the letter from
congressman Mica, for those of you who would like to read it. Duri ng the last two years, I have pointed out several irregularities and conflict of
interest s in the proc ess of selecting a private partner for the Munoz Marin Airport. I also recently denounced how that private partner has channeled
scandalous amounts of money for the reelection campaign of Governor Fortuño utilizing the Republican Governors Association as intermediary. These issues are currently being investigated by the Puerto Rico Department of Justice and the Office of Government Ethics, to whom I shall
appear next Monday to testify about the scandal. We understand that this privatization process is unfavorable to neither the best interest of the people of Puerto Rico nor the interest of the taxpayers of the United States,Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. which is why we strongly o ppose. There are many reasons not to privatize. Today I will briefly discuss the ones that the so limited time will let me. As you know from this agency, Ports Authority of Puerto Rico is not only an airport; it consists of 11 airports and 7 maritime ports . With the exception of Luis Munoz Marin, Ports Authority operates its assets with losses and debt.
Nevertheless, this privatization does not clarify what would happen to the Ports Authority and its employees, as soon as they lose their ability to issue
debt. We have consulted economists who understand that the authority will
not receive nearly one billion dollars during the term of this contract and shall be oblig at ed to close most of its remaining operations. Still, even if the Port Authority could surv ive the economic impact of this transaction it would adversely affect regional airports which have used U.S. taxpayer ’s money. One of those airports is i n my district. The proposed lease penalize s the Port Authority for 15 or 20 years if it develops its passenger operations at regional airports. To survive
, these airports must dramatically increase their
rates which would favor the monopoly created in favor of the private partner
of the Munoz Marin Airport. By allowing this transaction it would be a matte r of time until these airports become totally non
- viable

. You d on’t believe me
,
n or do you have to believe the exponents , read section 3.22 of the contract, the only ones that believe what they don’t say are government bureaucrats’
executives. We further understand that this transaction is contrary to the
best interests of environmental protection. According to the contract
, the Ports Authority remains responsible for all claims existing or potential environmental damage in the Muñoz Marín, including any d amage arising from the operation
, for decades , from a fuel distribution system on the airport grounds. The government of Puerto Rico is exposed through thisUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. contract to environmental claims by delivering resources that they might
have to respond. I strongly encourage the federal agency to consult with
the Environmental Protection Agency of its position on this issue before continuing the evaluation of the same. We also understand that
, in a jurisdiction like ours where there is a serious problem of d rug trafficking and weapons, illegal drugs and weapons , to put our main airport into private foreign hands raises serious public safety concerns. For this reason , recently we filed a communication to the Secretary of Labor... Pardon, the Secretary of Treasur y and the Chairman of the Committee on Foreign
Investment in the United States, Timothy Geithner, asking to evaluate this
transaction. Here is the letter and I put it on the record

. I also recommend waiting for the Secretary of Treasury’s response on this matter. It is of high sensibility the aspect of public safety for Puerto Ricans. Finally , there is nothing that this private partner can do that the people of Puerto Rico cannot do, if you put your will and better management than the ones that
ha ve paraded here to manage our airport. The privatization of Muñoz Marín only advances the interests of the private partner that, to make a high profit, puts at risk the security and fiscal stability of the Puerto Rican people. For these reasons, and in defense of the patrimony that with sacrifice the Puerto Ricans have built, we oppose to the privatization of the Luis Munoz Marin Airport. Thank you.

Randall Fiertz: Thank You. Number twenty

- three? Number twenty

- four?
Alejandro Alvelo: Good morning Chairman, good m orning members of the committee. I represent the American Federation Of Government Employees, who are fellow employees who work in SJU, BQN, PSE and Virgin Islands. I am the president of local 557, thank you for theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. opportunity to testify today regarding the lease of the Luis Muñoz Marín International Airport. I came here to testify on the lack of transparency on
the new on

- coming lease. Creating concerns among my brothers and sisters in the union. Not knowing how it will affect us, creating more
doubts , as a result of this privatization, we could face higher cost of living in the work environment. Meaning that if you pay today a dollar for the coffee, tomorrow could be two dollars. This privatization has to have more information, guarantees and econom ic protection for the working class. There’s not much that scares me, but the thought of the layoff of my brothers and sisters, especially on the airports of Aguadilla and Ponce, who are BQN and PSE. The private contractor will force the state to cut cor ners to increase their profits, that scares me the most. I have receive a lot of calls from my members from our bargaining union areas, worried about this privatization at SJU that could help the SJU airport, but what would happen to the other two airport s? We cannot keep expanding unemployment at the cost of a few to become more rich. Opting for the lease means selling our future in a long term. It is too important to be left to a company that would not be accountable by the Puerto Rican People. The a irport have many good jobs, although the working areas need a lot of improvement. Moving these jobs to the private sector is, at the best, a zero sum game after the private company take their profit off the table. We want a more information, we want a gu arantee, because later on that could hit United States in the face. In conclusion American Federation of Government Employees with the Executive vote approvement presents its opposition at this moment, until they share the information, they guarantees tha t the lease will not affect us and how this would affect the cost of living of the Puerto RicanUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. people that work in those airports. Thank you, Chairman for this opportunity to address this issue.

Randall Fiertz: Thank you very much. Do we have a ... Ok . Very good. Ok, we’re going to take a slight break in the order of speakers the congressman from Puerto Rico is arriving and he, we know he has a very tight schedule so we’d like to give him an opportunity to speak, so that he can talk to us and then go to his next, his next assignment. So my understanding is that he’s in the building making his way here.

Pedro Pierluisi: I hope you were not waiting too long.

Randall Fiertz: No, thank you.

Pedro Pierluisi: Ok. Thank you, Mr. Fiertz. I want to begin by expressing my gratitude to you, Mr. Cole from the Office of the U.S. Secretary of Transportation, and the other members of the panel representing the Federal Aviation Administration and the U.S. Transportation Security
Administration for travelin g to Puerto Rico to receive public comments on the matter in question. Mr. Fiertz, I hope you will also convey my thanks to Secretary LaHood; to Christa Fornarotto, the FAA Associate Administrator for Airports; and to your team at the FAA Office of Airpor t Compliance, for the assistance that has been provided to the relevant Puerto Rico government agencies throughout this process. As Puerto Rico's sole representative in the United States Congress, I am pleased to be here this morning to express my support for the final application to enable Luis Muñoz Marín International Airport to participate in the national, congressionally

- authorized Airport Privatization Pilot Program. The 1,600 page application filed last month with the FAA by the Puerto Rico PortsUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Au thority and the Puerto Rico Public

- Private Partnerships Authority reflects the hard work that has been undertaken by these two local government agencies over the past two

- and

- a
- half years. It is clear that they have done their best to prepare a comprehens ive submission that both fulfills Congress's vision for this pilot program and promotes the best interests of the 3.7 million U.S. citizens living in Puerto Rico. The scheduling of this public meeting, although not required by law, demonstrates the value that the FAA rightly places on public participation in this process. This meeting affords the federal government an additional opportunity to hear directly from my constituents about this application. This is the fourth public meeting that has been held i n the 16

- year history of the pilot program. The FAA previously held public meetings about the privatization of airports in New York, Chicago, and New Orleans. The FAA subsequently approved two of those applications and the other was discontinued. In addit ion, two general aviation airports in Florida and Georgia remain active candidates for the pilot program. Earlier this year, Congress expanded the total number of airports authorized to participate in this pilot program from five to 10, through the enactme nt of Section 156 of the FAA Modernization and Reform Act of 2012. I respectfully submit that the Puerto Rico application is consistent with the objectives of the pilot program, as it was envisioned by Congress and the FAA. When Congress established this program in 1996, it sought to determine whether new investment and capital from the private sector can be attracted through innovative financial arrangements in order to modernize and otherwise improve the U.S. airport system. In my view, the Puerto Rico application is a superb candidate for the program, and I want to highlight three reasons why I believe this to be the case. First, given the current bond rating of the airport sponsor, the Puerto RicoUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Ports Authority, and the questions surrounding the ca pacity of the federal Airport and Airway Trust Fund to meet future demand across the U.S. airport system, participation in the pilot program will help ensure that credit can be obtained to finance critical capital improvements at Luis Muñoz
Marín Internati onal Airport. Second, the operational and passenger characteristics of this airport make it uniquely suited for a long

- term lease, as compared with other airports in the U.S. system. Third, participation in the pilot program will lead to additional route s, better services for the flying public, and enhanced economic development opportunities for my constituents. Let me briefly expand upon each of these points. Luis Muñoz Marín International Airport is one of Puerto Rico's most important pieces of
infras tructure, an essential part of our transportation network, and our gateway to destinations in Puerto Rico, the 50 states, and abroad. The airport employs many workers and is a major contributor to our economy. My constituents want, and their leaders must s trive to provide, a world

class airport that meets the highest safety standards, features modern

amen ities, and promotes the Island' s positive image as a prime tourist destination and a preferred place to conduct business. I firmly believe that inclusion in the pilot program is the best way to achieve these objectives. Today, the Puerto Rico Ports Authority is burdened with significan t debt and cannot generate the funds necessary to provide the people of Puerto Rico and visitors to the Island with the airport they deserve. Between 2004 and 2008, the debt of the Puerto Rico Ports Authority increased by 63 percent. In 2009, the Ports Au thority had a bond rating of Triple B minus, the lowest credit rating above junk status. In 2010, Moody's Investors Service warned that the credit rating could be downgraded to junk status, which compelled the Puerto Rico Government Development Bank to ste p inUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. and purchase all of the bonds issued by the Ports Authority, effectively saving it from being downgraded to junk status. To this day, the Ports Authority remains effectively shut out of the bond market. Moreover, the airport, given its current usage, cannot generate sufficient revenue on its own from fees to finance its capital improvement plan and retire the Ports Authority's debt. Nationally, between 2001 and 2011, the volume of U.S. air traffic increased by about 14 percent, representing an increas e of 108 million passenger enplanements. This level of growth has helped generate the funds necessary for many airport sponsors across the nation to finance capital improvements at the airports they operate. By contrast, the number of passenger boardings a t Luis Muñoz Marín has generally remained stagnant, which has served to prevent the fees that are charged to airlines, passengers, concessionaires and others from being used to fund necessary capital improvements at the airport. In 2011 alone, the number

o f passenger enplanements at Luis Muñoz Marín declined by over 6 percent compared to 2010. Indeed, over the past 20 years, Puerto Rico has experienced no growth in the number of passenger enplanements, instead consistently hovering between four and five mil lion boardings per year. I would note that the 2011 to 2015 National Plan of Integrated Airport Systems, transmitted by the U.S. Secretary of Transportation to Congress in September 2010, estimates that Luis Muñoz Marín requires an investment of nearly 13 0 million dollars in order to meet federal aviation standards. To meet this target, the debt of the Ports Authority must be retired and the capital necessary to finance these improvements, whether through the bond market or private investment, must be obta ined without undue delay. Another factor that militates in favor of a long

- term lease is the uncertainty that surrounds the future availability of federal funds toUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. make improvements to the airport. As a February 2011 report by the Government Accountabilit y Office demonstrated, the financial condition of the federal Airport and Airway Trust Fund has deteriorated over the last decade. The Trust Fund is the fund that helps finance FAA investments in the U.S. airport system. These investments include improvem ents in construction, security and technology. In short, the combination of a lack of access to credit on the part of the Puerto Rico Ports Authority to finance its capital improvement plan, along with the potential for reduced federal funding from the Tr ust Fund, are key factors that prompted the government of Puerto Rico to consider leasing the airport to a private operator in order to ensure that the airport is sustained and strengthened for the future. Finally, I believe inclusion in this pilot progra m represents the most prudent course of action because it will provide an incentive for the new operator to modernize the airport and attract more airlines, more flights, and more passenger traffic. This increase in volume, in turn, will promote the

econom ic development of Puerto Rico by bringing more visitors to the Island, thereby increasing hotel occupancy and spending at restaurants and others businesses. Currently, nine airlines provide nonstop service from Puerto Rico to 20 cities throughout the Unit ed States. There is clearly room for improvement here, especially when one considers that there are now 4.6 million people in the 50 states of Puerto Rican birth or descent. Inclusion in the pilot program is likely to result in more flights between
Puerto Rico and the U. S. mainland, with the potential for new routes connecting the Island and destinations along the eastern seaboard, the Midwest, and the west coast. Inclusion in the pilot program can also lead to new routes connecting Puerto Rico and intern ational destinations in Europe, Canada, and Latin America, which would boost trade and tourismUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. between the Island and those expanding markets. In addition, given its prime location, a modernized Luis Muñoz Marín can be, and should be, the gateway to the C aribbean, a truly international hub connecting passengers from North America, Europe and Latin American with points all across the Caribbean. By modernizing our airport and increasing flight volume, we promote economic development in Puerto Rico and enhan ce economic opportunities for Island residents. To illustrate a recent analysis conducted by the Department of Economic Development and Commerce of Puerto Rico estimated that every new domestic air route established at Luis Muñoz Marín International Airpor t would contribute 77 million dollars to the local GDP, and each new international route would contribute 105 million dollars. In conclusion, I believe that approval of this application would promote both the national interest and the interest of my const ituents. Inclusion in the pilot program would help ensure that capital is available to convert Luis Muñoz Marín International Airport from a substandard facility
into a state

- of

- the

- art airport that will be a source of pride for the people of
Puerto Rico a nd a jewel in our nation's aviation system. A new and improved airport will attract more routes and more passengers, will better connect Puerto Rico with the United States and the rest of the world, and will strengthen the Island's economy and create jobs . I thank you for the opportunity to testify and I hope my testimony will serve to inform your decision on this application. Good luck with this hearing and thank you for coming to Puerto Rico.

Randall Fiertz: Thank you very much, I appreciate it. Tw o quick things before Ms. Rosario begins. First of all, thank you very much for letting theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Congressman go before you. And second of all, just say that the audience is aware we’ve given Ms. Rosario extra time to speak this morning.

Astrid Rosario Or tíz: Thank you. My name is Astrid Rosario Ortiz; I represent the Brotherhood of Office, Commercial and Related Field
Workers of Puerto Rico. This union dates back to the year 1948. It currently represents the management, operation, and maintenance workers that the Ports Authority of Puerto Rico employs to handle its activities related to the operation, development, conservation, and administrative maintenance of the air and sea facilities of said Ports Authority. By express disposition of the Constitution of the Commonwealth of Puerto Rico in its
Artic le II, sections 17 and 18
, employees of Public Corporations that operate as a business have the constitutional right to unionize and to bargain collective agreements. Even so, Act No. 130 of May 8, 1945
known as the Labor Relations Act of Puerto Rico as a mended
, guarantees these employees those same rights. Considering that the Ports Authority of Puerto Rico is a public corporation that operates as a private business, its employees have the right to unionize and bargain collective agreements under the pro tection of the rights consigned in said Act No. 130, section 1. This practice has been sustained by the courts of our country in
innumerable decisions. Among the 459 employees represented by the union H.E.O., 202 of them perform their jobs at the Luis Mu ñoz Marín Airport . This legal doctrine has been sustained by the country's courts in
countless decisions. Furthermore, Act No. 130 provides as an illicit labor practice for an employer to violate the terms of an agreement. At the same time, the Act poi nts out as a mandatory subject of collective bargaining the subcontracting of the labor of the Hiring Unit. In other words, the HiringUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Unit's work represented by the Union cannot be subcontracted without having negotiated said subcontract with the Union th at represents
them. Despite the aforementioned, on August 2, 2012, through a letter addressed to me, the Ports Authority's Executive Director, Mr. Bernardo Vazquez Santos, notified us about the plans of the P orts A uthority to privatize the operations and management of the Luis Muñoz Mann Airport. Specifically, they intend to subcontract our work through the granting of a contract to Aerostar Airport Holdings. Said letter specifically points out. At the same time of receiving said letter, we were notified on behalf of Mr. Vázquez Santos of an invitation to hold a meeting with the representatives
of the above mentioned company, Aerostar. Representing Aerostar, Mr. Carlos Trueba Coll, Director of t he Cancun Airport and Mr. Manuel Gutierrez Solá, ASUR Commercial Director, attended the meeting. This brief meeting, the invitation of which we received on the same day, lasted barely an hour. It is important to point out that the Ports Authority Director excused himself from it and was not present. In that meeting, the Ports Authority was represented by Mrs. Zulma Pérez Pérez, Sub

- Director of the Ports Authority of Puerto Rico and Mr. Arnaldo de Leo, Aviation Bureau Director. This has been the only meetin g, if it can be called a meeting, we have had with the company Aerostar's representatives. We have obtained

a ll other information regarding Aerostar's plans and its contract with the Ports Authority thanks to our individual and collective efforts, none of it has been provided by Aerostar, or by the Ports Authority. The Reauthorization Act of 1996 and the Federal Aviation Administration Act of 1996, Public
Law No. 104

- 264 of October 9, 1996, authorize the Secretary of Transportation and, through delegation , the FAA Administration, the approval or denial of requests filed under the dispositions of said Laws. TheUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. requirements that must be complied with are found in Section 47134, specifically Section 47134. Regarding the collective agreements specifically Se ction 47134 provides: "Any collective bargain agreement that covers employees of the airport and is in effect on the date of the sale or lease of the airport will not be abrogated by the sale or lease" Said requirement is mentioned and incorporated in the privatization contract of
Luis Muñoz Marín. Nevertheless, the term "abrogate" lacks definition and/or explanation in a way that adequate parameters may be established for its understanding and implementation in regards to the collective agreement that cov ers the group of employees affected by this privatization
contract. We understand that the law and its regulation do not establish that the Administration will become the agency that will ensure compliance of the labor aspects of the contract. This lack of definition, given the ambiguity of the disposition pointed at in the Lease Agreement, has permitted that the privatized entity, Aerostar, not assume any commitment in compliance to the existent collective agreement. Equally, and despite what has been pu blicly announced by the government agencies, and according to the actual dispositions of the Lease Agreement, Aerostar will limit itself in offering work to those employees that request it without any guarantee of employment. We see how it is not enough t o incorporate into the contract a general expression paraphrasing the legal obligation of complying with the Law and its regulation. This Federal Aviation
Administration entity should examine the whole contract and see the effects
that it has on the collec tive agreement in order to be able to determine if said contract complies with Law. In a similar way, and on the other hand, the only obligation that the Ports Authority appears to recognize as a consequence of having a valid collective agreement is to ma ke the noticeUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. that it sent us on August 2, 2012, and that we have previously mentioned. There has not been an expression on behalf of the Ports Authority up until now, written or verbal, that explains the destiny of the contractual obligations that arise f rom their collective agreement and about the consequences of said collective agreement pursuant to the signing of this Lease Agreement. We must recognize that this danger about the lack of definition of the abrogate term was pointed out in comments sent t o your agency in the past by sister unions. In a similar way, these ambiguous dispositions of this Lease Agreement around the existent collective agreement have as a result that Aerostar and the Ports Authority can avoid all logical consequences of the la bor doctrines regarding successor employers veiled in the federal and state level. With its behavior, Aerostar and the Ports Authority have ignored every responsibility from these
doctrines. Currently, the labor sector affected, which we represent its un ion part, has been ignored in the process and negotiation of this privatization. Aerostar and the Ports Authority have pretended to comply with its legal responsibilities "with a mere general mention in the contract that it will not
invalidate the collecti ve agreement. In a similar way, and despite mentioning, in a general and specific manner in its Article 11, Section 11.1, that Aerostar will comply with federal law and the laws of the Commonwealth, this contract completely ignores the obligations from th e Labor Relations Act of Puerto Rico regarding compliance with collective agreements, let us see several examples. The H.E.O. has been certified as exclusive representative of the group of employees to be affected by this transition, and its collective ag reement have been left aside and ignored in all of this process. It is unusual that the contract, the Lease Agreement, expressly provides, in clear violation to the labor law, the interview andUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. individual recruitment of the unionized employees on behalf of Aerostar. The terms and conditions of employment of these workers, provides this Article 2 Section 2, shall be established unilaterally by Aerostar “... on terms and conditions designated by the Lessee ...". Clearly, the collective agreement and the Labor R elations Act are considered as non

- existent "abrogated" by this contract in allowing the recruitment and the establishment of terms and conditions of employment, between Aerostar and the employee, unilaterally obviating the existence of its exclusive Repre sentative. Through this individual recruitment of Ports Authority employees, the parts of the Lease Agreement, the Ports Authority, and Aerostar, ignore and violate the labor obligations in effect regarding exclusive representation and the clear mandate o f the collective agreement in its Article 1 of recognition of the Union. The superficial mention of the obligation that the contract will not abrogate any collective agreement is in clear contradiction with the reality and the specific dispositions of it. In the same way, it is obvious that this contract violates labor laws that have guaranteed the rights of the Puerto Rican workers for decades. The legal norm is clear and points out that the Federal Aviation Administration must guarantee that the terms and conditions of the Lease Agreement comply with the requirements of law and its regulation. . In the discussion regarding Section 47134 of the Title 49 of the U.S. Code, carried out by the Federal Aviation Administration about the Applicative Procedures of the Airport Privatization Pilot Program where the document 28895 points out that the FAA: “would expect as a part of submitting the exemption application, the issues raises by labor should be the basis for discussion between the private operator”. In the current recruitment, the discussion or scheduled dialog was not only not done, but the Lease Agreement does notUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. comply with the applicable parameters of law and regulatory that prohibits the invalidation of the existent collective agreement between H.E .O. and the Ports Authority either. In light of the aforementioned, and due to the reasons hereby set forth, this Final Application that would allow the transfer of the Luis Muñoz Marín airport facilities must be rejected by the Federal
Aviation Administr ation. Everything that I have stated here about the presentation, what I did was summarize everything, in the presentation that I will give you is everything complete, obviously I made in Spanish so that all of you can understand the powerlessness that I, as a union leader, the people that I represent and part of the Puerto Rican people have felt when the Final Report hasn’t been published in Spanish. Thank you. Good day.

Randall Fiertz: Thank you very much. Ok, I think we’re ready to continue. Twenty six, please.

Armando Montero González: Good morning to all. I am Armando Montero Gonzalez, Principal of an elementary school close to where we are today. I
also live in front of the Isla Verde International Airport. I represent around 14,000 gener al employees of the Puerto Rico government. The Federation of Associations of management employees of the Commonwealth was created to promote the social progress, economic and general wellbeing of Puerto Rico. Another objective of our organization is to p romote the efficiency in the essential services to our town and adv ocate for government and management practices of genuine democratic spirit that favor the free exchange of ideas and allow citizens, through the general employment, a fair opportunity to de velop their creativity and potential as a country and as citizens. The Executive Branch of Government urged andUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. created the Authority for the Public Private Alliance of Puerto Rico to, supposedly, promote a continued collaboration between the public secti on and the private section. Through this law, it is intended to offer a high quality service, and I emphasize the word intend, for the Puerto Ricans that live on the island; and in the case of the Luis Munoz Marin Airport, the visitors that come in and out to the Country. The Federation and other private labor and community sectors stated that this law would affect the country ’s econ omy because it promoted : first
, dismissal of public employees and the enrichment of the private sector. We testify before this
committee that for management employees of the Puerto Rico government
, the data, statistics, studies and general radiography
, ev erything about this
transaction does not have credibility. Nor do we trust the candidate selection process for the airport administration; nor the genuine interest
and commitment of this entrepreneur with our Puerto Rican people . This
data
, for that parti cular issue were mentioned by the Representative Jaime Perello. The Government Executive Branch, in attempt to justify this bad so
call ed alliance, manifested that our country has weaken ed as a touristic destination, we heard it a little while ago from out resident commissioner, and that our government doesn’t have the ability to manage the Luis Munoz Marin Airport. The federation wants to establish that the only people responsible for this occurred deterioration is the Government of Puerto Rico, and we are partly responsible, with their lack of vision, carelessness and private interest and mainly because of the intrusion partisan politics.
With these actions
, the labor sections , both union and general, has not been permitted to effectively participate in th e process and in the decision making related to the public administration. The Law of Public

- Private Partnership pursues to establish the government political public to supportUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. alliances under a clear, transparent, agile and flexible legal scheme. This
tra nsaction does not meet any of these criteria’s. It may be legal but it is not fair, clear nor transparent; on the contrary, it has been organized in dark
rooms and behind the townspeople’s and employees affected through this
transaction’s back . We must acknowledge that it has been agile, yes, very agile, that have been utilized to transfer the infrastructure, the one already constructed by the people of Puerto Rico
, in exchange for a diminished
income that doesn’t fix the government 's critical fiscal sit uation . In regards to the flexibility of the proposed transaction in the law, we must inform that the process has been hasty, uncounseled and responds solely to the interest of the government administration to please the solicitor, by
economic interest and political parties. We, The Federation of Managerial Employees, are convinced that Puerto Rico does it better, that we have the capability to understand the importance and defend the democratic values that the constitution guarantees us. We would like to e xpress our rejection
, to this process, the little information presented, the lack of beneficial guarantees to the services of citizenship and the instability of the employees affected by this alliance. We are vigilant before the evaluation of
this commissi on. We trust that in the coming days and in the final determination by you reflect the importance this has for the people of Puerto Rico. We are at your disposition before any eventuality. Now we are one movement and together we do it better, that is our slogan. Reflection, prudence, in Puerto Rico many of these decisions are managed during an electoral year primarily coming close to a plebiscitary process and all of this could be affecting the future, inclusive the relationship
between Puerto Rico and the Unites States. So I request above all that, much prudence in the making of this decision. Have a good afternoon.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Randall Fiertz: Thank you very much.

Alfonso Fernández: Good morning. Good morning to FAA staff and other federal agencies present. My name is Alfonso Fernández; I’m President and shareholder of IVYPORT Logistical Services, Inc., a company in the
aviation business and a concessionaire at Luis Muñoz Internati onal Airport, since I997. IVYPORT is a I00% minority owned, I00% Hispanic, and 50% women owned. Accompanying me this morning is Mrs. María de Los Angeles Navas, Executive Vice President and shareholder of IVYPORT,
and our counsel Mr. Luis Mifiana. We are h ere today as small hard working business owners, not opposed and supportive of the privatization effort. Nevertheless, we are been steamrolled and our rights have been trampled by the way the process has been handled. Apart from my role at IVYPORT, I have been involved in the aviation industry from the late I980's in various capacities including acting as counsel, investment banker in aviation related financings and acquisitions, lecturer in Aviation Law and Airline Management at Interamerican University S chool of Management. In addition I’m a yearly contributor to Ground Handling International a British based Magazine on matters of Caribbean aviation businesses. I have
included for the record a small b io

- sketch. Pursuant to the FAA 's review of
the final application, we formally request that the FAA includes measures that make approval of the application contingent on adequately addressing issues regarding IVYPORT at the Luis Muñoz Marín International Airport, whose substantial proprietary interests are to acquired by the Government of Puerto Rico, for the benefit of the winning bidder. All of this, as a part of the privatizatio n plan. Specifically, IVYPORT' s real property interests and operational authorities are subject to an expropriation proceeding in itiatedUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. by the local Government. As of this date of this Public Meeting, IVYPORT has not been notified, nor communicated, as to how the Government intends to value and compensate our business. As you know, this process has been underway for several years and is a top priority for Puerto Rico and its Public Private Partnership Authority. The transfer of property and operating funds has been scheduled for December 20I2. Please note that IVYPORT supports the privatization of the airport; but we are concern ed of the lack of communication regarding payment for our interests and the possibility of an unjust taking by this action. As a program that has been undertaken pursuant of an act of Congress, it is important that the transaction goes forward since it se rves an important public purpose. However, the FAA, in its review should make clear to the PPA that the rights of private entities, who have made considerable monetary investments, be respected and adequately compensated before the
transaction valued at ov er 2.6 billion dol lars is finalized. In IVYPORT' s case the amount of 10 million dollars was paid for the acquisition of operational authority and non competition rights to conduct various aviation related business at LMM in I997. We request that the FAA be diligent and act swiftly in contacting the PPA, requesting detailed clarification of its plans as part of the public comment process on its intentions with respect to IVYPORT interests, which are to be transferred to Aerostar Airport Holdings. It is ou r understanding, that leases such as those of IVYPORT have already been included in the concession as stated in page 3I of the Partnership Report for the procurement to acquire, lease, finance, operate, maintain and operate Luis Muñoz Marín International A irport, dated July 20I2. These actions appear to be in contravention of various sections of the Pilot Privatization statute and the FAA grant assu rances. Specifically, ofUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. 49 U.S. C . Sec. 401 03(e) and FAA grant assurance No. 23, that states without compensa tion to the affected business by the de facto act of excluding a potential competitor in the ground handling business. In addition, the Lease Agreement may run afoul of FAA grant assurance No. 22, to the extent that the actions of the owner of a public

- us e and public funded airport result is discrimination to airport business if the state government continues its actions without prompt compensation. For the record, we are including a summary of key points and events, which I will discuss briefly regarding IVYPORT's claims, which should provide the FAA with pertinent information. In I997, IVYPORT, formerly Swissport Puerto Rico, Inc., leased from Caribbean Airport Facilities the operating authority, various rights including exclusivity and non competition for ground handling, terminal, and ramp services in a lan d area of 90.757 acres at LMM, e xpiring in 2028. On March 26, I998 IVYPORT paid 10 million dollars for those rights, which were recorded at the Registry of Property of Puerto Rico, and which is equi valent to a lien. On December 22, 2009 the
Puerto Rico Public

- Private Authority applied for inclusion of LMM in the FAA Privatization Program. More importantly, on December 28, 20II eminent domain proceedings, expropriations, were filed by the Commonwea lth of Puerto Rico depositing 25 million dollars in Stat e Court,
that included IVYPORT' s rights, and in which case IVYPORT promptly intervened. On March I5, 20I2 the Commonwealth filed a motion to desist from its eminent domain proceedings, said motion wa s denied, because the presiding judge ruled that expropriation had occurred as a matter of law when moneys were deposited in Court.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. Randall Fiertz: Sir, you need to finish up, please. We’re out of time. Thank you.

Alfonso Fernández: Basically, my con cluding my concluding remarks is we would like the following action. The FAA should request the state government to clarify and submit compensation plans for our business being affected by the privatization process. IVYPORT proprietary interests
have alr eady been severely affected by this process. We appreciate your attention and your presence this morning to review this very important matter and we request you give your highest consideration in your evaluation of the international airport PPA applicatio n and promptly notify the Puerto Rican government and the PPA of our strong concern. Thank
you.

Randall Fiertz: Thank you very much.
Benjamín Acosta Badke: Good morning to the Federal Panel and all of the participants and attendees of this public meeting. My name is Benjamin Acosta Badke and I am the Property Development and Marketing Director for the Luis Muñoz Marín International Airport. As such, I have been tasked with managing the commercial contracts of this airport. I have occupied this position since 20I0 and it has been an experience, my first government experience ever. When I started back in 2010, I encountered a department that was in need of immediate attendance, assistance in its development and market driven relations. As many of us know the Luis Muñoz Marín International Airport needs and deserves an improved market drive, one that benefits the airport and its passengers, as well as the
pr ivate entities which operate within. As the Property Development andUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Marketing Director I have been challenged with securing the commercial developments for the airport and managing all of the existing arrangements. In dealing with this challenge, I have encountered many obstacles that I’ve been able, and have been able to identify flaws in the... Forgive me ... I’ve been able to determine many flaws ... Public speaking isn’t my thing please forgive me, and the things I wrote here were from my heart so I really do want to get them out to you.

Randall Fiertz : Ok.
Benjamín Acosta: This challenge, I’ve encountered many obstacles and I’ve been able to identify many flaws in the historical process which have driven the airport its current condition. Some of the most daunting challenges include the granting of contracts that are of ab solutely no benefit to the Airport. Contracts that I would argue were wrongfully granted, and include clauses that do not make any sense to the airport or the government of Puerto Rico. These include contracts that were granted for excessive periods of t ime, with no apparent compensation to the Airport, the government or anybody else. Abusive contracts with such vague clauses and stipulations that have landed the Ports Authority in repeated litigations resulting in mounting litigation costs. What I need as Property Development and Marketing Director is to move forward eliminating obstacles. To move forward to a plan that allows for effective data analysis and for the availability of more resources and efficiency. We need to take politics out of the equ ation. Removing politics will result in more beneficial agreements with the Luis Muñoz Marín International Airport and its concessionaires. Most importantly, the Luis Muñoz Marín International Airport needs the ability to be able to implement a marketing andUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. development plan that has continuity. I thank you for the opportunity granted to me today.

Randall Fiertz: Thank you very much.

Kevi n Costello: Good morning. Thank you for the opportunity to address the Panel today. My name is Kevin Costello. I serve currently as the Director of Properties and Airport Affairs for JetBlue Airways. In this role, I am responsible for the corporate relationships for all the Airport operators throughout our network of 76 airports in the United States, Caribbean, Latin and South America. In this role, I've had the opportunity to participate in numerous Airline Airport Affairs Committees (or AAAC) throughout that

n etwork, including Luis Muñoz Marín International Airport. I’ve also had the privilege to also serve as chairman of the Airport Affairs Committee at Luis Muñoz Marín International Airport, as selected by my peers at the other airlines servicing San Juan. In that role as chairperson, I am here to voice the San Juan AAAC's strong support for completing this public private partnership transaction, and I offer three points to the Panel and for the public for consideration.

1. T he Process . The Puerto Rican Port s Authority and the Public Private Partnership Authority have conducted a transparent, collaborative and fair process in selecting their preferred bidder. The Airlines believe the most important aspect of the process has been the PRPA and P3's recognition of the role the airlines play in the process, and afforded the airlines a meaningful seat at the table.
2. Public I nterest . A lot of time was dedicated within the process of crafting a transaction that would provide significant improvements toUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Luis Muñoz Marín International Airport. This transaction will deliver significant capital improvements that are needed for the airport to compete in the Caribbean. The transaction calls for the operator to be held to a high operating standard, which will improve th e customer experience. All of this will be accomplished, while keeping airline rates and charges lower than they are today, thanks to the efficiencies a public private partnership can deliver. With lower costs, airlines servicing Luis Muñoz Marín Interna tional Airport, can further invest in air service to Puerto Rico. Such investments and opportunities for growth will only reinforce LMM as a driver in economic development in Puerto Rico.
3. Aerostar

. Aerostar, a joint venture between ASUR and Highstar Capi tal, has quickly engaged the airlines on their development and operational plans in a truly collaborative process. The airlines embrace this opportunity, and if the FAA grants a favorable decision, look forward to that partnership Aerostar is developing w ith the air carriers. ASUR, the operator at Cancún, Mexico, is well known to the members of the San Juan’s Airport, Airline

- Airport Affairs Committee. Cancún is consistently honored as the best airport in customer
satisfaction in Latin American and Caribb ean, by Airport Council International. It is not a coincident that Cancún Airport has grown in passengers, destinations serviced and airlines operating in Cancún, under ASUR's stewardship. This all speaks volumes of the potential
Aerostar can deliver to Luis Muñoz Marín International Airport.
The air carriers servicing LMM airport support this public private partnership. Given the challenging circumstances that faced theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. aviation community at LMM, the San Juan’s AAAC firmly believes that public private partnership of this airport at this time is the best path forward to ensure a vibrant and thriving Luis Muñoz Marín International Airport for Puerto Rico and its citizens. Thank you for the opportunity to address the panel today.

Randall Fiertz: Thank you.
Pablo Figueroa: Good morning ladies and gentlemen. My name is Pablo Figueroa; I’m the President of The Puerto Rico Chamber of Commerce.
The Puerto Rico Chamber of C ommerce is a non

- profit organization established in 1913 that will celebrate its 100th anniversary this coming year. It is the most inclusive multi

- sector organization in Puerto Rico and it has traditionally been the sounding board and platform for enhanc ing and promoting all private business activity in Puerto Rico. The Puerto Rico
Chamber’s mission is to advocate in favor of its 1265 constituents at all levels, including the preparation of those norms that guide and facilitate business opportunities that will support the socioeconomic development of Puerto Rico with the purpose of creating sustainable socio

- economic conditions that enhance its competitiveness. It also helps to foster the optimal climate for doing business, to facilitate the creation and expansion of local industries, to attract Foreign Direct Investment like the Luis Muñoz Marín International Airport PPP initiative, to develop also and increase Puerto Rico’s export capacity, to assist in the development of the Island’s manufacturing base, in the strengthening of our retail and wholesale base, in the expansion of the technical and professional services sector and in the augmentation of any other comparative and competitive advantage that will support the socioeconomic development of Puerto Rico; all with theUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. purpose of fostering the sustainable socio

- economic conditions that will create jobs, wealth, a robust and vibrant economy, socioeconomic mobility and quality of life for all our citizens. In the past two decades, jurisdictions and gove rnments around the world have turned to the private sector to help them face the daunting challenges that pose a complex and uncertain global economy. This uncertainty has resulted in governments with limited resources and little financial leeway to develo p and maintain vital infrastructure. As such, developed economies have not only allowed, but also fostered and welcomed, private business participation in the management and operation of airports as a mechanism to enhance
customer service while simultaneo usly effectively and efficiently managing the business and financial challenges of its operations. LMIA is Puerto Rico’s main air cargo hub. It is well known that the LMIA facility requires substantial infrastructure improvements in order to:
1. To develop a nd promote Puerto Rico as an international hub and transportation center with world class air services.
2. To effectively compete in the international business trade.
3. To increase airline availability and stimulate the local economy activity
within Puerto Ri co 4. To improve passenger and cargo movement and tourism to and from
the Island.
It is also well known that in order to be able to achieve the above described plans, the LMIA requires a large capital investment that our Government is not in the financial p osition to implement, on its own. Therefore, the P3 mechanism provides the win

- win arrangement that will limit or eliminate the financial exposure of the Government. Such structure
will allow the transfer of investment and risk from the Government toUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. Aero star, as its private lessee and operator. Such transfer will be channeled through an optimal contract were both thresholds, guarantee of minimum income within low market demand and a top maximum of income within high market demand which converge optimally in the intermediate demand contract. As such, Aerostar has demonstrated strong management capabilities and sound financial resources to enhance the LMIA’s operations, to generate revenues and to comply with Puerto Rico’s employment goals. The proposed P PP will have a substantial economic impact for the Island’s economy during the initial ten years of the concession agreement. The remodeling and new construction at the LMIA, as well as the significant increase in passenger movement, will
benefit local bu sinesses through the new employment, commercial activity, capital investment, technology transfer and other competitive opportunities for a wide array of international airlines that are keen in entering the Caribbean and Latin American air traffic through Puerto Rico. This in turn, will increase tax revenues over the contract period. The Chamber of
Commerce understands that there are four main factors to consider in the FAA’s evaluation of the LMMIA P3. They are:
1. During the first 3 years of operation Aero star is committed to invest over $1.6 billion for immediate and permanent improvements, including jet bridges, terminal redevelopments, etcetera.
2. Aerostar’s operational plan will result a significant increase in passenger movement.
3. A new governance structure focused on transfer of knowledge and investment in human resource development will yield a more productive, innovative, entrepreneurial work force with augmentedUnedited Version Transcription and Translation by Smile Again Learning Center, Corp. attributes, skills and competencies that will undoubtedly result in improved job conditions and wealth for our work force.
The Chamber of Commerce trusts that our comments will provide useful
information to the Federal Aviation Administration in determin ing the feasibility of this important project. Thank you very much.

Randall Fiertz: Thank you. Do we have a number thirty? Next speaker? Thirty one? Anybody before thirty one, or any ...? Thirty two? Thirty Three? Thirty four? Thirty five? We’re just g oing to wait a moment to see if there is anybody outside who wants too ... Please, just wait a moment we’re just gonna see if there’s anybody outside who should be speaking.
So we will reconvene at 1:00?

Carlee Cellar : 1:30

Randall Fiertz: Reconvene at 1:30?

Carlee Cellar : Everybody, you all have cards so while you’re in the room please put your name on the card if you intend to come back in the afternoon. That way you’ll drop your card off out here in the desk and you’ll have to pick it up when you co me back. Thank you very much.
(11:42am)

CERTIFICATE OF REPORTER
I, Aledawi Figueroa, from Smile Again Learning Center, Corp., CERTIFY: That the above is a true and correct transcript of the recording made during the meeting held at the place and date indicated on page one of this transcript.Unedited Version Transcription and Translation by Smile Again Learning Center, Corp. I also certify that I have no interest in the outcome of this matter and I have no relationship to any degree of consanguinity with the parties involved in it. In Isabela, Puerto Rico, October 11, 2012.

Aledawi Figueroa Martínez Smile Again Learning Center, Corp. (787)872

- 5151 / (787)225

- 6332 widy.figueroa@gmail.com www.smileagainpr.com