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FEDERAL AVIATION ADMINISTRATION

AIRPORT PRIVATIZATION PILOT PROGRAM PERMIT

SAN JUAN, PUERTO RICO

DATE: SEPTEMBER 28th, 2012, 8:00am-6:00pm

PLACE: VERDANZA HOTEL

ISLA VERDE, PUERTO RICO

ENGLISH VERSION OF MORNING SESSION

Chairman: RANDALL FIERTZ

Transcription: Aledawi Figueroa Martínez
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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-------------------------------------------------------------------------89
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(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 depending 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 you 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 sale 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 innovative 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 operation 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 or the pending 

agency decision at this time. I’d like to introduce the members of the panel; 
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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 Advisor 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 for 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 to 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 publicuse 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 Administration’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 any 
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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 federal 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 operation 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 airport. 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 impacts 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 airport 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 must 
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find that the approval of the application will not result 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 capability 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 caseby-case basis. If the exemption is issued approving the transfer 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 airport 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 Airport 

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 assure 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 compliance 

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 be conducted under 49 CFR Part 16, Rules 

of Practice for Federally Assisted Airport Enforcement Proceedings. FAA 
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also retains its authority to revoke any exemption should the private 

operator violate any of the nine statutory conditions. When the FAA is 

satisfied 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 public-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 speak 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 break 
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between about noon and 1:30, that’s the plan anyway. Once recognized 

and before beginning comments we ask that each speaker come forward 

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 

reporter 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, please 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 extra 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 be 
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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 

written 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 Department 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, please. 

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 Marín 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 Rico. 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 elected 
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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 win-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 and 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 investments. 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 Kingdom’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 the 
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security wait times 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 company 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 jobs. 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 competitive 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. 
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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 English, 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 the 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 

development 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 ago, 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 

prevails 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 airports from over 170 countries in the 

world. 13 years ago we were at the point where we are here today in San 
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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 

dedication, 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 is the essential difference. Our Latin 

heritage will give us the strength to change and transform the airport for the 

sake of a better future. ASUR's commitment will be the safety and security 

of the facilities, their passengers and all who collaborate in the 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 of 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, values 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, which 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, officers, 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.
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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 milestone in the publicprivate 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 of 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 humbly 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 your 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 signed 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 carry 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 ASUR. AZUR Before I joined, 
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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 all 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 closing, 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 payers. 

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 come. 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 local 
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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 for the long-term economic development of Puerto 

Rico, the place where the United States becomes a Caribbean nation. The 

proposed lease is essential in strengthening the United States' leadership 

role in the Caribbean, improves our competitiveness and 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 realized 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 competitive, 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 

educational services, among others. A large part of the future growth of 

this sector resides in exporting services. Increased connectivity is critical in 

delivering services to the rest of the Caribbean, 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 that will be 
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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 competitiveness. As 

an Island, not only the connectivity provided by our main airport is 

important in order to be competitive, but also the quality, costs and 

efficiency of developing and managing our airport. The proposed long-term 

lease will be a major driver of competitiveness for Puerto Rico. Not only are 

there strong incentives for improving connectivity but also there will be a 

robust capital improvement program, and a disciplined commercial program 

to ensure world-class services to 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 proposed structure is that costs per passengers will decline 

as passenger volume increases, effectively making Puerto Rico a more 

competitive destination for all passengers. Good transportation logistics is 

critical for enhancing competitiveness. More than ever, Puerto Rico needs 

to be well connected to the rest of the world. Presently, we have a welldeveloped 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. 
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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 Rivera 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 

island, 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 tourists 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 to 

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 business 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, we 
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were to increase traveler visits by 10%, it would represent 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 operations 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 airport 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 in 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 facilities, 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 reestablish 
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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 and 

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 the 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 terminals, 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 out 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 interest. 

Thank you very much. 

Randall Fiertz: Thank you. 
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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 Authority. 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 Board 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 transaction 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 people 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 

transparency 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 long-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 documents 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 our 
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competitors in the region and worldwide have already taken 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 allowing 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 credit, 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 Government 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 network 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 remaining 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 airport 
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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 for 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, engineers, 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 

clause concerning the regional airports. Among the four objectives the 
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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 system. 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 of 

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 regional 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 the 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 approved 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 Ports Authority capacity and 
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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 consumer 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 business 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 

so 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 opportunity 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 

Caribbean Airport Facilities. I would like to thank the FAA and the 
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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 to 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 Superior 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, offices, 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 into 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 rent 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 much 
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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 substantial 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 PRPA 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 the 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 how 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 and 
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baggage check in, passenger boarding handicap assistance, etc. We also 

have the right to provide 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 within 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 August 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 these 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 qualified 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 

interfered 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 need 
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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 on 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. In 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 the 
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right to participate in an Executive Committee that will be established for 

the review of the ongoing 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 the 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 collective 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 voluntary 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 

reduction 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, increase 
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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 regional 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. 
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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 International 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 

Rico, 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 Airport and provide inflight 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 the 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. 
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I was born and raised and raised in Puerto Rico, and here is where I’ve 

raised my two children. As a Puerto Rican 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 Authority:

 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, announced 

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 Commercial Entities that 

also operate in these terminals.
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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, where 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 

haven’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 

essential 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. 
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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 of 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 witnessed 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 small 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 understand 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 speak 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 were 

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 a 
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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 take 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 inherent 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 bureaucracy 

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 seek 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 selection 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 in 
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their support of this agreement. As a former airline manager, I can attest 

that growth, 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 employees, 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 Marín 

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 three 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 as 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 electrical systems 

and Wi-Fi access; water leaks in all terminals; new air conditioning 
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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 day 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 demand. 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 will 
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limit our ability to implement this airport 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 

the 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 number 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 represent, 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 great 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 airlines, 

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. Globalization and economic interdependence make it 

imperative that we have a modern, updated and improved international 
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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 appreciate 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 objectives 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 initiative. 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 the 
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community a sustainable project will develop. The project’s impact will be 

significant 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 ecotourism, entertainment, 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 in 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 Puerto 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 complements the development of the José Aponte de la Torre 
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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 Partnership 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 hinder 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 and 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 attendants 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 an 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 out of 

every ten passengers coming into Puerto Rico and processes over 80% of 
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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 long-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 airport 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 Authority 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 comprehensive 
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plan is based on a combination of measures such as enhancing the 

monitory of federal and other funding opportunities, supporting 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 acceptable 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 incentivize 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 income 

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 road. This 

makes us believe that Puerto Rico could very well profit from having a 

world-class airport, besides 3 commercial airports and 3 general aviation 
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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 is 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 

presenting 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 the 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 

government of Puerto Rico recognizes that air access is a critical 
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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 International 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 for Puerto Rico. Puerto Rico 

has scaled up 4 notches, to the 31st 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 

competitive 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, we 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 understand 
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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 significant 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, jobs 

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 invest 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 Airport 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 

States and to international destinations, especially in Latin America, Europe 

and in the Caribbean. The economic impact of increase volume, of the 
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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 injection 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 Puerto 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 to 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 

connectivity 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 the 
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economic development of Puerto 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 of 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 transaction. 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 through the life of the proposed contract, will 
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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 general 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 value 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 of the operation of 

the Luis Muñoz 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 remove current debt from Luis Muñoz 

Marín’s books so that it may transfer the 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 with 
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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 of passenger flights on Luis Muñoz 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 concentrate those flights in Luis Muñoz 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 passenger traffic in the 

Luis Muñoz Marín Airport. There are also ongoing legal suits to try to throw 

out of their leases tenants in the Isla Grande Airport, which is an airport 

which is very close to the Luis Muñoz 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 the 

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 has 
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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 

starts on January 2, 2013. The mere possibility of an outgoing 

administration making a forty year commitment on our most important 

airport facility on its last very days 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 responsibility 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

management 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 also 
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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 tourists that visit us, from which we benefit. Anything that is 

done and that threatens our 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 improvement 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 Force in the areas of Air Transportation, 

dispatcher for cargo planes, as a Fixed-Based Operator (FBO) and as an 
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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 today 

limits their development. This is because most of the decisions are made 

based on political conveniences and not on the short and long term 

necessities and benefits of the airport. 

For example, personnel without the required skills in aviation are 

contracted 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 Aviation 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 optimal level. For the first time in Puerto Rico we will have as a 

partner in the aviation industry a business expert in innovation and 
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development in all areas of the operation of an airport that seeks to grow 

together with their human capital and believes that 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, so 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 measures 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 importance 

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 opposed to this 

transaction, but due to time constrains I will limit my presentation to some 
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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 

Cancún, 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 tourist 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 million 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; What 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? The same funds 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 are 
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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 policy 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 regional 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 regions 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 final 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 airlines. And with this I 

conclude... This contrasts with the economic strategies that as recently 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 of 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 is 
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not approved, because it is not beneficial neither 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 the 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 evaluate 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 evaluated 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 survive 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 is 
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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 to 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 points 

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 there 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 better for 

Puerto Rico. There is also some issues regarding environmental liabilities 

that the Puerto Rico Ports Authority are, is not ... is keeping after this. 

Puerto Rico Ports Authority in documents that are filed within the final 

application admits that the way they handle the environmental liabilities 

today is through charging the airlines. But now, what is going when the 
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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 geared 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 moving 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 

have 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 allowing 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 the 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?
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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 Representatives 

since 2001. First of all, I would like to thank the Federal Agency 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 from people with no good interest 

for Puerto Rico in mind, requested that these hearings be 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. During the 

last two years, I have pointed out several irregularities and conflict of 

interests in the process 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, 
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which is why we strongly oppose. 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 obligated to close most of its remaining operations. Still, even if the 

Port Authority could survive 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 in my district. The proposed lease penalizes 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 matter 

of time until these airports become totally non-viable. You don’t believe me, 

nor 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 damage arising

from the operation, for decades, from a fuel distribution system on the 

airport grounds. The government of Puerto Rico is exposed through this 
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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 drug 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 Treasury 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

have 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 morning 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 the 
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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 economic 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 corners 

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 airports? 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 airport 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 guarantee, 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 that the lease will not 

affect us and how this would affect the cost of living of the Puerto Rican 
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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 traveling 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 Airport 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 Ports 
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Authority 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 comprehensive 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 in 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 addition, 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 enactment 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 Rico 
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Ports Authority, and the questions surrounding the capacity 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 International 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 routes, 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 

infrastructure, 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 strive to provide, a worldclass airport that meets the highest safety standards, features modern 

amenities, 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 significant 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 Authority 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 step in 
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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 increase 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 at 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 

of 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 million 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 130 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 obtained 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 to 
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make improvements to the airport. As a February 2011 report by the 

Government Accountability 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 improvements 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 Trust 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 program 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 

economic 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 United 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 international destinations in 

Europe, Canada, and Latin America, which would boost trade and tourism 
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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 Caribbean, 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 enhance 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 Airport 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 constituents. 

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 and 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. Two quick things 

before Ms. Rosario begins. First of all, thank you very much for letting the 
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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 Ortíz: 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 

Article 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 amended, 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 protection 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 Muñoz 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 points out as a mandatory subject of collective bargaining the 

subcontracting of the labor of the Hiring Unit. In other words, the Hiring 
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Unit's work represented by the Union cannot be subcontracted without 

having negotiated said subcontract with the Union that 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 Ports Authority 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 the 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 meeting, if it can be called a meeting, we 

have had with the company Aerostar's representatives. We have obtained 

all 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. The 
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requirements that must be complied with are found in Section 47134, 

specifically Section 47134. Regarding the collective agreements 

specifically Section 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 covers 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 publicly 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 to 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 collective 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 make the notice 
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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 from 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 to 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 labor 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 union 

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 collective 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 the 

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 agreement 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 and 
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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 Relations 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 

Representative. 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 of 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 not 
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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 Administration. 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 general 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 promote the 

efficiency in the essential services to our town and advocate 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 develop their creativity and potential as a 

country and as citizens. The Executive Branch of Government urged and 
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created the Authority for the Public Private Alliance of Puerto Rico to, 

supposedly, promote a continued collaboration between the public section 

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 economy 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, everything 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 particular issue were mentioned by the Representative Jaime 

Perello. The Government Executive Branch, in attempt to justify this bad so 

called alliance, manifested that our country has weakened 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 the 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 support 
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alliances under a clear, transparent, agile and flexible legal scheme. This 

transaction 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 situation. 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 express 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 commission. 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. 
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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 International 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 here 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 School 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 bio-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 privatization plan. Specifically, IVYPORT's real property interests and 

operational authorities are subject to an expropriation proceeding initiated 
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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 concerned 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 serves 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 over 2.6 billion dollars 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 our 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 Airport, dated July 

20I2. These actions appear to be in contravention of various sections of 

the Pilot Privatization statute and the FAA grant assurances. Specifically, of 
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49 U.S.C. Sec. 40103(e) and FAA grant assurance No. 23, that states 

without compensation 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-use 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 land area of 90.757 acres at 

LMM, expiring 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 equivalent 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 

Commonwealth of Puerto Rico depositing 25 million dollars in State 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 was denied, because the 

presiding judge ruled that expropriation had occurred as a matter of law 

when moneys were deposited in Court. 
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Randall Fiertz: Sir, you need to finish up, please. We’re out of time. 

Thank you. 

Alfonso Fernández: Basically, my concluding 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 already 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 application 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 

private entities which operate within. As the Property Development and 
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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 absolutely 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 time, 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 equation. 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 and 
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development plan that has continuity. I thank you for the opportunity 

granted to me today. 

Randall Fiertz: Thank you very much. 

Kevin 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 

network, 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. The Process. The Puerto Rican Ports 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 Interest. A lot of time was dedicated within the process of 

crafting a transaction that would provide significant improvements to 
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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 the 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 International 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 

Capital, 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 with 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 Caribbean, 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 the 
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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 Commerce 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 enhancing 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 the 
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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 governments 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 develop 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 simultaneously 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 and 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 Rico 

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 position 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 to 
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Aerostar, 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 PPP 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 businesses 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 Aerostar 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 augmented
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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 determining 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 going 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 come 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.
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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