Abstract
The Brazilian government began, in 2012, the program of concessions of the administration of Brazilian airports in order to improve customer service through private capital. One of the main subjects of this concession plan was the airport of Guarulhos, in the state of São Paulo (Brazil), which is the largest airport in the country, responsible on average for over 20,000 flights and transporting approximately 4 million passengers per month. Concessions of this scale demand large investments, which in turn can result in greater uncertainties regarding future cash flows. In certain cases, the NPV (Net Present Value) of these investments may become negative, which does not necessarily mean that the undertaking is unfeasible, or that it should not be encouraged. Changes in the overall economic scenario can subsequently lead to updated results in the expected cash flow, making the investment viable. One of the ways to evaluate a project under an uncertain scenario is to use the Real Options model as a strategic complement to cash flow analysis. This article presents an application to calculate the value of the expansion option for the Guarulhos international airport. For the models of uncertainty related to passenger load and flight volume, the value of the expansion option using the Black-Scholes-Merton model is calculated. The article concludes with the recommendation for the expansion to be carried out on a 4-year horizon, which in this period results in a positive strategic NPV, in addition to optimizing the utilization of the airport’s terminal capacity.
Highlights
The rates of economic development experienced by Brazil in recent years, in addition to the major sporting events hosted by the country, have resulted in an increasing need for travel, and a considerable expansion of the country's airline industry
This paper aims to identify and analyze the application of real options through the Black-Scholes-Merton method, as a means of evaluating the viability of investments in the Guarulhos airport's air terminal expansion in São Paulo, Brazil
This study presents in detail the methodology and steps used to forecast passenger demand at several Brazilian airports by the year 2037
Summary
The rates of economic development experienced by Brazil in recent years, in addition to the major sporting events hosted by the country, have resulted in an increasing need for travel, and a considerable expansion of the country's airline industry. In 2014, due to the World Cup, more than 100 million passengers were transported, an important number that made the country the 12th largest air market in the world [1]. As of July 2019, it will typically serve over 20,000 flights and 4 million passengers per month. The large number of transported passengers demands an adequate airport infrastructure that is able to serve travelers quickly and efficiently. Due to a previous lack of investment, the country's airport capacity has not increased at the same rate as the growing demand. This has lead to an overload of existing infrastructure, which is not able to deliver adequate air service to consumers [1]
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