By Kylie Madry
MEXICO CITY (Reuters) - The airport operating business in Mexico is thriving as traffic surges due to multinational companies bringing overseas operations closer to home and growth at Mexican airlines, according to the head of GAP, which operates 12 airports in the country.
Manufacturing hubs such as Guadalajara have seen record traffic growth due to the relocation trend, called nearshoring, CEO Raul Revuelta told Reuters in an interview late Wednesday.
"Yes it's nearshoring, when you think medium-to-long-term," Revuelta said. "But it's also Mexican airlines, VivaAerobus, Volaris, Aeromexico, expanding their fleets, which allows them to open new routes and move more passengers."
Airport operators have been rewarded. GAP's shares are up nearly 26% year-to-date, while competitors OMA and ASUR have seen shares rise almost 35% and 20%, respectively.
The firm, whose full name is Grupo Aeroportuario del Pacifico (NYSE:PAC), plans to spend around 10 billion pesos ($554.90 million) in 2023, Revuelta said.
Projects range from a second terminal at Guadalajara's airport to an additional runway at Puerto Vallarta.
Demand from Mexico's northern neighbors is also likely to continue. Nearly two-thirds of the 39.4 million international travelers expected to visit Mexico in 2023 are forecast to be from the U.S. and Canada, Tourism Minister Miguel Torruco told Reuters.
In another favorable development, Revuelta predicted that Mexico's aviation safety rating, which was downgraded to Category 2 by the Federal Aviation Administration (FAA) nearly two years ago, will return to Category 1 later this year.
The downgrade has prevented Mexican airlines from opening new routes to the United States, limiting expansion plans.
"It's looking like it'll be back by the fourth quarter," Revuelta said. The passage of a proposed aviation reform by Mexico's Congress will be an important step, he added.
The reform is expected to pass Congress soon, after a proposal to allow "cabotage," a rare practice permitting international airlines to open domestic routes, was removed from the text.
($1 = 18.0212 Mexican pesos)