Mexico’s Cancelled $13-Billion Zombie-Airport Refuses to Die

The people voted to scrap the project that was one-third finished, $4 billion over budget, mired in allegations of corruption, and built on an unstable lake-bed. But it has a life of its own.

By Nick Corbishley, for WOLF STREET:

A year ago, the Mexican people — albeit a small fraction of the electorate — voted to scrap a new $13-billion airport for the capital that was almost one-third finished, at least $4 billion over budget, and mired in allegations of corruption. Around $5 billion had already been poured into the new Texcoco airport, which was to feature a futuristic, X-shaped terminal designed by Norman Foster. Another $8.3 billion was earmarked to finish it.

And for the foreseeable future, Mexico City, one of the world’s largest metropolises, must continue to make do with an ancient airport, Benito Juarez, that is already overwhelmed by passenger numbers, has no room for further growth, and in some places, like many parts of Mexico City, is gradually sinking into the bed of one of the lakes on which the center of the city was originally built.

The final decision to undo years of construction work on Texcoco, at an estimated cost of $9 billion, ultimately fell to Mexico’s new president, Andrés Manuel Lopez Obrador (AMLO), who had spearheaded the opposition to the project in the first place, mainly on grounds of corruption and lack of transparency. A staggering 70% of the contracts for the project, some of which had a duration of 50 years (with the option of extending them to 100 years), were awarded without tender, in direct contravention of the Mexican government’s own anti-corruption laws.

But the biggest problems with the Texcoco airport are structural and environmental. The site chosen for its development is a drained lake bed that happens to attract much of Mexico City’s run-off water. The ground still has extremely high water content and low resistance to stress. For the big construction companies involved, it would have been the perfect boondoggle: once the airport was built, the chronic structural problems that ensued would have necessitated huge amounts of maintenance work, just to keep the land fit for purpose.

“The Texcoco lake bed is the worst land imaginable for building any kind of construction on,” said José Luis Luege Tamargo, the former head of Mexico’s water regulator, in an interview. Under Texcoco’s marshy land is one of Mexico City’s most important aquifers, but it is being depleted at an alarming rate. As a result, the land above it is sinking at an average rate of between 20 and 40 centimeters a year, further increasing the risk of flooding at Texcoco. In 2014, Luege Tamargo alerted the consortium in charge of the project to these risks but his warnings were ignored.

Yet while the airport project may have been cancelled and some of the bonds issued to finance its construction have already been repaid, it is still far from dead and buried. An avalanche of more than 140 lawsuits brought by a tenacious, well-funded coalition of business leaders, airline representatives and lobbyists has prevented AMLO’s government from dismantling the work on Texcoco and proceeding with his alternative project, to build two commercial runways at the Santa Lucia air force base and a new runway at Toluca Airport..

It was only in the last month that AMLO was given the green light to commence work on Santa Lucia, which is 55 kilometers from downturn Mexico City. The project is scheduled to be inaugurated in May 2022, though large-scale projects like these have an annoying habit of falling behind schedule and running well over budget.

The projected budget for Santa Lucia has already shot up three times in the last year, first from $3.64 billion to $4.07 billion, then to $4.76 billion, and most recently to $4.93 billion. That, together with the fact that the Ministry of Defense is overseeing the project and has deemed it classified, has intensified opposition to AMLO’s plans among business leaders and amplified calls for the original Texcoco project to be reinstated.

The coalition to save the Texcoco airport is led by a group called #NoMasDerroches (No More Splurges) whose members include Mexico’s most powerful business lobby group, Coparmex. “We’re not moved by politics. We simply believe the president’s decision to cancel Texcoco and build Santa Lucia is legally and financially unjustified,” Gerard Carrasco, a spokesman of the group, told Bloomberg. “It’s a waste of public resources.”

The government’s latest plan for Texcoco is to restore the former lake there and build a national park around it, which would deliver the definitive blow to the half-finished airport. Given the vast sums of money at stake in the Texcoco project, not just in its construction and future maintenance but also the long-hatched plans to build an “aerotropolis” — a vast multimodal “airport city” — around the airport, which investors hoped would become the biggest transport/infrastructure hub in the whole of Latin America, the companies and individuals invested in the project will do whatever it takes to stop that from happening. Those investors include:

  • The Atlacomulco Group, a secretive political network operating in the State of Mexico, where the new airport was being built. They were very closely connected to AMLO’s predecessor, Enrique Peña Nieto, who launched the NAIM project, and are alleged to have bought up much of the land on which the new airport and surrounding aerotropolis was to be built.
  • Large Mexican companies such as ICA, Prodemex, GIA, and Grupo Hermes, which is owned by Carlos Hank, a billionaire banker with close ties both to Peña Nieto and now to AMLO.
  • Carlos Slim, Mexico’s richest man. His construction company, Grupo Carso, had three major building contracts worth an estimated $5 billion. When AMLO threatened to cancel Texcoco, Slim famously warned that suspending the project “would mean suspending the country’s growth.’’

Given that Mexico’s economy has barely grown since the cancellation of Texcoco, Slim’s statement has so far proven to be eerily prescient. The construction and infrastructure sector has been particularly hard hit. As for the biggest infrastructure project of all, the Texcoco Airport, its future, despite AMLO’s best efforts, remains — if you’ll excuse the pun — up in the air. By Nick Corbishley, for WOLF STREET.

The slowdown in Mexico is not just in construction, exports, and manufacturing – but in services as well. Read…  Global Slowdown? Mexico’s GDP Declines Year-Over-Year for First Time Since 2009

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  40 comments for “Mexico’s Cancelled $13-Billion Zombie-Airport Refuses to Die

  1. Debs
    Nov 13, 2019 at 5:20 pm

    The classic call of “business leaders”. You must let us rip you off, or we’ll crash the economy. Then, they’ll claim to be Job Creators as they avoid taxes on their stolen wealth.

  2. Blockhead
    Nov 13, 2019 at 5:31 pm

    Like the US under Trump, the swamp cannot be drained. In fact, it looks like the swamp will drown everything else.

  3. Unamused
    Nov 13, 2019 at 6:12 pm

    It’s not actually an airport. It’s a mechanism for transferring wealth upwards, a model for the rest of the global economy.

  4. R2D2
    Nov 13, 2019 at 6:45 pm

    Wherever there is a giant public project, there will always be a swarm of private vultures ready to tear the carcass apart.

    England is building a highspeed railway line from south to north, called HS2, due by 2026. It will shave 20mins off a 2hr journey. The original cost was projected at $20-40b… Latest estimates suggest it will now cost at least $100-200b…

    Mexico may be close to civil war, but it is not the only country wasting public money on dodgy projects with murky contractors.

    • Uncle Jam
      Nov 14, 2019 at 8:09 am

      Why pay taxes so that some fool can give it to someone else. Now you see why businesses and the 1% prefer to pay thier fair share of taxes 0% ! Can you blame them?

    • rhodium
      Nov 15, 2019 at 9:55 am

      I’ve seen it in the U.S. too. Typical behavior for construction contractors, for some reason they have a tendency to draw particularly unsavory characters into management (but perhaps this is the case in more industries than not anyway) but my experience with them is still unrivaled. However, the difference between good contractors and bad ones for massive projects is usually whether the final cost is less than double the original estimate vs many multiples, because generally incompetence becomes an issue even if corruption isn’t. I’ve seen too many cases where the strategy for fixing a problem was basically just to scream about it rather than think it through. Good riddance I am not a part of that industry anymore.

  5. Brett Austin
    Nov 13, 2019 at 6:46 pm

    Wow; after reading Wolf’s article, I initially thought he was talking about the California High Speed Rail project – over budget, years away, corrupt politicians buying farm land in the path of the tracks, trains running on low speed tracks, destinations nobody every heard of, prior bidders suggesting the only viable alternative was above existing direct highways, etc., etc.

    Finally, I woke up and realized it was about an airport not rail. So what’s the difference? Always the same story when government is involved.
    Cheers

    • Paulo
      Nov 13, 2019 at 7:39 pm

      Pretty all encompassing statement about Govt projects, Brett. While the article certainly portrays a corrupt Mexican version, many many Govt organised and funded mega projects do quite well. In fact, with large infrastructure projects Govt sponsorship is the only way to make things possible and go forward. When you ask private interests to do it on their own,

      Mexico is corrupt due to influential corporations and individuals controlling the process. If you limit the influence of corporations and the wealthy, and nurture the rule of law while providing a transparent bidding process, mega projects can be completed on time and within budget.. In the case of Mexico and this particular project, a few firing squads might be in order.

      I do feel that Mexico is pretty much a basket case, though. I don’t see much possibility of reform unless something lights a fuse.

      This was interesting: https://www.nytimes.com/2018/12/28/nyregion/el-chapo-trial-mexico-corruption.html

      • Paulo
        Nov 13, 2019 at 7:41 pm

        Mising part of a sentence. ” When you ask private interests to do it on their own, ” (should add), why would they unless there is profit involved?

      • Cas127
        Nov 14, 2019 at 2:03 pm

        “many many Govt organised and funded mega projects do quite well.”

        Many, many huh?

        List three US mega public works that came in at budget in the last 50 years.

        In the US, public works is a synonym for bottomless fiscal/political shithole.

        • ultra
          Nov 14, 2019 at 6:18 pm

          Cas127: The US interstate highway system was funded by the government. It radically transformed the country.

    • Nov 13, 2019 at 8:13 pm

      One of the reasons the high-speed rail between SF and LA is very tough to build is because powerful and rich people live near where the train needs to go, and they don’t want it anywhere near their homes. NIMBY.

      • MCH
        Nov 13, 2019 at 9:46 pm

        That’s true after a fashion, but let’s face it, they couldn’t even get the train from the outskirts of LA to Gilroy where there are far fewer rich people to oppose the project.

        I love Brown, but that high speed rail project was a failure from the day it was announced. I admire Newsom for having the guts to put it on hold… though I am sure he is just keeping it in the back pocket for future use to pay off someone else.

        If nothing else, they should have just looked at that disaster of a rail project in Honolulu to get a taste of what California version would’ve looked like.

        The common denominator? One party Rule.

        • Nov 13, 2019 at 11:59 pm

          Don’t forget the hedge-fund farmers in the Central Valley. There are various lawsuits going on right now. Some have been settled. It will take a long time to get the right-of-way.

        • morticia
          Nov 14, 2019 at 12:12 am

          In China if you opposed “Right of Way” for a new high speed train, they would just take you out and shoot you.

          Why has not California adopted these progressive tools?

          China finishes its high-speed rails in the time that USA spends talking about it in meetings.

          At the current rate China will have colonys on the moon&mars and USA will still be driving on there 1950’s freeway system designed to transport missiles

          On a scale of first world countrys to 3rd, 4th, USA is clearly a 3rd world, where say Yemen might be 4th. But Yemen is only 4th because of USA bombing ( via Saudi )

          Another mention about highspeed trains, in JAPAN the SHINKANSEN (BULLET TRAIN) is the most expensive way to travel, more expensive than even airplane. Thus its only used by the ‘rich’. If they ever actually got a bullet-train in the USA, who would ride it? The rich in USA fly private jets.

        • Nov 14, 2019 at 2:16 am

          New York City to Washington DC — the Acela Express — is something close to high-speed rail. It’s packed. I used to use it all the time back in 2000 – 2005.

        • MCH
          Nov 15, 2019 at 12:00 am

          I think that California is far too full of itself, and its management far too smug for their own good. In a way, it wouldn’t be bad for California to be humbled or brought down a few notches. It is a great place being slowly managed into oblivion.

          And the double standard being laid down is just sad. CA keeps telling everyone else how it’s the best, it’s the most progressive, and how it’s government is the fairest. Yet, you look at its policies from state down to county down to the city, and what its really about is leveraging divisions for the sake of power, and siphoning off money from those who can least afford it, and the hypocrisy is just stunning.

          CA is all about equal opportunity… all about fairness, but by the way, we like helping the rich get richer, and screw the poor and the middle class along the way. Case in point, when electric cars first became the rage, CA ponied up a $2500 credit so that people can buy $100K+ cars, it wasn’t until the Leaf that there was actually a reasonably affordable electric car. And who benefits from the credit? Not the poor, who couldn’t even afford a $20K car, it’s the rich, who doesn’t need the credit in the first place. But in CA’s view, the point is to drive adaption of electric cars. But the ones who benefit from the credit are the ones who least need it. As for the guys who couldn’t take advantage of the credit, let them eat cake.

          Gas tax, hmmm, who does that disproportionately affect. I’ll give you a hint, it ain’t the people living in Palo Alto or Atherton. And by the way, they mostly drive Teslas, and even if they didn’t, they don’t care.

          And the most recent insult, HOV/Fast track lanes on 101 to help ease congestion, I heard it was pay $3 a mile, and set for anywhere between 5 am to 8 pm. So, the drive from the airport to the north end of the valley (if the $3 per mile thing is true) is going to be $60. I wonder who doesn’t care about $60 each way and who is going to be stuck in the traffic jam on 101. I’m going to bet it isn’t the millionaire in his Tesla X needing to get to the airport a little faster.

          But hey, CA is progressive, so we’re all good here. As for the middle class and the poor, just tell them that the other side hates immigrants and are against equal rights for the minority of the week, and let’s fleece them for all its worth. Those poor saps will believe anything.

      • Craig
        Nov 14, 2019 at 3:16 am

        Wolf

        If only you had some form of compulsory purchase system for economic development. In fact I thought you did. Where it has been used for building private malls.

        Seems like no poltican is prepared to appeal to the masses over the rich by backing it.

      • stan6565
        Nov 14, 2019 at 9:42 am

        There is a technical difficulty there as well.

        It’s called San Adreas Fault. You don’t want to build over that.

        One could perhaps build on the ocean side of it, but there are still mountains to cross on that route, meaning lots of tunelling work and bridges and viaducts. However, given that the whole thing would shake and move anywhere along its length, by 30-40cm in the preparatory quakes (once a year at least?) and not inconceivably 2 or 3m in the real big one (every 50-100 years?), you’d have to build a great deal of its length as an an elevated railway on skiddy legs, something akin to the laboratory buildings of British Antarctic Survey.

    • Nov 16, 2019 at 11:42 pm

      Not Wolf. Nick.

  6. David Hall
    Nov 13, 2019 at 7:09 pm

    By some estimates Mexico has the second most number of Catholics in the world. The Roman Catholic Church banned contraceptives. Children need shoes. They can not afford an airport.

    Mexican oil production peaked c. 2004. It has been declining since; to nearly half of peak production. They have untapped hydrocarbons in shale, but no major fracking reported.

    • Unamused
      Nov 13, 2019 at 7:50 pm

      They can not afford an airport.

      And they never will, if they cannot get the corporate corruption under control. Corporations are so keen on robbing countries they’ll plant their own people in government at every level to make sure the scams succeed. Sometimes the billionaires themselves grab the top spots and dig themselves in like ticks.

      Virtually every article on this site is about the corruption of corporations and the greedy people who run them. No, really. I would not kid you about such a thing.

  7. WES
    Nov 13, 2019 at 7:57 pm

    Reminds me of Trudeau’s unused white elephant airport north of Montreal!

    He also wanted to duplicate that white elephant by building another airport on the East end of Toronto.

    Rewards for his liberal supporters.

  8. gorbachev
    Nov 13, 2019 at 8:32 pm

    Everyone in mex is corrupt.So lets change things up.

    First they have to bid on the projest itself.Then they have to bid on the

    bribes they are willing to pay.All in public view.assigned payouts

    already negotiated.10% to pres.10%to the generals etc. Might work.

    • Unamused
      Nov 14, 2019 at 8:14 am

      Why does that sound like an answer to an interview question for a high-paying job?

  9. Javert Chip
    Nov 13, 2019 at 10:13 pm

    Great job AMALO for cancelling the white elephant airport that was sinking into the ground at 1 foot/year. On the other hand, you can’t have the usual gang of quite-possibly-corrupt-rich-guys standing around howling about the government finishing the airport. I’d publicly call their bluff by offering to give them all in-process assets plus a 50-year airport operating lease, with 2 qualifications:

    1) The quite-possibly-corrupt-rich-guys must pay 100% of the remaining construction costs ($0 public funding);

    2) The quite-possibly-corrupt-rich-guys must agree to complete the project as a safely functioning international airport within 5 years (surely somebody can document a meaningful definition of “complete”).

    If the above terms are not met at the end of 5 years, land & construction revert back to the government of Mexico, and the whole thing is turned into a theme park that looks a lot like Venice.

    Even quite-possibly-corrupt-rich-guys can’t be stupid enough to finance this…but they’ll be publicly humiliated and laughed at every time they yell about the government completing the airport.

    California’s Gov Newsom is damn lucky they have these Mexican airport clowns, or he’d spend all his time as the stupidest guy in the hemisphere.

    • Craig
      Nov 14, 2019 at 2:59 am

      I’d publicly call their bluff by offering to give them all in-process assets plus a 50-year airport operating lease, with 2 qualifications:

      1) The quite-possibly-corrupt-rich-guys must pay 100% of the remaining construction costs ($0 public funding)

      This. If they are willing to do “whatever it takes” to save the project then they will be quite happy to stump up the money.

      Who cares if they want to waste it on an airport instead of a loss making office rental company?

  10. Satya Mardelli
    Nov 13, 2019 at 10:24 pm

    To make the HSR viable the track needs to be straight and flat. Going around curves and climbing grades slows the “bullet” down to a normal speed of a commuter train. Thus, the best location of a rail is in the desert. Lay it straight as an arrow and flat as the desert floor will allow. Then you can hit max speed. Think Victorville to Las Vegas. Perfect!
    How about Los Angeles to Victorville? Zigzagging around all the existing infrastructure and you’ll be lucky to hit 50 MPH getting out of LaLa Land

    • stan6565
      Nov 14, 2019 at 9:19 am

      Or you could get Musk and his Acme Tunnel Boring Co. to drill you a straight line tunnel from LAX to Victorville. Under all the canyons.

      Price? Hah, details details don’t bother me with details. Taxpayers will foot the bill anyway.

    • Javert Chip
      Nov 14, 2019 at 9:24 pm

      Decent point, but remember, Mexican taxpayers have already sunk US$3-4B into what they thought was an airport.

    • Javert Chip
      Nov 14, 2019 at 9:43 pm

      Downtown LA to Victorville is 87 miles; having lived in LA, during most parts of the daylight hours, that’s at least 3-hr car trip (Victorville to Las Vegas is another 3 hours by car).

      No Angeleno in their right mind would make that drive so they could wait for a Train in Victorville, so they could rent a car (or UBER) to get around Las Vegas.

      The very fact that CA politicians are discussing this ten-of-billions-of-dollars boondoggle while CA literally has 130,000 homeless people rotting away on city streets, not to mention some of the worst public elementary & secondary schools in America, is absolutely criminal.

      • Nov 16, 2019 at 11:47 pm

        You forgot the fires, bad water, and horrible hipster problem.

  11. Craig
    Nov 14, 2019 at 3:12 am

    Thus, the best location of a rail is in the desert.

    it straight as an arrow and flat as the desert floor will allow. Then you can hit max speed.

    Most high speed rail is on plains or desserts.

    This is also why most high speed projects never got near the outskirts let alone the dense downtown. Expensive to demolish and slow needling around the districts.

    They ran from outside the city to outside the city(like airports). With interchanges to take you down. Cablecars or mountain railways like in the alps. Can take you over the hills. Dense last mile can be handled by BRT running straight on asphalt.

    The later density grew up around the high speed terminal. Rather than the high speed terminal around the density.

    Build like this and you can use 125mph steam engines! That’s just high speed 1.0. Flat,straight and island stations.

    First built 1899 for the London Manchester route!

  12. MC01
    Nov 14, 2019 at 6:08 am

    The world is full of useless airports: they were invariably built with promises of millions of passengers and tons of freight passing through to “pump money into our economy”.

    These places are invariably empty: to attract traffic they have to lower themselves to offer humiliating conditions to low-cost airlines such as Ryanair and Wizz, and these airlines will invariably dump them the minute money for the sweeteners runs out and/or the airport proves unappealing with travellers.
    Albacete, Agen, Hahn, Zielona Gora… the list goes on and on. The companies running these white elephants (invariably owned by local governments) are always coming up with ingenious schemes to turn their deserted runways and empty terminals into a beehive of activity rivaling Heathrow. Needless to say these new schemes always require large infusions of tax money, and that’s on top of the supersize loans that financed the airport in the first place.
    Politicians love this stuff, as do local “enterpreneurs”, who however always seem to be far keener to benefit from ultra-generous contracts than to directly invest into these white elephants.

    An old colleague from Finland once taught me the word “siltarumpupolitiika” (literally “culvert politics”) which Finns use to refer to local infrastructure schemes which have no other use but to enrich local companies through inflated contracts and buy votes for the politicians backing them. I reciprocated by teaching him the German word “wahlgeschenke” (literally “electoral gifts”) which has exactly the same meaning. We then had a good laugh at those wide-eyed dreamers who think Kallipolis really exist, complete with an infinitely wise philosopher king sitting on his throne.

    • Javert Chip
      Nov 14, 2019 at 9:47 pm

      LOL.

      Same general statements apply to sports stadiums (especially Olympic sports stadiums).

      • MC01
        Nov 15, 2019 at 3:43 am

        Ordinary stadiums are basically a community gift to sports team owners: don’t like football/rugby/soccer/etc? Tough luck because your tax money will go into subsidizing it instead of fixing that old bridge whose closure forces your bus to take a 15 minutes detour. But at least they see some use.

        But one-off infrastructures… they are something else. Not only they have to be paid for, but getting the Olympics, World Cup, Expo etc is an extremely expensive process, little more than legalized bribery.
        Back in 2005 the City of Milan paid $1.2 million to Al Gore (yes, that Al Gore) to lobby on their behalf to get the 2015 Expo. All out in the open. The FIFA committee charged with assigning the World Cup has been engulfed in so many financial scandals it has been nicknamed “The 40 Robbers”. And the less I say about the sundry dens of thieves called Olympic Committees, the better.

        That guy who said the key to a long healthy life was to steer well clear of sports has a very good point.

  13. nick kelly
    Nov 14, 2019 at 3:22 pm

    The rate of subsidence: 30 cm per year or about a foot is so unbelievable, nixing even the proposed construction of a large dog house, that it crossed my mind that it was a misprint.

    So I’ll echo the comment above: If Carlos Slim thinks it’s OK. let him build it and lease it to the govt, with an iron- clad clause requiring no cracking of foundations and runways etc. or the lease can be cancelled.

  14. sierra7
    Nov 15, 2019 at 12:32 pm

    What part of “our” (capitalist) system is NOT corrupt?????????
    Depressing article but so true.

  15. Pixel CHI
    Nov 16, 2019 at 1:06 pm

    Some day geotechnical engineers and engineering geologists will be paid their due.
    Anyway, this monster reminds me of the Denver International Airport (DIA) during its enlightened conceptual design and ultimate under estimated, overbudgeted design and construction. An unused, unworkable automatic baggage system sits abandoned in the basement, ten percent of the new construction budget dedicated to weird artwork to entertain travelers. Most recently, a strangely designed high rise hotel built with no attempt at blending it in with the rest of the tented terminal facility.

    Meanwhile, the current plan of updating the facility seeks to convert the airport into another “aerotropolis” with a mall so you and the kids can shop while waiting for your flight. The latest contractor was just fired after asking for $240 million more to continue work with a time of completion date pushed back two more years.

    Don’t think for a minute Texcoco is due to proprietary Mexican incompetence. DIA and its army of special interests, politicians, design consultants and eager contractors is right behind them.

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