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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 2039b-CO FILEC'O'"PY STAFF APPRAISAL REPORT Public Disclosure Authorized DOMESTIC AVIATION DEVELOPMENTPROJECT COLOMBIA September 28, 1978 Public Disclosure Authorized Projects Department Latin America and the Caribbean Regional Office Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Currency Equivalents 1 Colombian Peso (Col$) = US$0.03 US$1.00 = 37.6 Calombjan Pesos (Col$) 1 million Colombian Pesos = US$26,600 System of Weights and Measures Metric 1 kilometer. (km) = 0.62 mile (mi) 1 meter (m) = 3.28 feet (ft) 1 kilogram (kg) = 2.20 pounds (lb) 1 metric ton = 2205 pounds 1 metric ton-kilometer = 0.69 short ton-mile 1 passenger-kilometer = 0.62 passenger-mile Fiscal Year January 1 to December 31 Abbreviations and Acronyms Aerocondor Aerovlas Condor de Colombia S.A. Aerotal Taxi Aero el Llanero S.A. Avianca Aerovlas Nacionales de Colombia S.A. CFR Crash, Fire and Rescue Buildings and/or Equipment CIF Including Costs, Insurance and Freight CNR Colombian National Railways CNT Corporaci6n Nacional de Turismo CONPES Economic Committee of the Cabinet DAAC Departamento Administrativo de Aeronautica Civil DAINCO Department of National Territories DANE National Statistics Department DNP National Planning Department FALPRO Facilitation Program of UNCTAD FAN Fondo Aeronautico Nacional FFI Flight Facility Inspection Aircraft and/or Equipment FONADE Fondo Nacional de Desarrollo IATA International Air Transport Association ICAO International Civil Aviation Organization IDA International Development Association IDB Inter-American Development Bank INTRA National Transport Institute MOP Ministry of Public Works (up to January 1976) MOPT Ministry of Public Works and Transportation (after January 1976) NPA National Plan of Airports NPAN National Plan for Air Navigation SAM Sociedad Aeronautica de Medellin Consolidada S.A. Satena Servicio de Aeronavegacion a Territorios Nacionales TAC Aerovias del Cesar Ltda. UNCTAD United Nations Committee for Trade and Development UNDP United Nations Development Program VOR Very High Frequency Omni Directional Radio Range Less than 1 FOR OFFICIAL USE ONLY STAFF APPRAISAL REPORT DOMESTIC AVIATION DEVELOPMENT PROJECT COLOMBIA TABLE OF CONTENTS Page No. Is THE TRANSPORT SECTOR .. ..................... * ............ **** 1 A. General ............. .. ...........................* ...... *...** * * ..... 1 B. Railways ................................................ 3 C. Inland Waterways ........................... ...... ............ 4 D. Highways ................................................ 4 E. Ports ................................................. ..*.......... 5 F. Investments, Regulation and Coordination ................ 6 G. Ban,k Involvement in the Transport Sector ................ 7 II. THE AVIATION SUBSECTOR . ........................... ... s ..... 8 A. Subsector Characteristics . 8 B. The Aviation Network and Traffic Growth ............ 8 C. Regulation and Planning . ............. ... ............... 10 D. The Commercial Airlines * .......... ................. 11 E. Demand and Market Aspects .... ..................... s. 12 F. Traffic Projections ... ............. ......... .. .................13 G. Aviation Infrastructure ....... .. ..... .... ............. 15 III. THE EXE(:UTINGAGENCIES ....................................... 16 A. Avi.ationAdministration ..... ............................ 16 B. Financial Management ............. o.... %............. 18 C. Accounting ........ 0..............................0.... .... 18 D. AviLationPlanning ........ ............................... 19 E. System Engineering . ..... so........ ... so................... 19 F. System Maintenance . ........................ ...... 20 G. System Operation ......... .. ................... ..... ............. 20 IV. THE PROPOSED PROJECT . ............... ... ...................... 20 A. Oblectives ..... .............................................20 B. General Description ........ ................................. ... s.o. 20 C. Cost Estimate ........... .............................*.. 21 This report is based on the findings of an appraisal mission which visited Colombia during January-February 1978. The mission comprised Messrs. W.B.R. Zetterstrom (Senior Aviation Engineer), John R. Bowlin (Financial Analyst), Renato Schulz (Country Transport Economist) and Mrs. Jenifer A. Wishart (Economist). The report has been edited by Miss Virginia R. Foster. This document has a restricted distribuiion and may be used by recipients only in the performance of their officiialduties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - TABLE OF CONTENTS (Continued) Page No. IV. THE PROPOSED PROJECT (Continued) D. The Project Components . ......... ........................ 22 (i) Medellin -Rionegro Airport ..# .....................22 (ii) Cartagena -Crespo Airport . .............0 ......... , 23 (iii) Bogota - Eldorado International Airport ..0.......... 24 (iv) Bogota -Second Runway ..........................25 (v) Bogota -Customs Facilitation ................... So. 26 (vi) Flight Facility Inspection (FFI) Aircraft .......... 26 (vii) Technical Assistance and Training .... ..............27 (viii) Financial Consultants ...... o ................... 28 E. Execution .................................o .o...o.....&...... 28 Fo Procurement .. ...... ........................ ................ 29 G. Financing and Disbursement . ......................... 29 H. Ecology.. ................ 29 V. ECONOMIC EVALUATION. ... 30 Ao Medellin ............... o ....... 30 B. Bogota ... 35 C. Cartagena..... .......... 35 D. FFI Aircraft .. 36 E. Overall Project Returns and Benefit Distribution 37 F. Project Risks . 37 VI. FINANCIAL ANALYSIS ................ o ............. o........... 38 A. Existing Situation ................o................... ...... 38 B. Financial Objectives . ............... .... ...o............. 40 C. Financial Plan .... .. ........... ............... .......... 42 D. Financial Projections o..o .......................... 42 VII. AGREEMENTS REACHED AND RECOMMENDATION ..o.... ..........o...... 45 - iii - TABLE OF CO'NTENTS (Continued) Page No. TABLES 1.1 - Intercity Transport by Mode ........... 6 ................ 47 1.2 - IBRD-IDA Involvement in Colombia Transport .48 2.1 - Airport Traffic .49 2.2 - Domestic Traffic Flows 1976 . .50 2.3 - Domestic Air Fares - Colombia .51 2.4 - Visitor and Hotel Capacity - Cartagena (2 pages) 52-53 2.5 - Air Traffic Forecasts (2 pages) .54-55 3.1 - Planned Non-Project Investments, DAAC. 56 4.1 - Cost Estimates (3 pages) ... 57-59 4.2 - Disbursement Schedule .60 5.1 - Vehicle Operating Costs .61 5.2 - Domestic Passenger Time Values, Medellin 1977. 62 5.3 - Economic Rates of Return .63 5.4 - Cost and Benefit Streams .64 5.5 - E'roposed Flight Inspection Program. 65 6.1 - DAAC/FAN Operating Statements .66 6.2 - DAAC/FAN Cash Flow.... ..67 6.3 - DAAC/FAN Summary Balance Sheets as of December 31 68 6.4 - DAAC/FAN Statement of Revenues .69 6.5 - D)AAC/FAN Projected Operating Statements .70 6.6 - Mledellin Airport - Projected Operating Statements 71 6.7 - Bogota Airport - Projected Operating Statements .72 6.8 - Cartagena Airport - Projected Operating Statements 73 6.9 - DAAC/FAN Projected Cash Flow .74 6.10 - D)AAC/FAN Projected Balance Sheets as of December 31 75 ANNEXES I - Outline Advisor Job Descriptions .......... .............76-80 2 - Training ............................................... 81 3 - DAAC/FAN Schedule of Selected Financial Indicators ..... 83 4 - 'Financial Assumptions ............... .. ................. 84 5 - Selected Documents and Data Available in the Project File ............... .. .................86 CHARTS World Bank 18901 - DAAC/FAN Organization World Bank 18893 - Implementation Schedule MAPS IBRD 13569 - Location of Project Airports IBRD 13570 - Location of Proposed Airport at Rionegro IBRD 13571 - Master Plan of Proposed Airport at Rionegro IBRD 13572 - Proposed Project Works at Cartagena Airport IBRD 13573 - Proposed Project Works at Bogota Airport IBRD 13574 - Second Runway Proposals for Bogota Airport I. THE TRANSPORTSECTOR A. General 1.01 Colombia has coastlines on both the Pacific Ocean and the Carib- bean Sea, but this advantage of having two coastlines is offset by the dif- ficulty of movement between the coasts and the interior. The three mas- sive ranges of the Andes Mountains which run from south to north present formidable barriers to communication between the main areas of population, which, until recently, developed as separate and almost isolated communities. Transport investment policy over the past 20 years has been aimed at national integration and at overcoming the situation imposed by topography. 1.02 It was not until the early 1950s that Colombia's largely regionally oriented ground transport system began to evolve into a national system. For a long time, the Magdalena River was the only workable transport route between the central region and the Atlantic coast. Since 1961, the Atlantic Railroad, which was constructed with Bank assistance, has provided an all-weather connection to the north to the port of Santa Marta. Colombia was developing its trunk highway system at the same time. By the early 1960s, construction and upgrading of the Western Trunk
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