1 FEDERAL AVIATION ADMINISTRATION

AIRPORT PRIVATIZATION PILOT PROGRAM PERMIT

SAN JUAN, PUERTO RICO

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

- 6:00pm

PLACE: VERDANZA HOTEL ISLA VERDE, PUERTO RICO

Chairman: RANDALL FERTZ Transcription: Aledawi Figueroa M a r t í n e z2

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

-------------------------------- -------------------------------- ----- 64 Pedro Pierluisi

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

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

-------------------------------- --------------------- 77 Alfonso Fernández

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

-------------------------------- -------------------------- 83 Kevin Costello

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

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

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

-------------------------------- -------------------------------- --------- 893

(8:01am)

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

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

- own operators. The law may be found in the US code 49 USC Section 47134. The objective of the program is to determine if private investment and capital can be attracted to airport development through innova tive financial arrangements. The administrator may grant exemptions from certain federal statutory and regulatory requirements for up to ten airports to encourage privatization on a limited number of airports as a test of the benefits of private sector op eration of airports. The purpose of this meeting is to solicit public comment on the final application. Because the final application is presently before the Federal Aviation Administration for a decision, we will not be able to discuss the application o r the pending agency decision at this time. I’d like to introduce the members of the panel;4

to my immediate left is James Cole, Deputy General Counsel Office of the General Counsel Department of Transportation. On my right is Elizabeth Newman, Attorney A dvisor Office of the Chief Counsel FAA. On her right is Nancy Kessler, Office of Assistant General Counsel for Environmental Civil Rights and General Law Department of Transportation and on the far left is Mr. José Baquero the Federal Security Director fo r Luis Muñoz Marín International Airport Transportation Security Administration Department of Home Land Security. We also have Mr. Kevin Willis standing, he is Manager Airport Compliance Division at FAA and Kevin will be filling in if anyone of us needs t o step off the panel for a moment to ensure that we have a full participation. My name is Randy Fiertz and Director of the Office of Airport Compliance and Management Analysis at FAA and I will serve as the chairperson of this meeting. And at this time I ’d like to call on Elizabeth Newman, the FAA Attorney Advisor for the FAA to provide a brief description of the program.

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

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

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

-- to retain and use proceeds from the sale or lease of the airport for other than airport purposes, to grant an exemption to the public sponsor to waive any5

obligation of the public sponsor to repay grant funds, and grant an exemption to the purchaser or lessee from the revenue use requirements to permit the private operator to earn compensation from the operation of the airport. The private operator is subject to all fede ral requirements and obligations currently imposed on the exiting public owner and must continue to operate the airport as a public use airport. Private operator must demonstrate how they will comply with nine statutory conditions
outlined in the statute to the satisfaction of the Secretary. The nine
conditions must also be included in the lease. These conditions are: The airport will continue to be available for public use on reasonable terms and conditions and without unjust discrimination. The operat ion of the airport will not be interrupted in the event of a private operator’s financial difficulty, insolvency or bankruptcy. The private operator will maintain, improve, and modernize the airport facilities through capital investments and will maintain a capital improvement plan for carrying out airport maintenance, improvements and modernization. Charges to air carriers will not increase faster than the rate of inflation unless a higher amount is approved by 65 percent of the air carriers using the air port. Fee increases for general aviation aircraft owners will not exceed those imposed on air carriers. The private operator will maintain safety and security at the airport at the highest possible levels. The private operator will mitigate noise impact s to the same extent as at a public airport. The private operator will mitigate adverse environmental impacts to the same extent as at a public airport. The transaction will not abrogate by sale or lease any collective bargaining agreement that covers ai rport employees and is in effect on the date of the sale or lease of the airport. FAA must also ensure that the interests of general aviation users of the airport are not adversely affected, and must6

find that the approval of the application will not resu lt in unfair and deceptive practices or unfair methods of competition. As a part of the application process, the private operator must provide a description of its financial resources for operating the airport, its airport management experience, and its c apability of complying with the public sponsor’s existing grant assurances. FAA will review a private operator’s request to be the exclusive provider of commercial aeronautical services on a case

by

- case basis. If the exemption is issued approving the t ransfer of the airport to private control, the private operator must file annual financial statements with the FAA. Federal Regulations require commercial service airports having passenger service to apply for and comply with the requirements for an airpo rt security program from the Transportation Security Administration and an airport operating certificate from the FAA. Private operators leasing airports serving air carriers can apply to collect Passenger Facility Charges and will continue to receive Air port Improvement Program entitlement funds at the 75% rate in accordance with 49 USC 47109(a)(1); however, AIP discretionary funds for all airports in the pilot program are reduced to 70 percent Federal participation in accordance with 47109(a)(4). To as sure that the statutory requirements will be met, FAA requires the sale or lease agreements to include provisions explicitly granting third party beneficiary rights to the FAA. The third party beneficiary rights grant the FAA the right to enforce complian ce with the grant assurances directly against the private operator. As the operator of a federally obligated airport, the private operator as sponsor is obligated to the requirements of the FAA’s Airport Compliance Program. Any enforcement action would b e conducted under 49 CFR Part 16, Rules of Practice for Federally Assisted Airport Enforcement Proceedings. FAA7

also retains its authority to revoke any exemption should the private operator violate any of the nine statutory conditions. When the FAA is

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

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

Randall Fiertz : All right. Thank you, Beth. Now just gonna quickly go through some of the meeting procedures. Anybody who wishes to speak

ne eds 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 etc etera. 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
between ab out noon and 1:30, that’s the plan anyway. Once recognized and before beginning comments we ask that each speaker come forward8

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 l ike 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 fo r 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 plac ed 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 amoun t 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 sp eaker 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 particula r 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 engaged in a debate, it’s just we’re here to listen to comments, concerns, support, for the propose tr ansaction and to receive information from you. In9

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 b y 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 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,10

Aerostar, and most importantly the traveling public. The PRPA will r eceive 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 airpor ts, 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
ai rport 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 wante d 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 th e 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 improve ment program of nearly 100 million dollars to upgrade and expand the airport, we’ve optimize the terminal space, and we have reduce the security wait times by 30 percent. We’ve also successfully fostered the development of innovative and important new rou tes and services, most prominently British airway services to JFK in New York. Another example11

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 large st 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 Privat e 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 compl eted 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
communiti es 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.

Randall Fiertz: Thank you.

Ado lfo Castro : Thank you Emmet. Good morning everybody. My name is Adolfo Castro, I’m ASUR CEO and if you’ll excuse me I would like to speak12

in English, in Spanish, sorry. Buenos días a todos, estoy honrado de tener la posibilidad dirigirme a ustedes el día de hoy, y expresar el compromiso en el caso de que sea aprobada la solicitud de Aerostar. Este compromiso es con las autoridades, los puertorriqueños, los que trabajarem os en el aeropuerto y por supuesto con nuestros inversionistas. En ASUR decidimos invertir en Puerto Rico hoy, y por los siguientes 40 años, porque creemos en su gente y confiamos en el desarrollo y queremos ser parte de este promisorio futuro, que sabemo s se podrá alcanzar con el esfuerzo y trabajo conjunto de parte de la comunidad aeroportuaria y las autoridades federales y estatales. ASUR es una empresa que opera 9 aeropuertos en México y es el resultado de la apertura a la inversión privada en el sist ema aeroportuario mexicano. Esto ocurrió hace 13 años, fue la primera empresa aeroportuaria del mundo. Cotizaron sus acciones en las bolsas de Nueva York y México. Hoy 92% de sus acciones se cotizan en estos mercados con un valor de capitalización de más de 2.7 billones de dólares. Hoy quiero compartir con ustedes algo de lo que hemos alcanzado con el trabajo y esfuerzo diario por parte de la comunidad aeroportuaria de Cancún y sus autoridades. Este aeropuerto después de 8 años de pasión y compromiso f ue reconocido por sus pasajeros como el mejor de Latinoamérica, situación que prevalece hasta el día de hoy. Después de 3 años de haber alcanzado esto fue reconocido también como el segundo mejor del mundo en el rango de 5 a 15 millones de pasajeros. Est e reconocimiento fue otorgado por el Consejo Internacional de Aeropuertos, institución que agrupa a los aeropuertos de más de 170 países en el mundo. Hace 13 años estuvimos en el punto que hoy estamos aquí en San Juan; un punto lleno de incertidumbre en e l que pensamos y nos preguntamos qué pasará en el futuro. Al igual que hicimos en aquel13

momento la recomendación es dedicación, constancia y trabajo, siempre pensando que el servicio al pasajero será nuestro mejor activo. Los aeropuertos como todo, no so n sólo ladrillos, sino lo más importante es la gente y el trabajo que está detrás de ellos. La sonrisa y la amabilidad de los puertorriqueños será la diferencia esencial. Nuestro origen latino nos dará la fuerza para cambiar y transformar el aeropuerto e n aras de un mejor futuro. El compromiso de ASUR será la seguridad y protección de las instalaciones, sus pasajeros y de todos los que colaboraremos en el aeropuerto Luis Muñoz Marín. El trabajo enfocado en el desarrollo de esta gran ciudad para que cada día el aeropuerto reciba más pasajeros, generar empleos dignos, justos, estables y bien remunerados, en donde todos podamos crecer y desarrollarnos como seres humanos sensibles a las necesidades de los demás. Cumplir con el deber fiduciario de aquellos, de aquellos que han confiado una parte de su patrimonio teniendo la certeza de que haremos lo posible por preservarlo y hacerlo crecer. Que en el Aeropuerto Luis Muñoz Marín se pueda reconocer la identidad, las raíces, los valores y la alegría de los puer torriqueños. Un espacio del que nos podamos sentir orgullosos y que transmita el compromiso de los que ahí trabajamos y el calor de los puertorriqueños. En caso de que la solicitud de Aerostar sea aprobada el aeropuerto Luis Muñoz Marín, que es propiedad de los puertorriqueños, y la principal puerta de entrada y salida de esta isla tendrá que ser motivo de orgullo para los que ahí trabajamos, también para sus familias; aquellos que regresan a casa o aquellos que vienen a visitar a sus familiares. Hoy los invito a todos, aerolíneas, autoridades, empleados, concesionarios, a crear lo que será la fuente de inspiración en un futuro para otros. Sé que esto será posible con una comunidad aeroportuaria unida, fuerte, eficiente y justa. Gracias por su14

atención y dejo el micrófono a Agustín Arellano, director general de
Aerostar.

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, F AA, TSA, PRPA, and other distinguished government officials for their presence here today for this significant milestone in the public

private partnership for the Luis Muñoz Marín Airport. In addition, we recognize the presence of our airline customers her e 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 sayin g 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 buildin g 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. Agradezco la oportunidad para presentar a Aerostar Airport Holdings.
Aerostar es una em presa operadora de aeropuertos registrada en Puerto Rico y cuyos socios en partes iguales son Highstar Capital y ASUR. Aerostar ha firmado un contrato de arrendamiento a largo plazo por 40 años del Aeropuerto Internacional Luis Muñoz Marín con la Autorida d de Puertos, quien continuará como propietario y custodio de la instalación aeroportuaria. Como parte de esta instalación aeronáutica, Aerostar se compromete junto con la Autoridad de Puertos a llevar a cabo los trabajos15

de reacondicionamiento del aeropu erto con una inversión estimada de 1,400 millones de dólares. Permítanme hablar un poco de mi trayectoria. Antes de ocupar el puesto de director de Aerostar, me desempeñé como director de infraestructura y normatividad de ASUR. Antes de unirme a AZUR, f ui director general de los servicios de navegación y control de tránsito aéreo en México, organización equivalente a la Administración
Federal de Aviación en los Estados Unidos. Durante mis más de 30 años de experiencia en la aviación he participado en el proceso de apertura a la inversión privada de los sistemas aeroportuarios mexicano, en Brasil y en Puerto Rico. Será mi responsabilidad liderar al equipo de expertos que tendrá a su cargo la operación del Aeropuerto Internacional Luis Muñoz Marín, y adic ionalmente al encargo profesional estaré moviendo mi residencia a San Juan con el propósito de integrarme completamente a la vida de la isla. Nuestra filosofía de trabajo estará comprometida con la integración de profesionales puertorriqueños en nuestro equipo, para asegurar una transición exitosa y transparente para todos los usuarios. Seremos una empresa socialmente responsable y pro

- laboral. Reconocemos que el aeropuerto es una fuente valiosa de empleos especializados y bien remunerados. Los emplead os del aeropuerto tendrán la oportunidad, además, de mantener el empleo, sea con la
Autoridad de Puertos o con Aerostar. In closing, we believe that Aerostar can enhance the airport's service to the local community and the world. This public

- private partn ership 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 Pu erto Rico. And we16

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 s erve 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 approval of public

- private partnership proj ects. 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 l ease 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 ha ve 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,
t he 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 serv ices sector has great potential for further17

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 airpo rt. A stronger tourism sector, export of services and more efficient services for our manufacturing base are all objectives that will be 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 im prove 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 q uality, 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 ca pital 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 more18

com petitive destination for all passengers. Good transportation logistics is critical for enhancing competitiveness. More than ever, Puerto Rico needs to be well connected to the rest of the world. Presently, we have a well

developed highway system that to gether 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.

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 th e Americas, it is imperative19

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
ap proximately 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 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 dolla rs. 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 i n 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 reality20

is that our airport's deteriorati on 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 improvem ents, 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 the Ports Authority's fin ancial 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 inform ation 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.21

Luis Rivera Marín: In short, we are convinced that by establishing this public private partnership we will see greater gro wth 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.

Juan Carlos Batlle: Good morning. My name is Juan Carlos Batlle. I am the President of the Government De velopment 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
Interna tional 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 perso nalities 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 Puer to 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 charac terized 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 our22

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 Ric ans deserve, to the standards that our 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, de mand 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 an d 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 out standing 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
restructu re 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 cont inue 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, impr ove services, pay for capital improvements, and continue the development of23

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 s upport 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 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 bette r 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

as sociation 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 Marín24

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 airpo rt by lease to a private party. We will focus on the clause concerning the regional airports. Among the four objectives the transaction seeks to achieve, we will focus on the following: Operation of the Puerto Rico Ports and the regional airports that a re 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 airp ort 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 t he 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

r unway 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 provide25

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 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 Authori ty 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, pr ofit, 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 r egulate 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 w ith this public meeting. Thank you very much for the opportunity to address this26

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 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 re garding 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 w ith 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 al so 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 sui t 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 an27

investment in the tens of millions of dollars. As a result of that investment, which the Ports Authority was incapable of making, just as the y 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 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, yo ur 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 mil lion 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 mill ion 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 facil ity, 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 proper ties are not included in the28

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 baggage check in, passeng er 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 addres sed 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 con tractual 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 unders tand 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 our29

contractual right s 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 fo ur 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 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 pro tect 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 p rotected, 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 wor ld

- 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 n ot lose ownership or control of the Airport. This is30

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 o r 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 right to participate in an Executi ve 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 Gove rnment, 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 Agreemen t, 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 Agreeme nt 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 employm ent 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 Agree ment 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 reasonable31

restituti on 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 activity related to cargo, charters and increase frequency of present
offe ring. 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 Ce rtified 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 pl an 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

ser vices 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 the32

propose Lease does not generate any increase in tariffs and that’s
esta blished 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.

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 tha t 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

conces sions at the Luis Muñoz Marin International Airport and provide in

flight catering to all commercial airlines with the only FDA approved kitchen in the Caribbean. We also provide maintenance services to corporate and private aircraft, and fuel services to the U.S. Department of Defense, and operate 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 rev iewed 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.33

These include the actual impact of jobs at the Airport and the creation of new ones, as well as s ecurity 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.
Yo nací y crecí en Puerto Rico, y aquí he criado a mis dos hijo s. Como puertorriqueño me preocupan nuestros empleos y la posibilidad de un mejor porvenir. Hoy, ambos están amenazados por la manera en que este proceso de privatización se está manejando localmente. En febrero de este año, anunciamos una inversión de 2 2 millones de dólares y la creación de unos 1,200 nuevos empleos, con la apertura de unos 12 a 15 nuevos restaurantes dentro y fuera del Aeropuerto. Hoy día, tanto esta inversión como la creación de estos empleos están en riesgo por la
manera en que se es tá realizando este proceso. IMC ha invertido sobre
100 millones de dólares en Puerto Rico desde el 2008. Aún cuando el número de pasajeros bajó en un 50% con la reducción de vuelos que tuvo American Airlines, nosotros remodelamos todos nuestros restauran tes y abrimos nuevos. Esto en un solo restaurante en el Terminal D, Margaritaville, invertimos 3.2 millones de dólares y tuvimos que incurrir en 1.4 millones adicionales en arreglos a la infraestructura porque Puertos no
tenía los fondos. No obstante a e sto, la Autoridad de los Puertos primero nos canceló los espacios del Terminal A, previamente otorgados en nuestro contrato, firmado y ratificado por Puertos, poniendo como razón el hecho de que estaban en medio del proceso de privatización. Y encima de

e sto, el Operador que fue elegido por el Gobierno, anunció que su primera acción iba a ser el cierre de los Terminales D y E, lo cual representa el cierre inmediato de 10 de nuestros establecimientos, dejando34

prácticamente en la calle al menos unos 150 padr es y madres de familia que laboran en nuestra empresa, esto sin contar las otras entidades comerciales que también operan dentro de estos Terminales. Pregúntenle a un empleado de más de 25 años de servicio, que su único empleo ha
sido laborar en uno de es tos restaurantes o en la cocina que quieren cerrar, y que de su ingreso depende una familia de 5, ¿dónde a sus 60 años y en esta economía va a conseguir trabajo? De esas 150 personas que se quedarían sin empleo uno de cada cuatro ha trabajado en el Aeropu erto más de una década o es mayor de 50 años. IMC tiene un compromiso con sus empleados, con Puerto Rico y con la creación de nuevos empleos, pero ante estas acciones, no nos queda otra alternativa que denunciarlas y pedirle a la FAA que vea y analice con cuidado esta solicitud. Más aún, cuando esfuerzos similares de privatización no han tenido necesariamente los resultados esperados en los Estados Unidos. Si quieren una privatización exitosa, entonces tiene que realizarse de forma justa y responsable. E so no es lo que hemos visto hasta ahora. Este aeropuerto es el puente que nos conecta con el resto del mundo y es esencial para el turismo, una de las industrias más importantes, por lo que nuestra economía está en alta dependencia de la confiabilidad con la que se maneje la operación del mismo. Confiamos en que ustedes ponderen detenidamente este proceso para asegurarse que estos empleos se mantengan, que compañías comprometidas con el Aeropuerto como IMC inviertan más en Puerto Rico y que nosotros podam os cumplir nuestra palabra con más y mejores empleos. Le pregunto a esta honorable agencia ¿no vale la pena evaluar bien este proceso para que sea uno justo y responsable? Respetuosamente sometido. Buenos días.35

Randall Fiertz: Thank you.

Arnaldo Del eo : 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 dete rioration 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 pa rt 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 o f 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 c ome 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 the36

facility and the Ports Authority. Over the past several decades, politically motivated decisions, as well as bad business judgment has culminated in a Ports Authority that is unable to finance even the mere tas ks, 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 sele cted 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 team37

has worke d 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 their support of this agreement. As a former airline manager, I can attest that growth, prosperity and excellence in air ports 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
pas sengers of the Luis Muñoz Marín International Airport. Thank you.

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

- class standards a s defined by the International Air Transport Association and the Federal Aviation Administration. For example, there will be an immediate capital investment of 195 million dollars to repair and38

improve signage; lighting; boarding ports; the airport's elec trical systems
and Wi

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

-- primary airports increasing passenger demand,

-- while secondary airports within the same geographical region continue to build on their competitive advantages like cargo, private aviation and niche travel and leisure de mand. Exactly the same situation is expected from airports like Aguadilla, with their recently designated Free Trade Zone, Ponce with the economic activity related to the Ports of the Americas, and the tourism potential of destinations like Ceiba, Vieques and Culebra. All in all, under the proposed lease agreement, every component of the airport system in Puerto Rico will complement each other, as is the case in similar transactions and markets like New Delhi, Mumbai, Bangalore, Seoul, Tokyo, Chicago: O’ Hare, Midway, New York City: JFK, La Guardia and Newark, Dallas: Fort Worth39

and Love Field, and Washington DC with Dulles and the Washington National Reagan. Again, no clause or condition of the proposed lease will limit our ability to implement this airp ort system vision for the Island of Puerto Rico. On the labor side, once the transaction is closed, current Ports Authority jobs, as has been said, will continue under the Authority, although employees can certainly explore employment opportunities with
t he private operator should they choose to, should they choose to do so. Those employees that are offered job opportunities can either continue their careers with the private company or keep their jobs at the Ports Authority. Overall, the proposed lease should yield concrete benefits for all the parties involved. Puerto Rico will reinforce its position as a preferred Caribbean destination and increase its global air connectivity. The island's economy will benefit from an increase in passengers, in the n umber of airlines that serve the destination and in greater amounts of air cargo. The agreement will also guarantee a much needed sense of continuity in the long term investment in the airport's facilities and commercial viability. And to the agency I repr esent, it will continue ...

-- it will contribute

-- positively to the restructuring of the Ports Authority's fiscal situation, allowing us to improve services to regional airports and other facilities under our jurisdiction. The public at large will see gre at improvements in their travel experience, resulting from the airport's efficiency, convenience, safety and high quality services. Passengers will truly see the Luis Muñoz Marín Airport as a world class facility. By bringing in additional flights and air lines, travelers will also benefit from greater competition, which will naturally lead to lower prices, better service and greater convenience. I firmly believe that the people of Puerto Rico will be well served by this public private partnership. Global ization and economic interdependence make it40

imperative that we have a modern, updated and improved international airport in order to compete on the world stage. This is precisely what this public private partnership seeks to achieve. Thank you very much

.
Randall Fiertz: Thank you.

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

- use plan and in 2010 addendum to the Re

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

- use projects in the Caribbean. Stimulating economic growth in the eastern region, which was severely impacted by the base’s closure. Thus, fulfilling the mission and objectives that we re 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. Lo cated 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. Ou r goal is to attract private investment and companies to the area in a manner that41

will drive a robust economic growth, so that together with efforts from the community a sustainable project will develop. The project’s impact will be significant island wi de and in particular on the towns of Ceiba, Naguabo, Vieques and Culebra. We estimate that the total investment in the project in 20 to 25 years will be approximately 2.6 billion dollars, creating 24,700 direct and indirect jobs. Altogether, the economic activity that will be generated is certain to bring back hope for better quality of life and prosperity to the residents of the area. The redevelopment project represents an opportunity to transform the region into a unique eco

tourism, entertainment, co mmercial, 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 Caribb ean 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 regi on, 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,

-- tr ansferred 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 t he 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 this42

effort, which complements the devel opment of the José Aponte de la Torre 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 provide s 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 increase d 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 dev elopment 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 arti cle 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 part icipants 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 of43

every t en passengers coming into Puerto Rico and processes over 80% of 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 transportat ion 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 R ico. 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 conc essions 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 facin g, 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 re duction 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

- term44

concession of the international airport is approved. This comprehensive 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 airpor ts, 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 est imate 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 a45

world

- class airport, besides 3 commercial airports and 3 general aviation 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 Ric o 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 Intern ational 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 Industri al 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 p artnership 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. The46

government of Puerto Rico recognizes that air access is a critical component to economic development and essential to foster international commerce and that it is crucial to maintain it and strengthen Puert o 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 import ance 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 h ave resulted in improved global competitiveness rankings for Puerto Rico. Puerto Rico has scaled up 4 notches, to the 31 st position out of 144 jurisdictions
evaluated in the 2012

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

co mpetitive economy in Latin America. One of the indicators that was evaluated as part of this ranking was the available airline seats, which scaled up eleven positions thanks to the promotional efforts of the government of Puerto Rico and to an air access incentive program. Since the year 2009 Puerto Rico has gained 3 new airlines that include British Airways, with twice a week service from Gatwick, Condor with twice a week service from Frankfurt and Westjet with twice a week service from Toronto. Also, w e have negotiated new flights from key domestic cities, like Washington D.C., Jacksonville and West Palm Beach, as well as increase frequencies to New York City, Philadelphia, Miami, Atlanta, Baltimore, Fort Lauderdale, Tampa and Hartford. Without a doubt Puerto Rico has advanced its economy and is today in a better position than 4 years ago in47

many areas. However, there is still work to be done, and we understand that this Public Private Partnership will have a very significant contribution
to our future economic growth. Primarily, this partnership will generate jobs, according to an economic study realized by Estudios Técnicos, which is a local consulting firm, it is estimated that Aerostar’s execution of their plan for the airport will provide signific ant economic benefits. These benefits include the creation of 3,500 jobs direct and indirect as well as induced, an addition of 13,000 jobs by the year 2022 and a stimulus of 10 billion dollars in total economic activity to Puerto Rico. Additionally, job s will be created as part of a capitals improvement plan and new services which will be offered. For example, each million dollar investment will generate 23 direct, indirect and induced jobs, while at the same time actual jobs at the Ports Authority will be maintained and employees can explore job opportunity with the new operator should they wish to do so. This Public Private Partnership will also generate immediate economic benefits for Puerto Rico. As part of the partnership the Aerostar group will i nvest a total 2.5 billion dollars that will result in an improved airport, better customer
service for all of us that live here in Puerto Rico and those that come to visit us. Asides from generating immediate economic benefits for Puerto Rico
this Public Private Partnership will improve our air access. As part of the agreement it is required that the operator develop a plan to increase air seat capacity by bringing in more flights to Puerto Rico. For the last 20 year the Luis Muñoz Marín International Ai rport has managed on average 4 million embarking passengers whereas capacity of the airport is much larger than that. With this partnership Puerto Rico will have more airlines, more flights and better connections to key cities in the continental United St ates and to international destinations, especially in Latin America, Europe48

and in the Caribbean. The economic impact of increase volume, of the increase volume of flights, is very significant for Puerto Rico. For example, new domestic flight contributes 77 million dollars to the local economy on the island and a new international flight contributes 105 million dollars per year. Each year it is expected that the volume of passengers will increase by over 200,000 passengers which translates to an injectio n to approximately 140 million dollars to our economy. These incremental passengers include tourists which results in more jobs and increased activities in hotels, paradores, restaurants and artisans among many other sectors. Improved air access to Puert o Rico allows us to be better integrated into the global economy, better connectivity to main cities, makes Puerto Rico more attractive to national and international companies that are evaluating whether or not to establish their business in Puerto
Rico. This administration has implemented a set of economic incentives to foster investment and attract more companies to the island. These incentives have proven to be successful, but we also need to improve other areas, like connectivity in order to be able t o continue to make Puerto Rico an attractive destination for companies that want to establish themselves on the island. The potential to increase air access with the partnership represents a critical component in achieving this objective, the improved

con nectivity that the Public Private Partnership ...

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

José Pérez Riera: In conclusion Puerto Rico has a first

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

- class airport so that our visitors have a first impression of our island and so that they can49

experience that Puerto Rico does in fact do it better and will allow for the economic development of Puer to Rico that we are pushing forward to continue for generations to come.

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

- Ramos and I
am an At

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

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

- mail a longer, more detailed, version of my testimony sometime during the next fourteen days. Yet I will summarize my objections and concerns in the following six (6) statements: 1. Puerto50

Rico's SJU Airport is and th rough the life of the proposed contract, will continue to be, our main facility for air traffic to and from Puerto Rico. The reality of Puerto Rico being a group of islands makes the prospect of having our most important entrance and exit port in private hands for some four decades a very risky proposition indeed. As a matter of federal policy, the U.S. Government has decided that the private management of International Airports be a very scrutinized exception, a pilot program, if you will, and not the gen eral norm. Puerto Rico's SJU Airport is an extremely bad candidate to be the guinea pig for the never before conducted experiment of having an International Airport of a jurisdiction under the FAA's authority to be put in private hands. 2. The financial structure of the proposed transaction between the Aerostar Airport Holdings group and the Government of Puerto Rico is one that is set mainly to augment the effective value of the winnings made by the private entity and to, inversely
reduce the effective v alue of the amounts to be paid to the Government of
Puerto Rico. One of Puerto Rico's leading economists, whose study will be presented and discussed throughout this hearing, and the statement will be put in the official record, has said that in effective real terms Puerto Rico would lose over $1 billion of the real and present value of the operation of the Luis Muñóz 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 Muñóz Marín’s books so that it may transfer th e facility free of any major economic obligations. Furthermore, the way this bond issue is going to be paid back also favors the private partner substantially for the very same reasons that51

were previously stated. Simply put this bond issue, which I have here with 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 Muñóz 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 Muñóz 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 Muñóz Marín Airport. There are also ongoing legal suits to try to throw out of their leases tenants in the Isla Grande Ai rport, which is an airport which is very close to the Luis Muñóz Marín. 5. Actually, Today's press also reports that they have been put pressure on private sectors. Finally, I want to stress two brief points, this administration has said that under th e Public Private Partnership program it would have created some 99,000 jobs. It has not created one, so we cannot expect to accept those proposed52

estimates. And lastly, I want to stress the fact, that Puerto Rico has general elections in little more than a month. This transaction being as complex and controversial as it is, we strongly urge that the final consideration by the Federal Aviation Administration, of that transaction, be withheld until the inauguration of the next governmental period that
start s on January 2, 2013

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

Juan de León: Buenos días y gracias por permitirme hablar ante este foro. Me llamo Juan de León y represento a la Federación de Taxistas de
Puerto Rico. Como taxista, apoyo a cualquier proyecto que esté a favor de aumentar el turismo en el país. Como sindicalista, también estoy a favor de que se mejoren las condiciones de trabajo de nuestros unionados. En el caso de lo que se está evaluando aquí, sobre cambiar la operación del aeropuerto internacional para que lo maneje una compañía en alianza pública privada con el gobierno, nos unimos a todo lo que se dirija a mejorar el turismo y a mejorar nuestra economía. Tengo entendido que la compañía que está ev aluando para este cambio ya ha pasado por el escrutinio del gobierno y otros foros. También sé que la compañía Aerostar Airport Holdings es una de varias que se evaluaron y que se seleccionó por reunir una serie de condiciones que demostraron su53

capacidad para hacer el trabajo y su capacidad para lograr que se hagan cambios que necesita el aeropuerto, y para poder ofrecer más y mejores servicios a los pasajeros que pasan por el aeropuerto Luis Muñoz Marín. Por otra parte, quiero decirles claramente que re pudiaremos cualquier imposición que atente contra los turistas que nos visitan, de los cuales todos los taxistas nos beneficiamos. Cualquier cosa que se haga que tenga un impacto negativo en nuestros trabajos y en los turistas que son
nuestra fuente de in greso, y que también aportan grandemente a la economía de Puerto Rico, será tenazmente rechazada. Entendemos que este cambio en el aeropuerto tiene que venir de la mano con beneficios para todos los sectores que dependen del turismo. Así que toda mejora a las condiciones de trabajo de los taxistas será bienvenida. Como unión, y como individuos, queremos ser parte del desarrollo turismo, turístico y económico del país. Muchas gracias.
Randall Fiertz: Thank you. Edgar Sierra : Good morning to the Panel and all the participants and attendants to this Public Meeting. Today I will be reading my deposition in Spanish. Buenos días. Mi nombre es Edgar Sierra. Soy el Gerente de Operaciones Aeroportuarias del Aeropuerto Luis Muñoz Marín. Llevo, llevo
sobre 27 años en la industria de la aviación, tengo experiencia desde piloto privado, 10 años en la Fuerza Aérea de los Estados Unidos en el campo de Transportación Aérea, soy Despachador de Vuelos de Aviones en aerolíneas de carga, y en Operadores de Base Fija. Además fue administrador de un Aeropuerto de Aviación General. Actualmente estoy certificado por la Agencia Federal de Aviación como Despachador de Aviones y poseo Licencia de Piloto Privado con calificación de Vuelos por Instrumento y Multi

- Motor. Tambié n tengo un Bachillerato en Estudios54

Liberales con un Grado Mayor en Gerencia. A través de los años he experimentado diferentes culturas empresariales y he notado resultados tanto exitosos como fracasos. Tengo que decirles hoy que la forma en que
la Autori dad de los Puertos administra el aeropuerto Luis Muñoz Marín limita grandemente su desarrollo. Esto es debido a que muchas decisiones están basadas en conveniencias políticas y no en las necesidades y beneficios a corto plazo del aeropuerto, corto y largo plazo del aeropuerto. Por ejemplo, personas sin destrezas necesarias en aviación es contratada en puestos claves solamente considerando su afiliación política al partido del gobierno en turno. Aquí se cometen dos actos irresponsables; el empleo de pers onal no calificado en una posición crítica y la limitación al desarrollo y crecimiento de un profesional de la
Industria de la Aviación. Hubiese sido idóneo Ilevar a cabo estas vistas en un periodo no eleccionario, con el propósito de evitar agendas polít icas que desvirtúen el verdadero propósito de la audiencia que llevamos a cabo en el día de hoy. Lamentablemente algunos políticos utilizan este foro para adelantar causas que no tienen que ver con el bienestar, seguridad y empleados del aeropuerto. En c onclusión, esta transacción es buena para Puerto Rico porque se establece una alianza con una empresa capacitada para Ilevar las operaciones del aeropuerto a su nivel óptimo. Por primera
vez en la historia de Puerto Rico tendremos como socio en la industr ia de aviación a una empresa experta en la innovación y desarrollo de todas las áreas en la operación de un aeropuerto, que busca crecer de la mano de su capital humano y Puerto Rico se merece un aeropuerto de clase
mundial. Gracias.

Randall Fiertz: Thank you.55

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 Puer to 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 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. Comparezco a estas vistas como representante a la cámara por acumulación de Puerto Rico, pero sobre todo vengo a representar a muchos ciudadanos puertorriqueños con legítimas preocupaciones sobre este proceso de privatización. Me opongo a que se otorgue la administración del Aeropuerto a un operador privado por un término de 40 cuarenta años. Una transacción por tan largo periodo,
indudablemente resulta para el país un acto de enajenación, y limita sus facultades para tomar medidas necesarias en el ámbito económico, las cuales no deben estar a merced únicamente de intereses privados. Este foro es la única oportunidad que va a tener el ciudadano puertorriqueño para exponer su posición. Resaltamos el contexto y la importancia de estas vistas para significar que los ciudadanos puertorriqueños cifran todas sus esperanzas en que ustedes The FAA no aprueben esta solicitud de privatización. Las razone s para oponernos a esta transacción son múltiples pero por razones de tiempo me limitaré a unos aspectos
fundamentales. Primero, contrario a lo que expone la Autoridad de Puertos de Puerto Rico en la solicitud final radicada ante ustedes, el proceso que l levó a cabo el gobierno local para conformar la propuesta de privatización no contó con un proceso de consulta a la comunidad. El56

modelo jurídico que crearon para viabilizar este tipo de alianza público

- privada excluye que se consulte a la comunidad. Seg undo, existiría un conflicto de interés si permitimos que ASUR administre nuestro aeropuerto, a la vez que administra el de Cancún. En estudios realizados por el economista José Alameda y el planificador Carlos del Valle han
establecido una ecuación de regresión que muestra claramente una relación entre los aumentos en los turistas de Cancún, Bahamas y Jamaica; y una disminución en los turistas que llegan a nuestra isla. Ciertamente, el Aeropuerto Internacional de Cancún, por el destino
turístico en el cual se encuentra, es una competencia para Puerto Rico. Las estadísticas demuestran que el turista de Estados Unidos representa para Puerto Rico el 90% y para Cancún el 78.2%. Además, actualmente los ingresos derivados del Aeropuerto Internacional de Can cún representan para ASUR, socio del consorcio agraciado, 283 millones de sus ingresos versus una tercera parte de eso, 80 millones, que significaría
Puerto Rico. Con este panorama es de esperar que el operador privado seleccionando no se encuentra en pos ición de responder totalmente a los mejores intereses de la isla. Tercero, ¿Cuál es la inversión real del privatizador durante el término del contrato, conociendo que los aeropuertos en Estados Unidos, incluido éste, poseen una fuente de fondos para reali zar mejoras y proyectos de infraestructura tales como el PFC y los "grants" federales? Mismos fondos a los cuales el privatizador establece consistentemente en el contrato que se le debe garantizar el control sobre su manejo. Es evidente que la transacció n propuesta tendrá un impacto en los aeropuertos regionales, máximo cuando nuestro Aeropuerto ha solventado las operaciones de esos aeropuertos. De igual forma, existen restricciones en el contrato que destinan al fracaso los57

esfuerzos para desarrollar ec onómicamente nuestras regiones al garantizarle al operador privado el no surgimiento de nueva competencia. Nuestra condición de isla nos obliga a que cualquier política de promoción de un aeropuerto internacional esté vinculada a un modelo de desarrollo

n acional que integre las regiones. Asunto que se logra, sólo si retenemos el gobierno de Puerto Rico junto al Gobierno de los Estados Unidos el total control de la administración del Aeropuerto Muñoz Marín, y concebimos a los aeropuertos regionales como al iados para el desarrollo regional, y para el desarrollo económico y no como competencia. La actual propuesta resultará en un rezago de los aeropuertos regionales y de las iniciativas que iban atadas a ese crecimiento pues no responden a un esfuerzo de pla nificación integral. Por ejemplo, según el estudio antes mencionado, el impacto de esta transacción en las regiones en las cuales ubican los aeropuertos de Aguadilla y de Ponce sufrirían una pérdida de 4,700... perdón 4,736 empleos y un impacto negativo a la economía local de 377
millones de dólares. Incluso hemos evaluado las medidas que la Autoridad de Puertos propone en la solicitud final a la FAA sobre el plan para los aeropuertos regionales, y es evidente que no existe aquí ninguna intención de manej ar y mucho menos aumentar el flujo de pasajeros, ni las rutas y ni líneas aéreas. Y con esto concluyo...esto contrasta con las estrategias económicas que tan recientemente como en el 2010 esgrimió el actual gobierno, así como otras del gobierno federal, las cuales impulsaban el desarrollo de los aeropuertos regionales desde el punto de vista de la carga, y también el renglón de pasajeros. Pero el otorgamiento de este contrato de privatización marca una desvinculación total de esas recomendaciones para desar rollar nuestros aeropuertos regionales, regionales. Por todo lo antes expuesto nos oponemos a esta transacción y58

le solicitamos que no aprueben la misma por no ser beneficiosa ni para Puerto Rico, ni para los Estados Unidos. Muchas Gracias.

Randall Fiert z: 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 b ut 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 Pu erto 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 founda tion 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 fr om the Puerto Rico Ports Authority is59

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 Author ity 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 fu nctional 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 absolute ly 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 Authorit y 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 whe n the60

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 revi ew 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 aspe ct, 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 addre ssed 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 ineffec tive 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 certific ate 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 Fiert z: Thank you.

Mario Pabón: Who can I give this to? you?6 1

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: Sí, muy buenos días a todos, se dirige a ustedes el representante Charlie Hernández; uno de esos políticos locales al igual que el gobernador de Puerto Rico. Soy miembro de la Cámara de Representantes de Puerto Rico desde el año 2001. Antes que nada,
de seo agradecerle a la agencia federal la oportunidad que nos brindan para de expresarnos sobre la privatización del Aeropuerto Muñoz Marín. Al hacerlo la Agencia Federal desafía al Congresista republicano John Mica quien, a espaldas del pueblo de Puerto Ri co y probablemente a petición de personas que no tienen los mejores intereses de Puerto Rico en mente, solicitó que estas vistas se llevaran a cabo de forma expedita y fuera de la jurisdicción de Puerto Rico. Aquí está la carta del congresista Mica, para los que la quieran leer. Durante los últimos dos años, he señalado varias irregularidades y conflictos de interés en el proceso de selección del privatizador del aeropuerto Muñoz Marín. Además recientemente denuncié como ese privatizador ha canalizado ci fras escandalosas de dinero para la campaña de reelección del Gobernador Fortuño utilizando a la Asociación de Gobernadores Republicanos como intermediario. Esos asuntos están siendo investigados actualmente por el Departamento de Justicia de Puerto Rico y por la Oficina de Ética Gubernamental, ante quien compareceré el próximo lunes a testificar sobre
este escándalo. Entendemos que este proceso de privatización no es62

favorable ni a los mejores intereses del Pueblo de Puerto Rico ni a los
intereses de los contribuyentes de los Estados Unidos, por lo que nos oponemos firmemente. Existen innumerables razones por las cuales no debe privatizarse. Hoy discutiré brevemente las que aquellas el tiempo tan
l imitado me permita dar. Como es de conocimiento de esta agencia, la Autoridad de los Puertos de Puerto Rico no es sólo un aeropuerto, se compone de 11 aeropuertos y 7 puertos marítimos. Excepto por la operación del Muñoz Marín, la Autoridad de los Puertos opera sus activos con pérdidas y con deuda. No obstan te, esta privatización no aclara qué ocurriría con la Autoridad de los Puertos, y sus empleados, tan pronto pierda su capacidad para emitir deuda. Hemos consultado a economistas que entienden que la autoridad dejará de recibir cerca de 1000 millones de
dó lares durante el término de este contrato y que vendrá obligada a cerrar la mayoría de sus restantes operaciones. Aun así y aun si la Autoridad de Puertos pudiera sobrevivir el impacto económico de esta transacción, la misma afectaría negativamente a los aeropuertos regionales en los cuales se ha utilizado dinero de los contribuyentes estadounidenses. Uno de esos aeropuertos queda en mi distrito. El contrato de arrendamiento propuesto penaliza por 15 o 20 años a la Autoridad de los Puertos si
desarroll a su operación de pasajeros en los aeropuertos regionales. Para sobrevivir, esos aeropuertos deberán aumentar dramáticamente sus tarifas lo que favorecería el monopolio creado a favor del privatizador en aeropuerto Muñoz Marín. De permitirse esta transacc ión, sería cuestión de tiempo hasta que estos aeropuertos se convirtieran en totalmente
inviables. No me crean a mí, ni le tienen que creer a los exponentes; lean la sesión 3.22 del contrato los únicos que creen lo que no dicen son los ejecutivos burócrat as del gobierno. Entendemos además que esta63

transacción es contraria a los mejores intereses de la protección del ambiente. De acuerdo al contrato, la Autoridad de los Puertos permanece como responsable de todas las reclamaciones de daños ambientales
exis tentes o potenciales en el Muñoz Marín, incluyendo cualesquiera daños que puedan surgir por la operación, durante décadas, de un sistema de distribución de combustible en los predios del aeropuerto. El gobierno de Puerto Rico se expone con este contrato a reclamaciones ambientales entregando los recursos que podría tener para responder. Le recomiendo a la agencia federal que consulte con la Environmental Protection Agency

s obre su posición sobre este asunto antes de continuar la evaluación del
mismo. Ent endemos también que, en una jurisdicción como la nuestra donde existe un serio problema de tráfico de armas y drogas, drogas y armas ilegales, colocar nuestro principal aeropuerto en manos privadas extranjeras levanta serias preocupaciones de seguridad púb lica. Por tal razón, recientemente cursamos una comunicación al Secretario del Trabajo... perdón el Secretario del Tesoro y el Chairman del Comité para la Inversión Extranjera de los Estados Unidos Timothy Geithner, pidiéndole que revisara esta transacción. Aquí está la carta y la haré parte del record. Les recomiendo también que aguarden por la respuesta que le dará el secretario del tesoro sobre este asunto. Es de alta sensibilidad el aspecto de seg uridad pública para los puertorriqueños. Finalmente, n o hay nada que el privatizador pueda hacer que el pueblo de Puerto Rico no pueda hacer, si pones tu voluntad y una mejor gerencia que la que ha desfilado por aquí a administrar nuestro aeropuerto. La privatización del Muñoz
Marín sólo adelanta los interes es de un privatizador que, para lograr una ganancia excesiva, pone en riesgo la seguridad y la estabilidad fiscal del Pueblo de Puerto Rico. Por esas razones, y en defensa del patrimonio que64

con sacrifico los puertorriqueños hemos construido, nos oponemos a la privatización del Aeropuerto Muñoz Marín. Muchas gracias

.
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 opportunity to testify today regarding the lease of the Luis Muñoz Marín International Airport. I came here t o 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, b ut 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 imp rovement. Moving65

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 liv ing of the Puerto Rican 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 sp eakers 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 th e 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, for66

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 Airp ort 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 Authority and the Puerto Rico Public

- Private Partnerships Authority reflec ts 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 progr am 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. Thi s 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 pub lic 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 re spectfully submit that the Puerto Rico application is consistent with the objectives of the pilot program, as it was envisioned67

by Congress and the FAA. When Congress established this program in 1996, it sought to determine whether new investment and capi tal 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 highli ght three reasons why I believe this to be the case. First, given the current bond rating of the airport sponsor, the Puerto Rico Ports Authority, and the questions surrounding the capacity of the federal Airport and Airway Trust Fund to meet future deman d 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 developm ent 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 gatew ay 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 world

class airport that meets the highest safety st andards, features modern

amen ities, and promotes the Island' s positive image as a prime tourist destination and a preferred place to conduct business. I firmly believe that inclusion in the pilot program is the best way to achieve these objectives. Today , the Puerto Rico Ports Authority is burdened with significant debt68

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 P orts 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 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
t raffic 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 t hey 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 cap ital 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 enplanem ents, 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 Congress69

in September 2010, estima tes 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, whethe r 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 make improvements to the airpo rt. 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 i n 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, alo ng 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 t he 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 traff ic. 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 nons top service from Puerto Rico to 20 cities throughout the United States. There is clearly room for improvement here, especially when one considers that there are70

now 4.6 million people in the 50 states of Puerto Rican birth or descent. Inclusion in the pilo t 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 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 vol ume, 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 a ir 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
pr omote 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 t hat 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 wo rld, and will strengthen the Island's economy and create jobs. I thank you for the71

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 Congressman go before you. And second of all, just say that the audience is aware we’ve given Ms. Ros ario extra time to speak this morning.

Astrid Rosario Ortíz: Thank you. Buenos días mi nombre es Astrid Rosario Ortíz Represento a la Hermandad de Empleados de Oficina, Comercio y Ramas Anexas de Puerto Rico. Esta organización sindical
data su existencia desde el año 1948. Actualmente representa a los trabajadores de administración, operación y mantenimiento que emplea la Autoridad de Puertos de Puerto Rico para llevar sus actividades relativas a la operación, desarrollo, conservación y manteni miento administrativo de las facilidades aéreas, marítimas de dicha Autoridad de Puertos. Por disposición expresa de la Constitución del Estado Libre Asociado de Puerto Rico en su Artículo II, secciones 17, 18 los empleados de Corporaciones Públicas que o peran como negocio tienen el derecho constitucional a organizarse sindicalmente y a negociar convenios colectivos. Así mismo, iguales derechos garantiza a estos empleados la Ley Núm. 130, 8 de mayo de 1945, según enmendada conocida como la Ley de Relacion es del Trabajo de Puerto Rico. Teniendo en cuenta que la Autoridad de los Puertos de Puerto Rico es una corporación pública que opera como negocio privado. Sus empleados tienen el derecho a organizarse sindicalmente y negociar convenios colectivos amparad os públicos Artículo 1 en la Ley 130. Esta doctrina ha sido sostenía por los72

tribunales del país en innumerables decisiones. Además de lo anteriormente señalado, la Ley Núm. 130 dispone como práctica ilícita de trabajo el que un patrono viole los término s de un convenio. Igualmente la Ley señala como materia mandatoria de negociación colectiva la subcontratación de las labores de la Unidad Contratante. Es decir, no se puede proceder a subcontratar las labores de la Unidad Contratante representada por la Unión sin haber negociado dicha subcontratación con la Unión que los representa. A pesar de lo anteriormente señalado, el pasado 2 de agosto de 2012, mediante carta dirigida a mi persona, el Director Ejecutivo en ese entonces Sr. Bernardo Vázquez Sántos nos notificó los planes de la Autoridad de Puertos para privatizar las operaciones y administración del Aeropuerto Luis Muñoz Marín. Específicamente se pretende subcontratar nuestras labores mediante la otorgación de un contrato de Aerostar Airport Holding . Dicha carta específicamente señala: Contemporáneo al recibo de dicha carta, fuimos notificados por parte del Sr. Vázquez Santos de una invitación para
sostener una reunión con los representantes de la mencionada compañía Aerostar, a dicha reunión asisti eron en Representación de Aerostar los
señores Carlos Trueba Coll, Director del Aeropuerto de Cancún y Manuel Gutiérrez Solá Director Comercial de ASUR. Esta breve reunión, cuya Invitación recibimos el mismo día, duró escasamente una hora. Cabe señalar q ue el Director Ejecutivo de la Autoridad de los Puertos no estuvo presente, se excusó de la misma. En esa reunión la Autoridad de Puertos fue representada por la Sra. Zulma Pérez Pérez, Sub

- Directora de la Autoridad de los Puertos de Puerto Rico y el Sr. Arnaldo Deleo, Director del Negociado de Aviación. Esta ha sido la única reunión, si esto se puede llamar reunión, que hemos tenido con los representantes de la compañía73

Aerostar. Toda la información sobre los planes de Aerostar y su sub

contratación con la Autoridad de Puertos la hemos obtenido por nuestro esfuerzo individual y colectivo, ninguna de ella ha sido provista ni por Aerostar, ni por la Autoridad de los Puertos. En el "Reauthorization Act" de 1996 y el "Federal Aviation Administration Act" del 1996 en Public Law No.
104

- 264 de octubre 9 del ‘96, autorizan al Secretario de Transportación y por delegación al FAA, la aprobación o desaprobación de las solicitudes radicadas bajo las disposiciones de dichas Leyes. Los requisitos que se deben cumplir se encuentran en la Sección 47134, específicamente la Sección de esa ley 49 U.S.C 47134. Sobre los convenios colectivos específicamente la Sección 47134 dicta: "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". Dicho requisito es mencionado e incorporado en el contrato de privatización de Luis Muñoz Marín. No obstante mencionarse allí, el término abrogar
carece de definición y/o explicación alguna de forma que se puedan establecer los parámetros adecuados para su entendimiento e implementación en cuanto al convenio colectivo que cobija al grupo de empleados afectados por este contrato de la privatización. Entendemos que la le y y su reglamentación no establecen que la Administración se convertirá en la agencia que velará por el cumplimiento de los aspectos laborales del contrato. Esta indefinición, dado lo ambiguo de la disposición señalada en el “Lease Agreement”, ha permitido que la entidad privatizadora Aerostar, no asuma compromiso alguno sobre el cumplimiento de nuestro convenio colectivo existente. Igualmente y a pesar de lo anunciado públicamente por las entidades gubernamentales y según las propias disposiciones, Aerost ar se limitará a ofrecer trabajo a74

aquellos empleados que así lo soliciten sin garantía alguna de empleo. Vemos como no basta incorporar al contrato una expresión general parafraseando la obligación legal de cumplir con la Ley y su Reglamentación. Esta en tidad Federal de Aviación, de Administración debe examinar el contrato en su totalidad y ver los efectos que tiene el mismo sobre el convenio colectivo para así poder determinar si dicho contrato cumple con la Ley. De igual forma, y por otro lado, la únic a obligación que la Autoridad de Puertos aparenta reconocer como consecuencia de tener vigente un convenio colectivo es el efectuar la notificación que nos envió, el pasado 2 de agosto de 2012, y que ya hemos
citado anteriormente. Hasta el momento no ha h abido expresión alguna por parte de la Autoridad de Puertos, ni escrita ni verbal, que aclare el destino de las obligaciones contractuales que surgen de su convenio colectivo y sobre las consecuencias sobre dicho convenio colectivo a tenor
con la firma de este "Lease Agreement". Debemos reconocer que este peligro sobre la identificación del Término "abrogate" fue señalado en comentarios enviados a su agencia en el pasado por uniones hermanas. De igual forma, estas ambiguas disposiciones de este "Lease A greement"
en torno al convenio colectivo existente han tenido como resultado el obviar las consecuencias lógicas de las doctrinas laborales sobre los patronos sucesores, tanto a nivel federal y estatal. Con sus actuaciones Aerostar y la Autoridad de los P uertos han ignorado totalmente la responsabilidad proveniente de esta doctrina. Al presente el sector laboral afectado, del cual representamos su parte organizada sindicalmente, ha sido ignorado en el trámite de esta negociación de privatización. Aerost ar y la Autoridad de los Puertos han pretendido cumplir con sus responsabilidades legales con una mera mención general en el contrato de75

que no dejarán sin efecto el convenio colectivo. De igual forma, y a pesar de mencionar, de forma general y específica en su Artículo 11, Sección 11.1, que Aerostar cumplirá con la ley federal y las leyes del Estado Libre Asociado, este contrato ignora totalmente las obligaciones provenientes de la Ley de Relaciones del Trabajo. Sólo en cumplimiento de convenios
colectivo s, veamos algunos ejemplos. La H.E.O. ha sido certificada como representante exclusiva del grupo de empleados a ser afectados por la transición, al igual que su convenio colectivo, han sido dejados a un lado e ignorados en todo este proceso. Resulta insó lito que de forma expresa el contrato de "Lease Agreement" dispone, en abierta violación a la ley laboral, la entrevista y contratación individual por parte de Aerostar de los empleados unionados. Los términos y condiciones de empleo de estos trabajadores , disponen en el Artículo 2, Sección 2 que serán establecidas unilateralmente por Aerostar "on terms and conditions designated by the
Lessee... ". Claramente el convenio colectivo y la Ley de Relaciones del Trabajo son considerados como inexistentes por es te contrato al permitir la contratación y el establecimiento de los términos y condiciones de empleo, entre Aerostar y el empleado, unilateralmente obviando la existencia de su Representante exclusivo. Mediante estas contrataciones individuales de emplead os de la Autoridad de los Puertos, las partes del "Lease Agreement", la Autoridad de Puertos y Aerostar, ignoran y violan las obligaciones laborales vigentes sobre representación exclusiva y claro
mandato del convenio colectivo en su Artículo 1 de reconoci miento de la Unión. La mención superficial de la obligación de que el contrato no dejará sin efecto ningún convenio colectivo está en clara contradicción con la realidad y las disposiciones específicas del mismo. De igual forma, es patente que este contr ato violenta las leyes laborales que han garantizado76

la seguridad a los trabajadores puertorriqueños por décadas. La norma legal es clara y señala que la "Federal Aviation Administration" debe garantizar que los términos y condiciones del "Lease Agreemen t" cumplen con los requisitos de ley y su reglamentación. En la discusión sobre la Sección 47134 del Título 49 del U.S. Code, Ilevada a cabo por la "Federal Aviation Administration" sobre los "Applicative Procedures" del "Airport Privatization Pilot Progr am" donde el documento 28895 señala que la 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”. En la presente contratación no solamente se le d io discusión o diálogo señalado sino que tampoco el "Lease Agreement" cumple con los parámetros de ley reglamentarias aplicables que prohíben dejar sin efecto el convenio colectivo existente entre la H.E.O. y la Autoridad de Puertos.
En vista de los antes expuesto y por las razones aquí señaladas este "Final Application" que permitiría el traspaso de las facilidades del aeropuerto Luis Muñoz Marín debe ser rechazado por la Agencia Federal
de Aviación. Todo lo que expuse aquí en este momento sobre la ponen cia lo que hice fue una parte corta de resumir todo en la ponencia que le voy a hacer entrega a ustedes está todo completo, obviamente la hice en español para que ustedes puedan entender la impotencia que yo, como líder sindical, las
personas que como yo r epresento y parte del pueblo puertorriqueño hemos sentido cuando el Final Report no se ha publicado en español. Gracias, buen día.
Randall Fiertz: Thank you very much. Ok, I think we’re ready to continue. Twenty six, please.77

Armando Montero González: Buenos días tengan todos. Soy Armando Montero González, un director de escuela elemental muy cercana a este lugar que nos ocupa en el día de hoy. También residente frente al Aeropuerto Internacional de Isla Verde. Represento alrededor de 14,000 emplead os gerenciales del gobierno de Puerto Rico. La Federación de Asociaciones de Empleados Gerenciales del Estado Libre Asociado fue creada para promover el progreso social, económico, y el bienestar general del pueblo de Puerto Rico. Otro objetivo de nuestr a organización es promover la eficiencia en los servicios esenciales al pueblo y abogar por prácticas gubernamentales y gerenciales de genuino espíritu democrático que favorezcan el libre intercambio de ideas y que permitan a la ciudadanía, a través del em pleado gerencial, una justa oportunidad de desarrollar su creatividad y potencial como país y como ciudadanos. La Rama Ejecutiva del Gobierno impulsó y creó la Autoridad para las Alianzas Público Privadas de Puerto Rico para supuestamente promover una
col aboración continua entre el sector público y el sector privado. A través de esta ley se pretende ofrecer un servicio de alta calidad, y quiero resaltar el término de pretende, a los puertorriqueños que viven en la Isla; y en el caso del Aeropuerto Luis M uñoz Marín a los visitantes que salen y recibimos en el país. La Federación y otros sectores laborales y comunitarios privados señalaron que esta ley afectaría económicamente al país porque promovía primero el despido de servidores públicos y el enriquecim iento del sector privado. Queremos declarar ante esta Comisión que para los empleados gerenciales del gobierno de Puerto Rico los datos, estadísticas, estudios y la radiografía general de todo lo relacionado a esta transacción no tienen credibilidad. Tamp oco confiamos en el proceso de selección del candidato para administrar el aeropuerto; ni78

en el genuino interés y compromiso de este empresario con el pueblo puertorriqueño, datos de ese particular se lo mencionó el Representante Jaime Perelló. La Rama Ej ecutiva del gobierno en su intento de justificar esta mal llamada alianza manifestó que nuestro país se ha debilitado como un destino turístico, lo escuchamos hace un momento de nuestro comisionado residente, y que el gobierno no tiene la capacidad para
ad ministrar el Aeropuerto Luis Muñoz Marín. La Federación quiere establecer que el único responsable de que haya ocurrido este deterioro es el mismo gobierno de Puerto Rico, y nosotros tenemos parte de la responsabilidad, con su falta de visión, dejadez e i ntereses privados y principalmente, la intromisión de la política partidista. Con estas acciones no se ha permitido que el sector laboral; sindical y gerencial, participar de manera efectiva en este proceso y en la toma de decisiones relacionadas a
la admi nistración pública. La ley de las Alianzas Público Privadas persigue establecer la política pública del gobierno para apoyar alianzas bajo un esquema legal, claro, transparente, ágil y flexible. Esta transacción no cumple con ninguno de estos criterios. Podrá ser legal pero no es justa, ni clara, ni transparente, todo lo contrario, organizada en cuartos oscuros a espaldas del pueblo y de los empleados afectados por las transacciones. Tenemos que reconocer que ha sido ágil, sí, muy ágil, se han utilizado para transferir la infraestructura ya construida por el pueblo de Puerto Rico a cambio de un ingreso menguado que no le resuelve al gobierno la crítica situación fiscal. Y con respecto a la flexibilidad de la transacción propuesta en la ley debemos informa r que el proceso ha sido atropellado, inconsulto y que responde únicamente al interés de la administración de gobierno a complacer al solicitante, por intereses económicos y de política partidista. En la Federación de Asociaciones de Empleados Gerenciales estamos79

convencidos que Puerto Rico lo hace mejor, que los puertorriqueños y puertorriqueñas tenemos la capacidad para entender la importancia y defender los valores democráticos que nos garantiza la constitución. Queremos expresar nuestro total rechazo a este proceso, la poca información presentada, la falta de garantías del beneficio a los servicios a la ciudadanía, y a la inestabilidad de los empleados afectados por esta alianza. Estamos vigilantes ante la evaluación de esta Comisión. Confiamos que en los próximos días y en la determinación final que ustedes tomen reflexionen sobre la importancia que esto tiene para el pueblo de Puerto Rico. Estamos a su disposición ante cualquier eventualidad. Ahora somos nosotros un solo movimiento y juntos lo
hacem os mejor, ese es nuestro logo. Reflexión, prudencia, en Puerto Rico se manejan muchas de esas decisiones en un año eleccionario y principalmente estamos cercanos a un proceso plebiscitario y todo esto pudiera estar afectando el futuro de inclusive la rela ción de Puerto Rico y Estados Unidos. Así que les solicito sobre todo eso, mucha prudencia en esta decisión. Que tengan muy buenas tardes.

Randall Fiertz: Thank you very much.

Alfonso Fernández: Good morning. Good morning to FAA staff and other federal agencies present. My name is Alfonso Fernández; I’m President and shareholder of IVYPORT Logistical Services, Inc., a company in the
aviation business and a concessionaire at Luis Muñoz Internati onal Airport, since I997. IVYPORT is a I00% minority owned, I00% Hispanic, and 50% women owned. Accompanying me this morning is Mrs. María de Los Angeles Navas, Executive Vice President and shareholder of IVYPORT,
and our counsel Mr. Luis Mifiana. We are h ere today as small hard working80

business owners, not opposed and supportive of the privatization effort. Nevertheless, we are been steamrolled and our rights have been trampled by the way the process has been handled. Apart from my role at IVYPORT, I have been involved in the aviation industry from the late I980's in various capacities including acting as counsel, investment banker in aviation related financings and acquisitions, lecturer in Aviation Law and Airline Management at Interamerican University S chool of Management. In addition I’m a yearly contributor to Ground Handling International a British based Magazine on matters of Caribbean aviation businesses. I have
included for the record a small b io

- sketch. Pursuant to the FAA 's review of
the final application, we formally request that the FAA includes measures that make approval of the application contingent on adequately addressing issues regarding IVYPORT at the Luis Muñoz Marín International Airport, whose substantial proprietary interests are t o acquired by the Government of Puerto Rico, for the benefit of the winning bidder. All of this, as a part of the privatizatio n plan. Specifically, IVYPORT' s real property interests and operational authorities are subject to an expropriation proceeding initiated 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 yea rs 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 conce rned 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 the81

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 dol lars is finalized. In IVYPORT' s case the amount of 10 million dollars was paid for the acquisition of operational authority and non competition rights to conduct various aviation related business at LMM in I997. We request that the F AA 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 Internationa l Airport, dated July 20I2. These actions appear to be in contravention of various sections of the Pilot Privatization statute and the FAA grant assu rances. Specifically, of
49 U

. S. C

. Sec. 40 1 03(e) and FAA grant assurance No. 23, that states without compe nsation 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 regard ing IVYPORT's claims, which should provide the FAA with pertinent information. In I997, IVYPORT, formerly Swissport Puerto82

Rico, Inc., leased from Caribbean Airport Facilities the operating authority, various rights including exclusivity and non competiti on for ground handling, terminal, and ramp services in a lan d area of 90.757 acres at
LMM
, e xpiring in 2028. On March 26, I998 IVYPORT paid 10 million dollars for those rights, which were recorded at the Registry of Property of Puerto Rico, and which is 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 Commo nwealth of Puerto Rico depositing 25 million dollars in Stat e Court, that included IVYPORT' s rights, and in which case IVYPORT promptly intervened. On March I5, 20I2 the Commonwealth filed a motion to desist from its eminent domain proceedings, said moti on was denied, because the presiding judge ruled that expropriation had occurred as a matter of law when moneys were deposited in Court.

Randall Fiertz: Sir, you need to finish up, please. We’re out of time. Thank you.

Alfonso Fernández: Basically, m y 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
hav e 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 appli cation and promptly notify83

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 p osition 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 Marketing Director I h ave 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’v e encountered many obstacles and I’ve been able to identify many flaws in the historical process which have84

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 appar ent 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
Devel opment 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 p olitics 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 development p lan that has continuity. I thank you for the opportunity granted to me today.

Randall Fiertz: Thank you very much.

Kevi n Costello: Good morning. Thank you for the opportunity to address the Panel today. My name is Kevin Costello. I serve currently as the Director of Properties and Airport Affairs for JetBlue Airways. In this role, I am responsible for the corporate relationships for all the Airport operators throughout our network of 76 airports in the United States, Caribbean, Latin and South America. In this role, I've had the opportunity to participate in numerous Airline Airport Affairs Committees (or AAAC) throughout that85

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

1. T he Process . The Puerto Rica n 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 recog nition of the role the airlines play in the process, and afforded the airlines a meaningful seat at the table.
2. P ublic I nterest . A lot of time was dedicated within the process of crafting a transaction that would provide significant improvements to
L uis 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 Mar ín 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.86

3. Aerostar

. Aerostar, a joint venture bet ween 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 partnersh ip 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 i n 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 potenti al 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 aviation community at LMM, the San Juan’s AAAC firmly be lieves 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 coming87

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 Puert o 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 Ri co 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 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 sect or 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 managing88

the business a nd 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 tou rism 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 Aerostar, as its private lessee and operator. Such tra nsfer 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, Aer ostar 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 the89

LMIA, as well as the significant increase in passenger movement, will benefit local businesses through the new employment, commercial act ivity, 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 revenu es 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 i mmediate 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
investm ent in human resource development will yield a more productive, innovative, entrepreneurial work force with augmented attributes, skills and competencies that will undoubtedly result in improved job conditions and wealth for our work force.

The Chamber o f 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 speak er? 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 moment90

we’re just gonna see if there’s anybod y 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. 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 M

a r t í n e z Smile Again Learning Center, Corp. (787)872

- 5151 / (787)225

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