Peru Pays $91M After ‘Arbitrary’ Airport Contract Termination

LUXEMBOURG & LIMA – January 20, 2026 – The government of Peru has paid US$91.2 million to a consortium partially owned by Corporación América Airports (NYSE: CAAP), settling a landmark international arbitration case and closing a contentious chapter in the nation's infrastructure history. The payment resolves a dispute stemming from Peru's 2017 termination of a major airport concession, an act an international tribunal later deemed “arbitrary, unjustified and without a well-founded reason of public interest.”

The payment was made to Sociedad Aeroportuaria Kuntur Wasi, in which CAAP holds a 50% indirect stake. It follows a final award issued in May 2024 by the World Bank's International Centre for Settlement of Investment Disputes (ICSID). The decision marks a significant legal and financial victory for the airport operator and serves as a costly lesson for the Peruvian state on the sanctity of international investment contracts.

Mr. Martín Eurnekian, CEO of Corporación America Airports, commented on the resolution in a statement. “The receipt of this payment reflects the outcome of a long-standing process conducted within the established international arbitration framework, as well as constructive engagement with the relevant parties, and represents an important step toward bringing this matter to a conclusion, making it clear that CAAP complied with all its contractual obligations.”

A Costly End to a Contentious Dispute

The dispute's origins trace back to 2014, when the Kuntur Wasi consortium won a 40-year concession to design, build, and operate the new Chinchero International Airport. The project was championed as a critical infrastructure upgrade to boost tourism by providing more direct access to Cusco and the world-renowned Machu Picchu ruins. However, the project became mired in political controversy.

In May 2017, the administration of then-President Pedro Pablo Kuczynski unilaterally canceled the contract. The government publicly cited concerns that the financing structure was detrimental to the state, pointing to uncapped interest rates that it claimed could have cost taxpayers nearly $600 million over the life of the concession. The decision was made amid a volatile political climate, as the sweeping Odebrecht corruption scandal had cast a pall of suspicion over all major public-private partnerships in the country, leading to intense scrutiny from Congress and the media.

An attempt to salvage the deal with an addendum that would have shifted more of the financial burden onto the state backfired, drawing sharp criticism from the comptroller's office and opposition lawmakers. Ultimately, the government terminated the agreement, a move that Kuntur Wasi always maintained was a response to internal political pressure rather than a legitimate contractual issue. The consortium, having already invested around $60 million in preliminary work, initiated arbitration proceedings with ICSID in 2018.

Validation for CAAP, Precedent for Investors

For Corporación América Airports, one of the world's largest private airport operators with 52 airports under management, the $91.2 million award is both a financial boon and a strategic vindication. The company's 50% share of the net proceeds will be recorded as non-operating income, bolstering its balance sheet and providing additional liquidity to fuel its global growth strategy. This includes ongoing capital expenditure programs in Armenia and Italy and its recent expansion into the Middle East with an agreement to operate Baghdad International Airport.

The ICSID ruling carries weight far beyond CAAP’s financial statements. It sets a powerful precedent in international investment law, reinforcing protections for foreign companies against political risks in emerging markets. The tribunal's explicit rejection of Peru's “public interest” defense sends a clear message to governments that terminating contracts for political expediency can have severe financial consequences. The decision affirms that international arbitration bodies will uphold the terms of concession agreements, providing a degree of security for investors committing capital to long-term infrastructure projects in politically sensitive regions.

Peru's Lingering Infrastructure Headache

While the arbitration case is now closed, the saga of the Chinchero Airport is far from over for Peru. The $91.2 million payment represents a direct and substantial cost to Peruvian taxpayers for a decision the ICSID tribunal found to be without merit. This outcome has the potential for significant political fallout, raising questions about the accountability of the officials involved in the 2017 termination, including then-Transport Minister Martín Vizcarra, who later became president.

Beyond the financial loss, the ruling damages Peru's reputation as a stable and reliable destination for foreign direct investment. International firms may now perceive a higher risk of arbitrary government action, potentially demanding more stringent terms or higher returns on future projects, or avoiding investment altogether. This reputational harm could make it more challenging and expensive for Peru to attract the private capital needed to address its significant infrastructure gap.

The Unbuilt Airport's Troubled Future

Ironically, even after paying a hefty price for canceling the original contract, Peru has struggled to advance the Chinchero Airport project. Following the termination with Kuntur Wasi, the government pivoted to a government-to-government (G2G) model, bringing in a South Korean consortium for technical assistance. Construction officially began in 2019, but progress has been slow and plagued by new challenges.

As of mid-2024, the project faced yet another crisis, with the government on the verge of canceling its contract with the new construction consortium, Natividad, over a lack of progress and financial disagreements. This has led to further delays, pushing the estimated completion date to September 2026 at the earliest. The government has since reduced the contractor's scope to only the terminal building, with a new bidding process for the runway and control tower planned for 2025.

These persistent construction woes are compounded by long-standing technical and environmental concerns. Aviation experts have questioned the operational viability of an airport at such a high altitude (12,200 feet), while environmental and cultural advocates worry about its impact on the delicate local ecosystem and the nearby UNESCO World Heritage site of Machu Picchu. This ongoing turmoil ensures that even with the arbitration settled, the shadow of the Chinchero airport project will continue to loom over Peru's infrastructure ambitions for years to come.