Puerto Rico Economic Sector Profiles
Being a small and very open island economy, links with the outside world are essential. Thus, airport and port infrastructures are essential. Puerto Rico’s main airport is the Luis Muñoz Marín International Airport in Carolina, but it also has a number of other airports in San Juan, Ponce, Ceiba, Aguadilla and Mayagüez. The Aguadilla and Ceiba airports are former Air Force and Navy bases now operated by the Commonwealth. In addition, of course, the two island municipalities of Vieques and Culebra have their own airports, since most travel to and from them is via air. Jet Blue has consolidated its position as the leading airline serving Puerto Rico and has commenced flights, in addition to various cities in the mainland, to Caribbean destinations and the Dominican Republic.
In terms of maritime linkages with the outside world, the Port of San Juan is the key facility, with Ponce’s Port being the second largest. Mayagüez has its own port used primarily for ferry service to the Dominican Republic.
With respect to the former Roosevelt Roads Navy base, its Director, former Tourism Company Executive Director, Mario González, resigned. The Public-Private Partnership (PPP) related to the Luis Muñoz Marín International Airport will have an impact on the potential development of the Roosevelt Roads airport, limiting its activities particularly with respect to the movement of passengers. Since no development will occur in the property in the next three or four years, the impact is not considered damaging.
The Roosevelt Roads redevelopment process took a major step forward when the Navy and the Commonwealth Government reached an agreement to transfer a major parcel to Puerto Rico for the relatively small sum of $8.0 million. Other parcels had already been transferred, including land to the Department of Natural Resources to be kept as nature reserves in perpetuity. These lands are managed by the Puerto Rico Conservation Trust. The airport at Roosevelt Roads is being run by the Puerto Rico Ports Authority, although its use is limited to flights to Vieques and Culebra, a flight school and other minor uses. Two parcels were to be sold at auction but they found no takers.
The final use to which the former base will be put is still something of a question mark. The initial proposal in 2005 was to turn the property into a science and technology center. Subsequently, in 2009, a mega-casino based development known as “The Caribbean Riviera” was suggested. This scheme was subsequently downsized from the original 7,000 hotel rooms and other facilities to a somewhat more manageable project. In addition to creating a short route to Vieques with smaller and faster ferries, not much else has been decided with respect to transportation options related to the former Base.
The Port of the Americas in Ponce was initially conceived a transshipment port to be located further west in Guayanilla. After three years of planning it was moved to Ponce and work was begun on expanding and modernizing the port in order to make it accessible to Post-Panamax ships. Eventually, however, the emphasis shifted to having the Port of the Americas in Ponce be a domestic port handling primarily incoming and outgoing cargo. Investment so far in the Port exceeds $200 million and a similar amount will be needed to complete work required. A short term plan is in the works to make improvements in some of the piers and improve the port’s capacity.
Throughout the past five years a number of RFP’s have been issued and response has been very modest. A group based in Korea expressed its interest in running the port, but negotiations fell through because of unresolved financing issues. The Municipality of Ponce began negotiations with the Central Government to have the Port turned over to the Municipality. Late in 2011, legislation was approved that made the transfer possible. The Municipality has created a corporation that will be charged with running the port and lining up potential clients, as well as operators for the Port. Not much progress has been made in obtaining an operator for the port and for expanding capacity, particularly dredging to make it possible for Post Panamax ships to use the port.
The Luis Muñoz Marín International Airport PPP was signed and the process of obtaining regulatory approvals is underway. The private partner will be AZUR, a Mexican company in alliance with Highstar a financial sector company. The agreement calls for a lump sum payment of close to $700 million and annual payments to the Ports Authority of some $20 million. In addition, the private partner has committed to investing in major improvements in the airport. As in the PR-22 PPP, this is a brownfield project and not much investment is to be expected in the short run. However, improved management and increased traffic will generate economic activity in the midterm.
Other transportation projects recently completed or in advanced stages of development include the completion of Route-66 all the way to Rio Grande, the BRT from Bayamón to Toa Baja and the proposed light rail connecting the Sagrado Corazón station of the Urban Train in Santurce to the Convention District and Old San Juan. The future of the light rail project is now in doubt due to the Municipality’s fiscal condition. It is not clear yet whether the new municipal Administration will continue with this and other projects that the Santini Administration had planned.
In terms of air transportation, Iberia announced the discontinuation of its San Juan-Madrid route, a decision that also includes the Dominican Republic and Cuba’s routes to Madrid. Southwest Airlines bought Air Tran and has expressed its intention to expand the number of destinations it serves from San Juan as well as the frequency of flights. American Eagle has essentially left the routes from San Juan to various Caribbean destinations, many of which have been taken over by Jet Blue, notably the Dominican Republic and the U.S. Virgin Islands.
A new Secretary of Transportation and Public Works will take over on January 2, 2013. He is Miguel Torres, previously President of the Engineers Association and a well known and respected engineer. Víctor Suarez, who served as Secretary of the Popular Party, will take over as Director of the Ports Authority and previously was Deputy Mayor of Carolina and Secretary of Consumer Affairs.