SAN JUAN, Puerto Rico - A Mexican company will take over operations of Puerto Rico's main international airport as part of a US$2.6- billion deal that the US territory's government said will improve service and increase the number of flights and destinations, yesterday.

Aerostar Airport Holdings said it plans to invest more than US$1.4 billion at the Luis Munoz Marin airport in San Juan and make an upfront payment of US$615 million to the island's Port Authority as part of the 40-year agreement. Its statement and the government didn't provide a full breakdown of the US$2.6- billion figure.

The company is a joint venture of Highstar Capital and Grupo Aeroportuario del Sureste, which operates the Cancun airport and eight other airports in south-eastern Mexico. It won the concession over Spain's Grupo Aeropuertos Avance, which is made up of Ferrovial Aeropuertos and Macquarie Infrastructure and Real Assets.

The San Juan airport has long been the Caribbean's main hub. It handles about 8.5 million passengers a year and is served by 18 airlines that make more than 100 flights daily. But the government has struggled to increase passenger traffic, expand and modernise the airport and make improvements to terminals and taxi ways and runways.

"This will give us a world-class airport that we currently don't have," Economic Development Secretary Jose Perez-Riera said. "It will have a huge, huge impact on tourism in Puerto Rico."

The deal comes more than two years after Puerto Rico first proposed to privatise the airport's management to ease the Port Authority's crippling debt of US$1.1 billion, which stands to be cut in half, authority director Bernardo Vazquez said.

The first improvements will target public bathrooms, lighting, stairs, air conditioning, Wi-Fi and the parking lot's security system, Governor Luis Fortuno said. An additional 35,000 square feet (3,250 square metres) of retail area also will be built, he said.

The contract spells out very detailed goals, including that travellers wait no more than 12 minutes for their luggage after a flight and five minutes for a taxicab and that public bathrooms be cleaned 16 times a day.

Those are changes the Port Authority could never afford on its own, Vazquez said. "We don't have the money or the personnel to run the airport properly," he said.

Vazquez said the deal also will give the authority the means to improve the island's regional airports as well as its cruise ship piers, which were built nearly 60 years ago.

The contract says Aerostar will pay the Port Authority US$2.5 million a year for the first five years. It is then expected to pay five per cent of the airport's revenues in each of the next 25 years. During the final 10 years, the company is expected to pay 10 per cent of revenues.

Fortuno said the deal will bring 3,500 new jobs in the next three years and 13,000 more jobs within a decade. The airport currently generates more than 8,000 direct and indirect jobs.

Vazquez said he expects the US Federal Aviation Administration to approve the deal by late September.

The deal is a result of a public-private partnership programme that Fortuno created in June 2009 to help finance projects that the government could otherwise not afford. The programme so far has pushed the renovations of 10 schools and the construction of two toll roads, director David Alvarez said.