UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016

Commission File Number: 001-32751

Grupo Aeroportuario del Pacífico, S.A.B. de C.V.

(Exact name of registrant as specified in its charter)

Pacific Airport Group	United Mexican States
(Translation of registrant’s name into English)	(Jurisdiction of incorporation or organization)

Avenida Mariano Otero No. 1249-B

Torre Pacífico, Piso 6

Col. Rinconada del Bosque

44530 Guadalajara, Jalisco

Mexico

(Address of principal executive offices)

Saúl Villarreal

Chief Financial Officer

Grupo Aeroportuario del Pacífico, S.A.B. de C.V.

Avenida Mariano Otero No. 1249-B

Torre Pacífico, Piso 6

Col. Rinconada del Bosque

44530 Guadalajara, Jalisco

Mexico

Telephone: + 52 (33) 38801100 ext. 20151

svillarreal@aeropuertosgap.com.mx

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Series B Shares	New York Stock Exchange, Inc.*
American Depositary Shares (ADSs), each representing ten Series B Shares	New York Stock Exchange, Inc.

* Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: N/A

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Title of each class:	Number of Shares
Series B Shares	476,850,000
Series BB Shares	84,150,000

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

  Yes   ☒             No   ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

  Yes   ☐             No   ☒

Note: Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

  Yes   ☒             No   ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

N/A

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   ☒                  Accelerated filer   ☐                  Non-accelerated filer   ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP   ☐                  IFRS   ☒                  Other   ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17   ☐                  Item 18   ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐                  No ☒

TABLE OF CONTENTS

	Forward-Looking Statements	1
Item 1.	Identity of Directors, Senior Management and Advisers		2
Item 2.	Offer Statistics and Expected Timetable		2
Item 3.	Key Information		2
	Selected Financial Data		2
	Exchange Rates		7
	Risk Factors		7
Item 4.	Information on the Company		30
	History and Development of the Company		30
	Business Overview		37
	Regulatory Framework		71
	Organizational Structure		92
	Property, Plant And Equipment		93
Item 4A.	Unresolved Staff Comments		94
Item 5.	Operating and Financial Review and Prospects		94
Item 6.	Directors, Senior Management and Employees		142
Item 7.	Major Shareholders and Related Party Transactions		150
	Major Shareholders		150
	Related Party Transactions		151
Item 8.	Financial Information		152
	Legal Proceedings		152
	Dividends		156
Item 9.	The Offer and Listing		159
	Stock Price History		159
	Trading on the Mexican Stock Exchange		159
Item 10.	Additional Information		160
	Corporate Governance		160
	Material Contracts		169
	Exchange Controls		169

i

	Taxation	169
	Documents On Display	173
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	173
Item 12.	Description of Securities Other Than Equity Securities	174
Item 12A.	Debt Securities	174
Item 12B.	Warrants and Rights	175
Item 12C.	Other Securities	175
Item 12D.	American Depositary Shares	175
Item 13.	Defaults, Dividend Arrearages and Delinquencies	177
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	177
Item 15.	Controls and Procedures	177
Item 16.	Reserved	179
Item 16A.	Audit Committee Financial Expert	179
Item 16B.	Code of Ethics	179
Item 16C.	Principal Accountant Fees and Services	179
Item 16D.	Exemptions from the Listing Standards for Audit Committees	180
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	180
Item 16F.	Change in Registrant’s Certifying Accountant.	181
Item 16G.	Corporate Governance	181
Item 17.	Financial Statements	186
Item 18.	Financial Statements	186
Item 19.	Exhibits	186

ii

FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F contains forward-looking statements. We may from time to time make forward-looking statements in our reports to the Securities and Exchange Commission, or the SEC, on Forms 20-F and 6-K, in our annual reports to shareholders, in offering circulars and prospectuses, in press releases and other written materials and in oral statements made by our officers, directors or employees to financial analysts, institutional investors, representatives of the media and others. Examples of such forward-looking statements include:

• projections of revenues, operating income, net income (loss), net income (loss) per share, capital expenditures, dividends, capital structure or other financial items or ratios;

• statements of our plans or objectives;

• changes in our regulatory environment;

• statements about our future economic performance or that of the countries in which we operate or the countries to and from which the passengers who use our airports arrive and depart; and

• statements of assumptions underlying such statements.

Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “should” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from the projections, plans, objectives, expectations, estimates and intentions expressed in forward-looking statements. These factors, some of which are discussed below under “Risk Factors,” include material changes in the performance or terms of our concessions, developments in legal proceedings, economic and political conditions and government policies in Mexico, Jamaica or elsewhere, inflation rates, exchange rates, regulatory developments, customer demand and competition. We caution you that the foregoing list of factors is not exclusive and that eventualities related to other risks and uncertainties may cause actual results to differ materially from those expressed in forward-looking statements.

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments.

1

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

SELECTED FINANCIAL DAT A

The following tables present selected financial data for each of the periods indicated. This data should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements referred to in Item 18 hereof and included elsewhere in this document, including the notes thereto. Our audited consolidated financial statements are prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.

References in this annual report on Form 20-F to “U.S. dollars” or “U.S.$” are to the lawful currency of the United States of America. References in this annual report on Form 20-F to “pesos,” “Mexican pesos” or “Ps.” are to the lawful currency of Mexico. References in this annual report on Form 20-F to “Jamaican dollars” or “J$” are to the lawful currency of Jamaica. We publish our audited consolidated financial statements in Mexican pesos.

This annual report on Form 20-F contains translations of certain peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise indicated, U.S. dollar amounts have been translated from Mexican pesos at an exchange rate of Ps.20.6170 to U.S.$1.00, the noon buying rate for pesos on December 30, 2016, as published by the U.S. Federal Reserve Board. On April 7, 2017, the exchange rate for pesos as published by the U.S. Federal Reserve Board was Ps.18.6480 to U.S.$1.00.

This annual report on Form 20-F contains references to “workload units,” which are units measuring an airport’s passenger traffic volume and cargo volume. A workload unit currently is equivalent to one terminal passenger or 100 kilograms (220 pounds) of cargo. When we refer to “terminal passengers,” we mean the sum of all arriving and departing passengers on commercial and general aviation flights, other than transit passengers. “Transit passengers” are those who are generally not required to change aircraft while on a multiple-stop itinerary and who generally do not disembark from their aircraft to enter the terminal building. When we refer to “total passengers,” we mean the sum of terminal passengers and transit passengers. When we refer to “commercial aviation passengers,” we mean the sum of terminal and transit passengers, excluding general aviation passengers, such as those on private, non-commercial aircraft. This annual report on Form 20-F contains references to “air traffic movements,” which represent the sum of all aircraft arrivals and departures of any kind at an airport.

In reviewing this annual report, you should take into account the fact that certain margin and ratio calculations that utilize “total revenues” or “total operating costs” will reflect the effects of International Financial Reporting Interpretation Committee 12 Service Concession Arrangements (“IFRIC 12”), which provides the accounting treatment to be followed for service concession contracts for services considered to be public in nature. We recognize revenues and the associated costs of improvements to concession assets that we are obligated to perform at the airports as established by our Master Development Programs for our Mexican airports and Capital Development Program for the Montego Bay airport. The amount of revenues for these services are equal to the amount of costs incurred, as we do not obtain any profit margin for these construction services. The amounts paid are set at market value. As a result, revenues from improvements to concession assets do not have a cash impact on our results and do not represent a cash inflow. Furthermore, they are not directly related to our passenger traffic, which is the main driver of our revenues.

2

Consequently, changes in total revenues, total operating costs, operating margin, total revenues per terminal passenger and other ratios included in this annual report, as well as other ratios potentially useful to investors, may not be comparable between periods. In such instances we have included a parenthetical notation with comparable amounts or measures. Nominal results for amounts used in calculating certain margins, such as operating income, are not affected by the adoption of IFRIC 12 and are therefore comparable. See “Item 5, Operating and Financial Review and Prospects – Critical Accounting Policies.”

As a result of our acquisition of Desarrollo de Concesiones Aeroportuarias, S.L. (“DCA”) in April 2015, our selected consolidated financial and operating data for the fiscal year ended December 31, 2015 includes the consolidation of DCA’s financial and operating data from April 1, 2015. Therefore, financial and operating data for the fiscal year ended December 31, 2015 may not be directly comparable with financial and operating data for prior or subsequent fiscal years. DCA has a 74.5% stake in MBJ Airports Limited (“MBJA”), the entity that holds the concession to operate Montego Bay International Airport in Montego Bay, Jamaica.

3

	Year ended December 31,
	2012			2013			2014			2015			2016			2016
	(thousands of pesos, except per share and per ADS data)															(thousands of U.S. dollars; except per share and per ADS data)(1)
Profit or loss and other comprehensive income data:
Revenues:
Aeronautical services(2)	Ps.	3,365,982		Ps.	3,616,616		Ps.	3,925,736		Ps.	5,419,022		Ps.	7,037,920		U.S.$	341,365
Non-aeronautical services(3)		1,008,452			1,170,492			1,338,542			1,849,252			2,393,604			116,099
Improvements to concession assets(4)		570,233			440,728			281,874			838,635			1,676,037			81,294
Total revenues		4,944,667			5,227,836			5,546,152			8,106,909			11,107,561			538,758
Operating costs:
Costs of services:
Employee costs		402,607			390,606			393,537			502,794			584,560			28,353
Maintenance		200,022			200,224			223,687			302,203			346,805			16,821
Safety, security & insurance		159,379			173,748			192,932			249,752			282,310			13,693
Utilities		139,479			141,855			147,793			192,158			222,891			10,811
Other		158,515			222,518			203,639			311,351			345,805			16,773
Total costs of services		1,060,002			1,128,951			1,161,588			1,558,258			1,782,371			86,451
Technical assistance fees(5)		155,072			171,470			194,228			236,507			301,820			14,639
Concession taxes(6)		217,295			237,728			261,577			483,086			764,349			37,074
Depreciation and amortization:
Depreciation(7)		151,176			164,606			183,207			206,724			300,880			14,594
Amortization(8)		676,054			718,629			742,013			949,711			1,047,507			50,808
Total depreciation and amortization		827,230			883,235			925,220			1,156,435			1,348,387			65,402
Other expense (income)		1,333			(7,453	)		(43,424	)		(254,612	)		(295	)		(14	)
Cost of improvements to concession assets(4)		570,233			440,728			281,874			838,635			1,676,037			81,294
Total operating costs		2,831,165			2,854,659			2,781,063			4,018,309			5,872,669			284,846
Income from operations		2,113,502			2,373,177			2,765,089			4,088,600			5,234,892			253,912
Finance cost		(14,023	)		(51,159	)		(7,990	)		(456,810	)		(603,032	)		(29,249	)
Share of loss of associates		n/a			n/a			n/a			(13,704	)		(11,728	)		(569	)
Income before income taxes		2,099,479			2,322,018			2,757,099			3,618,086			4,620,132			224,094
Income tax expense		327,449			75,788			514,579			847,309			1,266,573			61,434
Profit for the year		1,772,030			2,246,230			2,242,520			2,770,777			3,353,559			162,660
Other comprehensive income
Exchange differences on translating foreign operations		n/a			n/a			n/a			482,394			773,453			37,515
Remeasurements of employee benefit – net of income taxes		n/a			n/a			n/a			n/a			10,773			523
Total comprehensive income for the year		1,772,030			2,246,230			2,242,520			3,253,171			4,137,785			200,698
Profit for the year attributable to:
Controlling interest		1,772,030			2,246,230			2,242,520			2,726,020			3,281,884			159,184
Non-controlling interest		n/a			n/a			n/a			44,757			71,675			3,476
Profit for the year		1,772,030			2,246,230			2,242,520			2,770,777			3,353,559			162,660
Total comprehensive income for the year
Controlling interest		1,772,030			2,246,230			2,242,520			3,141,513			3,948,323			191,508
Non-controlling interest		n/a			n/a			n/a			111,658			189,462			9,190
Total comprehensive income for the year		1,772,030			2,246,230			2,242,520			3,253,171			4,137,785			200,698
Basic and diluted earnings per share(9)	Ps.	3.3389		Ps.	4.2377		Ps.	4.2663		Ps.	5.1867		Ps.	6.2443		U.S.$	0.3029
Basic and diluted earnings per ADS(9)	Ps.	33.3891		Ps.	42.3768		Ps.	42.6629		Ps.	51.8670		Ps.	62.4430		U.S.$	3.0287

4

	Year ended December 31,
	2012			2013			2014			2015			2016			2016
	(thousands of pesos, except per share and per ADS data)															(thousands of U.S. dollars; except per share and per ADS data)(1)
Dividends per share(10)	Ps.	2.1292		Ps.	2.2837		Ps.	3.0249		Ps.	3.3200		Ps.	4.0700		U.S.$	0.1744
Dividends per ADS(10)	Ps.	21.2918		Ps.	22.8375		Ps.	30.2490		Ps.	33.2000		Ps.	40.7000		U.S.$	1.7436
Other operating data:
Total terminal passengers (thousands of passengers)(11)		21,287			23,173			24,719			30,319			36,549			36,549
Total air traffic movements (thousands of movements)		395			404			417			462			513			513
Total revenues per terminal passenger(12)	Ps.	232		Ps.	226		Ps.	224		Ps.	267		Ps.	304		U.S.$	15
Aeronautical and non-aeronautical services per terminal passenger	Ps.	205		Ps.	207		Ps.	213		Ps.	240		Ps.	258		U.S.$	13
Statement of financial position data:
Cash and cash equivalents	Ps.	1,663,683		Ps.	2,168,187		Ps.	1,595,502		Ps.	2,996,499		Ps.	5,188,138		U.S.$	251,644
Total current assets		2,459,168			2,872,087			2,062,571			3,386,683			5,998,574			290,953
Airport concessions, net		10,179,422			9,895,346			9,611,296			12,240,167			12,384,923			600,714
Rights to use airport facilities, net		1,270,490			1,213,792			1,157,093			1,100,394			1,043,695			50,623
Total assets		24,533,637			25,234,600			24,286,207			31,473,399			36,051,462			1,748,628
Current liabilities		1,132,711			1,212,154			1,582,227			4,658,310			1,941,299			94,160
Total liabilities		3,080,424			3,021,889			3,000,316			9,317,356			13,646,893			661,924
Total equity attributable to controlling interest		21,453,213			22,212,711			21,285,891			21,273,951			21,333,015			1,034,729
Common stock		15,447,322			15,447,322			13,937,322			12,528,780			10,778,613			522,802
Non-controlling interest		n/a			n/a			n/a			882,092			1,071,554			51,974
Statement of cash flows data:
Net cash flows provided by operating activities	Ps.	2,661,274		Ps.	2,964,713		Ps.	3,460,230		Ps.	4,904,753		Ps.	5,641,203		U.S.$	273,619
Net cash flows used in investing activities		(983,785	)		(680,951	)		(633,040	)		(3,669,927	)		(1,816,557	)		(88,110	)
Net cash flows (used in) provided by financing activities		(2,148,816	)		(1,779,258	)		(3,399,875	)		166,171			(1,771,185	)		(85,909	)
Effects of exchange rate changes on cash held:		n/a			n/a			n/a			0			138,178			6,702
(Decrease) increase in cash and cash equivalents		(471,327	)		504,504			(572,685	)		1,400,997			2,191,639			106,302

(1) Translated into U.S. dollars at the rate of Ps.20.6170 per U.S.$1.00, the noon buying rate on December 30, 2016, as published by the U.S. Federal Reserve Board. The U.S. dollar information should not be construed to imply that the peso amounts represent, or could have been or could be converted into, U.S. dollars at such rate or at any other rate. Per-share dollar amounts are expressed in U.S. dollars (not thousands of U.S. dollars). Operating data are expressed in the units indicated.

(2) Revenues from aeronautical services principally consist of a fee for each departing passenger, aircraft landing fees, aircraft parking fees, fees for the transport of passengers from an aircraft to a terminal building, security charges for each departing passenger and other sources of revenues subject to regulation under our maximum rates. See “Item 4, Information on the Company – Regulatory Framework” for a description of our regulatory framework, including our maximum rates, and “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges” for certain exclusions to these fees in each of Mexico and Jamaica.

(3) Revenues from non-aeronautical services consist of revenues not subject to regulation under our maximum rates, which are primarily revenues from leasing of commercial space to tenants, advertisers, certain ground transportation providers and other miscellaneous sources of revenues, as well as the revenues derived from business lines operated directly by us, which include car parking charges, advertising, VIP lounges and convenience stores. Pursuant to our

5

operating concessions and the Mexican Airport Law (Ley de Aeropuertos) and the regulations thereunder, car parking services are currently regulated under the Mexican Airport Law but are excluded from regulated services under our maximum rates, although the Ministry of Communication and Transportation (Secretaría de Comunicaciones y Transportes), or “SCT,” could decide to regulate such rates.

(4) Revenues from improvements to concession assets represent revenues generated from improvements made to concession assets and the related costs stemming from capital expenditures made as agreed with the Mexican government under our Master Development Programs for each fiscal year and with the Jamaican government in relation to our Capital Development Program. These amounts did not result in actual cash inflows, nor did they have an effect on our consolidated net income as revenues earned were equal to the costs incurred. See “Item 4, Information on the Company – Business Overview.”

(5) We pay Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V., or “AMP,” a technical assistance fee under the technical assistance agreement entered into in connection with AMP’s purchase of our Series BB shares. This fee is described in Item 7 hereof.

(6) Each of our subsidiary concession holders in Mexico is required to pay a concession tax to the Mexican government under the Mexican Federal Duties Law (Ley Federal de Derechos) for the use of public domain assets pursuant to the terms of its concession. The concession tax is currently 5% of each concession holder’s gross annual revenues (excluding revenues from improvements to concession assets).

(7) Reflects depreciation of machinery, equipment and improvements on leased buildings.

(8) Reflects amortization of concessions, improvements to concession assets, rights to use airport facilities, recovered long-term leases and parking lots.

(9) Based on a weighted average of 530,720,600, 530,061,831, 525,636,745, 525,575,547 and 525,575,547 common shares outstanding for the years ended December 31, 2012, 2013, 2014, 2015 and 2016, respectively, due to our stock repurchase program. Earnings per ADS are based on the ratio of 10 Series B shares per ADS.

(10) Dollar amounts per share were U.S.$0.1642 in 2012, U.S.$0.1744 in 2013, U.S.$0.2051 in 2014, U.S.$0.1931 in 2015 and U.S.$0.1744 in 2016 and per ADS were U.S.$1.6424 in 2012, U.S.$1.7436 in 2013, U.S.$2.0508 in 2014, U.S.$1.9308 in 2015 and U.S.$ 1.7436 in 2016. Per-share dollar amounts are expressed in U.S. dollars (not thousands of U.S. dollars).

(11) Includes arriving and departing passengers as well as transfer passengers (passengers who arrive at our airports on one aircraft and depart on a different aircraft). Excludes transit passengers (passengers who arrive at our airports but generally depart without changing aircraft).

(12) Total revenues for the period divided by terminal passengers for the period, expressed in pesos (not thousands of pesos).

6

EXCHANGE RATES

The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rate expressed in pesos per U.S. dollar. The average annual rates presented in the following table were calculated using the average of the exchange rates on the last day of each month during the relevant period. The data provided in this table is based on the rates published by the U.S. Federal Reserve Board in its weekly H.10 Release – Foreign Exchange Rates. All amounts are stated in pesos and have not been restated in constant currency units. We make no representation that the Mexican peso amounts referred to in this annual report could have been or could be converted into U.S. dollars at any particular rate or at all.

	Exchange Rate
Year ended December 31,	High		Low		Period End		Average(1)
2012		14.37		12.63		12.96		13.15
2013		13.43		11.98		13.10		12.76
2014		14.79		12.85		14.75		13.30
2015		17.36		14.56		17.20		15.87
2016		20.84		17.19		20.62		18.67
November 2016		20.84		18.44		20.46		20.01
December 2016		20.74		20.22		20.62		20.50
2017
January 2017		21.89		20.75		20.84		21.39
February 2017		20.82		19.74		20.00		20.30
March 2017		19.93		18.67		18.83		19.28
April 2017(2)		18.82		18.65		18.65		18.73

Sources: U.S. Federal Reserve Board.

(1) Average of month-end rates or daily rates, as applicable.

(2) Through April 7, 2017.

On April 7, 2017, the exchange rate for pesos, as published by the U.S. Federal Reserve Board, was Ps.18.6480 per U.S.$1.00.

Fluctuations in the exchange rate between the peso and the U.S. dollar affect the U.S. dollar value of securities traded on the Mexican Stock Exchange (Bolsa Mexicana de Valores, S.A.B. de C.V.), or “BMV,” and, as a result, will likely affect the market price of our American Depositary Shares (ADSs). Such fluctuations may also affect the U.S. dollar conversion by The Bank of New York Mellon, the depositary for our ADSs, of any cash dividends paid in pesos. See “ – Risk Factors – Risks Related to Mexico – Depreciation or fluctuation of the peso relative to the U.S. dollar could adversely affect our results of operations and financial condition” and “Item 5, Operating and Financial Review and Prospects – Overview – Recent Developments – Fluctuation of the Peso.”

RISK FACTORS

Risks Related to Our Operations

Our revenues are highly dependent on levels of passenger and cargo traffic volumes and air traffic, which depend in part on factors beyond our control.

Our revenues are closely linked to passenger and cargo traffic volumes and the number of air traffic movements at our airports. These factors directly determine our revenues from aeronautical services and indirectly determine our revenues from non-aeronautical services. Our principal source of aeronautical service revenues is passenger charges. Passenger charges are payable for each passenger departing from the airport terminals we operate (except certain exclusions in each of Mexico and Jamaica, described below under “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges”) and are collected by the airlines and paid to us. In 2014, 2015 and 2016, passenger charges represented 60.8%, 55.3% and 51.9%, respectively, of our total revenues (in 2014, 2015 and 2016, passenger charges represented 64.1%, 61.7% and 61.1%, respectively, of the sum of our aeronautical and non-aeronautical revenues).

7

Passenger and cargo traffic volumes and air traffic movements depend in part on many factors beyond our control, including economic conditions in Mexico, Jamaica, the United States, Canada and Europe, the political situation in Mexico, Jamaica and elsewhere in the world, public health crises, the attractiveness of the destinations that our airports serve relative to those of other competing airports, fluctuations in petroleum prices, disruptions of global debt markets and changes in regulatory policies applicable to the aviation industry. Any decreases in air traffic to or from our airports as a result of factors such as these could adversely affect our business, results of operations, prospects and financial condition.

A global economic and financial crisis may affect our business.

The global economic and financial crisis that began in 2007 and continued through 2009 led to high volatility and lack of liquidity in the global credit and other financial markets. The downturn in the U.S. and global economies led to increased commercial and consumer delinquencies, lack of consumer confidence, decreased market valuations, increased market volatility, high financial risk premiums and a widespread reduction of business activity generally. These conditions also limited the availability of credit and increased financial costs for companies around the world, including companies in Mexico and the United States. Although economic conditions improved starting in 2010 and the availability of credit has increased while interest rates remained stable, another recession could significantly affect our ability to access credit to finance our future projects, therefore adversely affecting our business.

Competition from other tourist destinations could adversely affect our business.

The principal factor affecting our results of operations and business is the number of passengers using our airports. The number of passengers using our airports (particularly our international airports at Los Cabos, Puerto Vallarta and Montego Bay) may vary as a result of factors beyond our control, including the level of tourism in Mexico and Jamaica. In addition, our passenger traffic volume may be adversely affected by the attractiveness, affordability and accessibility of competing tourist destinations in Mexico, such as Acapulco and Cancun, or elsewhere, such as Hawaii, Puerto Rico, Florida, Cuba, the Dominican Republic, the other Caribbean islands and destinations in Central America. The attractiveness of the destinations we serve is also likely to be affected by travelers’ perceptions of the safety and political and social stability of Mexico and Jamaica, particularly as a result of the uncertainty and safety concerns resulting from the Mexican government’s ongoing effort against drug cartels. There can be no assurance that tourism levels, and therefore the number of passengers using our airports, in the future will match or exceed current levels. A reduction in tourism to the destinations served by our airports could directly and indirectly affect our revenues from aeronautical and non-aeronautical services.

Negative economic developments in Mexico could reduce domestic passenger traffic at our Mexican airports, which would adversely affect our business and results of operations.

Although a substantial portion of our revenues is derived from foreign tourism, Mexican domestic passengers have represented approximately 66.1% of the passenger traffic volume at our Mexican airports for the last three years. Aside from our interest in the Montego Bay airport concession in Jamaica and the operation of DCA in Spain, all of our assets are located, and all of our operations are conducted, in Mexico. Because our revenues are largely dependent on the level of passenger traffic at our airports, any decline in domestic traffic could have an adverse effect on our business, results of operations, prospects and financial conditions. Therefore, if inflation or interest rates increase significantly or the Mexican economy is otherwise adversely impacted, our business, financial condition and results of operations could be materially and adversely affected because, among other things, domestic demand for transportation services may decrease. For more information on the potential impact of negative economic developments in Mexico, see “ – Risks Related to Mexico – Adverse economic conditions in Mexico may adversely affect our financial condition or results of operations” in this section.

Our business is particularly sensitive to economic conditions and other developments in the United States.

Our business is particularly sensitive to trends in the United States relating to leisure travel, consumer spending and international tourism. In 2014, 2015 and 2016, 89.5%, 89.7% and 89.3%, respectively, of the international terminal passengers served by our Mexican airports arrived or departed on flights originating in or departing to the United States and 66.2%, 67.0% and 68.6%, respectively, of the passengers served by our Jamaican airport arrived or departed on flights originating on or departing to the United States.

8

Thus, our business is highly dependent on the condition of the U.S. economy, and events affecting the U.S. economy may adversely affect our business, results of operations and financial condition. In 2014, 2015 and 2016, the U.S. gross domestic product (“GDP”) increased at a rate of 4.2%, 3.7% and 3.0%, respectively, according to the U.S. Bureau of Economic Analysis. If the U.S. economy falls into a recession, it would likely have a material adverse effect on our results of operations due to decreased passenger traffic travel to and from the United States.

Other trends and developments in the United States may also adversely impact the frequency and pattern of our international passenger traffic. For example, any development that could make travel to and from the United States less attractive to our passengers, including legislative developments related to immigration policy in the United States, could negatively affect the level of passenger traffic in our airports, which may adversely affect our business, financial condition or results of operations.

Any decision taken by the current U.S. administration and any amendments to the North American Free Trade Agreement (“NAFTA”) that could have a negative impact on the Mexican economy, such as reductions in the levels of remittances, reduced commercial activity among the two countries or a slowdown in direct foreign investment in Mexico, could adversely affect our business and our results of operations.

Levels of passenger and cargo traffic volumes and air traffic at our airports are highly sensitive to the impact on airlines of international petroleum prices and access to credit.

Our revenues are closely linked to passenger and cargo traffic volumes and air traffic movements at our airports, which are determined by the operating levels of airlines at our airports. Airlines’ costs are highly sensitive to the price of petroleum and their access to credit to finance their operations. Increased costs may increase ticket prices and reduce fleets, thereby decreasing flight frequencies and negatively impacting passenger and cargo traffic volumes.

International petroleum prices have experienced significant volatility in the recent past. For example, in 2014, European Brent crude oil spot prices reached a high of U.S.$115.19 per barrel on June 19, 2014 followed by a low of U.S.$55.27 per barrel on December 31, 2014, according to the U.S. Energy Information Administration. European Brent crude oil spot prices increased from U.S.$36.61 per barrel on December 31, 2015 to U.S.$54.96 per barrel on December 30, 2016, with an average price of U.S.$43.67 per barrel during 2016. The price of fuel may be subject to further fluctuations resulting from a reduction or increase in output of petroleum, voluntary or otherwise, by oil-producing countries, other market forces, a general increase in international hostilities, or any future terrorist attacks. High fuel prices result in increases in airlines’ costs and may lead to airline financial difficulties and bankruptcies, higher ticket prices, cancellations of routes and decreases in frequencies of flights, and may decrease demand for air travel generally. Each of these may reduce passenger and cargo traffic at our airports.

Most airlines also depend on reliable access to credit at interest rates they can afford to finance their fleet of aircraft and make other large investments. As evidenced by the 2008-2009 global recession and financial crisis, high interest rates and disruptions in the global debt markets had an adverse effect on airlines’ ability to operate their fleets, forcing many to raise ticket prices, cancel routes, decrease the frequencies of flights or forego scheduled investments. Such reductions in operations by airlines lead to lower passenger and cargo traffic volumes at our airports, which may have an adverse impact on our results of operations.

See “ – The loss of, or suspension of operations by, one or more of our key customers could result in a loss of a significant amount of our revenues” for a more detailed description of which of our major airline customers have recently reduced or cancelled operations at our airports.

Our business is highly dependent upon revenues from five of our airports and could be adversely impacted by any condition affecting those airports.

In 2016, approximately 84.8% of the sum of aeronautical and non-aeronautical revenues was generated from five of our thirteen airports. The following table lists the percentage of the sum of aeronautical and non-aeronautical revenues generated at our airports in 2016:

Airport	For year ended December 31, 2016
Guadalajara		27.6	%
Montego Bay		17.0	%
Los Cabos		15.0	%
Tijuana		13.1	%
Puerto Vallarta		12.1	%
Eight other Mexican airports (combined)		15.2	%
Total revenues		100.0	%

9

As a result of the substantial contribution to our aeronautical and non-aeronautical revenues from these five airports, any event or condition affecting these airports could have a material adverse effect on our business, results of operations, prospects and financial condition.

International events, including acts of terrorism, wars and global epidemics, could have a negative impact on international air travel.

International events may negatively impact international air travel. The terrorist attacks on the United States on September 11, 2001, wars and other armed conflicts, such as those in Iraq, Syria and the Ukraine, and public health crises, such as the Influenza A/H1N1 pandemic of 2009-2010, negatively affected the frequency and pattern of air travel worldwide in recent years.

The terrorist attacks on the United States on September 11, 2001, had a severe adverse impact on the air travel industry, particularly on U.S. carriers and on carriers operating international service to and from the United States. Airline traffic in the United States fell precipitously after the attacks. Any future terrorist attacks, whether or not involving aircraft, may adversely affect our business, results of operations, prospects and financial condition. Moreover, we cannot predict what effect any future terrorist attacks or threatened attacks on the United States or any retaliatory measures taken by the United States in response to these events may have on the U.S. economy or leisure travel trends, which may negatively affect our results of operations. Similarly, our Mexican and Jamaican airport operations could be negatively impacted by terrorist attacks on aircraft such as those which occurred with international airlines’ aircraft operating over Egypt and the Ukraine in 2015.

In April 2009, Mexico, like several other countries, was affected by an outbreak of Influenza A/H1N1. As a result of the outbreak, a number of countries advised against nonessential travel to Mexico, although these advisories were lifted by the end of May 2009. While we cannot completely isolate the impact on travel of the advisories and restrictions imposed by national and international governments from other potential factors such as the economy, our domestic passenger traffic and international passenger traffic declined by 33.3% and 43.7%, respectively, during May 2009 (in each case compared to May 2008). A new outbreak of Influenza A/H1N1 or any other pandemic or contagious disease, such as avian flu, severe acute respiratory syndrome (SARS) and the Ebola virus, could once again disrupt our operations or significantly affect passenger and cargo traffic levels.

On February 1, 2016, the World Health Organization designated the Zika virus and its suspected complications in newborns as an international public health emergency. The U.S. Department of Health and Human Services’ Centers for Disease Control and Prevention issued a travel advisory for people traveling to regions within the Zika virus outbreak, which include popular vacation destinations in Mexico and Jamaica. While these travel advisories to Mexico and Jamaica have not negatively affected the frequency and pattern of travel to our airports to date, such public health crises or any future public health crises and related travel advisories could disrupt our operations or significantly affect passenger and cargo traffic levels.

Because our revenues are largely dependent on the level of passenger traffic in our airports, any general increase of hostilities relating to reprisals against terrorist organizations, further armed conflict around the world, outbreaks of health epidemics or other events of general international concern (and any related economic impact of such events) could result in decreased passenger traffic and increased costs to the air travel industry and, as a result, could cause a material adverse effect on our business, results of operations, prospects and financial condition.

10

Security enhancements and requirements may require additional investments or result in additional expenses.

The air travel business is susceptible to, and has experienced, increased costs resulting from enhanced security and higher insurance. Following the events of September 11, 2001, we reinforced security at our airports, and our general liability insurance premiums increased substantially. For more information on the insurance policies we carry, see “Item 4, Information on the Company – Property, Plant and Equipment.” Because a substantial majority of our international flights involve travel to the United States, we may be required to comply with security directives of the U.S. Federal Aviation Authority, in addition to the directives of the Mexican and Jamaican civil aviation authorities.

The users of airports, principally airlines, also have been subject to increased costs following the events of September 11, 2001, as they have been required to adopt additional security measures and their insurance premiums have also increased substantially. While governments in other countries have agreed to indemnify airlines for liabilities they might incur resulting from terrorist attacks, the Mexican and Jamaican governments have not done so and have given no indication of any intention to do the same. In the future, airlines may be required to comply with more rigorous security rules or guidelines and premiums for aviation insurance could rise further. In addition, fuel prices, supplies and interest rates for airlines’ aircraft lease agreements, which constitute a significant cost for airlines using our airports, may be subject to increases resulting from any future terrorist attacks, a general increase in international hostilities or a reduction in output of fuel, voluntary or otherwise, by oil producing countries. Increases in airlines’ costs may result in higher airline ticket prices and decreased demand for air travel generally, thereby having an adverse effect on our revenues and results of operations.

If authorities require enhancements to security equipment or adoption of additional security measures, we may be required to undertake significant additional expenses and capital expenditures. We cannot guarantee that these expenses and/or capital expenditures will be taken into account for our Mexican airports in our Maximum Tariff and Master Development Programs negotiations. Therefore, these additional expenses could negatively affect our cash flows and affect our results of operations.

In the case of any change in security enhancement requirements in Jamaica, the Jamaican civil aviation authorities have permitted any such unavoidable and unforeseen expenditure to be treated as a cost pass-through for the purposes of regulation, allowing for an increase in regulated charges at any time within the tariff review period to cover the cost of additional security requirements. However, we can provide no assurance that we would be successful in negotiating new tariffs to recover the expenses and/or capital expenditures needed to comply with any new security requirements.

The operation of new baggage screening equipment could increase our expenses and may expose us to greater liability.

In 2005, the Mexican government issued a policy letter (carta de política) calling for all checked baggage on all commercial flights to undergo a new comprehensive screening process. The new screening process required the installation of dedicated screening equipment and the manual inspection of baggage if such equipment alerted to the potential presence of prohibited items. Uncertainty over the policy letter’s implementation of the new screening process, initially caused a delay in the implementation. Although the Mexican Airport Law expressly provides that airlines bear the responsibility for baggage screening, the fact that the policy letter is silent as to responsibility caused some of our airline customers to contend that the policy letter’s intent is for airport concessionaires, such as us, to bear responsibility for the new screening process. In addition, certain questions have been raised regarding the constitutionality of the new screening process. Since the issuance of the policy letter, the Mexican Directorate General of Civil Aviation (Dirección General de Aeronáutica Civil), or “DGAC”, has been expected to issue implementing regulations. On November 23, 2012, the Mexican civil aviation authority published a recommendation (circular obligatoria) on the SCT website that, instead of modifying the legal responsibilities set forth in the Mexican Airport Law, attempted to facilitate contracts between parties through certain non-binding recommendations regarding issues of responsibility that have been raised by the policy letter. These non-binding recommendations have no legal effect unless incorporated into a valid contract.

We have operated checked baggage screening equipment in our busiest Mexican airports since 2011, and today only flights departing from the Los Mochis airport continue to rely on manual inspection. As of December 31, 2016, we have signed agreements to operate the baggage screening equipment with every airline customer, and 98.9% of the passengers travelling through our airports were using the baggage screening system.

11

We incur ongoing expenses to maintain and operate this equipment. Currently, the operational costs of the screening system have been limited to the level necessary to provide the required services to airlines, and we expect to continue recovering those costs. However, if it is determined that we are responsible for all or a portion of the cost or that we are liable for certain issues arising from our operation of the screening systems, our exposure to liability could increase significantly. These operational costs were reviewed during the negotiation of the Master Development Programs for our Mexican airports for the years 2015-2019, completed in December 2014, and there were no changes contemplated to the operational costs or to the cost recovery procedures. We also expect to incur ongoing expenses to maintain any equipment purchased, and we could be required to undertake significant additional capital expenditures for items such as a new screening technology or additional equipment if screening guidelines are expanded further and require that additional steps be taken to comply with the requirements. For instance, replacement of current baggage screening equipment with new Computer Tomography X-ray (CTX) baggage screening equipment is scheduled for 2022, although regulatory changes could force our Mexican airports to undertake this replacement sooner. In addition, in July 2016, the DGAC issued a document titled Airport Security Recommendations, which established that airports must have alternative methods for baggage screening to be used in case the inspection technology that is used is not available. We believe that we comply with the requirement but the DGAC may require additional investments. These additional expenses could restrict our liquidity and adversely affect our results of operations if such costs are not accepted in the negotiations of our Master Development Programs for the 2020-2024 period. For more information on screening equipment, see “Item 4, Information on the Company – Regulatory Framework – Mexican Airport Concessions – Scope of Concessions.”

Our revenues and profitability may be adversely affected if we fail in our business strategy.

Our ability to increase our revenues and profitability depends in part on our business strategy, which consists of setting prices as close as possible to our regulatory maximum rates for any given year for our Mexican airports and for any given five-year period for the Montego Bay airport, reducing operating costs, controlling our capital expenditure commitments under our Master Development Programs with the Mexican government and under the Capital Development Program with the Jamaican government, increasing passenger and cargo traffic at our airports and increasing revenues from commercial activities.

Our ability to increase our commercial revenues is significantly dependent, among other factors, on increasing passenger traffic at our airports and on our ability to renegotiate rental agreements with our tenants to provide for contractual terms more favorable to us and for the ability for us to directly operate business lines. In addition, our ability to increase revenues from commercial activities depends on our ability to continue the remodeling, expansion and modernization of the commercial areas we operate within our airports and on the introduction of new business lines. Further, we are in the process of expanding the amount and types of business lines that we operate directly within our airports. Revenues from business lines operated directly by us represented 25.7% of non-aeronautical revenues in 2016 (6.7% of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2016).

We cannot provide assurance that we will be successful in implementing our strategy of increasing our passenger traffic or our revenues from commercial activities, including those that we operate directly. The passenger traffic volume in our airports depends on factors beyond our control, such as the attractiveness of the commercial, industrial and tourist centers that the airports serve. Additionally, our new commercial strategy of increasing revenues by operating lines of businesses in our airports directly could result in the loss of a significant amount of revenues, or not generate the level of profitability sufficient to increase our results of operations. Accordingly, there can be no assurance that the passenger traffic volume in our airports will increase or that our profitability will increase.

If a change in relations with our labor force should occur, such a change could have an adverse impact on our results of operations.

Although we believe we maintain positive relations with our labor force, if any conflicts with our employees were to arise in the future, including with our unionized employees (which accounted for 47.4% of our total employees in Mexico and 71.6% in Jamaica as of December 31, 2016), resulting events such as strikes or other disruptions that could arise with respect to our workforce could have a negative impact on our results of operations.

12

The loss of, or suspension of operations by, one or more of our key customers could result in a loss of a significant amount of our revenues.

A majority of our revenues are driven by the operations of a few key airline customers. In 2016, Concesionaria Vuela Compañía de Aviación, S.A. de C.V. (“Volaris”), Grupo Aeroméxico, S.A.B. de C.V. (“Aeroméxico Group”), a holding company that owns Aeroméxico and Aeroméxico Connect, American Airlines, Inc. (“American Airlines”) and ABC Aerolíneas, S.A. de C.V. (“Interjet”) transported a significant percentage of our passenger traffic. During 2016, the passenger charges collected by these four airlines accounted for 14.9%, 7.3%, 5.7% and 3.4%, respectively, of total revenues in our airports (17.6%, 8.6%, 6.7% and 4.0%, respectively, of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2016). Excluding revenues from passenger charges, these airlines accounted for 1.7%, 1.0%, 1.2% and 0.5%, respectively, of our total revenues in 2016 (2.0%, 1.2%, 1.4% and 0.5%, respectively, of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2016).

None of our contracts with our airline customers obligate them to continue providing service to our airports, and we can offer no assurance that if any of our key customers reduce their use of our airports, competing airlines would add flights to their schedules to replace any flights no longer handled by our principal airline customers. In addition, Mexican law prohibits an international airline from transporting passengers from one Mexican location to another, except if the passenger originated travel outside Mexico, thus limiting the number of airlines providing domestic service in Mexico. Accordingly, we expect to continue to generate a significant portion of our revenues from domestic travel from a limited number of airlines.

Furthermore, passenger charges, which accounted for 51.9% of our revenues in 2016 (61.1% when taking into account only the sum of aeronautical and non-aeronautical revenues), are collected, pursuant to passenger charges collection agreements, by airlines from passengers on our behalf and are later paid to us, depending on the airline, within no more than 60 days following the date of each flight. During 2016, the average collection term of passenger charges was 53 days. See “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges – Passenger Charges in Mexico.” Consequently, if any of our key airline customers were to become insolvent or seek bankruptcy protection, we would be an unsecured creditor with respect to any unpaid passenger charges, and we would not be assured of collecting the amounts invoiced to that airline for passenger charges despite cash deposits held in guarantee. Additionally, we could not be assured that we would recover the traffic they would stop transporting. Both scenarios could negatively affect our cash flows from operations or our results of operations.

Additionally, if some of our commercial clients face difficulties making their payments to our airports, we would try to renegotiate the commercial and payment terms to keep them at our airports. Despite our efforts, however, some clients may decide to leave our commercial spaces and cancel their contracts. This could potentially have a negative effect on our revenues.

The main domestic airlines operating at our Mexican airports have in the past refused to pay certain increases in our specific prices for aeronautical services and could refuse to pay additional increases in the future.

In the past, certain of the domestic airlines operating at our Mexican airports refused to pay certain increases in the specific prices we charge for aeronautical services. Although these prior disputes were resolved by 2006, because only a few airlines contribute a substantial portion of our revenues, our results of operations could be adversely impacted if any of these (or any of our other) airlines should refuse to make payments in the future. Moreover, during periods of economic downturn, the airlines that operate at our airports may be more likely to oppose increases in our charges for aeronautical services in future years, which could adversely impact our results of operations. See “Item 4, Information on the Company – Business Overview – Principal Customers – Principal Aeronautical Services Customers – Airline Customers.”

The airlines at our airports may refuse to continue collecting passenger charges on our behalf or we may decide to collect passenger charges ourselves, which would result in increased costs for us.

The airlines operating at our airports collect a passenger charge on our behalf from each departing passenger on an aircraft (except certain exclusions in each of Mexico and Jamaica, described below under “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges”).

13

Currently, we have entered into collection agreements with the airlines that operate at our Mexican airports to collect those passenger charges on our behalf. As a result, passenger charges are included in the cost of passengers’ tickets, and we issue invoices for those charges to each airline. We and the airlines with which we have these collection agreements have the right to cancel them with prior notice to the other party. If we or one of our airline customers were to cancel a collection agreement, we would have to implement a collection system of our own to collect passenger charges from passengers directly. The installation and operation of such a collection system would result in additional costs for us, which would negatively impact our results of operations.

MBJA does not have collection agreements with some of the airlines that operate at the Montego Bay airport for the collection of passenger charges on its behalf. However, the collection of passenger charges by the airlines is implied under the current operating agreements signed by each airline operating at the Montego Bay airport, whereby these airlines must pay MBJA for regulated passenger charges. Newly issued Air Carrier Operating Agreements, however, have been amended to expressly require airlines to collect passenger service charges.

The operations of our airports may be disrupted due to the actions of third parties, which are beyond our control.

As is the case with most airports, the operation of our airports is largely dependent on the services of third parties, such as air traffic control authorities, airlines and ground transportation providers. We also depend upon the government or entities of the government for provision of services, such as electricity, supply of fuel for aircraft, air traffic control and immigration and customs services for our international passengers. Additionally, the disruption or stoppage of taxi or bus services at one or more of our airports could also adversely affect our operations. We are not responsible for and cannot control the services provided by these parties. Any disruption in, or adverse consequence resulting from, their services, including a work stoppage or other similar event, may have a material adverse effect on the operation of our airports and on our results of operations.

In addition, we are dependent on third-party providers of certain complementary services such as catering, baggage handling, and operation of airport buses and passenger walkways. If these service providers were to halt operations at any of our airports, we would be required to seek a new service provider or provide services ourselves, either of which would likely result in increased capital expenditures or costs and have an adverse impact on our cash generation and results of operations.

Legal claims and other actions by the former holders of land comprising certain of our Mexican airports may disrupt the operations and security of these airports.

Some of our airports are partly sited on lands that were expropriated by the Mexican government pursuant to its power of eminent domain. Prior to their expropriation, some of these lands had been held by groups of individuals through a system of communal ownership of rural land known as an ejido. Certain of these former ejidos’ participants have asserted indemnity claims against the Mexican government challenging the expropriation decrees. See “Item 8, Financial Information – Legal Proceedings – Ejido participants at Tijuana, Guadalajara and Puerto Vallarta airports.”

The Mexican government owns the land on which Guadalajara International Airport operates and has granted us the right to use that land for the purpose of operating the airport pursuant to our concession. Currently, there are squatters residing on or claiming rights to a portion of the property, at least one of whom has attempted to subdivide and sell off certain portions of the property. As owner of the property, the Mexican government must initiate any actions directed at removing these persons from the property. In addition, during various periods of 2016 and 2017, members of an ejido blocked access to commercial areas of the Guadalajara International Airport, specifically the parking facilities, which resulted in commercial revenues losses of Ps.19.2 million in 2016 (7.5% of our total car parking charges at the airport for 2016) and losses of Ps.3.8 million during 2017. We are reviewing the actions these persons have taken and are cooperating with the Mexican government to ensure that the actions of these squatters and ejidos do not adversely affect the operations of Guadalajara International Airport. However, if the Mexican government is unable to successfully remove these persons from the property, their presence could have an adverse impact on our operations, revenues and security, and could restrict our ability to expand our operations, at the Guadalajara airport.

In addition to challenging the expropriation, certain of the former ejido participants are also currently occupying portions of Tijuana International Airport property. While these persons are not currently interfering with the

14

airport’s operations, their presence could limit our ability to expand the airport into the areas they occupy. There can also be no assurance that the former ejido participants will not seek to disrupt the airport’s operations if their legal claims against the Mexican government are not resolved to their satisfaction, which may negatively impact our results of operations.

Our Mexican concessions guarantee our access to the land and any interruption caused to our operations by any of the ejidos is the responsibility of the Mexican government. Although the Mexican government must provide restitution for any economic loss resulting from a disruption in access to our airports, there can be no assurance that the former ejido participants will not seek to disrupt the airport’s operations if their legal claims against the Mexican government are not resolved to their satisfaction. There also can be no assurance that the legal proceedings will be resolved in our favor, which may negatively impact our results of operations.

We may be liable for property tax claims asserted against us by certain Mexican municipalities.

We remain subject to ongoing property tax claims that have been asserted against us by certain municipal authorities for the payment of property taxes with respect to certain of the properties on which we operate our airports. We believe that under the law, the Mexican government, as the owner of the property upon which we operate our airports, would currently be responsible for paying these taxes directly if a court were to determine that these taxes must be paid. See “Item 8, Financial Information – Legal Proceedings – Property tax claims by certain municipalities” for a full discussion of these property tax proceedings.

Additionally, if the Mexican government changes the current laws or if we do not prevail in the aforementioned proceedings, these tax liabilities could have an adverse effect on our financial condition and results of operations.

Inability to generate sufficient future taxable profits or adverse changes to tax laws, regulatory requirements or accounting standards could have a negative impact on the recoverability of certain deferred tax assets.

We recognize deferred tax assets relating to tax losses carried forward and deductible temporary differences only to the extent that it is probable that future taxable profit will be available against which the tax losses carried forward and the temporary differences can be utilized. Net deferred tax assets amounted to approximately Ps.4.1 billion at December 31, 2016. The deferred tax assets are quantified on the basis of currently enacted tax rates and accounting standards and are subject to change as a result of future changes to tax laws or the rules for computing taxable profits and allowable losses. Failure to generate sufficient future taxable profits or changes in tax laws or accounting standards may reduce our estimated recoverable amount of net deferred tax assets. Such a reduction could have an adverse effect on our financial condition and results of operations. For further information on deferred tax assets, refer to Note 13 to our audited consolidated financial statements. See “Item 5, Operating and Financial Review and Prospects – Critical Accounting Policies – Income Taxes.”

Natural disasters could adversely affect our business.

The Pacific and Central regions of Mexico and the island of Jamaica experience seasonal torrential rains and hurricanes (particularly during the months of July through September), as well as earthquakes. Natural disasters may impede operations, damage infrastructure necessary to our operations or adversely affect the destinations served by our airports. Any of these events could reduce our passenger traffic volume.

For example, on September 14, 2014, Hurricane Odile moved through the Baja California coastal area, damaging our La Paz and Los Cabos airports. The La Paz airport terminal experienced minor damage, while the Los Cabos airport experienced damage to the building, including the detachment of the roof covering in Terminal 1 and the collapse of ceiling panels in Terminal 2. The Los Cabos airport also suffered minimal damage to the runways, taxiways and aprons. The Los Cabos airport remained closed to commercial flights for eighteen days, receiving authorization on October 3, 2014 from the DGAC to re-open for domestic and international commercial flights. We had a one-time loss of 269.6 thousand passengers at the Los Cabos airport in the last quarter of 2014 as a result of Hurricane Odile.

The occurrence of natural disasters in the destinations we serve could adversely affect our business, results of operations, prospects and financial condition. We have insured the physical facilities at our airports against damage caused by natural disasters, accidents or other similar events, but do not have insurance covering losses due to

15

resulting business interruption for our Mexican airports. Moreover, should losses occur, there can be no assurance that losses caused by damages to the physical facilities will not exceed the pre-established limits on any of our insurance policies.

Risks Related to the Regulation of Our Business

Our business is dependent on international regulations affecting airlines.

Airline regulations promulgated by international bodies or regulatory agencies in other countries could affect our operations and potentially affect our revenues or results of operations. For instance, on July 30, 2010, the U.S. Federal Aviation Administration (“FAA”) announced that, following an assessment of the Mexican Directorate General of Civil Aviation, it had determined that Mexico was not in compliance with international safety standards set by the International Civil Aviation Organization (“ICAO”), and, as a result, downgraded Mexico’s aviation safety rating from “Category 1” to “Category 2.”

Under FAA regulations, because of this downgrade, Mexican airlines were not permitted to expand or change their current operations between the United States and Mexico except under certain limited circumstances; code-sharing arrangements between Mexican and U.S. airlines were suspended; and operations by Mexican airlines flying to the United States were subject to greater FAA oversight. These additional regulatory requirements resulted in reduced service between our Mexican airports and the United States by Mexican airlines, which resulted in a decrease in demand for travel at our Mexican airports. In 2016, 9.3% of the passengers who traveled through our Mexican airports traveled on flights to or from the United States operated by Mexican airlines.

The FAA restored Mexico’s Category 1 rating on December 1, 2010. Jamaica has held an FAA Category 1 rating since a similar downgrade to Category 2 from July 1995 to September 1997. The FAA, however, may downgrade Mexico’s or Jamaica’s air safety rating in the future. We cannot predict what impact such a downgrade would have on our passenger traffic or results of operations, or on the public perception of the safety of our airports.

We provide a public service regulated by the governments of Mexico and Jamaica, and our flexibility in managing our aeronautical activities is limited by the regulatory environments in which we operate.

Our aeronautical fees charged to airlines and passengers are regulated, like those of most airports in other countries. In 2014, 2015 and 2016, 70.8%, 66.8% and 63.4%, respectively, of our total revenues were earned from aeronautical services (in 2014, 2015 and 2016, 74.6%, 74.6% and 74.6%, respectively, of the sum of aeronautical and non-aeronautical revenues were earned from aeronautical services), which are subject to price regulation under our maximum rates in Mexico and under the maximum regulated charges in Jamaica. These regulations may limit our flexibility in operating our aeronautical activities, which could have a material adverse effect on our business, results of operations, prospects and financial condition. In addition, several of the regulations applicable to our operations that affect our profitability are authorized or established by the Mexican government (as in the case of our Master Development Programs or our maximum rates, respectively) or the Jamaican government (as in the case of MBJ’s maximum regulated charges) for five-year terms. Except under limited circumstances, we generally do not have the ability to unilaterally change our obligations (such as the investment obligations under our Master Development Programs and Capital Development Program or the obligation under our Mexican concessions and MBJA’s Jamaican concession to provide a public service) or increase our maximum rates and regulated charges applicable under those regulations should the passenger traffic or other assumptions on which the regulations were based change during the applicable term. In addition, there can be no assurance that this price regulation system will not be amended in a manner that would cause additional sources of our revenues to be regulated.

We cannot predict how the regulations governing our business will be applied.

Many of the laws, regulations and instruments that regulate our business in Mexico were adopted or became effective in 1999, and there is limited precedent that would allow us to predict the impact of these legal requirements on our future operations. In addition, although Mexican law establishes ranges of sanctions that might be imposed should we fail to comply with the terms of one of our Mexican concessions, the Mexican Airport Law and its regulations or other applicable laws, we cannot predict the sanctions that are likely to be assessed for a given violation within these ranges. We cannot provide any assurance that we will not encounter difficulties in complying with these laws, regulations and instruments. Although our maximum rates through 2019 have been set, we cannot

16

predict what our Master Development Programs for the next five-year period from 2020 to 2024 will establish. We also cannot provide assurance that other regulatory agencies or the Mexican legislature will not impose regulations adverse to our operations in the future or that the laws and regulations governing our business, including the Master Development Programs, the maximum rate-setting process and the Mexican Airport Law, will not change in the future or be applied or interpreted in a way that could have a material adverse effect on our results of operations. For instance, on January 26, 2015, certain amendments to the Mexican Airport Law were enacted that institute an enforcement mechanism for existing requirements. For a discussion of the regulatory provisions applicable to our business in Mexico, see “Item 4, Information on the Company – Regulatory Framework – Sources of Mexican Regulation.”

Similarly, there is limited precedent that would allow us to predict the impact of the laws, regulations and instruments that regulate our business in Jamaica and we cannot provide any assurance that MBJA will not encounter difficulties in complying with these laws, regulations and instruments. In addition, although MBJA’s Concession Agreement (as defined below) and Jamaican law establishes ranges of sanctions that might be imposed should MBJA fail to comply with the terms of the concession, other Jamaican applicable law and its regulations, we cannot predict the sanctions that are likely to be assessed for a given violation within these ranges. Although the maximum regulated charges have been set for the Montego Bay airport through December 2019, we cannot predict what maximum regulated charges the Jamaican government will establish for the next five-year period from January 2020 to December 2024. We also cannot provide assurance that other regulatory agencies or the Jamaican legislature will not impose regulations adverse to MBJA’s operations in the future or that the laws and regulations governing our business in Jamaica, including the Jamaican Civil Aviation and Airports Authority acts and the process for setting maximum regulated charges, will not change in the future or be applied or interpreted in a way that could have a material adverse effect on our results of operations. For a discussion of the regulatory provisions applicable to our business in Jamaica, see “Item 4, Information on the Company – Regulatory Framework – Sources of Jamaican Regulation.”

The regulations pursuant to which the maximum rates applicable to our aeronautical revenues in Mexico and to the maximum regulated charges that MBJA may collect in Jamaica are established do not guarantee that we or any of our airports will be profitable.

The regulations applicable to our aeronautical activities establish an annual maximum rate for each Mexican airport, which is the maximum annual amount of revenues per workload unit that we may earn at that airport from services subject to price regulation. The maximum rates for our Mexican airports have been determined for each year through 2019. Our Mexican concessions provide that an airport’s maximum rates will be adjusted periodically for inflation determined by reference to the Mexican Producer Price Index (Índice Nacional de Precios al Productor), or “Mexican PPI,” excluding petroleum. Although we are entitled to request additional adjustments to an airport’s maximum rates under certain circumstances, including the amendment of certain provisions of the Mexican laws and regulations that structure and influence our business, our Mexican concessions provide that such a request will be approved only if the SCT determines that certain events specified in our Mexican concessions have occurred. The circumstances under which we are entitled to an adjustment are described under “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Services Regulation – Special Adjustments to Maximum Rates.” Therefore, there can be no assurance that any such request would be made or granted. For a discussion of the framework for establishing our maximum rates in Mexico and the application of these rates, see “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Services Regulation.”

The Jamaican Airports (Economic Regulation) Act mandates the Jamaica Civil Aviation Authority, or “JCAA,” to regulate five categories of charges: passenger charges, aircraft landing charges, aircraft parking charges, passenger walkway charges and airport security charges. Every five-year period, MBJA is entitled to submit to the JCAA its proposal for increases to the maximum regulated charges as justified by a schedule of five-year estimates for traffic growth and investment commitments (including capital expenditures for capital projects and required improvements at the Montego Bay airport under MBJA’s Concession Agreement) (a “Capital Development Program”). After its review of the preceding period’s maximum regulated rates and these estimates, the JCAA makes its determination as to the maximum regulated charges for the succeeding five-year period. Under the terms of the Montego Bay airport Concession Agreement with the Airports Authority of Jamaica, or “AAJ,” upon the JCAA’s approval of the new maximum regulated charges, MBJA has a commitment to fulfill the estimated capital expenditures included in the Capital Development Program. The last review by the JCAA of these maximum

17

regulated charges for the Montego Bay airport was completed in November 2014; changes resulting from that review period took effect in April 2015 and will remain in effect through December 2019. However, this review resulted in the JCAA setting maximum regulated charges for the Montego Bay airport below the proposed increases, and the AAJ has not similarly reduced the estimated capital expenditures included in the Capital Development Program. These maximum rates for regulated charges are adjusted annually for inflation based on the U.S. Bureau of Labor Statistics’ Consumer Price Index (“U.S. CPI”). For a discussion of the framework for establishing MBJA’s maximum regulated charges in Jamaica, see “Item 4, Information on the Company – Regulatory Framework – Jamaican Aeronautical Services Regulation.” MBJA has an obligation under the Concession Agreement to satisfy certain requirements applicable to a Capital Development Program. We cannot provide assurance that AAJ will determine that any such Capital Development Program complies with the applicable requirements under the Concession Agreement, or that AAJ will not request MBJA to undertake additional capital expenditures.

Under the terms of our concessions, there is no guarantee that our consolidated results of operations or the results of operations of any airport will be profitable.

Our results of operations may be adversely affected by required efficiency adjustments to our maximum rates in Mexico.

In addition, our maximum rates in Mexico are subject to annual efficiency adjustments, which have the effect of reducing the maximum rates for each year to reflect projected efficiency improvements. For the five-year terms ending 2014 and 2019, an annual efficiency adjustment factor of 0.7% was established by the SCT. Future annual efficiency adjustments will be determined by the SCT in connection with the setting of each Mexican airport’s maximum rates every five years. For a description of these efficiency adjustments, see “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Services Regulation – Methodology for Determining Future Maximum Rates.” We cannot provide assurance that we will achieve efficiency improvements sufficient to allow us to maintain or increase our operating income as a result of the progressive decrease in each Mexican airport’s maximum rate.

If we exceed the maximum rate at any Mexican airport at the end of any year, we could be subject to sanctions.

Historically, we have set the prices we charge for aeronautical services at each Mexican airport to come as close as possible to the authorized maximum rate for that airport in any given year. We expect to continue to pursue this pricing strategy in the future. For example, in 2014, 2015 and 2016, our revenues subject to maximum rate regulation represented 99.9%, 100.0% and 99.9%, respectively, of the amount we were entitled to earn under the maximum rates for all of our Mexican airports. However, there can be no assurance that we will be able to establish prices in the future that allow us to collect virtually all of the revenues we are entitled to earn from services subject to price regulation.

The specific prices we charge for aeronautical services are determined based on various factors, including projections of passenger traffic volumes, the Mexican PPI, excluding petroleum, and the value of the peso relative to the U.S. dollar. These variables are outside of our control. Our projections could differ from the applicable actual data, and if these differences occur at the end of any year, they could cause us to exceed the maximum rate at any one or more of our airports during that year.

If we exceed the maximum rate at any Mexican airport at the end of any year, the SCT may assess a fine and may reduce the maximum rate at that airport in the subsequent year. The imposition of sanctions for violations of certain terms of a concession, including for exceeding an airport’s maximum rate, can result in termination of the concession if the relevant term has been violated and sanctions have been imposed at least three times for the same cause. In the event that any one of our Mexican airport concessions is terminated, our other Mexican airport concessions may also be terminated.

In prior years, in order to ensure our compliance with the maximum rate at a particular airport when the possibility of exceeding that maximum rate has arisen, we have taken actions in the latter part of the year, such as reducing our specific prices and offering discounts. We can offer no assurance that, should external factors cause us to risk exceeding our maximum rates close to or at the end of any given year, we will have sufficient time to take the actions described above in order to avoid exceeding our maximum rates prior to year-end.

18

If we fail to fulfill the requirements of our Master Development Programs during a given five-year period, we could be subject to sanctions from the Mexican government.

Historically, our capital expenditure commitments under our Master Development Programs are determined by reference to the Mexican PPI’s construction price index. Using the index we aim to be as close as possible to the five-year period capital expenditure commitments at any time. We expect to continue this capital expenditure control strategy in the future. Using this strategy, our capital expenditure during 2014, 2015 and 2016 was 101.1%, 100.9% and 100.7%, respectively, of our capital expenditure commitments under our Master Development Programs. However, there can be no assurance that our capital expenditure control strategy will be sufficiently accurate and that we will not fall below our capital expenditure commitments. If, as a consequence of the annual maximum tariff fulfillment review, the SCT determines that we are not in compliance with the committed investments, the government may assess a fine and may reduce the maximum rate of that airport in the subsequent year. Non-compliance with committed investments could also result in the termination of the concession if the relevant term has been violated and sanctions have been imposed at least three times for the same cause. In the event that any one of our Mexican concessions is terminated, our other concessions may also be terminated.

Although in prior years, in order to ensure compliance with our Master Development Programs, we have taken actions in the latter part of the year, such as increasing the amount or pace of certain construction projects, we can give no assurance that, should external factors cause us to risk failing to meet our investment levels, we will have sufficient time to take actions to comply with our Master Development Programs.

Our operating results could be adversely affected if the airlines fail to collect sufficient Airport Improvement Fees for MBJA or if MBJA does not receive approval for the use of these funds to offset costs associated with capital investments at the Montego Bay airport.

The Airports (Economic Regulation) Act and related agreements require the airlines operating at the Montego Bay airport to charge an Airport Improvement Fee (“AIF”) from embarking international passengers on behalf of MBJA and to deposit the fees on a monthly basis in a trust account controlled by the Jamaican Ministry of Transport and Mining (“MTM”). Subject to the MTM’s approval, MBJA may use these funds for additional capital investments not included in the Capital Development Program, as well as for interest expenses relating to the financing thereof. MBJA is required to commit to such additional capital investments in exchange for the right to use the AIF funds.

The MTM approval of collection of AIF funds at the Montego Bay airport was renewed on February 25, 2015 for the period ending April 11, 2030, unless otherwise revoked. However, because the MTM’s prior approval of MBJA’s use of AIF funds is for specified capital investments in projects that have already been carried out, MBJA is not currently authorized to use any AIF funds collected after April 11, 2015. As of the date hereof, MBJA has entered into a Memorandum of Understanding (“MOU”) with the AAJ to fund “Phase 3” investments including the extension of the existing runway and installation of Runway End Safety Areas through the AIF. In the MOU, the AAJ has committed to guarantee the financing of specific capital projects to limit MBJA’s exposure to financial risks resulting from AIF shortfalls arising from lower than expected passenger traffic.

If MBJA’s passenger traffic projections are above the levels of passenger traffic realized at the Montego Bay airport, the amount of AIF to be collected may not be sufficient to finance all capital projects approved by the MTM and their financial cost. We can provide no assurance that the Montego Bay airport will achieve the passenger traffic required to recover MBJA’s capital investments committed in exchange for the use of the AIF funds. In addition, we can provide no assurance that the guarantee regarding financing in the MOU regarding “Phase 3” investments will be implemented in final documentation as currently outlined.

See “Item 4, Information on the Company – Regulatory Framework – Jamaican Aeronautical Services Regulation.”

If MBJA fails to fulfill the requirements of the Capital Development Program, it could suffer specific negative consequences, including a termination of its concession.

Under its Concession Agreement, MBJA is required to make capital expenditures in order to meet Capital Development Program requirements. Additionally, MBJA is also responsible for maintaining the tangible

19

concession assets under the Concession Agreement, which involves capital investment projects and improvements to concession assets. Although in prior years MBJA has complied with all of its committed capital expenditure requirements, if MBJA fails to comply with these terms and conditions of the Concession Agreement, it could be in default and, if it fails to remedy the breach within the applicable grace period, it could suffer negative consequences, including the termination of its concession.

The Mexican government may terminate or reacquire our Mexican concessions under various circumstances, some of which are beyond our control.

Our concessions are our principal assets, and we would be unable to continue operations without them. A Mexican concession may be revoked by the Mexican government for certain prescribed reasons, including failure to comply with our Master Development Programs, a temporary or permanent halt in our operations, actions affecting the operations of other concession holders in Mexico, failure to pay damages resulting from our operations, exceeding our maximum rates or failure to comply with any other material term of our Mexican concessions. Violations of certain terms of a concession (including violations for exceeding the applicable maximum rate) can result in revocation of a concession only if sanctions have been imposed for violations of the relevant term at least three times. Violations of other terms of a concession can result in the immediate termination of the concession. Our Mexican concessions may also be terminated upon our bankruptcy or insolvency.

We would face similar sanctions for violations of the Mexican Airport Law or the regulations thereunder. Under applicable Mexican law and the terms of our Mexican concessions, our Mexican concessions may also be made subject to additional conditions, including under our renewed Master Development Programs, which we may be unable to meet. Failure to meet these conditions may also result in fines, other sanctions and the termination of the concessions.

The Mexican government may also revoke one or more of our Mexican concessions at any time through reversion, if, in accordance with applicable Mexican law, it determines that it is in the public interest to do so. The Mexican government may also assume the operation of any airport in the event of war, public disturbance or a threat to national security. In addition, in the case of a force majeure event, the Mexican government may require us to implement certain changes in our operations. In the event of a reversion of the public domain assets that are the subject of our Mexican concessions, the Mexican government under Mexican law is required to compensate us for the value of the concessions or added costs based on the results of an audit performed by appraisers. In the case of a mandated change in our operations, the Mexican government is required to compensate us for the cost of that change. Similarly, in the event of an assumption of our operations, other than in the event of war, the government is required to compensate us and any other affected parties for any resulting damages. There can be no assurance that we would receive compensation equivalent to the value of our investment in, or any additional damages related to, our Mexican concessions and related assets in the event of such action.

In the event that any one of our Mexican airports’ concessions is terminated, whether through revocation or otherwise, our other concessions may also be terminated. Thus, the loss of any concession would have a material adverse effect on our business and results of operations.

The Jamaican government may terminate or reacquire MBJA’s concession under various circumstances, some of which are beyond our control.

The Montego Bay airport concession is MBJA’s principal asset, and MBJA would be unable to continue operations at the Montego Bay airport without it. As owner of the concession assets, the AAJ is entitled under certain circumstances, however, to expel MBJA from all or part of the Montego Bay airport site or to take over or carry on the operation and management of the airport or provision of airport services. The AAJ may step into the public domain assets that are the subject of the Montego Bay airport concession for as long as may be required if it determines that MBJA is in breach of the Concession Agreement, to prevent material disruptions in service at the Montego Bay airport or in cases of national emergencies. Upon such a step-in by the AAJ, the AAJ must account to MBJA for any revenues collected at the Montego Bay airport during the step-in period. Where the AAJ steps into the public domain assets that are the subject of the Montego Bay airport concession pursuant to any uncured event of default or to prevent material disruptions in service, MBJA is required to bear all costs (except consequential losses) and expenses associated with the AAJ exercise of its step-in rights. There can be no assurance that MBJA would receive compensation equivalent to the value of its investment in, or any additional damages related to, its concessions and related assets in the event of such action.

20

Following notice and good-faith consultations to avoid such a result, the AAJ may terminate the Concession Agreement with MBJA upon an event of default on the part of MBJA. Regardless of cause for termination, a termination fee is due to MBJA upon a termination or revocation of the concession. However, the Concession Agreement expressly limits the AAJ’s liability to such termination fee. In the event that the AAJ terminates the concession with or without cause, there can be no assurance that the loss of the Montego Bay airport concession would not have a material adverse effect on our business and results of operations.

See “Item 4, Information on the Company – Regulatory Framework – The Montego Bay Airport Concession – AAJ’s Rights to Step In, Terminate or Grant a New Concession.”

The Mexican and Jamaican governments could grant new concessions that compete with our airports.

The Mexican and Jamaican governments could grant additional concessions to operate existing government-managed airports, authorize the construction of new airports or allow existing privately held domestic airports to change into international airports and permit them to receive regular domestic and international flights, all of which could lead to increased competition for our airports.

One factor that may significantly increase competition from other airports is the expansion of the permits of existing private airports that are currently not permitted to operate regular commercial routes. Under Mexican law, any privately held airport that has operated with a permit to provide public service for at least five years automatically acquires the right to also operate regularly scheduled commercial flights and to receive a concession to operate as a public service airport. In addition, through an amendment proposed by the SCT and confirmed by the Presidency, an airport operating with a permit to provide public service could become an international airport.

Any competition from other such additional airports could have a material adverse effect on our business and results of operations. Under certain circumstances, the grant of a concession for a new or existing airport must be made pursuant to a public bidding process. In the event that a competing concession is offered in a public bidding process, we cannot provide assurance that we would participate in such process, or that we would be successful if we were to participate. See “Item 4, Information on the Company – Regulatory Framework – Other Regulation of Mexican Concessions and Concession Assets – Grants of New Mexican Concessions” and “Item 4, Information on the Company – Regulatory Framework – The Montego Bay Airport Concession – AAJ’s Rights to Step In, Terminate or Grant a New Concession.”

The SCT could require us to monitor certain aircraft movements at our Mexican airports that we do not currently control, which could result in increased costs.

The Mexican Air Traffic Control Authority (Servicios a la Navegación en el Espacio Aéreo Mexicano) or “SENEAM”, could require us to monitor certain aircraft movements at our Mexican airports that we do not currently control, which could result in increased costs. SENEAM currently requires us to manage and control aircraft movements in and out of our arrival and departure gates and remote boarding locations at our Guadalajara, Tijuana and Puerto Vallarta airports. At our other Mexican airports, these aircraft movements are monitored by SENEAM. Should SENEAM require us to control, or if we, for efficiency purposes, request to control, these aircraft movements directly at any or all of our other Mexican airports in the future, our results of operations could be negatively impacted by increased operating insurance and liability costs resulting from taking on these obligations.

The Mexican civil aviation authority could require us to extend the official operating schedule at our Mexican airports, which could result in increased operating costs.

The DGAC is responsible for establishing the official operating schedules of our Mexican airports. Outside of our Mexican airports’ official hours of operation, we are permitted to double our airport charges for services that we provide. Currently, our airports at Guadalajara, Puerto Vallarta and Morelia have official operating schedules of 24 hours per day. The DGAC can issue a decree extending the official operating schedule of one or more of our other airports from its current schedule, which would deprive us of the ability to double our airport charges for off-hour services at airports for which such a decree has been issued. For instance, as of January 17, 2014, the DGAC

21

expanded the operating schedule of our Aguascalientes airport from 6:00 a.m. to 8:00 p.m. to 6:00 a.m. to 12:00 a.m. and as of April 2, 2015, the operating schedule of our Los Cabos airport was expanded from 7:00 a.m. to 6:00 p.m. to 7:00 a.m. to 9:00 p.m. Such extensions of our official operating schedules result in increases in operating costs, and we can provide no assurances that we would be able to recover those costs.

Changes to Mexican laws, regulations and decrees applicable to us could have a material adverse impact on our results of operations.

The Mexican government has in recent years implemented various changes to the laws applicable to Mexican companies, including us. The terms of our Mexican concessions do not exempt us from any changes to Mexican laws. Changes to the Mexican constitution or to any other Mexican laws could have a material adverse impact on our results of operations.

For instance, as a result of certain 2013 amendments to Mexico’s Constitution, on July 6, 2014, a new Federal Economic Competition Law (Ley Federal de Competencia Económica) went into effect, which, among other things, grants broader powers to the federal competition authority, including the ability to regulate essential facilities. If the new competition authority determines that a specific service or product is an essential facility, it has the ability to regulate access conditions, prices, tariffs or technical conditions for or in connection with the specific service or product. Some of the services we render are public services that are regulated by the Mexican government, and we are unsure if the competition authority will apply the new competition law in the same manner and under the same considerations as it would apply to non-regulated service providers. Should the new competition authority determine that all or part of the services we provide are considered an essential facility, we may be required to implement significant changes to the way we currently do our business, which could have a material adverse impact on our results of operations. For a discussion of the new competition law, see “Item 4, Information on the Company – Regulatory Framework – Sources of Mexican Regulation – Federal Economic Competition Commission.” Also see “ – We cannot predict how the regulations governing our business will be applied” in this section.

For more detailed information on current sources of regulation governing the operation of airports in Mexico, see “Item 4, Information on the Company – Regulatory Framework – Sources of Mexican Regulation.”

Risks Related to Our Strategic Shareholder

AMP, our strategic shareholder, has significant influence over our operations, and AMP’s interests may differ from those of other shareholders.

AMP holds Series BB shares currently representing 15% of our total capital stock. The Series BB shares have certain special rights that allow AMP to exercise significant influence over our operations. Through its right to appoint and remove members of our senior management, AMP participates in the decision-making process of our management in areas such as business strategy, operations, financing, acquisitions and dispositions of assets or business.

Pursuant to our bylaws, AMP (as holder of our Series BB shares) has the right to appoint and remove our top-level executive officers (upon consultation with our Nominations and Compensation Committee), to elect four members of our board of directors and their alternates and to designate three members of our Operating Committee and 20% of the members of each other board committee (or one member of any committee consisting of fewer than five members), except for the Audit Committee, whose members are selected according to Mexican and U.S. independence standards. AMP (as holder of our Series BB shares) also has the right pursuant to our bylaws to veto certain actions requiring the approval of our shareholders (including the approval of our financial statements, increases or decreases of our capital stock, the payment of dividends, the amendment of our bylaws and any decision that has the objective to modify or annul its right to appoint our top-level executive officers). These rights are not conditioned on whether or not the technical assistance agreement and the participation agreement remain in force. Pursuant to our bylaws, if at any time AMP (as the holder of our Series BB shares) were to hold less than 7.65% of our capital stock in the form of Series BB shares, such shares would be mandatorily converted into Series B shares, which would cause AMP to lose all of its special rights. Shareholders of AMP have allocated among themselves certain veto rights relating to the exercise by AMP of its veto and other rights, which increases the risk of impasse at AMP shareholders’ meetings and ultimately at our shareholders’ meetings. Differences in points of view among AMP’s shareholders with respect to our management could affect our results of operations. The interests of AMP may differ from those of our other shareholders, and we can offer no assurance that AMP and the officers appointed by AMP will exercise their rights in ways that favor the interests of our other shareholders.

22

Disputes among AMP’s shareholders may affect our shareholders’ meetings or management.

In 2010 and 2011, disputes among AMP’s shareholders affected our shareholders’ meetings and trading of our shares on the Mexican Stock Exchange and the NYSE, as well as involving us in litigation. Notwithstanding those disputes, on December 1, 2011, we were advised by AMP’s shareholders that they had entered into an agreement to end their dispute and to terminate their legal proceedings. Additionally, we were informed that AMP’s shareholders agreed to a comprehensive mechanism for decision-making (primarily by consensus, but with specific mechanisms aimed at avoiding deadlocks that could affect our operations), and that AMP’s shareholders will continue developing our business. AMP’s shareholders also affirmed their intent to defend the rights granted to them by the Mexican government and further confirmed their respective original ownership percentages in AMP.

On November 19, 2014, Controladora Mexicana de Aeropuertos, S.A. de C.V. (“CMA”) entered into an agreement to purchase 33.33% of the capital stock of AMP from DCA. Although CMA became 66.66% owner of the capital stock of AMP as a result of this transaction, CMA agreed that the minority shareholders’ consent is required with respect to certain significant actions or decisions. See “Item 7, Major Shareholders and Related Party Transactions – Major Shareholders – AMP Trust, Bylaws and Shareholders’ Agreement.”

If any further disputes among AMP’s shareholders were to occur in the future, it is not possible to predict if they would result in deadlock at our shareholders’ meetings or distract our management, or what effects such events might have on the price of our stock, its liquidity or our market value and the effects that these conflicts could have on our business or results of operations. In addition, AMP’s veto, appointment and other rights could adversely impact our operations and constitute an obstacle for us to bring in a new strategic shareholder and/or operator.

If AMP should decide to sell all or a portion of its interest in us, our operations could be adversely affected.

AMP currently exercises significant influence over our management, as described above. Our bylaws and certain of the agreements executed in connection with the privatization process prohibited AMP from transferring any of its Series BB shares before August 25, 2004. Since that date, AMP has been permitted to transfer up to 49% of its Series BB shares without restriction. Since August 25, 2009, AMP additionally has been permitted to sell in any year up to 20% of its remaining 51% interest in our Series BB shares. Presently, therefore, AMP is able to sell nearly all of the shares that it owns. Our bylaws provide that, subject to certain exceptions, Series BB shares must be converted into Series B shares prior to transfer. Should AMP divest its interest in us or cease to hold Series BB shares, our management could change and our operations could be adversely and significantly affected as a result.

Our operations could be adversely affected if the technical assistance agreement is not renewed with AMP.

As described above, AMP exercises a significant influence over our management through the technical assistance agreement, through which AMP provides our airports with expertise in operating in the aeronautical sector and strategic planning guidance to increase aeronautical and non-aeronautical revenues, in addition to knowledge of the Mexican government and business sectors and assistance with the negotiation of our Master Development Programs. Therefore, if either we or AMP decides not to renew the technical assistance agreement, it would require time and potentially higher costs for us to replace AMP’s strategic expertise through contracts with new external advisors; apart from the possible higher costs, the need to replace AMP could have an impact on our business strategy and ongoing projects, such as the successful negotiation of tariffs, investments and other elements of our Master Development Programs. As a result, our results of operations could be negatively affected. For more detailed information on the technical assistance agreement with AMP, see “Item 4, Information on the Company – History and Development of the Company – Investment by AMP.”

Failure to comply with certain requirements of the privatization guidelines and the participation agreement relating to our privatization could have a material and adverse effect on our operations or the value of our securities.

In 1999, as part of the first stage in the process of opening Mexico’s airports to private investment, the Mexican government sold a 15% equity interest in us to AMP pursuant to a public bidding process.

23

Pursuant to the guidelines published by the Mexican government during the first phase of our privatization and the participation agreement setting forth the rights and obligations of each of the parties involved in our privatization, AMP assumed certain rights and obligations.

Although we believe AMP satisfies all their requirements under the privatization guidelines and the participation agreement, there can be no assurance that allegations or official inquiries relating to AMP’s compliance with its obligations under those requirements will not take place. In the event of future inquiries or an official finding that AMP is or was not in compliance with the requirements of the privatization guidelines or the participation agreement, AMP could be subject to fines and the technical assistance agreement between us and AMP could be terminated, which could have a material effect on our operations. In addition, there can be no assurance that any such developments would not result in a material decrease in the market value of our shares or ADSs or their liquidity.

Certain actions by Grupo México, S.A.B. de C.V. may affect our management, financial condition or results of operations.

Articles X and XII of our bylaws, among others, limit the ability of Series B shareholders, directly or with related parties, other than AMP, to hold more than 10% of our outstanding capital stock, and any shares held in excess of that amount must be sold in a public offering. In accordance with our bylaws, until the public offering of such shares takes place, such excess shares have no voting power and cannot be represented in any shareholders’ meeting.

On June 13, 2011, Grupo México, S.A.B. de C.V. (“Grupo México”) announced that its board of directors had approved the acquisition, directly or indirectly, of at least 30%, and up to 100%, of our shares outstanding at that time, excluding treasury shares, through a public tender offer. Grupo México and its subsidiary, Infraestructura y Transportes México, S.A. de C.V. (“ITM”), then commenced legal proceedings seeking (i) to modify our bylaws to eliminate the foregoing limitations and (ii) to terminate AMP’s special rights that stem from AMP’s ownership of our Series BB shares.

Initially, Grupo México obtained a favorable decision from a civil court in Mexico City. However, on June 17, 2015, the Mexican Supreme Court issued an amparo ruling upholding the validity of Articles X and XII of our bylaws regarding the limitations on ownership of our capital stock. On February 17, 2016, the Superior Court of Mexico City declared that Grupo México and ITM were in violation of the Company’s bylaws due to the fact that together they held more than 10% of our outstanding capital stock, and ordered Grupo México and ITM to sell any Series “B” shares held in excess of that limit. Consequently, the challenge initiated by Grupo México and ITM against these articles has been definitively concluded, with the ruling confirming the validity and effectiveness of these articles in support of the position we maintained and defended. Grupo México filed an appeal looking for clarification regarding the ruling. On November 9, 2016, the complaint was declared unfounded. Despite this ruling, we still expect that the Mexican Supreme Court will issue a new, binding decision on procedures for complying with the decision of the Superior Court of Mexico City regarding the disposition of shares exceeding 10% of our capital stock. See “Item 8, Financial Information – Legal Proceedings – Litigation related to Grupo México, S.A.B. de C.V. seeking to void certain of our bylaws.”

In its most recent filing on Schedule 13D with the SEC on April 20, 2016, Grupo México disclosed that it beneficially owned 14.9% of our total outstanding shares. Although these decisions are definitive and not appealable, it is possible that Grupo México will seek to challenge our management on other matters or through other legal means, which may present further disruptions for our management and the Company. It is not possible to predict the extent to which these disputes with Grupo México will distract our management, the effects that future developments in this dispute might have on the price of our stock, its liquidity or our market value or the effects that these conflicts could have on our business or results of operations.

Mexican stock brokers may not continue adhering to the injunction from trading in our capital stock when such trading would result in a violation of our bylaws, and we cannot we predict whether we would be successful in enforcing our bylaws upon Mexican stock brokers.

In accordance with a decision of a Mexican court that instructed us and our directors and officers to take all necessary legal measures to maintain and protect our bylaws, on February 15, 2012 we initiated a lawsuit against all

24

Mexican stock market brokers seeking that Mexican stock market brokers strictly adhere to our bylaws by restricting the sale of our shares to Grupo México and its subsidiaries if, in violation of our bylaws, they hold, individually or in the aggregate, more than 10% of our total outstanding capital stock. On February 29, 2012, we were informed that a court issued preliminary injunctions that required Mexican stock brokers to, among other things, refrain from trading our shares for an individual, group or group of related entities, where such a trade could result in any way in the acquisition of an ownership position that exceeds the 10% maximum allowed by Article X of our bylaws. We cannot predict the consequences from this proceeding or the future actions of the Mexican stock brokers, including any limitations on our access to financing. It is also not possible to predict what effects future developments in this dispute might have on the price of our stock, its liquidity or our market value and the effects that this conflict could have on our business or results of operations.

Risks Related to Mexico

Adverse economic conditions in Mexico may adversely affect our financial condition or results of operations.

All of our operations conducted in Mexico are dependent upon the performance of the Mexican economy. As a result, our business, financial condition or results of operations may be affected by the general condition of the Mexican economy, over which we have no control. In the past, Mexico has experienced economic crises, caused by internal and external factors, characterized by exchange rate instability (including large devaluations), high inflation, high domestic interest rates, economic contraction, a reduction of international capital flows, a reduction of liquidity in the banking sector and high unemployment rates. We cannot assure that such conditions will not return or that such conditions will not have a material adverse effect on our business, financial condition or results of operations.

According to the Mexican National Institute for Statistics and Geography (Instituto Nacional de Estadística y Geografía), or “INEGI,” GDP increased 4.1% in 2014, 2.5 % in 2015 and an estimated 2.3% for 2016, in each case compared with the previous year. The annualized interest rates for 28-day Mexican Treasury Bills (Cetes) averaged approximately 3.0%, 3.0% and 4.2% in 2014, 2015 and 2016, respectively. As of April 7, 2017, the 28-day Interbank Equilibrium Interest Rate (Tasa de Interés Interbancaria de Equilibrio), or “TIIE-28,” was 6.9%. To the extent that we incur peso-denominated debt in the future, it could be at high interest rates.

If inflation or interest rates increase significantly or if the Mexican economy is otherwise adversely impacted, our business, financial condition or results of operations could be materially and adversely affected.

Additionally, economic conditions in Mexico may also be affected by political developments in the United States, such as the change in administrations in January 2017, and economic developments in the United States, such as interest rates. We cannot assure you that any developments in the U.S. or elsewhere will not materially and adversely affect us in the future.

Depreciation or fluctuation of the peso relative to the U.S. dollar could adversely affect our results of operations and financial condition.

Any future significant appreciation or depreciation of the peso could impact our aggregate passenger traffic volume, which could have a material adverse effect on our results of operations. Following the devaluation of the peso and the economic crisis beginning in 1994, the aggregate passenger traffic volume in our airports in 1995 (then operated by our predecessor) decreased as compared to prior years, reflecting a decrease in Mexican passenger traffic volume that more than offset an increase in international passenger traffic volume. Another substantial decrease in value could occur, and it could (notwithstanding other factors) lead to a decrease in domestic passenger traffic that may not be offset by any increase in international passenger traffic. In 2014, the peso depreciated 12.9% against the U.S. dollar. In 2015, the peso depreciated 16.7% against the U.S. dollar. In 2016, the peso depreciated 20.1% against the U.S. dollar. Any future significant depreciation of the peso could impact our aggregate passenger traffic volume by increasing the cost of travel for domestic passengers, while any future significant appreciation of the peso could impact our aggregate passenger volume by increasing the cost of travel for international passengers.

In 2014, all of our indebtedness was denominated in pesos. Due to the acquisition of 100% of the shares of DCA in 2015, we incurred indebtedness in U.S. dollars. A devaluation of the peso would increase the debt service cost of such U.S. dollar-denominated indebtedness and result in foreign exchange losses. In 2016, approximately 99% of MBJA’s operating revenues and 60% of its operating expenses and capital expenditures were denominated

25

in U.S. dollars, with the remaining 40% of operating expenses and capital expenditures denominated in Jamaican dollars, which are pegged to the U.S. dollar. All of MBJA’s indebtedness was also denominated in U.S. dollars in 2016. Accordingly, fluctuations in the exchange rate between the Mexican peso and the U.S. dollar may also affect our performance through the consolidation of MBJA’s financial and operating results.

In addition, fluctuations in the exchange rate between the peso and the U.S. dollar, particularly depreciations, may adversely affect the U.S. dollar equivalent of the peso price of the Series B shares on the Mexican Stock Exchange. As a result, such peso depreciations will likely affect the market price of the ADSs. Exchange rate fluctuations would also affect the ADS depositary’s ability to convert into U.S. dollars, and make timely payment of, any peso cash dividends and other distributions paid in respect of the Series B shares.

The value and prices of securities issued by Mexican companies may be adversely affected by developments in other countries.

The Mexican economy may be, to varying degrees, affected by economic and market conditions in other countries. Although economic conditions in other countries may differ significantly from economic conditions in Mexico, investors’ reactions to adverse developments in other countries may have an adverse effect on the market value of securities of Mexican issuers. For instance, the credit freeze and global recession that began in 2007 and continued into 2009 had a significant impact in Mexico. Mexico’s stock market fell 48% during that period. Similarly, the European debt crisis that began in Greece and then spread to other countries such as Italy and Spain as well as European financial institutions, affected financial markets around the world and in Mexico.

In addition, economic conditions in Mexico are strongly correlated with economic conditions in the United States as a result of NAFTA and increased economic activity between the two countries. Therefore, adverse economic conditions in the United States, the termination of NAFTA or other related events could have a material adverse effect on the Mexican economy. We cannot provide assurance that events in other emerging market countries, in the United States or elsewhere, will not materially and adversely affect our business, financial condition or results of operations.

Political conditions in Mexico could materially and adversely affect Mexican economic policy or business conditions and, in turn, our operations.

The Mexican government has exercised, and continues to exercise, significant influence over the Mexican economy. Mexican governmental actions concerning the economy could have a significant impact on Mexican private sector entities in general, as well as on market conditions and prices and returns on Mexican securities, including our securities.

Enrique Peña Nieto, a member of the Institutional Revolutionary Party (“PRI”), began a six-year term as President of Mexico on December 1, 2012. As with any governmental change, this change to the country’s administration may lead to significant changes in laws, public policies or regulations, may affect the political and economic environment in Mexico, and consequently, they may contribute to economic uncertainty and to heightened volatility of the Mexican capital markets and in securities issued by Mexican companies. In addition, no single party has a clear majority in Congress, and consequently, governmental gridlock and political uncertainty may occur.

We can provide no assurance that changes in the policies of Mexico’s federal government will not have an adverse effect on our business, financial conditions and results of operations. Consequently, we can provide no assurance that Mexican political or social developments, over which we have no control, will not adversely affect our financial conditions, results of operations, our ability to make dividend payments to our shareholders or the market price of our securities.

Federal tax legislation in Mexico may have an adverse effect on our financial condition and our results of operations.

The Mexican government has in recent years implemented various changes to the tax laws applicable to Mexican companies. The terms of our Mexican concessions do not exempt us from generally applicable Mexican tax laws. Changes to tax laws and regulations in Mexico could significantly increase our tax expense, which could have a material adverse impact on our results of operations.

26

For instance, on January 1, 2014, new tax laws came into force following tax reforms in Mexico that, among other changes: maintained the income tax rate on corporations of 30%; imposed withholding tax in respect of dividends paid to Mexican and foreign shareholders; eliminated deductions previously allowed in respect of payments between related parties or certain foreign corporations; limited the tax deductions for certain benefits paid to employees; and increased the value-added tax in certain areas of Mexico.

We cannot predict the impact that changes in law will have, if fully implemented and applied to us, on our business, financial condition and results of operations. In addition, we cannot predict the indirect impact that such legislation could have on our customers and shareholders.

Our business could be adversely affected if penalties are imposed on us or any of our Mexican airports by the Mexican tax authority.

The Mexican tax authority (Servicio de Administración Tributaria), or “SAT,” has the right to review any of our subsidiaries’ tax calculations for the previous five fiscal years. If the tax authority determines that our subsidiaries’ taxes have been underpaid in any of these years, it may require payment of the difference, and any applicable additional penalties. Such fees and penalties may have a material adverse effect on our business.

Our business could be adversely affected by other claims by certain Mexican municipalities.

Certain of our Mexican airports are subject to claims by the municipalities in which they operate regarding our failure to obtain certain municipal licenses. Although we do not believe that we are subject to the license requirements at issue, if the municipalities require additional licenses or make changes to the current laws and we are unable to obtain the necessary licenses or if we do not prevail in proceedings challenging these requirements, our failure to obtain these licenses could have a material adverse effect on the operations of certain of our airports and consequently on our financial condition and results of operations.

High incidences of crime in Mexico and violence related to drug trafficking could adversely affect our business.

Travel alerts issued by the U.S. Bureau of Consular Affairs, the most recent as of December 8, 2016, informed of the risks of traveling in Mexico due to (i) threats to safety and security posed by transnational criminal organizations in the country and (ii) increased violence in many towns and cities across Mexico. These travel alerts emphasize the extent of criminal activity in the states of Baja California, Baja California Sur, Chihuahua, Coahuila, Durango, Estado de Mexico, Guerrero, Sinaloa, Sonora and Tamaulipas. According to the U.S. Department of State, while millions of U.S. citizens safely visit Mexico each year, some are victims of violence.

Higher incidences of crime throughout Mexico and drug trafficking-related violence could have an adverse effect on our business as it may decrease the international passenger traffic directed to Mexico or the domestic passenger travel using our airports in affected states.

Increased environmental regulation and enforcement in Mexico may affect us.

The level of environmental regulation in Mexico is increasing and the enforcement of environmental laws has become more common. There can be no assurance that environmental regulations or their enforcement will not change in a manner that could have a material adverse effect on our business, results of operations, prospects or financial condition.

Minority shareholders may be less able to enforce their rights against us, our directors, or our strategic shareholders in Mexico.

Under Mexican law, the protections afforded to minority shareholders are different from those afforded to minority shareholders in the United States. For example, because provisions concerning fiduciary duties of directors have only recently been incorporated into the new Securities Market Law, it may be difficult for minority shareholders to bring an action against directors for breach of this duty and achieve the same results as in most jurisdictions in the United States. In addition, the procedures for class action lawsuits were incorporated into

27

Mexican law and became effective in March 2012; however, certain rules and procedures could be different than the ones in the United States. Therefore, in some cases it may be more difficult for minority shareholders to enforce their rights against us, our directors, or our strategic shareholders than it would be for minority shareholders of a U.S. company.

We are subject to different corporate disclosure and accounting standards than U.S. companies.

A principal objective of the securities laws of the United States, Mexico and other countries is to promote full and fair disclosure of all material corporate information, including accounting information. However, there may be different or less publicly available information about issuers of securities in Mexico than is regularly made available by public companies in countries with highly developed capital markets, including the United States.

In addition, accounting standards and disclosure requirements in Mexico differ from those of the United States. Our financial statements are prepared in accordance with IFRS, which differs from U.S. GAAP in a number of respects. Items on the financial statements of a company prepared in accordance with IFRS may not reflect its financial position or results of operations in the way they would be reflected, if such financial statements had been prepared in accordance with U.S. GAAP.

Risks Related to Our Business Acquisition

We may fail to realize the benefits anticipated from our new Jamaican airport business.

Our Spanish subsidiary, DCA, holds a 74.5% stake in MBJA, the Jamaican entity that holds the concession for the Montego Bay airport. While MBJA is a similarly positioned airport concessionaire, we may be unable to fully implement our business plans and strategies for the integration of DCA’s business into ours. The business growth opportunities, revenue benefits, cost savings and other benefits we anticipated to result from our acquisition of DCA may not be achieved as expected, or may be delayed. To the extent that we incur higher integration costs or achieve lower revenue benefits or fewer cost savings than expected, or if we are required to recognize impairments of acquired assets, investments or goodwill, our results of operations and financial condition may be adversely affected.

The increase in our leverage as a result of our acquisition of DCA could significantly affect our results of operations and financial condition.

In order to conclude the acquisition of DCA in April 2015, we incurred significant amounts of debt as compared with our previous debt levels, which could adversely affect our capital structure and reduce available cash flow. Our outstanding consolidated indebtedness to banks, financial institutions and others was Ps.9.8 billion (approximately U.S.$477.6 million) as of December 31, 2016. This indebtedness may constrain our ability to raise incremental financing or increase the cost at which we could raise and maintain any such financing or impair our ability to take advantage of significant business opportunities that may arise. We cannot assure you that our business will generate cash in an amount sufficient to enable us to service our debt or to fund our other liquidity needs, which may adversely affect our overall performance. We may need to refinance all or a portion of our debt on or before maturity, and we cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources.”

Covenants in our newly incurred indebtedness may limit our discretion with respect to certain business matters.

The instruments governing our indebtedness or the indebtedness of our operating entities may contain restrictive covenants limiting our discretion with respect to certain business matters. These covenants could place significant restrictions on, among other things, our ability to incur additional liabilities, acquire new equity investments, create liens or other encumbrances or make certain other payments, investments, loans and guarantees. These covenants could also require us to meet certain financial ratios and financial condition tests. A failure to comply with any such covenants could result in a default which, if not cured or waived, could permit acceleration of the relevant indebtedness.

28

Risks Related to Jamaica

Adverse economic conditions in Jamaica may adversely affect our financial condition or results of operations.

Despite 99% of the passenger traffic through the Montego Bay airport consisting of international passengers, the general condition and performance of the Jamaican economy, over which we have no control, may affect our business, financial condition or results of operations. Jamaica is a small, emerging market country, which has struggled with low growth and high public debt. Due to its size, indebtedness, reliance on exports to a small number of principal markets, such as the United States and Canada, and the concentration of its economic activity in its three principal industries of sugar production, bauxite mining and tourism, the Jamaican economy is highly susceptible to external shocks. Jamaica is also affected by social and security problems, including, among others, trafficking in drugs and high rates of violent crime, underemployment and youth unemployment. After having seen its poverty rate drop almost 20% over two decades, Jamaica saw it increase by 8% in a few years after the onset of the global economic crisis in 2008, according to the World Bank.

In 2013, the Jamaican government began a comprehensive economic reform program, for which it obtained a multilateral financial support package of approximately U.S.$2 billion over four years, including a U.S.$932 million credit facility from the International Monetary Fund and U.S.$510 million credit facilities from the World Bank Group and the Inter-American Development Bank. The program aims to stabilize the economy by reducing debt and improving the balance of payments position. A change in administration after the national elections in February 2016 brought further consolidation of government efforts with a dedicated Ministry of Economic Growth and Job Creation. The reform program is beginning to bear fruit, in that institutional reforms and measures to improve the environment for the private sector have started to restore confidence in the Jamaican economy. The country’s credit rating has improved and total government debt was reduced to 128 percent of GDP by the end of fiscal year 2016, according to the World Bank.

During the past three years economic growth rates have been steadily rising, and the World Bank forecasts GDP growth of 1.7% in 2016 and over 2% in 2017. However, growth remains lower than what is needed for reducing poverty, and the country continues to be confronted by serious social issues that predominantly affect youth, such as high levels of crime and violence and high unemployment. The Statistical Institute of Jamaica estimated the unemployment rate in Jamaica at 12.9% in July 2016. The unemployment rate for youth is considerably higher at 29.6%, and the average unemployment rate for women is almost double that for men: 16.9% versus 9.5%.

If Jamaican inflation or interest rates increase significantly or if the Jamaican economy is otherwise adversely impacted, our business, financial condition or results of operations could be adversely affected.

Political conditions in Jamaica could materially and adversely affect Jamaican economic policy or business conditions and, in turn, our operations in Jamaica.

National elections to determine which party forms the Jamaican government for the next five years were held in February 2016, which resulted in the Jamaica Labour Party (“JLP”) holding a majority of the seats in both houses of Parliament. The previous ruling party, the People’s National Party (“PNP”) advocated for the continued implementation of public policies and private partnerships to encourage infrastructure development in the tourism sector, including the expansion of the Montego Bay airport in partnership with the owner of its concession. Thus far, the change in ruling political parties in Jamaica has not led to significant modifications of the economic and regulatory policies pursued by the previous administration. Any adverse changes in legislation in the future could have a negative impact on our business, financial condition, performance of operations and cash flows. Shortly after its election victory, the newly-formed JLP Government increased the departure tax from U.S.$20 to U.S.$35 in an effort to fulfill shortfalls in the national budget. This increase could affect Jamaica’s competitive advantage and may affect future growth, however less than a year since the increase, there have been no negative effects on passenger traffic.

Our business in Jamaica is subject to substantial governmental regulation.

The Montego Bay airport concession is regulated principally by the AAJ, an agency of the Jamaican government, under the Airports Authority Act of 1974. In April 2003, the AAJ divested operational responsibility for the Montego Bay airport to MBJA under a Concession Agreement pursuant to which MBJA is responsible for

29

the management of the day-to-day operations of the Montego Bay airport in keeping with specific performance criteria and prescribed international standards. The AAJ retains ownership of the non-movable assets of the airport. MBJA pays a concession fee to the Jamaican government and at the end of the contract will transfer the Montego Bay airport’s infrastructure and any moveable assets acquired during the period of the concession to the AAJ. Regular performance reviews and other contract administration oversight functions are conducted by the AAJ, as specified under the Concession Agreement. There can be no assurance that governmental regulations or their enforcement will not change in a manner that could have a material adverse effect on our business, results of operations, prospects or financial condition. However, there are certain provisions within the Concession Agreement that offer some protection to MBJA in the event of adverse changes in Jamaican law. In certain instances, if there is an adverse change in Jamaican law resulting in an unavoidable net increase in costs or net reduction in revenues to MBJA, MBJA will be entitled (subject to the remaining provisions of Clause 22C of the Concession Agreement) to monetary compensation payable by AAJ. See “Item 4, Information on the Company – Regulatory Framework.”

High incidences of crime in Jamaica and violence related to drug trafficking could adversely affect our business.

The U.S. Department of State’s Jamaica 2016 Crime and Safety Report states that organized crime and other criminal elements are prevalent and extremely active in Jamaica, and advises U.S. citizens to avoid travelling into certain areas of Montego Bay. Jamaica is a transit point for South American cocaine en route to the United States, Canada and Europe, and is also the largest Caribbean producer and exporter of marijuana. Higher incidences of crime and drug trafficking-related violence in Jamaica could have an adverse effect on our business as it may decrease the international passenger traffic directed to Jamaica.

Government tax legislation in Jamaica may have an adverse effect on our financial condition and results of operations.

The Jamaican government has in recent years implemented various changes to the tax laws applicable to Jamaican companies. Except certain relief from withholding tax in relation to interest on commercial and shareholder’s loans to non-resident lenders and to dividends to non-resident shareholders, the terms of our concessions agreement do not exempt us from generally applicable Jamaican tax laws. Changes to tax laws and regulations in Jamaica could significantly increase our tax expense, which could have a material adverse impact on our results of operations.

Since 2013, the Jamaican government has introduced a number of new taxes and changes to existing tax legislation in an effort to reform taxation in Jamaica. Among other changes, the Jamaican government introduced a special consumption tax on fuel, increased the education tax rate, introduced transfer pricing rules, increased the personal income tax threshold, and introduced changes to general consumption tax legislation.

We cannot predict the impact that changes in law, if fully implemented and applied to us, will have on our business, financial condition and results of operations. In addition, we cannot predict the indirect impact that such legislation could have on our customers and shareholders.

Item 4. Information on the Company

HISTORY AND DEVELOPMENT OF THE COMPANY

We hold concessions to operate, maintain and develop twelve international airports in the Pacific and Central regions of Mexico and one international airport in Jamaica. As operator of the airports under our concessions, we charge airlines, passengers and other users’ fees for the use of the airports’ facilities. We also derive rental and other income from commercial activities conducted at our airports, such as the leasing of space to restaurants and retailers.

Grupo Aeroportuario del Pacífico, S.A.B. de C.V., a corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico, was incorporated in 1998 as part of the Mexican government’s initiative to open Mexico’s airports to private investment. The corporation’s period of duration is set at 100 years.

30

Each of our Mexican concessions has a term of 50 years beginning on November 1, 1998. The term of each of our Mexican concessions may be extended by the SCT under certain circumstances for up to 50 additional years. Our wholly owned Spanish subsidiary, DCA, holds a 74.5% stake in MBJA, the entity that holds the concession to operate, maintain and utilize the Montego Bay International Airport in Jamaica for a period of 30 years beginning on April 12, 2003 but includes no extension provision.

The address of our registered office is as set forth on the cover of this annual report on Form 20-F. Our telephone number is +52 (33) 3880-1100. Our U.S. agent is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711.

Opening of Mexican Airports to Private Investment

In February 1998, the Mexican government issued the Investment Guidelines for the Opening of Investment in the Mexican Airport System. Under these guidelines, the SCT identified 35 of Mexico’s 58 principal airports as being suitable for investment. These 35 airports were divided into four airport groups: Grupo Aeroportuario del Pacífico, or the Pacific Airport Group (currently consisting of our twelve Mexican airports); Grupo Aeroportuario del Sureste, or the Southeast Airport Group (currently consisting of nine airports), Grupo Aeroportuario de la Ciudad de México, D.F., or the Mexico City Airport Group (currently consisting of one airport) and Grupo Aeroportuario del Centro-Norte, or the Central-North Airport Group (currently consisting of thirteen airports).

The guidelines generally provided for the airport groups to become open to private investment through a two-stage program. In the first stage, a series of public auctions were conducted to award a minority interest in each airport group to a strategic shareholder. In the second stage, all or a portion of the remaining interest in each airport group was sold through public offerings in the Mexican and international capital markets. Except for the Mexico City Airport Group, all of the other airport groups have completed both stages of the program.

As a result of the opening of Mexico’s airports to private investment, we and our subsidiaries are no longer subject to the Mexican regulations applicable to government wholly-owned companies. We believe that this provides us greater flexibility to develop and implement our business strategy and to respond to potential business opportunities.

Investment by AMP

In 1999, through a public auction held as part of the first stage of the private investment program, the Mexican government sold a 15% equity interest in us to AMP.

The following are AMP’s current shareholders:

• Controladora Mexicana (“CMA”) owns 66.66% of AMP. Controladora Mexicana is a private company 50%-owned by Pal Aeropuertos, S.A. de C.V. and 50%-owned by Promotora Aeronáutica del Pacífico, S.A. de C.V. Pal Aeropuertos, S.A. de C.V. is a Mexican special purpose vehicle owned by Eduardo Sánchez Navarro Redo and Promotora Aeronáutica del Pacífico, S.A. de C.V. is a Mexican special purpose vehicle owned by Laura Díez Barroso Azcárraga and her spouse, Carlos Laviada Ocejo. Mr. Sánchez, Mrs. Díez Barroso and Mr. Laviada are Mexican investors with substantial business interests in a variety of industries, including real estate. Pursuant to the privatization guidelines published by the Mexican government during the first phase of our privatization, which require our strategic shareholder to have, among other characteristics, an “operating” partner and a “Mexican” partner (each a “key partner”), Controladora Mexicana is one of AMP’s two key partners, acting as its designated “Mexican” partner.

• Aena Desarrollo Internacional, S.A. (“Aena Internacional”) owns 33.33% of AMP. Aena Internacional is a wholly-owned subsidiary of Aena, S.A. (“Aena”), parent company of the Spanish economic group Grupo AENA. Aena is a listed company with 51% of its shares currently held by E.P.E. Enaire, a Spanish government corporation, and the remaining 49% currently traded on the Spanish stock exchange. Aena operates 46 airports and two heliports in Spain and is one of the largest airport operators in the world. Pursuant to the privatization guidelines described above, Aena Internacional is one of AMP’s two key partners, acting as its designated “operating” partner. In addition to its investment in AMP, Aena Internacional also owns 51.0% of London Luton Airport Holding III Limited, a British airport company that owns the airport company concessionaire of the London Luton Airport in the United Kingdom, as well as relevant stakes in two other airport concession companies in Latin America.

31

AMP paid the Mexican government a total of Ps.2.45 billion (nominal pesos, excluding interest) (U.S.$261 million based on the exchange rates in effect on the date of AMP’s bid) in exchange for:

• all of our Series BB shares, representing 15% of our outstanding capital stock;

• an option to subscribe for up to 5% of newly issued Series B shares (since expired without being exercised); and

• the right and obligation to enter into various agreements with us and the Mexican government, including a participation agreement setting forth the rights and obligations of each of the parties involved in the privatization (including AMP), a fifteen-year technical assistance agreement setting forth AMP’s right and obligation to provide technical assistance to us in exchange for an annual fee and a shareholders’ agreement under terms established during the bidding process. These agreements are described in greater detail in Item 7.

The Technical Assistance Agreement with AMP

Under the technical assistance agreement, AMP provides management and consulting services and transfers industry expertise and technology to us in exchange for a fee. The agreement provides us an exclusive license in Mexico to use all technical assistance and expertise transferred to us by AMP or its shareholders during the term of the agreement. AMP provides us assistance in various areas, including development of our commercial activities, preparation of marketing studies focusing on increasing passenger traffic, assistance with the preparation of the Master Development Programs that we are required to submit to the SCT and the improvement of our airport operations. Our management believes that if we were not to receive the technical assistance provided via our agreement with AMP, this could adversely and significantly affect our results of operations.

Upon expiration, the agreement automatically renews for successive five-year terms unless one party provides notice of termination at least 60 days prior to a scheduled expiration date. Under our bylaws, a decision by us to renew or cancel the technical assistance agreement is subject to the approval of 51% of Series B shareholders other than AMP or any related party of AMP (to the extent that AMP or any such related party holds Series B shares). A party may also terminate the technical assistance agreement prior to its expiration date upon non-compliance with its terms by the other party. The technical assistance agreement with AMP was automatically renewed on August 25, 2014 for five additional years.

In 2014, 2015 and 2016, the technical assistance fee amounted to Ps.194.2 million, Ps.234.9 million and Ps.301.8 million, respectively. Since January 1, 2002, the technical assistance fee has been equal to the greater of U.S.$4.0 million, adjusted annually for U.S. inflation since August 25, 2000 (measured by the U.S. CPI), or 5% of our annual consolidated income from operations from our Mexican airports (calculated prior to deducting the technical assistance fee, income taxes and depreciation and amortization, in each case determined in accordance with MFRS). We believe that this structure creates an incentive for AMP to increase our annual consolidated earnings. AMP is also entitled to reimbursement for the out-of-pocket expenses it incurs in its provision of services under the agreement.

The technical assistance agreement allows AMP, its shareholders and their affiliates to render additional services to us only if our Acquisitions Committee determines that these related parties have submitted the most favorable bid in a public bidding process involving at least three unrelated parties. For a description of this committee, see Item 6 herein. Our bylaws, the participation agreement and the technical assistance agreement also contain certain other provisions designed to avoid conflicts of interest between AMP and us.

AMP’s Rights and Obligations under Our Bylaws

Pursuant to our bylaws, AMP (as holder of our Series BB shares) has the right to appoint and remove our top-level executive officers (upon consultation with our Nominations and Compensation Committee), to elect four members of our board of directors and their alternates and to designate three of the members of our Operating

32

Committee and 20% of the members of each other board committee (or one member of any committee consisting of fewer than five members). According to Mexican and U.S. independence standards, the members of our Audit Committee must be independent. Pursuant to our bylaws, AMP (as holder of our Series BB shares) also has the right to veto certain actions requiring approval by our shareholders (including the payment of dividends, the amendment of our bylaws and any decision that has the objective of modifying or annulling its right to appoint our top-level executive officers). In addition, shareholders of AMP have allocated among themselves certain veto rights relating to the exercise by AMP of its veto and other rights, which increases the risk of impasse at the AMP shareholders’ meetings and ultimately at our shareholders’ meetings. See “Item 3, Key Information – Risk Factors – Risks Related to Our Strategic Shareholder.”

Our bylaws provide that, subject to certain exceptions, Series BB shares must be converted into Series B shares prior to transfer. Our bylaws and certain of the agreements executed in connection with the privatization process prohibited AMP from transferring any of its Series BB shares before August 25, 2004. Since that date, AMP has been permitted to transfer up to 49% of its Series BB shares without restriction. Since August 25, 2009, AMP has been permitted to sell in any year up to 20% of its remaining 51% interest in our Series BB shares. Also pursuant to our bylaws, if at any time AMP (as the holder of our Series BB shares) were to hold less than 7.65% of our capital stock in the form of Series BB shares, its Series BB shares would be mandatorily converted into Series B shares, which would cause AMP to lose all of its special rights.

AMP Shares in Bancomext Trust

As required under the participation agreement entered into in connection with the Mexican government’s sale of our Series BB shares to AMP, AMP has transferred its Series BB shares to a trust, the trustee of which is Banco Nacional de Comercio Exterior, S.N.C. (“Bancomext”). For a description of this trust, see “Item 7, Major Shareholders and Related Party Transactions – Major Shareholders – AMP Trust, Bylaws and Shareholders’ Agreement.”

Pursuant to the terms of the trust, AMP may direct the trustee to vote only shares representing up to 10% of our capital stock. Any shares in excess of 10% are voted by the trustee in accordance with the vote of the majority of Series B shares. The trust does not affect the veto and other special rights granted to the holders of Series BB shares described above.

Global Offering and Establishment of ADR Facility with New York Stock Exchange Listing

In 1999, 85% of our capital stock was transferred from the Mexican government to a trust established in Nacional Financiera, S.N.C., Institución de Banca de Desarrollo (“NAFIN”), a Mexican government-owned development banking institution. In February 2006, we conducted an initial public offering to allow NAFIN to dispose of its 85% interest in us. Through this offering, all of our outstanding Series B shares were sold to the public in Mexico, the U.S. and elsewhere, and NAFIN ceased to be a shareholder. The net proceeds from the sale of shares were remitted entirely to the Mexican government. We received no proceeds from this offering. At the same time, we established an American Depositary Receipt facility with The Bank of New York Mellon (formerly The Bank of New York) and obtained approval to list our ADSs on the New York Stock Exchange. In addition, we registered our Series B shares with the National Securities Registry (Registro Nacional de Valores) and listed our Series B shares on the Mexican Stock Exchange.

Master Development Programs

Under the terms of our Mexican concessions, each of our Mexican subsidiary concession holders is required to present a Master Development Program for approval by the SCT every five years. Each Master Development Program includes investment commitments for the regulated part of our Mexican airports business (including capital expenditures and improvements) for the succeeding five-year period. Once approved by the SCT, these commitments become binding obligations under the terms of our Mexican concessions.

On December 19, 2014, the SCT approved our Master Development Programs for each of our Mexican airports for the 2015 to 2019 period. This five-year program took effect on January 1, 2015 and will be in effect through December 31, 2019.

33

The table below sets forth our historical capital expenditures for our Mexican airports. Capital expenditures are calculated on a cash flow basis, meaning that capital expenditures are equal to those investments actually paid for by each airport during a given year and not including investments allocated for by the airport during that year but not paid for during the given year. The investments shown in the table below therefore reflect our expenditures actually paid for by our Mexican airports for the years indicated. In order to be compared with our committed investments for a given year, the investments made in the previous year but paid for in the given year need to be subtracted while the investments allocated but not paid for in the given year need to be added. For 2014, 2015 and 2016, our investments allocated but unpaid totaled Ps.86.4 million, Ps.221.2 million and Ps.441.5 million, respectively. The substantial majority of these investments were made under the terms of our Master Development Programs.

Historical Capital Expenditures by Mexican Airport

	Year ended December 31,
	2014		2015		2016
	(thousands of pesos)
Guadalajara	Ps.	248,496	Ps.	209,230	Ps.	549,588
Tijuana		106,189		186,566		422,522
Los Cabos		111,345		158,105		206,013
Puerto Vallarta		38,679		108,518		92,190
Hermosillo		20,648		74,606		132,119
Guanajuato		11,448		58,406		103,143
La Paz		46,945		32,788		52,471
Mexicali		8,909		43,220		48,700
Aguascalientes		8,504		59,692		52,671
Morelia		1,726		134,979		86,879
Los Mochis		3,852		31,622		16,684
Manzanillo		6,508		28,689		20,109
Other(1)		7,017		1,961		28,713
Total	Ps.	620,266	Ps.	1,128,382	Ps.	1,811,802

(1) Includes SIAP, CORSA, PCP and Fundación GAP.

The following table sets forth our historical capital expenditures by type of investment across all of our Mexican airports for the years indicated:

Historical Capital Expenditures by Type for our Mexican Airports

	Year ended December 31,
	2014		2015		2016
	(thousands of pesos)
Terminals	Ps.	285,016	Ps.	476,369	Ps.	792,939
Runways and aprons		256,537		232,924		720,416
Machinery and equipment		62,387		411,153		235,650
Other		16,326		7,936		62,797
Total	Ps.	620,266	Ps.	1,128,382	Ps.	1,811,802

During 2014, 2015 and 2016, 17.2%, 0.2% and 3.9%, respectively, of our capital expenditures were funded by cash flows from operations, while the remaining balance was funded by bank loans and long-term debt securities issued on the Mexican capital markets (Certificados Bursátiles de Largo Plazo). We expect to continue funding the most significant portion of our capital expenditures in the future with new debt issuances on the Mexican capital markets; however, our ability to incur debt may be restricted by our existing bank loans. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources.”

34

Our capital expenditures from 2014, 2015 and 2016 were allocated to the following types of investments at the majority of our Mexican airports:

• Terminals. During 2016, we continued our terminal expansion projects in our Guadalajara and Hermosillo airports and began building improvement projects in our Puerto Vallarta, Tijuana, Guanajuato and Mexicali airports. These construction projects are expected to conclude by 2018. We also completed an expansion of the international departures lounge within Terminal 2 of our Guadalajara airport. During 2015, we began terminal expansion construction in our Guadalajara airport and building improvement projects in our Los Cabos and Tijuana airports. During 2014, we completed an expansion of the international departures area in our Guadalajara airport, including new boarding gates and expanded immigration areas, and the construction of the cross-border bridge in our Tijuana airport.

• Runways and aprons. During 2016, we completed the runway renovation at our Tijuana and Hermosillo airports, a new taxiway at our Guanajuato airport, and improvements to the taxiway at our Tijuana and Puerto Vallarta airports. We also performed expansions and improvements to aprons at our Guadalajara, Tijuana, Hermosillo, Puerto Vallarta and Los Cabos airports. During 2015, we completed the runway renovation in our Morelia airport and improved the runways and aprons in our Los Cabos and Tijuana airports. During 2014, we completed an expansion of the aircraft parking platforms in our Guadalajara, Hermosillo and Los Cabos airports, including 20 new aircraft parking positions at Guadalajara International Airport.

• Machinery and equipment. During 2016, we invested in machinery and equipment, such as airport buses, emergency back-up electricity generators, metal detectors and other security-related equipment, ambulances, passenger walkways, air conditioning equipment, equipment for inspecting checked baggage and public information systems. Also, we began the expansion of the baggage handling system in our Guadalajara and Los Cabos airports. During 2015, we invested in machinery and equipment, such as 17 fire extinguishing vehicles, emergency back-up electricity generators, metal detectors and other security-related equipment, ambulances, passenger walkways, air conditioning equipment, equipment for inspecting checked baggage and public information systems. During 2014, we paid Ps.8.2 million for upgrades to baggage screening equipment using funds placed in a trust for this purpose in 2009. For more information on equipment screening, see “Item 4, Information on the Company – Business Overview – Regulatory Framework – Mexican Airport Concessions – Scope of Concessions.”

• Other. We continued improving our sewage treatment plants and recycled water systems at several of our airports, improved our drainage systems, and installed underground electric wiring systems at several of our airports.

The following table sets forth our estimated committed investments for each airport for 2015 through 2019 under our Master Development Programs. We are required to comply with the investment obligations under these programs on a year-to-year basis.

Estimated Committed Investments by Mexican Airport (2015-2019)

	Year ended December 31,
	2015		2016		2017		2018		2019
	(thousands of constant pesos as of December 31, 2012)(1)
Guadalajara	Ps.	230,477	Ps.	645,884	Ps.	315,342	Ps.	136,365	Ps.	30,892
Tijuana		404,850		319,645		231,635		147,700		17,215
Los Cabos		183,833		186,421		235,653		252,845		176,369
Puerto Vallarta		104,725		162,204		69,700		13,477		10,456
Hermosillo		88,508		187,245		102,870		4,730		2,770
Guanajuato		65,333		101,453		60,484		40,160		2,270
La Paz		43,670		35,319		30,048		62,002		14,914
Mexicali		40,747		49,012		66,300		30,410		900
Aguascalientes		64,770		79,512		8,503		19,603		18,376
Morelia		124,974		41,557		11,899		18,355		19,450
Los Mochis		31,085		20,556		12,741		17,760		3,780
Manzanillo		29,261		13,761		12,509		15,930		9,400
Total	Ps.	1,412,233	Ps.	1,842,569	Ps.	1,157,684	Ps.	759,337	Ps.	306,792

35

(1) Figures expressed in thousands of constant pesos as of December 31, 2012. These amounts are based on investment commitments approved by the SCT. Because the amounts are expressed in constant pesos as of December 31, 2012, the figures for investment periods not yet elapsed are adjusted to take into consideration increases in the Mexican PPI’s construction price index since the date of the Ministry’s approval of the Master Development Programs then in effect.

The following table sets forth our estimated committed investments for 2015 through 2019 by type of investment:

Estimated Committed Investments by Type (2015-2019)

	Year ended December 31,
	2015		2016		2017		2018		2019
	(thousands of constant pesos as of December 31, 2012)(1)
Terminals	Ps.	437,486	Ps.	631,606	Ps.	435,521	Ps.	293,360	Ps.	163,466
Runways and aprons		347,402		804,888		473,423		362,699		91,492
Machinery and equipment		490,060		161,425		71,854		50,777		28,060
Other		137,285		244,650		176,886		52,501		23,774
Total	Ps.	1,412,233	Ps.	1,842,569	Ps.	1,157,684	Ps.	759,337	Ps.	306,792

(1) Figures expressed in thousands of constant pesos as of December 31, 2012. These amounts are based on investment commitments approved by the SCT. Because the amounts are expressed in constant pesos as of December 31, 2012, the figures for investment periods not yet elapsed are adjusted to take into consideration increases in the Mexican PPI’s construction price index since the date of the Ministry’s approval of the Master Development Programs then in effect.

Differences between estimated committed investments and historical capital expenditures sometimes exist due primarily to: (i) the difference between capital expenditures made but unpaid during the prior year and investments made but unpaid during the current year; (ii) adjustments for inflation; and (iii) investments deferred into the first three months following the corresponding fiscal year, among other factors.

We allocated a majority of our investments for the 2010-2014 period to expanding and remodeling our four largest airports: the Guadalajara, Puerto Vallarta, Tijuana and Los Cabos international airports. For the 2015-2019 period, the allocation will be mainly to six airports: Guadalajara, Tijuana, Los Cabos, Puerto Vallarta, Hermosillo and Guanajuato, representing 82.7% of the total amounts allocated under our Master Development Programs. We expect to finance most of the committed investments under our Master Development Programs for the 2015-2019 period primarily through the debt market in Mexico, subject to market conditions and cash from our operations. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Indebtedness.”

Acquisition of DCA

On April 20, 2015, we completed a transaction with Abertis for the acquisition of 100% of the shares of DCA for a total of U.S.$192.0 million. We financed 100% of the acquisition of DCA via bridge loans with external sources provided by Scotiabank and BBVA Bancomer. On September 24, 2015, we signed two new long-term loan agreements, also with Scotiabank and BBVA Bancomer, for the refinancing of the bridge loans. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Indebtedness.”

36

DCA Assets

DCA has a 74.5% stake in MBJA, the entity that holds the concession to operate, maintain and utilize Montego Bay International Airport in Jamaica. Vantage Airport Group Limited (“Vantage”), a Canadian joint venture that operates Vancouver International Airport, owns the remaining 25.5% stake in MBJA. The Montego Bay airport is Jamaica’s main airport, located in the city of Montego Bay, in the center of the tourist corridor between Negril and Ocho Rios, where 90% of the island’s hotel capacity is located. See “Item 3, Key Information – Risk Factors – Risks Related to Jamaica.” Based on our and Vantage’s experience in the airport sector, we believe that this cooperation will strengthen MBJA, benefitting it in terms of both operations and profitability.

DCA also held a 14.77% stake in SCL, the operator of the international terminal in Santiago de Chile until September 30, 2015. Upon expiration of the concession to operate the Santiago de Chile airport, those assets were immediately returned to the Chilean government and the new operator. Pursuant to the concession agreement, there is a one-year period after delivery of the concession assets during which the concessionaire remains responsible for any latent defects in those assets. After this period and a subsequent one-year period, SCL shall be liquidated in accordance with Chilean corporate and tax regulations. During 2016, we received dividend and capital repayments for Ps.58.9 million. During 2017, we expect to recover approximately Ps.26.0 million through dividends and capital repayments from SCL.

MBJA

On April 3, 2003, MBJA entered into a concession agreement with the AAJ pursuant to which the AAJ granted MBJA the right and obligation to rehabilitate, develop, operate and maintain Montego Bay International Airport for 30 years from April 12, 2003 (the “Concession Agreement”). MBJA, as the approved airport operator, is thereby permitted to undertake the functions of the AAJ with respect to the Montego Bay airport and required to provide the airport services set out therein at the Montego Bay airport. The Concession Agreement is governed by Jamaican law and MBJA cannot assign its rights or obligations under the agreement except with the prior written consent of the AAJ. Under the terms of the Concession Agreement, MBJA also has certain other obligations to make capital investments. See “Item 4, Information on the Company – Regulatory Framework – The Montego Bay Airport Concession.”

MBJA uses the U.S. dollar as its functional currency, and its financial statements are prepared in accordance with IFRS. As a result, consolidation of MBJA’s financial statements with GAP’s financial statements did not require any substantial accounting changes. However, as a result of our acquisition of DCA in April 2015, our selected consolidated financial and operating data for the fiscal year ended December 31, 2015 includes the consolidation of DCA’s financial and operating data from April 1, 2015. Therefore, financial and operating data for the fiscal year ended December 31, 2015 may not be directly comparable with financial and operating data for prior or subsequent fiscal years.

MBJA made capital investments of U.S.$0.7 million in 2015 and U.S.$2.42 million in 2016. These capital investments have been earmarked for the expansion of terminals, aprons and equipment at the Montego Bay airport. Estimated committed investments in the current Capital Development Program from April 2015 through December 2019 are U.S.$37.9 million. These investment commitments are expected to be funded by cash flows from operations, however, MBJA may seek financing, subject to AAJ approval, if favorable terms are available. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Capital Expenditures – Capital Expenditures in Jamaica.”

At their annual general meeting on June 30, 2015, MBJA’s shareholders approved a dividend payment of U.S.$26.0 million to be distributed pro rata amongst the shareholders. Accordingly, on September 17, 2015, MBJA paid dividends of approximately U.S.$19.4 million to DCA. No dividend payments were made to DCA by MBJA in 2016.

BUSINESS OVERVIEW

Our Operations

We hold concessions to operate twelve international airports in Mexico and one international airport in Jamaica.

37

Mexican Operations

Our twelve Mexican airports serve two major metropolitan areas (Guadalajara and Tijuana), several tourist destinations (Puerto Vallarta, Los Cabos, La Paz and Manzanillo), and a number of mid-sized cities (Hermosillo, Guanajuato, Morelia, Aguascalientes, Mexicali and Los Mochis). Our Mexican airports are located in nine of the 32 Mexican states, covering a territory of approximately 566,000 square kilometers, with a population of approximately 31.1 million according to the 2015 national census data from INEGI. All of our Mexican airports are designated as international airports under Mexican law, meaning that they are all equipped to receive international flights and maintain customs, refueling and immigration services managed by the Mexican government.

Our Mexican airports handled approximately 24.7 million, 27.6 million and 32.6 million terminal passengers in 2014, 2015 and 2016, respectively, which we believe places us among the largest private airport operators in the Americas. As of December 31, 2016, five of our airports ranked among the top ten busiest airports in Mexico based on commercial aviation passenger traffic, according to data published by the SCT. According to the SCT’s figures, our commercial aviation passenger traffic accounted for approximately 24.3%, 23.9% and 25.5% of all arriving and departing commercial aviation passengers in Mexico in 2014, 2015 and 2016, respectively. In 2016, our Mexican airports recorded total revenues of Ps.9.5 billion, of which Ps.7.8 billion corresponds to the sum of aeronautical and non-aeronautical revenues and Ps.1.7 billion corresponds to the improvements to concession assets.

Our Mexican airports serve several major international routes, including Guadalajara-Los Angeles, which, in 2016, ranked as the second busiest international route in Mexico by total number of passengers according to the Mexican Directorate General of Civil Aviation. In addition, our airports serve major resort destinations such as Puerto Vallarta and Los Cabos, which are among the most popular destinations in Mexico visited by tourists from the United States. Our airports also serve major domestic routes, including Guadalajara-Mexico City, which was the country’s third busiest route in 2016, according to the Mexican Directorate General of Civil Aviation. Other top domestic routes in terms of total passenger traffic include Mexico City-Tijuana and Guadalajara-Tijuana, which ranked fourth and fifth, respectively, among the busiest domestic routes in Mexico in 2016, according to the Mexican Directorate General of Civil Aviation.

Mexico and the United States are party to a bilateral aviation agreement that was last amended on December 18, 2015. This amendment, which went into force on August 21, 2016, provides for an increase in airlines servicing existing routes between Mexico and the United States, as well as the addition of new routes and an increase in the frequency of flights on existing routes. The agreement also grants Mexican airlines the ability to further penetrate international markets. We believe that our business has benefited from and will continue to benefit from this amendment as a result of increased service to Mexican airports by U.S. airlines.

Principal Mexican Airports by Passenger Traffic (2016)

	Commercial Aviation Passengers(1)
	(thousands)
Mexico City		41,408
Cancun		21,416
Guadalajara*		11,363
Monterrey		9,179
Tijuana*		6,319
Los Cabos*		4,089
Puerto Vallarta*		3,990
Merida		1,945
Culiacan		1,727
Guanajuato*		1,693

Source: SCT and Company data.

* Indicates airports operated by us.

(1) Excluding general aviation passengers.

38

Guadalajara and Tijuana are among Mexico’s most important manufacturing, industrial and commercial centers. Both cities have significant maquiladora industries. A maquiladora plant is a manufacturing facility to which mostly raw materials are imported and from which finished products are exported, with the manufacturer paying tariffs only on the value added in Mexico. Maquiladora plants were originally concentrated along the Mexico-U.S. border, but more recently have moved further south in order to access lower labor costs and a larger and more diverse labor pool, and to take greater advantage of certain inputs available from Mexican suppliers. In 2016, our Guadalajara and Tijuana airports were Mexico’s third and fifth busiest airports, respectively, in terms of passenger traffic, according to the SCT. In 2014, 2015 and 2016, our Guadalajara and Tijuana airports together represented approximately 53.1%, 53.1% and 54.3% of our Mexican airports’ terminal passenger traffic and 46.7%, 48.3% and 50.0% of our Mexican airports’ total revenues (in 2014, 2015 and 2016, they represented 49.2%, 48.3% and 49.1% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Mexico is one of the main tourist destinations in the world. Mexico has historically ranked in the top fifteen countries worldwide in terms of foreign visitors, ranking ninth with approximately 35 million international tourists in 2016, according to the Mexican Ministry of Tourism. The tourism industry is one of the largest generators of foreign exchange in the Mexican economy. Within Mexico, the region bordering the Pacific Ocean (where several of our airports are located) is a principal tourist destination due to its beaches and cultural sites, which are served by numerous hotels and resorts. Four of our airports, the Los Cabos, Puerto Vallarta, La Paz and Manzanillo airports, serve popular Mexican tourist destinations. Of these tourist destinations, Los Cabos and Puerto Vallarta are the most popular, with Los Cabos constituting Mexico’s third most popular international tourist destination and Puerto Vallarta the fourth, in terms of visitors in 2016, according to the Mexican National Institute of Migration (Instituto Nacional de Migración). The Los Cabos and Puerto Vallarta airports attracted approximately 4.2 million and 4.1 million terminal passengers, respectively, in 2016. In 2014, 2015 and 2016, our Los Cabos and Puerto Vallarta airports together represented 25.9%, 26.2% and 25.5% of our Mexican airports’ terminal passengers and 30.2%, 31.3% and 30.1% of our Mexican airports’ total revenues (31.9%, 33.0% and 32.7% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues). In addition, these two airports have general aviation and Fixed Base Operations (“FBO”) terminals, where specialized, full service operations are offered to general aviation aircraft, including refueling, cleaning and catering.

The remaining six Mexican airports in our group serve mid-sized cities—Hermosillo, Leon, Morelia, Aguascalientes, Mexicali and Los Mochis—with diverse economic activities. These cities are industrial centers (Hermosillo, Leon, Aguascalientes and Mexicali) and/or serve as the hubs for important agricultural regions (Leon, Morelia and Los Mochis). In 2014, 2015 and 2016, these six airports serving mid-sized cities accounted for approximately 17.4%, 17.5% and 17.0% of our Mexican airports’ terminal passenger traffic and 14.8%, 17.4% and 17.0% of our Mexican airports’ total revenues (15.6%, 15.9% and 15.3% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues). Of these six airports, Guanajuato has the greatest passenger traffic volume. In 2014, 2015 and 2016, Guanajuato accounted for approximately 4.9%, 5.4% and 5.2% of our Mexican airports’ terminal passenger traffic and 4.8%, 5.3% and 5.3% of our Mexican airports’ total revenues (5.0%, 5.5% and 5.2% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Jamaican Operations

Montego Bay International Airport is a full-service international passenger airport, with additional FBO and cargo operations driven by agricultural exports from the island, serving as the primary gateway for international air travel to Jamaica, a major international tourist destination and growing tourism market. In 2016, it was the third busiest airport in the Caribbean region, excluding Cuba, in terms of commercial aviation passenger traffic, according to Airports Council International. Located in the town of Montego Bay, which is in the geographical center of the tourist corridor between the coastal resort areas of Negril and Ocho Rios where, according to the Jamaican Tourist Board, 90.3% of the island’s hotel capacity is located, the Montego Bay airport facilitates the transit of more than 71% of the tourists arriving on the island. In 2016, 3.9 million terminal passengers travelled through the Montego Bay airport, a 4.3% increase over the previous year, of which 99.5% were international passengers. Of the total passengers in 2016, 68.6% came from the United States, 17.1% came from Canada and 12.5% came from Europe.

In the period from April 1, 2015 (when we began to consolidate MBJA’s financial and operating information) to December 31, 2015, the Montego Bay airport served 2.7 million terminal passengers. During that period, MBJA’s total revenues amounted to Ps.995.7 million, of which Ps.731.6 million were from aeronautical revenues and Ps.264.1 million were from non-aeronautical revenues. In 2016, Montego Bay International Airport served

39

3.9 million terminal passengers. During that period, MBJA’s total revenues amounted to Ps.1.6 billion, of which Ps.1.2 billion were from aeronautical revenues, Ps.438.6 million were from non-aeronautical revenues and Ps.14.3 million correspond to improvements to concession assets.

Our Sources of Revenues

All revenue amounts in this “Business Overview” section include revenues from improvements to concession assets; however, in some cases we include discussion surrounding only aeronautical and non-aeronautical revenues or the sum of both. See the introduction to “Item 3, Key Information – Selected Financial Data,” for a discussion of the reasons for using aeronautical and non-aeronautical revenues for certain comparisons. We specifically state when either aeronautical or non-aeronautical revenues are being used. Because aeronautical and non-aeronautical revenues are derived from our business operations, we believe these figures may in some cases be more useful for readers because those revenues stem from the key drivers of our business: passenger traffic and our maximum rates.

Aeronautical Services

Aeronautical services represent the most significant source of our revenues. In 2014, 2015 and 2016, aeronautical services revenues represented approximately 70.8%, 66.8% and 63.4%, respectively, of our total revenues (in 2014, 2015 and 2016, aeronautical services represented 74.6%, 74.6% and 74.6%, respectively, of the sum of aeronautical and non-aeronautical revenues). Our aeronautical services revenues are principally dependent on the following factors: passenger traffic volume, the number of air traffic movements, the weight of the aircraft, the duration of an aircraft’s stay at the airport and the time of day the aircraft operates at the airport.

In Mexico, all of our revenues from aeronautical services are regulated under the maximum-rate price regulation system applicable to our airports. See “– Regulatory Framework – Mexican Aeronautical Services Regulation.”

In Jamaica, MBJA’s revenues from passenger charges, aircraft landing and parking charges, airport security charges and passenger walkway charges are regulated by the JCAA, revenues from car parking charges are set by the MTM and revenues from leasing of space to airlines, complementary services, cargo handling and ground transportation are unregulated. See “– Regulatory Framework – Jamaican Aeronautical Services Regulation.”

Passenger Charges

Passenger Charges in Mexico

In Mexico, we collect a passenger charge for each departing passenger on an aircraft (other than diplomats, infants and transit and transfer passengers, if the transfer of the passenger occurs within 24 hours of the passenger’s arrival at the airport). We do not collect passenger charges from arriving passengers. Passenger charges are included in the cost of a passenger’s ticket, and we issue invoices for those charges to each airline on a weekly basis and record an account receivable for the invoice corresponding to a flight during the actual month of the flight.

Before the opening of Mexico’s airports to private investment, all airports in Mexico had entered into agreements with national and foreign airlines under which the airlines were obligated to collect all passenger charges on behalf of the airports in exchange for being given a period of time in which to reimburse those passenger charges to the airports. The length of the reimbursement period was tied to the interest rate on short-term Mexican treasury bills (Cetes), in order to allow airlines to accumulate interest that would compensate them for the costs they incurred in collecting those passenger charges.

Under passenger charges collection agreements negotiated with our airline customers, which took effect as of November 1, 2009, airlines requesting payment period extensions are obligated to: (i) reimburse passenger charges collected on behalf of our airports during a period no greater than 60 days after the “operational average date” (no later than the invoice date) for such charges; and (ii) provide cash, bonds, standby letters of credit or other similar instruments as a guarantee for passenger charges in an amount equal to the highest passenger charges received by the airline on an airport-by-airport basis for the previous year during a period of time equal to the requested payment period plus 30 additional days. Each airline with a payment grace period is obligated to maintain the guarantee at an agreed-upon level, and if it does not do so, it must reimburse the passenger charges on the day the applicable flight

40

departs from our airports without any grace period. If the airline pays our airports on time, the airport is obligated to give the airline an allowance of 3% of the value of each invoice billed no later than seven days after the payment date. The airline can then apply this allowance to cover airport services, leases for ticket counters and back-office and passenger charges. During 2014, 2015 and 2016, under the passenger charges collection agreements, we received payments within an average period of 60, 43 and 53 days, respectively.

Passenger charges vary at each of our Mexican airports and depending on whether the destination is national or international. International passenger charges are currently U.S. dollar-denominated, but are invoiced and collected in pesos based on the average exchange rate during the month prior to the flight. Domestic passenger charges are peso-denominated. Because passenger charges for international flights are denominated in U.S. dollars, the value of our revenues from those charges is therefore affected by fluctuations in the value of the U.S. dollar as compared to the peso.

At our Mexican airports in 2014, 2015 and 2016, passenger charges represented approximately 85.9% (domestic passenger charges represented 46.4% and international passenger charges represented 39.4%), 86.7% (domestic passenger charges represented 44.3% and international passenger charges represented 42.4%) and 86.2% (domestic passenger charges represented 43.5% and international passenger charges represented 42.8%), respectively, of our aeronautical services revenues and approximately 60.8% (domestic passenger charges represented 32.9% and international passenger charges represented 27.9%), 57.2% (domestic passenger charges represented 29.2% and international passenger charges represented 28.0%) and 53.4% (domestic passenger charges represented 26.9% and international passenger charges represented 26.5%), respectively, of our total revenues. In 2014, 2015 and 2016, passenger charges represented 64.1% (domestic passenger charges represented 34.6% and international passenger charges represented 29.4%), 64.8% (domestic passenger charges represented 33.1% and international passenger charges represented 31.7%) and 64.7% (domestic passenger charges represented 32.6% and international passenger charges represented 32.1%), respectively, of the sum of aeronautical and non-aeronautical revenues.

Between November 2015 and January 2016, we published new rates for passenger charges and other specific tariffs, which did not change materially compared to 2014. In June 2016, we published new passenger charges for all of our Mexican airports and passenger walkway charges for five of our airports (Guanajuato, Guadalajara, Puerto Vallarta, Los Cabos and Tijuana). These new rates for passenger charges and other specific tariffs did not change materially compared to 2015 because charges are capped by the Maximum Tariff corresponding to each airport in its Master Development Program for the period.

Passenger Charges in Jamaica

MBJA collects a passenger charge for each departing passenger on an aircraft (other than infants and transit and transfer passengers). MBJA does not collect passenger charges from arriving passengers. Passenger charges are included in the cost of a passenger’s ticket, and MBJA issues invoices for those charges to each airline on a weekly basis and records an account receivable for the invoice corresponding to a flight during the actual month of the flight. Passenger charges are invoiced in U.S. dollars for all airlines.

In the period from April 1 to December 31, 2015, passenger charges represented 57.0% of MBJA’s aeronautical revenues and 41.9% of MBJA’s total revenues. In 2016, passenger charges represented 60.0% of MBJA’s aeronautical revenues and 43.2% of MBJA’s total revenues.

Aircraft Landing Charges

Aircraft Landing Charges in Mexico

In Mexico, we collect landing charges from carriers for their use of our runways, illumination systems on the runways and other visual landing assistance services. Our landing charges are different for each of our airports and are based on each landing aircraft’s weight (determined as an average of the aircraft’s weight without fuel and maximum takeoff weight), the time of the landing, the origin of the flight and the nationality of the airline or client.

In 2014, 2015 and 2016, aircraft landing charges represented approximately 4.6%, 4.6% and 6.8%, respectively, of our Mexican airports’ aeronautical revenues and 3.2%, 3.0% and 4.2%, respectively, of our Mexican airports’ total revenues (in 2014, 2015 and 2016, aircraft landing charges represented 3.4%, 3.4% and 5.1%, respectively, of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

41

Aircraft Landing Charges in Jamaica

In Jamaica, MBJA collects landing charges from aircraft operators for landing at the airport. These landing charges are included in the list of charges regulated by the JCAA. Landing charges are paid by each aircraft operator based on each landing aircraft’s maximum takeoff weight and the origin, destination and purpose of the flight.

In the period from April 1 to December 31, 2015, aircraft landing charges represented 9.7% of MBJA’s aeronautical revenues and 7.1% of MBJA’s total revenues. In 2016, aircraft landing charges represented 10.1% of MBJA’s aeronautical revenues and 7.2% of MBJA’s total revenues.

Aircraft Parking Charges

Aircraft Parking Charges in Mexico

In Mexico, we collect various charges from carriers for the use of our facilities by their aircraft and passengers after landing. We collect aircraft parking charges for aircraft that are loading and unloading passengers or cargo as well as for long-term aircraft parking that does not involve the loading or unloading of passengers or cargo. Aircraft parking charges that involve loading and unloading passengers or cargo vary based on the time of day or night that the relevant service is provided (with higher fees generally charged during peak usage periods and at night), the aircraft’s maximum takeoff weight, the origin and destination of the flight and the nationality of the airline or client, while charges for long-term parking vary based on the time of day or night the aircraft is parked at our facilities, the length of time the aircraft is parked at our facilities and the nationality of the airline or client. We collect aircraft parking charges the entire time an aircraft is on our aprons.

During 2014, 2015 and 2016, these charges represented 4.2%, 3.6% and 1.9%, respectively, of our Mexican airports’ aeronautical revenues and 3.0%, 2.4% and 1.2%, respectively, of our Mexican airports’ total revenues (in 2014, 2015 and 2016, aircraft parking charges represented 3.1%, 2.7% and 1.4%, respectively, of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Aircraft Parking Charges in Jamaica

In Jamaica, MBJA collects parking charges from aircraft operators in respect of any aircraft remaining on the ground at the airport for a period of five hours or more. Parking charges are calculated on the basis of 24-hour intervals so that any ground stops amounting to five hours or more for the first 24-hour interval may be rounded up to one day. Parking charges are based on aircraft maximum takeoff weights and whether the aircraft is used for commercial, visiting non-commercial or domestic activity.

In the period from April 1 to December 31, 2015, aircraft parking charges represented 0.1% of MBJA’s aeronautical revenues and 0.1% of MBJA’s total revenues. In 2016, aircraft parking charges represented 0.1% of MBJA’s aeronautical revenues and 0.1% of MBJA’s total revenues.

Airport Security Charges

Airport Security Charges in Mexico

In Mexico, we also assess an airport security charge, which is collected from each airline, based on the number of its departing terminal passengers (other than diplomats, infants and transit passengers), for use of our x-ray equipment, metal detectors and other security equipment and personnel. These charges are based on the time of day the services are used, the number of departing passengers and the destination of the flight. We provide airport security services at our airports directly.

The DGAC and the Ministry of Public Security (Secretaría de Seguridad Pública) issue guidelines for airport security in Mexico. In response to the September 11, 2001 terrorist attacks in the United States, we took additional steps to increase security at our airports. At the request of the U.S. Federal Aviation Authority, the Mexican civil

42

aviation authority issued directives in October 2001 establishing new rules and procedures to be adopted at our airports. Under these directives, these rules and procedures were implemented immediately and for an indefinite period of time.

Additional regulations were issued by the DGAC in 2011 established rules and procedures for the inspection of carry-on baggage. See “– Non-Aeronautical Services – Recovery of Costs from Checked Baggage Screening at our Mexican Airports” in this section. To fulfill these requirements, we improved our security by providing new training and operating procedures, adding new equipment and security personnel, most of them from third-party providers, in addition to increasing our coordination with other airports and airlines. However, as security is a primary concern in our industry, the possibility of new threats may require frequent updates to the security measures at our airports.

In 2014, 2015 and 2016, these charges represented approximately 1.3%, 1.3% and 1.2%, respectively, of our Mexican airports’ aeronautical services revenues and approximately 0.9%, 0.8% and 0.7%, respectively, of our Mexican airports’ total revenues. In 2014, 2015 and 2016 security charges represented 1.0%, 0.9% and 0.9% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues.

Airport Security Charges in Jamaica

In Jamaica, MBJA collects a security charge from each airline based on the number of its departing terminal passengers (other than infants and transit and transfer passengers) for use of the Montego Bay airport’s x-ray equipment, metal detectors, security personnel services and other related security equipment. These security charges are included in the list of charges regulated by the JCAA. Security charges are billed at a flat rate for all categories of passengers.

In the period from April 1 to December 31, 2015, airport security charges represented 7.4% of MBJA’s aeronautical revenues and 5.5% of MBJA’s total revenues. In 2016, airport security charges represented 7.8% of MBJA’s aeronautical revenues and 5.7% of MBJA’s total revenues.

Passenger Walkway Charges

Passenger Walkway Charges in Mexico

In Mexico, airlines are also assessed charges for the connection of their aircraft to terminals through a passenger walkway and for the transportation of passengers between terminals and aircraft via airport buses and other vehicles. Charges for use of passenger walkways are based on each unit or service rendered, which are limited to a period of 30 minutes each, but charges for the transportation of customers between terminals and aircraft via airport buses and other vehicles are determined based on the number of trips taken between the terminal and the aircraft.

Passenger walkways are only available at our Guadalajara, Tijuana, Los Cabos, Puerto Vallarta and Guanajuato airports. Beginning in November 2012, we transferred the operation of our passenger walkways and our airport buses, which had previously been provided by us, to an independent third party, which also maintains relationships with the airlines for their use of this equipment. Therefore, as of November 2012, we receive only recovery of cost revenues associated with the energy usage of the walkways and a per-unit fee for the use of the walkways.

During 2014, passenger walkway revenues equaled Ps.2.9 million, or 0.1% of our Mexican airports’ total revenues (0.1% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues). During 2015, passenger walkway revenues equaled Ps.2.7 million, or 0.04% of our Mexican airports’ total revenues (0.04% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues). During 2016, passenger walkway revenues equaled Ps.3.7 million, or 0.04% of our Mexican airports’ total revenues (0.05% of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Passenger Walkway Charges in Jamaica

In Jamaica, airlines are also assessed charges for the connection of their aircraft to terminals through a passenger walkway or loading bridge, which are included in the list of charges regulated by the JCAA. Each airline is billed at a flat rate per aircraft connection for the first two hours and at an hourly rate thereafter.

43

In the period from April 1 to December 31, 2015, passenger walkway charges represented 2.5% of MBJA’s aeronautical revenues and 1.8% of MBJA’s total revenues. In 2016, passenger walkway charges represented 2.7% of MBJA’s aeronautical revenues and 1.9% of MBJA’s total revenues.

Leasing of Space to Airlines

Leasing of Space to Airlines in Mexico

In addition, we receive regulated revenues from leasing space in our Mexican airports to airlines as needed for their operations, such as the leasing of ticket counters, monitors and back offices.

In 2014, 2015 and 2016, leasing of space to airlines represented approximately 2.4%, 2.1% and 2.1%, respectively, of our Mexican airports’ aeronautical revenues services, and approximately 1.7%, 1.4% and 1.3%, respectively, of our Mexican airports’ total revenues (in 2014, 2015 and 2016, revenues from leasing of space to airlines represented 1.8%, 1.5% and 1.6%, respectively, of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Leasing of Space to Airlines in Jamaica

MBJA receives revenues from leasing land and space, such as back offices and ticket offices, storage, vehicle and aircraft maintenance areas and ground handling equipment space. Land and space leasing is not considered a regulated activity by the JCAA.

Complementary Services

Complementary Services in Mexico

At each of our Mexican airports, we earn revenues from charging access and other fees to third-party providers of baggage handling services, catering services, aircraft maintenance and repair services and fuel services. These fees are included in the revenues that are regulated under our maximum-rate price regulation system and are determined for each third-party service provider based on a percentage of its total revenues.

Under the Mexican Airport Law, we are required to provide complementary services at each of our airports if there are no third parties providing such services. For example, Menzies Aviation, S.A. de C.V., Administradora Especializada en Negocios, S.A. de C.V. (a subsidiary of Aeroméxico Group) and Aveespress, S.A. de C.V. currently provide the majority of the baggage handling services at our Mexican airports. If the third parties currently providing these services ceased to do so, we would be required to provide these services or find other third parties to provide such services.

The Mexican Airport and Auxiliary Services Agency (Aeropuertos y Servicios Auxiliares), or “ASA,” a corporation owned by the federal government, maintains an exclusive contract to sell fuel at all of our Mexican airports, and we charge the agency a nominal access fee. ASA, in turn, is required to purchase all of its fuel from Petróleos Mexicanos (“Pemex”), a decentralized public entity of the Mexican federal government. In the event that the Mexican government privatizes fuel supply activities in the future, the terms of our Mexican concessions provide that it will do so through a competitive bidding process.

We currently maintain contracts with 44 companies that provide the majority of these complementary services at our twelve Mexican airports. In 2014, 2015 and 2016, revenues from complementary service fees represented approximately 1.5%, 1.7% and 1.8%, respectively, of our Mexican airports’ aeronautical revenues services, and approximately 1.1%, 1.1%, 1.0% respectively of our Mexican airports’ total revenues (in 2014, 2015 and 2016, revenues from complementary service fees represented 1.1%, 1.3% and 1.3%, respectively, of the sum of our Mexican airports’ aeronautical and non-aeronautical revenues).

Complementary Services in Jamaica

In Jamaica, MBJA earns revenues from charging access and other fees to third-party providers of refueling, inflight catering, ground handling and FBO services. Refueling services are provided by a consortium of three companies: Total, GB Energy and Jamaica Aircraft Refueling Services. This consortium leases land from MBJA

44

on which they constructed an aviation fuel storage facility and each operator pays MBJA a fuel concession fee based on the number of gallons of fuel sold through the airport’s fueling system. Inflight catering is provided by Goddard Catering through an exclusive contract inherited from the AAJ. The three ground handling services companies operating at the Montego Bay airport, AJAS, Jamaica Dispatch and Eulen America, pay a fee per aircraft and cargo handled as well as for each ramp vehicle permit. IAM JetCentre is the licensed operator for provision of FBO services at the Montego Bay airport. MBJA is not required by law to provide complementary services, even if a third party is not providing such services at the Montego Bay airport.

In the period from April 1 to December 31, 2015, revenues from complementary service fees represented 23.3% of MBJA’s aeronautical revenues and 17.1% of MBJA’s total revenues. In 2016, revenues from complementary service fees represented 19.4% of MBJA’s aeronautical revenues and 14.1% of MBJA’s total revenues.

Cargo Handling

Cargo Handling in Mexico

Cargo-related revenues include revenues from the leasing of space in our airports to handling agents and shippers, landing fees for each arriving aircraft carrying cargo and a portion of the revenues derived from other complementary services for each workload unit of cargo. Cargo-related revenues are largely regulated and therefore subject to maximum rates applicable to regulated revenues sources. Increases in our cargo volume are beneficial to us for purposes of maximum rate calculations, as cargo increases the number of our workload units.

Revenues from cargo handling in our airports historically have represented a negligible portion of our total revenues, but we believe that Mexico has significant potential for growth in the volume of cargo transported by air. A substantial portion of cargo originating in the United States and destined for Latin America is currently handled in the Miami and Los Angeles international airports, and we believe that a portion of this cargo could instead be routed more efficiently through our Guadalajara airport or our Tijuana airport.

In 2014, 2015 and 2016, our Mexican airports handled approximately 183.3 thousand, 178.4 thousand and 193.2 thousand metric tons of cargo, respectively. Guadalajara International Airport represents the most significant portion of our cargo volume, accounting for approximately 77.8%, 76.4% and 78.2% of the cargo handled by our Mexican airports in 2014, 2015 and 2016, respectively.

Cargo Handling in Jamaica

The majority of cargo to the Montego Bay airport is belly cargo, or cargo carried on passenger aircraft; there are only two dedicated cargo carriers at the Montego Bay airport, both of which use small aircraft. There are no significant revenues from cargo handling at the Montego Bay airport.

In the period from April 1 to December 31, 2015, the Montego Bay airport handled approximately 4.8 thousand metric tons of cargo. In 2016, the Montego Bay airport handled approximately 6.9 thousand metric tons of cargo.

Ground Transportation

Permanent Ground Transportation in Mexico

In Mexico, we receive revenues from ground transportation vehicles and taxi companies who pay an access fee to operate on our airports’ premises. Our revenues from providers of ground transportation services deemed “permanent” under applicable Mexican law, such as access fees charged to taxis and buses, are subject to price regulation. Taxi rates to passengers are also subject to regulation.

Non-Aeronautical Services

General

Non-aeronautical services historically have generated a significantly smaller portion of our revenues as compared to aeronautical services, although the contribution to the sum of our aeronautical and non-aeronautical revenues from non-aeronautical services has increased in recent years from 24.5% in 2014 to 25.3% in 2015 and

45

25.4% in 2016. We estimate that this contribution will continue to increase because we continue to expand commercial spaces inside and outside our terminals and develop new commercial strategies. The expansion of businesses operated directly by us will continue, including conversion from static to digital signage for advertising and opening of more VIP lounges and convenience stores in our airports. Our revenues from non-aeronautical services are principally derived from commercial activities.

None of our revenues from non-aeronautical services are regulated under the Mexican price regulation system. In Jamaica, all of MBJA’s revenues from non-aeronautical services are unregulated except for revenues from car parking facilities.

Revenues from Commercial Activities

Leading privatized airports generally generate an important portion of their revenues from commercial activities. An airport’s revenues from commercial activities are largely dependent on passenger traffic, its passengers’ level of spending, terminal design, the mix of commercial tenants and the basis of fees charged to businesses operating in the airport. Revenues from commercial activities also depend substantially on the percentage of traffic represented by international passengers, who tend to spend greater amounts at our airports, particularly on duty-free items.

We currently have the following types of commercial activities in each of our airports:

• Leasing of space. Revenues that we derive from the leasing of space in our terminals to airlines and complementary service providers for certain non-essential activities, such as first class/VIP lounges, are not subject to price regulation under our maximum rates and are classified by us as non-aeronautical commercial activities. Examples of these first class/VIP lounges operated by third parties include the Banamex Salon Beyond in our Guadalajara airport and Aeroméxico’s Club Premier in our Guadalajara and Tijuana airports, in addition to Aeromar’s Club Diamante in our Manzanillo airport.

• Retail stores. In recent years, we have completed renovation projects to improve the product mix of retail stores in the commercial areas at our Guadalajara, Puerto Vallarta, Los Cabos, Hermosillo, Guanajuato, Tijuana, Manzanillo, Morelia, La Paz and Montego Bay airports. In 2016, we solicited bids for the development of new commercial areas in Terminal 2 of the Los Cabos airport, and we put into operation all of the commercial areas in Terminal 1 of the Los Cabos airport.

• Food and beverage services. In recent years, we have completed “clean up” projects with respect to our restaurant and bar leases, allowing us to introduce several providers with more brand recognition likely to increase consumer traffic in our commercial areas. For example, we changed the food and beverage operator in the Guanajuato airport to Mera Corporation.

• Car rentals. In 2016 we solicited bids for the rent-a-car modules in Terminal 2 of the Los Cabos airport and in the arrivals area at the Puerto Vallarta airport, improving revenues by 48.0% and 37.0%, respectively.

• Timeshare marketing and sales. We receive revenues from timeshare developers to whom we rent space in our Mexican airports for the purpose of marketing and sales of timeshare units.

• Duty-free stores. We currently have duty-free stores at four of our twelve Mexican airports, located at Los Cabos, Puerto Vallarta, Guanajuato and Guadalajara and at our Montego Bay airport, where we have a greater number of international passengers. All of the duty-free stores located in our airports are now operated on leases under which rent is structured primarily as a royalty based on tenants’ revenues, subject to minimum fixed amounts related to square footage. Because the duty-free stores are located at the entrance to the airport’s commercial area, our strategy with regards to the duty-free stores is to optimize passengers’ ability to quickly and easily find desired products and complete their purchase with a high level of service that encourages passengers to shop more. In 2017, we plan to open a new duty-free store in the Tijuana airport.

46

• Communications. We have consolidated all telephone and internet service at our Mexican airports with one provider. We charge the provider a fixed monthly rent in exchange for allowing the provider to install their communications infrastructure in our airports. In 2016, we renewed our contracts with this provider for two years, improving the rents that we obtain by 57.2% as compared to the previous agreement. In Jamaica, two communication companies, Digicel and Flow, provide cellular and fixed line telephone services at our Montego Bay airport. Fixed line telephone services have reached maturity and are now starting to decline due to the increasing prevalence of mobile phones. However, there has been an increase in the demand for space outside our terminals to install cellular antennas in order to improve the level of service offered to our passengers. All of our airports offer wireless internet service.

• Financial services. In recent years, we have expanded and modernized the spaces we lease to financial services providers, such as currency exchange bureaus, and have additionally improved our contracts with several of the financial services providers at our airports to reflect a percentage of the revenues recorded by those providers rather than fixed yearly fees.

• Ground transportation. Under applicable Mexican law, our revenues from providers of ground transportation services deemed “non-permanent,” such as access fees charged to charter buses, are not subject to price regulation under our maximum rates and are classified by us as non-aeronautical commercial activities. In 2014, 2015 and 2016, non-aeronautical ground transportation access fees represented 4.7%, 5.5% and 5.5% of aeronautical revenues at our Mexican airports, respectively. Income from ground transportation increased by 13.9% in 2016 to Ps.98.2 million, compared to Ps.86.2 million in 2015. In 2015, income from ground transportation increased by 37.0% to Ps.86.2 million, compared to Ps.62.9 million in 2014. In Jamaica, MBJA receives revenues from ground transportation vehicles and taxi companies who pay an access fee to operate on the Montego Bay airport’s premises. Ground transportation operators pay monthly fees for each vehicle operated on the airport’s premises and for any commercial space used in the airport. Ground transportation access fees charged to taxis and buses are not regulated and are set by MBJA. In the period from April 1 to December 31, 2015, ground transportation access fees represented 0.6% of MBJA’s total revenues. In 2016, ground transportation access fees represented 0.7% of MBJA’s total revenues.

We currently operate the following commercial lines directly:

• Parking facilities. We directly operate the car parking facilities at all of our airports. Our main car parking facilities are at Guadalajara International Airport and Tijuana International Airport, which together represented 66.9% of our total revenues from car parking services in 2016, and represented 20.5% of our non-aeronautical revenues from those airports. Revenues from parking facilities are directly correlated to passenger traffic at our airports. Currently, in Mexico, parking facilities are not regulated under our maximum rates, although they could become regulated upon a finding by the Mexican Antitrust Commission (Comisión Federal de Competencia) that there are no competing alternatives for such parking at certain airports. In Jamaica, car parking facility fees are set by the MTM, however, MBJA has lobbied and continues to press the Jamaican Government to allow car parking fees to be freely set at commercial rates.

• Advertising. Since May 2011, we have been directly operating the advertising at all of our Mexican airports. Increased domestic and international traffic in our Mexican airports makes third-party investment in advertising media more attractive. The new Cross Border Express, or “CBX,” was also an important factor for the growth of advertising revenues in Tijuana, which experienced increased traffic as a result. Similarly, the Guanajuato airport continued to grow due to the investment of car manufacturers in the area, making the airport much more attractive for advertising. Overall, the increase in passenger volume and improvement in spending power of users in all of our Mexican airports is expected to lead to an increase in sales of advertisements in our airports to international brands. Our revenues from advertising increased 37.1% from 2015 to 2016, despite the temporary negative impact of several remodeling projects on advertising space availability in our Puerto Vallarta, Hermosillo, Guadalajara, La Paz and Tijuana airports. We believe the demand for advertising will continue to grow in our airports. In 2017, new advertising media, such as backlit advertising signs and additional spaces for billboards and posters, will be introduced in the Guadalajara, Hermosillo, La Paz, Puerto Vallarta and Los Cabos airports, for which we will

47

implement an appropriate sales plan. In Jamaica, MBJA has recently renewed the contract for the advertising concession at the Montego Bay airport, which will continue to be operated directly by a third-party concessionaire, Clear Channel Airports.

• VIP Lounges. We began operating our first VIP Lounge at Los Cabos airport’s Terminal 1 in 2011. By the end of 2016, we operated nine lounges in seven Mexican airports: two in our Guadalajara airport (including both domestic and international lounges), two in our Los Cabos airport (Terminal 1 and Terminal 2) and one in each of our Puerto Vallarta, Hermosillo, Tijuana, Aguascalientes and Guanajuato airports. In 2016 the domestic VIP Lounge at Guadalajara’s East Terminal was named the Priority Pass Latin America & Caribbean Region Lounge of the Year, placing this lounge among the 14 best of the Priority Pass program, which includes over 1,000 lounges worldwide. In 2016, we hosted over 381 thousand users in the VIP lounges in our Mexican airports, an increase of 62.6% from 2015. In 2017, we will open 3 new lounges: two in Puerto Vallarta and one in our Hermosillo airport. In Jamaica, a third party operates the sole common use lounge in the arrivals and departures areas, and there are five lounges operated by hotels in the arrivals area.

• Convenience stores. In April 2012, we began operating certain airport convenience stores directly. Due to strong performance, we opened a total of 21 convenience stores across our Mexican airports. In October 2016, we franchised 14 of our Aeromarket stores to Grupo Areas, from which we now receive both a fixed payment and a variable sales-based monthly payment, in addition to a sales-based royalty. This strategic change maintained the same level of profitability over a smaller revenue base, achieving greater operational efficiency. As of December 31, 2016, we continued to operate directly seven convenience stores.

Domestic Passengers in Mexico

Domestic passengers represented approximately 65.5%, 65.4% and 67.3% of our Mexican terminal passenger traffic in 2014, 2015 and 2016, respectively. In addition, we estimate that a significant minority of our international passengers in Mexico are lower-income Mexicans traveling to or from the United States. Based on surveys and studies conducted during 2012 and 2013 at our Guadalajara airport to better understand the consumption habits of our passengers, we believe that the spending habits of these Mexican international passengers are more similar to the spending habits of our domestic passengers, who generally purchase fewer products than other international passengers do. However, in order to increase the consumer spending of this demographic, we have been increasing the brand recognition of commercial spaces and the products they offer, which, based on the surveys and studies we have conducted, we believe is likely to contribute to increased consumption among our domestic passengers and our Mexican international passengers. Partly as a result of the implementation of these strategies, consumer spending per passenger in our Mexican airports increased by 5.3% during 2016 as compared to 2015 and 6.6% during 2015 as compared to 2014.

Recovery of Costs from Checked Baggage Screening at our Mexican Airports

In 2005, the Mexican government issued a policy letter (carta de política) calling for all checked baggage on all commercial flights to undergo a new comprehensive screening process. The new screening process required the installation of dedicated screening equipment and the manual inspection of baggage if such equipment signals the potential presence of prohibited items.

The operation of this screening equipment is the responsibility of our airline customers under the Mexican Airport Law. Because the Mexican Airport Law expressly provides that airlines bear the responsibility for checked baggage screening, if an airline wants us to operate the baggage screening system for them, they must enter into a contract with us that allows us to recover the cost of operating the equipment. However, because of uncertainty over the policy letter’s implementation, the new screening process had been initially delayed. Although, as stated, the Mexican Airport Law expressly provides that airlines bear the responsibility for baggage screening, the fact that the policy letter is silent as to responsibility caused some of our airline customers to contend that the policy letter’s intent is for airport concessionaires, such as us, to bear responsibility for the new screening process. In addition, certain questions have been raised regarding the constitutionality of the new screening process. Since the issuance of the policy letter, the Mexican Directorate General of Civil Aviation has been expected to issue implementing regulations. On November 23, 2012, the Mexican civil aviation authority published a recommendation (circular obligatoria) on the SCT website that, instead of modifying the legal responsibilities set forth in the Mexican Airport

48

Law, attempted to facilitate contracts between parties through certain non-binding recommendations regarding issues of responsibility that had been raised by the policy letter. These non-binding recommendations have no legal effect unless incorporated into a valid contract.

We have operated checked baggage screening equipment in our ten busiest Mexican airports since 2011; only flights departing from the Los Mochis airport continue to rely on manual inspection due to the small number of passengers and high cost of equipment. During the first quarter of 2016, we integrated the Aguascalientes airport into the baggage screening system, which increased the percentage of baggage inspected with automated systems from 96.6% to 98.9%. In 2017, we will implement specialized screening equipment at the Los Mochis airport, as well.

As of December 31, 2016, we had agreements to operate baggage screening systems with all airlines operating at our Mexican airports. Under these agreements, we negotiated certain recovery tariffs per year and these airlines agreed to hold harmless and indemnify us against certain types of liability that might arise in connection with the operation of the baggage screening system, in accordance with the provisions of the Mexican Airport Law.

We incur ongoing expenses to maintain and operate this equipment. Currently, the operational costs of the screening system has been limited to the level necessary to provide the required services to airlines, and we expect to continue recovering those costs. We also expect to incur ongoing expenses to maintain any equipment purchased, and we could be required to undertake significant additional capital expenditures for items such as a new screening technology or additional equipment if screening guidelines are expanded further and require that additional steps be taken to comply with the requirements. For instance, replacement of current baggage screening equipment with new Computer Tomography X-ray (CTX) baggage screening equipment is scheduled for 2022, although regulatory changes could force our Mexican airports to undertake this replacement sooner.

Recent Expansion and Development of Commercial Areas

We believe that leading privatized airports typically generate a greater portion of their revenues from commercial activities than we currently do. We typically generate approximately 20% to 30% of total revenues from commercial activities. In 2016, revenues from non-aeronautical services in our airports accounted for 25.4% of our total revenues. As this is a primary component of our business strategy, we have focused on increasing our revenues from commercial activities in our airports by:

• Redesigning and expanding the space available in our airport terminals allocated to commercial activities:

In order to increase our revenues from commercial activities, we have focused on expanding and redesigning the layout of certain terminals in our Mexican airports to allow for the inclusion of more commercial businesses, as well as to redirect the flow of passengers through our airports, increasing their exposure to the commercial areas of our airports. In January 2014, 152 square meters of commercial space in the arrivals area of our Guadalajara airport began operations with a currency exchange service, and in the last quarter of 2014 we added a relocated and remodeled duty-free store. At the end of 2014, we added another 280 square meters of commercial areas to Terminal 1 at our Guadalajara airport’s international boarding gates, where we also built a new food court, more retail stores and increased the square meters of two of the biggest restaurants in this airport in 2015. In 2016 we added: 2,800 square meters in our Tijuana airport for the operation of a fuel station, 130 square meters in our Los Cabos Airport for the new commercial zone in Terminal 2, and 100 square meters in our Puerto Vallarta Airport for the new Corona Bar.

In Jamaica, MBJA remodeled the commercial areas at the Montego Bay airport in 2014, adding 1,000 square meters of commercial areas, with the main goal of redesigning and expanding the four duty-free stores representing the most important commercial activity at the airport. Because the duty-free stores are located at the entrance to the airport’s commercial area, our strategy with regards to the duty-free stores in Jamaica is to optimize passengers’ ability to quickly and easily find desired products and complete their purchase with a high level of service that encourages passengers to shop more.

49

• Renegotiating agreements with terminal tenants to be more consistent with market practices:

We have also continued improving our lease arrangements with existing tenants through the usage of royalty-based lease contracts, whereby lease amounts are based on tenants’ revenues, subject to minimum fixed amounts related to the square footage. We estimate that approximately 97% of current commercial revenues could be arranged as royalty-based contracts based on the nature of our tenants’ operations. Approximately 98.6% of the contracts that could be arranged as royalty-based have already been executed under those conditions.

• Recovering the rights to several retail and car parking businesses previously operated at our airports by third parties:

Prior to 1999, our predecessor entered into several contracts with third-party operators to develop new spaces and modernize existing spaces at our twelve Mexican airports. Under these leases, the third-party operators managed the airports’ commercial areas and received all revenues from the operations in those areas.

We acquired our Mexican concessions from our predecessor subject to these long-term lease obligations and sought to recover rights leased to the third-party operators. In prior years, either as a result of contract expirations or by compensating leaseholders for early termination of their leases, we recovered several significant retail leases and all car parking leases in our Mexican airports.

Following this process, in 2014 the only remaining material commercial activity at our airports subject to a third-party lease under which we received only nominal revenue was the hotel at Guadalajara International Airport. A third party, Coco Club Hoteles y Morandas de México, S.A. de C.V. (“Coco Club”), had been granted the right to operate the hotel at our Guadalajara airport, subject to its satisfaction of certain specific conditions at below-market rents. Because we did not believe that Coco Club satisfied all such conditions, we did not renew the lease and initiated legal proceedings against Coco Club to regain possession of the hotel. After Coco Club’s appeal from a decision ordering the return of the hotel to us, on October 29, 2014, we received a final court order for eviction and took possession of the hotel. On October 29, 2015, we began the demolition of the building. During 2016, we hired HVS Consulting & Valuation, a leading consultant in the hospitality industry, to develop plans for commercial development on this site, and we are currently in the process of reviewing their proposals.

Recognition of Revenues from Improvements to Concession Assets

We recognize revenues and the associated costs of improvements to concession assets that we are obligated to perform as established by the Master Development Programs at our Mexican airports and the Capital Development Program at the Montego Bay airport. Revenues represent the value of the exchange between ourselves and the respective governments with respect to the improvements, given that we construct or provide improvements to the airports as obligated under the Master Development Programs and the Capital Development Program, and in exchange, the governments grant us the right to obtain benefits for services provided using those assets, which are recognized as intangible assets. We have determined that our obligations per the Master Development Programs and the Capital Development Program should be considered to be a revenue-earning activity as all expenditures incurred to fulfill the Master Development Programs and the Capital Development Program are included in the maximum tariffs and regulated charges that we charge our customers. Therefore, we recognize the revenue and expense in profit or loss when the expenditures are performed. The cost for such additions and improvements to concession assets is based on actual costs incurred by us in the execution of the additions or improvements, considering the investment requirements in the Master Development Programs and the Capital Development Program. Through bidding processes, we contract third parties to carry out such construction. The amount of revenues for these services is equal to the amount of costs incurred, as we do not obtain any profit margin for these construction services. The amounts paid are set at market value. As a result, revenues from improvements to concession assets do not have a cash impact on our results. Furthermore, they are not directly related to our passenger traffic, which is the main driver of our revenues. See “Item 5, Operating and Financial Review and Prospects – Critical Accounting Policies.”

50

Marketing Activities

We focus our marketing activities, with respect to aeronautical services, on participation in business conferences organized by public organizations, such as the International Air Transport Association, and private organizations, such as the annual “Routes Americas” and “World Routes” conferences organized by United Business Media. These conferences provide a forum for the exchange of information relating to airlines’ decisions about changes in routes and flights. To lease properties and obtain related non-aeronautical services revenues, we principally rely on advertising through traditional local distribution channels, including newspapers.

Our Mexican Airports

In 2016, our Mexican airports served a total of approximately 32.6 million terminal passengers. In 2016, our two principal airports that serve important metropolitan areas, Guadalajara International Airport and Tijuana International Airport, together represented approximately 54.3% of our Mexican airports’ total terminal passenger traffic. Puerto Vallarta International Airport and Los Cabos International Airport, our main Mexican airports serving popular tourist destinations, together accounted for approximately 25.5% of our Mexican airports’ total terminal passenger traffic in 2016. Guanajuato International Airport, which is our largest airport serving a mid-sized city, accounted for approximately 5.2% of our Mexican airports’ total terminal passenger traffic in 2016.

All of our Mexican airports are designated as international airports under applicable Mexican law, meaning that they are equipped to receive international flights and maintain customs and immigration facilities operated by the Mexican government.

The following table shows the sum of aeronautical and non-aeronautical revenues for each of the Mexican airports for the years indicated:

Sum of Aeronautical and Non-Aeronautical Revenues by Mexican Airport

	Year ended December 31,
	2014		2015		2016
	(thousands of pesos)
Guadalajara	Ps.	1,858,510	Ps.	2,138,793	Ps.	2,605,256
Los Cabos		931,348		1,124,125		1,415,933
Tijuana		733,603		892,647		1,239,724
Puerto Vallarta		745,601		944,685		1,141,382
Guanajuato		262,829		346,416		409,824
Hermosillo		228,702		258,954		313,489
La Paz		127,858		135,649		177,893
Aguascalientes		101,588		125,112		152,393
Mexicali		87,310		105,827		131,249
Morelia		104,403		106,275		124,979
Los Mochis		38,115		51,921		66,102
Manzanillo		44,411		42,166		45,078
Total	Ps.	5,264,278	Ps.	6,272,570	Ps.	7,823,302

51

The following tables set forth the passenger traffic volume for each of our Mexican airports for the years indicated:

Passenger Traffic by Mexican Airport

	Year Ended December 31,
	2014						2015						2016
	Terminal(1)		Transit(2)		Total		Terminal(1)		Transit(2)		Total		Terminal(1)		Transit(2)		Total
Total Passengers:
Guadalajara		8,733,467		17,689		8,751,156		9,790,835		23,675		9,814,510		11,369,418		26,347		11,395,765
Tijuana		4,387,768		60,004		4,447,772		4,870,506		60,190		4,930,696		6,287,742		44,709		6,332,451
Los Cabos		3,285,140		1,679		3,286,819		3,652,921		1,716		3,654,637		4,245,508		2,463		4,247,971
Puerto Vallarta		3,127,390		7,302		3,134,692		3,593,496		5,697		3,599,193		4,055,919		7,387		4,063,306
Guanajuato		1,222,138		19,862		1,242,000		1,492,087		17,249		1,509,336		1,697,647		13,761		1,711,408
Hermosillo		1,326,242		52,996		1,379,238		1,349,297		28,619		1,377,916		1,537,684		23,771		1,561,455
La Paz		672,942		1,733		674,675		682,382		1,643		684,025		846,301		256		846,557
Mexicali		507,174		2,827		510,001		595,627		3,915		599,542		712,118		4,104		716,222
Aguascalientes		540,473		1,299		541,772		633,068		904		633,972		693,525		210		693,735
Morelia		476,053		5,266		481,319		478,481		4,725		483,206		532,841		3,094		535,935
Los Mochis		228,597		11,838		240,435		290,861		4,029		294,890		331,409		15,969		347,378
Manzanillo		211,311		990		212,301		194,414		423		194,837		194,093		1,085		195,178
Total		24,718,695		183,485		24,902,180		27,623,975		152,785		27,776,760		32,504,205		143,156		32,647,361

	Year Ended December 31,
	2014						2015						2016
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Departing Terminal Passengers:
Guadalajara		2,908,379		1,512,311		4,420,690		3,232,254		1,683,901		4,916,155		3,830,548		1,892,728		5,723,276
Tijuana		2,087,835		23,166		2,111,001		2,358,140		33,409		2,391,549		3,078,101		41,806		3,119,907
Los Cabos		438,200		1,212,754		1,650,954		497,565		1,329,587		1,827,152		617,954		1,505,839		2,123,793
Puerto Vallarta		449,021		1,120,695		1,569,716		544,671		1,256,795		1,801,466		635,149		1,401,186		2,036,335
Guanajuato		354,767		257,218		611,985		447,568		296,561		744,129		537,292		316,238		853,530
Hermosillo		610,319		46,731		657,050		625,539		44,665		670,204		726,745		48,695		775,440
La Paz		331,441		10,376		341,817		338,041		8,106		346,147		418,041		9,338		427,379
Mexicali		242,354		2,387		244,741		286,169		3,641		289,810		342,803		4,323		347,126
Aguascalientes		191,271		80,294		271,565		225,229		92,987		318,216		254,253		93,648		347,901
Morelia		120,016		121,001		241,017		107,961		130,080		238,041		128,529		139,286		267,815
Los Mochis		110,898		4,831		115,729		141,941		4,394		146,335		170,612		5,177		175,789
Manzanillo		60,012		45,382		105,394		47,344		50,295		97,639		52,926		44,807		97,733
Total		7,904,513		4,437,146		12,341,659		8,852,422		4,934,421		13,786,843		10,792,953		5,503,071		16,296,024

52

	Year Ended December 31,
	2014						2015						2016
	Domestic		International		Total		Domestic		International		Total		Domestic		International		Total
Arriving Terminal Passengers:
Guadalajara		2,942,335		1,370,442		4,312,777		3,304,312		1,570,368		4,874,680		3,892,289		1,780,200		5,672,489
Tijuana		2,270,248		6,519		2,276,767		2,464,872		14,085		2,478,957		3,193,940		18,604		3,212,544
Los Cabos		444,644		1,189,542		1,634,186		522,782		1,302,987		1,825,769		655,534		1,468,644		2,124,178
Puerto Vallarta		488,171		1,069,503		1,557,674		579,481		1,212,549		1,792,030		668,662		1,358,309		2,026,971
Guanajuato		386,453		223,700		610,153		488,873		259,085		747,958		574,820		283,058		857,878
Hermosillo		639,203		29,989		669,192		652,659		26,434		679,093		754,543		31,472		786,015
La Paz		328,625		2,500		331,125		334,517		1,718		336,235		417,593		1,585		419,178
Mexicali		261,664		769		262,433		304,994		823		305,817		367,920		1,176		369,096
Aguascalientes		208,399		60,509		268,908		246,572		68,280		314,852		277,427		68,407		345,834
Morelia		127,360		107,676		235,036		121,191		119,249		240,440		139,461		128,659		268,120
Los Mochis		112,384		484		112,868		143,931		595		144,526		171,097		492		171,589
Manzanillo		66,793		39,124		105,917		54,634		42,141		96,775		61,235		36,210		97,445
Total		8,276,279		4,100,757		12,377,036		9,218,818		4,618,314		13,837,132		11,174,521		5,176,816		16,351,337

(1) Includes arriving and departing passengers as well as transfer passengers (passengers who arrive on one aircraft and depart on a different aircraft).

(2) Terminal passengers who arrive at our airports but generally depart without changing aircraft.

53

The following table sets forth the air traffic movement capacity of each of our Mexican airports as of December 31, 2016:

Capacity by Mexican Airport in 2016

	Peak air traffic movements per hour(1) (2)		Runway capacity(3)
Guadalajara		43		39
Tijuana		22		36
Los Cabos		29		42
Puerto Vallarta		34		37
Hermosillo		21		30
Guanajuato		13		11
La Paz		11		15
Mexicali		7		14
Aguascalientes		8		14
Morelia		8		12
Los Mochis		8		16
Manzanillo		6		16

(1) Includes commercial and general aviation operations (demand).

(2) Represents the greatest number of air traffic movements in a single hour during the year.

(3) Air traffic movements per hour (capacity).

The following table sets forth the air traffic movements for each of our Mexican airports for the years indicated:

Air Traffic Movements by Mexican Airport⁽¹⁾

	For the year ended December 31,
	2014		2015		2016
Guadalajara		140,034		145,118		158,985
Tijuana		48,238		52,913		61,762
Los Cabos		36,315		39,090		43,792
Puerto Vallarta		44,412		47,096		50,546
Guanajuato		28,209		32,800		34,010
Hermosillo		44,635		41,641		44,527
La Paz		16,811		16,159		19,141
Mexicali		10,192		10,453		10,311
Aguascalientes		15,427		15,139		15,836
Morelia		14,453		14,578		14,450
Los Mochis		10,962		10,859		12,157
Manzanillo		7,031		6,468		6,296
Total		416,719		432,314		471,813

(1) Includes departures and arrivals.

54

The following table sets forth the average number of passengers per air traffic movement for each of our Mexican airports for the years indicated:

Average Passengers per Air Traffic Movement by Mexican Airport ⁽¹⁾

	Year ended December 31,
	2014		2015		2016
Guadalajara		62.49		67.63		71.68
Tijuana		92.20		93.18		102.53
Los Cabos		90.51		93.49		97.00
Puerto Vallarta		70.58		76.42		80.39
Guanajuato		44.03		46.02		50.32
Hermosillo		30.90		33.09		35.07
La Paz		40.13		42.33		44.23
Aguascalientes		35.12		41.88		43.81
Mexicali		50.04		57.36		69.46
Morelia		33.30		33.15		37.09
Los Mochis		21.93		27.16		28.57
Manzanillo		30.19		30.12		31.00
Average		59.76		64.25		69.20

(1) Includes number of total passengers within the total number of air traffic movements.

The following table sets forth the air traffic movements in our Mexican airports for the years indicated in terms of commercial, charter and general aviation:

Air Traffic Movements in Mexican Airports by Aviation Category ⁽¹⁾

	Year ended December 31,
	2014		2015		2016
Commercial aviation		303,819		317,877		350,980
Charter aviation		15,777		16,331		19,599
General aviation and other		97,123		98,106		101,234
Total		416,719		432,314		471,813

(1) Includes departures and landings for all twelve Mexican airports.

Guadalajara International Airport

Guadalajara International Airport is our most important Mexican airport in terms of passenger traffic, air traffic movements and contribution to the sum of aeronautical and non-aeronautical revenues.

In 2016, Guadalajara International Airport was the third busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2016, it served 11.4 million terminal passengers, accounting for approximately 34.9% of our Mexican airports’ terminal passenger traffic. During 2016, approximately 67.8% of the terminal passengers served were domestic passengers and 32.2% were international passengers. Of the airport’s international passengers, we estimate that a significant portion is Mexicans living in the United States visiting Guadalajara. This airport also serves many business travelers traveling to and from Guadalajara. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Guadalajara International Airport is located approximately 20 kilometers from the city of Guadalajara, which has a population (including its suburbs) of approximately 5 million inhabitants. Guadalajara is Mexico’s second largest city in terms of population and is the capital of the state of Jalisco, the country’s second largest state in terms of population. As a major hub for the Mexican national highway system, the city of Guadalajara is an important center for both ground and air transportation. Other major cities in the state of Jalisco include Puerto Vallarta and

55

Lagos de Moreno. Jalisco is an important agricultural producer, making Guadalajara an important center for agricultural commerce. The state is an important contributor to Mexico’s maquiladora industry, most notably in the electronic, computer equipment and clothing industries. The maquiladora industry in Jalisco grew significantly in the 1990’s as maquiladoras moved away from the U.S.-Mexico border seeking lower labor costs and a more diverse labor pool.

A total of fourteen airlines operate at the airport, the principal ones being Volaris, Aeroméxico Group and Interjet. The main non-Mexican airlines operating at the airport are United, American, Alaska and Delta. Airlines operating at the airport reach 58 destinations. Of these destinations, Mexico City, Tijuana and Los Angeles are the most popular.

Guadalajara International Airport operates 24 hours daily. The airport has two operating runways, one with a length of 4,000 meters and a full parallel taxiway and the other with a length of 1,800 meters, with a threshold displacement of 300 meters at the runway, which permits a landing distance of 1,500 meters. The runway capacity at this airport is 39 air traffic movements per hour. The airport also has an Instrument Landing System (“ILS”) that assists pilots in poor weather. The airport’s facilities include a main commercial terminal with a large parking facility and a general aviation building. The airport’s main commercial terminal has a total area of approximately 73,000 square meters, as well as parking facilities consisting of an additional 46,000 square meters. The general aviation building has an additional 975 square meters. The commercial terminal has 28 gates and 39 remote boarding positions. Of the 28 gates, ten serve international flights and 18 serve domestic flights. Of the international gates, four have air bridges, and of the domestic gates, six have air bridges.

In 2016, approximately 151.3 thousands metric tons of cargo was transported through the airport.

As part of our business strategy, during 2013 we continued changing the profile and category of service of almost all of the stores at the airport to increase brand recognition. We completed this process during the second quarter of 2014. In October 2014, we gained possession of the onsite hotel from the previous operator, a third-party lessee from whom we had received no revenues. We are currently planning new business projects for this site. For more information, see “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Non-Aeronautical Services – Recent Expansion and Development of Commercial Areas – Recovering the rights to several retail and car parking businesses previously operated at our airports by third parties.”

We directly operate two VIP lounges in the Guadalajara airport: we operate one lounge in the international departures area and a second lounge in the domestic departures area. In 2016, approximately 21.7% of the sum of our aeronautical and non-aeronautical revenues generated at Guadalajara International Airport was derived from non-aeronautical revenues.

We have continued to take significant steps to modernize and expand Guadalajara International Airport in order to improve its operations and image. These steps have included the improvement of the airport’s runways and platforms, an increase in the number of remote boarding positions, the installation of an improved computer system for resources allocation, and expansion of the main commercial terminal, including the installation and/or modernization of air bridges, the baggage claim area, ticket counters, restrooms, hallways and gate areas. In 2014, we completed an addition of 20 new remote parking positions for aircraft. In addition, the international arrivals area was expanded, and two new aircraft parking gates were added to this area. This expansion included the enlargement of the customs and immigration facilities, as well as the departures lounge and commercial areas. During 2015, we began terminal expansion construction, and we have continued this construction during 2016. During 2017, we will expand the commercial areas of our airport by 22.3%, primarily for food and beverage, specialty retail and convenience stores.

A portion of the land on which Guadalajara International Airport is located was expropriated by the Mexican federal government in 1975 pursuant to its power of eminent domain and is subject to certain legal proceedings by its former landholders. For a description of these legal proceedings and their potential impact on our operations, see “Item 8, Financial Information – Legal Proceedings – Ejido participants at Tijuana, Guadalajara and Puerto Vallarta airports.”

56

Tijuana International Airport

Tijuana International Airport is our second most important Mexican airport in terms of passenger traffic and air traffic movements, and fourth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Tijuana International Airport was the fifth busiest airport in Mexico in terms of commercial aviation traffic, according to the SCT. In 2016, it served a total of 6.3 million terminal passengers, accounting for approximately 19.4% of our Mexican airports’ terminal passenger traffic. Approximately 99.0% of the terminal passengers served were domestic passengers. Since Tijuana is located near the Mexico-U.S. border and is therefore a popular entry point to the United States for Mexican and American travelers, the airport’s passenger traffic and results of operations are affected by Mexican and U.S. economic conditions.

Tijuana International Airport serves the city of Tijuana and surrounding areas in the State of Baja California, including the municipalities of Ensenada, Tecate and Rosarito. With a population of approximately 1.7 million, Tijuana is the largest city in the state. Currently, the state of Baja California is the second largest maquiladora center in Mexico, according to INEGI data on workforce by industry. A highway connecting the city of Tijuana to the airport also extends directly to the U.S.-Mexico border crossing, providing convenient access to San Diego, California (which is located approximately 30 kilometers from Tijuana International Airport) and other areas of southern California, particularly Los Angeles.

A total of eight airlines operate at the airport; the principal ones are Volaris and Aeroméxico Group. Airlines operating at this airport provide service to 34 destinations. Of these destinations, Mexico City, Guadalajara and Culiacan are the most popular. In addition, Aeroméxico Group flies three times weekly from Tijuana to Shanghai.

Tijuana International Airport currently operates seventeen hours daily between the hours of 7:00 a.m. and 12:00 a.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway with a length of 2,959 meters and a full parallel taxiway. The runway capacity at this airport is 36 air traffic movements per hour. The airport also has an ILS that assists pilots in poor weather. It has twenty-two gates serving both domestic and international travelers and six remote boarding positions. Of the 22 gates, ten have air bridges.

In 2015, we inaugurated the international bridge between our Tijuana airport and the U.S. border, or CBX. This bridge allows passengers to cross directly to the United States using a pathway between the airport and the international border, facilitating transfers between the United States and Mexico for travelers holding a boarding pass to all flights departing from or arriving in Tijuana, and reducing connection and waiting times at both the San Isidro and Otay Mesa border crossings. The Mexican border authority’s services are located in the Tijuana airport, and the corresponding U.S. services are located on the premises of the CBX terminal on the north side of the border. The use of this facility is limited to passengers traveling through the airport upon presentation of a boarding pass, but is not subject to additional charges as it is part of the services offered by the Tijuana airport, which are included in the passenger charges. Passengers using the bridge from or to Tijuana may also be subject to toll charges levied by Otay-Tijuana Venture, L.L.C. (“OTV”), the bridge operator on the U.S. side. We estimate that up to 45% of Tijuana passengers have a final destination or origin in the U.S., and consequently a significant portion of the passengers at the airport are expected to be users of the CBX. Due to its convenience for U.S. residents in the area, the CBX is also expected to increase the overall number of passengers using the airport. As of March 31, 2017, the CBX has served 1.8 million passengers in the aggregate; on average, 20.8% of the Tijuana airport’s total passenger traffic utilizes the CBX. During the first quarter of 2017, the CBX has served 0.4 million passengers, approximately 25.7% of the Tijuana airport’s total passengers. For more information see “Item 7, Major Shareholders and Related Party Transactions – Related Party Transactions.”

Our investment in adapting the Tijuana airport installations and building the Mexican infrastructure amounted to Ps.185.0 million.

In 2016, approximately 21.3 thousands metric tons of cargo was transported through the airport.

During 2016, we completed the runway renovation at our Tijuana airport. In addition, during 2016 and 2015, we also performed terminal improvement projects.

57

During 2017, we will expand the commercial areas of our airport by 22.8%, primarily for food and beverage and retail. In 2016, approximately 21.4% of the sum of our aeronautical and non-aeronautical revenues generated at Tijuana International Airport was derived from non-aeronautical revenues.

A portion of the land on which Tijuana International Airport is sited was expropriated by the Mexican federal government in 1970 pursuant to its power of eminent domain and is subject to certain legal proceedings by its former landholders. For a description of these legal proceedings and their potential impact on our operations, see “Item 8, Financial Information – Legal Proceedings – Ejido participants at Tijuana, Guadalajara and Puerto Vallarta airports.”

Los Cabos International Airport

Los Cabos International Airport is our third most important Mexican airport in terms of passenger traffic, fifth in terms of air traffic movements and second in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Los Cabos International Airport was the sixth busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2016, it served 4.2 million terminal passengers, accounting for approximately 13.0% of our Mexican airports’ terminal passenger traffic of whom approximately 70.0% were international passengers.

The airport serves primarily tourists visiting San Jose del Cabo, Cabo San Lucas and other coastal destinations along the Trans-Peninsular highway of the state of Baja California Sur. Los Cabos International Airport is located approximately thirteen kilometers from the city of San Jose del Cabo, in the state of Baja California Sur. According to the Mexican Ministry of Tourism, 1.5 million tourists visited Los Cabos (San Jose del Cabo and the nearby city of Cabo San Lucas) by air in 2016. Visitors to this area are generally affluent and include golfers who enjoy world-class courses, as well as sport fishing and diving enthusiasts who are drawn by the rich marine life in the region’s coastal waters.

A total of twenty-two airlines operate at the airport with American, Alaska, United, Interjet and Volaris being the principal ones. Airlines operating at this airport provide service to 41 destinations. Of these destinations, Mexico City, Los Angeles and San Francisco are the most popular.

Los Cabos International Airport currently operates eleven hours daily between 7:00 a.m. and 9:00 p.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 3,004 meters, and a full parallel taxiway to the runway. The runway capacity at this airport is 42 air traffic movements per hour. The existing runway allows us to serve planes flying to any destination in the United States and Canada. The airport has two commercial aviation terminals. Terminal 1 occupies approximately 14,600 square meters and Terminal 2 occupies approximately 38,000 square meters. In addition, the airport has a general aviation and an FBO terminal. The airport has sixteen gates (eight in Terminal 1 and eight in Terminal 2), including four gates with air bridges, and fourteen remote boarding positions. We operate commercial space of approximately 2,000 square meters at Los Cabos International Airport; this space includes two VIP lounges and five convenience stores, which have been operated by a third party since October 2016.

In 2016, approximately 36.7% of the sum of our aeronautical and non-aeronautical revenues generated at Los Cabos International Airport was derived from non-aeronautical revenues (of which 92.7% came from commercial activities); the latter percentage is higher than any other airport of the Group.

Puerto Vallarta International Airport

Puerto Vallarta International Airport is our fourth most important Mexican airport in terms of passenger traffic, third in air traffic movements and fourth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Puerto Vallarta International Airport was the seventh busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2016, it served 4.1 million terminal passengers, accounting for 12.5% of our Mexican airports’ terminal passenger traffic. During 2016, 67.9% of these terminal passengers were international passengers and 32.1% were domestic passengers.

58

Puerto Vallarta International Airport is located on the Pacific coast in the state of Jalisco. The airport primarily serves foreign tourists and is also a popular tourist destination within Mexico. Puerto Vallarta’s tourist attractions include the natural beauty of the Bay of Banderas, the area’s many beaches and abundant marine wildlife. Puerto Vallarta is a mature tourist destination, and the completion of new resort areas including hotels and golf courses in the areas known as Nuevo Vallarta and Punta Mita is expected to bring more tourists to the area in subsequent years.

A total of twenty-three airlines operate at the airport; the principal ones are American, United, Alaska, Aeroméxico Group, Interjet and Southwest. Airlines operating at this airport provide service to 50 destinations. Of these destinations, the most popular are Mexico City, Los Angeles and San Francisco. In addition, Thomson Airways flies once weekly from Puerto Vallarta to London Gatwick and Manchester.

Puerto Vallarta International Airport operates 24 hours daily. The airport has one runway with a length of 3,105 meters as well as a parallel taxiway. The runway capacity at this airport is 37 air traffic movements per hour. This airport has one main commercial terminal, an FBO terminal and a general aviation building. The airport has nineteen gates, of which five serve domestic flights and fourteen serve international flights, seven remote boarding positions and eleven air bridges. During 2014, we began operating two new convenience stores in the airport. During 2015, we remodeled 6,000 square meters in the arrivals area to improve passenger flows in the terminal, with 200 square meters dedicated to commercial use, including one VIP lounge operated directly by us. We plan to open two more lounges, during 2017.

In 2016, approximately 27.4% of the sum of our aeronautical and non-aeronautical revenues generated at our Puerto Vallarta airport was derived from non-aeronautical revenues (of which 88.4% came from commercial activities).

Guanajuato International Airport

Guanajuato International Airport is our fifth most important Mexican airport in terms of passenger traffic and sixth in air traffic movements and fifth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Guanajuato International Airport was the tenth busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2016, it served 1.7 million terminal passengers, accounting for approximately 5.2% of our Mexican airports’ terminal passenger traffic. During 2016, approximately 65% of the terminal passengers served were domestic passengers.

Guanajuato International Airport is located in the central state of Guanajuato near the cities of Leon, Irapuato, Silao and Guanajuato, approximately 315 kilometers northwest of Mexico City. The state of Guanajuato has a population of approximately 5.5 million people according to the Mexican National Population Council and is located in Mexico’s Bajio region, best known for its rich colonial history, agricultural sector and manufacturing industry. General Motors has an assembly plant in Silao, Guanajuato, and Mazda has a new vehicle manufacturing plant in Salamanca, Guanajuato. The local government is developing a “dry dock”, or truck loading service terminal, near the airport that we believe will increase cargo demand.

A total of twelve airlines operate at the airport; the principal ones are Volaris, Aeroméxico Group and United. Airlines operating at this airport provide service to fourteen destinations. Of these destinations Tijuana, Mexico City and Monterrey are the most popular.

Guanajuato International Airport operates 20 hours daily between 4:00 a.m. and 12:00 midnight. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway with a length of 3,501 meters. The runway capacity at this airport is 11 air traffic movements per hour. It has two terminals (one commercial and one general aviation), with seven gates, five remote boarding positions and three air bridges. During 2016, we built a taxiway to increase capacity up to 16 operations per hour, which will become operational during 2017.

During 2014, we started operating two convenience stores, one in the check-in area and one beyond the security checkpoint in the boarding area. In 2016, we opened a VIP lounge in the boarding area beyond the security checkpoint. In 2016, approximately 22.4% of the sum of our aeronautical and non-aeronautical revenues generated at Guanajuato International Airport was derived from non-aeronautical revenues.

59

Hermosillo International Airport

Hermosillo International Airport is our sixth most important Mexican airport in terms of passenger traffic, fourth in terms of air traffic movements and sixth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Hermosillo International Airport was the eleventh busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2016, it served approximately 1.5 million terminal passengers, accounting for approximately 4.8% of our Mexican airports’ terminal passenger traffic. During 2016, approximately 94.9% of the terminal passengers served were domestic passengers. Many of the airport’s passengers use the airport as a hub for connecting flights between other Mexican cities, particularly Mexico City, Tijuana, Guadalajara and Monterrey. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Hermosillo International Airport serves the city of Hermosillo and four other nearby municipalities, which together have a population of approximately 1.0 million, according to the Mexican National Population Council. The city of Hermosillo, which is the capital of the state of Sonora, is located approximately 260 kilometers south of the border town of Nogales and 130 kilometers east of the Gulf of California. The airport is located approximately thirteen kilometers west of the city of Hermosillo. The airport is an important hub in a primarily agricultural and industrial region. Approximately 9.0 thousand metric tons of cargo passed through the airport in 2016. Currently, cargo transport services at this airport primarily serve the nearby Ford factory, which receives components via the airport.

A total of nine airlines operate at the airport; the principal ones are Aeroméxico Group, Volaris, Interjet and VivaAerobus. Airlines operating at this airport provide service to seventeen destinations. Of these destinations, Mexico City, Guadalajara, Monterrey and Tijuana are the most popular.

Hermosillo International Airport operates eighteen hours daily between 6:00 a.m. and 12:00 midnight. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has two runways, one with a length of 2,300 meters and the other, a private aircraft runway that is not currently operating due to commercial considerations, with a length of 1,100 meters. Runway capacity at this airport is 30 air traffic movements per hour. The airport has nine gates and ten remote boarding positions and includes both a commercial aviation building and a general aviation building for small private aircraft.

As part of our business strategy, in recent years we changed the profile and category of services of almost all of the stores at Hermosillo International Airport to stores with greater brand recognition. For instance, in 2014, we added Starbucks Coffee, Subway and Sunglass Hut shops and a second convenience store.

During 2016, we completed the runway renovation at our Hermosillo airport. In addition, during 2016 and 2015, we also performed a terminal expansion project. In 2017, we plan to open a new VIP lounge in our Hermosillo airport.

La Paz International Airport

La Paz International Airport is our seventh most important Mexican airport in terms of passenger traffic, air traffic movements and contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, La Paz International Airport was the eighteenth busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2016, it served 846.3 thousand terminal passengers, accounting for approximately 2.6% of our Mexican airports’ terminal passenger traffic. During 2016, approximately 98.7% of the terminal passengers served were domestic passengers. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

La Paz International Airport serves the city of La Paz, located along the coast of the Gulf of California in the state of Baja California Sur, of which La Paz is the capital. Eco-tourism is a growing industry in La Paz due to the abundance of marine life found in the Gulf of California.

60

A total of six airlines operate at the airport; the principal ones of which are TAR, Volaris and Aeroméxico Group. Airlines operating at this airport provide service to thirteen destinations. Of these destinations, Mexico City, Guadalajara and Tijuana are the most popular.

La Paz International Airport operates sixteen hours daily between 7:00 a.m. and 11:00 p.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 2,500 meters in length and a single main commercial terminal. The runway capacity at this airport is fifteen air traffic movements per hour. It also has three gates and seven remote boarding positions.

Mexicali International Airport

Mexicali International Airport is our eighth most important Mexican airport in terms of passenger traffic, eleventh in terms of air traffic movements and ninth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Mexicali International Airport was the twenty-third busiest airport in Mexico in terms of commercial aviation passenger traffic according to the SCT. In 2016, it served 712.1 thousand terminal passengers, accounting for approximately 2.2% of our Mexican airports’ terminal passenger traffic.

During 2016, approximately 99.2% of the terminal passengers served by this airport were domestic passengers. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Mexicali International Airport serves the city of Mexicali, in the Mexican state of Baja California, as well as the U.S. cities of Yuma, Arizona and Calexico, California. The city of Mexicali is located along the U.S.-Mexico border approximately 150 kilometers east of Tijuana and 80 kilometers west of Yuma, Arizona. Manufacturing forms the basis of the area’s economy, most notably in the form of maquiladora factories, which have proliferated along the California-Baja California border.

A total of four airlines operate at the airport; the principal ones are Volaris and Aeromexico Group. Airlines operating at this airport provide service to five destinations. Of these destinations, Mexico City, Guadalajara and Culiacan are the most popular.

Mexicali International Airport operates nineteen hours daily between 6:00 a.m. and 1:00 a.m. the following day. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 2,720 meters in length, as well as a main commercial terminal and a smaller general aviation terminal. The runway capacity at this airport is fourteen air traffic movements per hour. The main commercial terminal has two gates and five remote boarding positions.

During 2016, we continued our building improvement project at our Mexicali airport.

Aguascalientes International Airport

Aguascalientes International Airport is our ninth most important Mexican airport in terms of passenger traffic, eighth in air traffic movements and eighth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Aguascalientes International Airport was the twenty-fourth busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2016, it served 693.5 thousand terminal passengers, accounting for approximately 2.1% of our Mexican airports’ terminal passenger traffic. During 2016, approximately 76.6% of the terminal passengers served were domestic passengers. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Aguascalientes International Airport serves the city of Aguascalientes and eight surrounding municipalities in the central state of Aguascalientes, which is located roughly 513 kilometers northwest of Mexico City. Manufacturing forms the basis of the region’s economy. One of Nissan’s main manufacturing plants in Mexico is located in the city of Aguascalientes.

61

A total of eight airlines operate at the airport; the principal ones are Aeroméxico Group, Volaris and Interjet. Airlines operating at this airport provide service to eight destinations. Of these destinations Mexico City, Tijuana, Dallas and Los Angeles are the most popular.

Aguascalientes International Airport operates eighteen hours daily between 6:00 a.m. and 12:00 a.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. It has two runways, one measuring 3,000 meters in length and the other, a private aircraft runway that is not currently operating as a result of commercial considerations, measuring 1,000 meters, and a single main commercial terminal. The runway capacity at this airport is fourteen air traffic movements per hour. The airport has three gates and four remote boarding locations.

In 2014, we continued our expansion of commercial areas operated by us. In 2015, we inaugurated a VIP lounge at this airport and, in the first quarter of 2016, we installed a new CTX screening system for automated inspection of checked baggage.

Morelia International Airport

Morelia International Airport is our tenth most important Mexican airport in terms of passenger traffic, ninth in terms of air traffic movements and tenth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Morelia International Airport was the thirty-first busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2016, it served 535.8 thousand terminal passengers, accounting for approximately 1.6% of our Mexican airports’ terminal passenger traffic. During 2016, approximately 50% of the terminal passengers served by this airport were domestic passengers.

Morelia International Airport serves the city of Morelia and ten other municipalities in the immediate vicinity. The city of Morelia is the capital of the state of Michoacan, which has a population of approximately 4.4 million according to the Mexican National Population Council. Michoacan’s principal industry is agriculture, and it has a developing eco-tourism industry (primarily due to the seasonal presence of monarch butterflies).

A total of six airlines operate at the airport; the principal ones are Volaris, Aeroméxico Group, American and United. Airlines operating at this airport provide service to seven destinations. Of these destinations, Tijuana, Chicago Midway and Mexico City are the most popular.

Morelia International Airport operates 24 hours a day. The airport has one runway with a length of 3,408 meters and a single main terminal building. The runway capacity at this airport is fourteen air traffic movements per hour. The airport has four gates and eight remote boarding positions.

During 2015, we completed a runway renovation project in our Morelia airport.

Los Mochis International Airport

Los Mochis International Airport is our eleventh most important Mexican airport in terms of passenger traffic, tenth in terms of air traffic movements and eleventh in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Los Mochis International Airport was the thirty-eighth busiest airport in Mexico in terms of commercial aviation passenger traffic, according to the SCT. In 2016, it served 331.4 thousand terminal passengers, accounting for approximately 1.1% of our Mexican airports’ terminal passenger traffic. During 2016, approximately 98.4% of the terminal passengers served were domestic passengers. Because the airport’s passengers are predominantly domestic, the airport’s passenger traffic and results of operations are affected to a greater extent by Mexican economic conditions.

Los Mochis International Airport serves the city of Los Mochis, in the Pacific coastal state of Sinaloa, an important agricultural state. The area’s sport fishing and hunting attract both Mexican and foreign visitors.

A total of five airlines operate at the airport: Aeroméxico Group, Volaris, Aeromar, Aerocalafia and TAR Aerolíneas. Airlines operating at this airport provide service to eight destinations, of which Mexico City, Tijuana and Guadalajara are the most popular.

62

Los Mochis International Airport operates fourteen hours daily between 7:00 a.m. and 9:00 p.m. However, it is equipped to operate 24 hours daily if necessary, and we are authorized to charge double our regular passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 2,007 meters in length as well as a single main commercial terminal. The runway capacity at this airport is sixteen air traffic movements per hour. The airport has three gates and eight remote boarding positions.

Manzanillo International Airport

Manzanillo International Airport is our twelfth most important Mexican airport in terms of passenger traffic and air traffic movements and twelfth in terms of contribution to the sum of aeronautical and non-aeronautical revenues. In 2016, Manzanillo International Airport was the forty-fourth busiest airport in Mexico in terms of commercial aviation passenger traffic according to the SCT. During 2016, the airport served 194.1 thousand terminal passengers, accounting for approximately 0.6% of our Mexican airports’ terminal passenger traffic. During 2016, approximately 58.5% of the terminal passengers served were domestic passengers and 41.5% were international passengers.

Manzanillo International Airport serves the city of Manzanillo and six surrounding municipalities in the small Pacific coastal state of Colima. The city is located on the coast approximately 230 kilometers southeast of Puerto Vallarta and 520 kilometers northwest of Acapulco. The airport serves primarily tourists visiting coastal resorts in Colima and neighboring Jalisco. In recent years, passenger traffic at Manzanillo International Airport has remained stable despite the increased popularity of Puerto Vallarta and other tourist destinations due to a decline in investments in the tourism sector in Manzanillo.

A total of eleven airlines operate at this airport; the principal ones are Aeroméxico Group, Alaska and Sunwing. Some of the other airlines operate only during the high tourist season (November to April). The principal destinations served by airlines at this airport are Mexico City, Los Angeles and Calgary.

Manzanillo International Airport operates twelve hours daily between 8:00 a.m. and 8:00 p.m. However, it is equipped to operate 24 hours daily if necessary, and we double our passenger charges and fees for aeronautical services provided outside normal business hours. The airport has one runway measuring 2,260 meters. The runway capacity at this airport is sixteen air traffic movements per hour. The airport has four gates and four remote boarding positions.

DCA Acquisition

In April 2015, we acquired a 100% stake in DCA, a Spanish corporation. DCA holds a 74.5% stake in MBJA, the entity that operates Montego Bay International Airport in Jamaica.

Montego Bay International Airport

The Montego Bay International Airport is Jamaica’s main tourist airport. In 2016, the Montego Bay airport served 3.95 million terminal passengers, making it the third busiest airport in the Caribbean region, excluding Cuba, in terms of commercial aviation passenger traffic, according to Airports Council International. In 2016, 99.5% of the terminal passengers served were international passengers. Of the total passengers in 2016, 68.6% came from the United States, 17.1% came from Canada and 12.5% came from Europe.

Montego Bay International Airport serves as the primary gateway for international air travel to Jamaica, a major international tourist destination, by facilitating the transit of more than 71% of the tourists arriving on the island. In recent years, passenger traffic at Montego Bay International Airport has grown despite the increased traffic overall at the Kingston airport, which services mostly business and other traffic. In recent years, the Jamaican government has discussed plans to build a third international commercial airport, most likely on the southern coast at Vernamfield, to meet the long-term requirements for the growth of air transport. We do not expect the Kingston airport’s traffic growth to be a major factor in the Montego Bay airport concession’s growth, as the airports serve different demands, nor do we expect the Jamaican government’s Vernamfield airport plan to be executed within the next three years.

63

A total of twenty-seven international airlines operate at the airport, providing year-round and seasonal services. Our principal airlines are American, Delta, Southwest, and JetBlue. Airlines serving MBJ provide service from over 61 airport destinations. Of these, Toronto, New York, Atlanta and Ft. Lauderdale are the most popular.

Montego Bay International Airport operates eighteen hours daily between 6:00 a.m. and 12:00 midnight. However, it is equipped to operate 24 hours daily if necessary. The airport has one runway measuring 2,662 meters. The runway capacity at this airport is 33 air traffic movements per hour. The airport also has an ILS that assists pilots in poor weather. The airport’s facilities include a main commercial terminal with a large parking facility and a general aviation building. The airport’s main commercial terminal has a total area of approximately 6,000 square meters, as well as an additional 5,657 square meters of parking facilities. The general aviation building has an additional area of 300 square meters. The commercial terminal has 17 gates and 5 remote parking positions.

The following table sets forth revenues, passenger traffic and air traffic movement data for the Montego Bay airport from April 1 to December 31, 2015 and for 2016:

	April 1 to December 31, 2015		January 1 to December 31, 2016
Revenues (in thousands of pesos):
Sum of Aeronautical and Non-Aeronautical Revenues	Ps.	995,707	Ps.	1,607,689
Passenger Traffic (in thousands):
Terminal passengers		2,695		3,901
Arriving international passengers		1,360		1,945
Departing international passengers		1,335		1,956
Transit passengers		44		51
Air Traffic Movements(1):
Peak air traffic movements per hour(2)		22		21
Runway capacity(3)		33		33
Total air traffic movements (in thousands):		30		41
Commercial aviation		21		27
Charter aviation		1		2
General aviation and other		8		12
Average passengers per air traffic movement		91		96

(1) Includes departures and landings.

(2) Includes commercial and general aviation operations (demand).

(3) Air traffic movements per hour (capacity).

In the period between April 1 and December 31, 2015, approximately 4.8 thousand metric tons of cargo was transported through the airport. In 2016, approximately 6.9 thousand metric tons of cargo was transported through the airport.

Third parties operate a total of seven lounges in the Montego Bay airport: five hotel lounges and one general lounge in the arrivals area and one general lounge in the departures area. In 2015, we expanded the departures-area general lounge by 283.3 square meters.

Non-Airport Subsidiaries

As a holding company, we operate each of our thirteen airports through an operating subsidiary. In addition to these airport subsidiaries, we also have three employee service companies as operating subsidiaries. Our employee service companies, which provide part of the labor force for our airports but do not directly employ any personnel, are (i) Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V. (“SIAP”), (ii) Corporativo de Servicios Aeroportuarios, S.A. de C.V. (“CORSA”) and (iii) Puerta Cero Parking, S.A. de C.V. (“PCP”). We also have a non-profit foundation, Fundación Grupo Aeroportuario del Pacífico, A.C. (“Fundación GAP”).

64

SIAP

SIAP was incorporated as a subsidiary in June 1998 to provide technical assistance and corporate services to our airport operating subsidiaries. SIAP was set up as part of the Mexican government’s privatization plan for the airports operated by us. SIAP invoices our airports for three types of services:

• SIAP employs the senior management at our corporate headquarters and at our airports, and charges our subsidiaries for the services rendered according to each subsidiary’s individual performance;

• As part of the privatization plan that was implemented by the Mexican government in 1998, our strategic shareholder has the right and obligation to enter into various agreements with us and the Mexican government, including a participation agreement and a shareholders’ agreement. As a result of the participation agreement requirement, we entered into a technical assistance agreement with AMP, which was renewed for an additional five-year period through August 26, 2019. Under this agreement, AMP receives an annual fee to provide SIAP with consulting services and technological and industry knowledge and expertise to manage our airports. SIAP charges our subsidiaries a technical assistance fee, which is then used to pay AMP. The technical assistance fee is a component of our maximum tariffs and is collected through the maximum tariffs charged. See also “Item 5, Operating and Financial Review and Prospects – Operating Costs – Technical Assistance Fee”); and

• SIAP employs non-unionized personnel to perform services at our airports according to their capabilities and expertise and collects fees on a monthly basis for the services performed.

CORSA

CORSA was incorporated as a subsidiary on November 8, 2007, and began operations in January 2008. CORSA employs unionized personnel to perform services at our airports according to their capabilities and expertise and collects fees on a monthly basis for the services performed.

PCP

PCP was incorporated as a subsidiary on November 28, 2007, and began operations in January 2008. PCP provides operating and administrative services for airport parking lots. PCP employs both unionized and non-unionized personnel and collects fees on a monthly basis for the services performed.

Fundación GAP

We established this non-profit foundation in May 2013 with the aim of improving social welfare in the communities near our airports. The foundation’s focus is on children’s education, as well as other charitable activities. See “Item 4, Information on the Company – Business Overview – Corporate Social Responsibility – Community Initiatives and Philanthropic Efforts – Fundación GAP.”

Principal Customers

Principal Aeronautical Services Customers

Airline Customers

As of December 31, 2016, sixteen international airlines and nine Mexican airlines operated flights at our twelve Mexican airports. Volaris is our principal airline customer in terms of total passengers at our Mexican airports, with Aeroméxico Group and Interjet providing the second and third largest number of total passengers. In 2015 and 2016, revenues from Volaris and the passengers it moved through our airports totaled Ps.1,462.9 million and Ps.1,843.3 million, respectively, of which Ps.1,319.2 million and Ps.1,655.5 million, respectively, were paid to the airports in the form of passenger charges, representing 20.1% and 21.2%, respectively, of the sum of our aeronautical and non-aeronautical revenues for 2015 and 2016. Revenues from the Aeroméxico Group and the

65

passengers they moved through our airports were Ps.775.0 million and Ps.921.6 million during 2015 and 2016, respectively, of which Ps.744.8 million and Ps.809.5 million, respectively, were paid to the airports for the passengers they moved in form of passengers charges, representing 10.3% and 10.7%, respectively, of the sum of our aeronautical and non-aeronautical revenues for 2015 and 2016.

In Jamaica, American Airlines transported a significant percentage of the Montego Bay airport’s passenger traffic. For the period from April 1 to December 31, 2015, revenues from American Airlines and the passengers it moved through the Montego Bay airport totaled Ps.132.7 million, of which Ps.100.5 million was paid to MBJA in the form of passenger charges, representing 13.3% of the sum of aeronautical and non-aeronautical revenues for the Montego Bay airport during the period. In 2016, revenues from American Airlines and the passengers it moved through the Montego Bay airport totaled Ps.236.8 million, of which Ps.156.9 million was paid to MBJA in the form of passenger charges, representing 14.7% of the sum of aeronautical and non-aeronautical revenues for the Montego Bay airport. However, passenger charges from American Airlines do not represent a significant portion of our total revenues across all airports. During the period from April 1 to December 31, 2015, passenger charges collected by American Airlines at MBJA accounted for 1.2% of total revenues in our airports (1.4% of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2015). In 2016, passenger charges collected by American Airlines across all airports accounted for 5.7% of total revenues in our airports (6.7% of the sum of aeronautical and non-aeronautical revenues generated in our airports in 2016).

In addition to passenger charges (revenues generated by the services provided by airports to passengers), we also earned revenues from aircraft landing and parking charges and the leasing of space to these airlines.

Mexican Aeronautical Services Agreement

As a result of certain disputes with our airline customers in Mexico, beginning in 2003 we entered into an agreement with the Mexican National Air Transportation Chamber of Commerce and the SCT pursuant to which we resolved certain existing disputes with our airline customers and entered into: (i) contracts governing charges for aeronautical services; (ii) lease contracts for property used by the airlines; and (iii) contracts governing collection of passenger charges. In March 2012, we renewed the agreement, which represented: (i) virtually all of the relevant contracts governing the collection of passenger charges; (ii) a substantial majority of the agreements for the leasing of space in our terminals; and (iii) a substantial majority of the contracts governing our aeronautical services. This contract expired on December 31, 2014. We are currently in the process of negotiating a new agreement.

Changes in Principal Airlines Operating at our Mexican Airports

On August 28, 2010, Grupo Mexicana, which operated through its three subsidiaries, Mexicana, Mexicana Click and Mexicana Link, suspended operations indefinitely. On the day Grupo Mexicana suspended operations, they were operating at ten of our twelve Mexican airports. During the first half of 2010, Grupo Mexicana transported 1,869,636 total passengers in our network representing 18.3% of our total passengers. This made Grupo Mexicana our third most important airline group in terms of the number of passengers transported within our airports. During 2009 and the first half 2010, aeronautical revenues from Grupo Mexicana and from the passengers they moved through our airports represented 16.2% and 17.0% of our total aeronautical revenues, respectively. We initially recorded an allowance for doubtful accounts of Ps.49.9 million for Grupo Mexicana in 2010, which was primarily composed of Ps.38.6 million in passenger charges that Grupo Mexicana collected on behalf of our airports from passengers of Mexicana, Click or Link through August 27, 2010. As of December 31, 2016, as a result of the conclusion of Grupo Mexicana’s bankruptcy process and the unlikely recovery of amounts outstanding from Grupo Mexicana for the rent of certain areas of our airports and other services, we canceled Ps.65.9 million, which had previously been provisioned as an allowance for doubtful accounts.

Complementary Services Customers

Our principal complementary services clients are our three principal providers of baggage handling services: Menzies Aviation, S.A. de C.V., Administradora Especializada en Negocios, S.A. de C.V. (a subsidiary of Aeroméxico Group) and Aveespress, S.A. de C.V., which provided Ps.27.8 million, Ps.9.4 million and Ps.17.2 million in revenues, respectively, each in the form of access fees, in 2016. Our primary catering clients are Aerococina, S.A. de C.V. and Gate Gourmet & Maasa México, S. de R.L. de C.V., which respectively provided Ps.9.0 million and Ps.1.2 million of revenues in the form of access fees in 2016.

66

While we receive a fee from our complementary services clients equivalent to 10% to 15% of their reported sales, we receive only a fixed fee when a company is a subsidiary or affiliate of an airline. Among our three principal providers of baggage handling, Administradora Especializada en Negocios, S.A. de C.V. is the only subsidiary of an airline.

Principal Non-Aeronautical Services Customers

As of December 31, 2016, we were party to approximately 1,050 contracts – 3.1% more than the 1,018 contracts we were party to as of December 31, 2015 – with providers of commercial services in the commercial spaces in our Mexican airports, including retail store operators, duty-free store operators, food and beverage providers, timeshare developers, financial services providers, car rental companies, telecommunications providers, VIP lounges, advertising, travel agencies, tourist information and promotion services. The increase in the number of contracts is due to our expansion of commercial spaces within our existing terminal space and the construction of new terminal space, reflected in an increase in the number of new retail store customers, food and beverage providers and advertising customers. In 2016, our largest commercial customers in terms of revenues paid to us were Dufry México, S.A. de C.V. (duty-free stores; Ps.95.1 million in revenue for 2016 compared to Ps.83.5 million in 2015), Aldeasa México, S.A. de C.V. (duty-free stores; Ps.66.1 million in revenue for 2016 compared to Ps.61.9 million in 2015), Aerocomidas, S.A. de C.V. (food and beverages; Ps.62.8 million in revenue for 2016 compared to Ps.53.7 million in 2015), Operadora Aeroboutiques, S.A. de C.V. (retail; Ps.39.8 million in revenue for 2016 compared to Ps.29.8 million in 2015), and Servicios Inmobiliarios Alsea, S.A. de C.V. (food and beverages; Ps.28.4 million in revenue for 2016 compared to Ps.24.3 in 2015). In Jamaica, MBJA’s largest commercial customer in terms of revenues paid to MBJA were World Duty Free (duty-free stores: U.S.$7.4 million in revenue for 2016, compared to U.S.$6.7 million in 2015) and Express Catering (food and beverages: U.S.$2.7 million in revenue for 2016, an increase from U.S.$2.5 million in 2015).

Seasonality

Our business is subject to seasonal fluctuations. In general, demand for air travel is typically higher during the summer months and during the winter holiday season, particularly in international markets, because there is more vacation travel during these periods. Our results of operations generally reflect this seasonality, but have also been impacted by numerous other factors that are not necessarily seasonal, including economic conditions, war or threat of war, terrorism or threat of terrorism, weather, air traffic control delays, health crises and general economic conditions, as well as the other factors discussed above. As a result, our results of operations for a quarterly period are not necessarily indicative of results of operations for an entire year, and historical results of operations are not necessarily indicative of future results of operations.

Competition

Excluding our airports servicing tourist destinations, our airports generally are natural monopolies in the geographic areas that they serve and generally do not face significant competition. However, the Mexican and Jamaican governments could grant additional concessions to operate existing government-managed airports, authorize the construction of new airports or allow existing privately held domestic airports to become international airports and permit them to receive regular domestic and international flights, all of which could lead to increased competition for our airports.

For instance, our Los Cabos airport may experience greater competition in the future from a small private airport near Cabo San Lucas, which received a permit to operate public service in March 2008 from the SCT. On November 4, 2009, this airport received authorization to operate regular commercial routes for domestic and international flights. Consequently, we implemented commercial strategies to improve our level of service in order to ensure that we remain the best airport option for airlines serving the San Jose del Cabo and Cabo San Lucas corridor. Also, in order to serve the private aviation market, we started operations at our new state-of-the-art Fixed Base of Operations in the Los Cabos airport. This allowed us to increase our capacity, and we redesigned our fee structure in order to make our service the most attractive in the region.

In addition, the Mexican government announced in the National Infrastructure Plan for 2007-2012 (Programa Nacional de Infraestructura 2007-2012) (published in July 2007) that at least three new airports would be constructed between 2007 and 2012: the Riviera Maya airport, the Ensenada airport and the Mar de Cortés airport.

67

As of the date of this filing, the SCT has not announced whether or not there will be a new bidding process for the Riviera Maya airport project, which was previously abandoned, and the government has not provided further information in respect of either the Ensenada airport or the Mar de Cortés airport as to the expected type or size of these airports. In addition, no date has been set to initiate the bidding process for construction of these airports. We cannot predict whether these airports, if they are constructed, will compete with our airports.

On September 2, 2014, President Enrique Peña Nieto announced plans for a new airport in Mexico City with double the capacity of the current airport. Construction began in 2015, and is expected to conclude by October 2020 in its first stage. When this airport is operating, we expect our passenger traffic and revenues to increase due primarily to an expected increase in service to and from most of our airports, as Mexico City is the top destination for eleven of our twelve airports in Mexico.

ASA currently operates seven small airports in Mexico’s Pacific and Central regions. We believe that these airports collectively account for only a small fraction of the passenger traffic in these regions. In recent years, the Jamaican government has discussed plans to build a third international commercial airport, most likely on the southern coast at Vernamfield, to meet long-term requirements for the growth of air transport. We do not expect the Jamaican government’s Vernamfield airport plan to be executed in the near term. Also see “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of our Business – The Mexican and Jamaican governments could grant new concessions that compete with our airports.”

The relative attractiveness of the locations we serve is dependent on many factors, some of which are beyond our control. These factors include the general state of the Mexican economy and the attractiveness of other commercial and industrial centers in Mexico that may affect the attractiveness of Guadalajara, Tijuana and other growing industrial centers in our group, such as Hermosillo, Leon, Aguascalientes and Mexicali.

Because our Puerto Vallarta, Los Cabos, La Paz, Manzanillo and Montego Bay airports are substantially dependent on tourism, these airports face competition from competing tourist destinations. We believe that the main competitors to these airports are those airports serving vacation destinations in Mexico, such as Acapulco and Cancun, and abroad, such as Hawaii, Puerto Rico, Florida, Cuba, the Dominican Republic, other Caribbean islands and Central America. In addition, with respect to Puerto Vallarta, Los Cabos, La Paz, Manzanillo and Montego Bay, factors beyond our control include promotional activities and pricing policies of hotel and resort operators, weather conditions, natural disasters (such as hurricanes and earthquakes), security concerns, health crises and the development of new resorts that may be considered more attractive. There can be no assurance that the locations we serve will continue to attract the same level of passenger traffic in the future.

Corporate Social Responsibility

Sustainability and Environmental Responsibility

Environmental Management in Mexico

We maintain an environmental management system according to ISO 14001:2004 requirements, which provides a reference point for best practices and allows us to measure environmental performance and efficiency. This system is in place and has been independently certified in our Aguascalientes, Guanajuato, Hermosillo, La Paz, Los Mochis and Morelia airports.

Since 2007, when GAP obtained the ISO 14001:2004 certificate, we employed a team of specialists to coordinate and supervise environmental management initiatives at all of our airports. This team is now under the supervision of the Director of Technical Operations.

All of our airports in Mexico are certified under the ISO 9001:2008 System Quality Management Standard.

In 2016, as a result of the release of the ISO 14001:2015 and ISO 9001:2015 standards, we are migrating to an integrated management system, which integrates quality and environmental management systems. We plan to complete this migration process by the end of 2017.

68

Additionally, our Master Development Programs approved for the 2015-2019 period include measures prioritizing the reduction of our airports’ environmental impacts through (i) wastewater and sewage separation; (ii) improvements to residual water treatment plants; and (iii) storage of hazardous and other special wastes. In 2014, 2015 and 2016, we invested Ps.2.2 million, Ps.44.8 million and Ps.77.5 million, respectively, in these projects.

In 2015, we established the following objectives for our environmental programs: (i) to reduce consumption of water per passenger; (ii) to increase the use of treated residual water; and (iii) to maintain our electricity consumption levels. The following table sets forth certain performance indicators tracked by our environmental management systems:

Environmental Management Performance Indicators for Mexican Airports

	Year ended December 31,
	2014		2015		2016
Water consumption (in cubic meters per passenger)		25.0		20.6		17.1
Energy consumption (in kilowatt hours per passenger)		2.7		2.5		2.2
Greenhouse gas (GHG) emissions (in kilograms of CO2 equivalent per passenger)(1)		1.24		1.16		1.05
Hazardous waste generation (in kilograms per passenger)		n/a		0.0004		0.0004
Special waste generation (in kilograms per passenger)		n/a		0.14		0.18

(1) 2016 figures calculated with the Emission Factor published by SEMARNAT for CFE electricity generation in 2015.

Environmental Management in Jamaica

To ensure continuous improvement in its environmental performance, and as a requirement of the Concession Agreement and of the International Finance Corporation (“IFC”) Performance Standards to which it is subject, MBJ has in place an Environmental Management Plan, or “EMP,” developed to be generally consistent with ISO 14001:2004 Environmental Management System Standard, though not certified as such. MBJ’s EMP guides business planning across departments to ensure compliance with local regulations, the IFC Performance Standards and industry best practices, and represents MBJ’s commitment to, among other things, integrating environmental management measures with planning, design, construction and operation of the airport.

MBJ’s EMP is managed by an environment, health and safety professional within the airport’s Environment, Health and Safety Department. MBJ’s EMP provides specific management plans for management of fuel and other hazardous materials, storm water and underground water, contaminated sites, solid waste, noise, wildlife and community relations.

In 2016, MBJ began an initiative to quantify emissions and produce an emissions inventory for the facility. MBJ also participated in a United Nations capacity building project titled Climate Change Impacts on Coastal Transport Infrastructure in the Caribbean: Enhancing the Adaptive Capacity of Small Island Developing States (SIDS), and was selected as one of two airports to benefit from the ICAO/UNDP environmental pilot demonstration project titled Transforming the Global Aviation Sector: Emissions Reduction from International Aviation.

MBJA continues to assess its environmental performance through independent audits and investigations with the goal of implementing practicable recommendations for continued improvement in environmental performance and stewardship.

Accreditations

Our Aguascalientes, Guanajuato, Guadalajara, Hermosillo, Los Mochis, Manzanillo, Morelia and Tijuana airports are “Environmental Quality” certified by the Federal Office for the Protection of the Environment (Procuraduría Federal de Protección al Ambiente, or PROFEPA). Also, in 2016, our Aguascalientes airport was the first Mexican airport to obtain the highest level of “Environmental Performance” certified by PROFEPA.

69

Our Puerto Vallarta airport has Level 2 Airport Carbon Accreditation from the Latin America and Caribbean Region of the Airports Council International (ACI-LAC). Our Tijuana airport is an ACI-LAC Level 1 accredited airport, as well.

Employee Health and Safety

With the goal of guaranteeing occupational health and safety, as well as institutionalizing the prevention of occupational hazards, we have begun implementing a self-administered program, promoted by the Ministry of Labor and Social Welfare (Secretaría del Trabajo y Previsión Social), or “STPS,” and based on national and international standards and regulations, to promote the operation of a safe and clean airport network in Mexico. The voluntary compliance program comprises three levels of recognitions: (1) for compliance with health and safety regulations, (2) for actions that promote continuous improvement in health and safety standards, and (3) for successful management of health and safety standards. Under this program, we have obtained the following levels of certification: Level 1 (Aguascalientes, Guanajuato, Manzanillo and Morelia airports), and Level 3 (Guadalajara and Puerto Vallarta airports).

A key component of the voluntary compliance program is the Safety and Hygiene Commission, which we have established in each of our airports. These commissions conduct investigations and reviews of the work area, verifying the implementation of the voluntary compliance program and recommending additional improvements to create optimal working conditions depending on the airport’s needs. In conjunction with these commissions, we have also formed brigades to help minimize the impact and risk, through evacuation and first aid plans, of any kind of natural phenomenon that could negatively affect the safety of our employees or our operations.

In addition, as part of our company policies, we provide an annual general medical review for certain employees. As part of our philosophy of well-being and quality of life, we also allocate approximately Ps.13 million per year to organize cultural and sports activities, thus encouraging physical activity. Together, these measures help provide a suitable workplace for our employees, as well as the relevant safety tools and equipment to prevent accidents and diseases to the extent possible.

Workplace Culture

Our policy is to provide the same job opportunities to all qualified applicants and to provide employees with a work environment free of harassment or discrimination, where each employee behaves respectfully towards their co-workers, promoting a spirit of collaboration regardless of gender, age, religion or hierarchical level.

We provide financial aid for our employees and scholarships for our employees’ dependents. In 2014, 2015 and 2016, we invested Ps.1.0 million, Ps.1.4 million and Ps.1.6 million, respectively, in these programs.

Since 2009, we have been evaluated by Expansión Magazine as a “Super Company” in Mexico with respect to workplace culture and professional climate. In 2014, 2015 and 2016, we were ranked 8^th, 6^th and 9^th, respectively, among Mexican companies according to this evaluation.

Supply Chains and Sourcing

In our bidding process for suppliers, we include our Code of Conduct as part of the initial information package with the intention that our suppliers comply with our ethical standards. The terms and conditions of our contract with suppliers then include provisions designed to ensure that our suppliers comply with labor laws and regulations, including requirements to monitor legal and regulatory compliance in the areas of employer responsibilities and occupational health and safety.

In our supplier development program, suppliers are strategically selected by us based on the contracting amounts, technical complexity of their work or impact on the quality of the service provided by us. Once the provider is selected, visits and face-to-face monitoring are carried out at its facilities in order to verify, among other things, the supplier’s policies, guidelines and processes comply with legal and regulatory requirements, as well as the management’s approach to staff development and the safety of the work environment. Once a contracted supplier has completed their work, we evaluate their performance to determine whether they should be invited to participate in future bids.

70

Community Initiatives and Philanthropic Efforts

Fundación GAP

In May 2013, we established a non-profit foundation, Fundación GAP with the aim of improving social welfare in the communities near our airports. The foundation’s focus is on children’s education, and it engages in other charitable activities, as well.

In September 2014, we inaugurated the first Fundación GAP school near our Guadalajara airport. The first year began with a class of first-grade students, and we plan to add a new class each consecutive year to eventually reach a maximum capacity of 360 students for grades one through six. Additionally, in 2016 we opened another school near our Los Cabos airport, which began activities with another 60 students. We have also committed to opening a new school near our Tijuana airport in the coming years.

Our board of directors annually reviews our donation to the foundation. For 2016, our board of directors authorized a Ps.10.0 million donation, and over past three years GAP has authorized more than Ps.33.0 million in donations. The foundation is supervised by a board of trustees, which is presided over by Mrs. Díez Barroso.

Philanthropic Efforts

• Through the Fundación GAP schools, we provided 240 low-income families with an excellent free education for their children in 2016.

• For the 8th consecutive year, we obtained the Socially Responsible Company Distinction awarded by the Mexican Center for Philanthropy (Centro Mexicano para la Filantropía), or “CEMEFI,” to companies committed to active and voluntary contribution to social, economic and environmental issues.

• Since 2014, we have provided scholarships and financial support to entrepreneurs seeking to develop projects to solve social problems through the Entrepreneurship Promotion Program organized by the Monterrey Institute of Technology (Tecnológico de Monterrey).

REGULATORY FRAMEWORK

Sources of Mexican Regulation

Principal Laws Governing Our Mexican Operations

The following are the principal laws, regulations and instruments that govern our business and the operation of our Mexican airports:

• The Mexican General Law of Commercial Corporations (Ley General de Sociedades Mercantiles), enacted August 4, 1934;

• the Mexican Airport Law (Ley de Aeropuertos), enacted December 22, 1995;

• the regulations under the Mexican Airport Law (Reglamento de la Ley de Aeropuertos), enacted February 17, 2000;

• the Mexican Communications Law (Ley de Vías Generales de Comunicación), enacted February 19, 1940;

• the Mexican Civil Aviation Law (Ley de Aviación Civil), enacted May 12, 1995;

• the Mexican Federal Duties Law (Ley Federal de Derechos), enacted December 31, 1981, and revised on an annual basis;

• the Mexican National Assets Law (Ley de Bienes Nacionales), enacted May 20, 2004;

• the Mexican Securities Market Law (Ley del Mercado de Valores), enacted December 30, 2005; and

• the concessions that entitle our subsidiaries to operate our twelve Mexican airports, which were granted on June 29, 1998, and amended on November 15, 1999.

71

The Mexican Airport Law and the regulations under the Mexican Airport Law establish the general framework regulating the construction, operation, maintenance and development of Mexican airport facilities. The Mexican Airport Law’s stated intent is to promote the expansion, development and modernization of Mexico’s airport infrastructure by encouraging investment and competition.

Under the Mexican Airport Law, a concession granted by the SCT is required to construct, operate, maintain and develop a public service airport in Mexico. A concession generally must be granted pursuant to a public bidding process, except for: (i) concessions granted to (a) entities considered part of “the federal public administration” as defined under Mexican law and (b) any private company the principal shareholder of which is a state or municipal government; (ii) concessions granted to operators of private airports (that have operated privately for five or more years) wishing to begin operating their facilities as public service airports and complying with certain requirements; and (iii) complementary concessions granted to existing concession holders that comply with certain requirements. Complementary concessions may be granted only under certain limited circumstances, such as where an existing concession holder can demonstrate, among other things, that the award of the complementary concession is necessary to satisfy passenger demand.

On June 29, 1998, the SCT granted twelve concessions to operate, maintain and develop the twelve principal airports in Mexico’s Pacific and Central regions to our subsidiaries. Because our subsidiaries were considered entities of the federal public administration at the time the concessions were granted, the concessions were awarded without a public bidding process. However, our privatization, through which our strategic shareholder acquired 15% of our capital stock, was conducted through a public bidding process. Each of our Mexican concessions was amended on November 15, 1999, in order to, among other things, incorporate each airport’s maximum rates and certain other terms as part of the concession.

On February 17, 2000, the regulations under the Mexican Airport Law were issued. We believe we are currently complying with the material requirements of the Mexican Airport Law and its regulations. Non-compliance with these regulations could result in fines or other sanctions being assessed by the SCT and are among the violations that could result in termination of a concession if they were to occur three or more times.

The Mexican National Assets Law, among other things, establishes regulations relating to concessions granted with respect to property held in the public domain, including the airports that we operate. The Mexican National Assets Law requires concessionaires of real property held in the public domain and used for administrative or non-public purposes to pay a tax, and establishes grounds for revocation of concessions for failure to pay applicable taxes, but does not specify which taxes must be paid, including whether certain taxes to municipalities must be paid by a concessionaire.

Under the Mexican Federal Duties Law, each of our subsidiary concession holders is required to pay the Mexican government a concession tax based on its gross annual revenues (excluding revenues from improvements to concession assets) from the use of public domain assets pursuant to the terms of its concession. Currently, this concession tax is set at a rate of 5% and may be revised annually by the Mexican Congress. Our Mexican concessions provide that we may request an amendment of our maximum rates if there is a change in this concession tax.

Reforms to the Mexican Airport Law and Civil Aviation Law

The SCT intended to establish a new regulatory agency, expected to be authorized to monitor our activities and those of the other airport groups, enforce applicable regulations, propose amendments to concessions, set maximum rates, resolve disputes between concession holders and airport users (such as airlines) and collect and distribute information relating to the airport sector. An initiative was introduced in Mexico’s Congress on February 26, 2009, to establish such an agency and reform a substantial part of the current Mexican Airport Law, but it was rejected by the legislature on April 20, 2010. On December 14, 2011, a new bill was introduced in Mexico’s Congress to amend the Mexican Airport Law. Among other items, the bill proposes to give the SCT additional authority to plan and apply the standards, policies and programs for the Mexican airport system, to oversee the correct operation of civil aviation in Mexico, and to establish rules for airport service providers and the general basis for flight schedules,

72

so as to guarantee the competitiveness of Mexico’s airports. On January 26, 2015, Congress published changes to the Mexican Airport Law and Civil Aviation Law, however, these changes are less extensive than those proposed in the 2011 bill. Among other things, the amendment includes provisions that seek to ensure a competitive market for suppliers of complementary services. The principal effect on airport concessionaires such as us is the requirement for concession holder not limit the number of providers of complementary services and fixed base operations in its airports, except for reasons of space availability, operational efficiency and safety. If a concession holder denies entry to any complementary service provider for a reason other than the above, which service provider may file a complaint with the SCT.

Federal Economic Competition Commission

As a result of certain 2013 amendments to Mexico’s Constitution, on July 6, 2014, a new Federal Economic Competition Law (Ley Federal de Competencia Económica) went into effect, which, among other things, extinguished the former Federal Competition Commission and created the Federal Economic Competition Commission (Comisión Federal de Competencia Económica), or “COFECE,” as an autonomous agency to be the competition authority for all industries except telecommunications and broadcasting. The new law grants broader powers to COFECE, including the ability to regulate essential facilities, order the divestment of assets and eliminate barriers to competition. The new law also sets forth important changes in connection with mergers and anti-competitive behavior, increases liabilities and the amount of fines that may be incurred for violations of the law, and limits the availability of legal defenses against the application of the law. If COFECE determines that a specific service or product is an essential facility, it has the ability to regulate access conditions, prices, tariffs or technical conditions for or in connection with the specific service or product. As of the date of filing, COFECE has not made any determination that the services we render are considered an essential facility, but we can provide no assurance that they will not do so in the future. If such a determination is made, it may have a material effect on our results of operations.

Role of the SCT

The SCT is the principal regulator of airports in Mexico and is authorized by the Mexican Airport Law to perform the following functions:

• plan, formulate and establish the policies and programs for the development of the national airport system;

• construct, administer and operate airports and airport-related services for the public interest;

• grant, modify and revoke concessions for the operation of airports;

• establish air transit rules and rules regulating take-off and landing schedules through the Mexican Air Traffic Control Authority;

• take all necessary action to create an efficient, competitive and non-discriminatory market for airport-related services, and set forth the minimum operating conditions for airports;

• establish safety regulations;

• close airports entirely or partially when safety requirements are not being satisfied;

• monitor airport facilities to determine their compliance with the Mexican Airport Law, other applicable laws and the terms of the concessions;

• maintain the Mexican aeronautical registry for registrations relating to airports;

• impose penalties for failure to observe and perform the rules under the Mexican Airport Law, the regulations thereunder and the concessions;

• approve any transaction or transactions that directly or indirectly may result in a change of control of a concession holder;

73

• approve the Master Development Programs prepared by each concession holder every five years;

• determine each airport’s maximum rates;

• approve any agreements entered into between a concession holder and a third party providing airport or complementary services at its airport; and

• perform any other function specified by the Mexican Airport Law.

In addition, under the Mexican Organic Law of the Federal Public Administration (Ley Orgánica de la Administración Pública Federal), the Mexican Airport Law and the Mexican Civil Aviation Law, the SCT is required to provide air traffic control, radio assistance and aeronautical communications at Mexico’s airports. The SCT provides these services through the Mexican Air Traffic Control Authority, which is a division of the SCT. Since 1978, the Mexican air traffic control authority has provided air traffic control for Mexico’s airports.

Mexican Airport Concessions

Scope of Concessions

We hold concessions granted to us by the Mexican government to use, operate, maintain and develop twelve airports in the Pacific and Central regions of Mexico in accordance with the Mexican Airport Law. As authorized under the Mexican Airport Law, each of the concessions is held by our subsidiaries for an initial 50-year term, each of which terms began on November 1, 1998. This initial term of each of our Mexican concessions may be renewed for one or more terms for up to an additional 50 years, subject to the concession holder’s acceptance of any new conditions imposed by the SCT and to its compliance with the terms of its concession. Each of the concessions held by our subsidiary concession holders allows the relevant concession holder, during the term of the concession, to: (i) operate, maintain and develop its airport and carry out any necessary construction in order to render airport, complementary and commercial services as provided under the Mexican Airport Law and the regulations thereunder; and (ii) use and develop the assets that comprise the airport that is the subject of the concession (consisting of the airport’s real estate and improvements but excluding assets used in connection with fuel supply and storage). These assets are government-owned assets, subject to the Mexican National Assets Law. Upon expiration of a concession, these assets, together with any improvements thereto, automatically revert to the Mexican government.

Concession holders are required to provide airport security, which must include contingent and emergency plans in accordance with the regulations under the Mexican Airport Law. The security regulations must be implemented in accordance with the requirements set forth in the National Program for Airport Security (Plan Nacional de Seguridad Aeroportuaria). In addition, the regulations pertaining to the Mexican Airport Law specify that an airport concession holder is responsible for inspecting passengers and their carry-on baggage before they reach the departure gates, while the transporting airline is responsible for the inspection of checked baggage and cargo. If public order or national security is endangered, the responsible federal authorities are authorized to act to protect the safety of aircraft, passengers, cargo, mail, installations and equipment.

The shares of a concession holder and the rights under a concession may be subject to a lien only with the approval of the SCT. No agreement documenting liens approved by the SCT may allow the beneficiary of a pledge to become a concession holder under any circumstances.

A concession holder may not assign any of its rights or obligations under its concession without the authorization of the SCT. The SCT is authorized to consent to an assignment only if the proposed assignee satisfies the requirements to be a concession holder under the Mexican Airport Law, undertakes to comply with the obligations under the relevant concession and agrees to any other conditions that the SCT may require.

General Obligations of Concession Holders

The concessions impose certain obligations on the concession holders, including, among others: (i) the obligation to pay the concession tax described above; (ii) the obligation to deliver concession services in a continuous, public and non-discriminatory manner; (iii) the obligation to maintain the airports in good working condition; and (iv) the obligation to make investments with respect to the infrastructure and equipment in accordance with the Master Development Programs and the concessions.

74

Each concession holder and any third party providing services at an airport is required to carry insurance in specified amounts and covering specified risks, such as damage to persons and property at the airport, in each case as specified by the SCT. To date, the SCT has not specified the required amounts of insurance. We may be required to obtain additional insurance once these amounts are specified. We and our subsidiary concession holders are jointly and severally liable to the SCT for the performance of all obligations under the concessions held by our subsidiaries. Each of our subsidiary concession holders is responsible for the performance of the obligations set forth in its concession and in the Master Development Programs, including the obligations arising from third-party contracts, as well as for any damages to the Mexican government-owned assets that they use and to third-party airport users. In the event of a breach of the concession held by any one of our subsidiaries, the SCT is entitled to revoke the concessions held by all of our subsidiaries.

Substantially all of the contracts entered into prior to August 25, 1999, by the ASA with respect to each of our airports were assigned to the relevant concession holder for each airport. As part of this assignment, each concession holder agreed to indemnify the ASA for any loss suffered by the ASA due to the concession holder’s breach of its obligations under an assigned agreement.

Classification of Services Provided at Airports

The Mexican Airport Law and the regulations thereunder classify the services that may be rendered at an airport into the following three categories:

• Airport Services. Airport services may be rendered only by the holder of a concession or a third party that has entered into an agreement with the concession holder to provide such services. These services include the following:

• the use of airport runways, taxiways and aprons for landing, aircraft parking and departure;

• the use of hangars, passenger walkways, airport buses and car parking facilities;

• the provision of airport security services, rescue and firefighting services, ground traffic control, lighting and visual aids;

• the general use of terminal space and other infrastructure by aircraft, passengers and cargo; and

• the provision of access to an airport to third parties providing complementary services (as defined in the Mexican Airport Law) and third parties providing permanent ground transportation services (such as taxis).

• Complementary Services. Complementary services may be rendered by an airline, by the airport operator or by a third party under agreements with airlines and the airport operator. These services include: ramp and handling services, passenger check-in, aircraft security, catering, cleaning, maintenance, repair and fuel supply and related activities that provide support to air carriers.

• Commercial Services. Commercial services are services that are not considered essential to the operation of an airport or aircraft, and include, among other things, retailers, restaurants, banks and advertisers to which we lease space.

A third party providing complementary or commercial services to an airport is required to do so only pursuant to a written agreement with the relevant concession holder. On November 1, 2012, we entered into an agreement with a third party with respect to the provision of airbus and passenger walkway services in all of our airports. Accordingly, we will no longer provide these services directly. As of the date of this report, this is the only agreement with a third party regarding the provision of regulated services. All agreements relating to airport or complementary services are required to be approved by the SCT. The Mexican Airport Law provides that the concession holder is jointly liable with these third parties for compliance with the terms of the relevant concession with respect to the services provided by such third parties. All third-party service providers are required to be corporations incorporated under Mexican law.

75

Airport and complementary services are required to be provided to all users in a uniform and regular manner, without discrimination as to quality, access or price. Concession holders are required to provide airport and complementary services on a priority basis to military aircraft, disaster support aircraft and aircraft experiencing emergencies. Airport and complementary services are required to be provided at no cost to military aircraft and aircraft performing national security activities. The concession holders have not and do not provide complementary services, as these services are provided by third parties.

In the event of force majeure, the SCT may impose additional regulations governing the provision of services at airports, but only to the extent necessary to address the force majeure event. The Mexican Airport Law allows the airport administrator appointed by a concession holder to suspend the provision of airport services in the event of force majeure.

A concession holder is also required to take all necessary measures to create a competitive market for complementary services. A concession holder may not limit the number of providers of complementary services in its airport, except in instances where space, efficiency and/or safety considerations warrant such limitation. If a concession holder denies entry to any complementary services provider for reasons other than the above, such service provider may file a complaint with the SCT, which shall determine within 60 days of the filing of the complaint whether entry of the service provider into the airport shall be authorized.

Master Development Programs

Each concession holder is required to submit to the SCT a Master Development Program describing, among other things, the concession holder’s construction and maintenance plans.

Each Master Development Program is required to be updated every five years and resubmitted for approval to the SCT. Upon such approval, the Master Development Program is deemed to constitute a part of the relevant concession. Any major construction, renovation or expansion of an airport may only be made with the approval of the SCT, typically provided pursuant to a concession holder’s Master Development Programs.

Information required to be presented in the Master Development Programs includes:

• airport growth and development expectations;

• fifteen-year projections for air traffic demand (including passenger, cargo and operations);

• construction, conservation, maintenance, expansion and modernization programs for infrastructure, facilities and equipment;

• a binding five-year detailed investment program and planned major investments for the following ten years;

• descriptive airport plans specifying the distinct uses for the corresponding airport areas;

• any financing sources; and

• environmental protection measures.

Each concession provides for a 24-month period for the preparation and submission of the concession holder’s Master Development Program, and requires the concession holder to engage recognized independent consultants to conduct polls among airport users with respect to current and expected quality standards and to prepare air traffic projections and assess investment requirements. The concession holder must submit a draft of the Master Development Program to an operations committee (Comité de Operación y Horarios), composed of each of the airport’s principal users, for their review and comments six months prior to its submission for approval to the SCT. Further, the concession holder must submit, six months prior to the expiration of the five-year term, the new Master Development Program to the SCT. The SCT may request additional information or clarification as well as seek further comments from airport users. The Ministry of Defense (Secretaría de Defensa Nacional) may also opine on the Master Development Programs.

76

Any major construction project, renovation or expansion relating to an airport can only be done pursuant to the Master Development Program of the concession holder or with the approval of the SCT. We are required to spend the full amounts set forth in each investment program under our Master Development Programs.

Changes to a Master Development Program, including the related investment program, require the approval of the SCT, except for emergency repairs and minor works that do not adversely affect an airport’s operations.

Once capital expenditures related to the Master Development Programs are established, they are adjusted annually according to increases in the Mexican PPI’s construction price index, and the concessionaire is obligated to meet the adjusted amounts.

On December 19, 2014, the SCT approved new maximum tariffs and Master Development Programs for the five-year period from 2015-2019 for each of our Mexican airports. The combined maximum tariffs are expressed in workload units for each airport, and were determined by the SCT based on traffic projections, operating costs and capital investments included in the Master Development Programs, as well as in accordance with pre-determined parameters for the calculation of the maximum tariff set forth in the concession for each airport.

We allocated 82.3% of our investments for the 2015-2019 period to our Guadalajara, Tijuana, Los Cabos, Hermosillo, Puerto Vallarta and Guanajuato airports. The investments of the new Master Development Programs for the 2015-2019 period represent the fourth investment period within the terms of the concession, assume an increase of over 60% for the period 2010-2014 and reflect the highest investment amounts committed to date.

Our Master Development Programs are approved by the SCT for periods of five years, as stated in our Mexican concessions. We are required to comply with the five-year period investment obligations under the Master Development Programs, and the SCT may apply sanctions if we do not so comply. Recently, the SCT has reviewed our compliance on an annual basis. The SCT may choose to do this revision officially and apply sanctions on an annual basis if it determines that we have failed in our investment obligations. The SCT has certified our compliance with our Master Development Programs through 2015 and 2016.

Mexican Aeronautical Services Regulation

The Mexican Airport Law directs the SCT to establish price regulations for services for which there is no competitive market, as determined by the Mexican Antitrust Commission. In 1999, the Mexican Antitrust Commission issued a ruling stating that competitive markets generally do not exist for airport services and airport access provided to third parties rendering complementary services. This ruling authorized the SCT to establish regulations governing the prices that may be charged for airport services and access fees that may be charged to third parties rendering complementary services in our airports. On November 15, 1999, a new regulation, the Rate Regulation (Regulación Tarifaria), was incorporated within the terms of each of our Mexican concessions. This regulation provides a framework for the setting by the SCT of five-year maximum rates. See “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – Changes to Mexican laws, regulations and decrees applicable to us could have a material adverse impact on our results of operations.”

Regulated Revenues

The majority of our revenues are derived from providing aeronautical services, which generally are related to the use of airport facilities by airlines and passengers and principally consist of a fee for each departing passenger, aircraft landing fees based on an aircraft’s weight and arrival time, an aircraft parking fee, a fee for the transfer of passengers from an aircraft to the terminal building, a security charge for each departing passenger and the leasing of space to, and collection of access fees from, third parties that provide complementary services at our airports.

Since January 1, 2000, all of our revenues from aeronautical services have been subject to a price regulation system established by the SCT. Under this price regulation system, the SCT establishes a maximum rate for each airport for every year in a five-year period. The maximum rate is the maximum amount of revenues per workload

77

unit that may be earned at an airport each year from regulated revenue sources. Under this regulation, a workload unit is equivalent to one passenger, or 100 kilograms (220 pounds) of cargo, including those transported in passenger airplanes. The combined maximum tariffs are expressed in workload units for each airport and were determined based on: (i) projected workload units; (ii) capital investments; and (iii) the operating expenses authorized for the five-year period in the Master Development Programs.

The maximum tariffs for the five-year period are expressed in constant pesos and are adjusted by the rate of inflation according to the Mexican PPI, excluding petroleum, and by the efficiency factor at the end of any given year. Since the inflation rate for each applicable year, as measured in terms of the variation of the Mexican PPI, excluding petroleum, is not known at the beginning of the application of the maximum tariffs negotiated with the Mexican Directorate General of Civil Aviation, the adjustment for inflation is not included in the maximum rates set at the beginning of each five-year period. These adjusted tariffs will be applicable once they are published.

We are able to set the specific prices for each aeronautical service every six months (or more frequently if accumulated inflation since the last adjustment exceeds 5%), as long as the combined revenues from regulated services at an airport do not exceed the maximum rate per workload unit at that airport. Each year, the SCT certifies that our regulated revenues divided by workload units are equal to or below the established maximum rate for the period. The SCT has reviewed our maximum rates and certified that we have not collected revenues in excess of the permitted level through 2015. The review for 2016 will take place during the second quarter of 2017. Since our aggregate revenues resulting from regulated services are not otherwise restricted, increases in passenger and cargo traffic permit greater revenues overall within each five-year interval for which maximum rates are established.

In 2014, 2015 and 2016, approximately 70.8%, 66.8% and 63.4%, respectively, of our total revenues were earned from aeronautical services subject to price regulation under our maximum rates (74.6%, 74.6% and 74.6%, respectively, of the sum of aeronautical and non-aeronautical revenues).

Our revenues from non-aeronautical services, including revenues that we earn from most commercial activities in our terminals, are not regulated under our maximum-rate price regulation system and are therefore not subject to a ceiling under any regulation. For a description of how we classify our revenues into aeronautical and non-aeronautical services, see “Item 5, Operating and Financial Review and Prospects – Overview – Classification of Revenues.”

Maximum Rates

Each airport’s maximum rate is determined by the SCT based on a general framework established in our Mexican concessions. This framework reflects, among other factors, projections of an airport’s revenues, operating costs and capital expenditures, as well as the estimated cost of capital related to regulated services and projected annual efficiency adjustments determined by the SCT. The schedule of maximum rates for each airport is established every five years.

Maximum Rates for 2010 through 2014

In December 2009, the SCT set new airport maximum rates for the five-year period from January 1, 2010 through December 31, 2014. The following table sets forth the maximum rates for each of our airports under the Master Development Programs that went into effect as of January 1, 2010:

Previous Maximum Rates⁽¹⁾

	Year ended December 31,
	2010		2011		2012		2013		2014
Guadalajara		112.00		111.22		110.44		109.66		108.90
Tijuana		99.18		98.49		97.80		97.11		96.43
Los Cabos		143.14		142.14		141.14		140.16		139.17
Puerto Vallarta		137.91		136.94		135.98		135.03		134.09
Hermosillo		97.63		96.95		96.27		95.60		94.93
Guanajuato		130.69		129.77		128.87		127.96		127.07

78

	Year ended December 31,
	2010		2011		2012		2013		2014
La Paz		122.34		121.48		120.63		119.79		118.95
Mexicali		99.65		98.95		98.26		97.57		96.89
Aguascalientes		113.38		112.59		111.80		111.02		110.24
Morelia		136.01		135.06		134.11		133.17		132.24
Los Mochis		116.85		116.03		115.22		114.41		113.61
Manzanillo		128.37		127.47		126.58		125.69		124.81

(1) Expressed in constant pesos as of December 31, 2007, and applying the efficiency factor described below under “Methodology for Determining Future Maximum Rates.”

Maximum Rates for 2015 through 2019

On December 23, 2014, the SCT set new airport maximum rates for the five-year period from January 1, 2015 through December 31, 2019 expressed in constant pesos as of December 31, 2012. On December 31, 2014, these rates were published in the Official Gazette of the Federation (Diario Oficial de la Federación). These maximum rates are subject to adjustment only as described above or under the limited circumstances described below under “Special Adjustments to Maximum Rates.” The following table sets forth the maximum rates for each of our airports under the Master Development Programs that went into effect as of January 1, 2015:

Current Maximum Rates⁽¹⁾

	Year ended December 31,
	2015		2016		2017		2018		2019
Guadalajara		137.61		136.65		135.69		134.74		133.80
Tijuana		129.16		128.26		127.36		126.47		125.58
Los Cabos		184.07		182.78		181.50		180.23		178.97
Puerto Vallarta		177.91		176.66		175.42		174.19		172.97
Hermosillo		129.55		128.64		127.74		126.85		125.96
Guanajuato		160.57		159.45		158.33		157.22		156.12
La Paz		150.31		149.26		148.22		147.18		146.15
Mexicali		126.40		125.52		124.64		123.77		122.90
Aguascalientes		139.31		138.33		137.36		136.40		135.45
Morelia		167.10		165.93		164.77		163.62		162.47
Los Mochis		146.44		145.41		144.39		143.38		142.38
Manzanillo		160.88		159.75		158.63		157.52		156.42

(1) Expressed in constant pesos as of December 31, 2012, and applying the efficiency factor described below under “Methodology for Determining Future Maximum Rates.”

Methodology for Determining Future Maximum Rates

The Rate Regulation provides that each airport’s annual maximum rates are to be determined in five-year intervals based on the following variables:

• Projections for the following fifteen years of workload units, operating costs and expenses related to services subject to price regulation and pre-tax earnings from services subject to price regulation. The concessions provide that projections for workload units and expenses related to regulated services are to be derived from the terms of the relevant concession holder’s Master Development Program for the following fifteen years;

• Projections for the following fifteen years of capital expenditures related to regulated services, based on air traffic forecasts and quality standards for services to be derived from the Master Development Programs;

79

• Reference values, which initially were established in the concessions and are designed to reflect the net present value of the regulated revenues minus the corresponding regulated operating costs and expenses (excluding amortization and depreciation), and capital expenditures related to the provision of regulated services plus a terminal value;

• A discount rate to be determined by the SCT. The concessions provide that the discount rate shall reflect the cost of capital to Mexican and international companies in the airport industry (on a pre-tax basis), as well as Mexican economic conditions. The concessions provide that the discount rate shall be at least equal to the average yield of long-term Mexican government debt securities quoted in the international markets during the 24 months prior to the date of the negotiations plus a risk premium to be determined by the SCT based on the inherent risk of the airport business in Mexico; and

• An efficiency factor to be determined by the SCT. The maximum rates applicable to our airports reflect a projected annual efficiency improvement of 0.70% for both the five-year period from January 1, 2010, through December 31, 2014, and for the five-year period from January 1, 2015, through December 31, 2019.

Our Mexican concessions specify a discounted cash flow formula to be used by the SCT to determine the maximum rates that, given the projected earnings before interest, taxes, depreciation and amortization, capital expenditures and discount rate, would result in a net present value equal to the reference values established in connection with the last determination of maximum rates. The maximum rates ultimately established by the SCT historically have resulted from a negotiation between the SCT and us regarding these variables. Once the maximum rates are established, they must be adjusted each year by the efficiency factor and by the Mexican PPI, excluding petroleum. Also, once the maximum rates are established based in part on the capital expenditures included in our Master Development Programs, the capital expenditures must be adjusted according to the Mexican PPI’s construction price index.

The concessions provide that each airport’s reference values and discount rate and the other variables used in calculating the maximum rates do not in any manner represent an undertaking by the SCT or the Mexican government as to the profitability of any concession holder. Therefore, whether or not the maximum rates (or the amounts up to the maximum rates that we are able to collect) multiplied by workload units at any airport generate a profit or exceed our profit estimates, or reflect the actual profitability, discount rates, capital expenditures or productivity gains at that airport over the five-year period, we are not entitled to any adjustment to compensate for any shortfall.

To the extent that such aggregate revenues per workload unit exceed the relevant maximum rate, the SCT may proportionately reduce the maximum rate in the immediately subsequent year and assess penalties equivalent to 1,000 to 50,000 times the general minimum wage in Mexico. On January 1, 2017, the daily minimum wage in Mexico was Ps.80.04. As a result, the maximum penalty at such date could have been approximately Ps.4.0 million (approximately U.S.$194.0 thousand) per airport.

As established by the SCT, the calculation of workload units does not include transit passengers for subsequent years. The current workload unit calculation is therefore equal to one terminal passenger or 100 kilograms (220 pounds) of cargo.

Special Adjustments to Maximum Rates

Once determined, each airport’s maximum rates are subject to special adjustment only under the following circumstances:

• Change in law or natural disasters. A concession holder may request an adjustment in its maximum rates if a change in law with respect to quality standards or safety and environmental protection results in operating costs or capital expenditures that were not contemplated when its maximum rates were determined. In addition, a concession holder may also request an adjustment in its maximum rates if a natural disaster affects demand or requires unanticipated capital expenditures. There can be no assurance that any request on these grounds would be approved.

80

• Macroeconomic conditions. A concession holder may request an adjustment in its maximum rates if, as a result of a decrease of at least 5% in Mexican GDP in a twelve-month period, the workload units processed in the concession holder’s airport are less than those projected when its Master Development Program was approved. To grant an adjustment under these circumstances, the SCT must have already allowed the concession holder to decrease its projected capital improvements under its Master Development Program as a result of the decline in passenger traffic volume. There can be no assurance that any request on these grounds would be approved.

• Increase in concession tax under Mexican Federal Duties Law. An increase in duty payable by a concession holder under the Mexican Federal Duties Law entitles the concession holder to request an adjustment in its maximum rates. There can be no assurance that any request on these grounds would be approved.

• Failure to make required investments or improvements. The SCT annually reviews each concession holder’s compliance with its Master Development Program (including the provision of services and the making of capital investments). If a concession holder fails to satisfy any of the investment commitments contained in its Master Development Program, the SCT is entitled to decrease the concession holder’s maximum rates and assess penalties.

• Excess revenues. In the event that revenues subject to price regulation per workload unit in any year exceed the applicable maximum rate, the maximum rate for the following year will be decreased to compensate airport users for overpayment in the previous year. Under these circumstances, the SCT is also entitled to assess penalties against the concession holder.

Other Regulation of Mexican Concessions and Concession Assets

Ownership Commitments and Restrictions

The Mexican concessions require us to retain a 51% direct ownership interest in each of our twelve Mexican concession holders throughout the term of these concessions. Any acquisition by us or by one of our Mexican concession holders of any additional airport concessions or of a beneficial interest of 30% or more of another concession holder requires the consent of the Mexican Antitrust Commission. In addition, the Mexican concessions prohibit us and our concession holders, collectively or individually, from acquiring more than one concession for the operation of an airport along each of Mexico’s southern and northern borders.

Air carriers are prohibited under the Mexican Airport Law from controlling or beneficially owning 5% or more of the shares of a holder of an airport concession. We, and each of our subsidiaries, are similarly restricted from owning 5% or more of the shares of any air carrier.

Foreign governments acting in a sovereign capacity are prohibited from owning any direct or indirect equity interest in a holder of an airport concession.

Reporting, Information and Consent Requirements

Mexican concession holders and third parties providing services at airports are required to provide the SCT access to all airport facilities and information relating to an airport’s construction, operation, maintenance and development. Each Mexican concession holder is obligated to maintain statistical records of operations and air traffic movements in its airport and to provide the SCT with any information that it may request. Each Mexican concession holder is also required to publish its annual audited financial statements in a principal Mexican newspaper within the first four months of each year.

The Mexican Airport Law provides that any person or group directly or indirectly acquiring control of a concession holder is required to obtain the consent of the SCT for such control acquisition. For purposes of this requirement, control is deemed to be acquired in the following circumstances:

• if a person acquires 35% or more of the shares of a concession holder;

81

• if a person has the ability to control the outcome of meetings of the shareholders of a concession holder;

• if a person has the ability to appoint a majority of the members of the board of directors of a concession holder; or

• if a person by any other means acquires control of an airport.

Pursuant to the regulations under the Mexican Airport Law, any company acquiring control of a Mexican concession holder is deemed to be jointly and severally liable with the concession holder for the performance of the terms and conditions of the concession.

The SCT requires notification upon any change in a concession holder’s chief executive officer, board of directors or management. A concession holder is also required to notify the SCT at least 90 days prior to the adoption of any amendment to its bylaws concerning the dissolution, corporate purpose, merger, transformation or spin-off of the concession holder.

Termination of Concessions

Under the Mexican Airport Law and the terms of the concessions, a concession may be terminated upon any of the following events:

• the expiration of its term;

• its surrender by the concession holder;

• the revocation of the concession by the SCT;

• the reversion (rescate) of the Mexican government-owned assets that are the subject of the concession (principally real estate, improvements and other infrastructure);

• the inability to achieve the purpose of the concession, except in the event of force majeure;

• the dissolution, liquidation or bankruptcy of the concession holder; or

• the failure by the concession holder to satisfy the shareholding obligations set forth in the concession.

Following a concession’s termination, the concession holder remains liable for the performance of its obligations during the term of the concession.

Revocation of Concessions

A concession may be revoked by the SCT under certain conditions, including:

• the failure by a concession holder to operate, maintain and develop an airport pursuant to the terms established in the concession;

• the failure by a concession holder to maintain insurance as required under the Mexican Airport Law;

• the assignment, encumbrance, transfer or sale of a concession, any of the rights thereunder or the assets underlying the concession in violation of the Mexican Airport Law;

• any alteration of the nature or condition of an airport’s facilities without the authorization of the SCT;

• use, with a concession holder’s consent or without the approval of air traffic control authorities, of an airport by any aircraft that does not comply with the requirements of the Mexican Civil Aviation Law, that has not been authorized by the Mexican Air Traffic Control Authority, or that is involved in the commission of a felony;

82

• knowingly appointing a chief executive officer or board member of a concession holder that is not qualified to perform his functions under the law as a result of having violated criminal laws;

• the failure by the concession holder to pay the Mexican government the airport concession tax;

• failure to own at least 51% of the capital stock of subsidiary concession holders;

• violation of the safety regulations established in the Mexican Airport Law and other applicable laws;

• total or partial interruption of the operation of an airport or its airport or complementary services without just cause;

• the failure to maintain an airport’s facilities;

• the provision of unauthorized services;

• the failure to indemnify a third party for damages caused by the provision of services by the concession holder or a third-party service provider;

• charging prices higher than those registered with the SCT for regulated services or exceeding the applicable maximum rate;

• any act or omission that impedes the ability of other service providers or authorities to carry out their functions within an airport; or

• any other failure to comply with the Mexican Airport Law, its regulations and the terms of a concession.

The SCT is entitled to revoke a concession without prior notice as a result of the first six events described above. Regarding the other violations listed above, violations may result in revocation of a concession only if sanctions have been imposed at least three times with respect to the same violation.

Pursuant to the terms of our Mexican concessions, in the event the SCT revokes one of our Mexican concessions, it is entitled to revoke all of our Mexican concessions.

According to the Mexican National Assets Law, the surface area of our airports and improvements on such space are government-owned assets. A concession concerning government-owned assets may be “rescued,” or reverted to the Mexican government prior to the concession’s expiration, when considered necessary for the public interest. In exchange, the Mexican government is required to pay compensation as determined by expert appraisers. Following a declaration of reversion (rescate), the assets that were subject to the concession are automatically returned to the Mexican government.

In the event of war, public disturbances or threats to national security, the Mexican government may assume the operation (requisa) of any airport and any airport assets, as well as any airport and complementary services. Such government action may exist only during the duration of the emergency. Except in the case of war, the Mexican federal government is required to compensate all affected parties for any damages or losses suffered as a result of such government action. If the Mexican government and a concession holder cannot agree as to the appropriate amount of damages or losses, the amount of damages must be determined by experts jointly appointed by both parties and the amount of losses must be determined based on the average net income of the concession holder during the previous year.

The Mexican Airport Law provides that a sanction of up to 200,000 times the minimum daily wage in Mexico may be assessed for a failure to comply with the law or terms of a concession. Such sanction may be duplicated in the event of reiterative failures to comply. As a result, the maximum penalty on January 1, 2017, was Ps.16.0 million (U.S.$776.1 thousand) for an individual failure to comply.

83

Consequences of Termination or Revocation of a Concession

Upon termination, whether as a result of expiration or revocation, the real estate and fixtures that were the subject of the concession automatically revert to the Mexican government. In addition, upon termination, the Mexican federal government has a preemptive right to acquire all other assets used by the concession holder to provide services under the concession at prices determined by expert appraisers appointed by the SCT. Alternatively, the Mexican government may elect to lease these assets for up to five years at fair market rates as determined by expert appraisers appointed by the Mexican government and the concession holder. In the event of a discrepancy between appraisals, a third expert appraiser must be jointly appointed by the Mexican government and the concession holder. If the concession holder does not appoint an expert appraiser, or if such appraiser fails to determine a price, the determination of the appraiser appointed by the Mexican government will be conclusive. If the Mexican government chooses to lease the assets, it may thereafter purchase the assets at their fair market value, as determined by an expert appraiser appointed by the Mexican government.

The Mexican Communications Law, however, provides that upon expiration, termination or revocation of a concession, all assets necessary to operate the airports will revert to the Mexican government, at no cost and free of any liens or other encumbrances. There is substantial doubt as to whether the provisions of our Mexican concessions would prevail over those of the Mexican Communications Law. Accordingly, there can be no assurance that upon expiration or termination of our Mexican concessions the assets used by our subsidiary concession holders to provide services at our airports will not revert to the Mexican government, free of charge, together with government-owned assets and improvements permanently attached thereto.

Grants of New Mexican Concessions

The Mexican government may grant new concessions to manage, operate, develop and construct airports. Such concessions may be granted through a public bidding process in which bidders must demonstrate their technical, legal, managerial and financial capabilities. The Federal Competition Commission has the power, under certain circumstances, to prohibit a party from bidding and to cancel an award after the process has concluded. In addition, the government may grant concessions without a public bidding process to the following entities:

• any person who holds a permit to operate a civil aerodrome and intends to transform the aerodrome into an airport so long as: (i) the proposed change is consistent with the national airport development programs and policies, (ii) the civil aerodrome has been in continuous operation for the previous five years and (iii) the permit holder complies with all requirements of the concession;

• a current concession holder when necessary to meet increased demand so long as: (i) a new airport is necessary to increase existing capacity, (ii) the operation of both airports by a single concession holder is more efficient than other options and (iii) the concession holder complies with all requirements of the concession;

• a current concession holder when it is in the public interest for its airport to be relocated;

• entities in the federal public administration; and

• commercial entities in which local or municipal governments have a majority equity interest if the entities’ corporate purpose is to manage, operate, develop and/or construct airports.

Mexican Environmental Regulation

Legislative Framework

Our operations are subject to Mexican federal, state and municipal laws and regulations relating to the protection of the environment. The major federal environmental laws applicable to our operations are: (i) the General Law of Ecological Balance and Environmental Protection (Ley General de Equilibrio Ecológico y Protección Ambiental, or the “General Environmental Law”) and its regulations, which are administered by the Ministry of the Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales) and enforced by the Ministry’s enforcement branch, the Federal Office for the Protection of the Environment

84

(Procuraduría Federal de Protección al Ambiente); (ii) the General Law for the Prevention and Integral Management of Waste (Ley General para la Prevención y Gestión Integral de los Residuos, or the “Law on Waste”), which is also administered by the Ministry of the Environment and Natural Resources and enforced by the Federal Office for the Protection of the Environment; and (iii) the National Waters Law (Ley de Aguas Nacionales) and its regulations, which are administered and enforced by the National Waters Commission (Comisión Nacional del Agua), also a branch of the Ministry of the Environment and Natural Resources.

Under the General Environmental Law, regulations have been enacted concerning air pollution, environmental impact, land use, soil contamination, noise control, hazardous waste, environmental audits and natural protected areas. The General Environmental Law also regulates, among other things, vibrations, thermal energy and visual pollution, although the Mexican government has not yet issued enforceable regulation on the majority of these matters. The General Environmental Law also provides that companies that contaminate soils are responsible for their clean-up. Further, according to the Law on Waste, owners and/or possessors of property with soil contamination are jointly and severally liable for the remediation of such contaminated sites, irrespective of any recourse or other actions such owners and/or possessors may have against the contaminating party, and aside from the criminal or administrative liability to which the contaminating party may be subject. Restrictions on the transfer of contaminated sites also exist. The Law on Waste also regulates the generation, handling and final disposal of hazardous waste.

Pursuant to the National Waters Law, companies that discharge waste waters into national water bodies must comply with, among other requirements, maximum permissible contaminant levels in order to preserve water quality. Periodic reports on water quality must be provided to competent authorities. Liability may result from the contamination of underground waters or recipient water bodies. The use of underground waters is subject to restrictions pursuant to our Mexican concessions and the National Waters Commission.

In addition to the foregoing, Mexican Official Norms (Normas Oficiales Mexicanas), or “NOMs,” which are technical standards issued by competent regulatory authorities pursuant to the General Normalization Law (Ley General de Metrología y Normalización) and the General Law of Ecological Balance and Environmental Protection (Ley General del Equilibrio Ecológico y la Protección al Ambiente), establish limits on air emissions, waste water discharges, the generation, handling and disposal of hazardous waste and noise control, among other matters.

The General Environmental Law and Law on Waste establish the main policies for soil remediation. Remediation standards and procedures are gradually beginning to be implemented through NOMs.

Although not enforceable, the internal administrative criteria on soil contamination of the Federal Office for the Protection of the Environment are widely used as guidance in cases where soil remediation, restoration or clean-up is required.

The Ministry of the Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales) and the Federal Office for the Protection of the Environment (Procuraduría Federal de Protección al Ambiente) are the responsible regulators. The Federal Office for the Protection of the Environment can bring administrative, civil and criminal proceedings against companies that violate environmental laws, and it also has the power to close non-complying facilities and impose a variety of sanctions. Companies in Mexico are required to obtain proper authorizations, licenses, concessions or permits from competent environmental authorities for the performance of activities that may have an impact on the environment or that may constitute a source of contamination. Companies in Mexico are also required to comply with a variety of reporting obligations that include, among others, providing the Ministry of the Environment and Natural Resources, the Federal Office for the Protection of the Environment and the National Waters Commission, as applicable, with periodic reports regarding compliance with various environmental laws.

Prior to the opening of Mexico’s airports to private investment, the Federal Office for the Protection of the Environment required that environmental audits had to be performed at each of our airports. Based on the results of these audits, the Federal Office for the Protection of the Environment issued recommendations for improvements and corrective actions to be taken at each of our airports. In connection with the transfer of the management of our airports from our predecessor, we entered into environmental compliance agreements with the Federal Office for the Protection of the Environment on January 1, 1999, and July 12, 2000, pursuant to which we agreed to comply with a specific action plan and adopt specific actions within a determined time frame.

85

The Federal Office for the Protection of the Environment has confirmed that we have complied with all of the relevant environmental requirements derived from the aforementioned environmental audits and has issued compliance certificates for all of our airports. These certificates, which are known as Environmental Quality Certificates (Certificados de Calidad Ambiental) certify compliance with applicable Mexican environmental laws, regulations and applicable NOMs and must be renewed periodically.

In June 2013, a decree was published in the Official Gazette of the Federation (Diario Oficial de la Federación) issuing the Federal Environmental Responsibility Law (Ley Federal de Responsabilidad Ambiental). As part of the Federal Environmental Responsibility Law, various provisions were amended, added and revoked of the General Law of Ecological Equilibrium and Protection of the Environment, the General Law of Wildlife, the General Law for the Comprehensive Prevention and Waste Management, the General Law for Sustainable Forest Development, the National Water Act and the Federal Criminal Code, among others, to the effect that any person or company whose acts or omissions directly or indirectly causes harm to the natural environment, is obligated to repair the environmental damage, or when reparation is not possible, to compensate for the harm, and undertake any necessary actions to avoid increasing the harm. A second general aspect of this reform is the creation of expanded standing so that individuals, including Mexican environmental non-profits, may initiate lawsuits for the protection of property that they do not directly own.

Liability for Environmental Noncompliance

The legal framework of environmental liability applicable to our operations is generally outlined above. Under the terms of our Mexican concessions, the Mexican government has agreed to indemnify us for any environmental liabilities arising prior to November 1, 1998, and for any failure by ASA prior to November 1, 1998, to comply with applicable environmental laws and with its agreements with Mexican environmental authorities. Although there can be no assurance, we believe that we are entitled to indemnification for any liabilities related to the actions our predecessor was required to perform or refrain from performing under applicable environmental laws and under its agreements with environmental authorities. For further information regarding these liabilities, see Note 29 to our audited consolidated financial statements.

The level of environmental regulation in Mexico has significantly increased in recent years, and the enforcement of environmental laws is becoming substantially more stringent. We expect this trend to continue and expect additional norms to be imposed by the North American Agreement on Environmental Cooperation entered into by Canada, the United States and Mexico in the context of NAFTA, as well as by other international treaties on environmental matters. We do not expect that compliance with Mexican federal, state or municipal environmental laws currently in effect will have a material adverse effect on our financial condition or results of operations. However, there can be no assurance that environmental regulations or the enforcement thereof will not change in a manner that could have a material adverse effect on our business, results of operations, prospects or financial condition.

Mexican Safety Regulation

Our aeronautical operations are subject to national and international regulations regarding maintaining acceptable safety standards. Compliance with these safety regulations is overseen by the Mexican Directorate General of Civil Aviation, which conducts audits and inspections of each of our Mexican airports.

In 2013, the Mexican Government issued a Mexican Official Standard (Norma Oficial Mexicana), which created an obligation to implement the Safety Management System (“SMS”). The SMS is a systematic approach to managing safety, including the necessary organizational structures, accountabilities, policies and procedures. The ICAO encourages various types of product and service providers that design, manufacture, operate or support the operation of aircrafts to implement this system. The Civil Aviation Authority can bring administrative proceedings against providers that do not comply with SMS regulations, and it also has the power to impose a variety of sanctions or close non-complying facilities.

We began implementing this system as soon as the standard was issued. In 2015, after two years of work and having completed 4 stages, we obtained SMS certification for the Puerto Vallarta, Los Cabos and Tijuana airports, which were the first three airports to receive SMS certification in Mexico. In 2016, we obtained SMS certification for the Guanajuato, La Paz, Guadalajara, Aguascalientes, Manzanillo, Mexicali and Hermosillo airports. We intend to complete the last stage required to obtain SMS certification for the Los Mochis and Morelia airports in 2017. Currently, there are only ten SMS certified airports in Mexico, all of which are GAP airports.

86

In addition, the ICAO provides certification based on compliance with safety, regulatory and efficiency standards for aircraft operations at aerodromes and ensures that certified aerodromes are in compliance with relevant ICAO standards and recommended Civil Aviation Authority practices. Ten of our twelve airports (all except Guadalajara and Los Mochis) have obtained ICAO aerodrome certification. We expect to obtain this certification for our Los Mochis airport during 2017.

Sources of Jamaican Regulation

The following are the principal laws, regulations and instruments that govern our business in Jamaica and the operation of the Montego Bay airport as a concession by MBJA:

• Civil Aviation Act, enacted June 1, 1966;

• Airports Authority Act, enacted July 31, 1974; and

• Airports (Economic Regulation) Act, enacted December 31, 2002.

• Income Tax Act, enacted January 1, 1955;

• Assets Tax (Specified Bodies) Act, enacted January 2, 2003; and

• General Consumption Tax Act, enacted October 22, 1991.

• The Employment (Termination and Redundancy Act, enacted December 9, 1974; and

• Holiday with Pay Act, enacted March 27, 1947.

• The Natural Resources Conservation Authority Act, enacted July 5, 1991.

• Companies Act, enacted February 1, 2005; and

• the Concession Agreement that entitles MBJA to operate Montego Bay International Airport, which was granted on April 3, 2003 and came into force on April 12, 2003.

Legislation specifically applicable to the operation of airport concessions and airports in Jamaica are the Civil Aviation Act, the Airports Authority Act and the Airports (Economic Regulation) Act, and each of their respective subsidiary legislation and regulations. In addition, MBJA is subject to all applicable laws and regulations related to the operation of a private limited liability company in Jamaica.

The Civil Aviation Act and the regulations thereunder provide the general framework regulating air transportation and establish the JCAA, under the authority of the MTM, to oversee safety and security, provide air navigation services and regulate aviation industry prices. The Civil Aviation Act’s stated intent is to promote the development of air transport in Jamaica.

In 1974, the Airports Authority Act transferred to the AAJ, an independent government agency, the concessions for Jamaica’s two international airports – the Montego Bay airport and the international airport serving Kingston, the Jamaican capital, on the southern coast. The AAJ continues to own both airports. However, while it operates the Kingston airport through a wholly owned subsidiary, the AAJ divested operational responsibility for the Montego Bay airport when it privatized the concession through a public bidding process in 2003. At that time, MBJA became the new operator of the Montego Bay airport, with responsibility for the daily management and capital development of the airport facility under a 30-year Concession Agreement from April 12, 2003.

The Airports (Economic Regulation) Act of 2002 establishes the framework for the economic regulation of Jamaica’s airports and governs the provision of services or facilities at the international airports for the purposes of landing, parking, fueling, servicing or taking off of aircraft and handling passengers, baggage and cargo at the

87

airport. The Act allows the MTM to levy airport improvement fees, and authorizes the JCAA to regulate airport charges and deal with public interest issues such as anti-competitive behavior and accounting transparency. Airport operators must submit an application for permission to levy airport charges on airlines and passengers to the JCAA. Airport operators permitted to levy airport charges must also routinely provide the JCAA with their annual accounts and schedules of airport charges.

Jamaican Regulatory Agencies

The regulatory agencies overseeing the operation of airports and airport concessions are the MTM, JCAA and the AAJ.

The MTM’s primary responsibility is Jamaica’s land, marine and air transport and their related infrastructure. The MTM has regulatory responsibility for the safety of all modes of transportation, whether publicly or privately operated. This includes airports, aerodromes and airline operators. The following agencies and departments fall under the MTM and oversee the operation of airports and airport concessions:

• Jamaica Civil Aviation Authority. The JCAA is a statutory organization under the MTM, which regulates the Jamaican aviation industry, including oversight of safety and security, provision of air navigation services and regulation of aviation industry prices. The JCAA is the agency empowered to grant the Montego Bay airport its required annual permits and licenses, except for the Aerodrome License, which is granted by the MTM, and to approve or reject the regulated charges proposed by MBJA for the Montego Bay airport.

• Airports Authority of Jamaica. The AAJ is an independent statutory body established by the Jamaican Airports Authority Act with responsibility for the nation’s commercial and civil airports. In addition to owning and operating the concession for the Kingston airport, the AAJ owns the Montego Bay airport concession assets and provides contract administration for the Concession Agreement granted to MBJA to operate and manage the Montego Bay airport situated on lands owned by it. Under the Concession Agreement, the AAJ conducts regular performance reviews and other contract administration oversight functions. In addition, the AAJ obligates MBJA to hold a biannual airport forum to provide the Montego Bay airport’s stakeholders with the opportunity to provide progress reports and issues pertinent to them.

The Montego Bay Airport Concession

On April 3, 2003, MBJA entered into a 30-year Concession Agreement with the AAJ, which began on April 12, 2003, to operate the Montego Bay airport in accordance with the Concession Agreement and relevant legislation. MBJA pays both monthly and annual concession taxes to the Jamaican government to allow it to use and develop the assets subject to the concession. At the end of the concession’s term, MBJA will transfer these concession assets back to the AAJ. See “Item 5, Operating and Financial Review and Prospects – Overview – Operating Costs – Concession Taxes – Jamaican Concession Taxes.”

MBJA’s Obligations as Concessionaire

Under the terms of the Concession Agreement, the concession holder is responsible for the maintenance, operation and development of the airport, including the management of day-to-day operations in keeping with specific performance criteria and prescribed international standards, in order to render airport, complementary and commercial services. As such, MBJA’s general obligations as concession holder are thus to: operate and manage the airport in compliance with applicable law; provide airport, complementary and commercial services; report on accounts, financial records, traffic and performance levels; and carry out the capital investments proposed in the Capital Development Program and maintain and develop the tangible concession assets.

• Licensing Requirements. “Material License” in the Concession Agreement means any permission, consent, license or approval that MBJA must hold or obtain by any applicable law in order to operate and manage the airport and provide airport services, including the Aerodrome License from the MTM, the Aerodrome Certificate from the JCAA and the JCAA’s permission to levy airport charges. A revocation of the JCAA’s permission to levy airport charges for cause attributable to MBJA, or the failure to renew any other Material License within 30 days of revocation for cause attributable to MBJA, is considered an event of default under the Concession Agreement.

88

• Required Services. The concession requires MBJA to provide the following airport, complementary and commercial services at the Montego Bay airport:

• handling of aircraft on land (including the movement, parking, maintenance and storage of aircraft and the supply of fuel, catering and other provisions to aircraft, but excluding directing aircraft from the landing strip and taxiways to the ramp);

• handling of passengers, baggage, cargo, mail and other freight, including transfer to and from aircraft,

• emergency and security facilities, equipment, personnel and services;

• information services, car parking and refreshments for passengers;

• ground transportation and transfer options;

• leasing and management of the airport site; and

• supply of consumer goods and services (including currency exchange services);

• Reporting Requirements. Under the terms of the concession, MBJA is obligated to:

• monitor and report on service levels achieved in respect of specified service areas;

• provide quarterly unaudited financial statements and an annual report and audited financial statements, together with copies of all related directors’ and auditors’ reports;

• provide semi-annual (or more frequently if required by and supplied to lenders on a more frequent basis) cash flow statement in respect of the Capital Development Program;

• provide preliminary proposals as to yearly financing arrangements and an annual business plan; and

• provide records of all passengers and freight using or passing through the airport as frequently as the AAJ may require.

• Capital Investment Requirements. Every five years, MBJA is entitled to submit to the JCAA its proposal for increases to the maximum regulated charges as justified by a Capital Development Program consisting of a proposal for increases in maximum regulated charges justified by five-year estimates for traffic growth and investment commitments (including capital expenditures for capital projects and required maintenance at the Montego Bay airport). Under the terms of the Concession Agreement, upon the JCAA’s approval of a proposal for price increases, MBJA has a commitment to fulfill the estimated capital expenditures in the Capital Development Program.

The AAJ remains the owner of the land upon which the airport is sited, as well as the physical assets subject to the concession. MBJA is required to maintain and manage the airport concession with the intent that AAJ or a successor operator would be able to take over the operation and management of the airport business at any time, including through the use of all reasonable endeavors to ensure that the AAJ or such other successor airport operator would have immediate access to all of its airport employees and assets. Following a termination of the concession, MBJA is obligated to return to the AAJ the facilities and services ordinarily provided or reasonably incidental to the operation of the airport.

89

AAJ Consent Requirements

Under the Concession Agreement, MBJA requires the consent of the MTM and the AAJ if it wishes to expand its services into any business, activity, facility or service not permitted by the definition of “core airport services” in the Concession Agreement, which consent shall not be unreasonably withheld.

MBJA also requires the consent of AAJ to:

• hold any shares, participation or any other ownership interest in any other undertaking (except for investments, including deposits, in the ordinary course of treasury management of the airport business);

• enter into contracts or arrangements other than for the purpose of carrying on the airport business or other than on arm’s length terms;

• enter into contracts imposing obligations or liabilities upon MBJA which will not be fully performed or discharged prior to the expiry of the concession period; and

• amend, vary or supplement (or grant a waiver in respect of) certain financing documents related to the Concession Agreement.

AAJ’s Rights to Step In, Terminate or Grant a New Concession

As owner of the concession assets, the AAJ is entitled, upon seven days’ notice (or sooner in case of emergency) and for so long as may be required, to expel MBJA from all or part of the airport site or to take over or take steps to carry on the operation and management of the airport or provision of airport services when:

• any MBJA event of default has occurred and is continuing and any cure period provided therefor has expired without the event or circumstance being cured;

• traffic at the airport will be materially disrupted and MBJA is unable or unwilling to resolve the disruption promptly;

• members of the public are unable to use the airport or its facilities safely and MBJA is unable or unwilling to resolve the problem promptly; or

• there is a material threat to national security or any other national emergency occurs (whether involving hostilities or otherwise).

Upon a step-in by the AAJ, the AAJ will account to MBJA for any revenues collected during the step-in period. Where the AAJ exercises its right to step in pursuant to any uncured MBJA event of default or because traffic at the airport will be materially disrupted and MBJA is unable or unwilling for any reason to resolve the disruption, MBJA is required to bear all costs and expenses associated with the AAJ exercise of step-in, but not consequential losses. MBJA is not liable for costs if there is step-in by the AAJ because of a material threat to national security.

The AAJ may terminate the Concession Agreement with MBJA upon an event of default on the part of MBJA, after which the AAJ must provide notice of its intention to serve a written termination notice and conduct up to 30 days of good-faith consultations to avoid termination, during which MBJA fails to cure the event of default. Regardless of cause for termination, a termination fee is due to MBJA upon termination or revocation of the concession, and the Concession Agreement limits the AAJ’s liability to such termination fee. However, the payment terms of the termination fee depend upon the cause: upon an event of default on the AAJ’s part, the termination fee is payable by the AAJ within three months, with an option to extend for up to twelve months with default interest, while if the event of default is on MBJA’s part, the termination fee is payable by the AAJ in installments within twelve months.

The Jamaican government may grant new concessions to manage, operate, develop and construct airports. In the Concession Agreement, MBJA acknowledges that the AAJ may also wish, at the expiry or termination of the 30-year concession period, to invite persons to tender for the right to provide all or some of the airport services at the

90

Montego Bay airport. MBJA may participate in such tenders, if interested, except to the extent that there has been an event of default attributable to the insolvency of MBJA’s shareholders, in which case MBJA would be disqualified from participating. However, in preparation for such tendering process, and regardless of whether MBJA intends to participate in the tender, MBJA would be obligated to provide access to employees, assets, books and records related to the airport business, and may not in any way prejudice or frustrate the transfer of the airport business. The Concession Agreement sets out the handback procedures to be observed as the end of the concession period approaches and the dispute resolution mechanism for addressing objections by either party regarding the handback. Under the agreement, MBJA commits to assisting and advising the AAJ or any successor operator (subject to payment of reasonable remuneration and reasonable costs and expenses) in providing and operating the airport for up to six months following completion of the handover, and must post a bond equivalent to the cost of the handback works for the six-month period.

Jamaican Aeronautical Services Regulation

In Jamaica, charges levied on airlines and passengers are regulated by the JCAA using a price cap mechanism based on a forecast return on assets. Permission for any increase in the levy of regulated charges, which include passenger charges, aircraft landing and parking charges, passenger walkway charges and airport security charges, must be granted by the JCAA. The first review period began with the concession on April 12, 2003 and concluded in November 2014 with the determination of new charges effective April 1, 2015. For example, maximum passenger charges increased from U.S.$8.50 per departing passenger to U.S.$19.34 per departing passenger. Thereafter, regulated aeronautical charges will be reviewed every five years, with charges adjusted by U.S. CPI annually.

The Airports (Economic Regulation) Act and the related Airport Expansion Fund Agreement require the airlines operating at the Montego Bay airport to collect the AIF fee of U.S.$5.00 per embarking international passenger, on behalf of the Government of Jamaica and to deposit the fees on a monthly basis in a trust account controlled by the MTM. Subject to the MTM’s approval, MBJA may use these funds for additional capital investments not included in the Capital Development Program, as well as for interest expenses relating to the financing thereof. MBJA is required to commit to such new investments in exchange for the right to use the AIF funds. The MTM approval of collection of AIF funds at the Montego Bay airport was renewed on February 25, 2015 for the period ending April 11, 2030, unless otherwise revoked. Having already completed all projects approved for funding by the AIF to date, MBJA is currently in discussions with MTM for further approval to fund capital investment projects from AIF funds collected after April 11, 2015.

See “Item 5, Operating and Financial Review and Prospects – Overview – Classification of Revenues – Aeronautical Revenues.”

Other Regulation of Jamaican Concessions and Concession Assets

Jamaican Companies Act Restrictions

MBJA was incorporated as a limited liability company to enter into and carry out the terms of the concession with respect to the development, financing, management and operation of the Montego Bay airport.

MBJA’s constitutive documents bar the transfer of shares in MBJA to passenger or cargo airlines or persons broadly connected to them, other than AAJ or the Jamaican government. Under the shareholders’ agreement between DCA and Vantage, any transfer of MBJA shares to non-affiliates is subject to a right of first refusal.

Reporting Requirements

Pursuant to the regulations under the Jamaican Civil Aviation Act, airport operators must report on compliance with operating procedures and safety measures. MBJA, as airport operator, is required to report to the JCAA any changes in conditions or other hazardous circumstances or occurrences at the airport, including: any reduction in the level of service or closure of any part of the movement area; any obstacle, obstruction or hazard; and any other condition that could affect aviation safety, as well as and what precautions are deemed warranted. MBJA is also obligated to provide reports to the JCAA on the results of internal audits of its safety management system, including inspections of the airport facilities and equipment and of the airport operator’s own administrative functions.

91

MBJA must report to the Jamaican government the number of passengers paying AIF and the amount of each transfer of AIF made during the previous month.

As a Jamaican registered company, MBJA is also required to file an annual report with the Companies Office of Jamaica reporting any changes in the ownership or management structure and notifying the registrar of any share transactions and changes in the value of shares during the prior year.

Jamaican Environmental Regulation

Operations at the Montego Bay airport are subject to Jamaican laws and regulations relating to the protection of the environment. The major environmental law applicable to these operations is the National Resources Conservation Authority Act, which establishes the National Resources Conservation Authority (now part of the National Environmental Protection Agency) under the Jamaican Ministry of Water, Land, Environment and Climate Change, and its subsidiary legislation and regulations. Under the act, regulations have been enacted concerning discharge of pollutants into Montego Bay Marine Park’s waters, discharge and treatment of wastewater and sludge, safe storage of fuels and responses to industrial emergencies involving hazardous materials.

Other environmental laws of particular relevance to the Montego Bay airport’s operations are: the Noise Abatement Act, aimed at controlling noise (but with no specific reference to aeronautical noise), the Beach Control Act, addressing access to the shoreline; the Watersheds Protection Act, addressing water resource and soil conservation practices; and the Wild Life Protection Act, specifying protected species of fauna. Other related regulations are the Town and Country Planning Act, Public Health Act, National Solid Waste Management Act, Water Resources Act and Clean Air Act. In addition, MBJA is also subject to common law principles of tort liability, in the event of a nuisance claim resulting from environmental factors.

The legal framework of environmental liability applicable to the Montego Bay airport’s operations is generally outlined above. The level of environmental regulation in Jamaica has increased in recent years, and the enforcement of environmental laws is becoming more stringent. For example, the National Solid Waste Management Act and the Water Resources Act each carry certain penalties of JMD1 million (approx. U.S.$7,800). We expect this trend to continue, but we do not expect that compliance with Jamaican environmental laws currently in effect will have a material adverse effect on MBJA’s results of operations or our financial condition. However, there can be no assurance that environmental regulations or the enforcement thereof will not change in a manner that could have a material adverse effect on our business, results of operations, prospects or financial condition.

ORGANIZATIONAL STRUCTURE

We have sixteen subsidiaries in Mexico: one operating subsidiary for each of our twelve Mexican airports; two subsidiaries (SIAP and CORSA) that provide administrative and operational services; one subsidiary (PCP) that provides parking services across our twelve Mexican airports; and one non-profit foundation (Fundación GAP). We have one Spanish subsidiary (DCA) that holds our 74.5% stake in our Jamaican operating subsidiary (MBJA) for the Montego Bay airport. We also have a holding company subsidiary in Brazil, GA del Pacífico Participações do Brasil LTDA, established in 2010 but thus far remaining inactive and with no capital contributions.

The following table sets forth our subsidiaries as of December 31, 2016:

Name of Company	Jurisdiction of Organization	Percentage Owned (1)	Description
Aeropuerto de Guadalajara, S.A. de C.V.	Mexico	100%	Holder of concession for Guadalajara International Airport
Aeropuerto de Tijuana, S.A. de C.V.	Mexico	100%	Holder of concession for Tijuana International Airport
Aeropuerto de Puerto Vallarta, S.A. de C.V.	Mexico	100%	Holder of concession for Puerto Vallarta International Airport
Aeropuerto de San José del Cabo, S.A. de C.V.	Mexico	100%	Holder of concession for Los Cabos International Airport

92

Name of Company	Jurisdiction of Organization	Percentage Owned (1)	Description
Aeropuerto de Hermosillo, S.A. de C.V.	Mexico	100%	Holder of concession for Hermosillo International Airport
Aeropuerto del Bajío, S.A. de C.V.	Mexico	100%	Holder of concession for Guanajuato International Airport
Aeropuerto de Morelia, S.A. de C.V.	Mexico	100%	Holder of concession for Morelia International Airport
Aeropuerto de La Paz, S.A. de C.V.	Mexico	100%	Holder of concession for La Paz International Airport
Aeropuerto de Aguascalientes, S.A. de C.V.	Mexico	100%	Holder of concession for Aguascalientes International Airport
Aeropuerto de Mexicali, S.A. de C.V.	Mexico	100%	Holder of concession for Mexicali International Airport
Aeropuerto de Los Mochis, S.A. de C.V.	Mexico	100%	Holder of concession for Los Mochis International Airport
Aeropuerto de Manzanillo, S.A. de C.V.	Mexico	100%	Holder of concession for Manzanillo International Airport
Desarrollo de Concesiones Aeroportuarias, S.L.U.	Spain	100%	Holder of 74.5% stake in MBJA
MBJ Airports Limited	Jamaica	74.5%	Holder of concession for Montego Bay International Airport
Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V.	Mexico	100%	Provider of administrative services to our other subsidiaries
Corporativo de Servicios Aeroportuarios, S.A. de C.V.	Mexico	100%	Provider of operational services to our other subsidiaries
Puerta Cero Parking, S.A. de C.V.	Mexico	100%	Provider of car parking administration services to our other subsidiaries
GA del Pacífico Participações do Brasil LTDA	Brazil	100%	Holding company for other acquisitions (incorporated in 2010; not operational through the date of this filing)
Fundación Grupo Aeroportuario del Pacífico, A.C.	Mexico	100%	Non-profit company incorporated in 2013 to manage charitable donations and social welfare activities

(1) We directly hold 99.99% of the shares in each of our Mexican operating subsidiaries. The remaining shares of SIAP are held by Aeropuerto de Guadalajara, S.A. de C.V., while the remaining shares of our other Mexican subsidiaries are held by SIAP. As a result, we directly or indirectly hold 100% of the shares of each of our subsidiaries except MBJA.

PROPERTY, PLANT AND EQUIPMENT

Our corporate headquarters are located in Guadalajara, Jalisco. We lease the office space for our corporate headquarters, located on the third, fifth and sixth floors of Torre Pacífico, from Guadalajara World Trade Center. In addition to our corporate offices in Guadalajara, we also lease office space in Colonia Los Morales, in Mexico City from third parties.

Pursuant to the Mexican National Assets Law (Ley General de Bienes Nacionales), all real estate and fixtures in our Mexican airports are owned by the Mexican government. Each of our Mexican concessions is scheduled to terminate in 2048, although each concession may be extended one or more times for up to an aggregate of an additional 50 years. The option to extend a concession is subject to our acceptance of any changes to such

93

concession that may be imposed by the SCT and our compliance with the terms of our current concessions. Upon expiration of our Mexican concessions, the concession assets automatically revert to the Mexican government, including improvements we may have made during the terms of the concessions, free and clear of any liens and/or encumbrances, and we will be required to indemnify the Mexican government for damages to these assets, except for those caused by normal wear and tear.

Pursuant to MBJA’s Concession Agreement, the AAJ remains the owner of the land upon which the Montego Bay airport is sited, as well as the physical assets subject to the concession. MBJA’s concession for the Montego Bay airport is scheduled to terminate in 2033. Upon expiration of the Montego Bay airport concession, MBJA is obligated to hand back to the AAJ the facilities and services ordinarily provided or reasonably incidental to the operation of the airport.

We maintain comprehensive insurance coverage that covers the principal assets of our airports and other property, subject to customary limits, against damage due to natural disasters, accidents, terrorism or similar events. Our Mexican airports carry a general Ps.2.25 billion insurance policy covering damage to our assets and infrastructure and a U.S.$500 million insurance policy covering personal and property damages to third parties. Our Mexican airports are covered by a Ps.500 million insurance policy covering damage to our property resulting from terrorist acts and a U.S.$150 million insurance policy covering personal and property damage to third parties resulting from terrorist acts. The Montego Bay airport carries a U.S.$135 million insurance policy covering property damage and business interruptions and losses and a U.S.$30 million insurance policy covering damage resulting from any single terrorist event. The Montego Bay airport also carries a U.S.$750 million annual insurance policy covering personal and property damage to third parties.

Item 4A. Unresolved Staff Comments

None.

Item 5. Operating and Financial Review and Prospects

The following discussion should be read in conjunction with, and is entirely qualified by reference to, our consolidated financial statements prepared in accordance with IFRS, as issued by IASB, and the notes to those financial statements, which are included elsewhere in this annual report. It does not include all of the information included in our consolidated financial statements. You should read our consolidated financial statements to gain a better understanding of our business and our historical results of operations.

As a result of our acquisition of DCA in April 2015, our consolidated financial and operating data for the fiscal year ended December 31, 2015 includes the consolidation of DCA from April 1, 2015. Therefore, financial and operating data for the fiscal year ended December 31, 2015 may not be directly comparable with financial and operating data for prior or subsequent fiscal years.

OVERVIEW

We operate twelve airports in the Pacific and Central regions of Mexico pursuant to concessions granted by the Mexican government and one airport in Jamaica pursuant to a concession granted by the Jamaican government. The majority of our revenues are derived from providing aeronautical services, which generally are related to the use of our airport facilities by airlines and passengers. For example, in 2014, 2015 and 2016, approximately 70.8%, 66.8% and 63.4%, respectively, of our total revenues were derived from aeronautical services (in 2014, 2015 and 2016, aeronautical services represented 74.6%, 74.6% and 74.6%, respectively, of the sum of our aeronautical and non-aeronautical revenues). Changes in our revenues from aeronautical services are principally driven by the passenger and cargo volumes at our airports. Our revenues from aeronautical services are also affected by the maximum rates we are allowed to charge under the price regulation system established by the SCT and JCAA, respectively. The system of price regulation that applies to our aeronautical revenues allows us to charge up to a maximum rate for each unit of traffic volume (which is measured in workload units) at each airport. Thus, increases in aeronautical services, such as passenger and cargo volume, and therefore the number of workload units that we handle, generate greater revenues.

94

We also derive revenue from non-aeronautical activities, principally related to the commercial services offered at our airports, such as the leasing of space to restaurants, retailers and service providers. Revenues from non-aeronautical activities are not subject to the system of price regulation established by the SCT and JCAA, respectively. Thus, our non-aeronautical revenues are primarily affected by the passenger volume at our airports and the mix of commercial services offered at our airports, the contracts that we have with the providers of those commercial services and our ability to increase the rates we charge to those service providers. While we expect that aeronautical revenues will continue to represent a majority of our future aeronautical and non-aeronautical revenues, growth of our revenues from commercial activities generally has exceeded, and we expect will continue to exceed, the growth rate of our aeronautical revenues. As a result, in recent years we have completed renovation projects to improve the product mix of retail stores in the commercial areas at our Guadalajara, Puerto Vallarta, Los Cabos, Guanajuato, Tijuana, Manzanillo, Morelia and La Paz international airports. Similarly, we intend to redesign and expand the space available to commercial activities in our other airports’ terminals. We also expect to continue renegotiating agreements with terminal tenants to be more consistent with market practices and to recover the rights to certain non-aeronautical businesses at our airports previously or currently operated by third parties and developing new sources of non-aeronautical revenues through the direct operation of certain businesses such as our VIP lounges, advertising, convenience stores and car parking lots, among others. Also, see “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Non-Aeronautical Services – Recent Expansion and Development of Commercial Areas.”

Traffic at our airports may be adversely affected by increased levels of competition as a result of the attractiveness, affordability and accessibility of competing tourist destinations in Mexico, such as Acapulco and Cancun, or elsewhere, such as Hawaii, Puerto Rico, Florida, Cuba, the Dominican Republic and other Caribbean islands and destinations in Central America. In addition, we expect increased competition as a result of the government granting new concessions or amending existing permits for other airports that may compete with our airports. For more information, see “Item 3, Key Information – Risk Factors – Risks Related to Our Operations – Competition from other tourist destinations could adversely affect our business” and “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – The Mexican and Jamaican governments could grant new concessions that compete with our airports.”

Recent Developments

Fluctuation of the Peso

International passengers and international flights pay tariffs denominated in U.S. dollars. However, in Mexico, these tariffs are generally invoiced and collected in Mexican pesos. Because such tariffs are invoiced taking into account the average of the exchange rate for the 30 days prior to the date of a flight, a significant depreciation of the peso during the final two months of any year could result in our exceeding our maximum rates, which would be a violation of our concession. If a significant depreciation of the peso occurred, we could be required to issue rebates to airline customers to avoid exceeding our maximum rates. On the other hand, a significant appreciation of the peso could result in us invoicing substantially less than our maximum rate per workload unit. We do not have any means of recovering lost revenue if we charge less than the maximum rate as a result of a significant appreciation in the peso. We attempt to set our U.S. dollar-denominated tariffs so as to avoid exceeding our maximum rates while attempting to charge as close to the maximum rate as possible. Since the beginning of our Mexican concessions, fluctuations in the peso have not caused us to exceed our maximum rates or required us to issue rebates to avoid exceeding our maximum rates.

As long as we are able to ensure that our revenues do not exceed our maximum rates as discussed above, an depreciation in the peso has a positive effect on our revenues from a commercial and aeronautical operations perspective while an appreciation in the peso has a negative effect. Tariffs on international passengers and international flights and some of our contracts with commercial services providers are denominated in U.S. dollars, but only in the case of charges for international passengers and international flights are charges invoiced and collected in Mexican pesos. Therefore, depreciation in the peso against the U.S. dollar results in us collecting more pesos than before the depreciation, whereas appreciation of the peso results in us collecting fewer pesos, which may result in lower commercial revenues in the future, especially if the appreciation continues unabated or surpasses historic levels of appreciation. In addition, although most of our operating costs are denominated in pesos, we cannot predict whether our cost of services will increase as a result of the depreciation of the peso or as a result of other factors.

95

The peso depreciated from Ps.13.10 per U.S. dollar on December 31, 2013 to Ps.14.75 per U.S. dollar on December 31, 2014. In 2015, the peso again depreciated, reaching Ps.17.20 per U.S. dollar on December 31, 2015. In 2016, the peso further depreciated, reaching Ps.20.66 per U.S. dollar on December 31, 2016. On April 7, 2017, the exchange rate was Ps.18.6480 per U.S. dollar.

Financing of Committed Capital Expenditures

On February 20, 2015, we made our debut issuance of long-term debt securities on the Mexican market for a total of Ps.2.6 billion. The proceeds from the issuance of Ps.2.6 billion long-term debt securities were used to repay in full our outstanding bank debt in the amount of Ps.1.7 billion and to finance capital investments set forth in the Master Development Programs for 2015. The long-term debt securities were issued in two tranches with the following terms: (i) eleven million five-year debt securities issued under the ticker symbol “GAP 15” at a nominal value of Ps.100 each, for a total value of Ps.1.1 billion, on which interest is payable every 28 days at a variable rate of TIIE-28 plus 24 basis points, and the principal payable at maturity on February 14, 2020; and (ii) fifteen million ten-year debt securities issued under the ticker symbol “GAP 15-2” at a nominal value of Ps.100 each, for a total value of Ps.1.5 billion, on which interest is payable every 182 days at a fixed rate of 7.08%, and the principal payable at maturity on February 7, 2025.

On January 29, 2016, we issued eleven million new GAP 15 debt securities at a nominal value of Ps.100 each, for a total value of Ps.1.1 billion. This issuance was a reopening of the GAP 15 debt securities originally issued on February 20, 2015, and the new GAP 15 debt securities have the same terms and conditions as the original issuance, except for the issue date and issue price. As a result of this reopening, GAP issued an aggregate total of 22 million GAP 15 debt securities at a nominal value of Ps.100 each, for a total value of Ps.2.2 billion. The proceeds from the reopening were allocated to finance capital investments set forth in the Master Development Programs for 2016.

On July 8, 2016, we issued fifteen million new five-year debt securities under the ticker symbol “GAP 16” at a nominal value of Ps.100 each, for a total value of Ps.1.5 billion, on which interest is payable every 28 days at a variable rate of TIIE-28 plus 49 basis points, and the principal payable at maturity on July 2, 2021. The proceeds from the issuance were allocated to financing the investments set forth in the Master Development Programs for the second half of 2016 and the first quarter of 2017.

On April 6, 2017, we issued fifteen million new five-year debt securities under the ticker symbol “GAP 17” at a nominal value of Ps.100 each, for a total value of Ps.1.5 billion, on which interest is payable every 28 days at a variable rate of TIIE-28 plus 49 basis points, and the principal payable at maturity on March 31, 2022. The proceeds from the issuance were allocated to financing the investments set forth in the Master Development Programs for 2017.

These issuances of long-term debt securities were made under a Ps.9.0 billion program approved by the CNBV for five years. As part of our financing strategy, we will continue financing all of our capital expenditures commitments and new investments through the debt market, subject to market conditions.

Passenger and Cargo Volumes

Volumes in Mexico

The majority of the passenger traffic volume in our Mexican airports is made up of domestic passengers. In 2014, 2015 and 2016, approximately 65.5%, 65.4% and 67.3% of the terminal passengers using our Mexican airports were domestic. The total number of domestic terminal passengers for 2016 increased 21.6% as compared to 2015, and the total number of domestic terminal passengers in 2015 increased 11.7% as compared to 2014. In addition, of the international passengers traveling through our Mexican airports, approximately 89.3% traveled on flights originating in or departing to the United States during 2016, as compared to 89.7% and 89.5% in 2015 and 2014, respectively. Accordingly, our results of operations are influenced strongly by changes to Mexican economic conditions and to a lesser extent influenced by U.S. economic and other conditions, particularly trends and events affecting leisure travel and consumer spending. Many factors affecting our passenger traffic volume and the mix of passenger traffic in our airports are beyond our control.

96

In 2016, we had 32.6 million terminal passengers (22.0 million domestic and 10.7 million international), of which 108 thousand were on general aviation flights, and an additional 143 thousand were transit passengers. Approximately 31.2% of our transit passengers were handled at Tijuana International Airport.

During 2016, the CBX served 1.3 million passengers, who are considered domestic passengers under our recording system. If we were to consider these passengers as international, the proportion of international passengers would increase from 39.9% to 43.4% of total passengers.

Volumes in Jamaica

The majority of the passenger traffic volume in Jamaica is made up of international passengers. In 2016, approximately 99.5% of the terminal passengers using the Montego Bay airport were international. Additionally, of the international passengers traveling through the Montego Bay airport, approximately 68.6% traveled on flights originating in or departing to the United States during 2016. Accordingly, MBJA’s results of operations are influenced strongly by international and U.S. economic and other conditions, particularly trends and events affecting leisure travel and consumer spending. Many factors affecting our passenger traffic volume are beyond our control.

In 2016, we had approximately 3.9 million terminal passengers, of which approximately 17.4 thousand were on general aviation flights (excludes IAM JetCentre passengers which use FBO), and an additional 51.0 thousand were transit passengers.

97

The following table sets forth certain operating and financial information relating to certain of our revenues and passenger and cargo volumes in Mexico and Jamaica for the years indicated:

Passenger and Cargo Volumes

	Year ended December 31,
	2014		2015		2016
Macroeconomic indicators:
Change in Mexican GDP (1)		2.1%		2.5%		2.3%
Change in Mexican CPI (2)		4.1%		2.1%		3.4%
Change in U.S. GDP (3)		2.4%		2.6%		1.6%
Change in U.S. CPI (4)		0.8%		0.7%		2.1%
Passenger volumes (thousands of passengers) (5),(6):
Domestic terminal passengers in Mexico		16,180.8		18,071.2		21,967.5
International terminal passengers in Mexico		8,537.9		9,552.7		10,679.9
Mexican total terminal passengers		24,718.7		27,623.9		32,647.4
Domestic terminal passengers in Jamaica		n/a		7.1		8.7
International terminal passengers in Jamaica		n/a		2,688.3		3,892.9
Jamaican total terminal passengers		n/a		2,695.4		3,901.6
Total terminal passengers (thousands)		24,718.7		30,319.3		36,549.0
Cargo volumes (thousands of cargo units) (5),(7):
Cargo units in Mexico		1,833.0		1,784.5		1,933.2
Cargo units in Jamaica		n/a		47.6		69.1
Total cargo units		26,551.7		32,151.4		38,551.3
Other operating and financial information:
Change in total terminal passengers (7)		6.7%		22.7%		20.5%
Change in total workload units (7)		9.8%		21.1%		19.9%
Aeronautical revenues (millions of pesos)	Ps.	3,925.7	Ps.	5,419.0	Ps.	7,037.9
Change in aeronautical revenues (7)		8.5%		38.0%		29.9%
Aeronautical revenues per workload unit	Ps.	147.9	Ps.	168.5	Ps.	182.3
Change in aeronautical revenues per workload unit (7)		1.6%		14.0%		8.3%
Non-aeronautical revenues (millions of pesos)	Ps.	1,338.5	Ps.	1,849.3	Ps.	2,393.6
Change in non-aeronautical revenues (7)		14.4%		38.2%		29.4%
Non-aeronautical revenues per terminal passenger	Ps.	54.2	Ps.	61.0	Ps.	65.5
Change in non-aeronautical revenues per terminal passenger (7)		7.2%		12.5%		7.4%

(1) In real terms, as reported by INEGI.

(2) As reported by INEGI.

(3) In real terms, as reported by the U.S. Bureau of Economic Analysis.

(4) As reported by the U.S. Bureau of Labor Statistics.

(5) For the fiscal year ended December 31, 2015, Montego Bay airport information includes only the period from April 1 to December 31, 2015.

(6) Under the regulation applicable to our aeronautical revenues, one workload unit is equivalent to one terminal passenger or one cargo unit.

(7) Under the regulation applicable to our aeronautical revenues, one workload unit is equivalent to one terminal passenger or one cargo unit. One cargo unit is equivalent to 100 kilograms (220 pounds) of cargo.

Classification of Revenues

We classify our revenues into three categories: (i) revenues from aeronautical services; (ii) revenues from non-aeronautical services; and (iii) revenues from improvements to concession assets. Historically, a majority of our revenues have been derived from aeronautical services; however, with the inclusion of revenues from improvements to concession assets, revenues from aeronautical services and from non-aeronautical services will account for a smaller percentage of total revenues. For example, in 2014, 2015 and 2016, with the inclusion of revenues from

98

improvements to concession assets, aeronautical revenues represented 70.8%, 66.8% and 63.4%, respectively, of total revenues. In 2014, 2015 and 2016, with the inclusion of revenues from improvements to concession assets, non-aeronautical revenues represented 24.1%, 22.8% and 21.5%, respectively, of total revenues. Aeronautical revenues and non-aeronautical revenues, however, represented 74.6% and 25.4%, respectively, of the sum of aeronautical and non-aeronautical revenues in 2014, 74.6% and 25.4%, respectively, of the sum of aeronautical and non-aeronautical revenues in 2015 and 74.6% and 25.4%, respectively, of the sum of aeronautical and non-aeronautical revenues in 2016. In 2014, 2015 and 2016, revenues from improvements to concession assets accounted for 5.1%, 10.3% and 15.1%, respectively, of our total revenues.

Our revenues from aeronautical services are subject to price regulation under the applicable maximum rate at each of our airports, and principally consist of passenger charges, aircraft landing and parking charges, airport security charges, passenger walkway charges, leasing of space in our airports to airlines (other than first class/VIP lounges and other similar non-essential activities) and complementary services (i.e., fees from handling and catering providers, permanent ground transportation operators and access fees from fuel providers at our airports).

Our revenues from non-aeronautical services are not subject to price regulation under our maximum rates and generally include revenues earned from car parking, leasing of space in our airports to airlines and complementary service providers (for first class/VIP lounges and similar non-essential activities), rental and royalty payments from third parties operating stores, providing commercial services at our airports (such as car rental agencies, food and beverage providers and retail and duty-free store operators), as well as advertising and fees collected from other miscellaneous sources, such as vending machines and timeshare developers. Additionally, we derive revenues from recovery of costs that are included in our non-aeronautical services.

Our revenues from improvements to concession assets represent the fair value of the additions and upgrades to the concession that we undertake in accordance with our Master Development Programs in Mexico and our Capital Development Program in Jamaica. In exchange for making those additions and upgrades, the governments of Mexico and Jamaica grant us the right to obtain benefits for services provided using those assets, which are recognized as intangible assets. This represents an exchange of dissimilar goods or services rather than an actual cash exchange since we receive an intangible asset for the construction services we provide. Through a bidding process, we hire third parties to make the additions and upgrades. The amount of revenues for these services is equal to the costs of making the additions and upgrades since those values represent the fair value of the goods or services received as there is no profit margin stemming from these construction services. Although these revenues do not generate actual cash inflows, IFRS requires that they be recorded given that revenue generation is inherent in an exchange of dissimilar services, similar to a barter transaction. These revenues do not have a cash impact on our results.

For a detailed description of the components of our revenue categories, see “Item 4, Information on the Company – Business Overview – Our Sources of Revenues.”

99

Aeronautical Revenues

The following table sets forth our revenues from aeronautical services for the years indicated:

Aeronautical Revenues

	Year ended December 31,
	2014					2015(1)					2016
	Amount		Percent			Amount		Percent			Amount		Percent
	(millions of pesos, except percentages and workload unit data)
Aeronautical Revenues:
Passenger charges		Ps. 3,371.9		85.9	%		Ps. 4,482.4		82.7	%		Ps. 5,763.0		81.9	%
Aircraft landing charges		179.9		4.6			284.3		5.2			518.4		7.4
Aircraft parking charges		165.1		4.2			171.4		3.2			111.8		1.6
Airport security charges		52.5		1.3			113.6		2.1			161.0		2.3
Passenger walkway charges		0.0		0.0			18.3		0.3			31.2		0.4
Leasing of space to airlines		94.7		2.4			96.7		1.8			123.2		1.8
Revenues from complementary service providers (2)		61.7		1.6			252.4		4.7	%		329.3		4.7	%
Total Aeronautical Revenues		Ps. 3,925.7		100.0	%		Ps. 5,419.0		100	%		Ps.  7,037.9		100	%
Other Information:
Total workload units (millions) (3)		26.6					32.2					38.6
Total aeronautical revenues per workload unit		Ps. 147.9					Ps. 168.5					Ps. 182.3
Change in aeronautical revenues (4)				8.5	%				38.0	%				29.9	%
Change in total aeronautical revenues per workload unit (4)				1.6	%				14.0	%				8.3	%

(1) For the fiscal year ended December 31, 2015, Montego Bay airport information includes only the period from April 1 to December 31, 2015.

(2) Revenues from complementary service providers consist of access and other fees charged to third parties providing baggage handling, catering and other services at our airports.

(3) Under the regulation applicable to our aeronautical revenues, a workload unit is equivalent to one terminal passenger or 100 kilograms (220 pounds) of cargo.

(4) In each case, as compared to the prior year.

Under the relevant agreements with airlines, our specific prices are structured such that the substantial majority of our aeronautical revenues are derived from passenger charges, and we expect that this will continue to be the case in any future agreements. We earn passenger charges from each departing passenger at our airports (except certain exclusions in each of Mexico and Jamaica, described above under “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services – Passenger Charges”). In 2014, 2015 and 2016, passenger charges represented 85.9%, 82.7% and 81.9%, respectively, of our aeronautical services revenues and 60.8%, 55.3% and 51.9%, respectively, of our total revenues (in 2014, 2015 and 2016, passenger charges represented 64.1%, 61.7% and 61.1%, respectively, of the sum of aeronautical and non-aeronautical revenues).

100

The following table sets forth the number of passengers paying passenger charges per airport for the years indicated:

Passengers Paying Passenger Charges per Airport

	Year ended December 31,
Airport:	2014					2015					2016
	Amount		% change			Amount		% change			Amount		% change
	(in thousands, except percentages)
Guadalajara		4,045.9		5.7	%		4,512.7		11.5	%		5,254.4		16.4	%
Tijuana		2,043.1		2.7			2,315.6		13.3			3,016.2		30.3
Los Cabos		1,606.5		(4.0	)		1,801.9		12.2			2,093.7		16.2
Puerto Vallarta		1,525.3		17.0			1,751.7		14.8			1,985.8		13.4
Montego Bay (1)		n/a		n/a			1,334.9		100.0			1,948.2		45.9
Guanajuato		592.4		23.4			725.1		22.4			832.6		14.8
Hermosillo		572.7		1.6			618.5		8.0			726.5		17.5
La Paz		322.0		10.2			334.3		3.8			411.3		23.0
Mexicali		238.1		2.7			282.0		18.5			339.1		20.3
Aguascalientes		260.3		17.5			308.3		18.4			336.7		9.2
Morelia		228.4		11.1			229.1		0.3			259.2		13.1
Los Mochis		111.0		16.6			141.3		27.4			170.3		20.5
Manzanillo		101.6		11.0			94.2		(7.3	)		93.9		(-0.3	)
Total		11,647.3		6.1	%		14,449.6		12.6	%		17,467.9		20.9	%

(1) For the fiscal year ended December 31, 2015, Montego Bay airport information includes only the period from April 1 to December 31, 2015.

Mexican Aeronautical Revenues

The system of price regulation applicable to our aeronautical revenues in Mexico establishes a maximum rate in pesos for each Mexican airport for each year in a five-year period, which is the maximum annual amount of revenues per workload unit that we may earn at that airport from aeronautical services. As of December 31, 2014, the SCT determined the maximum rates for our airports for each year through December 31, 2019. Our aeronautical revenues are determined largely by the number of workload units at each of our airports, which is primarily driven by passenger traffic levels, multiplied by the value of the maximum tariffs approved by the SCT. In addition, aeronautical revenues differ among our airports to the extent passenger traffic levels differ among these airports. See “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Services Regulation” for a description of our maximum rates and the rate-setting procedures for future periods.

Our Mexican concessions provide that our maximum rates must be adjusted on an annual basis as determined by the efficiency factor and by changes in inflation. See “Item 4, Information on the Company – Regulatory Framework – Mexican Aeronautical Revenues Regulation – Methodology for Determining Future Maximum Rates.” Under the regulatory system applicable to our Mexican aeronautical revenues, we can set the specific price for each category of aeronautical services every six months (or more frequently if accumulated inflation since the last adjustment exceeds 5%), as long as the total aeronautical revenues per workload unit each year at each of our airports do not exceed the maximum rate set for such airport for that year. Although the SCT may in some cases authorize an increase in our maximum rates, we must negotiate with our principal airline customers the specific rates applicable to each aeronautical activity. As a result, we are not always able to increase prices up to the amount of maximum rates.

We currently set the specific price for each category of aeronautical services after negotiations with our principal airline customers. In March 2012, we signed an agreement with the Mexican Air Transportation Chamber for the 2012-2014 period that allowed for increases in our specific tariffs equal to the average increases of the Mexican Consumer Price Index (the “Mexican CPI”) and PPI, excluding petroleum, published by INEGI. Even though we are in the process of negotiating a new agreement, tariffs will continue to be adjusted in accordance with the Mexican PPI. See “Item 4, Information on the Company – Business Overview – Principal Customers – Principal Aeronautical Services Customers – Mexican Aeronautical Services Agreement.”

101

Aeronautical revenue per workload unit is an indicator that is calculated by dividing total aeronautical revenues by the workload units for a given period. This indicator is affected annually, except for years in which the new maximum tariffs are set, by:

• Adjustment in the maximum rates for the efficiency factor and the Mexican PPI, excluding petroleum;

• Increases and decreases in the relative number of workload units at each airport; and

• Changes in total workload units per airport.

From January 1, 2010, through December 31, 2014, the efficiency factor was 0.70%. For the period from January 1, 2015 until December 31, 2019, the efficiency factor remained 0.70%. Our weighted average maximum tariffs, as determined by the SCT (prior to inflation adjustments using the Mexican PPI), decreased 0.5% in 2014, increased 2.0% in 2015 and decreased 0.7% in 2016, mainly as a result of variation in the percentage that each airport’s workload units represent of our total workload units. At the same time, the Mexican PPI, excluding petroleum, increased by 4.2%, 5.3% and 10.3% in 2014, 2015 and 2016, respectively. Our weighted average maximum tariffs as adjusted by the efficiency factor and the Mexican PPI, excluding petroleum, increased 3.7% during 2014, increased 7.5% in 2015 and increased 9.6% in 2016. The total workload units at our Mexican airports were 26.5 million, 29.4 million and 34.6 million in 2014, 2015 and 2016, respectively, representing an increase of 6.9% in 2014, an increase of 10.8% in 2015 and an increase of 17.6% in 2016. Accordingly, when calculating aeronautical revenue per workload units, the result will fluctuate depending on the relative changes in the aforementioned factors. During 2014, 2015 and 2016, average aeronautical revenues per workload unit at our Mexican airports were Ps.147.9, Ps.168.5 and Ps.182.3, respectively, which represented an increase of 1.6%, an increase of 14.0% and an increase of 8.3% in 2014, 2015 and 2016, respectively. The increase in 2014, 2015 and 2016 resulted mainly from increases in traffic and tariffs due to adjustments for inflation.

Historically, we have set our prices for regulated services at our Mexican airports as close as possible to the maximum rates allowed in any given year, and we expect to pursue this pricing strategy in the future. However, there can be no assurance that we will be able to collect virtually all of the revenues we are entitled to earn from services subject to price regulation in the future or that we will not be sanctioned in case we exceed our maximum rates. In prior years, in order to ensure our compliance with the maximum rate at a particular Mexican airport when the possibility of exceeding that maximum rate arose, we have taken actions in the latter part of the year, such as reducing our specific prices for aeronautical services and offering discounts or rebates, to ensure our compliance with the applicable maximum rate. For a discussion of risks related to our ability to set specific prices, see “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – We provide a public service regulated by the governments of Mexico and Jamaica, and our flexibility in managing our aeronautical activities is limited by the regulatory environments in which we operate” and “Item 3, Key Information – Risk Factors – Risks Related to the Regulation of Our Business – If we exceed the maximum rate at any Mexican airport at the end of any year, we could be subject to sanctions.”

Jamaican Aeronautical Revenues

In Jamaica, MBJA’s revenues from passenger charges, aircraft landing and parking charges, airport security charges and passenger walkway charges are regulated by the JCAA. See “Item 4, Information on the Company – Business Overview – Our Sources of Revenues – Aeronautical Services.”

The system of price regulation applicable to MBJA’s aeronautical revenues establishes maximum rates in U.S. dollars for a five-year period for charges levied on airlines and passengers using a price cap mechanism. Permission for any increase in the levy of regulated charges, which include passenger charges, aircraft landing and parking charges, passenger walkway charges and airport security charges, must be granted by the JCAA. The first review period began with the concession on April 12, 2003 and concluded in November 2014 with the determination of new charges effective April 1, 2015. For example, maximum passenger charges increased from U.S.$8.50 to U.S.$19.34 per departing passenger. Thereafter, regulated aeronautical charges will be reviewed every five years, with charges adjusted on an annual basis according to the U.S. CPI. The April 2016 tariff increase was 1.13%. See “Item 4,

102

Information on the Company – Regulatory Framework – Jamaican Aeronautical Services Regulation” for a description of MBJA’s maximum regulated charges and the procedures for setting maximum regulated charges for future periods.

Non-Aeronautical Revenues

Non-aeronautical services historically generate a smaller portion of our total revenues as compared to aeronautical services. Non-aeronautical revenues represented 24.1%, 22.8% and 21.5% of total revenues in 2014, 2015 and 2016, respectively. Non-aeronautical revenues per terminal passenger were Ps.54.4, Ps.61.0 and Ps.65.5 in 2014, 2015 and 2016, respectively. None of our revenues from non-aeronautical services are subject to price regulation under our maximum-rate price regulation systems.

Our revenues from non-aeronautical services are principally derived from commercial activities. We divide non-aeronautical commercial activities into revenues from businesses operated by third parties and revenues from businesses operated directly. Businesses operated by third parties include leasing of space in our airports to airlines and complementary service providers (for first class/VIP lounges and similar non-essential activities) and rental and royalty payments from third parties operating stores and providing commercial services at our airports, such as timeshare developers, retail stores, food and beverage providers, car rental agencies and duty-free store operators, as well as fees collected from other miscellaneous sources, such as vending machines. Businesses operated directly by us include car parking, advertising, VIP lounges and convenience stores. Additionally, we derive revenues from recovery of costs which are included in our non-aeronautical revenues.

The following table sets forth our revenues from non-aeronautical services for the years indicated:

Non-Aeronautical Revenues

	Year ended December 31,
	2014					2015(1)					2016
	Amount		Percent			Amount		Percent			Amount		Percent
	(millions of pesos, except percentages and workload unit data)
Non-aeronautical Services:
Businesses operated by third parties:
Leasing of space(2)	Ps.	120.2		9.0	%	Ps.	145.5		7.9	%	Ps.	177.1		7.4	%
Car rentals		105.6		7.9			147.4		8.0			198.7		8.3
Food and beverage operations		112.4		8.4			169.8		9.2			220.5		9.2
Retail operations		103.2		7.7			175.9		9.5			269.3		11.2
Duty-free operations		115.2		8.6			247.6		13.4			348.9		14.6
Timeshare operators		109.5		8.2			139.6		7.5			173.5		7.2
Ground transportation		62.9		4.7			86.9		4.7			131.3		5.5
Communications and financial services		29.2		2.2			39.2		2.1			49.2		2.1
Other		17.7		1.3			30.4		1.6			46.5		1.9
Total businesses operated by third parties:		775.9		58.0			1,182.3		63.9			1,615.0		67.4
Businesses operated directly by us:
Car parking charges		230.0		17.2			251.5		13.6			254.1		10.6
Advertising		100.1		7.5			121.8		6.6			156.5		6.5
VIP lounges		38.2		2.9			65.0		3.5			112.0		4.7
Convenience stores		39.7		3.0			81.5		4.4			93.8		3.9
Total businesses operated directly by us:		408.0		30.6			519.8		28.1			616.4		25.7
Recovery of costs(3)		154.2		11.5			147.2		8.0			162.2		6.8
Total non-aeronautical revenues	Ps.	1,338.2		100.0	%	Ps.	1,849.3		100.0	%	Ps.	2,393.6		100.0	%
Other Information:
Total terminal passengers (millions)		24.7					30.3					36.5
Non-aeronautical revenues per terminal passenger	Ps.	54.2				Ps.	61.0				Ps.	65.6
Change in non-aeronautical revenues per terminal passenger (year-on-year)				7.2	%				12.6	%				7.4	%

103

(1) For the fiscal year ended December 31, 2015, Montego Bay airport information includes only the period from April 1 to December 31, 2015.

(2) Includes leasing of space in our airports to airlines and complementary service providers (for first class/VIP lounges and other similar non-essential activities).

(3) Recovery of costs consists of utility, fuel, maintenance and operation charges that are transferred to airlines and other tenants in our airports.

In 2016, revenues from non-aeronautical services in our airports accounted for 21.5% of the total revenues generated by our airports (in 2016, non-aeronautical revenues represented 25.4% of the sum of aeronautical and non-aeronautical revenues). While we believe that aeronautical revenues will continue to represent a majority of our future revenues, we currently estimate that the growth rate of our revenues from commercial activities will likely exceed the growth rate of our aeronautical revenues (as was the case during the period from 2014 to 2016), except in the years in which the maximum tariffs are reset. In the last year, non-aeronautical revenues per terminal passenger increased 7.4% (from Ps.61.0 in 2015 to Ps.65.6 in 2016, during which time the number of terminal passengers increased 20.5%).

Non-aeronautical revenues per terminal passenger show the average revenue generated by the commercial areas of our airports, and it is calculated by dividing total non-aeronautical revenues by the number of terminal passengers during the same period. Therefore if non-aeronautical revenues decline proportionately less than the decline in the number of terminal passengers during a period, non-aeronautical revenues per terminal passenger will increase despite the decrease in non-aeronautical revenues. Non-aeronautical revenues per terminal passenger are principally affected by:

• recovery of rights to certain businesses that we previously did not operate;

• opening of new commercial spaces at our airports;

• the level of passenger traffic; and

• the exchange rate between the Mexican peso and the U.S. dollar. This exchange rate affects our contracts that are denominated in U.S. dollars, which mainly consist of lease contracts for timeshare developers, car rentals, duty-free services and certain lease contracts for food and beverages and retail operations.

Certain categories of non-aeronautical revenues are directly impacted by passenger traffic (for example car parking and rental, and food and beverage providers) while others are not (for example leasing of space, on which we earn at least a minimum fixed rent indexed to inflation each year, which may be increased by royalty-based payments as discussed below). Accordingly, non-aeronautical revenues do not always behave in the same manner as passenger traffic or workload units.

104

Approximately 97.9% of the contracts with third-party tenants that could be arranged as royalty-based have already been executed under those conditions (representing approximately 66.7% of our total non-aeronautical revenues). Under a royalty-based contract the amount tenants must pay is based on tenants’ revenues, subject to minimum guaranteed fixed amounts related to the square footage of the space leased. When the royalty-based amount is lower than the minimum guaranteed amount, the tenant must still pay the latter. Therefore, a decrease in passenger traffic volumes would result in a reduction in non-aeronautical revenues from such tenants only if, prior to such decrease in passenger traffic, the sales of royalty-based tenants were higher than the minimum guaranteed amount. As a result, during periods in which airports experience a reduction in passenger traffic volumes, non-aeronautical revenues may remain stable due to the minimum guaranteed amount received by the airport under the lease contract, thereby resulting in a potential increase in non-aeronautical revenues per workload unit.

During 2014, 2015 and 2016, non-aeronautical revenues were Ps.1,338.5 million, Ps.1,849.3 million and Ps.2,393.6 million, respectively, representing an increase of 38.2% in 2015 and 29.4% in 2016. During 2016, non-aeronautical revenues increased more than terminal passengers, which increased 20.5%. In 2016, non-aeronautical revenues per terminal passenger increased from Ps.54.2 per passenger in 2014 and Ps.61.0 per passenger in 2015 to Ps.65.5 per passenger in 2016, representing an increase of 12.6% from 2014 to 2015 and an increase of 7.4% from 2015 to 2016.

Recognition of Revenues from Improvements to Concession Assets

IFRIC 12 requires, subject to certain conditions, that the infrastructure of a service concession contract falling within its scope not be recognized as property, plant and equipment. It also requires that revenues obtained when the operator performs both construction or upgrade services and operating services under a single contract be recognized according to each type of service provided, based on the fair value of consideration received at the time the service is rendered. We recognize revenues and the associated costs of improvements to concession assets in relation with the concession’s obligation to perform improvements as established in the Master Development Programs in Mexico and Capital Development Program in Jamaica. Revenues represent the value of the exchange between ourselves and the respective government with respect to the improvements, given that we construct or provide improvements to the airports as obligated under the Master Development Programs in Mexico and Capital Development Program in Jamaica, and in exchange, the respective government grants us the right to obtain benefits for services provided using those assets, which are recognized as intangible assets. We have determined that our obligations per the Master Development Programs in Mexico and Capital Development Program in Jamaica should be considered to be a revenue-earning activity as all expenditures incurred to fulfill the Master Development Programs and Capital Development Program are included in the tariffs. Therefore we recognize the revenue and expense in profit or loss when the expenditures are performed. The cost for such additions and improvements to concession assets is based on actual costs incurred by us in the execution of the additions or improvements, considering the investment requirements in the Master Development Programs and Capital Development Program.

Through bidding processes, we contract third parties to carry out such construction. The amount of revenues for these services is equal to the amount of costs incurred, as we do not obtain any profit margin for these construction services. The amounts paid are set at market value. As a result, revenues from improvements to concession assets do not have a cash impact on our results. Furthermore, they are not directly related to our passenger traffic, which is the main driver of our revenues. In 2014, we recognized Ps.281.9 million in revenues from improvements to concession assets. This represented a decrease of 36.0% as compared to 2013 due to lower investment commitments under our Master Development Programs for 2014. In 2015, we recognized Ps.838.6 million in revenues from improvements to concession assets. This represented an increase of 197.5% as compared to 2014, due to higher investment commitments under our Master Development Programs. In 2016, we recognized Ps.1,676.0 million in revenues from improvements to concession assets. This represented an increase of 99.9% as compared to 2015, due to higher investment commitments under our Master Development Programs. During 2016, MBJA recognized Ps.14.3 million in revenues from improvements to concession assets, while MBJA recognized no revenues from improvements to concession assets from April 1, 2015 to December 31, 2015.

105

Operating Costs

The following table sets forth our operating costs and certain other related information for the years indicated:

Operating Costs

	Year ended December 31,
	2014			2015(1)			2016
	Amount			Amount			Amount			% change
	(millions of pesos, except percentages and passenger data)
Operating Costs:
Cost of services:
Employee costs	Ps.	393.5		Ps.	502.8		Ps.	584.6			16.3	%
Maintenance		223.7			302.2			346.8			14.8	%
Safety, security and insurance		192.9			249.8			282.3			13.0	%
Utilities		147.8			192.2			222.9			16.0	%
Other		203.7			311.3			345.8			11.1	%
Total cost of services		1,161.6			1,558.3			1,782.4			14.4	%
Technical assistance fees		194.2			236.5			301.8			27.6	%
Concession taxes		261.6			483.1			764.3			58.2	%
Depreciation and amortization:
Depreciation(2)		183.2			206.7			300.9			49.1	%
Amortization(3)		742.0			949.7			1,047.5			9.5	%
Total depreciation and amortization		925.2			1,156.4			1,348.4			16.6	%
Other income - net		(43.4	)		(254.6	)		(0.3	)		(99.9	)%
		2,499.2			3,179.7			4,196.7			32.0	%
Cost of improvements to concession assets		281.9			838.6			1,676.0			99.9	%
Total operating costs	Ps.	2,781.1		Ps.	4,018.3		Ps.	5,872.7			46.1	%
Other Information:
Total workload units (thousands)(4)		26,551.7			32,151.4			38,551.2			19.9	%
Cost of services per workload unit	Ps.	43.7		Ps.	48.5		Ps.	46.2			(4.6	)%
Cost of services / the sum of aeronautical and non-aeronautical revenues (5)		22.1	%		21.4	%		18.9	%

(1) For the fiscal year ended December 31, 2015, Montego Bay airport information includes only the period from April 1 to December 31, 2015.

(2) Reflects depreciation of machinery, equipment and improvements on leased buildings.

(3) Reflects amortization of our improvements of concession assets, concessions and other acquired rights.

(4) Under the regulation applicable to our aeronautical revenues, a workload unit is equivalent to one terminal passenger or 100 kilograms (220 pounds) of cargo.

(5) Cost of services divided by the sum of aeronautical and non-aeronautical revenues, expressed as a percentage.

Cost of Services

Our cost of services consists primarily of employee costs, maintenance, safety, security and insurance costs, as well as utilities (a portion of which we recover from our tenants) and various other miscellaneous expenses. Cost of services per workload unit is an indicator that is calculated by dividing cost of services by the workload units for a given period. This indicator is affected annually by:

• Increases and decreases in the different items included in cost of services; and

• Increases and decreases in the relative number of workload units.

Therefore, if the cost of services increases less in proportion to the increase in workload units, the cost of service per workload unit decreases. Similarly, cost of service per workload units increases in periods in which the costs of service remains stable but workload units declined.

Our cost of services per workload unit was Ps.43.7 in 2014, Ps.48.5 in 2015 and Ps.46.2 in 2016, an increase of 10.8% from 2014 to 2015 and decrease of 4.6% from 2015 to 2016. In 2016, cost of services per workload unit decreased 4.6%, as a result of a lower increase in cost of service than the corresponding increase in total workload units. Cost of service increased 14.4%, and total workload units increased 19.9%. Cost of services increased primarily due to the consolidation of MBJA, which had an increase in cost of services of Ps.123.4 million in 2016, compared to the period from April 1 to December 31, 2015, mainly due to an increase in employee costs of Ps.43.5 million, in other costs of Ps.24.3 million, in safety and security costs of Ps.19.9 million and in maintenance costs of Ps.18.7 million. Cost of services increased Ps.100.7 million for our Mexican airports, which was mainly due to a

106

Ps.25.8 million increase in maintenance, a Ps.38.3 million increase in employee costs, a Ps.13.7 million increase in utilities, a Ps.12.6 million increase in safety, security and insurance costs, and an increase in other costs, driven primarily by (i) an increase of Ps.19.2 million in costs for supplies for convenience stores and VIP lounges in 2016 and (ii) an offset, or decrease, of Ps.9.5 million in reserves for doubtful accounts in Mexico. Our income from operations divided by the sum of aeronautical and non-aeronautical revenues (operating margin) decreased 80 basis points from 56.3% in 2015 to 55.5% in 2016.

Technical Assistance Fees

Technical Assistance Fees in Mexico

Under the technical assistance agreement, AMP provides management and consulting services as well as technical assistance and technological and industry knowledge and experience to us in exchange for a fee. This agreement is more fully described in Item 7 hereof. Since January 1, 2002, the fee has been equal to the greater of U.S.$4.0 million (adjusted annually for U.S. inflation) and 5% of our annual consolidated operating income, defined as earnings before interest income or expense (calculated prior to deducting the technical assistance fee, income taxes, depreciation and amortization and in each case determined in accordance with MFRS). The technical assistance fee is a component of our maximum tariffs and is collected through the maximum tariffs charged. In 2014, 2015 and 2016, this fee was Ps.194.2 million, Ps.234.9 million and Ps.301.8 million, respectively.

Technical Assistance Fees in Jamaica

MBJA had a technical assistance agreement with Vantage which expired on April 3, 2015 and was not renewed. Accordingly, there were no technical assistance fees for 2016 payable to Vantage. In the period from April 1 to December 31, 2015, this fee amounted to Ps.1.6 million. Under the agreement, Vantage provided management and consulting services as well as technical assistance and technological and industry knowledge and experience to us in exchange for a fee.

Concession Taxes

Mexican Concession Tax

We are subject to the Mexican Federal Duties Law, which requires each of our Mexican airports to pay a concession tax to the Mexican government currently equal to 5% of the gross annual revenues (excluding revenues from improvements to concession assets) of each concession holder obtained from the use of public domain assets pursuant to the terms of its concession. The concession tax rate may vary on an annual basis as determined solely by the Mexican Federal Congress, and there can be no assurance that this rate will not increase in the future. If Mexico’s Federal Congress increases the concession tax rate, we are entitled to request an increase in our maximum rates from the SCT; however, there can be no assurance that the SCT would approve our request.

In 2014, 2015 and 2016, this tax amounted to Ps.261.6 million, Ps.312.0 million and Ps.389.5 million, respectively.

Jamaican Concession Fees

Under the terms of the Concession Agreement and the relevant tax legislation, MBJA is required to pay a monthly concession fee per workload unit, subject to annual adjustments based on increases in the U.S. CPI, to the Jamaican government to allow it to use and develop the assets subject to the concession. MBJA is also required to pay an additional concession fee equal to 45% of any revenues earned in excess of the forecast revenues established in the Concession Agreement. This additional concession fee considers the period from April to March of each year, with payment required yearly.

According to the Concession Agreement, once a 25% cumulative annualized internal rate of return hurdle (“IRR Hurdle”) is reached (as measured from the date of the first equity contribution to the concessionaire), any equity distributions above the IRR Hurdle to MBJA’s shareholders must be matched by an equal payment to the AAJ as owner of the concession assets (“Excess Benefit Payment”). Equity distributions include any dividend, capital reduction, interest, fee, loan or other payment to MBJA’s shareholders. To date, MBJA’s IRR Hurdle has not been reached; the aggregate as of December 2016 was of 10.0%.

107

The concession fee applied in 2015 was U.S.$2.73 per workload unit serviced. In the period from April 1 to December 31, 2015, the sum of these monthly and annual concession fees was Ps.171.1 million. The concession fee applied in 2016 was U.S.$2.75 per workload unit serviced. In 2016, the sum of these monthly and annual concession fee was Ps.374.8 million.

The additional concession fee for the concession year ending March 2016 and March 2017 was U.S.$4.5 million and approximately U.S.$11.0 million, respectively. No concession fee was due or paid for the period ending March 2015.

Depreciation and Amortization

Depreciation and Amortization of Mexican Assets

Our depreciation and amortization expenses primarily reflect the amortization of our investment in our twelve Mexican concessions, which we began amortizing for accounting purposes in August 1999, the date on which the value of our Mexican concessions was determined based on the value assigned by AMP to our Series BB shares as part of its winning bid to acquire its 15% interest in us. In addition, we amortize the value of certain fixed assets we acquire or build at our Mexican airports pursuant to the investment requirements under our Master Development Programs. Moreover, in 2014, 2015 and 2016, we wrote off the remaining balance of certain additions to and construction of facilities carried out since the beginning of our concession, as they were replaced with new investments as required under the Master Development Programs. The amounts of these write offs were Ps.11.9 million in 2014. In 2015 and 2016, we did not write off any amounts. For further information regarding depreciation and amortization expenses, refer to Notes 8, 9, 10, 11 and 12 to our audited consolidated financial statements.

Depreciation and Amortization of Jamaican Assets

MBJA’s depreciation and amortization expenses primarily reflect the amortization of its investment in the Montego Bay airport, the value of certain fixed assets it acquired pursuant to the investment requirements under the Capital Development Program and amortization of the Montego Bay airport concession’s fair value. For further information regarding depreciation and amortization expenses, refer to Notes 8, 9, 10, 11 and 12 to our audited consolidated financial statements.

Cost of Improvements to Concession Assets

In compliance with our Master Development Programs in Mexico and the Capital Development Program in Jamaica, we invest in additions and upgrades to our concession assets and these investments are reflected according to IFRIC 12. In our case, because we hire third parties to provide construction and upgrade services and we do not recognize a premium on the cost of services, our revenues from improvements to concession assets are equal to the cost of improvements to concession assets such that the application of IFRIC 12 does not have a cash impact on our results.

Taxation

We and each of our subsidiaries pay taxes on an individual (rather than consolidated) basis.

Our effective tax rates in 2014, 2015 and 2016 were 18.7%, 23.4% and 27.4%, respectively. In 2016, our effective tax rate increased 400 basis points as compared to 2015, resulting from an increase in our current tax expense derived from an increase in our earnings before income taxes of 27.7%. In 2015, our effective tax rate increased 470 basis points as compared to 2014, resulting from an increase in our current tax expense derived from an increase in our earnings before income taxes of 31.2%. In 2014, our effective tax rate increased 1,540 basis points as compared to 2013, resulting primarily from the one-time effects of changes in the Mexican income tax rates (increasing from 28% to 30%), as well as the elimination of the “IETU” flat corporate tax in Mexico (Impuesto Empresarial a Tasa Única), which impacted our deferred income tax balances in 2013. We paid Ps.758.3 million, Ps.930.7 million and Ps.1,445.9 million in corporate taxes in 2014, 2015 and 2016, respectively, representing 27.5%, 25.7% and 31.3%, of our earnings before taxes.

108

Taxation in Mexico

Beginning January 1, 2008, as a result of changes in the Mexican tax law, Mexican companies had to pay the greater of their income tax (30% for 2011 to 2013) or IETU, which replaced the asset tax. IETU was calculated by applying a tax rate, which since 2010 had been 17.5%, to income based on cash flows. This cash flow income was determined by taking authorized deductions (excluding wages, social security contributions, interest expense and certain investment expenditures) from total income earned from taxable activities. IETU tax credits are deducted according to procedures established in the IETU tax law. The IETU tax law established that the excess of the income tax over the asset tax could be recovered during the ten years following the implementation of the IETU tax law by up to 10% of the total asset tax carryforward at December 31, 2007 each year, provided that this amount did not exceed the difference between the income tax paid in the year and the lowest amount of asset tax paid during each of the three years preceding December 31, 2007.

Beginning in 2014, significant changes to tax laws applicable in Mexico came into force, with substantial effects for Mexican taxpayers (as published in the Official Gazette on December 11, 2013, the “2014 Fiscal Reform”). As a result of the 2014 Fiscal Reform, the IETU was repealed. However, the asset tax carryforwards can continue to be recovered as previously established. With respect to the Income Tax Law, some of the more favorable tax provisions were limited: the maximum income tax rate for individuals was increased from 30% to 35%; and companies’ deductible expenses regarding exempt payments to their employees were limited to 47%. A Value-Added Tax (VAT) rate of 16% was applied uniformly to all of Mexico, a change from the 11% rate that was previously applicable in some areas of Mexico. In addition, a new 10% withholding tax for dividends and capital gains paid to non-Mexican and to individual holders was imposed, which includes any gain on the sale of shares or ADSs by any holder, even if the transaction is carried out through the Mexican Stock Exchange or other approved securities markets. See “Item 3, Key Information – Risk Factors – Risks Related to Mexico – Federal tax legislation in Mexico may have an adverse effect on our financial condition and our results of operations.”

The principal change to affect our business from the 2014 Fiscal Reform was the effect on our deferred income taxes caused by the reform to the Income Tax Law, by which the income tax rate was prospectively increased from 28% to 30% and the IETU was eliminated. As a result of the net impact of these effects, we recognized a benefit of Ps.199.0 million in deferred income tax for the fiscal year ended December 31, 2013. We recognized no change due to these reforms in fiscal years 2014, 2015 and 2016.

We regularly review our deferred tax assets for recoverability, which are reduced as necessary to the extent that a future tax benefit is no longer probable, based on an analysis of historical taxable income, projected future taxable income and the expected timing of the reversals of existing temporary differences. In addition, Mexican tax law allows Mexican companies utilizing tax amortization rates that are lower than the maximum allowable rates to modify their tax amortization rates every five years, without exceeding the maximum allowable rate. Beginning in 2000, we utilized rates lower than the 15% maximum allowable rate to amortize our airport concessions and rights to use airport facilities for tax purposes.

According to the mechanism established to recover existing asset tax credit carryforwards, which ultimately benefit us, we have ten years beginning in 2008 to recover those existing asset tax credits. Every year, we review and adjust, as necessary, our financial projections based on new expectations of revenues, expenses and capital expenditures, whether for our Master Development Programs, for new maximum tariffs or new passenger traffic projections. Based on these changes, which resulted in our ability to recover tax on assets previously determined to be unrecoverable, and our financial projections for 2008 to 2017, we recognized Ps.354.9 million in 2007 associated with a previously paid recoverable tax on assets. In 2014, we increased the recoverable tax on assets by Ps.3.0 million, based on revised financial projections from 2015 to 2017. The recoverable tax on assets decreased Ps.61.6 million due to a refund requested and received in 2014. In 2015, we increased the recoverable tax on assets by Ps.3.2 million, based on revised financial projections from 2016 to 2017. In 2016, we decreased the recoverable tax on assets by Ps.2.6 million and Ps.48.1 million were recovered. The tax on assets expected to be recoverable in 2017 accounts for Ps.94.3 million, approximately.

109

Taxation in Jamaica

Jamaican companies, including MBJA, are required to pay corporate income tax on taxable profit, employer taxes on certain employee costs and a value-added tax on services offered.

Corporate income tax is applicable on taxable profit at a rate of 25%, but taxable profit may be reduced by an employer tax credit of up to the total amount of employer and certain obligatory employee taxes timely paid during any fiscal year. However, this employer tax credit is clawed back if any dividends are paid to shareholders in the subsequent fiscal years, based on a prescribed formula. For the year ended December 31, 2016, MBJA incurred approximately U.S.$7.9 million (Ps.148.0 million) in corporate income tax liabilities, as compared to U.S.$6.4 million (Ps.103.0 million) for the period from April to December 2015. MBJA took an employer tax credit of U.S.$0.4 million, and had paid off its tax liabilities for 2016 in March 2017.

Employee Profit Sharing

Employee Profit Sharing in Mexico

We are subject to the statutory employee profit sharing regime established under the Mexican Federal Labor Law (Ley Federal del Trabajo). Under this regime, 10% of each unconsolidated company’s annual profits (as calculated for tax purposes) must be distributed among its employees, other than its chief executive officer. As a result of the 2014 Fiscal Reform, Mexican companies had to change the way they calculate the employee profit sharing thereafter. The profit sharing is derived from the taxable income for the year as adjusted by the income tax for the year as modified per certain provisions; however, these changes do not have a material impact on our results.

Employee Profit Sharing in Jamaica

MBJA is not subject to an employee profit sharing regime.

Employee Retirement Plans

Employee Retirement Plans in Mexico

Under Mexican legislation, we must make payments equivalent to 2% of our workers’ comprehensive daily salary to a defined contribution plan that is part of the retirement savings system. This expense amounted to Ps.4.4 million in 2014, Ps.4.7 million in 2015 and Ps.5.0 million in 2016.

Employee Retirement Plans in Jamaica

MBJA participates in a defined contribution pension scheme, the assets of which are held in a separate fund administered by trustees and a fund Administrator. Under this contribution pension scheme MBJA pays fixed percentage contributions to the fund, which are funded by payments from employees and the company. MBJA’s contributions are charged to the statement of comprehensive income for the year to which they relate.

Effects of Devaluation and Inflation

The following table sets forth, for the periods indicated, the percentage change in the price of the Mexican peso against the U.S. dollar, the Mexican inflation rate, the U.S. inflation rate, and the Mexican GDP, each as compared to the previous period:

	Year ended December 31,
	2014			2015			2016
Depreciation (appreciation) of the Mexican peso as compared to the U.S. dollar(1)		12.9	%		16.7	%		20.2	%
Mexican inflation rate(2)		4.1	%		2.1	%		3.4	%
U.S. inflation rate(3)		0.8	%		0.7	%		2.1	%
Increase in Mexican GDP(4)		2.1	%		2.5	%		2.3	%

110

(1) Based on changes in the rates for calculating foreign exchange liabilities, as reported by the Mexican Central Bank (Banco de México), at the end of each period, which were as follows: Ps.14.7180 per U.S.$1.00 as of December 31, 2014, Ps.17.1950 per U.S.$1.00 as of December 31, 2015 and Ps.20.6640 per U.S.$1.00 as of December 31, 2016.

(2) Based on changes in the Mexican CPI from the previous period, as reported by INEGI. The Mexican CPI at year-end was 116.059 in 2014, 118.532 in 2015 and 122.515 in 2016.

(3) As reported by the U.S. Bureau of Labor Statistics.

(4) Estimated as reported by INEGI.

The general condition of the Mexican economy, changes in the value of the peso as compared to the U.S. dollar, inflation and high interest rates have in the past adversely affected, and may in the future adversely affect, our:

• Depreciation and amortization expense. According to IFRS, if inflation rates over a three-year period approach or exceed 100.0%, the incorporation of inflation in an entity’s financial statements becomes necessary. Therefore, non-monetary assets would be restated, and as a result depreciation and amortization of those assets would be higher, negatively affecting our net income.

• Passenger charges. Passenger charges for international passengers are currently denominated in U.S. dollars, but are invoiced and collected in pesos. Meanwhile, passenger charges for domestic passengers are denominated in pesos. Consequently, an appreciation of the peso against the U.S. dollar could cause declines in our revenues from passenger charges for international passengers and consequently our aeronautical revenues. This would also produce a decline in peso-denominated revenues when compared with the previous year, because our tariffs for the services we provide to international flights or international passengers are denominated in U.S. dollars but are generally invoiced and paid for in Mexican pesos based on the average exchange rate for the month prior to each flight on which the charge is incurred.

• Finance income (cost). As required by IFRS, our finance income (cost) reflects gains or losses from foreign exchange and gains and losses from interest earned or incurred, and as a consequence a depreciation or appreciation of the peso would impact the finance income (cost).

• Maximum rates in pesos. Our tariffs for the services we provide in our Mexican airports to international flights or international passengers are denominated in U.S. dollars, but are generally invoiced and paid in Mexican pesos based on the average exchange rate for the month prior to each flight. During 2014, 2015 and 2016, we collected passenger charges from airlines within an average period of 60, 57 and 53 days, respectively. We intend to charge prices that are as close as possible to the maximum rates that we can charge. Since we are usually only entitled to adjust our specific prices once every six months (or earlier upon a cumulative increase of 5% in the Mexican PPI, excluding petroleum), a depreciation of the peso as compared to the U.S. dollar, particularly late in the year, could cause us to exceed the maximum rates at one or more of our airports, possibly leading to the termination of one of our Mexican concessions if it is repeated and sanctioned by the SCT at least three times. In the event that any one of our Mexican concessions is terminated, our other Mexican concessions may also be terminated. In addition, if the peso appreciates as compared to the U.S. dollar we may underestimate the specific prices we can charge for regulated services and be unable to adjust our prices upwards to maximize our regulated revenues.

• Non-aeronautical revenues. In addition, some of our non-aeronautical revenue contracts are denominated and invoiced in U.S. dollars; however, some of them are collected in Mexican pesos. Consequently, an appreciation of the peso against the U.S. dollar would cause declines in our revenues from these U.S. dollar-denominated contracts.

Results of Operations by Subsidiary

Historically, our most profitable airports have been our Guadalajara, Los Cabos and Puerto Vallarta international airports, which handle the majority of our international passengers. We determine profitability per airport by dividing income from operations at each airport by total revenues for that airport. Operating margins at our Tijuana airport historically have been lower than at our other principal airports because the maximum rates applicable to aeronautical services provided at our Tijuana airport are lower than those applicable to our other principal airports. This results from the amortization of our concession relative to the level of revenues being much higher at our Tijuana airport than at our other principal airports because the original concession value assigned to Tijuana International Airport was proportionately higher.

111

The following table sets forth our results of operations for the years indicated for each of our principal airports and our other subsidiaries:

Results of Operations by Subsidiary

	Year ended December 31,
	2014			2015			2016
	(thousands of pesos, except percentages)
Guadalajara:
Revenues:
Aeronautical services	Ps.	1,432,498		Ps.	1,647,398		Ps.	2,039,875
Non-aeronautical services		426,012			491,395			565,381
		1,858,510			2,138,793			2,605,256
Improvements to concession assets(5)		194,903			126,606			521,056
Total revenues		2,053,413			2,265,399			3,126,312
Total costs		881,510			913,658			1,391,119
Costs of operations(4)		428,405			516,939			565,490
Cost of improvements to concession(5)		194,904			126,606			521,056
Depreciation and amortization		246,144			264,975			268,391
Other (income) expense		12,057			5,138			36,182
Income from operations		1,171,903			1,351,741			1,735,193
Operating margin(1)		57.07	%		59.67	%		55.50	%
Tijuana:
Revenues:
Aeronautical services	Ps.	568,992		Ps.	702,069		Ps.	974,023
Non-aeronautical services		164,611			190,578			265,700
		733,603			892,647			1,239,723
Improvements to concession assets(5)		4,016			278,716			376,290
Total revenues		737,619			1,171,363			1,616,013
Total costs		383,402			688,270			850,085
Costs of operations(4)		241,461			271,254			285,424
Cost of improvements to concession(5)		4,016			278,716			376,290
Depreciation and amortization		135,101			133,101			153,644
Other (income) expense		2,824			5,199			34,727
Income from operations		354,217			483,093			765,928
Operating margin(1)		48.02	%		41.24	%		47.40	%
Los Cabos:
Revenues:
Aeronautical services	Ps.	599,879		Ps.	723,994		Ps.	895,586
Non-aeronautical services		331,469			400,131			520,347
		931,348			1,124,125			1,415,933
Improvements to concession assets(5)		46,079			116,250			189,625
Total revenues		977,427			1,240,375			1,605,558
Total costs		463,466			577,288			712,178
Costs of operations(4)		253,890			284,980			305,844
Cost of improvements to concession(5)		46,078			116,250			189,625
Depreciation and amortization		187,048			169,624			188,376
Other (income) expense		(23,550	)		6,434			28,333
Income from operations		513,961			663,087			893,380
Operating margin(1)		52.58	%		53.46	%		55.64	%

112

	Year ended December 31,
	2014			2015			2016
	(thousands of pesos, except percentages)
Montego Bay:(6)
Revenues:
Aeronautical services		n/a			Ps. 731,576		Ps.	1,169,114
Non-aeronautical services		n/a			264,130			438,575
		n/a			995,706			1,607,689
Improvements to concession assets(5)		n/a			—			14,343
Total revenues		n/a			995,706			1,622,032
Total costs		n/a			654,404			1,108,756
Costs of operations(4)		n/a			433,803			759,330
Cost of improvements to concession(5)		n/a			—			14,343
Depreciation and amortization		n/a			220,601			333,924
Other (income) expense		n/a			—			1,159
Income from operations		n/a			341,302			513,276
Operating margin(1)		n/a			34.28	%		31.64	%
Puerto Vallarta:
Revenues:
Aeronautical services	Ps.	545,916		Ps.	688,403		Ps.	828,073
Non-aeronautical services		199,685			256,281			313,309
		745,601			944,684			1,141,382
Improvements to concession assets(5)		14,576			41,325			109,902
Total revenues		760,177			986,009			1,251,284
Total costs		361,637			409,323			521,331
Costs of operations(4)		216,508			236,114			247,727
Cost of improvements to concession(5)		14,575			41,325			109,902
Depreciation and amortization		127,914			132,076			139,500
Other (income) expense		2,640			(192	)		24,202
Income from operations		398,540			576,686			729,953
Operating margin(1)		52.43	%		58.49	%		58.34	%
Guanajuato:
Revenues:
Aeronautical services	Ps.	202,486		Ps.	266,422		Ps.	318,144
Non-aeronautical services		60,343			79,994			91,680
		262,829			346,416			409,824
Improvements to concession assets(5)		1,496			27,971			92,516
Total revenues		264,325			374,387			502,340
Total costs		132,124			169,223			251,268
Costs of operations(4)		89,293			97,502			100,332
Cost of improvements to concession(5)		1,496			27,971			92,516
Depreciation and amortization		41,806			43,390			47,960
Other (income) expense		(471	)		360			10,460
Income from operations		132,201			205,164			251,072
Operating margin(1)		50.01	%		54.80	%		49.98	%

113

	Year ended December 31,
	2014			2015			2016
	(thousands of pesos, except percentages)
Hermosillo:
Revenues:
Aeronautical services	Ps.	173,782		Ps.	199,116		Ps.	245,090
Non-aeronautical services		54,920			59,838			68,399
		228,702			258,954			313,489
Improvements to concession assets(5)		6,637			56,975			133,963
Total revenues		235,338			315,929			447,452
Total costs		144,678			205,595			294,530
Costs of operations(4)		94,038			102,437			103,514
Cost of improvements to concession(5)		6,637			56,975			133,963
Depreciation and amortization		43,985			45,364			49,111
Other (income) expense		18			819			7,942
Income from operations		90,660			110,334			152,922
Operating margin(1)		38.52	%		34.92	%		34.18	%
Other Airport Subsidiaries(2):
Revenues:
Aeronautical services	Ps.	402,184		Ps.	460,044		Ps.	568,015
Non-aeronautical services		101,503			106,905			129,681
		503,687			566,949			697,696
Improvements to concession assets(5)		14,168			190,793			238,342
Total revenues		517,855			757,742			936,038
Total costs		422,235			640,098			740,531
Costs of operations(4)		287,297			308,325			307,579
Cost of improvements to concession(5)		14,169			190,792			238,342
Depreciation and amortization		133,536			137,816			159,277
Other (income) expense		(12,767	)		3,165			35,333
Income from operations		95,620			117,644			195,507
Operating margin(1)		18.5	%		15.5	%		21.9	%
Other Subsidiaries(3):
Revenues:
Non-aeronautical services	Ps.	—		Ps.	—		Ps.	532
Total revenues		—			—			532
Total costs		(7,988	)		(239,550	)		2,871
Costs of operations(4)		6,500			26,497			173,300
Depreciation and amortization		9,686			9,488			8,204
Other (income) expense		(24,177	)		(275,535	)		(178,633	)
Income (loss) from operations		7,988			(239,550	)		(2,339	)
Total:
Revenues:
Aeronautical services	Ps.	3,925,736		Ps.	5,419,022		Ps.	7,037,920
Non-aeronautical services		1,338,542			1,849,252			2,393,604
		5,264,278			7,268,274			9,431,524
Improvements to concession assets(5)		281,874			838,635			1,676,037
Total revenues		5,546,152			8,106,909			11,107,561
Total costs		2,781,063			4,018,309			5,872,669
Costs of operations(4)		1,617,393			2,277,851			2,848,540
Cost of improvements to concession(5)		281,874			838,635			1,676,037
Depreciation and amortization		925,220			1,156,435			1,348,387
Other (income) expense		(43,424	)		(254,612	)		(295	)
Income from operations		2,765,089			4,088,600			5,234,892
Operating margin(1)		49.9	%		50.4	%		47.1	%

114

(1) We determine operating margin per airport by dividing income from operations at each airport or group of airports by total revenues for that airport or group of airports.

(2) Reflects the results of operations of our Morelia, La Paz, Aguascalientes, Mexicali, Los Mochis and Manzanillo airports.

(3) Other subsidiaries data reflects the results of operations of our principal holding company as well as those of our administrative, operating and car parking services providers.

(4) Cost of operations includes cost of services, technical assistance fees and concession taxes.

(5) Corresponds to recognition of revenues and costs pursuant to IFRIC 12.

(6) For the fiscal year ended December 31, 2015, Montego Bay airport information includes only the period from April 1 to December 31, 2015.

Summary Historical Results of Operations

As a result of our acquisition of DCA in April 2015, our summary consolidated financial and operating data for the fiscal year ended December 31, 2015 includes the consolidation of DCA from April 1, 2015. Therefore, financial and operating data for the fiscal year ended December 31, 2015 may not be directly comparable with financial and operating data for prior or subsequent fiscal years.

115

The following table sets forth a summary of our consolidated results of operations for the years indicated:

Summary Consolidated Results of Operations

	Year ended December 31,
	2014			2015			2016			% change
	(thousands of pesos, except percentages)
Revenues:
Aeronautical services		Ps. 3,925,736			Ps. 5,419,022			Ps. 7,037,920			29.9	%
Non-aeronautical services		1,338,542			1,849,252			2,393,604			29.4	%
		5,264,278			7,268,274			9,431,524			29.8	%
Improvements to concession assets		281,874			838,635			1,676,037			99.9	%
Total revenues		5,546,152			8,106,909			11,107,561			37.0	%
Operating costs:
Cost of services		1,161,588			1,558,258			1,782,371			14.4	%
Technical assistance fees		194,228			236,507			301,820			27.6	%
Concession taxes		261,577			483,086			764,349			58.2	%
Depreciation and amortization		925,220			1,156,435			1,348,387			16.6	%
Other income		(43,424	)		(254,612	)		(295	)		(99.9	)%
Cost of improvements to concession assets		281,874			838,635			1,676,037			99.9	%
Total costs		2,781,063			4,018,309			5,872,669			46.1	%
Income from operations		2,765,089			4,088,600			5,234,892			28.0	%
Finance income (cost)
Interest income, net		(15,225	)		(118,415	)		(102,138	)		(13.7	)%
Exchange gain (loss), net		7,235			(338,395	)		(500,894	)		48.0	%
Net finance (cost) income		(7,990	)		(456,810	)		(603,032	)		32.0	%
Share of loss of associate		n/a			(13,704	)		(11,728	)		(14.4	)%
Income before income taxes		2,757,099			3,618,086			4,620,132			27.7	%
Income tax expense		514,579			847,309			1,266,573			49.5	%
Profit for the year		2,242,520			2,770,777			3,353,559			21.0	%
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations		n/a			482,394			773,453			60.3	%
Items that will not be reclassified to profit or loss:
Remeasurements of employee benefit – net of income tax		n/a			n/a			10,773			100.0	%
Total comprehensive income for the year		2,242,520			3,253,171			4,137,785			27.2	%
Profit for the year attributable to:
Controlling interest		2,242,520			2,726,020			3,281,884			20.4	%
Non-controlling interesting		n/a			44,757			71,675			60.1	%
Profit for the year		2,242,520			2,770,777			3,353,559			21.0	%
Total comprehensive income for the year
Controlling interest		2,242,520			3,141,513			3,948,323			25.7	%
Non-controlling interesting		n/a			111,658			189,462			69.7	%
Total comprehensive income for the year		2,242,520			3,253,171			4,137,785			27.2	%
Other operating data:
Operating margin(1)		49.9	%		50.4	%		47.1	%
Net margin(2)		40.4	%		34.2	%		30.2	%

(1) Income from operations divided by total revenues, expressed as a percentage.

(2) Net income divided by total revenues, expressed as a percentage.

116

Results of Operations for the Year ended December 31, 2016 Compared to the Year Ended December 31, 2015

Revenues

Total revenues increased by 37.0%, from Ps.8,106.9 million in 2015 to Ps.11,107.6 million in 2016, in large part due to the consolidation of MBJA, which had total revenues of Ps.1,622.0 million in 2016, its first full year of revenues since it was consolidated in April 2015, an increase of Ps.626.3 million from the period from April 1 to December 31, 2015. The total revenue increase comprised an increase of Ps.1,618.9 million, or 29.9%, in aeronautical services revenues, an increase of Ps.544.4 million, or 29.4%, in non-aeronautical services revenues and an increase of Ps.837.4 million, or 99.9%, in revenues from improvements to concession assets as a result of the committed investments outlined in our Master Development Programs.

Aeronautical Services Revenues

Aeronautical services revenues increased by Ps.1,618.9 million, or 29.9%, from Ps.5,419.0 million in 2015 to Ps.7,037.9 million in 2016, in large part due to the consolidation of MBJA, which had aeronautical services revenues of Ps.1,169.1 million in 2016, its first full year of revenues since it was consolidated in April 2015, in addition to a Ps.1,181.4 million, or 25.2%, increase in revenues in our Mexican airports as a result of an increase in total passenger traffic and the tariff adjustment for 2016. Revenues from passenger charges in our Mexican airports increased by Ps.996.4 million, or 24.5%, primarily driven by an 18.2% increase in passengers paying passenger charges and the increase in specific tariffs as of January 1, 2016. Revenues from aircraft landing and parking fees in our Mexican airports increased by Ps.174.6 million, or 38.3%, while revenues from the leasing of space to airlines for ticket counters, airport security, complementary services and passenger walkaway charges increased by Ps.163.7 million, or 34.0%.

Non-Aeronautical Services Revenues

Non-aeronautical services revenues increased by Ps.544.4 million, or 29.4%, from Ps.1,849.3 million in 2015 to Ps.2,393.6 million in 2016, in large part due to the consolidation of MBJA, which had non-aeronautical services revenues of Ps.438.6 million in 2016. Revenues from businesses operated by third parties increased by Ps.432.7 million, or 36.6%, primarily driven by revenues from duty-free stores, leasing of space, food and beverage, timeshare developers, ground transportation and car rental companies, which together increased by Ps.375.1 million, or 38.8%. Revenues from businesses operated directly by us in our Mexican airports increased by Ps.92.6 million, or 18.1%, mainly due to an increase of Ps.47.0 million, or 72.3%, from VIP lounges (related to more passenger visits, the opening of one new lounge and the reopening of one lounge in the Los Cabos airport), as well as an increase of Ps.34.7 million, or 26.9%, in revenues from advertising.

Revenues from Improvements to Concession Assets

Revenues from improvements to concession assets increased by Ps.837.4 million, or 99.9%, from Ps.838.6 million in 2015 to Ps.1,676.0 million in 2016. Revenues from improvements to concession assets are determined by committed investments under our Master Development Programs in Mexico and our Capital Development Program in Jamaica. During 2016, the main commitments of improvements to concession assets included: (i) the construction of aprons and the expansion of the terminal building at the Guanajuato airport, (ii) the expansion of the terminal building at the Guadalajara airport, (iii) the expansion of the terminal building and improvement to the operational areas at the Puerto Vallarta airport, (iv) improvements to the terminal building and aprons at the Los Cabos airport and (v) improvements to taxiways and the terminal building at the Tijuana airport. The committed investments for 2016 under our Master Development Programs in Mexico represented our greatest committed investments to date.

Revenues by Airport

Total revenues increased at most of our airports, mainly due to increases in aeronautical services revenues.

Total revenues for the Guadalajara airport increased by Ps.860.9 million, or 38.0%, from Ps.2,265.4 million in 2015 to Ps.3,126.3 million in 2016 (revenues increased by Ps.466.5 million, or 21.8%, taking into account only

117

revenues from aeronautical and non-aeronautical services). Aeronautical services revenues increased by Ps.392.5 million, or 23.8%, from Ps.1,647.4 million in 2015 to Ps.2,039.9 million in 2016, due to a Ps.298.7 million, or 20.8%, increase in passenger charges driven by a 16.4% increase in passenger traffic. Non-aeronautical services revenues increased by Ps.74.0 million, or 15.1%, from Ps.491.4 million in 2015 to Ps.565.4 million in 2016, primarily due to a Ps.47.0 million increase in revenues from businesses operated by third parties, such as food and beverage operations, car rentals, duty-free stores and retail operations. Revenues from business lines operated by us increased Ps.27.0 million principally as a result of increased revenues from advertising, convenience stores and VIP lounges. Revenues from improvements to concession assets increased by Ps.394.5 million, or 311.6%, in 2016, as compared to 2015.

Total revenues for the Tijuana airport increased by Ps.444.7 million, or 38.0%, from Ps.1,171.4 million in 2015 to Ps.1,616.0 million in 2016, mainly due to a Ps.272.0 million, or 38.7%, increase in aeronautical services revenues from Ps.702.1 million in 2015 to Ps.974.0 million in 2016 (revenues increased by 38.9% taking into account only revenues from aeronautical and non-aeronautical services). This increase in aeronautical services revenues was due to an increase in passenger charges of Ps.249.3 million as well as in revenues from landing, leasing of space to airlines and aircraft parking charges, which together increased by Ps.17.8 million. Non-aeronautical services revenues increased by Ps.75.1 million, or 39.4%, from Ps.190.6 million in 2015 to Ps.265.7 million in 2016, primarily due to an increase of Ps.56.8 million in revenues from business lines operated by third parties, including from leasing of space, food and beverage operations, retail operations and other (mostly related to compensation fees from the CBX), as well as an increase of Ps.18.3 million from business lines operated by us, including car parking, VIP lounges, advertising and operation of the baggage screening systems. Revenues from improvements to concession assets increased by Ps.97.6 million, or 35.0%, in 2016 as compared to 2015.

Total revenues for the Los Cabos airport increased by Ps.365.2 million, or 29.4%, from Ps.1,240.4 million in 2015 to Ps.1,605.6 million in 2016, mainly due to an increase in aeronautical services revenues by Ps.171.6 million, or 23.7%, from Ps.724.0 million in 2015 to Ps.895.6 million in 2016. This increase in aeronautical services revenues was mainly due to a Ps.147.1 million, or 23.9%, increase in passenger charges driven by a 16.3% increase in passenger traffic, and increases in landing charges, aircraft parking charges, leasing of space and complementary service providers totaling Ps.23.0 million. Non-aeronautical services revenues increased by Ps.120.2 million, or 30.0%, from Ps.400.1 million in 2015 to Ps.520.3 million in 2016, primarily due to a Ps.112.9 million increase in revenues from business lines operated by third parties, including food and beverage operations, car rentals, leasing of space to timeshare developers and duty-free operations, as well as a Ps.7.3 million increase in revenues from business lines operated by us, including car parking charges and VIP lounges. Revenues from improvements to concession assets increased by Ps.73.4 million, or 62.1%, in 2016, as compared to 2015.

Total revenues for the Montego Bay airport increased from Ps.995.7 million for the period from April 1 through December 31, 2015 to Ps.1,622.0 million in 2016, mainly due to an increase in aeronautical services revenues from Ps.731.6 million for the period from April 1 through December 31, 2015 to Ps.1,169.1 million in 2016. Aeronautical services revenues in 2016 primarily comprised revenues from passenger charges of Ps.701.4 million, complementary service providers for Ps.226.5 million and landing charges for Ps.117.5 million. Non-aeronautical services revenues increased from Ps.264.1 million for the period from April 1 through December 31, 2015 to Ps.438.6 million in 2016. Non-aeronautical services revenues in 2016 primarily comprised Ps.396.5 million in revenues from businesses operated by third parties, such as retail, duty-free, car rentals and food and beverage operations, as well as revenues from business lines operated by us of Ps.42.1 million, principally as a result of revenues related to the operation of the baggage screening systems, car parking charges and advertising. MBJA recognized Ps.14.3 million in revenues from improvements to concession assets in 2016; it recognized no revenues from improvements to concession assets for the period from April 1 through December 31, 2015.

Total revenues for the Puerto Vallarta airport increased by Ps.265.3 million, or 26.9%, from Ps.986.0 million in 2015 to Ps.1,251.3 million in 2016, mainly due to a Ps.139.7 million, or 20.3%, increase in aeronautical services revenues, from Ps.688.4 million in 2015 to Ps.828.1 million in 2016 (revenues increased by Ps.196.7 million, or 20.8%, taking into account only revenues from aeronautical and non-aeronautical services). This increase in aeronautical services revenues was primarily due to an increase in passenger charges of Ps.120.2 million, itself caused principally by a 13.1% increase in passenger traffic, and an increase in revenues from landing charges of Ps.5.2 million. This increase in aeronautical services revenues was partially offset by a decrease of Ps.9.3 million in aircraft parking charges. Non-aeronautical services revenues increased by Ps.57.0 million, or 22.3%, from

118

Ps.256.3 million in 2015 to Ps.313.3 million in 2016, primarily due to a Ps.37.3 million increase in revenues from businesses operated by third parties, including leasing of space, leasing of space to timeshare developers, car rentals and duty-free operations, as well as an increase in revenues from business lines operated by us of Ps.19.7 million, including revenues related to the operation of the baggage screening systems, advertising and VIP lounges. Revenues from improvements to concession assets increased by Ps.68.6 million, or 166.0%, in 2016, as compared to 2015.

Total revenues for the Guanajuato airport increased by Ps.128.0 million, or 34.2%, from Ps.374.4 million in 2015 to Ps.502.3 million in 2016, mainly due to a Ps.64.5 million, or 230.8%, increase in revenues from improvements to concession assets, from Ps.28.0 million in 2015 to Ps.92.5 million in 2016 (revenues increased Ps.63.4 million, or 18.3%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues increased by Ps.51.7 million, or 19.4%, from Ps.266.4 million in 2015 to Ps.318.1 million in 2016, mainly due to a 14.7% increase in passenger traffic. Non-aeronautical services revenues increased by Ps.11.7 million, or 14.6%, from Ps.80.0 million in 2015 to Ps.91.7 million in 2016. This increase in non-aeronautical services revenues is a result of a Ps.8.3 million increase in revenues from businesses operated by us, including revenues related to VIP lounges, convenience stores and advertising, as well as a Ps.3.2 million increase in revenues from businesses operated by third parties, including retail operations and car rentals.

Total revenues for the Hermosillo airport increased by Ps.131.5 million, or 41.6%, from Ps.315.9 million in 2015 to Ps.447.5 million in 2016, primarily due to a Ps.77.0 million increase in revenues from improvements to concession assets, from Ps.57.0 million in 2015 to Ps.134.0 million in 2016 (revenues increased Ps.54.5 million, or 21.1%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues increased by Ps.46.0 million, or 23.1%, from Ps.199.1 million in 2015 to Ps.245.1 million in 2016, mainly due to a 15.7% increase in passenger traffic. Non-aeronautical services revenues increased by Ps.8.6 million, or 14.3%, from Ps.59.8 million in 2015 to Ps.68.4 million in 2016, primarily due to a Ps.5.0 million increase in revenues from business lines operated by us, including the operation of baggage screening systems, car parking charges, convenience stores and VIP lounges, and a Ps.3.6 million increase in revenues from business lines operated by third parties, primarily from retail operations, car rentals, and ground transportation.

Total revenues for our other six Mexican airports increased by Ps.178.3 million, or 23.5%, from Ps.757.7 million in 2015 to Ps.936.0 million in 2016, partly due to an increase in revenues from improvements to concession assets of Ps.47.5 million, or 24.9%, from Ps.190.8 million in 2015 to Ps.238.3 million in 2016 (revenues increased by Ps.130.7 million, or 23.1%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues at these airports increased by Ps.108.0 million, or 23.5%, from Ps.460.0 million in 2015 to Ps.568.0 million in 2016, mainly due to a 16.0% increase in passenger traffic. Non-aeronautical services revenues increased by Ps.22.8 million, or 21.3%, from Ps.106.9 million in 2015 to Ps.129.7 million in 2016, primarily due to a Ps.17.3 million increase in revenues from businesses operated by us, including advertising, car parking charges and the operation of baggage screening systems, as well as a Ps.5.5 million increase in revenues from businesses operated by third parties, including the retail operations and car rentals.

Operating Costs

Total operating costs increased by Ps.1,854.4 million, or 46.1%, from Ps.4,018.3 million in 2015 to Ps.5,872.7 million in 2016, partly due to an increase in operating costs for our Mexican airports of Ps.1,179.6 million, or 32.9%, from Ps.3,584.3 million in 2015 to Ps.4,763.9 million in 2016. Operating expenses of MBJA increased from Ps.654.4 million for the period from April 1 to December 31, 2015 to Ps.1,108.7 million for 2016. In addition, in 2015, we recognized Ps.189.8 million in revenues under other income as a result of a one-time gain in the fair value from the acquisition of DCA, which lowered operating costs for 2015. The value of the Montego Bay airport concession was determined from the fair value of the DCA and MBJA acquisition. See “Item 5, Operating and Financial Review and Prospects – Critical Accounting Policies – Fair Value of the DCA Acquisition Assets.”

Cost of Services

Cost of services, which comprises employee costs, maintenance, safety, security and insurance, utilities and other expenses, increased by Ps.224.1 million, or 14.4%, from Ps.1,558.3 million in 2015 to Ps.1,782.4 million in 2016, primarily due to a Ps.123.4 million increase in cost of services from MBJA, from Ps.261.1 million for the period from April 1, 2015 to December 31, 2015 to Ps.384.5 million in 2016. Employee costs increased by

119

Ps.81.7 million, or 16.3%, mainly due to a Ps.43.5 million increase at the Montego Bay airport. Maintenance expenses increased by Ps.44.6 million, or 14.8%, mainly due to a Ps.18.7 million increase at the Montego Bay airport and Ps 25.9 million caused by routine maintenance on runways, security equipment, machinery and equipment, in addition to major maintenance undertaken in certain operational areas of our Mexican airports. Safety, security and insurance expenses increased by Ps.32.6 million, or 13.0%, mainly due to a Ps.19.9 million increase in expenses at the Montego Bay airport. Utility expenses increased by Ps.30.7 million, or 16.0%, mainly due to the Ps.17.0 million increase at the Montego Bay airport. Other expenses increased by Ps.34.5 million, or 11.1%, driven by a Ps.24.2 million increase in other expenses for the Montego Bay airport, as well as increases in sales costs for our convenience stores and supplies for our VIP lounges, as well as the development and analysis of new business opportunities abroad.

Cost of services for our Mexican airports increased by Ps.100.7 million, or 7.8%, in 2016 compared to 2015. The change in cost of services for these airports was composed primarily of the following factors:

• Employee costs increased by Ps.38.3 million, or 9.0%, compared to 2015, mainly due to an increase in wages and salaries.

• Maintenance costs increased by Ps.25.9 million, or 10.0%, compared to 2015, mainly due to maintenance of checked baggage inspection equipment, operating areas, air conditioning, replacement of baggage equipment parts and building cleaning services.

• Safety, security and insurance expenses increased by Ps.12.6 million, or 6.2%, compared to 2015, mainly due to increased security costs for our terminals.

• Utility costs increased by Ps.13.7 million, or 10.4%, compared to 2015, mainly due to an increase of Ps.13.0 million in electricity consumption and the cost of broadband for our airports.

• Other operating expenses increased by Ps.10.2 million, or 3.7%, compared to 2015, due to an increase of Ps.14.0 million in supplies for convenience stores and VIP lounges, and partially offset by a decrease in the reserve for doubtful accounts of Ps.4.4 million.

Of our Mexican airports, the Guadalajara airport contributed most to the increase in the cost of services in 2016 as compared to 2015. The cost of services at our Guadalajara airport increased by Ps.48.6 million, or 9.4%, from Ps.516.9 million in 2015 to Ps.565.5 million in 2016, mainly as a result of a 12.7% increase in maintenance expenses resulting from the expansion of the terminal building.

Technical Assistance Fees

Technical assistance fees increased by Ps.65.3 million, or 27.6%, from Ps.236.5 million in 2015 to Ps.301.8 million in 2016. This increase in technical assistance fees was mainly due to an increase in our consolidated income from operations, which is used to calculate the technical assistance fee due to AMP. See “Item 4, Information on the Company – History and Development of the Company – Investment by AMP.”

Concession Taxes

As a result of increased revenues (excluding revenues from improvements to concession assets, which do not form part of income for purposes of the government concession tax), government concession taxes increased by Ps.281.2 million, or 58.2%, from Ps.483.1 million in 2015 to Ps.764.3 million in 2016. This increase in concession taxes was mainly due to the consolidation of MBJA, which recognized Ps.374.8 million in concession taxes for 2016 as compared to Ps.171.1 million in the period from April 1 to December 31, 2015.

Depreciation and Amortization

Depreciation and amortization increased by Ps.192.0 million, or 16.6%, from Ps.1,156.4 million in 2015 to Ps.1,348.4 million in 2016, mainly due to the consolidation of MBJA, which recognized an increase in depreciation and amortization from Ps.220.6 million in 2015 to Ps.333.9 million in 2016 (including an increase in the amortization of the Montego Bay airport concession’s fair value from Ps.116.9 million in 2015 to Ps.180.0 million in 2016), and, to a lesser extent, the growth in infrastructure resulting from the fulfillment of our Master Development Programs.

120

Other (Income)

Other income decreased by Ps.254.3 million, or 99.9%, from Ps.254.6 million in 2015 to Ps.0.3 million in 2016, mainly due to the recognition of a bargain purchase gain in the amount of Ps.189.8 million in 2015 from the determination of the fair value for the acquisition of DCA and MBJA. For further explanation of this one-time effect, see “Critical Accounting Policies – Fair Value of the DCA Acquisition Assets” below. Other income also decreased due to a Ps.22.4 million decrease in the cost of repairs caused by natural disasters, net of the insurance recovery.

Cost of Improvements to Concession Assets

Cost of improvements to concession assets increased by Ps.837.4 million, or 99.9%, from Ps.838.6 million in 2015 to Ps.1,676.0 million in 2016. The primary factor influencing this increase was the change in amounts allocated in our Master Development Programs for 2016 as compared to 2015. MBJA recognized Ps.14.3 million in cost of improvements to concession assets in 2016; it recognized no cost of improvement to concession assets in the period from April 1, 2015 to December 31, 2015.

Operating Costs by Airport

Operating costs for the Guadalajara airport increased by Ps.477.5 million, or 52.3%, from Ps.913.7 million in 2015 to Ps.1,391.1 million in 2016. This increase was primarily due to a Ps.394.5 million, or 311.6%, increase in the cost of improvements to concession assets from Ps.126.6 million in 2015 to Ps.521.1 million in 2016. The increase was also due to a Ps.79.6 million, or 15.2%, increase in the cost of services, mainly in employee costs, safety, security and insurance, maintenance and concession taxes. Depreciation and amortization increased by Ps.3.4 million, or 1.3%, in 2016 as compared to 2015. Operating costs increased by Ps.83.0 million, or 10.5%, without including the cost of improvements to concession assets.

Operating costs for the Tijuana airport increased by Ps.161.8 million, or 23.5%, to Ps.850.1 million in 2016 from Ps.688.3 million in 2015. This increase was mainly due to a Ps.97.6 million increase in the cost of improvements to concession assets from Ps.278.7 million in 2015 to Ps.376.3 million in 2016, and, to a lesser extent, an increase of Ps.43.7 million, or 15.8%, in the cost of services mainly driven by safety, security and insurance, utilities, employees costs and concession taxes, from Ps.276.5 million in 2015 to Ps.320.2 million in 2016. In addition, there was an increase of Ps.20.5 million in depreciation and amortization. Operating costs increased by Ps.64.2 million, or 15.7%, without including improvements to concession assets.

Operating costs for the Los Cabos airport increased by Ps.134.9 million, or 23.4%, from Ps.577.3 million in 2015 to Ps.712.2 million in 2016. This increase was mainly due to a Ps.73.4 million, or 63.1%, increase in the cost of improvements to concession assets from Ps.116.3 million in 2015 to Ps.189.6 million in 2016, as well as due to a Ps.20.9 million, or 7.3%, increase in the cost of services mainly in maintenance, utilities, safety, security and insurance and concession taxes, from Ps.291.4 million in 2015 to Ps.334.2 million in 2016. In addition, there was a Ps.18.8 million increase in depreciation and amortization. Operating costs increased by Ps.61.5 million, 13.3%, without including improvements to concession assets.

Operating costs for the Montego Bay airport increased from Ps.654.4 million for the period from April 1 through December 31, 2015 to Ps.1,108.8 million in 2016, mainly due to an increase in costs of services, from Ps.261.1 million for the period from April 1 through December 31, 2015 to Ps.384.5 million in 2016, including employee costs, maintenance costs, utilities and safety, security and insurance. To a lesser extent, the increase was due to an increase in depreciation and amortization expenses from Ps.220.6 million from April 1, 2015 to December 31, 2015 to Ps.333.9 million in 2016. MBJA also recorded Ps.14.3 million in cost of improvements to concession assets in 2016; it recorded no cost of improvements to concession assets in 2015. Operating costs, without including improvements to concession assets, increased from Ps.654.4 million for the period from April 1 through December 31, 2015 to Ps.1,094.4 million in 2016.

121

Operating costs for the Puerto Vallarta airport increased by Ps.112.0 million, or 27.4%, to Ps.521.3 million in 2016 from Ps.409.3 million in 2015. This increase was primarily due to a Ps.68.6 million, or 165.9%, increase in the cost of improvements to concession assets, as well as a Ps.36.0 million, or 15.3%, increase in the cost of services, driven by an increase in maintenance, utilities and employee cost. Operating costs increased by Ps.43.4 million, or 11.8%, without including improvements to concession assets.

Operating costs for the Guanajuato airport increased by Ps.82.0 million, or 48.5%, from Ps.169.2 million in 2015 to Ps.251.3 million in 2016. This increase was primarily due to a Ps.64.5 million increase in the cost of improvements to concession assets from Ps.28.0 million in 2015 to Ps.92.5 million in 2016. The cost of services increased by Ps.12.9 million, or 13.2%, mainly in maintenance, safety, security and insurance, other expenses costs and concession taxes. Depreciation and amortization increased Ps.4.6 million. Operating costs increased by Ps.17.5 million, or 12.4%, without including improvements to concession assets.

Operating costs for the Hermosillo airport increased by Ps.88.9 million, or 43.3%, from Ps.205.6 million in 2015 to Ps.294.5 million in 2016. This increase was due to a Ps.77.0 million, or 135.1%, increase in the cost of improvements to concession assets from Ps.57.0 million in 2015 to Ps.134.0 million in 2016. The cost of services increased by Ps.1.5 million, mainly in other costs for the cost of supplies for convenience stores and maintenance. Depreciation and amortization increased by Ps.3.7 million. Operating costs increased by Ps.11.9 million, or 8.0%, without including improvements to concession assets.

Operating costs for our six other Mexican airports increased by Ps.100.4 million, or 15.7%, from Ps.640.1 million in 2015 to Ps.740.5 million in 2016. This increase was partially due to a Ps.47.5 million, or 24.9%, increase in the cost of improvements to concession assets from Ps.190.8 million in 2015 to Ps.238.3 million in 2016. Additionally, the cost of services increased by Ps.10.1 million, and depreciation and amortization increased by Ps.21.5 million. Operating costs increased by Ps.52.9 million, or 11.8%, without including improvements to concession assets.

Operating Income

Operating income increased by Ps.1.1 billion, or 28.0%, from Ps.4.1 billion in 2015 to Ps.5.2 billion in 2016. This increase was due to a Ps.3.0 billion increase in total revenues in 2016, partially offset by a Ps.1.8 billion increase in total costs. Our operating margin decreased by 330 basis points, from 50.4% in 2015 to 47.1% in 2016 (taking into account only the sum of aeronautical and non-aeronautical services revenues, the operating margin decreased by 80 basis points in 2016, from 56.3% to 55.5%).

Operating margin is calculated by dividing income from operations at each airport by total revenues for that airport. Historically, our most profitable airports have been our Guadalajara, Los Cabos and Puerto Vallarta airports, which handle the majority of our international passengers. Historically, operating margins at our Tijuana airport have been lower than at our other principal airports because of a combination of (i) a high initial concession value, and consequently larger amortizations thereof, and (ii) lower revenues due to low maximum rates applicable to aeronautical services.

Operating Income by Airport

Operating income for the Guadalajara airport increased by Ps.383.5 million, or 28.4%, from Ps.1.4 billion in 2015 to Ps.1.7 billion in 2016, mainly due to an increase in aeronautical and non-aeronautical services revenues of Ps.466.5 million. Additionally, operating costs increased by Ps.477.5 million (excluding improvements to concession assets, operating costs increased Ps.79.6 million) and depreciation and amortization increased by Ps.3.4 million. The operating margin decreased by 420 basis points, from 59.7% to 55.5 % (operating margin increased by 340 basis points, from 63.2% to 66.6%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for the Tijuana airport increased by Ps.282.8 million, or 58.5%, from Ps.483.1 million in 2015 to Ps.765.9 million in 2016, primarily due to an increase in aeronautical and non-aeronautical services revenues as a result of an increase in passenger traffic. The operating margin increased by 620 basis points from 41.2% to 47.4% (operating margin increased by 770 basis points from 54.1% to 61.8%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

122

Operating income for the Los Cabos airport increased by Ps.230.3 million, or 34.7%, from Ps.663.1 million in 2015 to Ps.893.4 million in 2016, primarily due to an increase in aeronautical and non-aeronautical services revenues. The operating margin increased by 210 basis points from 53.5% to 55.6% (operating margin increased by 410 basis points, from 59.0% to 63.1%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for the Montego Bay airport increased from Ps.341.3 million for the period from April 1 through December 31, 2015 to Ps.513.3 million in 2016, primarily due to increases in aeronautical and non-aeronautical services revenues, which were greater than increases in operating costs. The operating margin decreased from 34.3% in the period from April 1 through December 31, 2015 to 31.6% in 2016 (operating margin decreased from 34.3% in the period from April 1 through December 31, 2015 to 31.9% in 2016, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for the Puerto Vallarta airport increased by Ps.153.3 million, or 26.6%, from Ps.576.7 million in 2015 to Ps.730.3 million in 2016, mainly due to an increase in aeronautical and non-aeronautical services revenues as a result of the increase in passenger traffic greater than the corresponding increase in operating costs. The operating margin decreased by 20 basis points from 58.5% to 58.3% (operating margin increased by 300 basis points from 61.0% to 64.0%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for the Guanajuato airport increased by Ps.45.9 million, or 22.4%, from Ps.205.2 million in 2015 to Ps.251.1 million in 2016, primarily due to an increase in aeronautical and non-aeronautical services revenues. The operating margin decreased by 480 basis points, from 54.8% to 50.0% (operating margin increased by 210 basis points from 59.2% to 61.3%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for the Hermosillo airport increased by Ps.42.6 million, or 38.6%, from Ps.110.3 million in 2015 to Ps.152.9 million in 2016, primarily due to an increase in aeronautical and non-aeronautical services revenues. The operating margin decreased by 70 basis points from 34.9% to 34.2% (operating margin increased by 620 basis points from 42.6% to 48.8%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for our six other Mexican airports increased by Ps.77.9 million, or 66.2%, from Ps.117.6 million in 2015 to Ps.195.5 million in 2016. The change in operating income was primarily due to a higher percentage increase in the sum of aeronautical and non-aeronautical services revenues as compared to our fixed costs.

Finance Income (Cost)

Financial cost in 2016 increased by Ps.146.2 million, or 32.0%, from Ps.456.8 million in 2015 to Ps.603.0 million in 2016. This increase was mainly due to the foreign exchange rate loss of Ps.162.5 million in 2016 as a result of a peso depreciation from Ps.17.20 per U.S. dollar at December 31, 2015 to Ps.20.66 per U.S. dollar at December 31, 2016. The foreign exchange rate expense increased from Ps.338.4 million in 2015 to Ps.500.9 million in 2016, primarily as a result of the U.S.$191.0 million U.S. dollar-denominated loan obtained in connection with the acquisition of DCA. The exchange rate loss was partially offset by an exchange rate gain on our assets denominated in U.S. dollars of Ps.45.9 million in 2016. The effect of the foreign exchange rate loss was partially offset by the recognition of Ps.773.4 million in revenues from currency translation effects in 2016, recognized within other comprehensive income, in accordance with applicable norms. Additionally, interest expenses increased by Ps.172.4 million in 2016 compared to 2015, mainly due to an increase in reference interest rates, as well as the issuance of a total of Ps.2.6 billion principal amount in bond certificates during 2016. Interest income increased by Ps.188.7 million in 2016 as compared to 2015, due to an increase in cash balances and higher interest rates and a gain of Ps.68.2 million in our hedging instruments.

Income Taxes

Income taxes increased in 2016 by Ps.419.3 million, from Ps.847.3 million in 2015 to Ps.1,266.6 million in 2016. MBJA’s income tax expense increased Ps.69.7 million, while the Mexican airports’ current tax increased by

123

Ps.433.2 million. Benefit from deferred tax increased by Ps.62.2 million due to a 3.4% inflation rate in 2016 as compared to a 2.1% inflation rate in 2015. Our effective tax rate increased from 23.4% in 2015 to 27.4% in 2016, primarily due to a decrease in the favorable effects of inflation from non-monetary assets, Ps.138.9 million in 2015 to Ps.4.9 million in 2016.

Net Income and Comprehensive Income Attributable to Controlling Interest

Net income and comprehensive income increased by Ps.884.6 million, or 27.2%, from Ps.3,253.2 million in 2015 to Ps.4,137.8 million in 2016, mainly due to a Ps.756.1 million increase in our Mexican airports’ operating income. This effect was offset by a Ps.502.8 million increase in income taxes and a Ps.83.6 million increase in deferred tax. Our net margin decreased from 34.2% in 2015 to 30.2% in 2016 (taking into account only aeronautical and non-aeronautical services revenues, net margin decreased to 35.6% from 38.1%).

Statement of Financial Position

The Company’s financial position as of December 31, 2016 reported an increase of Ps.4,578.1 million, primarily due to the following items: cash and cash equivalents of Ps.2,191.6 million, trade accounts receivable of Ps.448.4 million, equipment and machinery of Ps.74.8 million, improvements to concession assets of Ps.1,618.2 million, deferred taxes of Ps.137.6 million and advanced payments to suppliers of Ps.54.7 million.

Total liabilities increased by Ps.4,329.5 million, or 46.5%, compared to the same period in 2015. This increase was primarily due to: (i) a Ps.2,600.0 million increase in capital market debt for capital expenditures financing, (ii) an increase in the bank loan obtained for the acquisition of DCA for the equivalent in U.S. dollars of Ps.660.4 million based on the 20.2% depreciation of the peso compared to the dollar, (iii) accounts payable of Ps.448.7 million, (iv) deposits received in guarantee from our airline customers for the collection of passenger fees and from other clients of Ps.211.4 million, (v) concession taxes payable of Ps.132.5 million, (vi) deferred tax liabilities of Ps.127.8 million due to the Montego Bay airport’s concession assets and (vii) income taxes payable of Ps.99.1 million, among other liabilities.

124

Results of Operations for the Year ended December 31, 2015 Compared to the Year Ended December 31, 2014

Revenues

Total revenues increased by 46.2%, from Ps.5,546.2 million in 2014 to Ps.8,106.9 million in 2015, mainly due to the consolidation of MBJA, which had total revenues of Ps.995.7 million. The total revenue increase comprised an increase of Ps.1,493.3 million in aeronautical services revenues, an increase of Ps.510.7 million in non-aeronautical services revenues and an increase of Ps.556.7 in revenues from improvements to concession assets as a result of the committed investments outlined in our Master Development Programs.

Aeronautical Services Revenues

Aeronautical services revenues increased by 38.0%, from Ps.3,925.7 million in 2014 to Ps.5,419.0 million in 2015, primarily due to the consolidation of MBJA, which had an aeronautical services revenues of Ps.731.6 million, in addition to an increase of Ps.761.4 million, or 19.4%, in revenues in our Mexican airports as a result of an increase in total passenger traffic and the tariff adjustment for 2015. During 2015, revenues in our Mexican airports from passenger charges increased by Ps.693.2 million, or 20.6%, primarily driven by a 12.6% increase in passengers that paid passenger charges and the increase in specific tariffs as of January 1, 2015. Revenues in our Mexican airports from aircraft landing and parking fees increased by Ps.39.6 million, or 11.5%, while revenues from the leasing of spaces to airlines for ticket counter, airport security, complementary services and passenger walkaway charges increased by Ps.28.9 million, or 13.9%.

Non-Aeronautical Services Revenues

Non-aeronautical services revenues increased by Ps.510.7 million, or 38.2%, from Ps.1,338.5 million in 2014 to Ps.1,849.3 million in 2015, mainly due to the consolidation of MBJA, which had non-aeronautical services revenues of Ps.264.1 million. Revenues from businesses operated directly by us in our Mexican airports increased by Ps.103.9 million, or 25.4%, mainly due to an increase of Ps.41.7 million, or 105.1%, in revenues from convenience stores (related to the opening of nine new convenience stores), as well as an increase of Ps.26.7 million, or 69.8%, from VIP lounges (related to the opening of two new lounges). Revenues from businesses operated by third parties in our Mexican airports increased by Ps.162.2 million, or 20.9%, primarily driven by revenues from duty-free stores, leasing of space, food and beverage, timeshare developers, ground transportation and car rental companies, which together increased by Ps.155.3 million, or 28.7%.

Revenues from Improvements to Concession Assets

Revenues from improvements to concession assets increased by Ps.556.7 million, or 197.5%, from Ps.281.9 million in 2014 to Ps.838.6 million in 2015. The main factor that determines the change in revenues from improvements to concession assets from 2014 to 2015 is the beginning of a new Master Development Programs for the 2015-2019 period, which represents the greatest committed investment for us to date. During 2015, the main commitments of improvements to concession assets included: (i) the expansion of the terminals at our Guadalajara, La Paz, Mexicali and Los Cabos airports and (ii) the adaptation of the Tijuana terminal for the cross-border bridge and the construction of the bridge. During 2015, MBJA did not undertake improvements to concession assets.

Revenues by Airport

Total revenues at most of our airports increased, mainly due to the increase in aeronautical services revenues.

Total revenues for the Guadalajara airport increased by Ps.212.0 million, or 10.3%, from Ps.2,053.4 million in 2014 to Ps.2,265.4 million in 2015 (revenues increased by Ps.280.3 million, or 15.1%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues increased by Ps.214.9 million, or 15.0%, from Ps.1,432.5 million in 2014 to Ps.1,647.4 million in 2015, due to a Ps.210.3 million or 17.2% increase in passenger charges driven by a 12.1% increase in passenger traffic. Non-aeronautical services revenues increased by Ps.65.4 million, or 15.3%, from Ps.426.0 million in 2014 to Ps.491.4 million in 2015,

125

primarily due to a Ps.36.6 million increase in revenues from businesses operated by third parties, such as leasing of space, food and beverage operations, car rentals, duty-free stores and retail operations. Revenues from business lines operated by us increased by Ps.28.7 million, principally as a result of increased revenues related to the operation of the baggage screening systems, advertising and VIP lounges. Revenues from improvements to concession assets decreased by Ps.68.3 million.

Total revenues for the Tijuana airport increased by Ps.433.7 million, or 58.8%, from Ps.737.6 million in 2014 to Ps.1,171.4 million in 2015, mainly due to a Ps.274.7 million increase in revenues from improvements to concession assets from Ps.4.0 million in 2014 to Ps.278.7 million in 2015. Aeronautical services revenues increased by Ps.133.1 million, or 23.4%, from Ps.569.0 million in 2014 to Ps.702.1 million in 2015 (revenues increased by 21.7% taking into account only revenues from aeronautical and non-aeronautical services). This increase was due to an increase in passenger charges of Ps.115.6 million as well as in revenues from landing and aircraft parking charges, which together increased by Ps.12.7 million, and, to a lesser extent, an increase in airport security charges, leasing of space to airlines and complementary services, which together increased by Ps.4.8 million. Non-aeronautical services revenues increased by Ps.26.0 million, or 15.8%, from Ps.164.6 million in 2014 to Ps.190.6 million in 2015, primarily due to an increase of Ps.12.5 million from business lines operated by us, including car parking, VIP lounges, advertising and operation of the baggage screening systems, as well as an increase of Ps.13.5 million in revenues from business lines operated by third parties, including from leasing of space, food and beverage operations, retail operations and car rentals and leasing.

Total revenues for the Los Cabos airport increased by Ps.263.0 million, or 26.9%, from Ps.977.4 million in 2014 to Ps.1,240.4 million in 2015, mainly due to an increase of aeronautical services revenues by Ps.124.1 million, or 20.7%, from Ps.599.9 million in 2014 to Ps.724.0 million in 2015. This increase was mainly due to a Ps.118.4 million, or 23.8%, increase in passenger charges driven by a 11.2% increase in passenger traffic, and increases in landing charges, aircraft parking charges, leasing of space to airlines and airport security charges totaling Ps.5.7 million. Non-aeronautical services revenues increased by Ps.68.7 million, or 20.7%, from Ps.331.5 million in 2014 to Ps.400.1 million in 2015, primarily due to a Ps.57.3 million increase in revenues from business lines operated by third parties, including food and beverage operations, car rentals, leasing of space to timeshare developers and duty-free operations, as well as a Ps.11.4 million increase in revenues from business lines operated by us, including convenience stores and VIP lounges. Revenues from improvements to concession assets increased by Ps.70.2 million.

Total revenues for the Montego Bay airport were Ps.995.7 million for the period from April 1 through December 31, 2015. Aeronautical services revenues amounted to Ps.731.6 million for the period from April 1 through December 31, 2015 (representing 73.5% over total revenues), mainly due to passenger charges for Ps.417.2 million, complementary service providers for Ps.170.4 million and landing charges for Ps.70.6 million. Non-aeronautical services revenues were Ps.264.1 million for the period from April 1 through December 31, 2015 (representing 26.5% over total revenues), primarily due to Ps.236.5 million in revenues from businesses operated by third parties, such as leasing of space, food and beverage operations, car rentals, duty-free store and retail operations. Revenues from business lines operated by us amounted to Ps.27.6 million, principally as a result of revenues related to the operation of the baggage screening systems and advertising. MBJA did not record revenues from improvements to concession assets for the period from April 1 through December 31, 2015.

Total revenues for the Puerto Vallarta airport increased by Ps.225.8 million, or 29.7%, from Ps.760.2 million in 2014 to Ps.986.0 million in 2015, mainly due to a Ps.142.5 million, or 26.1%, increase in aeronautical services revenues, from Ps.545.9 million in 2014 to Ps.688.4 million in 2015 (revenues increased by Ps.199.1 million, or 26.7%, taking into account only revenues from aeronautical and non-aeronautical services). This increase was due to an increase in passenger charges of Ps.143.3 million, itself caused principally by a 14.9% increase in passenger traffic, whereas revenues from complementary services provided and airport security charges increased in the aggregate by Ps.6.0 million, and partially offset by a combined decrease of Ps.6.8 million in landing and aircraft parking charges and leasing of space. Non-aeronautical services revenues increased by Ps.56.6 million, or 28.3%, from Ps.199.7 million in 2014 to Ps.256.3 million in 2015, primarily due to a Ps.42.4 million increase in revenues from businesses operated by third parties, including retail operations, leasing of space to timeshare developers, car rentals and duty-free store, as well as an increase in revenues from business lines operated by us of Ps.14.2 million, including revenues related to the operation of the baggage screening systems, convenience stores and VIP lounges. Revenues from improvements to concession assets increased by Ps.26.7 million in 2015 as compared to 2014.

126

Total revenues for the Guanajuato airport increased by Ps.110.1 million, or 41.6%, from Ps.264.3 million in 2014 to Ps.374.4 million in 2015, mainly due to a Ps.63.9 million, or 31.6%, increase in aeronautical services revenues, from Ps.202.5 million in 2014 to Ps.266.4 million in 2015 (revenues increased by Ps.83.6 million, or 31.8%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues increased by Ps.63.9 million, or 31.6%, from Ps.202.5 million in 2014 to Ps.266.4 million in 2015, mainly due to a 22.1% increase in passenger traffic. Non-aeronautical services revenues increased by Ps.19.7 million, or 32.6%, from Ps.60.3 million in 2014 to Ps.80.0 million in 2015. This increase is a result of a Ps.11.5 million increase in revenues from businesses operated by us, such as advertising, car parking charges and the operation of the baggage screening systems, as well as a Ps.8.2 million increase in revenues from businesses operated by third parties, including the leasing of space, car rentals and retail operations. The revenues from improvements to concession assets increased by Ps.26.5 million in 2015, as compared to 2014.

Total revenues for the Hermosillo airport increased by Ps.80.6 million, or 34.2%, from Ps.235.3 million in 2014 to Ps.315.9 million in 2015, primarily due to a Ps.50.3 million increase in revenues from improvements to concession assets, from Ps.6.6 million in 2014 to Ps.56.9 million in 2015 (revenues increased by Ps.30.3 million, or 13.2%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues increased by 14.6% or Ps.25.3 million, from Ps.173.8 million in 2014 to Ps.199.1 million in 2015, mainly due to a 1.7% increase in passenger traffic. Non-aeronautical services revenues increased by 9.0% or Ps.4.9 million, from Ps.54.9 million in 2014 to Ps.59.8 million in 2015, primarily due to a Ps.3.4 million increase in revenues from business lines operated by us, including the operation of the baggage screening systems, advertising, convenience stores and VIP lounges, as well as due to a Ps.1.5 million increase in revenues from business lines operated by third parties, primarily resulting from the leasing of space, car rentals, and ground transportation.

Total revenues for our other six Mexican airports increased by Ps.239.9 million, or 46.3%, from Ps.517.9 million in 2014 to Ps.757.7 million in 2015, mainly due to an increase of Ps.176.6 million, or 1,246.5%, from Ps.14.2 million in 2014 to Ps.190.8 million in 2015, in revenues from improvements to concession assets (revenues increased by Ps.63.3 million, or 12.6%, taking into account only revenues from aeronautical and non-aeronautical services). Aeronautical services revenues at these airports increased by Ps.57.9 million, or 14.4%, from Ps.402.2 million in 2014 to Ps.460.0 million in 2015, mainly due to a 9.0% increase in passenger traffic. Non-aeronautical services revenues increased by Ps.5.4 million, or 5.3%, from Ps.101.5 million in 2014 to Ps.106.9 million in 2015, primarily due to a Ps.2.6 million increase in revenues from businesses operated by us, including advertising, car parking charges and the operation of the baggage screening systems, as well as a Ps.2.8 million increase in revenues from businesses operated by third parties, including the leasing of space, car rentals and communications services.

Operating Costs

Total operating costs during 2015 increased by Ps.1,237.2 million, or 44.5%, compared to 2014, mainly due to the consolidation of MBJA, which had operating expenses of Ps.653.7 million. This amount primarily comprises depreciation and amortization costs of Ps.220.6 million (which included the amortization of the Montego Bay airport concession’s fair value by Ps.116.9 million), concession tax costs of Ps.171.1 million, employee costs of Ps.77.6 million, utilities costs of Ps.60.5 million, safety, security and insurance costs of Ps.46.4 million and maintenance costs of Ps.44.3 million. The value of the Montego Bay airport concession was determined from the fair value of the DCA and MBJA acquisition. See “– Critical Accounting Policies – Fair Value of the DCA Acquisition Assets.” Operating costs for our Mexican airports in 2015 increased by Ps.583.5 million, or 21.0%, compared to 2014.

Cost of Services

Cost of services, which comprises employee costs, maintenance, safety, security, insurance, utilities and other expenses, increased by Ps.396.7 million, or 34.1%, from Ps.1,161.6 million in 2014 to Ps.1,558.3 million in 2015 primarily due to the consolidation of MBJA, which had cost of services of Ps.262.2 million. Employee costs increased by Ps.109.2 million, or 27.8%, mainly due to the consolidation of Ps.77.6 million for the Montego Bay airport. Maintenance expenses increased by Ps.78.5 million, or 35.1%, mainly due to Ps.44.4 million for the Montego Bay airport, caused by routine maintenance on runways, security equipment, machinery and equipment, in addition to major maintenance undertaken in certain operational areas. Safety, security and insurance expenses increased by Ps.56.8 million, or 29.5%, mainly due to the consolidation of Ps.46.4 million expenses at the Montego

127

Bay airport, as a result of an increase in security. Utility expenses increased by Ps.44.4 million, or 30.0%, mainly due to the consolidation of MBJA which had an electricity cost of Ps.60.5 million. Other expenses increased by Ps.107.7 million (taking into account Ps.33.4 million of other expenses for the Montego Bay airport), or 52.9%, mainly due to increases in professional fees for legal defense and corporate consulting relating to the acquisition of DCA, as well as the development of projects to build or renovate a hotel, offices and commercial areas.

Cost of services for our Mexican airports increased by Ps.136.1 million, or 11.7%, in 2015 compared to 2014. The change in cost of services for these airports was composed primarily of the following factors:

• Other operating expenses increased by Ps.75.6 million, or 37.1%, compared to 2014, due to an increase in professional services fees of Ps.37.7 million, in addition to an increase of Ps.22.1 million in supplies for convenience stores and VIP lounges, a Ps.8.0 million increase in the reserve for doubtful accounts and other supplies of Ps.2.9 million.

• Maintenance costs increased by Ps.34.1 million, or 15.3%, compared to 2014, mainly due to maintenance of checked baggage inspection equipment, operating areas, air conditioning, computer equipment, replacement of baggage equipment parts and building cleaning services.

• Employee costs increased by Ps.31.6 million, or 8.0%, compared to 2014, mainly due to an increase in wages and salaries.

• Safety, security and insurance expenses increased by Ps.10.5 million, or 5.4% compared to 2014, mainly due to increased security costs for our terminals.

• Utility costs declined by Ps.15.6 million, or 10.9%, compared to 2014, mainly due to a decline in electricity consumption resulting from cost control initiatives implemented at the airports as well as the decrease in electricity rates.

The main Mexican airport that contributed to the increase in the cost of services for 2015 was the Guadalajara airport. The cost of services at our Guadalajara airport increased from Ps.428.4 million in 2014 to Ps.516.9 million in 2015, or 20.6%, mainly as a result of 13.4% increase in expenses of maintenance by the expansion of the terminal.

Technical Assistance Fees

Technical assistance fees increased by Ps.42.3 million, or 21.8%, from Ps.194.2 million in 2014 to Ps.236.5 million in 2015. This increase was mainly due to an increase in our consolidated income from operations, which is used to calculate the technical assistance fee due to AMP. See “Item 4, Information on the Company – History and Development of the Company – Investment by AMP.”

Concession Taxes

As a result of increased revenues (excluding revenues from improvements to concession assets as they do not form part of income for purposes of the government concession tax), government concession taxes increased by 84.7%, from Ps.261.6 million in 2014 to Ps.483.1 million in 2015. This increase was mainly due to the consolidation of MBJA, which had concession taxes of Ps.171.1 million.

Depreciation and Amortization

Depreciation and amortization increased by Ps.231.2 million, or 25.0%, from Ps.925.2 million in 2014 to Ps.1,156.4 million in 2015, mainly due to the consolidation of MBJA which had an amortization expense of Ps.220.6 million (including the amortization of the Montego Bay Airport concession’s fair value by Ps.116.9 million), and, to a lesser extent, the growth in infrastructure resulting from our fulfillment of our Master Development Programs and our commitment to provide better services to our clients.

128

Other Expense (Income)

Other income increased by Ps.211.2 million, or 486.3%, mainly due to the recognition of the Ps.189.8 million for bargain purchase gain from the determination of the fair value for the acquisition of DCA and MBJA. This is a one-time effect that is explained further under “Critical Accounting Policies – Fair Value of the DCA Acquisition Assets” below. Other income also increased due to other services provided by DCA of Ps.30.4 million, which was partially offset by the cost of repairs caused by natural disasters, net of the insurance recovery, for Ps.7.6 million, among others.

Cost of Improvements to Concession Assets

Cost of improvements to concession assets increased by Ps.556.8 million, or 197.5%, from Ps.281.9 million in 2014 to Ps.838.6 million in 2015. The primary factor influencing the increase in cost of improvements to concession assets from 2014 to 2015 was the change in amounts allocated in our Master Development Programs for 2015 as compared to 2014. MBJA did not undertake any improvements to concession assets at the Montego Bay airport in 2015.

Operating Costs by Airport

Operating costs for the Guadalajara airport increased by Ps.32.1 million, or 3.6%, from Ps.881.5 million in 2014 to Ps.913.7 million in 2015. This increase was primarily due to a Ps.81.6 million, or 18.5%, increase in the cost of services, mainly in utilities, safety, security and insurance and maintenance, as well as a Ps.18.8 million increase in depreciation and amortization (operating costs increased by Ps.100.4 million, or 14.6%, without including the cost of improvements to concession assets). The increase was partially offset by a Ps.68.3 million decrease in the cost of improvements to concession assets from Ps.194.9 million in 2014 to Ps.126.6 million in 2015.

Operating costs for the Tijuana airport increased by Ps.304.9 million, or 79.5%, to from Ps.383.4 million in 2014 to Ps.688.3 million in 2015. This increase was mainly due to a Ps.274.7 million increase in the cost of improvements to concession assets from Ps.4.0 million in 2014 to Ps.278.7 million, and, to a lesser extent, an increase of Ps.32.2 million, or 13.1%, in the cost of operation mainly in safety, security and insurance, professional services and other expenses, from Ps.244.3 million in 2014 to Ps.276.5 million in 2015. This increase was partially offset by a Ps.2.0 million decrease in depreciation and amortization. Operating costs increased by Ps.30.2 million, or 8.0%, without including improvements to concession assets.

Operating costs for the Los Cabos airport increased by Ps.113.8 million, or 24.6%, from Ps.463.5 million in 2014 to Ps.577.3 million in 2015. This increase was mainly due to a Ps.70.2 million, or 152.3%, increase in the cost of improvements to concession assets from Ps.46.1 million in 2014 to Ps.116.3 million in 2015, as well as due to a Ps.61.0 million, or 26.5%, increase in the cost of operation mainly in safety, security and insurance, services and other expenses, from Ps.230.4 million in 2014 to Ps.291.4 million in 2015. The increase was partially offset by a Ps.17.4 million decrease in depreciation and amortization, mainly due to remodeling costs required following terminal damage caused by Hurricane Odile in 2014. Operating costs increased by Ps.43.6 million, or 10.5%, without including improvements to concession assets.

Operating costs for the Montego Bay airport were Ps.653.7 million for the period from April 1 through December 31, 2015, comprising Ps.433.8 million operating cost (representing 66.3% over total costs) mainly cost of services, including employee costs, maintenance costs, utilities, security costs and insurance premiums, and depreciation and amortization expenses of Ps.220.6 million. MBJA did not record any improvements to concession assets at the Montego Bay airport for the period from April 1 through December 31, 2015.

Operating costs for the Puerto Vallarta airport increased by Ps.47.7 million, or 13.2%, to Ps.409.3 million in 2015 from Ps.361.6 million in 2014. This increase was primarily due to a Ps.26.8 million, or 183.5%, increase in the cost of improvements to concession assets, as well as a Ps.16.8 million, or 7.6%, increase in the cost of services, driven by an increase in the cost of supplies for convenience stores and maintenance cost. Operating costs increased by Ps.20.9 million, or 6.0%, without including of improvements to concession assets.

Operating costs for the Guanajuato airport increased by Ps.37.1 million, or 28.1%, from the Ps.132.1 million recorded in 2014 to Ps.169.2 million in 2015. This increase was primarily due to a Ps.26.5 million increase in the

129

cost of improvements to concession assets from Ps.1.5 million in 2014 to Ps.28.0 million in 2015. The cost of services increased by Ps.9.0 million, or 10.2%, mainly in maintenance costs, which was partially offset by a decrease in the cost of supplies for convenience stores, and depreciation and amortization increased by Ps.1.6 million. Operating costs increased by Ps.10.6 million, or 8.1%, without including improvements to concession assets.

Operating costs for the Hermosillo airport increased by Ps.60.9 million, or 42.1%, to Ps.205.6 million in 2015 from the Ps.144.7 million recorded in 2014. This increase was due to a Ps.50.4 million increase in the cost of improvements to concession assets from Ps.6.6 million in 2014 to Ps.57.0 million in 2015. The cost of services increased by Ps.9.2 million, mainly in maintenance and the cost of supplies for convenience stores, and depreciation and amortization increased by Ps.1.4 million. Operating costs increased by Ps.10.6 million, or 7.7%, without including improvements to concession assets.

Operating costs for our six other Mexican airports increased by Ps.190.1 million, or 42.2%, from the Ps.450.0 million recorded in 2014 to Ps.640.1 million in 2015. This increase was primarily due to a Ps.176.6 million increase in the cost of improvements to concession assets from Ps.14.2 million in 2014 to Ps.190.8 million in 2015. Additionally, the cost of services increased by Ps.37.0 million, and depreciation and amortization increased by Ps.4.3 million. Operating costs increased by Ps.13.5 million, or 3.1%, without including improvements to concession assets.

Operating Income

Operating income increased by Ps.1.3 billion, or 47.9%, from Ps.2.8 billion in 2014 to Ps.4.1 billion in 2015. This increase was due to higher revenue in 2015 and the consolidation of MBJA, (which contributed Ps.341.3 million), which was partially offset by increases in expenses. Our operating margin increased by 50 basis points, from 49.9% in 2014 to 50.4% in 2015 (taking into account only the sum of aeronautical and non-aeronautical services revenues, the operating margin increased by 380 basis points in 2015, from 52.5% to 56.3%).

Operating margin is calculated by dividing income from operations at each airport by total revenues for that airport. Historically, our most profitable airports have been our Guadalajara, Los Cabos and Puerto Vallarta airports, which handle the majority of our international passengers. Historically, operating margins at our Tijuana airport have been lower than at our other principal airports because of a combination of (i) a high initial concession value, and consequently larger amortizations thereof, and (ii) lower revenues due to low maximum rates applicable to aeronautical services.

Operating Income by Airport

Operating income for the Guadalajara airport increased by Ps.179.8 million, or 15.3%, from Ps.1.2 billion in 2014 to Ps.1.4 billion in 2015, mainly due to an increase in aeronautical and non-aeronautical services revenues of Ps.280.3 million. Additionally, operating costs increased by Ps.32.1 million and depreciation and amortization increased by Ps.18.8 million. The operating margin increased by 260 basis points, from 57.1% to 59.7% (operating margin increased by 10 basis points, from 63.1% to 63.2%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for the Tijuana airport increased by Ps.128.9 million, or 36.4%, from Ps.354.2 million in 2014 to Ps.483.1 million in 2015, primarily due to an increase in aeronautical and non-aeronautical services revenues as a result of an increase in passenger traffic. The operating margin decreased by 680 basis points, from 48.0% to 41.2% (operating margin increased by 580 basis points, from 48.3% to 54.1%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for the Los Cabos airport increased by Ps.149.1 million, or 29.0%, from Ps.514.0 million in 2014 to Ps.663.1 million in 2015, primarily due to an increase in aeronautical and non-aeronautical services revenues. The operating margin increased by 90 basis points, from 52.6% to 53.5% (operating margin increased by 380 basis points, from 55.2% to 59.0%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

130

Operating income for the Montego Bay airport amounted to Ps.341.3 million for the period from April 1 through December 31, 2015. The operating margin was 34.3%, taking into account only the sum of aeronautical and non-aeronautical services revenues.

Operating income for the Puerto Vallarta airport increased by Ps.178.2 million, or 44.7%, from Ps.398.5 million in 2014 to Ps.576.7 million in 2015, mainly due to an increase in aeronautical and non-aeronautical services revenues as a result of the increase in passenger traffic greater than the corresponding increase in operating costs. The operating margin increased by 610 basis points, from 52.4% to 58.5% (operating margin increased by 750 basis points, from 53.5% to 61.0%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for the Guanajuato airport increased by Ps.73.0 million, or 55.2%, from Ps.132.2 million in 2014 to Ps.205.2 million in 2015, primarily due to an increase in aeronautical and non-aeronautical services revenues. The operating margin increased by 480 basis points, from 50.0% to 54.8% (operating margin increased by 890 basis points from 50.3% to 59.2%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for the Hermosillo airport increased by Ps.19.7 million, or 21.7%, from Ps.90.7 million in 2014 to Ps.110.3 million in 2015, primarily due to an increase in aeronautical and non-aeronautical services revenues. The operating margin decreased by 360 basis points, from 38.5% to 34.9% (operating margin increased by 300 basis points from 39.6% to 42.6%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Operating income for our six other Mexican airports increased by Ps.49.8 million, or 73.4%, from Ps.67.8 million in 2014 to Ps.117.6 million in 2015. The change in operating income was primarily due to a higher percentage increase in the sum of aeronautical and non-aeronautical services revenues as compared to our fixed costs. The operating margin increased by 240 basis points, from 13.1% to 15.5% (operating margin increased by 1,060 basis points from 15.6% to 26.2%, taking into account only the sum of aeronautical and non-aeronautical services revenues).

Finance Income (Cost)

Our financial cost increased by Ps.448.8 million in 2015 as compared to 2014, from an expense of Ps.8.0 million in 2014 to an expense of Ps.456.8 million in 2015. This increase was mainly due to the foreign exchange rate loss of Ps.344.3 million in 2015 as compared to 2014, from an income of Ps.7.2 million in 2014 to an expense of Ps.337.1 million in 2015, as a result of a peso depreciation from Ps.14.71 per U.S. dollar at December 31, 2014 to Ps.17.20 per U.S. dollar at December 31, 2015, derived from the U.S.$191.0 million U.S. dollar-denominated loan obtained in connection with the acquisition of DCA, which was partially offset by the exchange rate gain of Ps.35.9 million in 2015. The effect of the foreign exchange rate loss was partially offset by the recognition of Ps.482.4 million in revenues from currency translation effects in 2015, recognized within other comprehensive income, in accordance with applicable norms. Additionally, we incurred the following financial expenses: (i) Ps.138.9 million in interest expense paid on loans for capital investments in Mexico; (ii) Ps.36.2 million in financing interest expenses related to MBJA’s debt and (iii) Ps.23.4 financing interest expenses paid for the acquisition of DCA. These expenses were partially offset by an increase in interest income of Ps.80.1 million.

Income Taxes

As compared with 2014, income taxes increased by Ps.332.7 million, from Ps.514.6 million in 2014 to Ps.847.3 million in 2015. MBJA’s income tax expense was Ps.74.1 million, while the Mexican airports’ current tax increased by Ps.195.4 million and deferred tax decreased by Ps.63.2 million due to a 2.1% inflation rate in 2015 as compared to a 4.1% inflation rate in 2014. Our effective tax rate increased from 19% in 2014 to 23% in 2015 primarily due to a decrease in the favorable effects of inflation from non-monetary assets from Ps.345.8 million in 2014 to Ps.138.9 million in 2015.

131

Net Income and Comprehensive Income Attributable to Controlling Interest

Net income and comprehensive income increased by Ps.1,010.6 million, or 45.1%, from Ps.2,242.5 million in 2014 to Ps.3,253.2 million in 2015, mainly due to a Ps.1,323.5 million increase in operating income comprising a Ps.792.3 million increase in our Mexican airports’ operating income, a Ps.341.5 million increase from the consolidation of the Montego Bay airport and a Ps.189.8 increase due to bargain purchase gain from the acquisition of DCA. This effect was offset by a Ps.269.5 million increase in income taxes and a $63.2 million decrease in deferred tax. Our net margin decreased from 40.4% in 2014 to 34.2% in 2015 (taking into account only aeronautical and non-aeronautical services revenues, net margin decreased from 42.6% to 38.1%).

Statement of Financial Position

The consolidation of DCA had a positive impact on the following items in the Company’s financial statements as of December 31, 2015: cash and cash equivalents of Ps.439.0 million, trade accounts receivable of Ps.80.8 million, equipment and machinery of Ps.413.7 million, improvements to concession assets of Ps.1,996.0 million, and airport concessions of Ps.2,912.9 million.

Total liabilities increased by Ps.6,317.2 million compared to the same period in 2014. This increase was primarily due to (i) the U.S.$191.0 million (Ps.3,286.4 million) bridge loan obtained for the acquisition of 100% of DCA’s shares, (ii) a Ps.850.0 million increase in capital market debt for capital expenditures financing, (iii) MBJA financial debt of Ps.663.9 million, (iv) deferred tax liabilities of Ps.818.8 million due to the Montego Bay airport’s concession assets, (v) accounts payable of Ps.336.6 million, (vi) deposits received in guarantee from our airline customers for the collection of passenger fees and from other clients of Ps.128.3 million, (vii) income taxes payable of Ps.99.4 million and (viii) concession taxes payable of Ps.79.1 million, among other liabilities.

Liquidity and Capital Resources

Historically, our operations had been funded through cash flow from operations, and we did not incur any significant indebtedness until 2007. The cash flow generated from our operations has generally been used to fund operating costs and capital expenditures, including expenditures under our Master Development Programs, and the excess of our cash flow has been added to our accumulated cash balances. In 2014, we decided to modify our leverage strategy to rely more heavily on debt issuances on the Mexican capital markets while continuing to use working capital and resources expected to be generated from operations. On April 1, 2015, we consolidated MBJA’s results of operations, including net debt in the amount of U.S.$21.4 million. In our opinion, our working capital is sufficient to meet our present obligations.

As of December 31, 2014, 2015 and 2016, we had Ps.1,595.5 million, Ps.2,996.5 million and Ps.5,188.2 million, respectively, of cash and cash equivalents. We recorded no financial investments held for trading purposes as of December 31, 2014, 2015 and 2016. In 2016, we had Ps.72.4 million in derivative financial instruments.

Cash Flows

Cash flows for the year ended December 31, 2016 as compared to cash flows for the year ended December 31, 2015

Cash and cash equivalents increased by Ps.2,191.6 million, or 73.1%, from Ps.2,996.5 million in 2015 to Ps.5,188.2 million in 2016, mainly due to Ps.5,641.2 million in net cash flows provided by operating activities, an increase of 14.2% from Ps.4,904.8 million in 2015. The increase in net cash provided by operating activities was primarily due to: (i) profit for the year of Ps.3,353.6 million (a 21.0% increase compared to 2015), (ii) an increase in cash collected from recoverable income tax and other current assets of Ps.116.2 million, as well as (iii) an increase in deposits received in guarantee of Ps.204.0 million, and was partially offset by an increase in income taxes paid of Ps.515.2 million. Net cash flows provided by operating activities was offset by net cash flows used in investing activities of Ps.1,816.6 million and net cash flows used in financing activities of Ps.1,771.2 million, this increase includes the issuance of debt securities in the amount of Ps.2,600.0 million.

Cash and cash equivalents were mainly used for: (i) dividend payments of Ps.2,139.1 million (Ps.1,198.3 million paid on August 25, 2016 and Ps.940.8 million paid on November 18, 2016); (ii) a capital distribution payment of Ps.1,750.2 million on May 9, 2016; (iii) purchases of machinery and equipment, improvements on leased buildings and concession assets and advance payments to suppliers of Ps.1,857.0 million; and (iv) payments of Ps.345.7 million to service the cost of debt.

132

Cash flows for the year ended December 31, 2015 as compared to cash flows for the year ended December 31, 2014

Cash and cash equivalents increased by Ps.1,401.0 million, or 87.8%, from Ps.1,595.5 million in 2014 to Ps.2,996.5 million in 2015. In 2015, we generated Ps.4,904.8 million in net cash flows provided by operating activities, an increase of 41.7% from Ps.3,460.2 million in 2014. The increase in net cash provided by operating activities was primarily due to: (i) profit for the year of Ps.2,770.8 million (a 23.6% increase compared to 2014), (ii) an increase in cash collected from recoverable trade accounts receivable of Ps.173.0 million, and (iii) an increase in deposits received in guarantee from clients of Ps.128.3 million, and was partially offset by an increase in accounts payable of Ps.301.5 million. Net cash flows provided by operating activities was offset by net cash flows used in investing activities of Ps.3,670.0 million, and slightly improved by net cash flows provided by financing activities of Ps.166.1 million, this increase includes the issuance of debt securities in the amount of Ps.2,600.0 million.

Cash and cash equivalents were mainly used for: (i) dividend payments of Ps.1,744.9 million (Ps.956.5 million paid on August 21, 2015 and Ps.788.4 million paid on November 4, 2015); (ii) a capital distribution payment of Ps.1,408.1 million paid on May 15, 2015; (iii) purchases of machinery and equipment, improvements on leased buildings and concession assets and advance payments to suppliers of Ps.1,128.4 billion; and (iv) payments of Ps.177.8 million to service the cost of debt.

Indebtedness

Indebtedness in Mexico

As a result of a decision to modify our leverage strategy to rely more heavily on debt issuances on the Mexican capital markets, on February 20, 2015, we made our debut issuance of long-term debt securities on the Mexican market for a total of Ps.2.6 billion, the proceeds of which were used to repay in full our outstanding bank debt of Ps.1.7 billion and to finance capital investments set forth in the Master Development Programs for 2015. The long-term debt securities were issued in two tranches with the following terms: (i) eleven million five-year debt securities issued under the ticker symbol “GAP 15” at a nominal value of Ps.100 each, for a total value of Ps.1.1 billion, on which interest is payable every 28 days at a variable rate of TIIE-28 plus 24 basis points, and the principal will be payable at maturity on February 14, 2020; and (ii) fifteen million ten-year debt securities issued under the ticker symbol “GAP 15-2” at a nominal value of Ps.100 each, for a total value of Ps.1.5 billion, on which interest is payable every 182 days at a fixed rate of 7.08%, and the principal will be payable at maturity on February 7, 2025.

On January 29, 2016, we issued another eleven million GAP 15 debt securities for a total value of Ps.1.1 billion. This issuance is a reopening of the GAP 15 debt securities originally issued on February 20, 2015, and the securities have the same characteristics as the original issuance except for the issuance date and placement price. The proceeds from this issuance were allocated to finance investments set forth in our Master Development Programs for 2016.

On July 8, 2016, we issued a tranche of fifteen million five-year debt securities under the ticker symbol “GAP 16” at a nominal value of Ps.100 each, for a total value of Ps.1.5 billion, on which interest will be payable every 28 days at a variable rate of TIIE-28 plus 49 basis points. The principal is payable upon maturity on July 2, 2021. Proceeds from the issuance will be allocated to finance investments set forth in our Master Development Programs for 2016 and the first quarter of 2017.

On April 6, 2017, we issued fifteen million new five-year debt securities under the ticker symbol “GAP 17” at a nominal value of Ps.100 each, for a total value of Ps.1.5 billion, on which interest is payable every 28 days at a variable rate of TIIE-28 plus 49 basis points, and the principal payable at maturity on March 31, 2022. The proceeds from the issuance were allocated to financing the investments set forth in the Master Development Programs for 2017. In addition, to finance the acquisition of DCA in April 2015, we borrowed a total of U.S.$191.0 million through bridge loans with Scotiabank (U.S.$96 million) and BBVA Bancomer (U.S.$95 million), at the variable one-month LIBOR rate plus 70 and 60 basis points, respectively. On September 24, 2015, we signed two new unsecured credit agreements for the refinancing of the bridge loans obtained for the acquisition of DCA. The new

133

loans, from Bank of Nova Scotia and BBVA Bancomer, for U.S.$95.5 million each, generate interest at a variable one-month LIBOR rate plus 99 and 105 basis points, respectively. The Bank of Nova Scotia and BBVA Bancomer loans were disbursed on January 19, 2016 and February 15, 2016, respectively, and have a 5-year maturity.

As of December 31, 2016, we were in compliance with all covenants stipulated by these credit agreements.

Indebtedness in Jamaica

On September 14, 2007, MBJA entered into a loan with the IFC for up to U.S.$20.0 million. The loan bears interest at a variable rate of 6-month LIBOR plus 392 basis points, with semi-annual principal and interest payments and final maturity in February 2019. As of December 31, 2016, the balance outstanding under this facility amounted to U.S.$8.1 million (Ps.167.9 million).

As part of the IFC loan transaction described above, MBJA entered into unsecured loans with its shareholder, Vantage, for U.S.$10.9 million and U.S.$0.5 million, in June 2007 and February 2009, respectively. The loans bear annual interest, payable semi-annually, at 14.0% and 8.0%, respectively, without a fixed maturity, and are subject to prepayment restrictions. As of December 31, 2016, the outstanding balance under this facility amounted to U.S.$11.4 million (Ps.236.5 million).

On December 12, 2012, MBJA entered into a second loan with IFC for U.S.$13.5 million. The loan bears interest at a variable rate of 6-month LIBOR plus 450 basis points, with semi-annual principal and interest payments and final maturity five years from each disbursement. As of December 31, 2016, the balance outstanding under this facility amounted to U.S.$10.5 million (Ps.217.0 million).

As of December 31, 2016, we were in compliance with all covenants stipulated by these credit agreements.

Capital Expenditures

For the years ended December 31, 2014, 2015 and 2016, we had total capital expenditures of Ps.620.3 million, Ps.1.1 billion and Ps.1.8 billion, respectively. During 2014, 2015 and 2016, 17.2%, 4.2% and 3.9%, respectively, of our capital expenditures were funded by cash flows from operations, while the remaining balance was funded with bank loans and long-term debt securities issued on the Mexican capital markets. We currently intend to fund the investments and working capital required by our business strategy through cash flows from operations and from the indebtedness described above.

Capital Expenditures in Mexico

Under the terms of our Mexican concessions, each of our Mexican subsidiary concession holders is required to present a Master Development Program for approval by the SCT every five years. Each Master Development Program includes investment commitments (including capital expenditures and improvements) applicable to us as the concession holder for the succeeding five-year period. Once approved by the SCT, these commitments become binding obligations under the terms of our Mexican concessions.

In December 2009, the SCT approved our Master Development Programs for each of our Mexican airports for the 2010 to 2014 period. This five-year program was in effect from January 1, 2010 until December 31, 2014. In December 2014, the SCT approved our Master Development Programs for each of our Mexican airports for the 2015 to 2019 period. This five-year program is in effect from January 1, 2015 until December 31, 2019.

134

The table below sets forth our historical capital expenditures in Mexico. Capital expenditures are calculated on a cash flow basis, meaning that capital expenditures are equal to those investments actually paid for by each airport during a given year and not including investments for which the airport made allocations but did not pay during the given year. The investments shown in the table below therefore reflect our expenditures actually paid for by our airports for the years indicated. In order to be compared with our committed investments for a given year, the investments made in the previous year but paid for in the given year need to be subtracted while the investments allocated but not paid for in the given year need to be added. For the 2014, 2015 and 2016, the total of our investments allocated but unpaid were Ps.86.4 million, Ps.221.2 million and Ps.441.5 million, respectively.

Capital Expenditures in Mexico

Year ended December 31,	Total Capital Expenditures
	(thousands of pesos) (1)
2014		Ps. 620,266
2015		1,128,382
2016		1,811,802

(1) Expressed in nominal pesos.

In 2016, we spent Ps.1.8 billion on capital expenditures in Mexico, primarily for expansion and remodeling of terminal buildings and improvements to runways, taxiways and aprons at our Guanajuato, Guadalajara, Puerto Vallarta, Los Cabos and Tijuana airports. In 2015, we spent Ps.1.1 billion on capital expenditures in Mexico, primarily for expansion and remodeling of terminal buildings and improvements to runways and aprons at our Morelia, Guadalajara and Puerto Vallarta airports and acquisition of fire trucks at all airports. In 2014, we spent Ps.620.3 million on capital expenditures, primarily for expansion and remodeling of terminal buildings and improvements to runways and aprons at our Guadalajara airport and for the border crossing at our Tijuana airport.

Capital Expenditures in Jamaica

Every five-year period, MBJA is entitled to submit to the JCAA its proposal for increases to the maximum regulated charges together with investment commitments (including capital expenditures for capital projects and required improvements at the Montego Bay airport under MBJA’s Concession Agreement). Upon the JCAA’s approval of the new maximum regulated charges, these commitments become binding obligations under the terms of MBJA’s concession.

On November 18, 2014, the JCAA approved new maximum regulated charges for the Montego Bay airport that assume capital investments (including scheduled maintenance) for the period from April 1, 2015 through December 31, 2019 estimated to cost approximately U.S.$37.9 million. The maximum regulated charges were determined by the JCAA based on traffic projections, operating costs and capital investments included in the new Capital Development Program. It is our understanding that, under the terms of the Concession Agreement with the AAJ, these committed capital investments must be met over the 5-year period and not on an annual basis. In 2016, MBJA made investments of approximately U.S.$2.4 million in capital expenditures, primarily for expansion and remodeling of the terminal and improvements to the runway and apron. In 2015, MBJA made investments of approximately U.S.$0.7 million in capital expenditures, which was fully dedicated to the replacement of equipment.

Share Repurchase Program

In the aggregate, as of December 31, 2016, we held 35,424,453 shares in our treasury worth approximately Ps.1.7 billion, at an average price of Ps.48.93 per share; as of April 7, 2017, we held 35,424,453 shares at an average price of Ps.48.93 per share.

At the General Ordinary Shareholder’s Meeting held on April 23, 2014, a share repurchase program for Series B shares was approved for a maximum amount of Ps.400 million for the twelve months following April 23, 2014. During the twelve months following April 23, 2014, we did not repurchase any shares.

At the General Ordinary Shareholder’s Meeting held on April 21, 2015, a share repurchase program for Series B shares was approved for a maximum amount of Ps.850 million for the twelve months following April 21, 2015. During the twelve months following April 21, 2015, we did not repurchase any shares.

At the General Ordinary Shareholders’ Meeting held on April 26, 2016, a share repurchase program for Series B shares was approved for a maximum amount of Ps.950 million for the twelve months following April 26, 2016. During the twelve months following April 26, 2016, we did not repurchase any shares.

135

Critical Accounting Policies

We prepare our consolidated financial statements in conformity with IFRS. Our significant accounting policies are described in Note 3 to our audited consolidated financial statements.

The preparation of consolidated financial statements in conformity with IFRS requires us to make estimates and assumptions that affect the application of accounting policies relating to the reported amounts of assets, liabilities, income and expenses of the relevant period. We base our estimates and judgments on our historical experience, on technical merits for tax positions, on financial projections and on various other reasonable factors that together form the basis for making judgments about the carrying values of our assets and liabilities. Our actual results may differ from these estimates under different assumptions or conditions. We evaluate our estimates and judgments on an ongoing basis. Information on the uncertainty in the use of assumptions and estimates that have a significant risk of resulting in a material adjustment within the next financial year are described in Note 2.g to our audited consolidated financial statements.

We believe our most critical accounting policies that result in the application of estimates and/or judgments are the following:

Contingencies and Provisions

We are a party to a number of legal proceedings. Under IFRS, provisions are recognized in the financial statements when: an entity has a present obligation (legal or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. A provision is not recognized for contingent liabilities. Contingent liabilities must be disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.

Allowance for Doubtful Accounts

We systematically and periodically review the aging and collection of our accounts receivable and recognize an allowance for doubtful accounts when evidence exists that they will not be fully recoverable, according to our bad debt policy. Moreover, because our accounts receivable are concentrated among a small number of important clients, a change in the liquidity of these clients could have a material adverse impact on the collection of our accounts receivables and our future operating results. We believe such risk is adequately covered by guarantee deposits in cash or other kind of guarantees by clients.

Income Taxes

Under IFRS, we recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. At December 31, 2014, 2015 and 2016, we recognized, within the deferred income tax asset, an estimated amount of recoverable asset tax paid of Ps.233.1 million, Ps.168.1 million and Ps.94.3 million, respectively, based on financial projections that show that we will recover the excess of asset tax over income tax relating to our Guanajuato, Guadalajara, Puerto Vallarta and Tijuana airports. As a result of changes in Mexican tax law (see “Item 5, Operating and Financial Review and Prospects – Overview – Taxation”), the asset tax balance may be recovered through rebates of up to 10% of the total asset tax paid out and pending recovery over the next ten years (starting in 2008), provided that this sum does not exceed the difference between the income tax paid during the period and the asset tax paid during the years 2007, 2006 and 2005, whichever is lower, whenever the income tax exceeds asset tax in any of those years. Additionally, we have recorded a tax loss carryforward, expiring in 2048 as permitted by the Mexican tax authorities for concession operation relating to our Aguascalientes and Morelia airports, and for ourselves, which has ten years to apply its tax loss. We regularly review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income and related income tax expense compared to future estimated asset tax and the expected timing of the reversals of existing temporary differences. If these estimates and related assumptions change in the future, we may be required to make additional adjustments to our deferred tax assets, which may result in a reduction of, or an increase in, income tax expense. Based on our financial projections, up to December 31, 2016, we will recognize deferred income taxes based on that expectation. In 2014 and 2015, we reduced the recoverable income taxes paid on dividends for a total amount of Ps.32.6 million and Ps.11.4 million,

136

respectively, in 2016 we did not pay income taxes on dividends as we did not believe we would recover those amounts in future years. Every year we review the amount of income taxes paid on dividends according to our financial projections and determine the amount that could be recovered.

Impairment in the Value of Long-Lived Assets

We must test for impairment when indicators of potential impairment in the carrying amount of tangible and intangible long-lived assets in use exist, unless there is conclusive evidence that the indicators of impairment are temporary. An impairment is recorded when the carrying amount of long-lived assets exceeds the greater of the present value of future net cash flows provided by the assets or the net sales price upon disposal. Present value of future net cash flows is based on management’s projections of future operations, discounted using current interest rates. Our evaluations throughout the year and up to the date of this filing did not reveal any impairment of tangible and intangible long-lived assets. We can give no assurance that our evaluations will not change as a result of new information or developments which may change our future projections of net cash flows or the related discount rates and result in future impairment charges.

Accounting for the Concession

We believe we have carried out a comprehensive implementation of the standards applicable to the accounting treatment of our concession and have determined that, among others IFRIC 12 is applicable to us. We treat our investments related to improvements and upgrades to be performed in connection with our Master Development Programs and Capital Development Program under the intangible asset model established by IFRIC 12 and do not recognize a provision for maintenance, as all investments required by the Master Development Programs and Capital Development Program, regardless of their nature, directly increase the maximum tariff per traffic unit. Accordingly, all amounts invested under the Master Development Programs and Capital Development Program have a direct correlation to the amount of fees we will be able to charge each passenger or cargo service provider, and thus, a direct correlation to the amount of revenues we will be able to generate. As a result, we define all expenditures associated with investments required by the Master Development Programs and Capital Development Program as revenue-generating activities given that they ultimately provide future benefits, whereby subsequent improvements and upgrades made to the concession are recognized as intangible assets based on the principles of IFRIC 12. Additionally, compliance with the committed investments per the Master Development Programs and Capital Development Program is mandatory, as well as the fulfillment of the maximum tariff and therefore, in case of a failure to meet any one of these obligations (Master Development Programs or Capital Development Program amounts or maximum tariff or maximum regulated charges), we could be subject to sanctions and our Mexican concessions or MBJA’s concession could be revoked. See “Item 4, Information on the Company – Regulatory Framework – Mexican Airport Concessions – General Obligations of Concession Holders.”

Depreciation and Amortization

In light of the nature of our business and our concessions, we make certain assumptions and professional judgments regarding recognition of depreciation and amortization of our tangible and intangible assets. Depreciation of our tangible assets is calculated under the straight-line method based on the useful lives of the related assets. The estimated useful life and the depreciation method are reviewed at the end of each year, and the effect of any changes in the estimate recorded is recognized on a prospective basis. To determine the amortization period of intangible assets, we focus either on the period over which they will generate future economic benefits or the concession term, whichever is less. We do not determine residual values for machinery, equipment, improvements and leased buildings as they are not considered to be material. As of the date of this filing, we have not made any changes to estimated useful life and depreciation and amortization methods for the years ended as of December 31, 2014, 2015 and 2016. We believe that the decisions made are the most reasonable based on information available, on the judgments made and the way in which we manage our operations.

Fair Value of the DCA Acquisition Assets

Under IFRS 3 – Business Combinations, an acquirer of a business accounts for the acquisition of a control position using the “acquisition method,” which generally recognizes the assets acquired and liabilities assumed at their acquisition-date fair values.

137

As a result of the DCA acquisition, we completed our measurement of the acquisition-date fair values of the acquired assets and assumed liabilities. DCA’s participation in SCL, however, was not recognized because the Santiago de Chile airport concession’s term expired on September 30, 2015. According to our estimates for 2017 and 2018, we expect to recover approximately Ps.26.0 million through dividends and capital repayments. During 2016, we recovered Ps.58.9 million through dividends and capital repayments.

Using this “acquisition method,” we measured an acquisition-date fair value of Ps.3,969.9 million for the net assets held by DCA and MBJA, comprising a non-controlling interest of Ps.852.8 million and a net asset value for our controlling interest of Ps.3,117.1 million. This acquisition-date fair value net asset amount, when compared to the total payment amount of Ps.2,927.4 million at the acquisition date, generates a bargain purchase gain in fair value of Ps.189.8 million, which is recognized in our consolidated statement of Profit or Loss and Other Comprehensive Income under Other Income.

Recently Issued Accounting Standards

The following are new or revised International Financial Reporting Standards that have been issued but are not yet effective:

Standard	Effective as of
Amendments to IFRS 7, Breakout initiative	January 1, 2017
Amendments to IFRS 12, Deferred tax assets for unrealized losses	January 1, 2017
IFRS 9 – Financial Instruments	January 1, 2018
IFRS 15 – Revenue from Contracts with Customers	January 1, 2018
IFRS 16 – Leases	January 1, 2019

The following is a summary of these recently issued accounting standards, our expected adoption methods and timelines for their implementation, as well as our assessments of their impacts on our consolidated financial position and results of operations, if any.

Amendments to IFRS 7 Disclosure initiative

These amendments, which form part of the IASB disclosure initiative, introduce additional disclosure requirements to those already in place in order to improve the information provided to users of the financial statements on financing activities. The amendments require entities to disclose information that allows users of financial statements to evaluate changes in the liabilities arising from financing activities. Although no specific format is required, the amendments indicate that one acceptable format is a reconciliation of the liabilities at the beginning and end of the period with cash flows from financing activities.

The modification will be applied prospectively for annual periods beginning on or after January 1, 2017. Early application is allowed, and companies are not required to submit comparative information for prior periods.

Amendments to IFRS 12 Deferred tax assets for unrealized losses

These amendments clarify the principles established regarding the recognition of deferred tax assets for unrealized losses in relation to the following three aspects:

• Unrealized losses on debt instruments measured at fair value whose tax bases are linked to their cost may give rise to a deductible temporary difference, regardless of whether recovery of the book value is expected by holding the debt instrument to expiration (in other words, assuming a recovery above its fair value) or selling it.

• When estimating probable future taxable profits, an asset is deemed recovered at a value greater than book value if such recovery is probable and the asset is not a deteriorated asset.

• When analyzing the recoverability of such deductible temporary differences and comparing them with future taxable profits, the taxable income resulting from the reversal of such temporary deductible differences need not be included.

138

IFRS 9 Financial Instruments

IFRS 9, issued in November 2009, introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition. A revised version of IFRS 9 was issued in July 2014 that included impairment requirements for financial assets and limited amendments to the classification and measurement requirements introducing a “fair value through other comprehensive income” (FVTOCI) measurement category for certain simple debt instruments. In November 2014, IFRS 9 was amended again to include the new requirements for general hedge accounting.

Key requirements of IFRS 9:

• All recognized financial assets within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding, are generally measured at amortized cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are generally measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in net income (loss).

• With regard to the measurement of financial liabilities designated as of fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability be presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.

• In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to occur before credit losses are recognized.

• The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. IFRS 9 introduces greater flexibility to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an “economic relationship.” Retrospective assessment of hedge effectiveness is no longer required. IFRS 9 also introduces enhanced disclosure requirements about an entity’s risk management activities.

We are in the process of performing an assessment on how IFRS 9 Financial Instruments will impact our consolidated financial positions and results of operations. Once this assessment is concluded, we will have a reasonable perspective regarding the impact that this new standard will have on our consolidated financial statements.

We plan to take advantage of the exemption allowing us not to restate comparative information for prior periods with respect to classification and measurement (including impairment) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 generally will be recognized in retained earnings and reserves as at January 1, 2018. We will continue accounting for financial assets and financial liabilities before January 1, 2018 under the previous revenue recognition standard.

139

Even though the impact analysis mentioned above is still in progress, we believe that, apart from the additional disclosure requirements to be fulfilled, there will be no significant changes on our consolidated financial position and results of operations as compared to the financial information reported under the current accounting standards.

IFRS 15 Revenue from Contracts with Customers

IFRS 15, issued in May 2014, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations, when it becomes effective.

The core principle of IFRS 15 is that an entity should recognize revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Specifically, IFRS 15 introduces a five-step approach to revenue recognition:

• Step 1: Identify the contract(s) with a customer

• Step 2: Identify the performance obligations in the contract

• Step 3: Determine the transaction price

• Step 4: Allocate the transaction price to the performance obligations in the contract

• Step 5: Recognize revenue when (or as) the company satisfies a performance obligation

Under IFRS 15, a company recognizes revenue when (or as) a performance obligation is satisfied, i.e., when control of the goods or services underlying the particular performance obligation is transferred to the customer. IFRS 15 adds more prescriptive guidance to deal with specific scenarios and also requires more extensive disclosures.

We plan to use the practical records for completed contracts. This means that completed contracts that began and ended in the same comparative period, as well as contracts that are contracts terminated at the beginning of the earliest period presented, are not restated.

We are in the process of performing an assessment on how IFRS 15 will impact our consolidated financial positions and results of operations. Once this assessment is concluded. We will have a reasonable perspective regarding the impact that this new standard will have on our consolidated financial statements.

We have decided to apply the “cumulative effect approach” for purposes of our transition to IFRS 15, which means that the comparative periods presented on the consolidated financial statements will remain unmodified and we will only start applying IFRS 15 as of January 1, 2018. We will continue accounting for contracts and related revenues before January 1, 2018 under the previous revenue recognition standard.

Even though the impact analysis mentioned above is still in progress, we believe that, apart from the additional disclosure requirements to be fulfilled, there will be no significant changes on our consolidated financial position and results of operations as compared to the financial information reported under the current accounting standards.

IFRS 16 Leases

IFRS 16, issued in January 2016, supersedes IAS 17 “Leases” and related interpretations. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor accounting, however, remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 is effective for periods beginning on or after January 1, 2019, with earlier adoption permitted if IFRS 15 has also been adopted.

140

Under IFRS 16, a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets, is depreciated accordingly and accrues interest. This will typically produce a front-loaded expense profile (whereas operating leases under IAS 17 typically had straight-line expenses), as an assumed linear depreciation of the right-of-use asset and the decreasing interest on the liability will lead to an overall decrease of expense over the reporting period.

The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if that can be readily determined. If that rate cannot be readily determined, the lessee shall use their incremental borrowing rate.

However, a lessee may elect to account for lease payments as an expense on a straight-line basis over the lease term for leases with a term of twelve months or less and containing no purchase options (this election is made by class of underlying asset), and for leases where the underlying asset has a low value when new, such as personal computers or small items of office furniture (this election can be made on a lease-by-lease basis).

IFRS 16 establishes different transitional provisions, including retrospective application or the modified retrospective application where the comparative period is not restated.

We are in the process of performing an assessment on how IFRS 16 will impact our consolidated financial positions and results of operations. Once this assessment is concluded, we will have a reasonable perspective regarding the impact that this new standard will have on our consolidated financial statements.

We have decided to adopt IFRS 16 early on January 1, 2018 and to apply the “partial retrospective approach” for purposes of transitioning to IFRS 16. This means that the comparative periods presented on the consolidated financial statements will remain unmodified and we will only start applying IFRS 16 as of January 1, 2018. We will continue accounting for leases before January 1, 2018 under the previous standard.

Even though the impact analysis mentioned above is still in progress, we believe that, apart from the additional disclosure requirements to be fulfilled, there will be no significant changes on our consolidated financial position and results of operations as compared to the financial information reported under the current accounting standards.

Off-balance Sheet Arrangements

We are not party to any off-balance sheet arrangements.

Tabular Disclosure of Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2016:

	Payments due by period
	Total		Less than 1 year(4)		1-3 years		3-5 years		More than 5 years
	(in millions of pesos)
Contractual Obligations:
Master Development Programs (1)(5)		Ps. 2,223.8		Ps. 1,157.7		Ps. 1,066.1		Ps. n/a-		Ps. n/a
Capital Development Program (7)		502.7		294.0		208.7		n/a		n/a
Purchase Obligations (2)		322.9		121.7		201.2		n/a		n/a
Debt		9,814.2		84.8		265.1		7,727.8		1,736.5
Interest from Debt (6)		1,679.7		336.6		646.4		320.9		375.8
Operating Lease Obligations (3)		79.0		20.9		39.1		19.0		n/a
Total		Ps. 14,622.3		Ps. 2,015.7		Ps. 2,426.6		Ps. 8,067.7		Ps. 2,112.3

141

(1) Peso figures are expressed in constant pesos as of December 31, 2012, based on the Mexican PPI’s construction price index.

(2) Reflects a minimum fixed annual payment of U.S.$4.0 million required to be paid under our technical assistance agreement. The agreement was automatically renewed for another five-year period on August 25, 2014. For the peso calculation, we assume an average exchange rate of Ps.21.0 per U.S.$1.00 and an annual U.S. inflation rate of 1.5%. The amount ultimately to be paid in any year will depend on our profitability.

(3) Includes leasing of buildings and vehicles.

(4) Amount for less than one year corresponds to obligations for 2017.

(5) In the fifth year of the Master Development Programs (2019), a negotiation will take place with the SCT to determine the new Master Development Programs commitments for the subsequent five-year period (2020-2024).

(6) For the interest calculations, we determined the interest payments using an average fixed interest rate of 9.85% and an average variable rate of 4.73% for the loans contracted. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Indebtedness.”

(7) In the fifth year of the current Capital Development Programs (2019), a negotiation will take place with the AAJ to determine the new Capital Development Program commitments for the subsequent five-year period (2020-2024).

Item 6. Directors, Senior Management and Employees

Directors

The board of directors is responsible for the management of our business. Pursuant to our bylaws, our board of directors generally must consist of eleven members. Under Mexican law, at least 25 percent of our directors must be independent (as determined by our shareholders at each annual General Ordinary Shareholders’ Meeting, applying the provisions of our bylaws and relevant Mexican and other laws); under the Securities Market Law, the National Banking and Securities Commission may object to such designation of independence. Currently, our board of directors comprises eleven members.

Our bylaws provide that the holders of Series BB shares are entitled to elect four members to the board of directors and their alternates. Our remaining directors are elected by the holders of our Series B shares (who do not elect alternates). Under our bylaws, each shareholder or group of shareholders owning 10% of our capital stock in the form of Series B shares is entitled to elect one member to the board of directors. Also our bylaws prevent any Series B shareholders, individually, or together with related parties, from appointing more than one board member, even if the shareholder owns more than 10% of our outstanding capital stock (because any shares in excess of the 10% maximum do not have any voting rights under our bylaws). The other directors to be elected by the holders of our Series B shares are elected by majority vote of all holders of Series B shares present at the shareholders’ meeting, except for those Series B shareholders that already participated in any 10% board member designation. Selection of independent directors is conducted through an executive search firm tasked with locating individuals with appropriate profiles. Directors are elected for one-year terms at the ordinary shareholders’ meeting.

At our April 21, 2015, General Ordinary Shareholders’ Meeting, several changes were approved to the composition of our board of directors, including the ratification of new members. The composition of our board of directors as of the date of this report is set forth in the following table, which lists the title, date of appointment, age and alternate, as applicable, of each of our current directors, however, this composition could change in the Ordinary Shareholders Meeting to be held on April 25, 2017. In the past, certain of our shareholders have challenged the composition of our board of directors. For more information see “Item 8, Financial Information – Legal Proceedings – Litigation related to Grupo México, S.A.B. de C.V. seeking to void certain resolutions adopted at our corporate shareholders’ meetings.”

Name	Title	Director since	Age		Alternate
Laura Díez Barroso Azcárraga(1)	Chairwoman and Director (AMP)	April 21, 2015		65	Carlos Laviada Ocejo
Eduardo Sánchez Navarro Redo(1)	Director (AMP)	April 16, 2012		71	Carlos Alberto Rohm Campos
Juan Gallardo Thurlow(1)	Director (AMP)	April 26, 2016		69	Alejandro Cortina Gallardo

142

Name	Title	Director since	Age		Alternate
Francisco Javier Marín San Andrés(1)	Director (AMP)	August 1, 2001		58	Rodrigo Marabini Ruíz
Alfredo Casar Pérez(3)	Director (appointed by Grupo México)	April 26, 2016		63	—
Carlos Cárdenas Guzmán(2)	Director (Independent)	September 22, 2011		66	—
Joaquin Vargas Guajardo(2)	Director (Independent)	April 16, 2012		63	—
Álvaro Fernández Garza(2)	Director (Independent)	February 26, 2014		49	—
Juan Díez-Canedo Ruíz(2)	Director (Independent)	April 23, 2014		66	—
Ángel Losada Moreno(2)	Director (Independent)	April 23, 2014		62	—
Roberto Servitje Achutegui(2)	Director (Independent)	April 16, 2012		63	—

(1) Elected by AMP as holder of Series BB shares, which represents 15% of our capital stock.

(2) Independent directors elected to comply with the Securities Market Law (Ley del Mercado de Valores).

(3) Director representing Grupo México as shareholder or group of shareholders owning 10% of our capital stock.

Laura Díez Barroso Azcárraga. Mrs. Díez Barroso is chairwoman of our board of directors since 2015 and chairwoman of Fundación GAP since its establishment in 2013. She is also a member of the board of directors of Telmex and Grupo Financiero Inbursa, as well as president and general director of the LCA Capital economic group. She has been a regular board member of Royal Caribbean International, ProMujer México, Telmex Internacional and the Fundación del Centro Histórico de la Ciudad de México, A.C, as well as president of international publishers Editorial Eres and Editorial Televisa. Mrs. Díez Barroso participates in philanthropic works in her role as chairwoman of Fundación GAP and president of the board of trustees of the museum of San Ildefonso College in Mexico City.

Eduardo Sánchez Navarro Redo. Mr. Sánchez was chairman of our board of directors from April 2012 to April 2015. He is currently chairman of the board of AMP. He is the founder of Grupo Questro, a real estate investment group with substantial holdings in Los Cabos, including luxury resorts and residential developments such as Cabo Real and Puerto Los Cabos. He is also a member of the board of directors and vice chairman of CULTIBA (the holding company for GEPP and Grupo Azucarero) and a member of the Mexican Resort Development Association (AMDETUR) since 1991, which is an organization that includes 90% of tourism real estate developers in the country. He is the vice president of the National Tourist Business Counsel (CNET) and has served as president of the Hotels and Tourism Companies Investors Association (AIHET). He is also president and founder of the Coordinating Counsel of Los Cabos.

Juan Gallardo Thurlow. Mr. Gallardo was elected to our board of directors on April 26, 2016. Mr. Gallardo currently is the chairman of the board of directors of Organización CULTIBA (the holding company for GEPP and Grupo Azucarero), and the chairman of the board of Grupo Azucarero México, the largest sugar mill group in Mexico. Mr. Gallardo is also a member of the board of directors of Caterpillar Inc. and Banco Santander (Mexico) S.A., as well as a member of the international advisory councils of Bombardier, Rabobank and Lafarge. Mr. Gallardo was previously a member of the Consejo Mexicano de Negocios, A.C. and of the Consejo Empresarial de América Latina; and coordinator of COECE, a special ad-hoc alliance of all Mexican private sector organizations formed to promote increased trade between Mexico, the United States and Canada and the rest of the world, particularly in the context of NAFTA and the Free Trade Agreement with the European Union. Mr. Gallardo has a bachelor’s degree in law from the Escuela Libre de Derecho in Mexico City and completed the AD-II Top Management Course at IPADE in Mexico City. He was honored by the French Government with the Legion of Honor.

Francisco Javier Marín San Andrés. Mr. Marín was elected to our board of directors on August 1, 2001 as a director nominee. He is General Director of Aena, S.A. He also serves as managing director of Aena Internacional,

143

a subsidiary that manages Aena’s operations outside of Spain. He joined Aena in 1991, and he has occupied different management positions since then, including General Director of Air Navigation, Director of Corporate Development, and Director General of Aena Internacional. He has also served in various companies and institutions including the Universidad Politécnica of Madrid, , the Civil Aviation Authority, the Eurocontrol Experimental Centre in Paris, and in the business group Indra Sistemas S.A. Mr. Marín has a degree in aeronautical engineering from the Universidad Politécnica of Madrid and a master’s degree in financial management from the Official Chamber of Commerce and Industry of Madrid, and he has completed an Executive Management Program (PADE) at the IESE Business School.

Alfredo Casar Pérez. Mr. Casar has been a director of our company since April 26, 2016. He has been a member of the board of directors of Grupo México since 1997. He is also a member of the board of directors of Ferrocarril Mexicano, S.A. de C.V., an affiliated company of Grupo México, since 1998 and its Chief Executive Officer since 1999. From 1992 to 1999, Mr. Casar served as general director and member of the board of directors of Compañía Perforadora México, S.A. de C.V. and México Compañía Constructora, S.A. de C.V., two affiliated companies of Grupo México. Mr. Casar served as Project Director of ISEFI, a subsidiary of Banco Internacional in 1991 and Executive Vice President of Grupo Costamex in 1985. Mr. Casar holds a bachelor’s degree in economics from the Autonomous Technological Institute of Mexico (ITAM), a degree in industrial engineering from Anahuac University and a master’s degree in economics from the University of Chicago.

Carlos Cárdenas Guzmán. Mr. Cárdenas has been a member of our board of directors since 2011, where he also serves as president of our Audit Committee. After 39 years of active service as a public accountant, he retired as a partner from Ernst & Young Mexico. Currently, he also serves on the boards of directors and audit committees of numerous large Mexican companies, including among others as: former board president of The American British Cowdray Medical Center, I.A.P., board member and president of the Audit Committee of Reaseguradora Patria, S.A., board member and Audit Committee member of Grupo Farmacias del Ahorro, board member and Audit Committee member of Anteris, Audit Committee member of Lockton Mexico, and Statutory Auditor of General de Seguros, S.A.B. He is also a member of several business and professional associations; most notably, he served as President of the Mexican Institute of Certified Public Accountants (IMCP) for 2012 to 2013. Mr. Cárdenas is a Certified Public Accountant, with a degree from the Universidad Autónoma de Guadalajara and a master’s degree in tax law from the Universidad Panamericana (IPADE).

Joaquin Vargas Guajardo. Mr. Vargas was elected as an independent director to the Company’s board of directors on April 16, 2012. He is chairman of the board of directors of Grupo MVS Comunicaciones, S.A. de C.V., which includes, among others, radio stations such as MVS News, EXA FM and La Mejor, as well as DISH satellite television services and the television channel 52MX. He serves on the boards of directors of publically traded companies Vitro, Grupo Financiero Santander and Médica Sur. He is also a member of the boards of directors of El Universal newspaper, Costamex, the Panamericana University and of the Patronage of the National Nutrition Institute, among others.

Álvaro Fernández Garza. Mr. Fernández was elected to the Company’s board of directors on February 26, 2014 as a provisional director nominee and serves as an independent director. He serves on the boards of Vitro, ALFA and CYDSA, as well as of the Universidad de Monterrey (UDEM) and the Museo de Arte Contemporáneo de Monterrey (MARCO). Mr. Fernández holds a bachelor’s degree in economics from the University of Notre Dame and MBAs from the Instituto Tecnológico de Estudios Superiores de Monterrey (ITESM) and from Georgetown University.

Juan Díez-Canedo Ruíz. Mr. Díez-Canedo was elected as an independent director to the Company’s board of directors on April 23, 2014. From 1978 until 1988, he worked at Banco de México, where he became head of Microfinancial Programming and Economic Research. Subsequently, he led Banco Internacional (currently HSBC) through some of the major privatizations at the time, including Telmex, Mexicana de Aviación, Industrias Conasupo and Fertimex. From 1995 to 1996, he was EVP of Grupo Maseca (GRUMA), and from 1995 to 1999, he was EVP of Banorte. In 1999, he was appointed CEO of CINTRA, the holding company for the Mexican airlines Aeroméxico Group and Mexicana. From 2001 to 2009, he was president of FODECO, a consulting firm. Since 2009, he serves as the president of Financiera Local, S.A. de C.V. SOFOM ENR. He has been an independent member of the boards of directors of Banco Mercantil del Norte (Banorte), Gruma (and its subsidiary Maseca), Gimsa, Telmex, Alcatel, Fondo de Cultura Económica and Deportes Martí. He is currently also a member of the board of Agrofinanciera del Noroeste, TdA (Titulización de Activos Madrid España), and the Regional Metropolitan Board of Banorte. Mr. Díez-Canedo holds a bachelor’s degree in economics from Instituto Tecnológico Autónomo de Mexico (ITAM) and a Ph.D. in economics from the Massachusetts Institute of Technology.

144

Ángel Losada Moreno. Mr. Losada was elected as an independent director to the Company’s board of directors on April 23, 2014. He is currently chairman of the board of directors and CEO of Grupo Gigante, S.A.B. de C.V. He is a member of the boards of directors of Banco Nacional de México, S.A. (Citi Banamex Group), the Federico Gómez Children’s Hospital and Laboratorios Novag. He has also served as chairman of the board of directors of the Mexican National Association of Retailers (Asociación Nacional de Tiendas de Autoservicio y Departamentales, A.C., or ANTAD), as a director and member of the board of directors of the Food Marketing Institute of the United States and as member of the board of Mexico City’s National Chamber of Commerce. Mr. Losada holds a bachelor’s degree in business administration from Universidad Anáhuac.

Roberto Servitje Achutegui. Mr. Servitje was elected as an independent director to the Company’s board of directors on April 16, 2012. He has 25 years of experience in the food and beverage industry. He served as executive vice president and director of Grupo Bimbo, S.A., and as president of Grupo Altex S.A., a diversified agro-industrial group, since January 2000. He is also a member of the boards of directors of various companies, such as Grupo Elektra, Banco Azteca, Grupo Lacrem (in Barcelona, Spain) and Financiera Independencia. He also serves as co-chairman of Mexico’s “Vision for Sustainable Agriculture” at the World Economic Forum and as Treasurer of the Patronato de Arte Contemporáneo and of the Fundación Olga y Rufino Tamayo. Mr. Servitje received a degree in business administration from Universidad Iberoamericana and an MBA in marketing and finance from Northwestern University (Kellogg).

Executive Officers

Pursuant to our bylaws, the directors appointed by the holders of Series BB shares are entitled to appoint and remove our top-level executive officers.

The following table lists our top-level executive officers, their current positions and their dates of appointment as executive officers:

Name	Current position	Executive officer since	Age
Fernando Bosque Mohíno	Chief Executive Officer	January 1, 2011		63
Saúl Villarreal García	Chief Financial Officer	February 25, 2015		46
Sergio Enrique Flores Ochoa	General Counsel	February 8, 2002		64
Jorge Luis Valdespino Rivera	Director of Human Resources	August 21, 2006		53
Tomás Enrique Ramírez Vargas	Director of Commercial Activities	August 1, 2013		36
José Ángel Martínez Sánchez	Director of Technical Operations	May 7, 2016		41

Fernando Bosque Mohíno. Mr. Bosque was named our CEO effective January 1, 2011. He has over 35 years of experience in the airport sector. He began his career in 1976 the Federal Aviation and Transportation Department in Spain. Up to December 2010, he served as the CEO of MBJA, appointed by Abertis. He has extensive knowledge of the airport industry, having previously been the CFO of AENA Internacional, one of our strategic partners. He served as a member of ASUR’s Board, working as Ferrovial’s concession director, and consequently has a strong understanding of the privatization structure of Mexican Airports. Mr. Bosque is a graduate in economics and business from the Universidad Autónoma de Madrid.

Saúl Villarreal García. Mr. Villarreal was named our CFO effective on February 25, 2015. He joined the Company in October 2003 and has been responsible for overseeing Corporate Administration since that time; as a result, he has vast experience and knowledge of the Company, mainly from an Administrative and Financial Management aspect. In 2006, he participated in the Initial Public Offering process and more recently participated in the issuance of debt securities on the local market. Mr. Villarreal is a public accountant with an MBA from the University of Guadalajara and a master’s degree in finance with a concentration in international accounting from the Universidad Panamericana.

145

Sergio Enrique Flores Ochoa. Mr. Flores was named our General Counsel in February 2002. Previously, he was the manager of legal matters for the ASA and an Assistant District Attorney for Mexico City. In addition, he was head of the legal department of INFONAVIT and legal manager for NAFIN. Mr. Flores received a degree in law, as well as a master’s degree in law, from the Universidad Nacional Autónoma de México (UNAM).

Jorge Luis Valdespino Rivera. Mr. Valdespino was named our Director of Human Resources in August 2006. He has twenty-five years of experience as a human resources executive. Previously, he worked in human resources in different industries, including energy, pharmaceutical, automotive and aeronautics. Currently, Mr. Valdespino also serves as President of the Human Resources Committee for the Latin American and Caribbean Association of International Airports (ACI-LAC). Mr. Valdespino received an undergraduate degree in business administration and a postgraduate degree in human resources from the Universidad Tecnológica de México, and a master’s degree in human talent management from the Universidad Panamericana.

Tomás Enrique Ramírez Vargas. Mr. Ramírez was named our Director of Commercial Activities in August 2013. He joined our comppany in 2007 as the Commercial Development Manager. Previously, he worked for Deloitte and Promotora y Operadora de Infraestructura (Pinfra). In addition, he was part of our Aeronautical Revenues and Air Service Development team from 2004 to 2006. Mr. Ramírez holds a bachelor’s degree in management and finance from the Universidad Panamericana and has a joint MBA from the Thunderbird School of Global Management and the Instituto Tecnológico de Estudios Superiores de Monterrey (ITESM).

José Ángel Martínez Sánchez. Mr. Martínez was named our Director of Technical Operations in May 2016. Previously, he worked at AENA in several capacities within Airport Engineering and Maintenance. Most recently, as part of AENA Internacional, he was Manager of Technical Operations for five years in Colombia, supporting the Cartagena de Indias, Cali and Barranquilla airports. He was also the AENA manager responsible for the takeover of the London-Luton Airport in the United Kingdom. Mr. Martínez holds a degree in Aeronautical Engineering with a specialization in Airports and Air Transport. He also holds an MBA from the Universidad Rey Juan Carlos in Madrid, and a master’s degree in Infrastructures, Equipment and Services Management from the Universidad Politécnica in Madrid.

The business address of our directors and executive officers is our principal executive headquarters.

Compensation of Directors and Executives

Under the technical assistance agreement with AMP, the four directors and four alternates elected by AMP do not receive compensation from us for serving on our board of directors.

For 2016, the aggregate compensation paid to our directors designated by our Series B shareholders was approximately Ps.5.0 million. The compensation paid to the director appointed by Grupo México was of approximately Ps.0.6 million. We have not established any pension, retirement or similar benefits or arrangements for these individuals. These directors receive a base annual compensation of approximately U.S.$44,100 for their service on our board of directors. Additionally, for their services to our corporate governance committees, certain directors receive supplemental compensation: the president of our Audit Committee receives an additional 35% of the base annual compensation; members of our Audit Committee receive 20% of the base annual compensation; and members of our Acquisition Committee and our Compensation Committee receive 10% of the base annual compensation.

The compensation paid to our six executive officers amounted to Ps.27.7 million in 2016, of which 70% was salary, 29% was bonuses and 1% was other compensation. We have not established any pension, retirement or similar benefits or arrangements for these individuals through 2016. However, in 2016 we established a new long-term cash bonus incentives plan for our executives, which seeks to encourage the retention and development of key management within the Company. The executive officers’ rights to exercise this compensation plan will vest at the end of 2019, subject to achieving certain performance and profitability targets for the Company, including share price, distributions to shareholders, operating profitability, net income and capital expenditures.

None of our directors, alternate directors or executive officers is the beneficial owner of more than 1% of any class of our capital stock, except as described in “Item 7, Major Shareholders and Related Party Transactions – Major Shareholders.” None of our directors or executive officers is entitled to benefits upon termination under their

146

service contracts with us, except for what is due to them according to the Mexican Federal Labor Law. Additionally, we have not made personal loans to our directors or executive officers and do not have a stock option plan or any equivalent plan.

Board Committees

Our bylaws provide for four committees to assist the board of directors with the management of our business: an Operating Committee, an Audit and Corporate Practices Committee, an Acquisitions Committee and a Nominations and Compensation Committee. The Audit Committee, to which our bylaws have granted the duties provided for in the Securities Market Law for Mexican corporate practices committees, is the only legally required committee. The other committees have been established to assist the board of directors. The board of directors may establish further committees from time to time.

Operating Committee

The Operating Committee, which, pursuant to our bylaws, shall have six members and three alternates, is responsible for, among other matters, proposing and approving certain plans and policies relating to our business, investments and administration, including approval of the Master Development Programs of our subsidiary concession holders, our dividend policy and investments of less than U.S.$3.0 million that are not provided for in our annual budget. Pursuant to our bylaws, the board of directors is authorized to appoint the six members of the Operating Committee. Board members elected by the holders of Series BB shares have the right to appoint three of the committee members. As of the date of this report, the members of the Operating Committee are Fernando Bosque Mohíno, CEO, who chairs the committee; Carlos Alberto Rohm Campos; Alejandro Cortina Gallardo; Saúl Villarreal García, Chief Financial Officer; Tomás Enrique Ramírez Vargas, Director of Commercial Activities; and José Ángel Martínez Sánchez, Director of Technical Operations. Carlos Manuel Porrón Suarez, Santiago Riveroll and Carlos Laviada Ocejo serve as alternates for Fernando Bosque Mohíno, Carlos Alberto Rohm Compos and Alejandro Cortina Gallardo, respectively.

Audit and Corporate Practices Committee

The Audit and Corporate Practices Committee, which must have a minimum of three members, the majority of whom must be members of our board of directors, is responsible, among other things, for: (i) monitoring the compliance of our directors, officers and employees (and those of our subsidiaries) with our (and their) bylaws (estatutos sociales) and applicable law, (ii) naming, and supervising the work of, our independent auditors and (iii) receiving and investigating internal complaints or other information concerning our systems of internal control and other such matters. The Audit and Corporate Practices Committee is also responsible for reviewing our corporate governance and all related-party transactions (according to the requirements of our bylaws and the Mexican Market Law), including transactions with AMP. The members of the board of directors elected by the holders of Series BB shares are entitled to propose the appointment to the Audit and Corporate Practices Committee of the number of members representing 20% of the committee’s total members, but at least one member who must also fulfill applicable independence requirements. The president of this committee is elected at the annual shareholders’ meeting. The composition of the Audit and Corporate Practices Committee must at all times be compliant with all applicable laws and regulations, including independence requirements, for every jurisdiction in which our securities are listed or quoted. As of the date of this report, the Audit and Corporate Practices Committee comprises the following directors: Carlos Cárdenas Guzmán serves as president and Juan Díez-Canedo Ruíz and Ángel Losada Moreno serve as members.

Acquisitions Committee

The Acquisitions Committee is responsible for ensuring compliance with our procurement policies set forth in our bylaws. Among other things, these policies require that the Acquisitions Committee approve any transaction or series of related transactions between us and a third party involving consideration in excess of U.S.$400,000 and that any contract between us, on the one hand, and AMP or any of its related parties, on the other hand, be awarded pursuant to a bidding process, which, in the case of AMP, must involve at least three other bidders. In the case of a proposed transaction between us and AMP or any related party, we are required to invite, pursuant to the bylaws, at least three contractors to bid on the transaction and, in the case that a third-party contractor’s bid is equal to or less than AMP’s bid, the transaction is awarded to the third-party contractor.

147

Our bylaws provide that a shareholders’ meeting will determine the number of members of the Acquisitions Committee, which must be composed primarily of members of the board of directors. The members of the board of directors elected by the holders of Series BB shares are entitled to appoint to the committee the number of members representing 20% of its total members but at a minimum, one member. As of the date of this report, the Acquisitions Committee consists of proprietary members Eduardo Sánchez Navarro Redo and Joaquin Vargas Guajardo. Rodrigo Marabini Ruíz was elected to serve as an alternate member to Eduardo Sánchez Navarro Redo. A secretary has also been appointed who is not a member of the committee.

Nominations and Compensation Committee

The Nominations and Compensation Committee is responsible for nominating candidates for election to our board of directors and making recommendations regarding the compensation of our directors and officers. The committee also serves in a corporate governance role within the scope of its subject matter. Our bylaws provide that a shareholders’ meeting will determine the number of members of the committee. The holders of the Series B and Series BB shares, each acting as a class, are each entitled to name one member of the Nominations and Compensation Committee. The remaining members of the committee, if any, are designated by the two members who were selected by the Series B and Series BB shareholders. If these two members are unable to reach agreement, the remaining members of the committee will be designated by the majority of the votes in the shareholders’ meeting, provided that, in such case, holders of the Series BB Shares will be entitled to appoint 20% of the members but at a minimum, one member. Members of the committee serve for a term of one year. At each annual shareholders’ meeting, the Nominations and Compensation Committee is required to present a list of candidates for election as directors for the vote of the Series B shareholders. As of the date of this report, the members of the Nominations and Compensation Committee are Rodrigo Marabini Ruíz and Álvaro Fernández Garza. Laura Díez Barroso Azcárraga was elected to serve as an alternate member to Rodrigo Marabini Ruíz.

Employees

Employees in Mexico

The following table sets forth the number of employees and a breakdown of employees by main category of activity and geographic location as of the end of each year indicated:

Employees in Mexico

	December 31,
	2014		2015		2016 (2)
By category of activity:
Airport operations		524		523		534
Airport maintenance		142		142		144
Administration(1)		211		213		217
Fundación GAP		—		7		16
By geographic location:
Guadalajara		132		139		146
Tijuana		88		84		91
Los Cabos		82		78		81
Puerto Vallarta		80		86		87
Hermosillo		54		54		54
Guanajuato		53		53		54
La Paz		44		43		43
Mexicali		42		44		44
Aguascalientes		45		44		44
Morelia		49		47		47
Los Mochis		38		39		39
Manzanillo		33		33		34
Total(1)		877		885		911

148

(1) Total at December 31, 2014, 2015 and 2016 includes 137, 141 and 147 employees, respectively, of SIAP, our administrative services subsidiary located in Guadalajara.

(2) As of December 31, 2016, CORSA employed 419 people, SIAP employed 406 people, PCP employed 70 people and Fundación GAP employed 16.

As of December 31, 2016, 52.6% of our employees were non-unionized employees. The remaining 47.4% employees were unionized. All of our unionized employees are members of local chapters of the Mexican National Union of Airport Workers (Sindicato Nacional de Trabajadores de la Industria Aeroportuaria y Servicios Similares y Conexos de la República Mexicana), an organization formed in 1998 whose members include employees of ASA as well as of the three other airport groups (the Southeast Group, the Mexico City Group and the Central-North Group) operating in Mexico. Labor relations with our employees are governed by one collective bargaining agreement relating to each one of our twelve airport subsidiaries; which is negotiated by the respective local chapter of the union. As is typical in Mexico, wages are renegotiated every year, while other terms and conditions of employment are renegotiated every two years. In 2016, we successfully renegotiated our collective bargaining agreements, thereby securing a favorable and productive work environment for our employees for 2017 and 2018. We believe that our relations with our employees are good, and the wages we pay our employees are similar to those paid to employees of similar airport operating companies in Mexico. During October 2018, we will begin renegotiating our collective bargaining agreements.

We offer a savings plan available to all of our Mexican employees pursuant to which our employees may make bi-weekly contributions of up to 13% of their pre-tax salaries. We make bi-weekly contributions matching each employee’s contribution. Employees are entitled to withdraw funds from their accounts on an annual basis. In 2014, 2015 and 2016, we made a total of Ps.15.1 million, Ps.17.0 million and Ps.17.7 million, respectively, in payments to employees’ accounts pursuant to the savings plan.

Funds in the savings plan may be used to make loans to employees and are otherwise invested in securities listed on the Mexican Stock Exchange or in treasury bills issued by the Mexican Treasury Department.

Employees in Jamaica

The following table sets forth the number of employees and a breakdown of employees by main category of activity as of the end of each year indicated:

Employees in Jamaica

	December 31,
	2015		2016
By category of activity:
Airport operations		71		76
Airport maintenance(1)		48		48
Administration		49		31
Total		168		155

(1) Total at December 31, 2016 includes 25 employees representing contractors in maintenance assigned to work on landscaping, runway maintenance, drainages and general labor tasks.

As of December 31, 2016, 28.4% of MBJA’s employees, comprising management and contract staff, were non-unionized employees and the remaining 71.6% employees were unionized. The unionized employees are members of two local trade unions: the Trade Union Congress (“TUC”) and Union of Technical, Administrative, and Supervisory Personnel (“UTASP”).

On December 16, 2016, MBJA and the TUC amicably agreed and executed the current collective bargaining agreement covering the period from March 1, 2016 to February 28, 2018. Forty-eight employees from MBJA’s maintenance, engineering and emergency response service teams are members of the TUC.

149

On December 12, 2016, MBJA and the UTASP amicably agreed and executed the current collective bargaining agreement covering the period from April 1, 2016 to March 31, 2018. Sixty-three employees from MBJA’s supervisory and administrative personnel across different departments are members of the UTASP.

MBJA’s collective bargaining agreements have been amicably renegotiated with both unions for a two-year period, and will secure a continued favorable and productive work environment for MBJA’s employees through the contract period that expires in the first quarter of 2018.

We anticipate an amicable conclusion of the next round of negotiations as MBJA continues to maintain a good relationship with both unions. Further, to our knowledge, MBJA pays comparable salaries and benefits to similar enterprises in Jamaica.

MBJA also facilitates voluntary employee salary deductions for personal savings.

Item 7. Major Shareholders and Related Party Transactions

MAJOR SHAREHOLDERS

Prior to our initial public offering in 2006, the Mexican government owned 476,850,000 Series B shares, representing 85% of our issued and outstanding capital stock. After the offering, the Mexican government ceased to be a shareholder.

The following table sets forth information with respect to beneficial ownership of our capital stock as of April 7, 2017:

Major Shareholders

	Number of Shares				Percentage of Total Capital Stock
Identity of shareholder	B Shares		BB Shares		B Shares			BB Shares
AMP		13,519,900		84,150,000		2.4	%		15.0	%
Grupo México S.A.B. de C.V. (1)		83,839,520		—		14.9	%		—
Weston Hill Equity Holdings, LP (2)		39,056,295		—		7.0	%		—
Public (3)		340,434,285		—		60.7	%		—

(1) Based on the Schedule 13D amendment filed on April 20, 2016, by Grupo México.

(2) As reported to the CNBV on September 9, 2016, by Weston Hill Equity Holdings, LP. Mr. Laviada is a general partner of Weston Hill Equity Holdings, L.P. In addition, Mr. Laviada and Mrs. Díez Barroso are investors in CMA, which owns 66.66% of AMP. Mr. Laviada directly beneficially owns 150,000 Series B shares, and Mrs. Díez Barroso directly beneficially owns 430,000 Series B shares. Consequently, they may be deemed to share an indirect beneficial ownership of 52,165,195 Series B shares, representing 9.3% of our total capital stock (excluding the 84,150,000 BB shares beneficially owned directly by AMP). See “Item 4, Information on the Company —History and Development of the Company – Investment by AMP.”

(3) As of December 31, 2016, we held 35,424,453 shares in treasury as a result of our Share Repurchase Programs. These shares have not been cancelled and may be resold into the market from time to time. See “Item 16E, Purchases of Equity Securities by the Issuer and Affiliated Purchasers.”

AMP holds all of our Series BB shares, representing 15% of our total capital stock. Special rights and restrictions attached to our Series BB shares are described under “Item 4, Information on the Company – History and Development of the Company” and “Item 10, Additional Information – Corporate Governance – Voting Rights and Shareholders’ Meetings.” As of April 7, 2017, approximately 9.4% of our Series B shares were held in the form of ADSs, and 64% of the holders of our ADSs (72 holders, including The Depository Trust Company) had registered addresses in the United States.

150

AMP Trust, Bylaws and Shareholders’ Agreement

The rules governing the sale of our Series BB shares to AMP required that AMP place all of its Series BB shares in trust in order to guarantee AMP’s performance of its obligations under the technical assistance agreement and AMP’s commitment to maintain its interest in us for a specified period. Accordingly, AMP has placed its shares in trust with Bancomext. This trust provides that AMP may instruct Bancomext with respect to the voting of the shares held in trust that represent up to 10% of our capital stock; the remaining 5% is required to be voted in the same manner as the majority of all shares voted at the relevant shareholders’ meeting. Under our bylaws and the trust, AMP could not sell any of its Series BB shares before August 25, 2004. Since the end of this no-sale period, AMP has been permitted to transfer up to 49% of its Series BB shares without restriction. After August 25, 2009, AMP may sell in any year up to 20% of its remaining 51% ownership interest in us represented by Series BB shares. The terms of the trust will be extended for an additional fifteen years if, at the end of the initial fifteen-year term, AMP holds shares representing more than 10% of our capital stock. AMP may terminate the trust before the second fifteen-year term begins if (i) AMP holds less than 10% of our capital stock at the end of the initial term, and (ii) the technical services agreement has been terminated. AMP is required to deposit in the trust any additional shares of our capital stock that it acquires.

AMP’s shareholders have entered into a shareholders’ agreement that provides that AENA will have the right to appoint our director of technical operations, meanwhile (i) the appointment of AMP’s representatives to our board of directors and board committees shall be made on a rotating basis, and (ii) any right of AMP regarding the appointment of our chief executive officer, chief financial officer, director of investor relations, general counsel, director of human resources, director of commercial activities, the secretary of our board of directors and most other matters relating to AMP’s participation in us, must be made, in principle, pursuant to the unanimous consent of AMP’s shareholders. When unanimous consent is not obtained, other mechanisms exist to avoid the resulting deadlocks. However, such deadlocks might still occur, which may affect our operations. See “Item 3, Key Information – Risk Factors – Risks Related to our Strategic Shareholder – Disputes among AMP’s shareholders may affect our shareholders’ meetings or management.”

Under the terms of the participation agreement and the trust agreement, AMP’s designated “Mexican” and “operating” partners were required to maintain their current 25.5% ownership interest in AMP until August 25, 2014. On November 19, 2014, CMA and DCA entered into a stock purchase agreement and formalized the transaction through which CMA purchased from DCA 792,800,000 shares, representative of 33.33% of the capital stock of AMP. Although CMA became 66.66% owner of the capital stock of AMP as a result of this transaction, CMA and AENA have agreed that AENA’s consent is required with respect to certain significant actions or decisions.

RELATED PARTY TRANSACTION S

Arrangements with AMP and its Affiliates

The rules for the sale of the Series BB shares required AMP, us and the SCT to enter into a participation agreement, which established the framework for the technical assistance agreement and the Banco Nacional de Comercio Exterior, S.N.C., or Bancomext, trust agreement.

Pursuant to the technical assistance agreement and the participation agreement, AMP and its shareholders agreed to provide management and consulting services and transfer to us technical assistance and technical and industry expertise related to the operation of airports. The agreement has an initial term of fifteen years, but automatically renews for successive five-year terms unless one party provides the other a notice of termination at least 60 days prior to a scheduled expiration date. Despite the automatic renewal under Clause 5.2 of the agreement, at our April 23, 2014, board of directors meeting, we requested the opinion of the board’s independent directors with respect to the continuation of the agreement. The majority of our independent directors voted in favor of the five-year automatic renewal option. The agreement was thus automatically renewed on August 25, 2014, for an additional five-year term.

A decision by us to renew or cancel the technical assistance agreement is subject to the approval of 51% of Series B shareholders other than AMP or any related party of AMP (to the extent that AMP or any such related party holds Series B shares). The agreement will only remain in effect if AMP continues to hold at least 7.65% of our capital stock. If the agreement does not remain in place, our management could change and due to the lack of technical assistance, our operations could be adversely and significantly affected.

151

Subsequent to January 1, 2002, the technical assistance fee has been required to equal the greater of U.S.$4.0 million adjusted annually for inflation (measured by the U.S. CPI) or 5% of our annual consolidated income from operations (calculated prior to deducting the technical assistance fee and depreciation and amortization in accordance with MFRS). We believe that this structure creates an incentive for AMP to increase our annual consolidated earnings.

The technical assistance agreement allows AMP, its shareholders and their affiliates to render additional services to us only if our Acquisitions Committee determines that these related parties have submitted the most favorable bid in a bidding process with at least three unrelated parties. This process is described in “Item 6, Directors, Senior Management and Employees – Board Committees.”

In 2014, we did not recognize any expenses paid to AMP. In 2015, we recognized expenses of Ps.2.3 million (U.S.$111.0 thousand) paid to AMP. In 2016, we recognized travel expenses of Ps.2.3 million (U.S.$109.6 thousand) paid to AMP. Pursuant to the technical assistance agreement, the fee paid to AMP and its affiliates was approximately Ps.194.2 million (U.S.$9.4 million), Ps.234.9 million (U.S.$11.4 million) and Ps.301.8 million (U.S.$14.6 million) for 2014, 2015 and 2016, respectively.

Tijuana cross-border walkway

The Tijuana airport has a commercial agreement with OTV for the construction, operation, maintenance and use of a cross-border walkway (“the CBX”), with each party responsible for the section of walkway corresponding to such party’s side of the U.S.-Mexico border. The CBX aims to facilitate the flow of passengers in both directions across the border with the presentation of a valid boarding pass. The contract has been in effect since April 8, 2013 and expires with the expiration of the Tijuana airport concession. The CBX began operations on December 9, 2015, and as of December 31, 2016, it had been used by approximately 1.3 million passengers. The agreement establishes that OTV must pay the Tijuana airport a fixed fee for every passenger that uses the CBX as compensation for the reduction in non-aeronautical services revenues from parking, taxi, bus, retail, car rental and money exchange services. In 2016, the Tijuana airport invoiced and collected Ps.33.1 million under this agreement. For more information, see Note 32 of our audited consolidated financial statements.

OTV is a private company incorporated in the United States and wholly owned by Otay-Tj Holdings, L.L.C. The holding company has two shareholders, 25% is held by a U.S. company, and 75% is held by a Mexican company. The shareholders of the Mexican company, also own 66.66% of AMP, our strategic shareholder. Consequently, this agreement is considered an operation between related parties. OTV obtained the presidential permits in the U.S. to provide border-crossing services, and is responsible for all obligations with the U.S. government. It is also the owner of the property along the U.S. border which it acquired prior to obtaining the presidential permit on which subsequently the CBX terminal was constructed. For this reason, this business opportunity could only be conducted with OTV.

The agreement with OTV was negotiated at arm’s length and reported to our Audit and Corporate Practices Committee. It was approved by a majority of our independent directors at a board of directors meeting on February 26, 2013, and our Series “BB” directors appointed by AMP abstained from the vote.

Item 8. Financial Information

See “Item 18, Financial Statements” and our consolidated financial statements beginning on page F-1. Since the date of the financial statements, no significant change has occurred.

LEGAL PROCEEDINGS

General

We are periodically involved in certain legal proceedings that are incidental to the normal conduct of our business, none of which is expected to have a material or adverse effect on our business. In addition to those legal proceedings in the ordinary course of our businesses, in recent years, we have also been subject, directly and indirectly, to the litigation proceedings that are summarized below.

152

Litigation related to Grupo México, S.A.B. de C.V. seeking to void certain of our bylaws

Articles X and XII of our bylaws, among others, limit the ability of Series B shareholders, directly or with related parties, other than AMP, to hold more than 10% of our outstanding capital stock, and any shares held in excess of that amount must be sold in a public offering. In accordance with our bylaws, until the public offering of such shares takes place, such excess shares have no voting power and cannot be represented in any shareholders’ meeting.

On June 13, 2011, Grupo México announced that it intended to acquire more than 30% and up to 100% of our shares outstanding at that time, excluding treasury shares. Grupo México and certain of its subsidiaries commenced legal proceedings, among others, seeking (i) to modify our bylaws to eliminate the foregoing limitations and (ii) to terminate AMP’s special rights that stem from AMP’s ownership of our Series BB shares.

In October 2010, a legal proceeding was filed against us in a civil court in Mexico City. The complaint sought to have the court grant relief by, among others, declaring Articles X and XII of our bylaws void. The plaintiffs are Grupo México and its subsidiary ITM. On February 19, 2014, the Mexican Supreme Court agreed to review the legal proceeding regarding ownership limits contained in our bylaws that impose a 10% ownership threshold, stating that it considered this issue a matter of national interest and significance, and referred the proceeding to the second chamber of the Supreme Court. On June 17, 2015, the Mexican Supreme Court issued an amparo ruling upholding the validity of Articles X and XII of our bylaws under Article 48, Section III of the Mexican Securities Law and remanded the case to the intermediate appellate court. Consequently, the challenges initiated by Grupo México and ITM against these articles have been definitively concluded. In accordance with the decision of the Mexican Supreme Court, the Superior Court of Mexico City: (i) declared that Grupo México and ITM are in violation of our bylaws, resulting from the fact that together they hold more than the 10% of our capital stock; (ii) ordered the sale by GM and ITM of the Series “B” shares held in excess of 10% of our capital stock; and (iii) instructed that the sale should be conducted through a public offer (Oferta Pública de Venta) in accordance with the laws of Mexico and Article XII of our bylaws. Grupo México filed an appeal looking for clarification regarding the ruling. On November 9, 2016, the Grupo México complaint was declared unfounded. Despite this finding, we still expect that the Mexican Supreme Court will issue a new, binding decision on procedures for compliance with the decision of the Superior Court of Mexico City regarding the disposition of shares exceeding 10% of our capital stock. As of the date of this filing, and according to the last Schedule 13D filed with the SEC, Grupo México owns 14.95% of our outstanding shares. See “Item 3, Key Information – Risk Factors – Risks Related to Our Strategic Shareholder – Certain actions by Grupo México, S.A.B. de C.V. may affect our management, financial condition or results of operations.”

Litigation related to Grupo México, S.A.B. de C.V. seeking to void certain resolutions adopted at our corporate shareholders’ meetings

General Ordinary Shareholders’ Meetings of April 16, 2012, April 16, 2013, and April 23, 2014

Grupo México and its subsidiary, ITM, have filed lawsuits seeking to void shareholder resolutions adopted at each of our General Ordinary Shareholders’ Meetings from 2012 to 2014. As a result of a motion filed by us to join these three related actions with the proceedings regarding the Extraordinary Shareholders’ Meeting held on September 25, 2012, the issues in each case will be resolved together with the trial seeking to nullify the resolutions adopted at the Extraordinary Shareholders’ Meeting held on September 25, 2012. The court delivered a judgment that absolved us and declared that the resolutions adopted in the General Ordinary Shareholders’ Meetings were valid. Grupo México appealed that judgment. On September 2, 2016, Grupo México requested that the Supreme Court review the cases; however, on February 8, 2017, the Supreme Court determined not to review the matter. Amparos filed by both parties will now proceed and remain pending.

Extraordinary Shareholders’ Meeting of September 25, 2012

At the Extraordinary Shareholders’ Meeting held on September 25, 2012, duly held by a quorum of 75% of the shares entitled to vote, shareholders approved a capital stock reduction, for the fixed portions proportional to the

153

historical value of the capital stock and to the value of the stock as adjusted for inflation through December 31, 2007. The resolution required Ps.870.0 million to be paid in cash pro rata among the shares outstanding on a date no later than October 3, 2012.

On October 3, 2012, we complied with the resolution by making a payment to the Central Securities Depository (S.D. Indeval Institución para el Depósito de Valores, S.A. de C.V.), or “Indeval,” equivalent to Ps.1.639281 per share outstanding. However, after our payment to Indeval, Grupo México issued a press release announcing that a Mexico City civil court had issued a decision that ordered us to immediately and unconditionally suspend the resolution related to the capital reduction. As we were otherwise not properly notified by the court of the injunction, we thereby became aware of a lawsuit filed by Grupo México seeking the suspension of the resolutions adopted at the Extraordinary Shareholders’ Meeting held on September 25, 2012. Despite not being notified by the competent court, and after we had complied with the resolutions and completed the required payment, we were then informed by Indeval that, because it had been notified of this judicial injunction that presumably ordered us, not Indeval, to suspend the resolution related to the capital reduction, Indeval would suspend the disbursement of the funds deposited by us.

As a result of a motion we filed to join this case with the three pending related actions discussed above, the issues in this case will be resolved together with the trial seeking to nullify the resolutions of the General Ordinary Shareholders’ Meetings held on April 16, 2012, April 16, 2013, and April 23, 2014. As a result, these matters are still pending, and, as of the date of this report, Indeval continues to hold the funds allocated for the capital reduction. We expect that Indeval will continue holding the funds until the injunction is resolved judicially.

Grupo México, S.A.B. de C.V. and certain of its subsidiaries challenge our participation agreement with AMP

ITM, a subsidiary of Grupo México, filed a legal proceeding against us on November 4, 2011, seeking to void AMP’s ownership of our Series BB shares as granted by the participation agreement between AMP and us, which would result in the termination of AMP’s veto, appointment of executives and other special rights. Additionally, ITM’s suit sought the repayment of all economic benefits conferred by us upon AMP during the period in which AMP has held our shares. We filed an initial reply in this proceeding on November 25, 2011. On March 7, 2012, we were notified by our external legal counsel that a ruling was issued in our favor, which found a lack of jurisdiction by the civil court due to the administrative nature of the claim. Although we received notice that this proceeding had concluded, a federal court later granted a direct amparo appeal that had been filed by Grupo México on June 6, 2012. Therefore, on July 13, 2012, the legal proceeding was recommenced in the appropriate federal civil court. On October 22, 2013, we filed briefs responding to the plaintiff’s arguments. As of the filing of this report, a decision in this case is still pending.

Ejido participants at Tijuana, Guadalajara and Puerto Vallarta airports

A portion of the lands constituting some of our airports were expropriated by the Mexican government under its power of eminent domain. Prior to their expropriation, some of these lands had been held by groups of individuals through a system of communal ownership of rural land known as an ejido. Certain of these former ejidos’ participants have asserted indemnity claims against the Mexican government challenging the expropriation decrees.

Tijuana

In the case of our Tijuana airport, our airport subsidiary has been joined as an interested third party in the proceedings challenging the 1970 expropriation decree. During 2008, the ejido received an unfavorable ruling, which it appealed, and subsequently, it received a judgment in its favor from the agrarian court calling for the restitution of 320 hectares of land. On October 20, 2016, we filed an amparo against the decision, the outcome of which remains pending. If we are not successful in our appeal, although the precise area affected has yet to be determined, depending on which particular land parcel is to be returned, the decision could affect the airport’s perimeter and could materially disrupt the airport’s current operations.

In addition, certain of the former ejidos’ participants are currently occupying portions of the property on which we operate Tijuana International Airport. Although the currently occupied portions are not at present essential to the airport’s operations and these former ejidos’ participants are not currently interfering with the airport’s operations, their presence could limit our ability to expand the airport into the areas they occupy and they may seek to disrupt the airport’s operations if their legal claims against the Mexican government are not resolved to their satisfaction.

154

Guadalajara

Similarly, in the case of Guadalajara International Airport, in 2009 two different ejidos commenced proceedings before an agrarian court (Tribunal Superior Agrario) against the SCT, seeking to void the expropriation decree of 1975. The case was transferred to the federal justice system, and in a November 2010 ruling in favor of the ejidos, the district court ordered the return of all expropriated property to the ejidos and thus voided the specific concession granted to us on expropriated land. Although our Guadalajara airport has been joined only as an interested third party in the proceedings, we appealed this decision. On July 10, 2012, the appellate court reversed and remanded the decision, and on July 31, 2014, the district court issued a new judgment in favor of one of the ejidos, El Zapote, which both our Guadalajara airport and the federal authorities again appealed. On April 14, 2016, an appellate court issued a definitive decision on the matter declaring that although the rights of the ejido to challenge the appraised value of their land were violated, the land could not be returned to them. Furthermore, the court concluded that our concession was valid. The decision is now in the enforcement phase. On January 13, 2017, federal authorities notified El Zapote of the new appraisal for the disputed property as part of the enforcement phase. The ejido has challenged this appraisal and, consequently, the case is pending final resolution. In addition, during various periods of 2016 and 2017, members of an ejido blocked access to commercial areas of Guadalajara International Airport, specifically the parking facilities, which resulted in commercial revenue losses of Ps.19.2 million (7.5% of our total car parking charges at the airport for 2016) in 2016 and losses of Ps.3.8 million during 2017. On March 27, 2017, we regained control of the affected areas through means of a judicial order. On February 17, 2017, we were notified of a new legal proceeding before an agrarian court instituted by El Zapote against the federal government. This proceeding alleges similar facts to the initial case and claims the same disputed property that was the subject of the initial case. This legal proceeding is in its initial phases, and we have joined as an interested third party.

With respect to the second ejido, Santa Cruz del Valle, the district court’s ruling that the Mexican government’s 1975 expropriation decree was illegal was confirmed by the appellate court and is subject to enforcement against the Mexican government. On August 22, 2016, the district court ordered that their decision be carried out. We have appealed this decision. Our legal advisors expect the Mexican government to seek restitution through financial compensation, but we can provide no assurance that the Mexican government will pursue this action or that it will be accepted by the courts.

In February 10, 2014, our Guadalajara airport received a notice from the district court regarding a proceeding by the ejido San José del Valle claiming approximately five hectares within the airport’s possession. Currently, this case is in the presentation of evidence stage.

Puerto Vallarta

In September 2013, Puerto Vallarta International Airport received notification of lawsuits related to the ejido Valle de Banderas, which claimed the invalidity of the expropriation by the Mexican government of the land on which the airport is located. Participants of the ejido commenced three proceedings against us, our Puerto Vallarta airport and various federal authorities for restitution or compensation with respect to 154 hectares of land comprising this airport. The claimants seek, among other things, to invalidate the expropriation decree issued on October 9, 1957 and, in two of the proceedings, are also seeking restitution of the land as they were not part of the expropriation decrees of October 9, 1957, August 20, 1990, November 24, 1993, and April 24, 1997. These lawsuits are also seeking, in part, to void the concession granted to the airport. We challenged the lawsuits on the basis of a lack of jurisdiction, as the claims were brought in the courts of the State of Nayarit, while our Puerto Vallarta airport is located in the State of Jalisco. The superior agrarian court agreed with our appeal and removed the case to Guadalajara. This proceeding is in process and remains pending.

The terms of our concession require the Mexican government to provide us restitution for any loss of our use of the land provided for in our Mexican concessions. Although no assurance can be given, we believe that the Mexican government would be liable for any operational disruption caused by the proceedings with the ejidos and would have to restore our rights of use for the public property assigned to us under the concessions if we were to lose our appeals.

155

Property tax claims by certain municipalities

We remain subject to ongoing property tax claims that have been asserted against us by various municipalities for the payment of property taxes with respect to the property on which we operate our airports in those cities.

Of these, the most relevant case regards our Tijuana airport, where the municipal authority issued a second property tax claim against the airport on June 8, 2005. On March 25, 2008, the Tijuana airport received an initial ruling declaring the tax claim by the municipal authority void but upholding the right of the municipal authorities to assess property taxes over commercial areas. We appealed the ruling with respect to the assessment of property taxes over commercial areas. Our challenge to this request is still pending.

On October 20, 2010, the municipal authority of Tijuana issued a separate request for the repayment of property taxes for 2000 through 2010. We and our legal counsel believe that this request for payment of taxes is not valid since local courts had already ruled the tax claims for the years 2005 and 2006 invalid. Because we and our legal counsel believe that this request for repayment is also invalid, we commenced legal proceedings against the municipal authority. The legal proceeding is currently pending.

On February 7, 2013, the Tijuana municipal authority filed a property tax claim for the period from 2008 to 2012 against the Tijuana airport in the amount of Ps.15.2 million, demanding payment within three business days. On February 28, 2013, we began an annulment proceeding against the claim. On March 5, 2013 the authority established the amount to be guaranteed, and on March 8, 2013 we presented a bond to guarantee the amount claimed. As of the date of this report, this proceeding is still pending.

On October 24, 2014, the Tijuana municipal authority issued a requirement for payment of Ps.233.7 million in real estate taxes covering the period from 2000 to 2014. On November 13, 2014, we filed an administrative proceeding for annulment against this requirement, which we consider to be unfounded. On October 29, 2014, the municipal authority revoked the requirement as unfounded, however, on November 26, 2014, the authority issued a different requirement for payment of Ps.234.8 million in property taxes for the period from 2000 to 2014, which we again challenged on December 19, 2014. With respect to the municipal authority’s request for us to post a collateral bond guaranteeing the entire amount in question, the court granted judgment in our favor and suspended the requirement, which we had challenged on the grounds that we have already guaranteed part of the amount in previous proceedings. This matter has not yet been resolved by the courts.

We do not believe that liabilities related to any claims or proceedings against us are likely to have, individually or in the aggregate, a material adverse effect on our consolidated financial condition or results of operations should a court determine that these property taxes must be paid in response to any future proceedings.

Infractions of the Mexican Securities Law alleged by the CNBV

On April 25, 2011, we received a formal notice from the CNBV by which it initiated a proceeding against us for alleged violations of Mexican disclosure statutes primarily in connection with disputes among AMP’s shareholders during 2010. See “Item 3, Key Information – Risk Factors – Risks Related to Our Strategic Shareholder.” This notice was the first stage of an administrative proceeding required to impose a fine on us. On June 3, 2011, we exercised our right to appeal the determination of the CNBV and to file evidence to contest this determination.

On April 24, 2013, we were notified by the CNBV of the imposition of administrative sanctions for up to Ps.31.0 million (approximately U.S.$1.8 million) for the alleged violations. We appealed the sanctions by means of an administrative proceeding before the Fiscal Federal and Administrative Justice Court on June 27, 2013. During the proceedings, the CNBV dismissed certain of the alleged violations. Subsequently, after exhausting the administrative proceeding process, on January 27, 2017 we paid a fine of Ps.5.9 million (approximately U.S.$286 thousand) to definitively resolve the issue.

DIVIDENDS

The declaration, amount and payment of dividends are determined by a majority vote of our shareholders present at a shareholders’ meeting and generally, but not necessarily, on the recommendation of the board of directors, which is empowered by Article 18 of our bylaws to set our dividend policies. So long as the Series BB shares represent at least 7.65% of our outstanding capital stock, the declaration and payment of dividends will require the approval of the holders of a majority of the Series BB shares.

156

Mexican law requires that at least 5% of a company’s net income each year (after profit sharing and other deductions required by Mexican law) be allocated to a legal reserve fund until such fund reaches an amount equal to at least 20% of the company’s capital stock from time to time (without adjustment for inflation). Our legal reserve fund was Ps.960.9 million (historical value) at December 31, 2016 (excluding reserve amounts corresponding to 2016 net income).

Mexican companies may pay dividends only out of earnings (including retained earnings after all losses have been absorbed or paid up) and only after such allocation to the legal reserve fund. The reserve fund is required to be funded on a stand-alone basis for each company, rather than on a consolidated basis. The level of earnings available for the payment of dividends is determined under MFRS. Our subsidiaries, which prepare and report financial information under MFRS, are required to allocate earnings to their respective legal reserve funds prior to paying dividends to Grupo Aeroportuario del Pacífico, S.A.B. de C.V. We are also required to allocate earnings to our legal reserve fund prior to distributing any dividend payments to our shareholders.

As a result of the 2014 Fiscal Reform, dividends paid to Mexican individuals or any foreign residents with respect to our Series B shares and ADSs are subject to a 10% withholding tax. The definition of dividend for this purpose includes, among others, in addition to declared dividends: (i) interest paid on preferred shares; (ii) loans to shareholders and partners unless the loan is established for less than one year, incurred in the operations of the business and meets certain requirements; (iii) payments that are considered non-deductible and benefit the shareholders; (iv) amounts not recognized as a result of omissions of income or unrealized purchases; and (v) transfer pricing adjustments to income or expenses as a result of assessments by the tax authorities for related party transactions. The 10% distribution tax would also apply on distributions from a branch to the home office. A transitory provision limits the withholding tax on dividends to earnings generated in 2014 and subsequent years. For this purpose, the transitory provision refers to distributions from accumulated previously taxed earnings (CUFIN) as of 2013, being free of tax. Taxpayers are currently required to maintain a separate CUFIN account for earnings. Because this withholding tax would be a tax on the shareholders under the Mexican Income Tax Law, treaty benefits should be available.

Dividends that are paid from a company’s distributable earnings that have not been subject to corporate income tax will be subject to a corporate-level dividend tax (retained against cumulative net income and payable by us) calculated on a gross-up basis by applying a factor of 1.4286 for 2013 and subsequent years. For 2013 and thereafter, the corporate tax rate is 30%. This corporate-level dividend income tax on the distribution of earnings may be applied as a credit against Mexican corporate income tax corresponding to the fiscal year in which the dividend was paid or against the Mexican corporate income tax of the two fiscal years following the date on which the dividend was paid.

Distributions made by us to our shareholders other than as dividends (in the manner described above), including capital reductions, amortization of shares or otherwise, would be subject to taxation in Mexico, including withholding taxes. The tax rates applicable and the method of assessing and paying taxes applicable to any such non-dividend distributions will vary depending on the nature of the distributions.

Under our dividend policy adopted at the Extraordinary Shareholders’ Meeting held on April 15, 2005, our annual dividend is expected to consist of two components. The first component is a fixed amount, which was Ps.450 million for 2005 (for the dividend paid in 2006) and is intended to increase gradually each year. The dividend policy also contemplates that our annual dividend will include any cash and cash equivalents we hold (as reflected in our balance sheet as of the month-end prior to the dividend payment, after deducting the fixed component) in excess of our “minimum cash balance.” For purposes of our policy, the “minimum cash balance” is the amount of cash and cash equivalents that our board of directors determines is necessary to cover the minimum amount of expenses and investments expected to be incurred in the fiscal year during which the dividend payment is made and the subsequent fiscal year. Dividends are expected to be made payable in cash and in one or more payments as determined in the relevant ordinary shareholders’ meeting approving dividends.

We paid aggregate dividends of Ps.1,590.0 million in 2014, Ps.1,744.9 million in 2015 and Ps.2,139.1 million in 2016.

157

The declaration, amount and payment of dividends pursuant to the policy described above are subject to (i) compliance with applicable law regarding the declaration and payment of dividends with respect to any year including the establishment of the statutory legal reserve fund and (ii) the absence of any adverse effect on our business plan for the current or subsequent fiscal year as a result of the payment of any dividend. We cannot provide assurance that we will continue to pay dividends or that future dividends will be comparable to our previous dividends. Our ability to pay dividends may be further restricted if we fail to make timely interest payments under our credit agreements. See “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources.” Our dividend policy may also be amended at any time by our shareholders.

As of December 31, 2016, we had accumulated approximately Ps.3.3 billion of distributable earnings that had been subject to the corporate income tax and that could be declared at the relevant shareholders’ meeting and paid to shareholders free of the corporate level dividend tax, but a 10% withholding tax may apply to Mexican individuals or any foreign residents.

We pay dividends in pesos. In the case of Series B shares represented by ADSs, the cash dividends are paid to the depositary and, subject to the terms of the Deposit Agreement, converted into and paid in U.S. dollars at the prevailing rate of exchange, net of conversion expenses of the depositary and applicable Mexican withholding tax. Fluctuations in exchange rates will affect the amount of dividends that ADS holders receive.

158

Item 9. The Offer and Listing

STOCK PRICE HISTOR Y

The following table sets forth, for the periods indicated, the high and low closing prices for (i) the ADSs on the New York Stock Exchange in U.S. dollars and (ii) our common shares on the Mexican Stock Exchange in pesos. See “Item 3, Key Information – Exchange Rates” for the exchange rates applicable during the periods set forth below. The information set forth in the table below reflects actual historical amounts at the trade dates and has not been restated in constant pesos:

	U.S.$ per ADR(1)				Pesos per Series B Share
Year ended December 31,	Low		High		Low		High
2012		34.13		62.58		44.00		74.70
2013		42.55		65.95		56.61		80.76
2014		48.65		75.13		63.37		98.75
	U.S.$ per ADR(1)				Pesos per Series B Share
Year ended December 31,	Low		High		Low		High
2015		57.51		96.58		89.09		161.21
First Quarter		57.51		66.36		89.09		100.07
Second Quarter		62.14		72.31		97.38		111.57
Third Quarter		68.12		89.00		107.67		146.49
Fourth Quarter		86.10		96.58		144.05		161.21
	U.S.$ per ADR(1)				Pesos per Series B Share
Year ended December 31,	Low		High		Low		High
2016		76.79		108.17		140.19		197.95
First Quarter		76.79		88.71		140.19		154.14
Second Quarter		87.83		103.67		153.99		194.16
Third Quarter		87.68		108.17		173.75		197.95
Fourth Quarter		78.43		104.65		163.10		194.47
	U.S.$ per ADR(1)				Pesos per Series B Share
Current Year:	Low		High		Low		High
First Quarter		72.98		97.92		159.87		184.18
	U.S.$ per ADR(1)				Pesos per Series B Share
Monthly Prices:	Low		High		Low		High
November 2016		78.43		98.89		163.10		183.62
December 2016		79.65		88.24		164.87		178.94
January 2017		72.98		80.00		159.87		171.64
February 2017		78.43		87.14		160.88		175.84
March 2017		86.47		97.92		169.99		184.18
April 2017(2)		99.57		101.01		186.18		189.84

(1) 10 Series B shares per ADR.

(2) As of April 7, 2017.

TRADING ON THE MEXICAN STOCK EXCHANGE

The Mexican Stock Exchange, located in Mexico City, is the only stock exchange in Mexico. Founded in 1894 and in continuous operations since 1907, the Mexican Stock Exchange is organized as a Mexican corporation (sociedad anónima bursátil de capital variable) operating under a concession granted by the Ministry of Finance and Public Credit (SHCP). Securities trading on the Mexican Stock Exchange occurs each business day from 8:30 a.m. to 3:00 p.m., Mexico City time.

Since January 1999, all trading on the Mexican Stock Exchange has been effected electronically. The Mexican Stock Exchange may impose a number of measures to promote orderly and transparent trading in securities,

159

including the operation of a system of automatic suspension of trading in shares of a particular issuer when price fluctuation exceeds certain limits. The Mexican Stock Exchange may also suspend trading in shares of a particular issuer as a result of:

• non-disclosure of material events; or

• changes in the offer or demand, volume traded, or prevailing share price that are inconsistent with the shares’ historical performance and cannot be explained through publicly available information.

The Mexican Stock Exchange may reinstate trading in suspended shares when it deems that the material events have been adequately disclosed to public investors or when it deems that the issuer has adequately explained the reasons for the changes in offer and demand, volume traded, or prevailing share price. Under current regulations, the Mexican Stock Exchange may consider the measures adopted by the other stock exchanges in order to suspend and/or resume trading in an issuer’s shares in cases where the relevant securities are simultaneously traded on a stock exchange outside of Mexico.

Settlement on the Mexican Stock Exchange is effected three business days after a share transaction. Deferred settlement is not permitted without the approval of the Mexican National Banking and Securities Commission, even where mutually agreed. Most securities traded on the Mexican Stock Exchange are on deposit with Indeval, a privately owned securities depositary that acts as a clearinghouse, depositary, and custodian, as well as a settlement, transfer, and registration agent for Mexican Stock Exchange transactions, eliminating the need for physical transfer of securities.

Item 10. Additional Information

CORPORATE GOVERNANC E

Organization and Register

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. is a corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico under the Mexican General Law of Commercial Corporations (Ley General de Sociedades Mercantiles) and the Mexican Securities Market Law. It is registered with the Public Registry of Commerce of Mexico City under the number 238,578.

Purpose

Our main corporate purpose is to operate airports pursuant to airport concessions.

Bylaws

This section summarizes certain provisions of Mexican law and our estatutos sociales (bylaws).

At our Extraordinary Shareholders’ Meeting held on October 27, 2006, our shareholders adopted resolutions amending and restating of our bylaws to organize the company as a sociedad anónima bursátil (a form then newly required by law for publicly traded companies in Mexico), and to conform our bylaws to the provisions of the Securities Market Law. Many of the changes related to the enhancement of our corporate governance.

During 2010, our Audit Committee proposed, to our board of directors, an amendment to our bylaws relating to the Corporate Practices articles (Practicas Societarias, as described in the Mexican Securities Market Law) in order to more closely align our bylaws with the terms of the Mexican Securities Market Law with respect to Corporate Practices. After reviewing the amendment proposal, our board of directors instructed the Audit Committee to submit the proposal to the CNBV to obtain their opinion regarding how the amended articles compared with the Mexican Securities Market Law, specifically as it relates to Corporate Practices. In response, the CNBV provided their recommendations both with respect to the specific consultation as well as with respect to other articles contained in the proposed amendment. We accepted the CNBV’s recommendations and re-submitted the proposed amendments to the CNBV. As of the date of this report, we have not received a response from the CNBV.

160

Board of Directors

Our bylaws provide that our board of directors will generally have eleven members (increasing to twelve or thirteen members only when necessary to preserve minority shareholders’ voting rights in cases of multiple appointments by persons with 10% interests (as described below)).

At each shareholders’ meeting for the election of directors, the holders of Series BB shares are entitled to elect four directors. The remaining members of the board of directors are to be elected by the holders of the Series B shares.

Each person (or group of persons acting together) holding 10% of our capital stock in the form of Series B shares is entitled to appoint one director. The remaining positions on the board of directors will be filled based on the vote of all holders of Series B shares that have not elected to appoint a director by virtue of owning 10% of our capital stock. The candidates to be considered for election as directors by the Series B shareholders are proposed to the shareholders by the Nominations and Compensation Committee. All directors are elected based on a simple majority of the votes cast at the relevant shareholders’ meeting. Our bylaws do not currently require mandatory retirement of directors after they reach a certain age. The compensation of our directors is proposed by the Nominations and Compensation Committee to all of our shareholders at shareholders’ meetings for their approval. Pursuant to the Securities Market Law, 25% of our directors must be independent within the definition of that term specified therein.

Authority of the Board of Directors

The board of directors is our legal representative. The powers of the board include, among others, the following:

• to define our strategic planning decisions and approve our annual business plans and investment budgets;

• to approve our Master Development Programs and modifications thereto;

• to call shareholders’ meetings and act upon shareholders’ resolutions; and

• to create special committees and grant them the powers and authority as it sees fit, provided that said committees will not be vested with the authorities which by law or under our bylaws are expressly reserved for the shareholders or the board of directors.

Meetings of the board of directors will be validly convened and held if a majority of the members are present. Resolutions at said meetings will be valid if approved by a majority of the members of the board of directors, unless our bylaws require a higher number. Notwithstanding the board’s authority, under general principles of Mexican law, our shareholders, pursuant to a decision validly taken at a shareholders’ meeting, may at any time override the board.

Powers of Series BB Directors

The Series BB directors are entitled to: (i) appoint and remove our chief executive officer and our other top-level executive officers (upon consultation with our Nominations and Compensation Committee); (ii) appoint three members of the Operating Committee and their respective alternates; (iii) appoint 20% of the total members of the Audit Committee, the Acquisitions Committee and the Nominations and Compensation Committee (a minimum of one member per committee), and their respective alternatives; and (iv) consent to the appointment of individuals appointed to the Operating Committee who are not members of our board of directors or our officers.

In addition to the foregoing, each of the following actions of our board of directors, among certain others, may only occur with the approval of the Series BB directors:

• approval of our airports’ five-year Master Development Programs or amendments thereto;

• approval of our annual business and investment plans;

161

• approval of capital expenditures outside of our annual investment plans;

• approval of any sale of our fixed assets, individually or jointly, in an amount exceeding U.S$3.0 million;

• approval for us to enter into any type of loan or credit agreement, other than for certain loans granted by us to our subsidiaries;

• approval of the granting by us of guarantees (avales) or other security interests other than for the benefit of our subsidiaries;

• proposing to increase our capital stock or that of our subsidiaries;

• approval of sales of shares in our subsidiaries;

• approval of our dividend policies; and

• proposing individuals to join our Audit Committee or our Nominations and Compensation Committee.

Our Capital Stock

The following table sets forth our authorized capital stock and our issued and outstanding capital stock as of April 7, 2017:

Capital Stock

Capital Stock	Authorized		Issued and Outstanding
Series B shares		476,850,000		476,850,000
Series BB shares		84,150,000		84,150,000
Total		561,000,000		561,000,000

Our bylaws provide that our shares have the following characteristics:

• Series B: Series B shares currently represent 85% of our capital, and may represent up to 100% of our share capital. Series B shares may be held by any Mexican or foreign natural person, company or entity, except for foreign governments.

• Series BB: Series BB shares currently represent 15% of our capital and may not represent a greater percentage of our share capital. Like Series B shares, Series BB shares may be held by any Mexican or foreign natural person, company or entity, except for foreign governments and subject to the other requirements of our bylaws.

Under the Mexican Airport Law and the Mexican Foreign Investments Law (Ley de Inversión Extranjera), foreign persons may not directly or indirectly own more than 49% of the capital stock of a holder of an airport concession unless an authorization from the Mexican Commission of Foreign Investments is obtained. We have obtained this authorization, and as a consequence these restrictions do not apply to our Series B or Series BB shares.

All ordinary shares confer equal rights and obligations to holders within each series. Series BB shares are subject to transfer restrictions under our bylaws and generally must be converted to Series B shares before they can be transferred. Up to 49% of the Series BB shares can be converted into Series B shares at any time. On or after August 25, 2014, one-fifth of the remaining 51% of Series BB shares could be converted into Series B shares each year. On or after August 25, 2014, none of the Series BB shares may be converted into Series B shares if (i) the Technical Assistance Agreement between AMP and us has not been renewed; and (ii) the Series BB shareholders so request. Notwithstanding the foregoing, if at any time after August 25, 2014, Series BB shares represent less than 7.65% of our share capital, those shares will be mandatorily converted into Series B shares and the Technical Assistance Agreement will be terminated.

162

Voting Rights and Shareholders’ Meetings

Each Series B share and Series BB share entitles the holder to one vote at any general meeting of our shareholders. Holders of Series BB shares are entitled to elect four members of our board of directors and holders of Series B shares are entitled to elect the remaining members of the board of directors.

Under Mexican law and our bylaws, we may hold three types of shareholders’ meetings: ordinary, extraordinary, and special. Ordinary shareholders’ meetings are those called to discuss any issue not reserved for extraordinary shareholders’ meeting. An annual ordinary shareholders’ meeting (our “General Ordinary Shareholders’ Meeting”) must be convened and held within the first four months following the end of each fiscal year to discuss, among other things, the report prepared by the board on our financial statements, the appointment of members of the board of directors, the declaration of dividends and the determination of compensation for members of the board.

Extraordinary shareholders’ meetings (our “Extraordinary Shareholders’ Meeting”) are those called to consider any of the following matters:

• the extension of our duration or our voluntary dissolution;

• an increase or decrease in our minimum fixed capital;

• a change in corporate purpose or nationality;

• any transformation, merger or spin-off involving the company;

• any stock redemption or issuance of preferred stock or bonds;

• the cancellation of the listing of our shares with the National Securities Registry or on any stock exchange;

• amendments to our company’s bylaws; and

• any other matters for which applicable Mexican law or the bylaws specifically require an extraordinary meeting.

Special shareholders’ meetings are those called and held by shareholders of the same series or class to consider any matter particularly affecting the relevant series or class of shares.

Shareholders’ meetings are required to be held in our corporate domicile, which is the city of Guadalajara, in the state of Jalisco. Calls for shareholders’ meetings must be made by the board of directors or the Audit Committee. Any shareholder or group of shareholders representing at least 10% of our capital stock has the right to request that the board of directors or the Audit Committee call a shareholders’ meeting to discuss the matters indicated in the relevant request. In certain circumstances specified in Mexican law, any individual shareholder may also make such a request. If the board of directors or the Audit Committee fails to call a meeting within fifteen calendar days following receipt of the request, the shareholder or group of shareholders may request that the call be made by a competent court.

Calls for shareholders’ meetings must be published in the Mexican Federal Gazette or in one newspaper of general circulation in Mexico at least fifteen calendar days prior to the date of the meeting. Each call must set forth the place, date and time of the meeting and the matters to be addressed. Shareholders’ meetings will be validly held and convened without the need for a prior call or publication whenever all the shares representing our capital are duly represented.

To be admitted to any shareholders’ meeting, shareholders must be registered in our share registry and comply with the requirements set forth in our bylaws. Shareholders may be represented at any shareholders’ meeting by one or more attorneys-in-fact who may not be our directors.

163

At or prior to the time of the publication of any call for a shareholders’ meeting, we will provide copies of the publication to the depositary for distribution to the holders of ADSs. Holders of ADSs are entitled to instruct the depositary as to the exercise of voting rights pertaining to the Series B shares.

Quorums

Ordinary shareholders’ meetings are regarded as legally convened pursuant to a first call when more than 50% of the shares representing our capital are present or duly represented. Resolutions at ordinary shareholders’ meetings are valid when approved by a majority of the shares present or duly represented at the meeting. Any number of shares represented at an ordinary shareholders’ meeting convened pursuant to a second or subsequent call constitutes a quorum. Resolutions at ordinary shareholders’ meetings convened in this manner are valid when approved by a majority of the shares represented at the meeting.

Extraordinary and special shareholders’ meetings are regarded as legally convened pursuant to a first or subsequent call when at least 75% of the shares representing our capital (or 75% of the relevant series) are present or duly represented. Resolutions at extraordinary shareholders’ meetings are valid if taken by the favorable vote of shares representing more than 50% of our capital (or 50% of the relevant series).

Notwithstanding the foregoing, resolutions at extraordinary shareholders’ meetings called to discuss any of the issues listed below are valid only if approved by a vote of shares representing at least 75% of our capital:

• any amendment to our bylaws that: (i) changes or deletes the authorities of our committees; or (ii) changes or deletes the rights of minority shareholders;

• any actions resulting in the cancellation of the concessions granted to us or our subsidiaries by the Mexican government or any assignment of rights arising therefrom;

• termination of the participation agreement between us and AMP;

• the cancellation of registration of our shares with the National Securities Registry (Registro Nacional de Valores), with the BMV or with any other domestic or foreign stock exchanges in which they are registered;

• a merger by us with an entity the business of which is not directly related to our business or that of our subsidiaries; or

• a spin-off, dissolution or liquidation of our business.

Our bylaws also establish the following voting requirements:

• the amendment of the restrictions in our bylaws on ownership of shares of our capital stock requires the vote of holders of 85% of our capital stock;

• a delisting of our shares requires the vote of holders of 95% of our capital stock; and

• the amendment of the provisions in our bylaws requiring that a shareholder exceeding our share ownership limits conduct a public sale of his excess shares requires the vote of holders of 85% of our capital stock.

Veto Rights of Holders of Series BB Shares

So long as the Series BB shares represent at least 7.65% of our capital stock, resolutions adopted at shareholders’ meetings with respect to any of the issues listed below will only be valid if approved by a vote of a majority of the Series BB shares:

• approval of our financial statements;

• liquidation or dissolution;

164

• capital increases or decreases;

• declaration and payment of dividends;

• amendment to our bylaws;

• mergers, spin-offs or share-splits;

• grant or amendment of special rights to any series of shares; and

• any decision amending or nullifying a resolution validly taken by the board of directors with respect to: (i) appointment of our top-level executive officers; (ii) appointment of the three members of our Operating Committee and of the members of the Audit, Acquisitions and Nominations and Compensation committees to be designated by the directors elected by the holders of the Series BB shares; and (iii) appointment of the members of the Operating Committee whose appointment requires the consent of the directors elected by the holders of the Series BB shares, and decisions of the board of directors that require the affirmative vote of the directors elected by the holders of our Series BB shares.

Dividends and Distributions

At our General Ordinary Shareholders’ Meeting, the board of directors will submit to the shareholders for their approval our audited consolidated financial statements for the preceding fiscal year. Five percent of our net income (after profit sharing and other deductions required by Mexican law) must be allocated to a legal reserve fund until the legal reserve fund reaches an amount equal to at least 20% of our capital stock (without adjustment for inflation). Additional amounts may be allocated to other reserve funds as the shareholders may from time to time determine including a reserve to repurchase shares. The remaining balance, if any, of net earnings may be distributed as dividends on the shares of common stock. A full discussion of our dividend policy may be found in “Item 8, Financial Information – Dividends.”

At the General Ordinary Shareholders’ Meeting held on April 23, 2014, we declared a dividend of Ps.1,590.0 million, or Ps.3.0249 per common share. The first payment for that dividend in the amount of Ps.1,192.5 million was made on May 27, 2014, and the remaining Ps.302.5 million was paid on July 4, 2014. In an Extraordinary Shareholders’ Meeting also held on April 23, 2014, our shareholders approved an additional capital distribution of Ps.1,510.0 million, or Ps.2.8730 per outstanding share. The payment was made on May 8, 2014.

At the General Ordinary Shareholders’ Meeting held on April 21, 2015, we declared a dividend of Ps.1,744.9 million, or Ps.3.32 per common share. The first payment for that dividend in the amount of Ps.956.5 million was made on August 21, 2015, and the remaining Ps.788.4 million was paid on November 4, 2015. In an Extraordinary Shareholders’ Meeting also held on April 21, 2015, our shareholders approved an additional capital distribution of Ps.1,408.5 million, or Ps.2.68 per outstanding share. The payment was made on May 15, 2015.

At the General Ordinary Shareholders’ Meeting held on April 26, 2016, we declared a dividend of Ps.2,139.1 million, or Ps.4.07 per common share. The first payment for that dividend in the amount of Ps.1,198.3 million was made on August 25, 2016, and the remaining Ps.940.8 million was paid on November 18, 2016. In an Extraordinary Shareholders’ Meeting also held on April 26, 2016, our shareholders approved an additional capital distribution of Ps.1,750.2 million, or Ps.3.33 per outstanding share. The payment was made on May 9, 2016.

Registration

Our shares have been registered with the National Securities Registry, as required under the Securities Market Law and regulations issued by the Mexican National Banking and Securities Commission. If we wish to cancel our registration, or if it is cancelled by the Mexican National Banking and Securities Commission, we will be required to make a public offer to purchase all outstanding shares, prior to such cancellation. Unless the Mexican National Banking and Securities Commission authorizes otherwise, the price of the offer to purchase will be the higher of: (i) the average of the trading price of our shares during the prior thirty trading days (during a period of no more than six months); or (ii) the book value of the shares in accordance with the most recent quarterly report submitted to the

165

Mexican National Banking and Securities Commission and to the Mexican Stock Exchange. Any waiver to the foregoing provisions included in our bylaws requires the prior approval of the Mexican National Banking and Securities Commission and the approval, at an extraordinary shareholders’ meeting, of 95% of our outstanding capital stock.

Shareholder Ownership Restrictions and Antitakeover Protection

Holders of our shares are subject to the following restrictions:

• holders of Series B shares, either individually or together with their related parties, may not directly or indirectly own more than 10% of our Series B shares;

• although there is no limit on individual holdings of Series BB shares, Series BB shares may represent no more than 15% of our outstanding capital stock;

• holders of Series BB shares may also own Series B shares;

• no shareholder may vote more than 10% of our capital stock. Shares in excess of this threshold will be voted in the same manner as the majority of our shares;

• the aforementioned limits may not be circumvented by means of any special trust; collective ownership or voting agreement or any other scheme that could confer a higher percentage of share ownership or voting powers; and

• foreign governments acting in a sovereign capacity may not directly or indirectly own any portion of our capital stock.

A person exceeding the 10% threshold described above with respect to our Series B shares must conduct a public offer of his excess shares.

Any amendment to the ownership restrictions described above requires the vote of shares representing 85% of our capital stock.

Changes in Capital Stock

Increases and reductions of our minimum fixed capital must be approved at an extraordinary shareholders’ meeting, subject to the provisions of our bylaws and the Mexican General Law of Business Corporations. Increases or reductions of the variable capital must be approved at an ordinary shareholders’ meeting in compliance with the voting requirements of our bylaws.

Pursuant to Article 53 of the Securities Market Law, we may issue unsubscribed shares that will be kept in treasury, to be subsequently subscribed by the investing public, provided that

• an extraordinary shareholders’ meeting approves the maximum amount of the capital increase and the conditions upon which the corresponding placement of shares shall be made,

• the subscription of issued shares is made through a public offer following registration in the National Securities Registry and complying with the provisions of the Securities Market Law and other applicable law, and

• the amount of the subscribed and paid-in capital of the company is announced when the company makes the authorized capital increase public.

The preferential subscription right provided under Article 132 of the General Law of Commercial Corporations (Ley General de Sociedades Mercantiles) is not applicable to capital increases through public offers.

Subject to the individual ownership limitations set forth in our bylaws, in the event of an increase of our capital stock our shareholders will have a preemptive right to subscribe and pay for new stock issued as a result of such

166

increase in proportion to their shareholder interest at that time, unless: the capital increase is made under the provisions of Article 53 of the Securities Market Law. Said preemptive right shall be exercised by any method provided in Section 132 of the Mexican General Corporations Law, by subscription and payment of the relevant stock within fifteen business days after the date of publication of the corresponding notice to our shareholders in the Mexican Federal Gazette and in one of the newspapers of greater circulation in Mexico, provided that if at the corresponding meeting all of our shares are duly represented, the fifteen business day period shall commence on the date of the meeting.

Our capital stock may be reduced by resolution of a shareholders’ meeting taken generally pursuant to the rules applicable to capital increases. Our capital stock may also be reduced upon repurchase of our own stock in accordance with the Securities Market Law. See “– Share Repurchases” below.

Share Repurchases

We may choose to acquire our own shares or negotiable instruments representing such shares through the Mexican Stock Exchange on the following terms and conditions:

• The acquisition and sale on the Mexican Stock Exchange is made at market price (except when dealing with public offerings or auctions authorized by the National Banking and Securities Commission).

• If the acquisition is charged against shareholder’s equity, the shares may be kept by us without the need to make a reduction in our capital stock. Otherwise, if the acquisition is charged against our capital stock, the shares will be converted into unsubscribed shares kept in our treasury, without need for a resolution by our shareholders’ at a shareholders’ meeting.

• The company must announce the amount of the subscribed and paid-in capital when the amount of the authorized capital represented by the issued and unsubscribed shares is publicly announced.

• The ordinary shareholders’ meeting will expressly determine for each fiscal year the maximum amount of resources that we may use to purchase our own shares or negotiable instruments that represent such shares, with the only limitation that the sum or total of the resources that may be used for such purpose may not exceed, at any time, the total balance of the net profits of the company, including retained profits.

• We must be up to date in the payment of obligations under debt instruments issued and registered in the National Securities Registry that we may have issued.

Shares of the company belonging to us may not be represented or voted in shareholders’ meetings, nor may corporate or economic rights of any kind be exercised, nor will the shares be considered as outstanding for the purpose of determining the quorum or voting in shareholders’ meetings.

See “Item 16E, Purchases of Equity Securities by the Issuer and Affiliated Purchasers.”

Ownership of Capital Stock by Subsidiaries

Our subsidiaries may not, directly or indirectly, invest in our shares, except for shares of our capital stock acquired as part of any employee stock option plan, which may not exceed 25% of our capital stock, or through asset managers (Sociedades de Inversión).

Liquidation

Upon our dissolution, one or more liquidators must be appointed at an extraordinary shareholders’ meeting to wind up our affairs. All fully paid and outstanding shares will be entitled to participate equally in any distribution upon liquidation. Partially paid shares participate in any distribution in the same proportion that such shares have been paid at the time of the distribution.

167

Other Provisions

Liabilities of the members of the Board of Directors

As in any other Mexican corporation, and due to the provisions contained in Article 38 of the Securities Market Law, any shareholder or group of shareholders holding at least 5% of our capital stock may directly exercise a civil liability action under Mexican law against the members of the board of directors.

In addition to the foregoing, our bylaws provide that, a member of the board of directors will be liable to us and our shareholders for breaching his or her duties, as provided under articles 29 to 37 of the Securities Market Law.

Our bylaws provide that the members of the board of directors, or the board committees, and the secretary shall be indemnified by us in case of violations of their duty of care (deber de diligencia), as long as they did not act in bad faith, violate their duty of loyalty or commit an illicit act under the Securities Market Law or other applicable law. Additionally, our bylaws provide that we shall indemnify the members of the board of directors and the secretary for any indemnification liability which they may incur as long as they have not acted in bad faith, violated their duty of loyalty or committed an illicit act under the Securities Market Law or other applicable law.

Information to Shareholders

The Securities Market Law establishes that we, acting through our boards of directors, must annually present a report at a shareholders’ meeting that includes the following:

• A report prepared by the chairman of our Audit Committee, as required by Article 43 of the Securities Market Law, which must cover, among other things: (i) the performance of our top-level officers; (ii) transactions with related parties; (iii) the compensation packages for our directors and officers; (iv) waivers granted by the board of directors regarding corporate opportunities; (v) the situation of our, and our subsidiaries’ internal controls and internal auditing; (vi) preventive and corrective measures adopted in connection with non-compliance with operational and accounting guidelines; (vii) the performance of our external auditor; (viii) additional services provided by our external auditor and independent experts; (ix) the main results of the review of our and our subsidiaries’ financial statements; and (x) the effects of changes to our accounting policies.

• The report prepared by the chief executive officer under article 44, paragraph XI of the Securities Market Law. This report must be accompanied by the report (dictamen) of the external auditor, and should include, among other things: (i) a report of the directors on the operations of the company during the preceding year, as well as on the policies followed by the directors and on the principal existing projects of the company, (ii) a statement of the financial condition of the company at the end of the fiscal year, (iii) a statement regarding the results of operations of the company during the preceding year, as well as changes in the company’s financial condition and capital stock during the preceding year, and (iv) the notes which are required to complete or clarify the foregoing information.

• The board’s opinion on the contents of the report prepared by the chief executive officer and mentioned in the preceding paragraph.

• A report explaining the principal accounting and information policies and criteria followed in the preparation of the financial information.

• A report regarding the operations and activities in which the board participated, as provided under the Securities Market Law.

In addition to the foregoing, our bylaws specify additional information obligations of the board of directors, including that the board of directors should also prepare the information referred to in Article 172 of the General Law on Business Entities with respect to any subsidiary that represents at least 20% of our net worth (based on the financial statements most recently available).

168

Duration

The duration of our corporate existence has been set at 100 years, expiring in 2098.

Shareholders’ Conflict of Interest

Under Mexican law, any shareholder that has a conflict of interest with respect to any transaction must abstain from voting thereon at the relevant shareholders’ meeting. A shareholder that votes on a transaction in which its interest conflicts with ours may be liable for damages in the event the relevant transaction would not have been approved without such shareholder’s vote.

Directors’ Conflict of Interest

Under Mexican law, any director who has a conflict of interest in any transaction must disclose such fact to the other directors and abstain from voting on such transaction. Any director who violates such provision will be liable to us for any resulting damages or losses. Additionally, under our bylaws, certain conflicts of interest will have the effect of disqualifying a person from serving on our board of directors.

MATERIAL CONTRACTS

Our Mexican subsidiaries are parties to the airport concessions granted by the SCT under which we are required to construct, operate, maintain and develop the airports in exchange for certain benefits. See “Item 4, Information on the Company – Regulatory Framework – Sources of Mexican Regulation,” “Item 4, Information on the Company – Regulatory Framework – Mexican Airport Concessions – Scope of Concessions” and “Item 4, Information on the Company – Regulatory Framework – Mexican Airport Concessions – General Obligations of Concession Holders.”

MBJA is a party to the airport concession granted by the AAJ under which it is required to operate, maintain and develop the airport in exchange for certain benefits. See “Item 4, Information on the Company – Regulatory Framework –Sources of Jamaican Regulation,” “Item 4, Information on the Company – Regulatory Framework – The Montego Bay Airport Concession.”

We are a party to a participation agreement with AMP and the SCT which establishes the framework for several other agreements to which we are a party. See “Item 7, Major Shareholders and Related Party Transactions – Related Party Transactions.”

We have entered into a Technical Assistance Agreement with AMP providing for management and consulting services. See “Item 7, Major Shareholders and Related Party Transactions – Related Party Transactions.”

EXCHANGE CONTROLS

Mexico has had a free market for foreign exchange since 1991, and the government has allowed the peso to float freely against the U.S. dollar since December 1994.

TAXATION

The following summary contains a description of the material U.S. and Mexican federal income tax consequences of the purchase, ownership and disposition of our Series B shares or ADSs by a beneficial holder that is a citizen or resident of the United States or a U.S. domestic corporation or that otherwise is subject to U.S. federal income tax on a net income basis in respect of our Series B shares or ADSs, that is a “non-Mexican holder” (as defined below), and that is fully eligible for benefits under the Tax Treaty, as defined below (a “U.S. holder”), but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase, hold or dispose of our Series B shares or ADSs. In particular, the summary deals only with U.S. holders that hold our Series B shares or ADSs as capital assets and does not address the tax treatment of special classes of U.S. holders such as entities treated as a partnership for U.S. federal income tax purposes or a partner in such partnership, dealers in securities or currencies, U.S. holders whose functional currency is not the U.S. dollar, U.S. holders that own or are treated as owning 10% or more of our outstanding voting shares, tax-exempt organizations, financial institutions, U.S. holders liable for the alternative minimum tax or net investment income

169

tax, securities traders who elect to account for their investment in Series B shares or ADSs on a mark-to-market basis and investors holding Series B shares or ADSs in a hedging transaction or as part of a straddle, conversion or other integrated transaction for U.S. federal income tax purposes. In addition, the summary does not address any U.S. or Mexican state or local tax considerations that may be relevant to a U.S. holder.

The summary is based upon the federal income tax laws of the United States of America (hereinafter “United States”) and the United Mexican States (hereinafter “Mexico”) as in effect on the date of this annual report on Form 20-F, including the provisions of The Convention between the Government of the United States of America and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, together with a related Protocols and Competent Authority Agreements (hereinafter “Tax Treaty”), all of which are subject to change, possibly with retroactive effect in the case of U.S. federal income tax law. Prospective investors in our Series B shares or ADSs should consult their own tax advisors as to the U.S., Mexican or other tax consequences of the purchase, ownership and disposition of the Series B shares or ADSs, including, in particular, the effect of any foreign, state or local tax laws and their entitlement to the benefits, if any, afforded by the Tax Treaty.

For purposes of this summary, the term “non-Mexican holder” shall mean a holder that is not a resident of Mexico for federal tax purposes and that does not hold the Series B shares or ADSs or a beneficial interest therein in connection with the conduct of a trade or business through a permanent establishment or fixed base in Mexico.

For purposes of Mexican taxation, the definition of residency is highly technical and residency results in several situations. Generally, an individual is a resident of Mexico if he or she has established his or her home in Mexico, and a corporation is a resident if it has its place of effective management or center of interests in Mexico. An individual who has a home in Mexico and another country will be considered to be a resident of Mexico if Mexico is the individual’s significant center of interest. However, any determination of residence should take into account the particular situation of each person or legal entity. If a legal entity or an individual is deemed to have a permanent establishment in Mexico for Mexican tax purposes, all income attributable to that permanent establishment will be subject to Mexican income taxes, in accordance with applicable tax laws.

This summary does not address all of the Mexican tax consequences that may be applicable to specific holders of the shares or ADSs (including a holder that controls the Company, an investor that holds 10% or more of the shares or ADSs or holders that constitute a group of persons for purposes of Mexican law that controls the Company or that holds 10% or more of the shares or ADSs, or a holder that is a resident of Mexico or that is a corporation resident in a tax haven (as defined in the Mexican Income Tax Law)). It also does not purport to be a comprehensive description of all the Mexican tax considerations that may be relevant to a decision to purchase, own or dispose of the shares. In particular, this summary does not describe any tax consequences arising under the laws of any state, locality, municipality or taxing jurisdiction other than certain federal laws of Mexico.

In general, for U.S. federal income tax purposes, holders of ADSs are treated as the beneficial owners of the Series B shares represented by those ADSs. Accordingly, deposits and withdrawals of Series B shares by U.S. holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.

Taxation of Dividends

Mexican Tax Considerations

Under the Mexican Income Tax Law, dividends paid to Mexican individuals or any foreign residents are subject to a 10% withholding tax if paid from earnings generated during and after 2014, but are not subject to Mexican withholding tax if paid from earnings generated before 2014. Non-Mexican holders may be subject to withholding tax at reduced rates if they are eligible for benefits under an applicable tax treaty with Mexico.

There is a tax incentive for Mexican individuals to claim a credit for dividends generated in 2014, 2015 and 2016 that are reinvested in our Company. This credit applies as follows: (i) if the dividends are paid in 2017, a net 9% tax would be withheld (comprising the 10% withholding tax less a 1% credit), such that 10% of the 10% withholding tax would be credited under the incentive; (ii) if the dividends are paid in 2018, a net 8% tax would be withheld (comprising the 10% withholding tax less a 2% credit), such that 20% of the 10% withholding tax would be credited under the incentive; or (iii) if the dividends are paid in 2019 or thereafter, a net 5% tax would be withheld (comprising the 10% withholding tax less a 5% credit), such that 50% of the 10% withholding tax would be credited under the incentive.

170

U.S. Federal Income Tax Considerations

The gross amount of any distributions paid with respect to the Series B shares or ADSs, to the extent paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, generally are includible in the gross income of a U.S. holder as ordinary income on the date on which the distributions are received by the depositary and are not eligible for the dividends received deduction allowed to certain corporations under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). To the extent that a distribution exceeds our current and accumulated earnings and profits, it is treated as a non-taxable return of basis to the extent thereof, and thereafter as capital gain from the sale of Series B shares or ADSs. We do not expect to maintain calculations of our earnings and profits in accordance with U.S. federal income tax principles. U.S. Holders therefore should expect that distributions generally will be treated as dividends for U.S. federal income tax purposes. Distributions, which are made in pesos, are includible in the income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date they are received by the depositary whether or not they are converted into U.S. dollars on the date of receipt. If such distributions are converted into U.S. dollars on the date of receipt, a U.S. holder generally should not be required to recognize foreign currency gain or loss in respect of the distributions. Any gain or loss on a subsequent conversion or other disposition of the pesos generally will be treated as ordinary income or loss to such U.S. holder and generally will be income or loss from sources within the United States for U.S. foreign tax credit purposes.

Subject to certain exceptions for short-term and hedged positions, so long as certain holding period and other requirements are met, the U.S. dollar amount of dividends received by certain non-corporate U.S. holders with respect to the Series B shares or ADSs will be subject to taxation at preferential rates if the dividends are “qualified dividends.” Dividends paid on the ADSs will be treated as qualified dividends if: (i) we are eligible for the benefits of a comprehensive income tax treaty with the United States that the Internal Revenue Service (“IRS”) has approved for the purpose of the qualified dividend rules; and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company (PFIC). The Tax Treaty has been approved for the purposes of the qualified dividend rule. In addition, based on our audited consolidated financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2016 taxable year. In addition, based on our audited consolidated financial statements and our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our 2017 taxable year.

Subject to certain exceptions for short-term and hedged positions, Mexican withholding tax imposed on distributions with respect to Series B shares or ADSs will generally give rise to a foreign tax credit or deduction against U.S. federal income tax liability. For purposes of applying the foreign tax credit limitation, dividend distributions generally constitute foreign-source, passive category income (or in the case of certain U.S. holders, general category income). The use of foreign tax credits is subject to complex rules and limitations. U.S. holders are urged to consult their tax adviser whether, and to what extent, a foreign tax credit will be available in light of their particular circumstances.

Taxation of Dispositions of Shares or ADSs

Mexican Tax Considerations

Subject to applicable tax treaties, any gain on the sale of our Series B shares or ADSs by any holder is subject to a 10% withholding tax in Mexico on the net gain from the sale if the transaction is carried out through the Mexican Stock Exchange or other approved securities markets (including the NYSE), while gains from a sale in other circumstances will give rise to a 25% Mexican withholding tax on the gross proceeds realized from the sale. Alternatively, a non-Mexican holder may, subject to certain requirements, elect to pay taxes on the gains realized from the sale of ADSs or Series B shares on a net basis at a rate of 35.0%.

However, a U.S. holder that demonstrates its eligibility for benefits under the Tax Treaty will generally be exempt from Mexican tax on gains or gross proceeds from the sale or other disposition of the Series B shares or

171

ADSs, so long as the holder did not own, directly or indirectly, 25% or more of our capital stock (including ADSs) within the twelve-month period preceding such sale or other disposition. Gains and gross proceeds realized by other non-Mexican holders that are eligible to receive benefits pursuant to other income tax treaties to which Mexico is a party may be exempt from Mexican income tax on a sale or disposition of the Series B shares or ADSs in whole or in part. Such other non-Mexican holders should consult their own tax advisors as to their possible eligibility under an applicable treaty. A U.S. holder may be required to comply with certain requirements, including, among others, certifying or documenting its tax residence or filing certain information with the Mexican tax authority, in order to qualify for benefits under the Tax Treaty.

U.S. Federal Income Tax Considerations

Upon the sale or other disposition of the Series B shares or ADSs, a U.S. holder will generally recognize gain or loss in an amount equal to the difference between the amount realized for the shares and such U.S. holder’s tax basis in the Series B shares or ADSs (in U.S. dollars). Such gain or loss will generally be capital gain or loss. Gain or loss recognized by a U.S. holder on such sale or other disposition generally is treated as long-term capital gain or loss if, at the time of the sale or other disposition, the Series B shares or ADSs had been held for more than one year. Long-term capital gain recognized by a non-corporate U.S. holder is taxable at reduced rates. The deduction of a capital loss is subject to limitations. A U.S. holder that receives non-U.S. currency from a sale or other disposition of the Series B shares or ADSs generally will recognize an amount equal to the U.S. dollar value of such non-U.S. currency on the date the shares are disposed of. A cash basis or electing accrual basis taxpayer will determine the U.S. dollar value of the amount realized by translating such amount at the spot rate on the settlement date of the sale. If an accrual basis U.S. holder makes the election described above, it must be applied consistently from year to year and cannot be revoked without the consent of the IRS. A U.S. holder will have a tax basis in any non-U.S. currency received in respect of the sale or other disposition of its Series B shares or ADSs equal to its U.S. dollar value calculated at the exchange rate in effect on the date of such sale or other disposition (or in the case of a cash basis or electing accrual basis taxpayer the exchange rate in effect on the date of the receipt).

Gain, if any, realized by a U.S. holder on the sale or other disposition of the Series B shares or ADSs generally will be treated as U.S. source income for U.S. foreign tax credit purposes. Consequently, if a Mexican withholding tax is imposed on the sale or disposition of the Series B shares or ADSs, a U.S. holder that does not receive significant foreign source income from other sources may not be able to derive effective U.S. foreign tax credit benefits in respect of these Mexican taxes. U.S. holders should consult their own tax advisors regarding the application of the foreign tax credit rules to their investment in, and disposition of, Series B shares or ADSs.

Other Taxes

Other Mexican Taxes

There are no Mexican inheritance, gift, succession or value-added taxes applicable to the ownership, transfer or disposition of the Series B shares or ADSs by non-Mexican holders; provided, however, that gratuitous transfers of the Series B shares or ADSs may in certain circumstances causes a Mexican federal tax to be imposed upon the recipient. There are no Mexican stamp, issue, registration or similar taxes or duties payable by non-Mexican holders of the Series B shares or ADSs.

U.S. Backup Withholding Tax and Information Reporting Requirements

Dividends on, and proceeds from the sale or other disposition of, the shares or ADSs paid to a U.S. holder generally may be subject to the information reporting requirements of the Code and may be subject to backup withholding unless the holder:

• establishes that it is a corporation or other exempt holder; or

• Provides an accurate taxpayer identification number on a properly completed IRS Form W-9 and certifies that it is not subject to backup withholding and otherwise complies with applicable requirements of the backup withholding rules.

172

The amount of any backup withholding from a payment to a holder will be allowed as a credit against the U.S. holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is furnished to the IRS.

DOCUMENTS ON DISPLAY

We file reports, including annual reports on Form 20-F, and other information electronically with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. You may read and copy any materials filed with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Any filings we make are also available to the public over the Internet at the SEC’s website at www.sec.gov and at our website at http://www.aeropuertosgap.com.mx/. (This URL is intended to be an inactive textual reference only. It is not intended to be an active hyperlink to our website. The information on our website, which might be accessible through a hyperlink resulting from this URL, is not and shall not be deemed to be incorporated into this annual report).

Item 11. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

See Note 5 to our audited consolidated financial statements for disclosure about market risk.

Foreign Currency Exchange Rate Risk

Our principal exchange rate risk involves changes in the value of the Mexican peso relative to the U.S. dollar. Historically, a significant portion of the revenues generated by our Mexican airports (principally derived from passenger charges for international passengers) has been denominated in or linked to the U.S. dollar but collected in pesos based on the average exchange rate for the prior month. In 2014, 2015 and 2016, approximately 27.9%, 29.7% and 28.9%, respectively, of our total revenues were derived from passenger charges for international passengers (in 2014, 2015 and 2016, 29.4%, 33.1% and 34.0%, respectively, of the sum of our aeronautical and non-aeronautical revenues were derived from passenger charges for international passengers). A depreciation of the peso as compared to the U.S. dollar, particularly late in the year, could cause us to exceed the maximum rates at one or more of our airports, in which case, we may provide discounts to passenger charges or to the airlines. In addition, if the peso appreciates as compared to the U.S. dollar, we may underestimate the specific prices we can charge for regulated services and be unable to adjust our prices upwards to maximize our regulated revenues. Approximately 25% of our 2016 aeronautical and non-aeronautical revenues were denominated in U.S. dollars. We estimate that approximately 18% of our consolidated costs and expenses are denominated in U.S. dollars. Based upon a 10% annual depreciation of the peso compared to the U.S. dollar as of December 31, 2016, we estimate that our revenues would have increased by approximately Ps.235.8 million, and our costs and expenses would have increased approximately Ps.105.7 million.

As of December 31, 2014, no cash and marketable securities were denominated in U.S. dollars. As of December 31, 2015, 4.6% of our cash and marketable securities were denominated in U.S. dollars and 1.3% were denominated in euros. As of December 31, 2016, 4.9% of our cash and marketable securities were denominated in U.S. dollars and none were denominated in euros.

At December 31, 2014 we did not have any relevant foreign currency indebtedness. In 2015, we obtained U.S.$191.0 million in loans, with which we financed 100% of the acquisition of DCA and we had a total of U.S.$229.6 million in U.S. dollar-denominated debt as of December 31, 2015. In 2016, we did not incur any additional U.S. dollar indebtedness, and, as of December 31, 2016, we had U.S.$223.3 million in U.S. dollar-denominated debt. Future decreases in the value of the peso relative to the U.S. dollar will increase the cost in pesos of servicing such indebtedness.

At December 31, 2014, 2015 and 2016, we did not have any outstanding forward foreign exchange contracts.

173

Interest Rate Risk

In the recent past, we have funded the majority of our capital expenditures with bank loans. However, due to a strategic shift, we now expect to fund the most significant portion of our capital investments through debt issuances on the Mexican capital markets, subject to market conditions.

On February 20, 2015, we issued Ps.2.6 billion in long-term debt securities in two tranches. The first tranche, “GAP 15,” was for Ps.1.1 billion, has interest payable every 28 days at a variable rate of TIIE-28 plus 24 basis points and matures in 5 years on February 14, 2020. The second tranche, “GAP 15-2,” was for the remaining Ps.1.5 billion and has interest payable every 182 days at a fixed rate of 7.08%. The GAP 15-2 certificates mature in 10 years on February 7, 2025. The proceeds of both these tranches were used to repay all our previously outstanding bank debt, and the remainder was used to finance capital investments set forth in our Master Development Programs for 2015. On January 29, 2016, we reopened issued a total of Ps.1.1 billion in additional GAP-15 debt securities on the Mexican debt capital markets, which was allocated to finance capital investments set forth in our Master Development Programs for 2016. Interest is payable every 28 days at a variable rate of TIIE-28 plus 24 basis points. The reopened GAP-15 debt securities mature on February 14, 2020. On July 8, 2016 we issued a total of Ps.1.5 billion in new “GAP 16” debt securities on the Mexican market. Proceeds from the issuance were allocated to finance the investments set forth in our Master Development Programs for the second half of 2016 and the first quarter of 2017. Interest is payable every 28 days at a variable rate of TIIE-28 plus 49 basis points. The maturity of these bond certificates will be 5 years, and the principal payment will be repaid upon maturity, on July 2, 2021. As of December 31, 2016, we had approximately Ps.3.7 billion in variable-rate debt issued.

In addition, on September 24, 2015, we signed two new unsecured credit agreements for the refinancing of the bridge loans obtained for the acquisition of DCA. The new loans, from Bank of Nova Scotia and BBVA Bancomer, for U.S.$95.5 million each, generate interest at the variable one-month LIBOR rate plus 99 and 105 basis points, respectively. The Bank of Nova Scotia and BBVA Bancomer loans were disbursed on January 19, 2016 and February 15, 2016, respectively, and have a 5-year maturity.

As of December 31, 2016, we paid Ps.141.4 million of interest expense under variable interest rate loans, with an average TIIE-28 rate of 4.3% plus a contractual fixed spread, and Ps.53.5 million of interest expense with an average LIBOR rate of 0.46% plus a contractual fixed spread. Based upon a 100 basis points increase of the TIIE-28 rate, we estimate that our interest expense would have increased by Ps.37.0 million.

Because both our U.S. dollar loans and our peso bond debt have variable interest rates, an increase in interest rates would reduce our cash flows. To reduce our exposure, we have contracted interest rate hedges with HSBC México, S.A. (“HSBC”) and Scotiabank. Our derivative financial instruments are negotiated in the over-the-counter (OTC) market through national and international banks.

	Notional amount (millions)		Coverage start date													Due date		Market value at December 31, 2016 (in millions)
					Rate		Floor			CAP 1			CAP 2
HSBC	U.S.$	95.5		March 2016		Libor 30		0.42	%		1.75	%		2.75	%		January 2021	Ps.	18.1
HSBC	U.S.$	95.5		March 2016		Libor 30		0.42	%		1.75	%		2.75	%		February 2021		18.4
Scotiabank	Ps.	2,200.0		April 2016		TIIE-28		4.05	%		5.75	%		6.75	%		February 2021		35.9
Total																		Ps.	72.4

For more information regarding our funding and liquidity strategies, see “Item 5, Operating and Financial Review and Prospects – Liquidity and Capital Resources – Indebtedness.”

Item 12. Description of Securities Other Than Equity Securities

Not applicable.

Item 12A. Debt Securities

Not applicable.

174

Item 12B. Warrants and Rights

Not applicable.

Item 12C. Other Securities

Not applicable.

Item 12D. American Depositary Shares

Deposit Agreement

The Bank of New York Mellon serves as the depositary for our ADSs. ADS holders are required to pay various fees to the depositary. The following is a summary of the fees payable by holders of our ADRs. For more complete information regarding ADRs, you should read the entire deposit agreement and the form of ADR.

Service	Fee or Charge Amount	Payee
Execution and delivery of ADRs	U.S.$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	Bank of New York Mellon
Surrender of ADRs	U.S.$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	Bank of New York Mellon
Any cash distribution to ADR registered holders	U.S.$0.02 (or less) per ADS	Bank of New York Mellon
Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADR registered holders	A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs	Bank of New York Mellon
Registration of transfers of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares	Registration or transfer fees	Bank of New York Mellon
Cable, telex and facsimile transmissions (as expressly provided in the deposit agreement)	Expenses of the depositary	Bank of New York Mellon
Converting foreign currency to U.S. dollars	Expenses of the depositary	Bank of New York Mellon
Taxes and other governmental charges the Bank of New York Mellon or the custodian has to pay on any ADR or share underlying an ADR, for example, stock transfer taxes, stamp duty or withholding taxes	As necessary	Bank of New York Mellon
Other fees, as necessary	Any charges incurred by Bank of New York Mellon or its agents for servicing the deposited securities	Bank of New York Mellon

The depositary of our ADSs, The Bank of New York Mellon, collects its fees directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal, or from intermediaries acting for them, by deducting the fees from the amounts distributed or by selling a portion of distributable property to pay the fees. For example, the depositary may deduct from cash distributions, directly bill investors or charge the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for these services are paid.

175

Reimbursements by the Depositary

The Bank of New York Mellon, as depositary of our ADSs, pays us an agreed amount, which includes expenses related to the administration and maintenance of the ADS facility including, but not limited to, investor relations expenses, the annual New York Stock Exchange listing fees (as invoiced in the reimbursement request to the depositary) or any other program related expenses. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount of reimbursement available to us is not necessarily tied to the amount of fees the depositary collects from investors. On January 31, 2014, we received U.S.$286.8 thousand in reimbursements for expenses from 2013 from the depositary. On September 1, 2015, we received U.S.$146.0 thousand in reimbursements for expenses from 2014 from the depositary. In 2016, we did not receive any reimbursements for expenses for 2015 from the depositary.

176

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15. Controls and Procedures

a) Disclosure Controls and Procedures

We have evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of December 31, 2016.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

b) Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with international financial reporting standards. Our internal control over financial reporting includes those policies and procedures that:

(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with international financial reporting standards, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate. Under the supervision of our Chief Executive Officer and Chief Financial Officer, our management assessed the design and effectiveness of our internal control over financial reporting as of December 31, 2016. In making its assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control — Integrated Framework (2013).

Based on our assessment and those criteria, our management has concluded that our company maintained effective internal control over financial reporting as of December 31, 2016.

177

Our independent registered public accounting firm that audited the financial statements included in this filing has issued an attestation report on the effectiveness of our internal control over financial reporting.

c) Report of Independent Registered Public Accounting Firm on Internal Controls

We have audited Grupo Aeroportuario del Pacífico, S.A.B. de C.V.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Grupo Aeroportuario del Pacífico, S.A.B. de C.V.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on internal control over financial reporting. Our responsibility is to express an opinion on Grupo Aeroportuario del Pacífico, S.A.B. de C.V.’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with financial reporting standards. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with financial reporting standards, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Grupo Aeroportuario del Pacífico, S.A.B. de C.V. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statement of financial position of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and subsidiaries as of December 31, 2016 and the related consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and our report dated April 12, 2017 expressed an unqualified opinion on those consolidated financial statements.

KPMG Cárdenas Dosal S.C.

/s/ LUIS LÓPEZ PÉREZ

C.P.C. Luis López Pérez

Guadalajara, Jalisco, Mexico

April 12, 2017

178

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16. Reserved

Item 16A. Audit Committee Financial Expert

Carlos Cárdenas Guzmán, an independent director under NYSE listing standards, joined our board of directors and our Audit Committee in 2011, and we believe that he is qualified to serve as our “audit committee financial expert” as defined in Item 16A of Form 20-F under the Securities and Exchange Act of 1934. Our board of directors appointed Mr. Cárdenas as President of the Audit Committee and also as the financial expert of that Committee. For a discussion of Mr. Cárdenas qualifications, see “Item 6, Directors, Senior Management and Employees – Directors.”

Item 16B. Code of Ethics

We have adopted a code of ethics, as defined in Item 16B of Form 20-F under the Securities Exchange Act of 1934, as amended. Our code of ethics applies to our chief executive officer, chief financial officer, chief accounting officer and personnel performing similar functions as well as to our other officers and employees. Our code of ethics is an exhibit to this annual report on Form 20-F and is available on our website at www.aeropuertosgap.com.mx. If we amend the provisions of our code of ethics that apply to our chief executive officer, chief financial officer, chief accounting officer and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address. The information found on our website, other than as specifically incorporated by reference into this annual report on Form 20-F, is not part of this annual report on Form 20-F.

Item 16C. Principal Accountant Fees and Services

Audit and Non-Audit Fees

The following table sets forth the fees billed to us by our independent auditors, Galaz, Yamazaki, Ruíz Urquiza, S.C. (“Deloitte”) (a member of Deloitte Touche Tohmatsu Limited), during the fiscal years ended December 31, 2014, 2015 and 2016, and KPMG Cárdenas Dosal S.C. (“KPMG Mexico”), during the fiscal year ended December 31, 2016:

	Year ended December 31,
	2014		2015		2016(1)
	(thousands of pesos)
Audit fees	Ps.	6,625	Ps.	6,941	Ps.	7,694
Audit-related fees		3,166		3,252		3,668
Tax fees		—		—		—
Other fees		1,501		2,237		331
Total fees	Ps.	11,292	Ps.	12,430	Ps.	11,693

(1) In 2016, Galaz, Yamazaki, Ruíz Urquiza, S.C. (our audit firm until 2015) billed us the following fees: audit fees of Ps.4,526 thousand, audit-related fees of Ps.2,412 thousand and other fees of Ps.331 thousand. In 2016, KPMG Cárdenas Dosal S.C. (our audit firm since 2016) billed us the following fees: audit fees of Ps.3,168 thousand and audit-related fees of Ps.1,256 thousand.

Audit fees in the above tables are the aggregate fees billed by our independent auditors in connection with the audit of our annual consolidated financial statements, the audit of the financial statements of certain subsidiaries and other statutory audit reports.

Audit-related fees in the above table are fees billed by our independent auditors for services related to the Sarbanes-Oxley Act of 2002 and other audit related-services.

179

Tax fees in the above table are fees billed by our independent auditors for a monthly review of our tax calculations and for services related to tax refund claims.

Other fees in the above table are fees billed by our independent auditors for transfer pricing services and other services contracts.

Audit Committee Pre-Approval Policies and Procedures

Our audit committee has not established pre-approval policies and procedures for the engagement of our independent auditors for services. Our audit committee expressly approves on a case-by-case basis any engagement of our independent auditors for audit and non-audit services provided to our subsidiaries or to us.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The tables below set forth, for the periods indicated, the total number of shares purchased by us or on our behalf, or by or on behalf of an “affiliated purchaser,” the average price paid per share, the total number of shares purchased as a part of a publicly announced repurchase plan or program and the maximum number (or approximate U.S. dollar value) of shares that may yet be purchased under our plans and programs.

Shares Repurchased Pursuant to the Share Repurchase Program

2016	(a) Total number of shares purchased(1) (2)		(b) Average price paid per share in Pesos		(c) Total number of shares purchased as part of publicly announced plans or programs(3)		(d) Approximate dollar value that may yet be purchased under the plans or programs (in million)
January 1-31		—		—		—		—
February 1-29		—		—		—		—
March 1-31		—		—		—		—
April 1-30		—		—		—		—
May 1-31		—		—		—		—
June 1-30		—		—		—		—
July 1-31		—		—		—		—
August 1-31		—		—		—		—
September 1-30		—		—		—		—
October 1-31		—		—		—		—
November 1-30		—		—		—		—
December 1-31		—		—		—		—
2016 Total		—		—		—		—

(1) We do not repurchase our shares other than through the share repurchase program. Shares repurchased, if any, were purchased in open-market transactions.

(2) During 2016, AMP did not buy any of our shares.

(3) We periodically repurchase our shares on the open market using funds authorized by our shareholders specifically for the repurchase of our shares by us at our discretion. At the General Ordinary Shareholders’ Meeting held on April 23, 2014, a stock buy-back program was approved under the Mexican Securities Law for a maximum amount of Ps.400 million for the twelve months following April 23, 2014. At the General Ordinary Shareholders’ Meeting held on April 21, 2015, a stock buy-back program was approved under the Mexican Securities Law for a maximum amount of Ps.850 million for the twelve months following April 21, 2015. At the General Ordinary Shareholders’ Meeting held on April 26, 2016, a stock buy-back program was approved under the Mexican Securities Law for a maximum amount of Ps.950 million for the twelve months following April 26, 2016. During 2014, the Company repurchased a total of 1,017,561 shares for Ps.69.3 million. During 2015 and 2016, we did not repurchase any shares.

180

As of each of December 31, 2014, 2015 and 2016, there was a total balance of 35,424,453, 35,424,453 and 35,424,453 repurchased shares, respectively, on our Consolidated Statements of Financial Position.

Item 16F. Change in Registrant’s Certifying Accountant.

On February 27, 2016, the Audit and Corporate Practices Committee recommended to our management that the independent audit service for the year ending December 31, 2016 out to tender through a competitive bidding process. On March 30, 2016, we invited the biggest audit firms in Mexico to submit technical and economic proposals. On April 18, 2016, we received proposals from the audit firms invited and on April 27, 2016, our management presented these proposals to the Audit and Corporate Practices Committee, along with a technical evaluation of each proposal and of the fees proposed. Following analysis and discussion, the Audit and Corporate Practices Committee proposed that our board of directors engage KPMG Cárdenas Dosal, S.C. (“KPMG Mexico”) as our independent registered public accounting firm. On the same date, our board of directors approved this proposal, appointing KPMG México as our independent registered public accounting firm for the year ending December 31, 2016.

Contemporaneously, our board of directors determined to dismiss Deloitte as our independent registered public accounting firm. Deloitte was our independent auditor from 2002 through 2015.

The audit reports of Deloitte on our consolidated financial statements as of and for the years ended December 31, 2015 and 2014 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

During the two fiscal years ended December 31, 2015, and through July 21, 2016, there were no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference on the subject matter of the disagreement in connection with its audit reports.

From January 2016 to April 2016, KPMG’s independent affiliate in Jamaica provided payroll processing service to fourteen employees of MBJA. This is considered a prohibited service under SEC and Public Company Accounting Oversight Board (United States) rules. The Audit and Corporate Practices Committee considered the facts and circumstances of this service and agreed with KPMG Mexico that the aforementioned matter does not and will not affect KPMG´s ability to be objective and apply impartial judgment during its audit of our consolidated financial statements as of and for the year ending December 31, 2016, given that the professionals who provided the payroll services are part of the Jamaican affiliate’s advisory practice, which precludes them from participating in the audits of our subsidiaries in Mexico and Jamaica.

The Audit and Corporate Practices Committee considered that a change in independent auditors, in accordance with corporate governance best practices on auditor rotation, would bring a fresh perspective in the audits of our consolidated financial statements and internal controls.

We have provided a copy of the above statements to Deloitte and requested that Deloitte furnish us with a letter addressed to the SEC stating whether or not they agree with the above disclosure. A copy of that letter, dated April 12, 2017, is filed as an exhibit to this annual report.

Item 16G. Corporate Governance

Pursuant to Section 303A.11 of the Listed Company Manual of the New York Stock Exchange, we are required to provide a summary of the significant ways in which our corporate governance practices differ from those required for U.S. companies under the NYSE listing standards. We are a Mexican corporation with shares listed on the Mexican Stock Exchange. Our corporate governance practices are governed by our bylaws, the Securities Market Law and the regulations issued by the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores). We also generally comply on a voluntary basis with the Mexican Code of Best Corporate Practices (Código de Mejores Prácticas Corporativas), which was created in January 2001 by a group of Mexican business leaders and was endorsed by the Mexican Banking and Securities Commission. On an annual basis, we file a report with the Mexican Banking and Securities Commission and the Mexican Stock Exchange regarding our compliance with the Mexican Code of Best Corporate Practices.

181

The table below discloses the significant differences between our corporate governance practices and the NYSE standards:

NYSE Standards for Domestic Listed Companies(1)	Our Corporate Governance Practices
Director Independence.
§303A.01 specifies that listed companies must have a majority of independent directors. To qualify as independent, a director must satisfy the criteria set forth in §303A.02. In particular, a director is not independent if such director is: (i) not a person who the board affirmatively determines has no material direct or indirect relationship with the company, its parent or a consolidated subsidiary; (ii) an employee, or an immediate family member of an executive officer, of the company, its parent or a consolidated subsidiary, other than employment as interim chair or CEO; (iii) a person who receives, or whose immediate family member receives, more than $120,000 during any twelve-month period within the last three years in direct compensation from the company, its parent or a consolidated subsidiary, other than director and committee fees or deferred compensation for prior services only (and other than compensation for service as interim chair or CEO or received by an immediate family member for service as a non-executive employee); (iv) a person who is affiliated with or employed, or whose immediate family member is affiliated with or employed in a professional capacity, by a present or former internal or external auditor of the company, its parent or a consolidated subsidiary; (v) an executive officer, or an immediate family member of an executive officer, of another company whose compensation committee’s membership includes an executive officer of the listed company, its parent or a consolidated subsidiary; or (vi) an executive officer or employee of a company, or an immediate family member of an executive officer of a company, that makes payments to, or receives payments from, the listed company, its parent or a consolidated subsidiary for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues (charities are not included, but any such payments must be disclosed in the company’s proxy (or, if no proxy is prepared, its Form 10-K / annual report)).	Pursuant to the Securities Market Law and Article 15 of our bylaws, at least 25% of the members of our board of directors must be independent. Determinations regarding independence must be made by our shareholders applying the provisions of the Securities Market Law and our bylaws (which incorporate Section 10A-3 of the Exchange Act). The determination of independence under the Securities Market Law differs in certain respect from the provisions of §303A.02. Under Article 26 of the Securities Market Law, a director is not independent if such director is: (i) an employee or officer of the company or of another company that is a member of the same corporate group (consorcio o grupo empresarial) as the company (or a person who has been so within the prior year); (ii) a person that, without being an employee or officer of the company, has influence or authority over the company or its officers, or over another company that is a member of the same corporate group as the company; (iii) an important client, supplier, debtor or creditor (or a partner, director or employee thereof). A client or supplier is considered important if its sales to or purchases from the company represent more than 10% of its total sales or purchases within the prior year. A debtor or creditor is considered important if the aggregate amount of the relevant loan represents more than 15% of its or the company’s aggregate assets; (iv) a shareholder that is a part of the control group of the company; or (v) a family member, spouse or concubine of any of the persons mentioned in (i) through (iv) above. Currently, our board of directors consists of eleven directors. Six of such directors qualify as independent in accordance with the Securities Market Law and our bylaws, and one director has been designated by a holder of 10% of our capital stock in the form of Series B shares in accordance with our bylaws.

182

Executive Sessions.
§303A.03 specifies that non-management directors must meet at regularly scheduled executive sessions without management. Independent directors should meet alone in an executive session at least once a year.	Mexican law, our bylaws and the Mexican Code of Best Corporate Practices, which we adhere to, do not provide for non-management executive sessions. None of our managers are members of either our board of directors or our other committees, except that our chief executive officer is the chair of our Operating Committee, as provided for in Article 27 of our bylaws.
Committees for Director Nominations and Compensation and for Corporate Governance.
§303A.04 (a) specifies that listed companies must have a nominating/corporate governance committee composed entirely of independent directors. §303A.05 (a) specifies that listed companies must have a compensation committee composed entirely of independent directors.	We have a “Nominations and Compensation Committee.” We also have an Audit Committee, which, pursuant to Article 31 of our bylaws, has been assigned certain corporate governance (prácticas societarias) oversight obligations mandated by the Securities Market Law. Under Mexican corporate law, a corporation’s “board committees,” except for audit and corporate governance committees need not be composed only of members of the corporation’s board of directors. Article 28 of our bylaws provides that at least a majority of the members of our Nominations and Compensation Committee must be members of our board of directors. No express independence requirements apply to this committee. Currently, the committee consists of 2 members, both of whom are members of our board of directors, and one of whom is independent as defined under the Securities Market Law and Section 10A-3 of the Exchange Act.
Audit Committee.
§303A.06 specifies that listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act. §303A.07 specifies other requirements for audit committees, including a minimum of three members who satisfy the independence requirements of Section 3003A.02.	Foreign private issuers, such as us, are subject to §303A.06 and thus must comply with Rule 10A-3. We are in compliance with Rule 10A-3 and, as such, our Audit Committee consists entirely of members of our board of directors who meet the independence requirements prescribed in that rule. (The Securities Market Law likewise contains a requirement that our Audit Committee be entirely independent.) We are not subject to §303A.07. As such, our Audit Committee charter (contained in Article 32 of our bylaws) does not make provision for every one of the specific duties required by §303A.07. See above for a description of the composition of our Audit Committee.

183

Corporate Governance Guidelines.
§303A.09 specifies that listed companies must adopt and disclose corporate governance guidelines.	Mexican law does not require us to disclose corporate governance guidelines and we have not done so. However, pursuant to the Securities Market Law, we have adopted board guidelines covering corporate governance matters such as the use of corporate assets, certain transactions with related parties (including loans to officers), repurchases of shares, communications with shareholders, managers and directors, and other matters.
Code of Ethics.
§303A.10 specifies that corporate governance guidelines and a code of business conduct and ethics is required, with disclosure of any waiver for directors or executive officers.	We have adopted a code of ethics, which has been accepted by all of our directors and executive officers and other personnel. A copy of our code of ethics is available on our website: www.aeropuertosgap.com.mx.
Equity Compensation Plans.
§303A.08 & 312.03 specify that equity compensation plans require shareholder approval, subject to limited exemptions.	No equity-compensation plans have been approved by our shareholders. Shareholders’ approval is not expressly required under our bylaws for the adoption and amendment of an equity-compensation plan.
Shareholder Approval for Issuance of Securities.
§§312.03(b)-(d) specify that issuances of securities (1) that will result in a change of control of the issuer, (2) that are to a related party or someone closely related to a related party, (3) that have voting power equal to at least 20% of the outstanding common stock voting power before such issuance or (4) that will increase the number of shares of common stock by at least 20% of the number of outstanding shares before such issuance require shareholder approval.	Mexican law and our bylaws require us to obtain shareholder approval of the issuance of new equity securities.
Conflicts of Interest.
§314.00 specifies that the determination of how to review and oversee related party transactions is left to the listed company. The audit committee or comparable body, however, could be considered the forum for such review and oversight. §312.03(b) specifies that certain issuances of common stock to a related party require shareholder approval.	Pursuant to Mexican law, our bylaws and applicable internal guidelines, provided that the corporate practices committee of our board of directors has opined favorably, our board of directors must vote on whether or not to grant approval of certain transactions with a related party that (i) are outside the ordinary course of our business; or (ii) are at non-market prices. A director with an interest in the transaction is not permitted to vote on its approval.

184

Solicitation of Proxies.

§§402.01 & 402.04 specifies that the solicitation of proxies and provision of proxy materials is required for all meetings of shareholders. Copies of such proxy solicitations are to be provided to NYSE.

We are not required to distribute proxy materials to, or solicit the return of proxies from, our shareholders. In accordance with Mexican law and our bylaws, we inform shareholders of all meetings by public notice, which states the requirements for admission to the meeting and provides a mechanism by which shareholders can vote through a representative using a power of attorney. Under the new Mexican Securities Market Law, we have to make power of attorney forms available to shareholders at their request. Under the deposit agreements relating to our ADSs, holders of our ADSs receive notices of shareholders’ meetings and, where applicable, instructions on how to vote at the shareholders’ meeting through the depositary.

(1) Reference to sections are references to sections of the New York Stock Exchange Listed Company Manual. Pursuant to Section 303A.00, foreign private issuers, such as us, are exempt from the corporate governance standards of the exchange, with certain exceptions.

185

PART III

Item 17. Financial Statements

Not applicable.

Item 18. Financial Statements

Our consolidated financial statements are included in this filing beginning on page F-1. The following is an index to the consolidated financial statements:

Consolidated Financial Statements for Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

	Page
Report of Independent Registered Public Accounting Firm for the Years Ended December 31, 2014 and 2015		F-1
Report of Independent Registered Public Accounting Firm for the Year Ended December 31, 2016		F-2
Consolidated Statements of Financial Position as of December  31, 2014, 2015 and 2016		F-3
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the Years Ended December 31, 2014, 2015 and 2016		F-5
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2014, 2015 and 2016		F-7
Consolidated Statements of Cash Flows for the Years Ended December  31, 2014, 2015 and 2016		F-8
Notes to Consolidated Financial Statements		F-10

Item 19. Exhibits

Documents filed as exhibits to this annual report:

Exhibit No.	Description
1.1	An English translation of the Amended and Restated Bylaws (Estatutos Sociales) of the Company.
2.1	Deposit Agreement among the Company, The Bank of New York Mellon (formerly The Bank of New York) and all registered holders from time to time of any American Depositary Receipts, including the form of American Depositary Receipt (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).
3.1	Trust Agreement among the Company, AMP and Bancomext, together with an English translation (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).
4.1	Amended and Restated Guadalajara Airport Concession Agreement and annexes thereto, together with an English translation and a schedule highlighting the differences between this concession and the Company’s other concessions (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).
4.2	Participation Agreement and Amendment No. 1 thereto among the Registrant, the Mexican Federal Government through the SCT, Nacional Financiera, S.N.C., the Company, Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V., Aeropuerto de Aguascalientes, S.A. de C.V., Aeropuerto del Bajío, S.A. de C.V., Aeropuerto de Guadalajara, S.A. de C.V., Aeropuerto de Hermosillo, S.A. de C.V., Aeropuerto de La Paz, S.A. de C.V., Aeropuerto de Los Mochis, S.A. de C.V., Aeropuerto de Manzanillo, S.A. de C.V., Aeropuerto de Mexicali, S.A. de C.V., Aeropuerto de Morelia, S.A. de C.V., Aeropuerto de Puerto Vallarta, S.A. de C.V., Aeropuerto de San José del Cabo, S.A. de C.V., Aeropuerto de Tijuana, S.A. de C.V., AMP, AENA, Aeropuerto del Pacífico Ángeles, S.A. de C.V., Inversora del Noroeste, S.A. de C.V., Grupo Dragados, S.A., Grupo Empresarial Ángeles, S.A. de C.V., Bancomext and the ASA, together with an English translation (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).

186

Exhibit No.	Description
4.3	Technical Assistance and Technology Transfer Agreement among the Registrant, Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V., Aeropuerto de Aguascalientes, S.A. de C.V., Aeropuerto del Bajío, S.A. de C.V., Aeropuerto de Guadalajara, S.A. de C.V., Aeropuerto de Hermosillo, S.A. de C.V., Aeropuerto de La Paz, S.A. de C.V., Aeropuerto de Los Mochis, S.A. de C.V., Aeropuerto de Manzanillo, S.A. de C.V., Aeropuerto de Mexicali, S.A. de C.V., Aeropuerto de Los Mochis, S.A. de C.V., Aeropuerto de Puerto Vallarta, S.A. de C.V., Aeropuerto de San José del Cabo, S.A. de C.V., Aeropuerto de Tijuana, S.A. de C.V., AMP, AENA, Aeropuerto del Pacífico Ángeles, S.A. de C.V., Inversora del Noroeste, S.A. de C.V., Grupo Dragados, S.A., and Grupo Empresarial Ángeles, S.A. de C.V., together with an English translation (incorporated by reference to our registration statement on Form F-1 (File No. 333-131220) filed on January 23, 2006).
4.4	Professional Services Agreement between Aeropuerto de Guadalajara, S.A. de C.V. and AENA Desarrollo Internacional, S.A. dated as of August 4, 2008 (English translation) and a schedule highlighting the differences between this agreement and similar agreements with the Company’s other airport operating subsidiaries (incorporated by reference to our Form 20-F filed on June 29, 2010).
8.1	List of subsidiaries of the Company.*
11.1	Code of Ethics of the Company (incorporated by reference to our annual report on Form 20-F for the year ended December 31, 2005, filed on May 10, 2007).
12.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
12.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
13.1	Certifications of Chief Financial Officer and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
16.1	Letter from Galaz, Yamazaki, Ruíz Urquiza, S.C. (a member of Deloitte Touche Tohmatsu Limited).*

* Filed herewith.

Omitted from the exhibits filed with this annual report are certain instruments and agreements with respect to our long-term debt, none of which authorizes securities or results in an incurrence of debt in a total amount that exceeds 10% of our total assets. We hereby agree to furnish to the SEC copies of any such omitted instruments or agreements as the SEC requests.

187

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

Grupo Aeroportuario del Pacífico, S.A.B. de C.V.
By:	/s/ SAÚL VILLARREAL GARCÍA
Name:	Saúl Villarreal García
Title:	Chief Financial Officer

Dated: April 12, 2017

Grupo Aeroportuario del Pacífico,

S.A.B. de C.V. and Subsidiaries

Consolidated Financial Statements as of December 31, 2014, 2015 and 2016 and for the Years Ended December 31, 2014, 2015 and 2016 and Reports of Independent Registered Public Accounting Firms Dated April 12, 2017

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Report of Independent Auditors and 2014, 2015 and 2016 Consolidated Financial Statements

Contents	Page
Report of Prior Independent Auditors		F-1
Report of Independent Auditors		F-2
Consolidated Statements of Financial Position as of December  31, 2014, 2015 and 2016		F-3
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the Years Ended December 31, 2014, 2015 and 2016		F-5
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2014, 2015 and 2016		F-7
Consolidated Statements of Cash Flows for the Years Ended December  31, 2014, 2015 and 2016		F-8
Notes to Consolidated Financial Statements		F-10

i

Report of Independent Registered Public Accounting Firm to the Board of Directors and Stockholders of Grupo Aeroportuario del Pacífico, S.A.B. de C.V.

We have audited the accompanying consolidated financial statements of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and subsidiaries (the “Company”), which comprise the consolidated statements of financial position as of December 31, 2015 and 2014 and the consolidated statements of profit or loss and other comprehensive income, changes in stockholders’ equity and of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and subsidiaries as of December 31, 2015 and 2014, and their results of operations, changes in their shareholders’ equity and their cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The accompanying consolidated financial statements have been translated into English solely for the convenience of readers.

Galaz, Yamazaki, Ruiz Urquiza, S. C.

Member of Deloitte Touche Tohmatsu Limited

/s/ SALVADOR A. SÁNCHEZ BARRAGÁN

C.P.C. Salvador A. Sánchez Barragán

Guadalajara, Jalisco, Mexico

April 20, 2016, except for Note 3 w), as to which the date is April 6, 2017.

F-1

Report of Independent Registered Public Accounting Firm to the Board of Directors and Stockholders of Grupo Aeroportuario del Pacífico, S.A.B. de C.V.

We have audited the accompanying consolidated statement of financial position of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and subsidiaries (the “Company”) as of December 31, 2016 and the related consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and subsidiaries as of December 31, 2016 and the results of their operations and their cash flows for the year then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Grupo Aeroportuario del Pacífico, S.A.B. de C.V.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated April 12, 2017 expressed an unqualified opinion on the effectiveness of Grupo Aeroportuario del Pacífico, S.A.B. de C.V.’s internal control over financial reporting.

KPMG Cárdenas Dosal, S.C.

/s/ LUIS LÓPEZ PÉREZ

Luis López Pérez

Guadalajara, Jalisco, Mexico

April 12, 2017

F-2

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Financial Position

As of December 31, 2014, 2015 and 2016

(In thousands of Mexican Pesos)

Assets

	December 31, 2014		December 31, 2015		December 31, 2016
Current assets:
Cash and cash equivalents (Note 6)	Ps.	1,595,502	Ps.	2,996,499	Ps.	5,188,138
Trade accounts receivable – net (Note 7)		337,581		159,196		607,544
Recoverable taxes and undue payments (Note 13.b)		124,616		175,578		146,680
Other current assets		4,872		55,410		56,212
Total current assets		2,062,571		3,386,683		5,998,574
Advanced payments to suppliers		30,288		253,491		308,164
Machinery, equipment and improvements on leased assets – net (Note 8)		812,653		1,555,593		1,630,393
Improvements to concession assets – net (Note 9)		5,148,431		7,294,318		8,912,544
Airport concessions – net (Note 10)		9,611,296		12,240,167		12,384,923
Rights to use airport facilities – net (Note 11)		1,157,093		1,100,394		1,043,695
Other acquired rights – net (Note 12)		565,084		548,387		531,690
Derivative financial instruments (Note 16)		—		—		72,454
Deferred income taxes – net (Note 13.e)		4,851,164		4,933,221		5,070,844
Investments in associates (Note 14)		—		92,232		21,636
Other assets – net		47,627		68,913		76,545
Total	Ps.	24,286,207	Ps.	31,473,399	Ps.	36,051,462

(Continued)

F-3

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Financial Position

As of December 31, 2014, 2015 and 2016

(In thousands of Mexican Pesos)

Liabilities and Equity

	December 31, 2014			December 31, 2015			December 31, 2016
Current liabilities:
Banks loans and current portion of long-term borrowings (Note 17.a)	Ps.	978,538		Ps.	3,529,102		Ps.	84,758
Concession taxes payable		38,704			117,802			250,300
Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V. (Note 32.a)		124,957			149,637			198,512
Accounts payable (Note 15)		300,642			637,246			1,085,926
Taxes payable		41,211			26,982			25,170
Income taxes payable (Note 13)		98,174			197,541			296,633
Total current liabilities		1,582,226			4,658,310			1,941,299
Deposits received in guarantee (Note 5)		597,139			725,437			936,828
Deferred income taxes (Note 13.e)		—			818,879			946,673
Employee benefits (Note 18)		80,015			93,367			92,575
Long-term borrowings (Note 17.a)		740,936			421,363			4,529,518
Debt securities (Note 17.b)		—			2,600,000			5,200,000
Total long-term liabilities		1,418,090			4,659,046			11,705,594
Total liabilities		3,000,316			9,317,356			13,646,893
Equity (Note 19):
Common stock		13,937,322			12,528,780			10,778,613
Repurchased shares		(1,733,374	)		(1,733,374	)		(1,733,374	)
Legal reserve		735,491			840,743			960,943
Reserve for repurchase of shares		2,133,374			2,583,374			2,683,374
Retained earnings		6,213,078			6,638,935			7,561,527
Foreign currency translation reserve		—			415,493			1,071,159
Remeasurements of employee benefits – Net of income tax		—			—			10,773
Total equity attributable to controlling interest		21,285,891			21,273,951			21,333,015
Non-controlling interest (Note 20)		—			882,092			1,071,554
Total equity		21,285,891			22,156,043			22,404,569
Total	Ps.	24,286,207		Ps.	31,473,399		Ps.	36,051,462

See accompanying notes to consolidated financial statements.

(Concluded)

F-4

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the years ended December 31, 2014, 2015 and 2016

(In thousands of Mexican Pesos, except per share amounts)

	2014			2015			2016
Revenues (Note 21):
Aeronautical services	Ps.	3,925,736		Ps.	5,419,022		Ps.	7,037,920
Non-aeronautical services		1,338,542			1,849,252			2,393,604
Improvements to concession assets		281,874			838,635			1,676,037
		5,546,152			8,106,909			11,107,561
Operating costs:
Cost of services (Note 22)		1,161,588			1,558,258			1,782,371
Technical assistance fees (Note 32)		194,228			236,507			301,820
Concession taxes (Note 1.a)		261,577			483,086			764,349
Depreciation and amortization (Note 23)		925,220			1,156,435			1,348,387
Cost of improvements to concession assets (Note 25)		281,874			838,635			1,676,037
Other income – net (Note 26)		(43,424	)		(254,612	)		(295	)
		2,781,063			4,018,309			5,872,669
Income from operations		2,765,089			4,088,600			5,234,892
Finance cost – net (Note 27):
Finance income		71,376			90,889			279,570
Finance cost		(86,601	)		(209,304	)		(381,708	)
Exchange gain (loss) – net		7,235			(338,395	)		(500,894	)
		(7,990	)		(456,810	)		(603,032	)
Share of loss of associate (Note 14)		—			(13,704	)		(11,728	)
Income before income taxes		2,757,099			3,618,086			4,620,132
Income tax (Note 13.c):
Current		760,508			1,030,026			1,532,875
Deferred		(245,929	)		(182,717	)		(266,302	)
		514,579			847,309			1,266,573
Profit for the year		2,242,520			2,770,777			3,353,559
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Items that will not be reclassified to profit or loss		—			482,394			773,453
Remeasurements of employee benefit – net of income tax		—			—			10,773
Total comprehensive income for the year	Ps.	2,242,520		Ps.	3,253,171		Ps.	4,137,785

(Continued)

F-5

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Profit or Loss and Other Comprehensive Income

For the years ended December 31, 2014, 2015 and 2016

(In thousands of Mexican Pesos, except per share amounts)

	2014		2015		2016
Profit for the year attributable to:
Controlling interest	Ps.	2,242,520	Ps.	2,726,020	Ps.	3,281,884
Non-controlling interest		—		44,757		71,675
	Ps.	2,242,520	Ps.	2,770,777	Ps.	3,353,559
Total comprehensive income for the year attributable to:
Controlling interest	Ps.	2,242,520	Ps.	3,141,513	Ps.	3,948,323
Non-controlling interest		—		111,658		189,462
	Ps.	2,242,520	Ps.	3,253,171	Ps.	4,137,785
Weighted average number of common shares outstanding		525,636,745		525,575,547		525,575,547
Basic and diluted earnings per share (in Mexican Pesos, Note 3.s and w.)	Ps.	4.2663	Ps.	5.1867	Ps.	6.2443

See accompanying notes to consolidated financial statements.

(Concluded)

F-6

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Changes in Equity

For the years ended December 31, 2014, 2015 and 2016

(In thousands of Mexican Pesos)

	Number of Shares		Common stock			Repurchased shares			Legal reserve		Reserve for repurchase of shares		Retained earnings			Foreign currency translation reserve		Remeasurements of employee benefits – Net of income tax		Total equity attributable to controlling interest			Non- controlling interest			Total ´ equity
Balances as of January 1, 2014		561,000,000	Ps.	15,447,322		Ps.	(1,664,034	)	Ps.	635,914	Ps.	2,027,302	Ps.	5,766,207		Ps.	—	Ps.	—	Ps.	22,212,711		Ps.	—		Ps.	22,212,711
Transfer of earnings to legal reserve (Note 19.i)		—		—			—			99,577		—		(99,577	)		—		—		—			—			—
Dividends declared and paid, Ps. 3.0249 pesos per share (Note 19.b)		—		—			—			—		—		(1,590,000	)		—		—		(1,590,000	)		—			(1,590,000	)
Capital distribution (Note 19.c)		—		(1,510,000	)		—			—		—		—			—		—		(1,510,000	)		—			(1,510,000	)
Reserve for repurchase of shares (Note 19.b)		—		—			—			—		106,072		(106,072	)		—		—		—			—			—
Repurchase of 1,017,561 shares (Note 19.d)		—		—			(69,340	)		—		—		—			—		—		(69,340	)		—			(69,340	)
Comprehensive income		—		—			—			—		—		2,242,520			—		—		2,242,520			—			2,242,520
Balances as of December 31, 2014		561,000,000		13,937,322			(1,733,374	)		735,491		2,133,374		6,213,078			—		—		21,285,891			—			21,285,891
Transfer of earnings to legal reserve (Note 19.i)		—		—			—			105,252		—		(105,252	)		—		—		—			—			—
Dividends declared and paid, Ps. 3.32 pesos per share (Note 19.e)		—		—			—			—		—		(1,744,911	)		—		—		(1,744,911	)		—			(1,744,911	)
Capital distribution Ps. 2.68 pesos per share (Note 19.f)		—		(1,408,542	)		—			—		—		—			—		—		(1,408,542	)		—			(1,408,542	)
Reserve for repurchase of shares (Note 19.e)		—		—			—			—		450,000		(450,000	)		—		—		—			—			—
Business combinations non-controlling interest (Note 20)		—		—			—			—		—		—			—		—		—			852,825			852,825
Dividends declared and paid non-controlling interest (Note 20)		—		—			—			—		—		—			—		—		—			(82,391	)		(82,391	)
Comprehensive income:
Profit of the year		—		—			—			—		—		2,726,020			—		—		2,726,020			44,757			2,770,777
Other comprehensive income for the year		—		—			—			—		—		—			415,493		—		415,493			66,901			482,394
Total comprehensive income for the year		—		—			—			—		—		2,726,020			415,493		—		3,141,513			111,658			3,253,171
Balances as of December 31, 2015		561,000,000		12,528,780			(1,733,374	)		840,743		2,583,374		6,638,935			415,493		—		21,273,951			882,092			22,156,043
Transfer of earnings to legal reserve (Note 19.i)		—		—			—			120,200		—		(120,200	)		—		—		—			—			—
Dividends declared and paid, Ps. 4.07 pesos per share (Note 19.g)		—		—			—			—		—		(2,139,092	)		—		—		(2,139,092	)		—			(2,139,092	)
Capital distribution Ps. 3.33 pesos per share (Note 19.h)		—		(1,750,167	)		—			—		—		—			—		—		(1,750,167	)		—			(1,750,167	)
Reserve for repurchase of shares (Note 19.g)		—		—			—			—		100,000		(100,000	)		—		—		—			—			—
Comprehensive income:
Profit of the year		—		—			—			—		—		3,281,884			—		—		3,281,884			71,675			3,353,559
Other comprehensive income for the year		—		—			—			—		—		—			655,666		10,773		666,439			117,787			784,226
Total comprehensive income for the year		—		—			—			—		—		3,281,884			655,666		10,773		3,948,323			189,462			4,137,785
Balances as of December 31, 2016		561,000,000	Ps.	10,778,613		Ps.	(1,733,374	)	Ps.	960,943	Ps.	2,683,374	Ps.	7,561,527		Ps.	1,071,159	Ps.	10,773	Ps.	21,333,015		Ps.	1,071,554		Ps.	22,404,569

See accompanying notes to consolidated financial statements.

F-7

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Cash Flows

For the years ended December 31, 2014, 2015 and 2016

(In thousands of Mexican Pesos)

	2014			2015			2016
Cash flows from operating activities:
Profit for the year	Ps.	2,242,520		Ps.	2,770,777		Ps.	3,353,559
Adjustments for:
Employee benefits		9,383			13,352			14,718
Bad debt expense		15,056			5,380			1,100
Depreciation and amortization		925,220			1,156,435			1,348,387
Share of loss of associate		—			13,704			11,728
Bargain purchase gain		—			(189,744	)		—
Net loss (gain) on derivative financial instruments		340			—			(68,261	)
Interest expense for banks loans and debt securities		65,730			198,567			357,087
Unrealized exchange loss		—			354,458			549,768
Long term provisions		—			—			6,480
Income tax expense		514,579			847,309			1,266,573
		3,772,828			5,170,238			6,841,139
Changes in:
Financial investments held for trading purposes		410,433			—			—
Trade accounts receivable		(145,122	)		173,005			(434,534	)
Recoverable income tax and other current assets		25,047			(27,188	)		116,181
Recoverable income tax		269			—			—
Concession taxes payable		2,369			79,098			107,473
Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V.		22,563			24,680			48,875
Accounts payable		37,772			301,508			205,797
Taxes payable		17,446			(14,229	)		(1,816	)
Deposits received in guarantee		74,935			128,298			203,987
Cash generated by operating activities		4,218,540			5,835,410			7,087,102
Income taxes paid		(758,310	)		(930,657	)		(1,445,899	)
Net cash provided by operating activities		3,460,230			4,904,753			5,641,203
Cash flows from investing activities:
Purchases of machinery, equipment, improvements on leased buildings, improvements to concession assets and advance payments to suppliers		(620,266	)		(1,128,382	)		(1,856,997	)
Proceeds from sales of machinery and equipment		435			2,023			329
Net cash outflows on acquisition of subsidiary		—			(2,543,568	)		—
Equity reimbursement from associate		—			—			58,868
Other assets		(13,209	)		—			(18,757	)
Net cash used in investing activities		(633,040	)		(3,669,927	)		(1,816,557	)

(Continued)

F-8

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Consolidated Statements of Cash Flows

For the years ended December 31, 2014, 2015 and 2016

(In thousands of Mexican Pesos)

	2014			2015			2016
Cash flows from financing activities:
Dividends declared and paid		(1,590,000	)		(1,744,911	)		(2,139,092	)
Dividends paid to non-controlling interest		—			(82,391	)		—
Capital distribution		(1,510,000	)		(1,408,542	)		(1,750,167	)
Repurchase of shares		(69,340	)		—			—
Proceeds from issuance of Debt securities		—			2,600,000			2,600,000
Proceeds from bank loans		1,378,881			9,056,701			3,528,849
Repayments on bank loans		(1,513,883	)		(8,076,912	)		(3,661,049	)
Derivative financial instruments		—			—			(4,193	)
Interest paid on financial loans		(95,533	)		(177,774	)		(345,533	)
Net cash (used in) provided by financing activities		(3,399,875	)		166,171			(1,771,185	)
Effects of exchange rate changes on cash held:		—			—			138,178
(Decrease) increase in cash and cash equivalents		(572,685	)		1,400,997			2,191,639
Cash and cash equivalents at beginning of year		2,168,187			1,595,502			2,996,499
Cash and cash equivalents at the end of year	Ps.	1,595,502		Ps.	2,996,499		Ps.	5,188,138
Non-cash investing activities:
Purchases of machinery, equipment, improvements on leased buildings and improvements to concession assets on account	Ps.	86,383		Ps.	221,151		Ps.	441,515

See accompanying notes to consolidated financial statements.

(Concluded)

F-9

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Subsidiaries

Notes to Consolidated Financial Statements

For the years ended December 31, 2014, 2015 and 2016

(In thousands of Mexican Pesos)

1. Activities of the Company and significant events

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and subsidiaries (the Company or GAP) was incorporated in May 1998 as a state-owned entity to manage, operate and develop 12 airport facilities, mainly in Mexico’s Pacific region. The airports are located in the following cities: Guadalajara, Puerto Vallarta, Tijuana, San Jose del Cabo, Silao (Guanajuato), Hermosillo, Mexicali, Los Mochis, La Paz, Manzanillo, Morelia and Aguascalientes. Additionally, in April 2015, GAP acquired 100% of the shares of Desarrollo de Concesiones Aeroportuarias, S.L. (DCA), a Spanish company, which owns a majority stake in MBJ Airports Limited (MBJA), which operates the Sangster International Airport in Montego Bay in Jamaica. The Company’s principal address is Mariano Otero Avenue 1249 B, six floor, Rinconada del Bosque, zip code 44530, Guadalajara, Jalisco, Mexico.

a. Activities

The Company began operations on November 1, 1998. Prior to that date, the Company’s activities were carried out by Aeropuertos y Servicios Auxiliares (ASA), a Mexican Governmental agency, which was responsible for the operation of all public airports in Mexico.

In June 1998, the subsidiaries of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. were granted concessions by the Ministry of Communications and Transportation (SCT) to manage, operate and develop each of the Pacific Group’s 12 airports and benefit from the use of the airport facilities, for a 50-year term beginning November 1, 1998 (The Concession or Concessions). The cost of the concessions, which totaled Ps.15,938,359, was determined by the Mexican Government in August 1999, based upon the price paid by Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V. (AMP, the strategic stockholder of the Company) for its interests in GAP. On August 20, 1999, GAP entered into a Liabilities Assumption Agreement with each of its subsidiaries, whereby it assumed the liabilities incurred by each subsidiary derived from obtaining the concession. Such liabilities were capitalized by GAP as equity in favor of the Mexican Government on such date.

The term of the concession is 50 years as from November 1, 1998 and may be extended by the SCT on one or more occasions for up to 50 additional years under certain circumstances. Beginning on November 1, 1998, the Company is required to pay an annual tax to the Mexican Government, through the SCT, for use of the public property, equivalent to 5% of each concessionaire’s annual gross revenues, according to the concession terms and the Mexican Federal Duties Law.

Title to all of the long-term fixed assets within the airports is retained by the Mexican Government. Accordingly, upon expiration of the term of the concessions granted to the Company, the assets, including all of the improvements made to the airport facilities during the term of the concessions, shall automatically revert to the Mexican Government. Additionally, ASA and other agencies of the Mexican Government maintain the rights to provide certain services such as air traffic control, fuel supply and immigration control.

On February 24, 2006, the Company made an initial public offering of its Series B shares, under which the Mexican Government, which held 85% of the voting common stock of the Company sold its 100% shares participation, both in the United States of America, via the New York Stock Exchange (NYSE) and in Mexico, via the Mexican Stock Exchange (BMV). Consequently, as of such date, the Company became a public entity in both Mexico and in the United States of America and is required to meet various legal obligations and regulations for public entities applicable in each country.

F-10

On April 20, 2015, the Company completed and paid a transaction with Spanish company Abertis Airports, S.A (Abertis) for the acquisition of 100% of the shares of DCA. The acquisition was the result of a private and confidential bidding process among various participants which concluded in favor of GAP. The total amount of the transaction was USD$192,000,000.

DCA has a 74.5% stake in MBJA, the entity that operates Sangster International airport in Montego Bay in Jamaica. MBJA holds the concession to operate, maintain and utilize the airport for a period of 30 years, beginning April 2, 2003. Vantage Airport Group Limited (Vantage) owns the remaining 25.5% stake in MBJA.

DCA also has a 14.77% stake in SCL Terminal Aéreo Santiago, S.A. (SCL), the operator of the international terminal in Santiago, Chile until September 30, 2015. On September 30, 2015, the concession to operate the Santiago, Chile airport expired, consequently, those assets were immediately returned to the Chilean government and the new operator without any significant incidents. Though SCL will no longer have operations, according to the concession agreement, SCL must remain in effect for an additional year after the transfer, so if there are potential contingencies, SCL can address them. After that first year, SCL will remain in effect for another year before its dissolution in accordance with tax regulations in Chile.

Significant events

• On January 19 and February 15, 2016, the Company paid off the loans entered into with Scotiabank Inverlat, S.A. (Scotiabank) and BBVA Bancomer (BBVA) for USD$96,000,000 and USD$95,000,000, respectively. These loans were paid with funds obtained from new loans received on the same date from Bank of Nova Scotia (Nova Scotia) and BBVA for USD$95,500,000 each, for a term of 5 years paying interest at Libor 1M plus 99 and 105 basis points, respectively.

• On January 29, 2016, the Company issued 11 million long-term debt securities for a total of Ps. 1,100,000, which are unsecured and payment of principal at maturity, corresponding to the first reopening of the GAP 15, originally issued on February 20, 2015. The GAP 15 debt securities’ interest will be payable every 28 days at a variable rate of TIIE-28 plus 24 basis points. Principal will be payable at maturity on February 14, 2020. The placement price for these additional GAP 15 debt securities was Ps. 99.694371 (ninety nine pesos 694371/100 M.N.), due to accrued interest payable upon issuance and the 34 basis points spread of the new issuance. The funds raised in this issuance will be used to finance capital investments in accordance with the Company’s Master Development Program (MDP).

• On February 18, 2016, the Company was notified of the decision of the Superior Court of Mexico City in accordance with the decision of Mexico’s Supreme Court, which confirmed the validity of the Company’s bylaws, declared that Grupo México S.A.B. de C.V. (GM) and Infraestructura y Transportes México, S.A. de C.V. (ITM) are in violation of the Company’s bylaws. Resulting from the fact that together they hold more than the 10% of the Company’s capital stock allowed under Article X of the bylaws. Therefore, it ordered the sale by GM and ITM of the Series “B” shares held in excess of 10% of the Company’s capital stock; and instructed them that the sale should be conducted through a public offer (Oferta Pública de Venta) in accordance with the Mexico´s laws and Article XII of the Company’s bylaws.

• In an Annual General Ordinary Stockholders’ Meeting held on April 26, 2016, the stockholders approved a dividend payment of Ps. 4.07 per outstanding shares at the date of each payment, excluding shares repurchased in accordance with Article 56 of the Mexican Securities Market Law. The first payment for Ps. 2.28 per share was in cash on August 25, 2016 for a total of Ps. 1,198,312 and the second payment for Ps. 1.79 per share was made on November 18, 2016 for a total of Ps. 940,780. The total payment for dividends was Ps. 2,139,092, as mentioned in Note 19.g.

• In an General Extraordinary Stockholders’ Meeting held on April 26, 2016, the stockholders approved a capital reduction of Ps. 3.33 per share. The payment was made on May 9, 2016 for Ps. 1,750,167 as described in Note 19.h.

F-11

• On July 8, 2016, the Company issued 15 million long-term debt securities for a total Ps. 1,500,000 which are unsecured and payment of principal at maturity corresponding to the tranche of the GAP 16 long-term debt securities, interest will be payable every 28 days at a variable rate of TIIE-28 plus 49 basis points. The maturity will be 5 years, and the principal payment will be made upon maturity, on July 2, 2021. Proceeds from the issuance will be allocated to finance Company’s MDP.

2. Basis of presentation

a. Statement of Compliance – These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), its amendments and interpretations issued by the International Accounting Standards Board (IASB) issued and outstanding or issued and early adopted at the date of preparation of these consolidated financial statements.

b. Translation into English – The accompanying consolidated financial statements have been translated from Spanish into English for use outside of Mexico.

c. Basis of preparation – The consolidated financial statements have been prepared on the historical cost basis except for assets and liabilities assumed in the business combinations on the date of purchase, which were recorded at fair value.

• Historical cost – Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

• Fair value – The Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability

F-12

d. Consolidation of financial statements – The consolidated financial statements include those of Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and its subsidiaries in which the Company has control, for the years ended December 31, 2014, 2015 and 2016. The consolidated subsidiaries are as follows:

Company	% participation	Location	Activity
Aeropuerto de Aguascalientes, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto del Bajío, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de Guadalajara, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de Hermosillo, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de La Paz, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de Los Mochis, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de Manzanillo, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de Mexicali, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de Morelia, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de Puerto Vallarta, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de San José del Cabo, S.A. de C.V.	99.99%	Mexico	Operation of airport
Aeropuerto de Tijuana, S.A. de C.V.	99.99%	Mexico	Operation of airport
Corporativo de Servicios Aeroportuarios, S.A. de C.V. (CORSA)	99.99%	Mexico	Provides personnel services
Fundación Grupo Aeroportuario del Pacífico, A.C. (Fundación GAP)	99.99%	Mexico	Social advice and support infrastructure of educational institutions
Puerta Cero Parking, S.A. de C.V. (PCP)	99.99%	Mexico	Operation of parking lot.
Servicios a la Infraestructura Aeroportuaria del Pacífico, S.A. de C.V. (SIAP)	99.99%	Mexico	Administrative services
Desarrollo de Concesiones Aeroportuarias, S.L. (Consolidated as of April 2015) (DCA)	100%	Spain	Management administration, maintenance, servicing of all types of infrastructure
MBJ Airports Limited (consolidated as of April 2015) (MBJA)	74.50%	Jamaica	Operation of airport
GA del Pacífico es do Brasil, LTDA	99.99%	Brazil	No operation

Control is achieved when the Company:

• Has power over the investee;

• Is exposed, or has rights, to variable returns from its involvement with the investee; and

• Has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Company’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Company are eliminated in full on consolidation. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

F-13

e. Application of new and revised International Financing Reporting Standards

Application of new and revised International Financing Reporting Standards (“IFRSs” or “IAS”) and interpretations that are mandatorily effective for the current year

In the current year, the Company has applied a number of amendments to IFRSs and new Interpretation issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after January 1, 2016.

Annual Improvements to IFRSs 2012 – 2014 Cycle

The Company has applied the amendments to IFRSs included in the Annual Improvements to IFRSs 2012 – 2014 Cycle. which are summarised below.

The amendments to IFRS 5 introduce specific guidance in IFRS 5 for when an entity reclassifies an asset (or disposal group) from held for sale to held for distribution to owners (or vice versa). The amendments clarify that such a change should be considered as a continuation of the original plan of disposal and hence requirements set out in IFRS 5 regarding the change of sale plan do not apply.

The amendments also clarifies the guidance for when held-for-distribution accounting is discontinued.

The amendments to IFRS 7 provide additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset for the purpose of the disclosures required in relation to transferred assets.

The amendments to IAS 19 clarify that the rate used to discount post-employment benefit obligations should be determined by reference to market yields at the end of the reporting period on high quality corporate bonds. The assessment of the depth of a market for high qualify corporate bonds should be at the currency level (i.e. the same currency as the benefits are to be paid). For currencies for which there is no deep market in such high quality corporate bonds, the market yields at the end of the reporting period on government bonds denominated in that currency should be used instead.

Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortization

The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortization of an intangible asset. This presumption can only be rebutted in the following two limited circumstances:

a) When the intangible asset is expressed as a measure of revenue; or

b) When it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated.

The amendments apply prospectively for annual periods beginning on or after January 1, 2016. Currently, the Company uses the straight-line method for depreciation and amortization for its machinery equipment and improvements on lease building, improvements to concession assets, airport concessions, right to use airport facilities and other acquired rights. The Company’s management believes that the straight-line method is the most appropriate method to reflect the consumption of economic benefits inherent in the respective assets and accordingly, and therefore the application of these amendments to IAS 16 and IAS 38 did not have a material impact on the Company’s consolidated financial statements.

Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Specifically, the amendments state that gains

F-14

or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognized in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognized in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint venture.

The amendments should be applied prospectively to transactions occurring in annual periods beginning on January 1, 2016. The management of the Company anticipate that the application of these amendments to IFRS 10 and IAS 28 may have an impact on the Company’s consolidated financial statements in future periods should such transactions arise.

Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception

The amendments to IFRS 10, IFRS 12 and IAS 28 clarify that the exemption from preparing consolidated financial statements is available to a parent that is a subsidiary of an investment entity, even if the investment entity measures all its subsidiaries at fair value in accordance with IFRS 10. The amendments also clarify that the requirement for an investment entity to consolidate a subsidiary providing services related to the former’s investment activities applies only to subsidiaries that are not investment entities themselves.

f. Functional and presentation currency – The consolidated financial statements and notes as of December 31, 2014, 2015 and 2016, and for the years then ended, are prepared in pesos, which is both, the functional and reporting currency of the Company and are presented in thousands of pesos.

The assets and liabilities of foreign operations, including the fair value of assets arising on acquisition, are translated at the exchange rates prevailing at the reporting date. In 2015, income and expenses of foreign operations are translated at the average exchange rate for the period of transactions of Ps.16.1548 pesos per USD and euros to USD$1.1057. In 2016, income and expenses of foreign operations are translated at the average exchange rate for the period of transactions of Ps.18.6568 pesos per USD and euros to USD$1.1066.

g. Use of estimates and critical judgments in preparing the financial statements – The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of accounting policies relating to the reported amounts of assets, liabilities, income and expenses of the relevant period. Actual results could differ from these estimates. Information on the uncertainty in the use of assumptions and estimates that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

• Identification of net assets and liabilities assumed in a business combination and determination of fair value (Note 4)

• Estimation of doubtful accounts (Note 7)

• Definition of useful lives and depreciation and amortization periods (Note 3c. and 3.d.)

• Probability of recovery of deferred income tax from tax loss carryforwards (Note 13.g)

• Recovery of tax on assets paid in prior years (Note 13.i)

• Assumptions used to determine liabilities for retirement benefits (Note 18)

• Contingency liabilities (Note 29)

In addition to the estimates, the Company makes critical judgments in applying its accounting policies, which have a material effect on the amounts recognized in the financial statements. Management believes that the decisions made are the most reasonable based on information available, on the judgments made and the way it manages the operation of the Company. Critical judgments relate to the following:

Accounting for the Concession – Management believes it has carried out a comprehensive implementation of the standards applicable to the accounting treatment of its concessions in México and Jamaica and it determined that, among others, International Financial Reporting Interpretation (IFRIC) 12 Service Concession Arrangements is applicable to the Company. The Company treats its investments related to improvements and upgrades to be performed in connection with the MDP under the intangible

F-15

asset model established by IFRIC 12 and does not recognize a provision for maintenance, as all investments required by the MDP, regardless of their nature, directly increase the Maximum Tariff per traffic unit (MT). Accordingly, all amounts invested under the MDP have a direct correlation to the amount of fees the Company will be able to charge each passenger or cargo service provider, and thus, a direct correlation to the amount of revenues the Company will be able to generate. As result, management defines all expenditures associated with investments required by the MDP as revenue generating activities given that they ultimately provide future benefits, whereby subsequent improvements and upgrades made to the concession are recognized as intangible assets based on the principles of IFRIC 12. Additionally, compliance with the committed investments per the MDP is mandatory, as well as the fulfillment of the MT and therefore, in case of default in any of these obligations (MDP or MT), the Company could be subject to sanctions and even its concession could be revoked. To determine the amortization period of the intangible associated with the improvements and upgrades made to comply with the MDP, the Company focuses on the period over which they will generate future economic benefits or the concession term, whichever is less.     

h. Income from operations – This line item is comprised by total revenues less operating costs, including other income, net. See Note 26 for the components of other income, net. Although the presentation of income from operations is not required by nor is it defined under IFRS, it is included in the consolidated statements of profit or loss and other comprehensive income because management believes it represents a useful and reliable measure of the economic and financial performance of the Company.

i. Comprehensive income – Comprehensive income comprised the net income of the period, plus other comprehensive income (loss) items of the same period. For the years ended December 31, 2015 and 2016, other comprehensive income are represented by the effects of translation of foreign subsidiaries and actuarial remeasurements. At the moment the assets and liabilities giving rise to other comprehensive income are realized, the latter are recognized in the income statement as long as permitted under IFRS. For the year ended December 31, 2014, comprehensive income is represented only by the net income.

j. Classification of cost and expenses – Costs and expenses presented in the consolidated statements of profit or loss and other comprehensive income were classified according to their nature.

3. Significant accounting policies

The consolidated financial statements comply with IFRS as issued by the IASB. Its preparation requires management to make certain estimates and use certain assumptions that affect certain items of the consolidated financial statements and their related disclosures required therein. However, actual results could differ from those estimates. The Company’s management, upon applying professional judgment, considers that estimates and assumptions used were adequate under the circumstances (Note 2.g). The significant accounting policies of the Company are as follows:

a. Financial instruments

Financial assets – Financial assets are recognized when the Company becomes a contractual party to the terms of the related instruments.

Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets (other than financial assets at fair value through profit or loss) are added to or deducted from the fair value of the financial assets, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss (FVTPL) are recognized immediately in profit or loss.

The Company’s financial assets are classified into the following specified categories: i) FVTPL and ii) accounts receivable. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way of purchases or sales, are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

F-16

• Financial assets at FVTPL – Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. A financial asset is classified as held for trading if:

• It has been acquired principally for the purpose of selling it in the near term; or

• In its initial recognition, it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

• It is a derivative that is not designated and is effective as a hedging instrument.

Financial assets at FVTPL are stated at fair value, with any gain or loss arising on remeasurement is recognized in profit or loss. The net gain or loss recognized in profit or loss includes any dividend or interest earned from the financial asset and is included in the finance income in the consolidated statements of profit or loss and other comprehensive income. Fair value is determined in the manner described in Note 5.

• Accounts receivable – Trade accounts receivable and other receivables, with fixed or determinable payments that are not quoted in an active market are classified as receivables. Interest income is recognized by applying the effective interest rate, except for the short term receivables, in the event that the recognition of interest is not material.

The effective interest rate is the rate that discounts the estimated future cash receipts, (including all professional fees and basis points paid or received that are part of the effective interest rate, transaction costs and other premiums or discounts), for the expected life of the instrument, or when is appropriate a shorter period, to the net carrying amount at initial recognition.

• Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.

Financial liabilities and equity instruments – Financial liabilities are recognized when the Company becomes a contractual party to the terms of the related instruments.

Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial liabilities (other than financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial

F-17

liabilities, as appropriate, on its initial recognition. Transaction costs directly attributable to the acquisition of financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements.

• Equity instruments – An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the resources received, net of direct costs from the emission.

Repurchase of the Company’s common stock is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss at the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Financial liabilities – Financial liabilities are classified as financial liabilities at FVTPL or as other financial liabilities. At the date of the financial statements, the Company does not have liabilities at FVTPL.

Other financial liabilities (including borrowings and trade accounts payable) are subsequently measured at amortized cost, using the effective interest rate method.

The effective interest rate method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments exactly (or as appropriate in a short term) with the net book value on its initial recognition.

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the amount paid and payable is recognized in profit or loss.

Even when the Company has the right, in certain cases, for a compensation of financial assets and liabilities, as of the date of this consolidated financial statements, the Company does not have the intention of compensate a liability with an asset, nor expect in a short term may require it. Therefore, deposits received in guarantee are presented separately from accounts receivable.    

b. Cash and cash equivalents – Cash and cash equivalents consist mainly of bank deposits in checking accounts and readily available daily investments of cash surpluses with immediate availability as well as cash equivalents designates for expenditure, held in trust (See Note 6). Cash is stated at nominal value and cash equivalents are valued at fair value that does not exceed their market value; the yields, which are recognized as interest income as it accrues.

c. Machinery, equipment and improvements on leased buildings

• Recognition and valuation – Machinery, equipment and improvements to leased buildings are recognized at acquisition cost less accumulated depreciation and any accumulated impairment losses. The acquisition cost includes expenses directly attributable to the acquisition of the asset.

When significant parts of an asset of machinery, equipment and improvements to leased buildings have different useful lives, they are accounted for separately as a component of the asset.

Gains and losses from sales or retirements of machinery, equipment and improvements to leased buildings are determined comparing the proceeds from the sale or retirement against net amount of machinery, equipment and improvements to leased buildings and are recognized net in other income in the consolidated statement of profit and loss and other comprehensive income.

• Subsequent costs – The cost to replace a part or item of machinery, equipment and improvements to leased buildings are recognized in the value of the asset when it is probable that future economic benefits associated with that part will flow to the Company and its cost can be measured reliably. The net value of the replaced item is derecognized at its net book value. Minor maintenance costs are recognized in the consolidated statement of profit and loss and other comprehensive income.

F-18

• Depreciation – Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other substitute value of that cost based on the straight-line method, this is the value that reflects more certainty the expected pattern of consumption of future economic benefits implicit in the active. The Company does not determine residual values for machinery, equipment, improvements and leased buildings as they are not considered to be material.

• Depreciation of machinery and equipment is recognized in the consolidated statement of profit and loss and other comprehensive income and is calculated under the straight-line method based on the useful lives of the related assets. Also, improvements to leased buildings are amortized by the straight-line method based on the remaining useful life of the improvements or the lease term, whichever is less. The estimated useful life and the depreciation method are reviewed at the end of each year, and the effect of any changes in the estimate recorded is recognized on a prospective basis.

The estimated useful lives for the current period and comparative period are as follows:

	Useful life (years)	Average annual depreciation rate
Machinery and equipment	10	10%
Office furniture and equipment	10	10%
Computer equipment	3.3 - 4	30% - 25%
Transportation equipment	4 - 5	25% - 20%
Communication equipment	10 -4 - 3.3	10% - 25% - 30%
Improvements on leased buildings	10	10%

d. Intangible Assets

• Improvements to concession assets – Improvements to concession assets are accounted for the improvements that are made pursuant to the MDP and improvements carried out by the daily operation of the Company’s airports. All infrastructure investments made by the airports will be delivered to the Mexican government or the government of Jamaica as corresponds at the end of the term of the Concession. Under the Company’s concession agreements, through the MDP agreed with each government every five years, the Company is committed to carry out various improvements, upgrades and additions to each of its airports on an annual basis in the case of Mexican airports and every five years in Jamaica. In exchange for investing in those additions and upgrades, each government grants the Company the right to obtain benefits for services provided using those assets. The Company, as the operator of the concession assets, recognizes an intangible asset as it receives a right granted by each government to charge users of the public service associated with the use of its airports.

• Airport concessions – The Company recognized an intangible asset of the Concession granted by the SCT to manage and operate each of the airports in Mexico for 50 years since its acquisition. As regards to MBJA, the Company recognized an intangible asset at the fair value of the concession to operate and exploit that airport until 2033 according to the determination of fair values resulting from the acquisition of DCA and MBJA accordance IFRS 3 Business Combinations.

• Rights to use airport facilities –rights to use airport facilities in Mexico are recorded at acquisition cost of the assets recorded by ASA and transferred to the Company according to the Concession granted, in order to manage, operate and exploit them during the Concession term. At MBJA no rights to use airport facilities were identified.

• Other acquired rights – These rights correspond to payments made by the Company after the date the Mexican concessions were granted, in order to early-terminate certain long-term leases contracts that existed at that time between ASA and third-party leaseholders, these rights are recorded at its acquisition cost. In MBJA there are no other acquired rights.

• Amortization – After to its initial recognition, intangible assets are valued at acquisition cost plus capitalized borrowing costs that are recognized, less accumulated amortization and accumulated

F-19

impairment losses. Amortization is recognized in the consolidated statement of comprehensive income under the straight line method applied to the shorter of the estimated period of future economic benefits the intangible assets will generate, or the concession period, from the date they are available for use.

Amortization periods for the current and comparative period are as follows:

	Period (years)	Average annual amortization rate
Improvements to concession assets	12.5 - 20	8% - 5%
Airport concessions	49 - 18	2% - 5.5%
Rights to use airport facilities	10 - 49	10% - 2%
Other acquired rights	44 - 48	2%

The amortization method and useful lives are reviewed at each year end date and adjusted prospectively if necessary.

e. Capitalized borrowing costs – Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use are added to the cost of those assets, until such time as the assets are substantially ready for their intended use for sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

f. Impairment of financial and non-financial assets (Tangible and intangible)

• Financial assets – A financial asset that is not recognized at FVTPL is evaluated by the Company at the close of each reporting period to determine whether there is evidence of potential impairment. A financial asset is impaired if there is objective evidence that a loss has occurred after the initial recognition of the asset and that loss has a negative effect on the estimated future cash flows of the asset, that can be estimated reliably.

For all other financial assets, objective evidence of impairment could include:

• Significant financial difficulty of the issuer or counterparty; or

• Breach in the payment of the interests or the loan; or

• It is probable that the borrower will enter in bankruptcy or into a financial reorganization; or

• The disappearance of an active market for that financial asset because of financial difficulties.

An impairment loss on financial assets carried at amortized cost is calculated as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Losses are recognized in consolidated statements of profit or loss and other comprehensive income and are reflected in the allowance for doubtful accounts included in cost of services in the “other” category. When a subsequent event causes the amount of impairment loss to reverse, such amount is recognized in consolidated statements of profit or loss and other comprehensive income on a prospective basis and cannot exceed the amount of the impairment previously recognized.

Individually significant financial assets are tested one by one for impairment. The remaining financial assets are assessed in groups of similar credit risk characteristics.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

F-20

All impairment losses are recognized in the consolidated statement of profit and loss and other comprehensive income.

A reversal of an impairment loss occurs only if it can be associated objectively to an event that occurred after the date the loss was recognized.

• Non-financial assets – Non-financial assets of the Company are assessed at each period end date to determine whether there is any indication of impairment. If there is such an indication of impairment, management estimates the recoverable amount.

The recoverable amount of an asset or cash-generating unit is the higher of asset value in use and net selling price. To determine the asset’s value in use, the estimated future cash flows are discounted to present value using an appropriate discount rate before tax that reflects current market conditions in relation to the time value of money and the risks specific to the asset. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating unit or CGU). An impairment loss is recognized immediately in profit and loss.

The individual airports of the Company in Mexico cannot be considered as separate cash-generating units, as the bidding process, in which it decided to sell up to 15% of the shares representing the capital stock of the holding company Shares of the companies that received for the concession made by the Mexican Federal Government included the package of twelve airports, and therefore the Company is required to operate and maintain all 12 airports independently of the results they generate individually. Considering the above, if there are indicators of impairment exist, the Company performs an impairment assessment on a consolidated basis with Mexican companies. Moreover, the value of the assets of MBJA are individually valued at the end of each period to determine whether there are indications of impairment to be a single separate cash-generating units.

When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimated recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of depreciation) had an impairment loss not been recognized for the asset (or CGU) in prior years. A reversal of an impairment loss is recognized immediately in profit and loss, unless the relevant asset is recognized on a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

For purposes of assessing impairment, goodwill is allocated to each single separate CGU of the company, which is expected to be benefited from the synergies of the combination.

The single separate CGU to which goodwill has been allocated are tested for impairment annually or more frequently when there are indications that the CGU may be impaired. If the recoverable amount of a CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU pro rata basis and based on the book value of each asset within the CGU. Any impairment loss of goodwill is recognized directly in income. An impairment loss recognized in goodwill is not reversed in periods posteriors.

g. Investment in associate – An associate is an entity in which control is not exercised but over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Entity’s share of the profit or loss and other comprehensive income of the associate.

Significant influence is the power to participate in decisions about the financial and operating policies of the entity in which it is investee, but does not imply joint control or control over those policies.

The Company discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment is classified as held for sale.

F-21

When the Company transacts with an associate of the Company, profits and losses resulting from the transactions with the associate are recognized in the Company’s consolidated financial statements only to the extent of interests in the associate that are not related to the Company.

h. Derivative financial instruments – The Company occasionally uses derivative financial instruments, specifically interest rate caps, to hedge its exposure to interest rate risk arising primarily from debt instruments.

Derivatives are initially recognized at fair value at the date the derivative contract are entered into and subsequently valued at fair value at the end of each reporting period. The gain or loss is recognized in profit or loss and other comprehensive income immediately, unless the derivative is designated as a hedging instrument and is considered to be effective. The timing of the recognition of the hedging instrument in earnings will depend on the nature of the hedge.

The Company may designate certain instruments as hedges for accounting purposes if at inception of the hedge, the Company documents the relationship between the hedging instrument and the hedged item, as well as the risk management and management strategy objectives for undertaking various hedging transactions. Additionally, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting the exposure to changes in fair value or changes in cash flows of the hedged item.

Hedge accounting is discontinued when the Company revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it fails to meet the criteria for hedge accounting. Any cumulative gain or loss on the hedging instrument that has been recognized in equity remains in equity until the forecasted transaction is ultimately recognized in profit or loss. When management no longer expects the forecasted transaction to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

i. Business combinations – Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interests issued by the Company in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:

• Deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 respectively;

• Liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Company entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 at the acquisition date; and

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquire (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis.

F-22

When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognized in profit or loss.

Transaction costs, different from those associated with the issuance of debt or capital, incurred by the Company in connection with a business combination are expensed as incurred.

j. Other intangible assets – Costs incurred in the development phase, as well as other intangible assets that meet certain requirements and that the Company has determined will have future economic benefits, are capitalized and amortized based on the straight-line method. Expenditures that do not meet such requirements, as well as research costs, are recorded in the results of the period in which they are incurred.

k. Leases – The payments made by the Company as a lessee under operating leases are recognized in the consolidated statements of profit of loss and other comprehensive income on a straight-line basis over the lease term. Lease incentives received are recognized, as applicable, as a decrease in overall rental costs over the term of the contract. The Company’s accounting policy as a lessor is disclosed in Note 3.o.

l. Provisions and contingent liabilities – Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, an account receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Provisions are classified as current or noncurrent based on the period of time estimated to meet the obligations covered.

A contingent liability is a possible obligation that arises from a past event and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Company, or a present obligation that arises from a past event but 1) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or 2) the amount of the obligation cannot be measured with sufficient reliability. A contingent liability is not recognized in the financial statements, but rather is disclosed unless the probability of an outflow of resources embodying economic benefits is remote.

F-23

m. Direct employee benefits – The Company provides its employees in Mexico and abroad different types of benefits. In Mexico the liabilities for direct employee benefits are recognized based on the services rendered by employees, considering their most recent salaries. These benefits primarily include statutory employee profit sharing (PTU) payable, compensated absences, vacation and vacation premium and incentives. The PTU is recorded in the income year in which it is incurred and presented under cost of services in the consolidated statements of profit or loss and other comprehensive income.

n. Employee benefits – The seniority premium liability are calculated by independent actuaries at the projected unit credit method using nominal interest rates. For the years 2014 and 2015 due to its impact is not material, actuarial gains and losses generated during the year are recognized directly in the profit or loss rather than recognize them in other comprehensive income.

Beginning in 2016 the remeasurements of the defined benefit liability, which includes actuarial gains and losses, the performance of the plan assets (excluding interest) and the effect of the asset ceiling, are recognized immediately in other comprehensive income. The Company has determined the net interest income for the defined benefit liability net of the period applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset), considering any change in The liability (asset) for net defined benefit during the period as a result of contributions and benefits payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit and loss in the year.

The past service cost is recognized in the profit or loss in the year of the plan amendment. Interest is calculated using the discount rate at the beginning of the period the balance of the defined benefit obligation. Defined benefit costs are classified as follows:

• Cost of service (including current service cost, past service cost and gains and losses on reductions and compensations).

• Interest expenses.

• Remeasurements.

The Company present the first two components of defined benefit cost as an expense in cost of services. The reduction and early liquidation of obligations are recognized as past service costs.

Contributions to benefit plans to defined contribution retirement are recognized as expenses at the time the employees render services that give them the right to contributions.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in Other Comprehensive Income.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Any liability for compensation is recognized when the Company can no longer withdraw the offer of compensation and / or when the entity recognizes related restructuring costs.

o. Revenue recognition – Aeronautical and non-aeronautical revenues are recognized at their fair value, within a maximum thirty-day term subsequent to the time passengers depart, planes land or other services are provided, as the case may be, considering that the events that occur and services that are rendered in any given month are invoiced and recognized within that same month.

• Aeronautical services – The majority of the revenues in México are derived from rendering aeronautical services, related to the use of airport facilities by airlines and passengers. These revenues are regulated by the SCT through a “maximum rate” per “workload unit.” The maximum rate is the maximum amount of revenues per workload unit that may be earned at an airport each year from regulated revenue sources. A workload unit is currently equivalent to one terminal passenger (excluding passengers in transit) or 100 kilograms (220 pounds) of cargo. Moreover, in MBJA aeronautical revenues correspond to the fee for passengers and security, which are collected by airlines who are also invoice other charges for landing and parking aircraft.

F-24

• Revenues from non-aeronautical services consist mainly of the leasing of commercial space at the airport terminals (other than space deemed essential to airline operations), car parking, access fees charged to third parties providing food catering and other services at the airports, other miscellaneous revenues and royalties for the use of Company´s brands.

Commercial space within the terminals is leased through operating lease agreements, based on either a monthly fixed rent or a charge based on the higher of a minimum monthly rent or a percentage of the lessee’s monthly revenues. Rental income from the Company’s leases is recognized on a straight-line basis over the term of the relevant lease.

• Revenues and cost of improvements to concession assets – In conformity with IFRIC 12, the Company recognizes revenues and the associated costs of improvements to concession assets which it is obligated to perform at the airports as established by the MDP. Revenues represent the value of the exchange between the Company and the government with respect to the improvements, given that the Company constructs or provides improvements to the airports as obligated under the MDP and in exchange, the government grants the Company the right to obtain benefits for services provided using those assets. The Company has determined that its obligations per the MDP should be considered to be a revenue-earning activity as all expenditures incurred to fulfill the MDP are included in the maximum tariff it charges its customers and therefore it recognizes the revenue and expense in profit or loss when the expenditures are performed. The cost for such additions and improvements to concession assets is based on actual costs incurred by the Company in the execution of the additions or improvements, considering the investment requirements in the MDP. Through bidding processes, the Company contracts third parties to carry out such construction.

The amount of revenues for these services are equal to the amount of costs incurred, as the Company does not obtain any profit margin for these construction services. The amounts paid are set at market value.

p. Foreign currency transactions – Transactions in currencies other than the functional currency of the Company (foreign currencies) are recognized using exchange rates prevailing at the dates on which the transactions are made. At the end of each reporting period, monetary items denominated in foreign currencies are converted at the exchange rates prevailing at that time.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rates prevailing at the date of the statements would. Exchange fluctuations are recorded in results of the period within the financial costs and presented as exchange gain or loss, on a net basis in the consolidated or profit or loss and other comprehensive income.

Non-monetary items that are valued at historical cost in a foreign currency are converted at the exchange rate at the date of the transaction.

q. Conversion of foreign operations – The assets and liabilities of foreign operations and the fair value adjustments arising from the acquisition, are translated at the exchange rates prevailing at the reporting date. Revenues and expenses of foreign operations are translated at the average exchange rate for the period of transactions.

The differences associated with foreign currency translation of foreign operations to the presentation currency (pesos) are recognized in other comprehensive income and presented in the foreign currency translation reserve in equity.

r. Income taxes – Current income tax is recorded in the income statement of the year in which it is incurred. The expense for income taxes includes both the tax assessed and deferred tax. Deferred and current tax are recognized the consolidated statement of profit or loss, except when they are related to items recognized in other comprehensive income, or directly in equity, in that case the deferred and current tax are also recognized in other comprehensive income or directly in equity, respectively.

F-25

Current tax expense is the tax payable determined for the year, using tax rates enacted or substantially enacted at the reporting date, plus any adjustment to tax payable in respect of previous years. Taxable income differs from income before income taxes reported in the consolidated statements of comprehensive income because there are items of income or expense that are taxable or deductible in other years and items that will never be taxable or deductible.

Deferred income tax is calculated by applying the statutory rate for temporary differences, resulting from comparing the accounting and tax assets and liabilities, and when applicable, the benefits from tax loss carryforwards and certain tax credits, such as the Tax on Assets (IMPAC) paid in previous years and expected to be recovered in future periods in accordance with the rules established in the tax laws, to the extent that it is probable the existence of future taxable profit that can be applied against such tax benefits. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the tax benefit can be recognized.

The rates applied to determine the deferred tax are those that correspond to the year in which it is expected the reversal of the temporary difference.

The Company did not recognized deferred taxes for the following items:

• Initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor tax results.

• Differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future and where the Company has the power to control the reversal date.

s. Earnings per share – Basic earnings per common share are calculated by dividing consolidated net income by the weighted average number of shares outstanding during the period, adjusted by repurchased shares retained in treasury. The Company does not have any dilutive securities; therefore basic and diluted earnings per share are the same.

t. Interest income and cost – Interest income comprises interest income from investments in debt securities, changes in the market value of financial assets at FVTPL and gains on hedging instruments that are recognized in the consolidated statement of comprehensive income, among other concepts. Interest income is recognized when it is probable that the economic benefits will flow to the Company and the amount can be reliably measured. Interest income is recorded on a regular basis, with reference to the capital invested and the effective interest rate.

Interest costs comprise interest costs of loans net of interest cost capitalized on qualifying assets, changes in the market value of financial assets at FVTPL, losses on hedging instruments that are recognized in the consolidated statement of comprehensive income, interest paid to the tax authorities, among other items. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in the consolidated statement of comprehensive income, using the effective interest method.

F-26

u. Operating segments – An operating segment is a component of the Company:1) that is engaged in business activities from which it may earn revenue and incur expenses, including revenues and expenses relating to transactions with other components of the Company, 2) whose operating results are regularly reviewed by Company’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance, and 3) for which discrete financial information is available. The Company has determined that its Chief Executive Officer its CODM. Each of the airports of the Company represents an operating segment. The Company has determined that its reportable segment, based on quantitative threshold test, to be the Guadalajara, Tijuana, Puerto Vallarta, San Jose del Cabo, Montego Bay, Hermosillo and Guanajuato airports. The operating segment information relating to the remaining six airports are combined and reported under “Other airports”. The corresponding information related with SIAP (company that provides technical assistance and professional services highly qualified), CORSA (company that provides operative services specialized in aeronautical industry), PCP (company that manages the parking lot operation), Fundación GAP, DCA, as well as the Company’s own operation (including investments in subsidiaries), was combined and included under “Other Companies”. Segment profit and loss is determined based on income before income taxes. Segment assets represent total assets and segment liabilities represent total liabilities. The accounting policies used in reporting segment information are the same as those used in the preparation of these consolidated financial statements, except that the investments in subsidiaries are accounted for under the equity method for purposes of determining segment assets and segment profit and loss for purposes of what is reported for “Other Companies”. Intersegment transactions are based on prices available to third parties.

v. Cash flow statement – The Company presents cash flows from operating activities using the indirect method, in which the net income is adjusted for the effects of transactions that do not require cash flows including those associated with investing and financing activities. Additionally, the Company has elected to present cash paid for interest as part of the financing activities and cash received from interest income as part of operating activities.

w. Other immaterial restatements – Subsequent to the issuance of the Company’s consolidated financial statements as of December 31, 2015 and for the year then ended, the Company’s management identified certain unintentional immaterial errors. The Company’s management assessed the impact of these errors in accordance to the International Accounting Standard 8 – Accounting Policies, Changes in Accounting Estimates and Error and concluded that even though they were not material to the 2015 consolidated financial statements, it was appropriate to make the required changes to correct all such immaterial errors. Aforementioned adjustments were to correct the following disclosures within the 2015 consolidated financial statements and the notes thereto:

• Note 5 Financial risk management - In 2015’s column within Capital management, the amount of Stockholders’ equity -controlling interest, was corrected.

• Consolidated statement of profit or loss and other comprehensive income for the year ended December 31, 2015 - The amount of the basic and diluted earnings per share related to 2015, was corrected.

• Note 13 Income taxes - Paragraph h. Balances and movements in deferred income taxes during the period. The 2015’s movements of the temporary differences related to deferred income tax liability were corrected.

• Note 30 Information by operating segment - Within the 2015’s figures, disclosures related to investment in associates as per IFRS 8, Operating segments, were included.

4. Business Combination

Acquisition of DCA

The Board of Directors of the Company at an extraordinary meeting held on March 18, 2015, approved the participation in bidding for the acquisition of DCA, leaving the Operating Committee and three independent members of the Board of Directors the authority to determine the acquisition price and conditions to offer in the bidding. The Board of Directors also granted special powers of attorney to the Chief Executive Officer, Chief Financial Officer and the General Counsel to sign all contracts related to the transaction and the ability to obtain bank or debt securities to finance the entire acquisition.

F-27

On April 17, 2015, the Company reached an agreement with the Spanish company Abertis for the acquisition of the entire stake in the Spanish company DCA for a price of USD$192.0 million. The transaction closed on April 20, 2015. The contract establishes that the date for determining the purchase price was January 1, 2015, so all the rights and obligations of these companies were identified on that date.

DCA also has a MBJA the 74.5% and 14.77% stake in SCL. The acquisition qualifies as a business combination in accordance with IFRS 3.

MBJA operates the Sangster International airport in Montego Bay in Jamaica, who has concession with the government that ends on April 12, 2033. The airport is located right in the center of the tourist corridor from Negril to Ocho Rios, which concentrates 90% the hotel capacity of the island according to information published by the Jamaican Tourist Board. In 2014 the airport served a total of 3.6 million passengers, 99.0% were international, of which 66% had as their origin the United States, 20% from Canada, 1% from Europe and 2% from the Caribbean and others regions.

SCL was the operator of the International Airport of Santiago de Chile until September 30, 2015. On that date SCL was handed over to the airport authority in that country and the new operator. Although it no longer has operations in accordance with the concession agreement, SCL must remain in effect for one year after the transfer of the concession in order to address any potential contingencies that arise. After that first year, SCL will remain in force for a year before dissolutions in accordance with tax regulations in Chile.

As part of the analysis performed to determine the acquisition date of DCA, the Company concluded that the date it acquired control over was April 20, 2015. Therefore, for all practical purposes the beginning of the consolidation was defined as of April 1, 2015 so, the consolidated statement of income and other comprehensive income for the year ended December 31, 2015 the Company comprises the results of DCA from that date. The Company consolidated only the last nine months of the DCA exercise.

The Company finalized in 2015 the determination of the fair value of assets acquired and liabilities assumed in the acquisition of DCA and MBJA and their recognition for accounting purposes.

Valuation Methodology

The income approach was used to quantify the fair value of the concession, which is based on cash generation expected by the asset during its remaining useful life (concession term). This approach assumes that the income from the asset determines its value. As a first step, it requires the development of projected cash flows, continuing with the determination of the present value of these cash flows to calculate the terminal value, which is a representation of the defined period in which the asset will continue to generate revenue.

The cost and market approach was used to determine the fair values of property, plant and equipment and improvements to concession assets, which estimates the fair value by determining the current replacement cost of one asset for another of equal value. The replacement cost of an asset reflects the estimated cost of rebuilding or replacement of assets, less an allowance for loss in value due to depreciation. The market approach is based on the price in a different observable market participants have paid for similar and comparable assets for the determination of fair value.

Assets acquired and liabilities recognized at the date of acquisition

Following are the details of the fair value the identifiable assets acquired and liabilities assumed at April 1, 2015.

Identifiable Assets Acquired
Cash and cash equivalents	Ps.	383,799
Trade accounts receivable		98,211
Other current assets		78,597
Machinery and equipment		398,072
Improvements to concession assets		1,816,380
Airport concessions		2,684,026
Other assets		74,926
Total identifiable assets acquired		5,534,011

F-28

Liabilities Assumed
Accounts playable		(155,515	)
Loans		(658,981	)
Deferred income taxes		(749,579	)
Total current liabilities		(1,564,075	)
Net assets acquired		3,969,936
Cash consideration paid		2,927,367
Fair value of non-controlling interest		852,825
		3,780,192
Bargain purchase gain	Ps.	189,744

In determining the fair value of DCA, a deferred tax liability of Ps. 678,792 was recognized.

During the process of the acquisition of DCA there was no contingent consideration.

In the valuation process it was determined that the values of cash equivalents, accounts receivable, other current assets, accounts payable, financial liabilities, other current liabilities and other noncurrent liabilities recorded in DCA approximate their fair value at the date of acquisition.

The non-controlling interest (25.5% in MBJA) recognized at the date of acquisition of DCA was valued by reference to the fair value of the net assets acquired and amounted to Ps. 852,825.

The bargain purchase gain was due to a strategy implemented by the Company as part of its financial analysis to determine the most appropriate acquisition price, which was compared to the expected cash flows of the business that resulted in the fair value of the net assets acquired being greater than the price paid. After reviewing if it had appropriately identified and valued all the assets acquired and liabilities assumed, a bargain purchase gain was recognized in profit or loss for the year ended December 31, 2015. This bargain purchase gain is also reflected in 2015 income from operations in the other companies reportable segment (See note 30)

Following is the pro forma consolidated statement of profit or loss and other comprehensive income to present the revenues and income of the combined entity as if the acquisition had occurred on January 1, 2015. In addition to provide analysts and investors a better understanding of the acquisition, the condensed consolidated statement of profit or loss and other comprehensive income of the Company for the year 2014, was presented for comparative purposes.

	December 2014			December 2015
Revenues:
Aeronautical revenue	Ps.	3,925,736		Ps.	5,622,575
No aeronautical revenue		1,338,542			1,933,760
Improvements to concession assets		281,874			838,635
		5,546,152			8,394,970
Operating costs:
Costs of services		1,161,588			1,637,919
Technical assistance fees		194,228			242,456
Concession taxes		261,577			525,745
Depreciation and amortization		925,220			1,224,123
Cost of improvements to concession assets		281,874			838,635
Other income		(43,424	)		(254,236	)
		2,781,063			4,214,642
Operating income		2,765,089			4,180,328
Finance costs		(7,990	)		(406,839	)
Share of loss of associate		—			(15,733	)
Income before income taxes		2,757,099			3,757,756
Income taxes		514,579			884,517
Profit for the year		2,242,520			2,873,239

F-29

	December 2014		December 2015
Other comprehensive income
Exchange differences on translating foreign operations		—		427,238
Comprehensive income	Ps.	2,242,520	Ps.	3,300,477
Profit for the year attributable to:
Controlling interest	Ps.	2,242,520	Ps.	2,816,523
Non-controlling interest		—		56,716
	Ps.	2,242,520	Ps.	2,873,239
Total comprehensive income for the year attributable to:
Controlling interest	Ps.	2,242,520	Ps.	3,176,861
Non-controlling interest		—		123,616
	Ps.	2,242,520	Ps.	3,300,477

It is important to consider that the dividends to be paid in the future by MBJA to DCA shall include the results for the full year 2015 and its retained earnings at December 31, 2014.

The Company’s consolidated result of the year ended December 31, 2015 from DCA include revenues of Ps. 995,707 and profits of Ps. 308,323.

5. Financial risk management

The Company is exposed to the following risks from the use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

This note presents information about the Company’s exposure to each of the above risks, the objectives, policies and processes of measuring and risk management of the Company. In different sections of these financial statements the Company has included additional in-depth disclosures.

At December 31, 2014, 2015 and 2016, financial instruments held by the Company are comprised of the following:

	December 31, 2014		December 31, 2015		December 31, 2016
Financial assets
Cash and cash equivalents		Ps.  1,595,502		Ps.  2,996,499		Ps.  5,188,138
Receivables		337,581		159,196		607,544
Derivative financial instruments		—		—		72,454
Financial liabilities at amortized cost
Long-term debt securities		Ps.          —		Ps.  2,600,000		Ps.  5,200,000
Current and long term bank loans		1,719,474		3,950,465		4,614,276
Accounts payable		353,839		586,875		891,611

Financial risk management objectives – The Board of Directors is responsible for developing and monitoring the Company’s risk management policies.

The Company’s risk management policies are established to identify and analyze potential risks, to set appropriate limits and controls, to monitor such risk on an ongoing basis. Policies and risk management systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop an environment of disciplined and constructive control in which all employees understand their roles and obligations.

The Audit Committee of the Company supervises how management monitors compliance with policies, procedures and reviews risks that is appropriate to the risk management framework in relation to the risks faced by the Company. The Audit Committee is supported in its oversight role by the Company’s Internal Audit Function. Internal Audit performs routine and special reviews of controls and risk management procedures, and reports its results directly to the Audit Committee.

F-30

Credit risk – Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company and arises primarily for trade accounts receivable and the Company’s investments, including investment funds and derivative financial instruments.

• Accounts receivable and others – The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographic characteristics of its customers, including the default risk of the industry and country in which its customers operate, as these factors could also affect credit risk, particularly considering the recent economic downturn. The main source of income for the Company is the Passenger Charge Fees (Tarifa de Uso Aeroportuario, TUA) and leasing revenues from commercial areas in its airports. The TUA is charged to each departing passenger (except diplomat, infant or transit passenger), and is collected by the airlines and subsequently refunded to the airports. For the years ended December 31, 2014, 2015 and 2016 the revenues for TUA represented 60.8%, 55.3% and 51.9% of the total revenues, respectively. The leasing revenues from commercial areas are collected from other clients, which are not airline customers. Approximately 37.2%, 29.8% and 26.3% of the Company’s revenues in 2014, 2015 and 2016 are derived from the TUA collected by three major client airlines, which collect the TUA and remit it to the airports. However, geographically there is no credit risk concentration because airports are located in different cities in Mexico and Jamaica, and therefore if one airport has an operating problem the other airports would not be affected. Approximately 35.3%, 29.4% and 27.6% of aeronautical and non-aeronautical revenues earned during the periods ended December 31, 2014, 2015 and 2016 were generated by the Guadalajara airport. In addition, approximately 90.4%, 92.2% and 92.6% of aeronautical and non-aeronautical revenues earned during the periods ended December 31, 2014, 2015 and 2016, respectively, were generated by seven of the Company’s airports (Guadalajara, Tijuana, San Jose del Cabo, Puerto Vallarta, Montego Bay, Bajío and Hermosillo).

The Company has a credit policy under which each new customer is analyzed individually for creditworthiness before offering the standard terms and conditions of payment and delivery of the services provided by the Company. The review of the Company includes external ratings, when they are available, and in some cases bank references. Every customer has established credit limits, which must be approved by the Company’s management and are reviewed periodically.

The Company has entered into agreements with all its airline customers to collect the TUA in Mexico, by who receive the payment for the use of the airport services on behalf of the airports. According to these agreements, each customer airline could have a grace period of up to a maximum of 60 days to reimburse to the airport the TUA paid by passengers. If an airline customer needed a credit term of up to 60 days, it must provide a guarantee to the airport covering this period, bond or cash equivalent of 30 days more than the estimated consumption for the credit period requested by that airline. In the case of insolvency of any airline or a notice by the authorities on suspension of operations, the Company may recover the pending amounts regarding TUA up to the value of the guarantee. In order to mitigate credit risk with its customers, mainly TUA, airlines have granted cash guaranties, which are reported as deposits received, in the consolidated statements of financial position, in addition to the cash guaranties of other commercial customers. At December 31, 2014, 2015 and 2016, the Company has customer deposits received in guarantee of Ps. 597,139, Ps. 725,437, and Ps. 936,828, respectively. These deposits are considered long-term based on the duration of the contracts signed with these airlines and the expectation that they will maintain long-term operations at the Company’s airports.

When reviewing credit risk, management groups the Company’s clients according to their credit characteristics that include whether the customer is an individual or a corporation, if they are airline customers, commercial customers, age and the existence of previous financial difficulties.

The Company systematically and periodically reviews the aging and collection of trade accounts receivable, and recognizes an allowance for doubtful accounts when it has evidence that it is probable these accounts will not be recovered (Note 7).

F-31

• Financial instruments held for trading purposes – The Company limits its exposure to credit risk by investing in government-backed securities. Management constantly monitors credit ratings to anticipate any counterparty defaults.

• Liquid funds and derivative financial instruments – The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by recognized rating agencies.

Liquidity Risk – The risk of liquidity represents the possibility that the Company will have difficulty to fulfill its obligations related with its financial liabilities that will be paid in cash or another financial asset. The Company focuses its liquidity management to ensure, as much as possible, that it will have sufficient liquidity to comply with its obligations at their maturity date, both in normal and in extraordinary conditions, without incurring in unacceptable losses or risking the reputation of the Company.

The Company utilizes its budget, prepared at a cost center level, to allocate resources to render its services, which helps to monitor cash flow requirements and to optimize the performance of its investments. Generally, the Company ensures availability of sufficient cash flows to cover operating expenses for a period of 60 days, including payment of its financial debt; this excludes the possible impact of extreme circumstances that are not reasonably predictable, such as natural disasters. The Company has external financing as described in Note 17 for compliance of its obligations under the MDP, whereas for other obligations it uses cash flows from operating activities and resources received at the maturity of its financial investments. As of December 31, 2014, the Company has available credit lines of Ps. 1,011,000. As of December 31, 2015 and 2016 the Company doesn’t have any unused lines of credit.

Following is a table with a summary of the Company’s contractual maturities for its financial liabilities, including the interest to be paid, as of December 31, 2014, 2015 and 2016:

	December 31, 2014
	Weighted average of effective interest rate			Less than 1 month		From 1 to 3 months		From 3 months to 1 year		From 1 year to 5 years		More than 5 years		Total
Fixed rate bank loans				Ps.	21,928	Ps.	—	Ps.	28,929	Ps.	9,643	Ps.	—	Ps.	60,500
Variable rate bank loans					30,503		18,917		878,261		689,586		41,707		1,658,974
Fixed rate interest		8.52	%		1,795		—		2,762		630		—		5,187
Variable rate interest		4.69	%		5,824		16,621		29,070		71,370		2,600		125,485
Trade accounts payable		N/A			133,619		95,263		—		—		—		228,882
AMP		N/A			—		—		124,957		—		—		124,957
				Ps.	193,669	Ps.	130,801	Ps.	1,063,979	Ps.	771,229	Ps.	44,307	Ps.	2,203,985
	December 31, 2015
	Weighted average of effective interest rate			Less than 1 month		From 1 to 3 months		From 3 months to 1 year		From 1 year to 5 years		More than 5 years		Total
Long-term debt securities (fixed rate)				Ps.	—	Ps.	—	Ps.	—	Ps.	—	Ps.	1,500,000	Ps.	1,500,000
Long-term debt securities (variable rate)					—		—		—		1,100,000		—		1,100,000
Fixed rate loans					516		1,569		201,860		31,709		5,529		241,183
Variable rate bank loans					—		3,286,442		38,715		358,316		25,809		3,709,282
Fixed rate interest		9.85	%		1,405		5,949		128,836		436,654		483,357		1,056,201
Variable rate interest		3.62	%		5,485		7,014		42,028		160,328		—		214,855
Trade accounts payable		N/A			196,757		240,481		—		—		—		437,238
AMP		N/A			—		—		149,637		—		—		149,637
				Ps.	204,163	Ps.	3,541,455	Ps.	561,076	Ps.	2,087,007	Ps.	2,014,695	Ps.	8,408,396

F-32

	December 31, 2016
	Weighted average of effective interest rate			Less than 1 month		From 1 to 3 months		From 3 months to 1 year		From 1 year to 5 years		More than 5 years		Total
Long-term debt securities (fixed rate)				Ps.	—	Ps.	—	Ps.	—	Ps.	—	Ps.	1,500,000	Ps.	1,500,000
Long-term debt securities (variable rate)					—		—		—		3,700,000		—		3,700,000
Fixed rate loans					667		2,027		5,608		37,756		236,538		282,596
Variable rate bank loans					—		—		76,457		4,255,223		—		4,331,680
Fixed rate interest		9.85	%		3,104		6,398		109,563		435,591		375,830		930,486
Variable rate interest		4.73	%		16,626		38,363		162,507		531,713		—		749,209
Trade accounts payable		N/A			358,587		334,512		—		—		—		693,099
AMP		N/A			—		—		198,512		—		—		198,512
				Ps.	378,984	Ps.	381,300	Ps.	552,647	Ps.	8,960,283	Ps.	2,112,368	Ps.	12,385,582

The interest payable from loans with variable interest rates was determined based on projected interest rates, plus the basis point adjustment corresponding to each bank loan.

The Company has bank loans, which include, among other obligations, restrictions that limit the destination of the resources, in addition to maintaining some financial ratios.

Market risk – Is the risk that changes in market prices, such as exchange rates, interest rates and prices of equity instruments, may affect the amount of the Company’s financial instruments. The Company’s market risk management objectives include controlling the risk exposures between acceptable parameters, while optimizing profits.

The Company in certain cases enters into derivatives instrument contracts to manage market risks. These transactions are in-line within the policies established by management. The Company also applies hedge accounting to minimize the volatility in profit or loss associated with certain financial instruments.

• Foreign exchange risk – The Company is exposed to currency risk for its revenues and trade accounts receivable denominated in a currency other than the functional currency of the Company. The foreign currencies in which transactions are primarily denominated is the U.S. dollar (USD) (Note 31).

In Mexico, the tariffs to be charged to international passengers and international flights are published in the Official Journal (Diario Oficial de la Federación) in USD, however, in accordance with Mexican law these tariffs are billed and collected in Mexican pesos. A significant depreciation of the peso during the last two months in each year could lead to an increase in aeronautical revenues that could lead to exceed the maximum tariff per traffic unit allowed, which may be a breach of compliance with the Concession’s maximum rates of each airport. If a significant appreciation of the peso occurs, the Company may be required to provide discounts to avoid exceeding the maximum tariffs. On the other hand, a significant appreciation of the peso could lead to our rates substantially decreasing. The Company has no way to recover the lost revenue if it charges less than the maximum rate as a result of a significant appreciation of the peso.

In MBJ, the tariffs to be charged to domestic and international passengers in USD, which they are composed for a fixed amount for 12 months (from April to March), and then updated for inflation in the United States. In April 2015, the new tariffs approved by the Airport Authority of Jamaica (AAJ) in November 2014 came into effect, where the increase in the rate for international passengers was USD$8.50 to USD$19.34 per person and domestic passengers tariffs remained of at USD$5.52 per person. Therefore, the Company’s revenues would not be exposed to a possible devaluation or appreciation of the Jamaican dollar against the US dollar.

While the Company can ensure that it does not exceed the maximum rates in Mexico as mentioned above, the depreciation of the Mexican peso can have a positive effect on commercial revenues and aeronautical revenues, while that appreciation of Mexican peso generally has a negative effect. The rates applied to

F-33

international passengers, international flights and some of our commercial contracts are denominated in USD and are billed and collected in Mexican pesos translated at the average exchange rate of the previous month. Therefore, the depreciation of the peso against the dollar results in the Company obtaining more USD than before the depreciation, while the appreciation of the peso against the USD results in the Company obtaining less Mexican pesos. As the Mexican peso appreciates against the USD, the Company obtains fewer pesos which could result in a decreased in profit, especially if the appreciation continues or exceeds historical levels. In addition, although most of our operating costs are denominated in pesos, we cannot predict whether our cost of services will increase as a consequence of the depreciation of the peso, or as a result of other factors.

In MBJA, expenses are comprised approximately 60% in USD, with the rest payable in Jamaican dollars. An appreciation of the Jamaican dollar would therefore increase expenses in USD terms.    

Following is a sensitivity analysis of the Company financial assets and liabilities denominated in USD, if the peso were to depreciate or appreciate by 10%, which is the amount management considers reasonably possible of occurring at year end:

	USD amounts at December 31, 2016			Peso amounts at exchange rate of Ps. 20.6640 at December 31, 2016			Peso amounts if exchange rate would depreciate 10%			Peso amounts if exchange rate would appreciate 10%
Thousands of U.S. dollars:
Financial assets:
Cash and cash equivalents		59,842		Ps.	1,236,583		Ps.	1,360,241		Ps.	1,124,169
Trade accounts receivable		7,972			164,739			181,212			149,763
		67,814			1,401,322			1,541,453			1,273,932
Financial liabilities:
Accounts payable		(56,398	)		(1,165,401	)		(1,281,940	)		(1,059,457	)
Bank loans		(213,820	)		(4,418,376	)		(4,860,212	)		(4,016,714	)
Net liability position		(202,404	)	Ps.	(4,182,455	)	Ps.	(4,600,699	)	Ps.	(3,802,239	)

Interest rate risk – The Company is exposed to fluctuation in interest rates on financial instruments, such as investments, loans and debt issuances. The Company monitors its interest rate risk and when bank loans are entered into with variable interest rates, it determines whether it should enter into derivative financial instruments, in order to reduce its exposure to the risk of volatility in interest rates type CAP. The negotiation with derivative financial instruments is only entered into with institutions of high repute and credit rating. The Company does not enter into operations for speculative purposes.

Fluctuations in interest rates impact primarily loans, changing either their fair value (fixed rate debt) or their future cash flows (variable rate debt). Management does not have a formal policy to determine how much exposure the Company should have to fixed or variable rates. However, when getting new loans, management uses its judgment to decide if it believes that a fixed or variable rate would be more favorable during the term of the loan.

The following sensitivity analysis has been determined based on the exposure to interest rates for both derivatives and non-derivative financial instruments at the end of the reporting period. For loans with variable interest rates, an analysis is prepared assuming the amount of liability outstanding at the end of the reporting period under review has been the current liability for the year. The sensitivity analysis used assumes an increase or decrease of 100 basis points, which is the change management considers reasonably possible of occurring at year end.

The Company has financial debt denominated in pesos and U.S. dollars, which accrues interest at a variable rate based on TIIE 28-days, LIBOR 30-days in Mexico and LIBOR GRA in MBJA, respectively. If the date of year end 2016, variable interest rates to which the Company is exposed had been 100 basis points (higher) or lower than the interest rate at year-end with the other variables remaining constant, the

F-34

effect on net income and stockholders’ equity for the years ended December 31, 2014, 2015 and 2016 would be as follows:

	2014			2015			2016
Effect in case of interest rate increase in 100 basis points
Variable rate long term debt	Ps.	(6,794	)	Ps.	(40,370	)	Ps.	(64,031	)
Effect in case of interest rate decrease in 100 basis points
Variable rate long term debt	Ps.	6,794		Ps.	40,370		Ps.	64,031

In 2016, the Company contracted hedges of derivative financial instrument interest rate caps (CAPs), whereby it agreed to exchange the difference between the amounts of the variable interest rate calculated over the principal amounts of the hedged items associated with its variable rate debt instruments. These contracts allow the Company to hedge the cash flow exposures on debt contracted at variable interest rates. The fair value at the end of the period of the interest rate CAP is determine at market value.

Capital Management – The policy of the Board of Directors of the Company is to maintain a strong capital position to provide confidence to its investors, creditors, and the market and to sustain future development of the business. The Board of Directors monitors the return on equity, which the Company defines as result from net profit divided by total stockholders’ equity.

The Board of Directors seeks to maintain the optimal balance for the ratio between total liabilities and stockholders’ equity, which may result from increased levels of bank loans up to the financial structure that it deems optimal, therefore, management seeks authorization from the Board of Directors for any additional debt issuances or for the prepayment of debt. While total liabilities grow in relation to equity and net profit continues to increase, the Company will generate higher returns on capital. The Company has no obligation to maintain a ratio of equity to total liabilities in particular.

Following is the ratio of stockholders’ equity to total liabilities of the Company at the end of the reporting period:

	2014		2015		2016
Stockholders’ equity –controlling interest	Ps.	21,285,891	Ps.	21,273,951	Ps.	21,333,015
Total liabilities		3,000,316		9,317,356		13,646,893
Ratio of total stockholders’ equity to liabilities		7.1		2.3		1.6

The Company may elect to repurchase its own shares in the stock market, under the following terms and conditions:

• The acquisition has to be approved previously at a Stockholders Meeting and be at market price (except in the case of public offerings or auctions authorized by the stock market).

• If the acquisition is made against the Company´s stockholders equity and reflects the acquisition within the repurchased shares account. If the Company decides to cancel the shares it reduces common stock accordingly.

• Announcing the amount of common stock issued and paid when determining the authorized stock for repurchase. The Ordinary Stockholders Meeting shall expressly agree, for each year, the maximum amount of funds that may be used for the repurchase of the Company’s shares, with the only limitation that the sum of the resources that can be used for this purpose, in no event shall exceed the total balance of retained earnings of the Company.

Repurchased shares are not subject to vote at the Company’s Stockholders Meeting, do not provide rights or economic benefits and are also not considered when determining a quorum to vote.

During the year, there was no change in the Company’s capital management policy. The Company is not subject to externally equity requirements, except for those corresponding to the minimum common stock required by Mexican Companies Law (Ley General de Sociedades Mercantiles).

F-35

Fair value of the financial instruments – Except for loans and debt securities, management believes the carrying amounts of financial assets and financial liabilities, recognized at amortized cost in the financial statements, approximate their fair value due to their short-term maturities.

As of December 31, 2014, 2015 and 2016, the fair value of financial liabilities recognized at amortized cost was Ps. 1,702,710, Ps. 6,568,634 and Ps. 9,841,498, respectively, while their book value is Ps. 1,719,474, Ps. 6,550,465 and Ps. 9,789,511, respectively. The fair value of loans are determined in accordance with generally accepted pricing models based on discounted cash flow analysis determinated in accordance by Level 1 of FVTPL.

The fair value of financial assets and liabilities is determined as follows:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

• Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3)

Financial instruments recognized at fair value, are categorized according to the fair value hierarchy into levels 1 to 3 based on the degree to which their fair value is objectively observable, are:

• Financial instruments classified as FVTPL – Are classified within Level 1 of the fair value hierarchy.

• Derivative financial instruments – Are classified within Level 2 of the fair value hierarchy.

6. Cash and cash equivalents

As of December 31, 2014, 2015 and 2016, the balances are comprised of the following:

	December 31, 2014		December 31, 2015		December 31, 2016
Cash	Ps.	140,638	Ps.	1,171,725	Ps.	1,560,536
Overnight investments of cash surpluses		1,454,864		1,824,774		3,326,662
Cash equivalents designated for expenditure, held in trust		—		—		300,940
	Ps.	1,595,502	Ps.	2,996,499	Ps.	5,188,138

On December 20, 2016 the Company established four trusts for investment and administration with Banco Interacciones, S.A. Institución de Banca Múltiple, Grupo Financiero Interacciones (Interacciones), who acts as a trustee, while the airports of the Company are trustors and beneficiaries. The trust is controlled by a Technical Committee consisting solely of executives of the Company, this trust is revocable and only can be destined to pay the execution of MDP in the Guadalajara airport for Ps. 276,575; Hermosillo airport for Ps. 5,801; Puerto Vallarta airport for Ps. 9,282 and San Jose del Cabo airport for Ps. 9,282. The resources should be invested in government securities denominated in national currency or bonds guaranteed by the Mexican Government, as instructed by the Company, and should be immediately available. The duration of the trust is for the period in which the contracts with the airports are in force. The Company expects these contracts to be completed during 2017. Consequently, the cash held in these trusts are classified as current assets.

7. Trade accounts receivable

As of December 31, 2014, 2015 and 2016, trade accounts receivable are comprised of the following:

	December 31, 2014			December 31, 2015			December 31, 2016
Trade accounts receivable	Ps.	490,579			Ps.  295,611		Ps.	638,166
Allowance for doubtful accounts		(152,998	)		(136,415	)		(30,622	)
	Ps.	337,581			Ps.  159,196		Ps.	607,544

F-36

Accounts receivable include balances to be reimbursed to the Company by domestic and international airlines for passenger charges fees (TUA) of Ps. 257,605, Ps. 170,541 and Ps. 414,655 as of December 31, 2014, 2015 and 2016, respectively. Passenger charges are payable for each passenger (other than diplomats, infants, transfer and transit passengers) departing from the airport terminals operated by the Company and are collected by the airlines and subsequently remitted to the Company.

The movements for bad debt expense in the allowance for doubtful accounts are recognized under cost of services in the consolidated statement of profit or loss and other comprehensive income.

	2014			2015			2016
Beginning balance	Ps.	(164,982	)	Ps.	(152,998	)	Ps.	(136,415	)
Bad debt expense		(15,056	)		(15,285	)		(14,327	)
Write-offs		6,466			9,905			105,236
Reversal of bad debts		20,574			24,891			14,884
Increased for MBJA´s consolidation		—			(2,928	)		—
Ending balance	Ps.	(152,998	)	Ps.	(136,415	)	Ps.	(30,622	)

The allowance for doubtful accounts is comprised of customer balances that are in litigation or bankruptcy process and legal proceedings, which at the date of the consolidated financial statements are not yet completed. As of December 31, 2014, 2015 and 2016 these balances amounted to Ps. 77,137, Ps. 110,442 and Ps. 9,876, respectively. The allowance also includes customer balances in arrears in their payments and that are in a process of regularization; therefore they have not been sued. At December 31, 2014, 2015 and 2016 the amount of these balances amounted to Ps. 75,861, Ps. 25,973 and Ps. 20,747, respectively. During 2014, 2015 and 2016, the Company recognized reversals of bad debt of the balances that were in a legal process with an unfavorable outcome for the Company. The amount of these bad debt expense totaled Ps. 20,574, Ps. 24,891 and Ps. 14,884, respectively also decreasing the balance of accounts receivablee. The reversal of bad debts had no effect on the operating results of the Company during 2014, 2015 and 2016. There are other cancellations of write-off for customers that were in arrears in their payments, but were paid in 2014, 2015 and 2016 for Ps. 6,466, Ps. 9,905 and Ps. 105,236, respectively.

Following are past due balances of accounts receivable, for which there has not been a provision of allowance for doubtful accounts, according to the Company’s policy and their maturity date:

	December 31, 2014		December 31, 2015		December 31, 2016
Accounts receivables past due from 1 to 30 days	Ps.	15,619	Ps.	52,833	Ps.	28,477
Accounts receivables past due 31 to 60 days		7,051		8,290		7,225
Accounts receivables past due 61 to 90 days		3,257		4,292		6,300
Accounts receivables past due more than 90 days		29		1,834		510
	Ps.	25,956	Ps.	67,249	Ps.	42,512

Following is the percentage of the main clients of the Company with relation to the total of the trade accounts receivable, segregating the accounts receivable of airport services (SAE) and the passengers charges (TUA) that corresponds to the amounts that airlines recover from passengers on behalf of the Company and subsequently pay:

	December 31, 2014						December 31, 2015						December 31, 2016
	% of TUA to be paid			% receivable of SAE			% of TUA to be paid			% receivable of SAE			% of TUA to be paid			% receivable of SAE
Concesionaria Vuela Compañía de Aviación, S.A.P.I. de C.V.		3.4	%		3.9	%		23.0	%		15.8	%		13.3	%		2.9	%
ABC Aerolíneas, S.A. de C.V.		2.1	%		1.2	%		6.4	%		5.7	%		4.6	%		1.0	%
Aerovías de México, S.A. de C.V.		2.2	%		1.5	%		4.9	%		7.4	%		2.7	%		0.8	%
Aerolitoral, S.A. de C.V.		1.7	%		0.7	%		7.9	%		5.9	%		4.8	%		0.4	%

F-37

The Company has cash, bonds and goods that guarantee certain amounts from TUA as well as accounts receivable from clients as of December 31, 2014, 2015 and 2016. These guarantees could be applied to any unpaid balance in case of a breach from clients and under certain circumstances.

8. Machinery, equipment and improvements on leased buildings

As of December 31, 2014, 2015 and 2016, the machinery, equipment and improvements on leased buildings are comprised as follows:

	Balance as of January 1, 2014			Additions			Divestitures			Balance as of December 31, 2014
Investment:
Machinery and equipment	Ps.	1,133,285		Ps.	60,052		Ps.	(10,836	)	Ps.	1,182,501
Office furniture and equipment		144,652			10,339			(11,453	)		143,538
Computer equipment		311,065			44,357			(51,777	)		303,645
Transportation equipment		27,249			1,162			(677	)		27,734
Communication equipment		17,702			2,231			(391	)		19,542
Improvements on leased buildings		10,413			6,060			—			16,473
Total investment	Ps.	1,644,366		Ps.	124,201		Ps.	(75,134	)	Ps.	1,693,433
Accumulated depreciation:
Machinery and equipment		(443,718	)		(102,813	)		10,394			(536,137	)
Office furniture and equipment		(79,406	)		(16,485	)		11,194			(84,697	)
Computer equipment		(211,568	)		(58,967	)		50,684			(219,851	)
Transportation equipment		(24,461	)		(1,781	)		678			(25,564	)
Communication equipment		(8,916	)		(2,109	)		302			(10,723	)
Improvements on leased buildings		(2,756	)		(1,052	)		—			(3,808	)
Total accumulated depreciation		(770,825	)		(183,207	)		73,252			(880,780	)
Net amounts	Ps.	873,541		Ps.	(59,006	)	Ps.	(1,882	)	Ps.	812,653

	Balance as of January 1, 2015		Additions		Divestitures			Currency translation effect		Balance as of December 31, 2015
Investment:
Machinery and equipment	Ps.	1,182,501	Ps.	670,607	Ps.	(9,306	)	Ps.	63,429	Ps.	1,907,231
Office furniture and equipment		143,538		27,737		(435	)		3,848		174,688
Computer equipment		303,645		193,369		(972	)		12,331		508,373
Transportation equipment		27,734		13,253		(4,984	)		844		36,847
Communication equipment		19,542		9,316		(330	)		—		28,528
Improvements on leased buildings		16,473		—		—			—		16,473
Total investment		1,693,433		914,282		(16,027	)		80,452		2,672,140

	Balance as of January 1, 2015			Additions			Divestitures			Currency translation effect			Balance as of December 31, 2015
Accumulated depreciation:
Machinery and equipment		(536,137	)		(123,293	)		7,337			(29,543	)		(681,636	)
Office furniture and equipment		(84,697	)		(12,636	)		435			(3,232	)		(100,130	)
Computer equipment		(219,851	)		(65,456	)		972			(9,313	)		(293,648	)
Transportation equipment		(25,564	)		(1,783	)		4,984			(809	)		(23,172	)
Communication equipment		(10,723	)		(2,515	)		126			—			(13,112	)
Improvements on leased buildings		(3,808	)		(1,041	)		—			—			(4,849	)
Total accumulated depreciation		(880,780	)		(206,724	)		13,854			(42,897	)		(1,116,547	)
Net amounts	Ps.	812,653		Ps.	707,558		Ps.	(2,173	)	Ps.	37,555		Ps.	1,555,593

F-38

	Balance as of January 1, 2016			Additions			Divestitures			Currency translation effect			Balance as of December 31, 2016
Investment:
Machinery and equipment	Ps.	1,907,231		Ps.	155,957		Ps.	(16,257	)	Ps.	134,374		Ps.	2,181,305
Office furniture and equipment		174,688			39,878			(14,182	)		8,292			208,676
Computer equipment		508,373			90,195			(28,346	)		26,430			596,652
Transportation equipment		36,847			4,081			(1,000	)		2,109			42,037
Communication equipment		28,528			1,904			(2,208	)		—			28,224
Improvements on leased buildings		16,473			24,986			—			—			41,458
Total investment		2,672,140			317,000			(61,993	)		171,205			3,098,351
Accumulated depreciation:
Machinery and equipment		(681,636	)		(189,241	)		15,838			(71,797	)		(926,836	)
Office furniture and equipment		(100,130	)		(10,238	)		12,330			(10,015	)		(108,053	)
Computer equipment		(293,648	)		(86,520	)		27,518			(24,753	)		(377,033	)
Transportation equipment		(23,172	)		(5,469	)		1,000			(2,733	)		(30,374	)
Communication equipment		(13,112	)		(2,879	)		1,710			—			(14,281	)
Improvements on leased buildings		(4,849	)		(6,533	)		—			—			(11,382	)
Total accumulated depreciation		(1,116,547	)		(300,880	)		58,766			(109,298	)		(1,467,959	)
Net amounts	Ps.	1,555,593		Ps.	16,120		Ps.	(3,227	)	Ps.	61,907		Ps.	1,630,393

Additions for investment and depreciation of machinery and equipment and improvements on leased buildings in 2015 include assets acquired as of April 1, 2015 by business combination, whose fair value at the acquisition date is shown below:

	2015 Net amounts
Machinery and equipment	Ps.	342,961
Office furniture and equipment		6,498
Computer equipment		31,626
Transportation equipment		342
Total	Ps.	381,427

During the years ended December 31, 2014 and 2016 no purchases of machinery and equipment and improvements on leased buildings by business combination took place.

F-39

As of December 31, 2014, 2015 and 2016, the net balances of machinery, equipment and improvements on leased buildings are:

	December 31, 2014		December 31, 2015		December 31, 2016
Net amounts:
Machinery and equipment	Ps.	646,364	Ps.	1,225,595	Ps.	1,254,469
Office furniture and equipment		58,841		74,558		100,623
Computer equipment		83,794		214,725		219,619
Transportation equipment		2,170		13,675		11,663
Communication equipment		8,819		15,416		13,943
Improvements on leased buildings		12,665		11,624		30,076
Total amounts	Ps.	812,653	Ps.	1,555,593	Ps.	1,630,393

The Company has several buildings under operating leasing for office use. In Notes 33, the costs and obligations under these leases are disclosed.

9. Improvements to concession assets

As of December 31, 2014, 2015 and 2016, the improvements to concession assets are comprised as follows:

	Balance as of January 1, 2014			Additions			Divestitures			Transfers			Balance as of December 31, 2014
Investment:
Improvements to concession assets	Ps.	6,346,319		Ps.	57,998		Ps.	(17,141	)	Ps.	632,012		Ps.	7,019,188
Construction in-progress		367,598			468,364			—			(632,012	)		203,950
Total investment		6,713,917			526,362			(17,141	)		—			7,223,138
Accumulated amortization		(1,711,250	)		(380,598	)		17,141			—			(2,074,707	)
Net amounts	Ps.	5,002,667		Ps.	145,764		Ps.	—		Ps.	—		Ps.	5,148,431

	Balance as of January 1, 2015			Additions			Divestitures		Transfers			Currency translation effect			Balance as of December 31, 2015
Investment:
Improvements to concession assets	Ps.	7,019,188		Ps.	2,278,944		Ps.	—	Ps.	368,575		Ps.	242,677		Ps.	9,909,384
Construction in-progress		203,950			609,743			—		(368,575	)		806			445,924
Total investment		7,223,138			2,888,687			—		—			243,483			10,355,308
Accumulated amortization		(2,074,707	)		(934,177	)		—		—			(52,106	)		(3,060,990	)
Net amounts	Ps.	5,148,431		Ps.	1,954,510		Ps.	—	Ps.	—		Ps.	191,377		Ps	7,294,318

	Balance as of January 1, 2016			Additions			Divestitures			Transfers			Currency translation effect			Balance as of December 31, 2016
Investment:
Improvements to concession assets	Ps.	9,909,384		Ps.	331,044		Ps.	(436	)	Ps.	147,806		Ps.	514,870		Ps.	10,902,668
Construction in-progress		445,924			1,400,942			—			(147,806	)		8,682			1,707,742
Total investment		10,355,308			1,731,986			(436	)		—			523,552			12,610,410
Accumulated amortization		(3,060,990	)		(510,747	)		68			—			(126,197	)		(3,697,866	)
Net amounts	Ps.	7,294,318		Ps.	1,221,239		Ps.	(368	)	Ps.	—		Ps.	397,355		Ps	8,912,544

F-40

Additions for investment and amortization of improvements to concession assets in 2015 include assets acquired as of April 1, 2015 by business combination, whose fair value at the acquisition date is shown below:

	Investment		Amortization			Net amounts
Improvements to concession assets	Ps.	2,264,602	Ps.	(462,719	)	Ps.	1,801,883
Construction in-progress		7,523		—			7,523
Total	Ps.	2,272,125	Ps.	(462,719	)	Ps.	1,809,406

During the years ended December 31, 2014 and 2016 no acquisitions of improvements to concession assets by business combination took place.

At December 31, 2014, 2015 and 2016, the net amounts of improvements to concession assets are:

	December 31, 2014		Total balance as of December 31, 2015		December 31, 2016
Net amounts:
Improvements to concession assets	Ps.	4,944,481	Ps.	6,848,394	Ps.	7,178,638
Construction in-progress		203,950		445,924		1,733,906
Total amounts	Ps.	5,148,431	Ps.	7,294,318	Ps.	8,912,544

Improvements to concession assets are comprised by intangible assets from additions and improvements to such assets in accordance with IFRIC 12, as well as other investments that have been carried out to the infrastructure of the airports qualifying as intangible assets, and even when they are not in committed investments in the MDP.

As of December 31, 2014, 2015 and 2016, the balance of machinery, equipment, improvements on leased buildings and improvements to concession assets includes investments pending to be paid in Mexican Companies of Ps. 86,383, Ps. 221,151, and Ps. 441,515, respectively. Construction in-progress relates mainly to construction of aprons and the expansion of the terminal building at the Bajio airport, the expansion of the terminal building at the Guadalajara airport, the expansion of the terminal building and improvement to the operational areas at the Puerto Vallarta airport, improvements to terminal building and aprons at the San Jose del Cabo airport and improvements to roads and terminal building in Tijuana airport. As of December 31, 2014, 2015 and 2016, the cumulative net amount capitalized was Ps. 185,797, Ps. 186,834 and Ps. 186,834, respectively, with a capitalization rate of 4.8%, 4.6% and 4.6%, respectively. During 2014 and 2015, the Company capitalized borrowing costs of Ps. 19,187 and Ps. 1,037, respectively. In 2016 the Company did not capitalized borrowing cost.

10. Airport concessions

a) Mexican Concessions

As described in Note 1.a, the Mexican Government granted concessions to manage, operate and develop 12 airports, and benefit from the use of the airport facilities over a 50-year term beginning November 1, 1998. The value of airport concessions and rights to use airport facilities was determined as explained in Note 1.a, and paid by GAP through the issuance of shares to the Mexican Government.

F-41

The table below shows the values of airport concessions and rights to use airport facilities as of December 31, 2014, 2015 and 2016:

Acquisition cost assigned to:	Ps.	15,938,359
Rights to use airport facilities (Note 11):
Runways, aprons, platforms	Ps.	519,057
Buildings		577,270
Other facilities		91,241
Land		930,140
		2,117,708
Airport concessions		13,820,651
	Ps.	15,938,359

The original amortization term for the concessions is 49 years. As mentioned in Note 1.a, the concession value was assigned in August 1999, date in which the amortization term began, and will run through November 2048.

Each airport concession agreement contains the following terms and basic conditions:

• The concessionaire has the right to manage, operate, maintain and use the airport facilities and carry out any construction, improvements, or maintenance of facilities in accordance with its MDP, and to provide airport, complementary and commercial services. Each concessionaire is required to make minimum investments at each airport under the terms of its MDP. The Company’s investment plans under the MDP must be updated every five years starting from 2000 and approved by the SCT. During December 2014, the SCT authorized the Company’s MDP update for the five-year period from 2015 to 2019.

• The concessionaire will use the airport facilities only for the purposes specified in the concession, will provide services in conformity with the law and applicable regulations, and will be subject to inspections by the SCT.

• The concessionaire must pay a tax for the use of the assets under concession (currently 5% of the concessionaire’s annual gross revenues derived from the use of public property), in conformity with the Mexican Federal Duties Law.

• The concessionaire assumed ASA’s rights and obligations derived from airport-related agreements with third parties.

• ASA has the exclusive right to supply fuel for consumption at the airport.

• The concessionaire must grant free access to specific airport areas to certain Mexican Government agencies (such as customs and immigration) so that they may carry out their activities within the airport.

• According to Article 27 of the General Law on Airports, the concession may be revoked if the concessionaire breaches any of its obligations established therein or falls under any of the causes for revocation referred to in Article 26 of law and in the concession agreement. The breach of certain concession terms may be cause for revocation if the SCT has applied sanctions in three different instances with respect to the same concession term.

• The SCT may modify concession terms and conditions that regulate the Company’s operations.

• The concession may be renewed in one or more instances, for terms not to exceed an additional 50 years.

b) Sangster Internacional Airport (MBJ)

As disclosed in Note 1.a, the Company acquired DCA in 2015, which holds a 74.5% stake in MBJA in 2015, located in Montego Bay, Jamaica. MBJA has a concession to operate, maintain and operate the airport for a period of 30 years as of April 12, 2003.

F-42

The concession of MBJ contains the following terms and conditions:

• On April 2003, MBJ entered into a concession agreement with AAJ pursuant to which AAJ granted MBJA the right to rehabilitate, develop, operate and maintain MBJ. MBJA is thereby designated as the approved airport operator and permitted to undertake the functions of AAJ, relative to SIA. The agreement was amended on December 16, 2005 and further amended on April 12, 2006.

• The concession agreement requires MBJA to provide the airport services set out therein at MBJ.

• Through its concession agreement, MBJA is obliged to pay AAJ a monthly concession fee on the basis of traffic units (passengers) multiplied by the rate established in the concession. The rate is subject to annual adjustment according to the National Consumer Price Index in the United States (CPI).

• The concession agreement is governed by Jamaican laws and MBJA cannot assign its rights or obligations under the agreement (except by way of security for indebtedness, without the prior written consent of AAJ).

• AAJ can terminate the concession agreement in an event of default of MBJA including insolvency of MBJA or its shareholders (if the latter would have a material adverse effect on MBJA), cessation of business, material breach by MBJA of the concession agreement including non-payment of any amount due within 60 days after the due date, change of control, bribery or corruption or failure by the shareholders to provide equity funding required by applicable documents. Also, MBJA may terminate the concession agreement in the event of a material breach by AAJ which has a material adverse effect on the business of MBJ or expropriation or other material adverse action by the Jamaican Government.

The value of the concessions at December 31, 2014, 2015 and 2016 is as follows:

	December 31, 2014			December 31, 2015			December 31, 2016
Mexican airport concession	Ps.	13,820,651		Ps.	13,820,651		Ps.	13,820,651
Other airport concession (fair value on date of acquisition in USD$176,086,000) (1)		—			3,029,824			3,638,641
Amortization (2)		(4,209,355	)		(4,610,308	)		(5,074,369	)
	Ps.	9,611,296		Ps.	12,240,167		Ps.	12,384,923

⁽¹⁾ The other airport concession includes translation effect for an amount of Ps. 345,908 and Ps. 608,817 as of December 31, 2015 and 2016 respectively.

Amortization recognized for the years ended December 31, 2014, 2015 and 2016, amounts to Ps. 284,050, Ps. 400,953 and Ps. 464,061, respectively.

⁽²⁾ Amortization includes translation effect for an amount of Ps. 6,600 and Ps. 32,941 as of December 2015 and 2016 respectively.

11. Rights to use airport facilities

The value of the rights to use airport facilities at December 31, 2014, 2015 and 2016 was as follows only Mexican airports:

	December 31, 2014			December 31, 2015			December 31, 2016
Rights to use airport facilities	Ps.	2,117,708		Ps.	2,117,708		Ps.	2,117,708
Less—accumulated amortization		(960,615	)		(1,017,314	)		(1,074,013	)
	Ps.	1,157,093		Ps.	1,100,394		Ps.	1,043,695

Amortization recognized for the years ended December 31, 2014, 2015 and 2016 amounted to Ps. 56,699 in each year.

F-43

12. Other acquired rights

At December 31, 2014, 2015 and 2016 the other acquired rights correspond to payments made by the Company after the date the concessions were granted, in order to early-terminate certain long-term leases contracts that existed at that time between ASA and third-party leaseholders in Mexican airports. The rights acquired are comprised as follows:

	December 31, 2014			December 31, 2015			December 31, 2016
Right to operate the charter and general aviation terminal and FBO at San Jose del Cabo airport terminal	Ps.	344,443		Ps.	344,443		Ps.	344,443
Right to operate commercial space at Tijuana airport		15,935			15,935			15,935
Right to operate various space at Puerto Vallarta airport		309,616			309,616			309,616
Right to operate commercial space at Guadalajara airport		93,560			93,560			93,560
Right to operate various parking lots		5,673			5,673			5,673
		769,227			769,227			769,227
Less – accumulated amortization		(204,143	)		(220,840	)		(237,537	)
	Ps.	565,084		Ps.	548,387		Ps.	531,690

Amortization recognized for the years ended December 31, 2014, 2015 and 2016 amounted to Ps. 16,697, in each year. These assets have a useful life until the end of the concession, as its use and operation will continue until the term expires.

13. Income taxes

The Company is subject to income taxes, according to the tax laws in Mexico, Spain and Jamaica.

Current income taxes – The income taxes rate was 30% for 2014, 2015 and the next years will continue the same tax rate for the Mexicans companies. The tax rate for MBJA is 25% in Jamaica and for the subsequent years will continue with the same tax rate and for DCA the tax rate was 28% for 2015 in Spain, and is 25% for 2016 and subsequent years.

To determine deferred income taxes at December 31, 2014, 2015 and 2016 the Company applied the applicable tax rates to temporary differences based on their estimated reversal dates.

a. Recoverable income taxes paid on dividends – Dividends paid to stockholders which are not derived from the net tax income account (CUFIN) generate current income taxes, which can be credited against the taxes of the Company during the year of the dividend payment and the two subsequent years.

b. Recoverable taxes – In the regular course of operations, the Company generates receivable balances by the overpayment of taxes payable, according to the calculation mechanism established in the Tax Law, which are recoverable through tax returns or offsetting. The main recoverable taxes are ISR, IMPAC and IVA.

In 2003, the Company filed a request with the tax authorities regarding the confirmation of the criteria with respect to the basis that the Company could use to calculate IMPAC, which included all airports and GAP. In this request, the Company requested that such calculation, based on the interpretations of tax law as published by the Mexican Treasury Department, should only take into account the amount effectively paid by AMP for the shares of the Company that was reflected in the assets in each concession acquired through the bidding process.

After several legal procedures, on August 29, 2006, the Mexican Treasury Department confirmed the criteria for the Aguascalientes, Hermosillo, La Paz, Los Mochis, Morelia and Manzanillo airports, reducing the asset tax basis for these airports. Thus, for these airports, the base used to calculate tax on assets considers only the amount effectively paid by AMP for its 15% of the shares of the Company. This generated a recoverable tax as of December 31, 2006 for Ps. 190,537, plus Ps. 18,026 of interest, for a total recoverable asset of Ps. 208,563, recognized within the current recoverable income tax asset.

F-44

As of December 31, 2014, the remaining portion pending to be recovered corresponds to the Hermosillo airport for Ps. 28,501 (values updated). The tax authorities determined that recoverable amount should be the result of the ISR calculation for the year and not be treated as an overpayment of taxes for the year. The risk with the resolution criteria is that the right to receive the refund of the amounts claimed will expire, as well as the favorable interest being sought by the Company. In a resolution dated October 25, 2013, the Company received a favorable ruling, however the authority filed for a review. On September 3, 2014 the Federal Tax and Administrative Judicial Tribunal (TFJFA) declared final judgment, which states that the authority has to return the amount of the refund and update the claim amount. On January 29, 2015 the Company received partial refund of Ps. 9,595 including interest, however, the TFJFA failed to rule on the accrued interest, therefore a judgment for recovery will be presented and the process will continue.

The balances of recoverable taxes are comprised as follows:

	December 31, 2014		December 31, 2015		December 31, 2016
Recoverable taxes:
IMPAC	Ps.	79,306	Ps.	70,398	Ps.	58,960
ISR		27,882		47,383		23,420
Value added tax		—		35,179		39,385
Tax to cash deposits		1,521		1,521		1,412
Business flat tax (IETU)		5,569		5,064		4,263
Withholding taxes		8,819		14,977		18,157
Other		1,519		1,056		1,083
	Ps.	124,616	Ps.	175,578	Ps.	146,680

c. Income Tax – Income tax expense (benefit) for the years ended at December 31, 2014, 2015 and 2016 consists of the following:

	2014			2015			2016
ISR:
Current	Ps.	727,923		Ps.	1,018,647		Ps.	1,532,875
Deferred		(245,929	)		(182,717	)		(266,302	)
Cancellation of unrecoverable tax on dividends		32,585			11,379			—
	Ps.	514,579		Ps.	847,309		Ps.	1,266,573

F-45

d. Effective tax rate – The reconciliation of the statutory income tax rate and the actual effective income tax rate as a percentage of income before income taxes for the years ended December 31, 2014, 2015 and 2016 is shown below:

	%			2014			%			2015			%			2016
Income before income taxes				Ps.	2,757,099					Ps.	3,618,086					Ps.	4,620,132
Income tax by applying the weighted average statutory rate (1)		30.0	%		827,130			29.5	%		1,067,335			29.5	%		1,362,939
Effects of tax inflation		(12.5	%)		(345,845	)		(3.8	%)		(138,985	)		(0.1	%)		(4,893	)
Cancellation of non-recoverable ISR from dividends		1.2	%		32,585			0.3	%		11,379			—			—
Profit from unrecognized tax loss carryforwards		—			—			(2.3	%)		(81,645	)		(2.1	%)		(96,635	)
Other		0.0	%		709			(0.3	%)		(10,775	)		0.1	%		5,162
Effective tax rate		18.7	%	Ps.	514,579			23.4	%	Ps.	847,309			27.4	%	Ps.	1,266,573

(1) The tax rate used for the 2014, 2015 and 2016 reconciliations above is the corporate tax rate of 30%, 29.5% and 29.5%, respectively payable by corporate entities in Mexico, Jamaica and Spain on taxable profits under tax law in these jurisdictions.

e. Assets and liabilities Deferred income tax recognized –

Deferred taxes are presented according to the origin of the operations of the individual subsidiaries of the Company as IAS - 12 Income taxes does not allow the offsetting of taxes in accordance with the following:

An entity shall offset deferred tax assets are tax deferred tax liabilities if, and only if:

(a) It has a legally enforceable right to set off the tax authority, the amounts recognized in these items; and

(b) deferred tax assets and deferred tax liabilities arising from profit tax corresponding to the same fiscal authority, which fall on:

(i) the same company or individual tax; or

(ii) different companies or individuals for tax purposes that seek to either liquidate assets and current tax liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which expected to be settled or recovered significant amounts of assets or liabilities for deferred taxes.

F-46

The deferred income tax are from Mexico subsidiaries:

	Assets December 31
	2014		2015			2016
Deferred ISR asset: (liability):
Allowance for doubtful accounts	Ps.	40,020	Ps.	34,813		Ps.	8,267
Machinery and equipment		29,459		30,017			31,855
Improvements to concession assets		345,242		372,266			411,620
Airport concessions and rights to use airport facilities		4,009,860		4,046,418			4,162,475
Other acquired rights		108,737		111,492			118,215
Derivative financial instruments		—		—			(20,446	)
Other assets		583		(121	)		268
Tax loss carryforwards		55,685		137,330			233,965
Employee benefits		24,005		25,701			20,898
Provisions		4,482		7,251			9,469
Recoverable tax on assets		233,091		168,054			94,258
Deferred income tax asset	Ps.	4,851,164	Ps.	4,933,221		Ps.	5,070,844

The net deferred tax liability corresponds to the subsidiary in Jamaica:

	December 31
	2015			2016
Deferred tax (liability) asset:
Trade receivables	Ps.	(2,158	)	Ps.	(10,991	)
Machinery and equipment		(100,485	)		(114,627	)
Improvements to concession assets		(1,908	)		(2,209	)
Airport concessions		(728,231	)		(835,432	)
Provisions		13,903			16,586
Deferred tax liability	Ps.	(818,879	)	Ps.	(946,673	)

f. Unrecognized deferred income tax assets – Unrecognized deferred income tax assets in the statement of financial position is comprised of the following items:

	December 31, 2014		December 31, 2015		December 31, 2016
Tax loss carryforwards	Ps.	184,746	Ps.	202,024	Ps.	221,330
Recoverable tax on assets		233,370		230,198		232,795
	Ps.	418,116	Ps.	432,222	Ps.	454,125

The Company does not recognize deferred tax assets on tax loss carryforwards for which it is not probable to generate future taxable profits to utilize such tax losses.

As disclosed in subparagraph i. of this Note, the recoverable tax on assets will expire in 2017. The recoverable income tax from recoverable tax on assets detailed above has not been recognized because the Company’s financial projections indicate it is not likely to be recovered.

The Company does not recognize deferred tax assets relating to temporary differences between the accounting and tax value of investments in subsidiaries, as it has the power to control the reversal date of those temporary differences, and does not expect them to reverse in the foreseeable future.

F-47

g. Deferred income tax from tax loss carryforwards – The Company generated tax loss carryforwards in the airports of Aguascalientes, Los Mochis, Manzanillo and Morelia, and at Grupo Aeroportuario del Pacífico, S.A.B. de C.V. The Company estimates tax loss carryforwards will be recoverable in the airports of Aguascalientes and Morelia and in Grupo Aeroportuario del Pacífico, S.A.B. de C.V., according to the amounts shown in the following table. With respect to tax legislation relative to concessions, such losses will expire in 2048, except for the tax losses of Grupo Aeroportuario del Pacífico, S.A.B. de C.V., which expire in 2020. Tax losses that can be recovered based on management’s financial projections are recognized as part of the deferred tax asset.

	December 31, 2014			December 31, 2015			December 31, 2016
Tax loss carryforwards	Ps.	801,434		Ps.	1,131,181		Ps.	1,517,650
Unrecognized tax loss carryforwards		(615,819	)		(673,415	)		(737,766	)
Recognized tax loss carryforwards	Ps.	185,615		Ps.	457,766		Ps.	779,884

h. Balances and movements in deferred taxes during the period.

	Balance as of January 1, 2014		Effects in profit and loss			Allocation to recoverable taxes			Balance as of December 31, 2014
Temporary differences for the deferred tax asset:
Allowance for doubtful accounts	Ps.	43,222	Ps.	(3,202	)	Ps.	—		Ps.	40,020
Machinery, equipment and improvements on leased buildings		25,954		3,505			—			29,459
Improvements to concession assets		294,130		51,112			—			345,242
Airport concessions and rights to use airport facilities		3,830,501		179,359			—			4,009,860
Other acquired rights		100,816		7,921			—			108,737
Derivative financial instruments		17		(17	)		—			—
Other assets		1,421		(838	)		—			583
Tax loss carryforwards		52,775		2,910						55,685
Employee benefits		21,190		2,815			—			24,005
Provisions		11,930		(7,448	)		—			4,482
Recoverable tax on assets		291,731		9,812			(68,452	)		233,091
Total deferred tax asset	Ps.	4,673,687	Ps.	245,929		Ps.	(68,452	)	Ps.	4,851,164

	Balance as of January 1, 2015		Effects in profit and loss			Allocation to recoverable taxes			Balance as of December 31, 2015
Temporary differences for the deferred tax asset:
Allowance for doubtful accounts	Ps.	40,020	Ps.	(5,207	)	Ps.	—		Ps.	34,813
Machinery, equipment and improvements on leased buildings		29,459		558			—			30,017
Improvements to concession assets		345,242		27,024			—			372,266
Airport concessions and rights to use airport facilities		4,009,860		36,558			—			4,046,418
Other acquired rights		108,737		2,755			—			111,492
Other assets		583		(704	)		—			(121	)
Tax loss carryforwards		55,685		81,645			—			137,330
Employee benefits		24,005		1,696			—			25,701
Provisions		4,482		2,769			—			7,251
Recoverable tax on assets		233,091		6,118			(71,155	)		168,054
Total deferred tax asset	Ps.	4,851,164	Ps.	153,212		Ps.	(71,155	)	Ps.	4,933,221

F-48

	Balance as of January 1, 2016			Effects in profit and loss			Allocation to recoverable taxes			Effects on capital			Balance as of December 31, 2016
Temporary differences for the deferred tax asset:
Allowance for doubtful accounts	Ps.	34,813		Ps.	(26,546	)	Ps.	—		Ps.	—		Ps.	8,267
Machinery, equipment and improvements on leased buildings		30,017			1,838			—			—			31,854
Improvements to concession assets		372,266			39,354			—			—			411,620
Airport concessions and rights to use airport facilities		4,046,418			116,057			—			—			4,162,475
Other acquired rights		111,492			6,723			—			—			118,215
Derivative financial instruments		—			(20,446	)		—			—			(20,446	)
Other assets		(121	)		389			—			—			268
Tax loss carryforwards		137,330			96,635			—			—			233,965
Employee benefits		25,701			61			—			(4,864	)		20,898
Provisions		7,251			2,218			—			—			9,469
Recoverable tax on assets		168,054			(842	)		(72,953	)		—			94,259
Total deferred tax asset	Ps.	4,933,221		Ps.	215,440		Ps.	(72,953	)	Ps.	(4,864	)	Ps.	5,070,844

	Balance as of January 1, 2015		Effects in profit and loss			Effects in Stockholders			Balance as of December 31, 2015
Temporary differences for the deferred tax liability:
Accounts receivable	Ps.	—	Ps.	78		Ps.	(2,236	)	Ps.	(2,158	)
Machinery, equipment and improvements on leased buildings		—		1,220			(101,705	)		(100,485	)
Improvements to concession assets		—		619			(3,085	)		(2,466	)
Airport concessions		—		29,226			(757,457	)		(728,231	)
Accruals		—		(1,638	)		16,099			14,461
Total deferred tax liability	Ps.	—	Ps.	29,505		Ps.	(848,384	)	Ps.	(818,879	)

	Balance as of January 1, 2016			Effects in profit and loss			Effects in Stockholders			Balance as of December 31, 2016
Temporary differences for the deferred tax liability:
Accounts receivable	Ps.	(2,158	)	Ps.	(535	)	Ps.	(8,298	)	Ps.	(10,991	)
Machinery, equipment and improvements on leased buildings		(100,485	)		6,307			(20,449	)		(114,627	)
Improvements to concession assets		(2,466	)		94			163			(2,209	)
Airport concessions		(728,231	)		45,003			(152,204	)		(835,432	)
Accruals		14,461			(6	)		2,131			16,586
Total deferred tax liability	Ps.	(818,879	)	Ps.	50,863		Ps.	(178,657	)	Ps.	(946,673	)

i. As a result of the enactment of IETU law beginning in 2008, specifically with respect to the third transitory article, the Company has ten years to recover, under specific circumstances, existing IMPAC paid in previous years, which as of December 31, 2016 amounted to Ps. 327,054. The previously mentioned article establishes the right to recover the tax on assets paid prior to the IETU law enactment date. However, to obtain a refund there are certain requirements that must be met, including: i) the tax on assets subject to recovery must have been paid over the previous ten years, ii) the ISR has to be higher than the tax on assets for the three years prior to 2008, and iii) is limited to 10% per year over the IMPAC effectively paid.

There are several interpretations as to how an entity can recover the tax on assets paid, but to the date there is no explicit definition from the tax authorities or a precedent from any court that provides clarity as

F-49

to the proper manner in which to recover such amounts. The Company’s management believes it is not probable that they will recover certain amounts and has therefore not recognized an asset of Ps. 232,796 as of December 31, 2016. The remaining amount of recoverable tax on assets is comprised of Ps. 70,622 (nominal value) and Ps. 27,636 of interest for the period from 2002 to 2016.

At December 31, 2014, 2015 and 2016, the recoverable tax on assets is comprised as follows:

	December 31, 2014			December 31, 2015			December 31, 2016
Recoverable tax on assets paid	Ps.	466,461		Ps.	398,252		Ps.	327,055
Unrecognized recoverable tax on assets paid		(233,370	)		(230,198	)		(232,796	)
Recognized recoverable tax on assets	Ps.	233,091		Ps.	168,054		Ps.	94,259

At December 31, 2016, the recoverable tax on assets paid is comprised as follows:

	Tax on assets recoverable from 2016 results		Tax on assets expected to be recoverable to 2017		Total
Guadalajara	Ps.	16,297	Ps.	498	Ps.	16,795
Tijuana		52,109		25,355		77,464
Total	Ps.	68,406	Ps.	25,853	Ps.	94,259

14. Investment in associate

Details of the associate of the Company at the end of the reporting period is as follow:

Name of associate	Place of constitution and operation	Proportion of ownership interest and voting power held by the Company
SCL Terminal Aérea de Santiago, S. A.	Santiago de Chile, Chile	14.77%

As disclosed in Note 1, DCA has a stake of 14.77% in SCL, operator of the international terminal of Santiago de Chile’s airport until September 30, 2015. On that date, the operation of the airport was delivered to the new operator. Although it no longer has operations in accordance with the concession agreement, SCL must remain in effect for one year after delivery of the concession to address any potential contingencies. After that first year, SCL shall remain in force for a year before being dissolved in accordance with tax regulations in Chile.

According to the Company’s estimates for 2017 and 2018, the Company expects to recover approximately Ps. 26,000 through dividend and capital repayments. During 2016, Ps. 58,868 was recovered.

At the date of acquisition the book value of SCL is €4,653,021 (Ps. 105,936). The results of DCA of the years ended to December 31, 2015 and 2016 were recognized using the equity method in the consolidated financial statements.

At December 31, 2015 and 2016, the net loss of SCL is comprised as follows:

	2015			2016
Net loss SCL	Ps.	(92,783	)	Ps.	(79,401	)
Proportion of ownership interest and voting power held by the Company		14.77	%		14.77	%
Share of loss of associate.	Ps.	(13,704	)	Ps.	(11,728	)

The Company owns less than 20% of the shares of SCL, however it concluded it has significant influence because it has a representation on its Board of Directors and participates in the process of setting its financial and operating policies.

F-50

The summarized financial information below represents the amounts shown in the financial statements of SCL prepared in accordance with IFRS.

The detail of the investment in the associate as of December 31, 2016 is as follows:

	Balance
Initial investment	Ps.	105,936
Share of loss of associate 2015		(13,704	)
Balance at December 31, 2015		92,232
Reimbursements 2016		(58,868	)
Share of loss of associate 2016		(11,728	)
Balance at December 31, 2016	Ps.	21,636

Condensed statements of financial position as of December 31, 2015 and 2016:

	2015		2016
Current assets	Ps.	411,465	Ps.	344,243
Non – current assets		281,943		50,412
Total assets		693,408		394,655
Total liability		193,476		193,554
Stockholders´ equity	Ps.	499,932	Ps.	201,101

Condensed statement of comprehensive loss for the period of nine months ended December 31, 2015 and for the year ended December 31, 2016:

	2015		2016
Revenues	Ps.	674,027	Ps.	13,629
Costs, expenses and income taxes		766,810		93,030
Loss of the year	Ps.	92,783	Ps.	79,401

15. Accounts payable

The Company receives credit from its suppliers at 30 and 45 days without charging interest, whereby the provider payment policy is to pay the maximum term granted. As of the date of these consolidated financial statements there is no supplier that represents more than 10% of its investments in productive assets and/or the total operating costs.

	December 31, 2014		December 31, 2015		December 31, 2016
Suppliers	Ps.	228,882	Ps.	437,238	Ps.	693,099
Advance payments from clients		36,363		66,676		70,215
Interest payable		11,329		58,499		69,917
Direct employee benefits		14,915		24,210		34,706
Others suppliers		—		23,257		182,387
Others		9,153		27,366		35,602
Total	Ps.	300,642	Ps.	637,246	Ps.	1,085,926

F-51

Advanced payments from clients represent payments for future services that have not yet been provided and if they are not performed, the Company has the obligation to reimburse it to its customers.

The balance of direct employee benefits corresponding principally of provisions of vacations, bonus and other employee benefits.

16. Derivative financial instruments

The Company has borrowings denominated in US dollars and debt securities at variable interest rates in pesos, which in case of an increase in interest rates, would reduce the Company’s cash flows. Through the contracting of the CAPs with HSBC México, S.A. (HSBC) and Scotiabank, in some of these borrowings, the Company contracted a hedge in which it has a floor and two collar to the increase in interest rates such that if the relevant rate surpasses the level established (strike) in the contract, the CAP generates positive cash flows to the Company, which offsets the negative effects of the increase in the interest rates from the underlying bank loans. The Company’s derivative financial instruments, are negotiated in the market Over The Counter (OTC) market, through national and international banks.

The issuance of debt securities GAP 15 in February 2015 for Ps. 1,100,000 an the second tranche of the same debt securities GAP 15 in January 2016 for Ps. 1,100,000, generates interest at a variable rate of TIIE-28 plus 24 basis points with a term of 5 years. This credit has a hedge of the interest rate described in the table below.

During January and February 2016, the Company entered into unsecured credit agreement with Scotiabank and BBVA for USD$95.5 million with each institution, for a total of USD$191.0 million. The loans generate interest at Libor 1M plus 99 and 105 basis points, respectively, with monthly interest payments, for a term of 5 years. With these loans the Company pre-paid banks loans used to finance DCA´s acquisition in April, 2015. For this credit an interest rate hedge was contracted.

These financial instruments were not entered into for speculative purposes, but neither were formally designated and therefore did not qualify as hedging instruments for accounting purposes and as a result changes in their fair value are recognized in profit or loss within finance cost. The main characteristics and the fair value of these derivatives at December 31, 2016 are as follows:

	Notional amount (millions)		Coverage start date											Due date	Market value December 31, 2016
				Rate	Floor			CAP 1			CAP 2
HSBC	USD$	95.5	March 2016	Libor 30		0.42	%		1.75	%		2.75	%	January 2021	Ps.	18,111
HSBC	USD$	95.5	March 2016	Libor 30		0.42	%		1.75	%		2.75	%	February 2021		18,417
Scotiabank	Ps.	2,200.0	April 2016	TIIE 28		4.05	%		5.75	%		6.75	%	February 2021		35,926
Total															Ps.	72,454

For the year ended December 31, 2016 was recognized a gain of Ps. 68,261, within finance cost as an income of the period, due to the value of the premium paid; no amounts have been recognized through other comprehensive income at the year ended December 31, 2016, for the effect of the intrinsic value of these hedges.

On March 4, 2016, began the bank loans hedge. Because the current Libor 1M rates are below CAP 1 which is 1.75%, the hedging instrument has not been used. As mentioned in the Risk Note, according to the projections of the interest curves, it is not expected that these will exceed the CAP of 2.75%.

On April 1, 2016 began the debts securities hedge with variable interest rates. On 2016, the Company use the hedge because the rate TIIE 28 surpassed the CAP 1 of 5.75%. At December 31, 2016, the Company recognized Ps. 607 for the application of the coverage in the comprehensive income.

F-52

17. Loans and issuance of Debt Certificates

a) Loans

During 2015, the Company obtained loans to finance capital investments associated with the MDP of its airports in Mexico as well as to repay bank debt used to finance its capital investments committed in the MDP of Bajío, Guadalajara, Hermosillo, Puerto Vallarta and San Jose del Cabo from 2007 to 2014. With the acquisition of MBJA the company assumed loans previously hired by MBJA, which are described below with the unpaid balance at each date.

	December 31 2014		December 31 2015		December 31 2016
On August 31, 2007 the Company entered into an unsecured loan agreement, with crossed guarantees by its individual airports with Banamex for a total amount of Ps. 1,214,000, bearing fixed interest at a rate of 8.52%. The agreement matures in seven years from the date of the borrowing and payments and amortization of principal are required to be made in 28 equal and consecutive quarterly principal and interest payments.	Ps.	60,500	Ps.	—	Ps.	—
On May 26, 2011, the Company entered into a contract for an unsecured loan agreement, with crossed guarantees among the individual airports, with HSBC for Ps. 1,023,980. The loans bear interest at a variable 28-day TIIE plus 165 basis points and require quarterly principal and interest payments for a period of seven years since each disposition. The Company paid off the outstanding balance in full with Certificate resources.		394,113		—		—
On August 2, 2012, the Company entered into a contract for an unsecured loan agreement with BBVA for Ps. 242,747, with crossed guarantees among the individual airports to a variable interest rate of TIIE 91 days, plus 120 basis points at quarterly principal and interest, for a period of seven years since each disposition. The Company paid off the outstanding balance in full with Certificate resources.		167,372		—		—
On November 23, 2012, the Company signed an unsecured loan agreement, with crossed guarantees between the accredited airports, with BBVA for Ps. 287,799. The loan bears interest at a variable rate based on the 91-day TIIE plus 120 basis points at quarterly principal and interest for a period of seven years since each disposition. The Company paid off the outstanding balance in full with Certificate resources.		137,137		—		—
On April 10, 2013, the Company signed an unsecured loan agreement, with crossed guarantees between the accredited airports, with BBVA for Ps. 459,350. The loan bears interest at a variable rate based in the 91-day TIIE plus 133 basis points for dispositions of 2013 and annualized rate that will be equivalent to the rate TIIE plus 138 basis points for dispositions of 2014, with quarterly payments of principal and interest, for a period of seven years since each disposition. The Company paid off the outstanding balance in full with Certificate resources.		230,352		—		—
On November 28, 2014, the Company signed a simple unsecured loan with crossed guarantees between accredited airports, with Scotiabank for Ps. 1,741,000. The loan bears interest at a variable rate of 28-day TIIE plus 57 basis points, for a period of 6 months since each disposition. The disposition was made on December 3, 2014 by Ps. 730,000. The remaining was available for dispositions in January and February, however the Company paid off the outstanding balance in full with Certificate resources.		730,000		—		—
On May 19, 2015, GAP signed a simple unsecured loan, with The Bank of Nova Scotia (Nova Scotia) for USD$191,000,000, for a period of one year. The loan bears interest at a variable rate of LIBOR 1M plus 70 basis points. The disposition was made on May 19, 2015 for USD$191,000,000. With this loan the Company pre-paid banks loans used to finance DCA´s acquisition. During August 2015, the Company paid USD$95,000,000. On January 19, 2016, the Company prepaid the outstanding balance with other credit signed in the same date.		—		1,651,824		—

F-53

	December 31 2014			December 31 2015			December 31 2016
On August 19, 2015, GAP signed a simple unsecured loan, with BBVA for USD$95,000,000. The loan bears interest at a variable rate of LIBOR 1M plus 60 basis points, for a period of 6 months from each disposition. With this loan the Company prepaid a portion of the Scotiabank loan. On February 15, 2016, the Company prepaid the outstanding balance with other credit signed in the same date.		—			1,634,618			—
On September 14, 2007, MBJA signed a simple unsecured loan, with the International Finance Corporation (IFC) for up to USD$20,000,000. The loan bears interest at a variable rate of 6 month LIBOR plus 392 basis points, for a period of 12 months from this disposition. The balance amounted to USD$8,124,468.		—			203,457			167,884
MBJA signed a simple unsecured loan with its shareholder Vantage in June 2007 for USD$10,936,000, which is repayable at the same maturity date as the IFC´s loans but are subject to restrictions. Interest is accrued at an interest rate of 14% per annum and is payable semi-annually.		—			188,185			225,999
In February 2009, MBJA signed a simple unsecured loan with guarantees with its shareholder Vantage for USD$510,000 to finance expenses related to a construction project of MBJA. No prepayments have been made.		—			8,775			10,539
On December 12. 2012, MBJA signed a simple unsecured loan with IFC for USD$13,000,000. The loan bears interest at a variable rate of 6 month LIBOR plus 450 basis points, for a period of five years from each disposition. The balance amounted to USD$10,500,000.		—			219,383			216,972
In 2014 MBJA signed two finance lease arrangements, one with SITA Information Networking Computing BV for USD$1,792,096, for equipment and the other with SITA Information Networking BV for software support for USD$1,231,858. Both leases are for seven years with a fixed interest rate of 8% per annum. Monthly lease payment total USD$47,132. The balance amounted to USD$2,228,950.		—			44,223			46,058
On January 19, 2016, GAP refinanced the simple unsecured loan contracted with Scotia Nova for amount of USD $ 95,500,000, with a five-year maturity. The loan bears interest at LIBOR 1M plus 99 basis points.		—			—			1,973,412
On February 15, 2016, GAP refinanced the simple unsecured loan contracted with BBVA for amount of USD $ 95,500,000, with a five-year maturity. The loan bears interest at LIBOR 1M plus 105 basis points.		—			—			1,973,412
Total unpaid balance of bank loans and long-term debt		1,719,474			3,950,465			4,614,276
Less – Current portion		(978,538	)		(3,529,102	)		(84,758	)
Long-term portion	Ps.	740,936		Ps.	421,363		Ps.	4,529,518

F-54

b) Issuance of Debt Securities

	December 31 2015		December 31 2016
Unsecured debt securities issued in the Mexican market on February 20, 2015, for Ps. 1,100,000 under the “GAP 15” name, at a variable interest rate of 28-day TIIE plus 24 basis points for a period of five years, maturing on February 14, 2020. On January 29, 2016, the first reopening was made the long-term debt securities GAP 15 for the total Ps. 1,100,000. With the same maturity as the originally issued on February 20, 2015 and accrue interest at a variable rate of TIIE to 28 days plus 24 basis points. At December 30, 2016, the TIIE rate is 6.11%	Ps.	1,100,000	Ps.	2,200,000
Unsecured debt securities issued in the Mexican market on February 20, 2015, for Ps. 1,500,000 under the name “GAP 15-2” at a fixed annual interest rate of 7.08% over a period of 10 years, maturing on February 7, 2025.		1,500,000		1,500,000
Unsecured debt securities issued in the Mexican market on July 8, 2016, for Ps. 1,500,000 under the “GAP 16” name, at a variable interest rate of 28-day TIIE plus 49 basis points for a period of five years. At December 31, 2016, the TIIE rate is 6.11%.		—		1,500,000
Long-term portion	Ps.	2,600,000	Ps.	5,200,000

The proceeds on 2015 from the issuance of the long-term debt securities were allocated to repay in full the Company’s outstanding bank debt in the amount of Ps. Ps.1,741,000 and the remainder of Ps. 852,500 was allocated to finance capital investments set forth in the Master Development Program for 2015. The difference of Ps. 6,500 corresponds to expenses related to the issuance.

The proceeds on 2015 from the issuance of the long-term debt securities were allocated to finance capital investments set forth in the Master Development Program 2016 in the Mexican Airports of Ps. 2,600,000. Expenses of Ps.7,797 corresponding to emissions were recognized.

The long-term debt previously described, matures as follows:

Year	December 31, 2016
2017	Ps	84,758
2018		161,905
2019		103,231
Thereafter		9,464,382
	Ps.	9,814,276

As disclosed in Note 1.b, the Scotiabank and BBVA loans were pre-paid for the months of January and February 2016 with proceeds from new loans, maturing in 5 years.

At December 31, 2014, 2015 and 2016, debts are payable by the following companies:

	At December 31, 2014
Company	Current		Long-Term		Total
GAP	Ps.	730,000	Ps.	—	Ps.	730,000
Bajío		15,217		43,747		58,964
Guadalajara		68,873		271,538		340,411
Hermosillo		14,205		31,211		45,416
Puerto Vallarta		38,419		122,839		161,258
San José del Cabo		111,824		271,601		383,425
Total	Ps.	978,538	Ps.	740,936	Ps.	1,719,474

F-55

	At December 31, 2015
Company	Current		Long-Term		Total
GAP	Ps.	3,286,442	Ps.	2,600,000	Ps.	5,886,442
MBJA		242,660		421,363		664,023
Total	Ps.	3,529,102	Ps.	3,021,363	Ps.	6,550,465

	At December 31, 2016
Company	Current		Long-Term		Total
GAP	Ps.	—	Ps.	9,146,824	Ps.	9,146,824
MBJA		84,758		582,694		667,452
Total	Ps.	84,758	Ps.	9,729,518	Ps.	9,814,276

The loan agreements limit the Company’s use of proceeds for the financing of capital expenditures, working capital and prepayments of loans, in addition to prohibiting the merger of the airport creditors with any other entity, as well as the prohibition of sales or transfers of assets in an amount greater than Ps. 1,000, without previous authorization from the creditors and requires the Company to maintain certain financial ratios. If the individual airports are unable to fulfill their commitments and maintain the minimum financial ratios under the credit agreements, dividends cannot be declared.

As a result of the issuance of the debt securities, the Company has covenants, which have been complied with during 2015 and 2016. The principal payment of the debt securities will be made at the end of the contractual term. Direct costs incurred in the issuance or incurrence of debt are deferred and amortized, as part of interest expense using the effective interest rate over the term of each transaction. These costs include commissions and professional fees.

18. Retirement employee benefits

a. Defined contribution plans – Under Mexican legislation, the Company makes payments equivalent to 2% of its workers’ daily comprehensive salary to a defined contribution plan that is part of the retirement savings system. The expense was Ps. 4,428, Ps. 4,728 and Ps. 4,986 in 2014, 2015 and 2016, respectively.

In Jamaica, the Company operates a defined contribution pension plan, which is managed by an independent trust. The Company has no further obligation other than its contribution mandated under the plan. The pension plan is financed primarily by payments from employees and the Company.

b. Defined benefit plans – According to the Federal Labor Law in Article 162, the Company is required to pay in Mexico a seniority premium as postemployment benefits if an employee leaves and if have at least 15 years of service, which consist of a payment of 12 days per worked year based on the last salary, not to exceed twice the legal minimum wage established by law. The present value of the retirement benefit obligation and the current service cost and past service costs were calculated by independent experts using the projected unit credit method.

The defined benefit plans in Mexico usually expose the Company to actuarial risks such as: interest rate risk, longevity risk and salary risk.

Interest risk	A decrease in the interest rate of the 30 years bond will increase the plan liability.
Longevity risk	The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of the plan participants, during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.
Salary risk	The present value of the defined benefit plan liability is calculated by reference to the future salaries of the plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

F-56

The amount included in the statement of financial position arising from the obligation of the entity for defined benefit plans on December 31, 2014, 2015 and 2016 is as follows:

	2014		2015		2016
Present value of defined benefit obligations	Ps.	80,015	Ps.	93,367	Ps.	92,575

The table below shows the movements in the present value of defined benefit obligations:

	2014			2015		2016
Opening defined benefit obligation	Ps.	70,632		Ps.	80,015	Ps.	93,367
Current service cost		6,268			6,754		7,233
Interest cost		5,498			6,463		7,365
Actuarial (gains) losses		(30	)		135		—
New measurement (gains) / losses:
Actuarial (gains) losses resulting from changes in financial and demographic assumptions		—			—		(7,165	)
Actuarial (gains) and losses arising from adjustments for actuarial experience		—			—		(8,225	)
Benefits paid		(2,353	)		—		—
Ending defined benefit obligation	Ps.	80,015		Ps.	93,367	Ps.	92,575

Below are the amounts for the years ended December 31, 2014, 2015 and 2016 that were recognized in the consolidated statements of profit or loss and other comprehensive income:

	2014			2015		2016
Current service cost	Ps.	6,268		Ps.	6,754	Ps.	7,233
Interest cost		5,498			6,463		7,365
Actuarial losses (gains)		(30	)		135		—
Components of defined benefit costs recognized in net income		11,736			13,352		14,598
Measurement of net defined benefit liability:
Actuarial (gains) losses arising from changes in financial and demographic assumptions		—			—		(7,165	)
Actuarial (gains) and losses arising from adjustments for actuarial experience		—			—		(8,225	)
Components of defined benefit costs recognized in other comprehensive income		—			—		(15,390	)
Total recognized as employee benefit cost (Note 24)	Ps.	11,736		Ps.	13,352	Ps.	(792	)

The main actuarial assumptions at the reporting date (expressed as weighted average nominal rates) are shown below:

	2014			2015			2016
Discount of the projected benefit obligation at present value		7.3	%		7.4	%		7.4	%
Salary increase		5.0	%		5.0	%		5.0	%
Remaining labor life		23.4 years			20.8 years			18.2 years
Inflation		3.5	%		3.5	%		3.4	%

F-57

The discount rate is determined based on the structure of the interest rate curve of government bonds for 30 years. The net interest cost on the retirement benefit obligation is recorded in profit and loss within the cost of services, in conjunction with the other components of liabilities for retirement benefits.

If the discount rate had a variation of 100 basis points upward or downward, the effect on the liability for retirement benefits would be impacted by Ps. 8,468.

Assumptions related to expected mortality are based on statistics and experience of the Mexican population. The average life expectancy of an individual retiring at age 65 is 17 years for men and 19 years for women (Demographic Mortality Experience for Active people, EMSSA 2009).

19. Equity

a. At December 31, 2014, common stock consists of the following:

	Number of shares		Nominal value
Fixed Capital
Series B		476,850,000	Ps.	11,846,723
Series BB		84,150,000		2,090,599
Total		561,000,000	Ps.	13,937,322

At December 31, 2015, common stock consists of the following:

	Number of shares		Nominal value
Fixed Capital
Series B		476,850,000	Ps.	10,649,462
Series BB		84,150,000		1,879,318
Total		561,000,000	Ps.	12,528,780

At December 31, 2016, common stock consists of the following:

	Number of shares		Nominal value
Fixed Capital
Series B		476,850,000	Ps.	9,161,820
Series BB		84,150,000		1,616,793
Total		561,000,000	Ps.	10,778,613

At December 31, 2016, all shares are fully subscribed and paid. The Company’s shares are represented by common ordinary shares and without nominal value. Series “BB” shares, which may represent up to 15% of common stock, may only be transferred upon prior conversion into Series “B” shares, based on certain time restrictions.

F-58

Each share of Series “B” and “BB” gives the holder the right to one vote at any Ordinary Stockholders’ Meeting. According to the Company’s bylaws, shareholders of Series “B” shares either individually or jointly with their related parties, cannot hold more than 10% of the total outstanding common stock of the Company, and therefore is prohibited from exceeding such limits by participating through trusts, agreements, social pacts or bylaws, pyramid schemes or any other mechanism that provides a larger share than legally allowed. Additionally, the Company’s bylaws provide that if a person individually or jointly with its related parties, acquires a percentage of shares exceeding the limits of participation previously mentioned, the person or group of persons will be required to sell the excess over what is allowed through a public offering, during which time, the shares owned over the 10% threshold by such individuals will not have voting rights and cannot be represented in any Stockholder Meeting. Furthermore, the shareholders of Series “BB” shares, either individually or jointly with their related parties, may also be owners of shares of Series “B” shares, regardless of the shares they hold in the aggregate of Series “B” and Series “BB”. However, those shareholders of the Series “BB” shares, their votes will be limited to no more than 10% of the voting common stock, and any additional participation is required to vote in the same way of the majority of the votes in any Stockholder Meeting.

Shareholders of Series “BB” shares are entitled to elect four members to the board of directors and their alternates, whereas shareholders of Series “B” shares with rights to vote, even limited or restricted, that individually or together owning 10% or more of the Company’s capital stock is entitled to elect one member to the board of directors at a Stockholders’ Meeting, an in such instances, such shareholder or group of shareholders may not exercise the right to vote for the board members corresponding to the majority. If any shareholder or group of shareholders representing at least 10% of the common shares of which the common stock is comprised, exercises the right to appoint a board member, such shareholder will not have the right to vote in the designation of the board members that correspond to appointment by the majority of Series “B” shareholders. The total number of members of the Board of Directors of the Company is 11, therefore holders of Series “B” shares have the right to appoint only seven members.

The members of the Board of Directors appointed by the Shareholders of the Series “BB” will have the ability to make the following valid designations: (i) upon consultation with the Company’s Nomination and Compensation Committee, appointment and dismissal of the Chief Executive Officer and the top-level executive officers; (ii) appointment of three of the six members of the Operating Committee and three alternates, and the number of members and their alternates to the Audit Committee, including the acquisition, nominations and compensation corresponding to 20% (twenty percent) of the total members, with the understanding that there will be at least one member and alternate, for each of them, iii) in the creation and determination of the Operating Committee whom are not part of the Company, members of the Board of Directors or the Company’s officers.

In the case of the Audit Committee must also comply with the legal restrictions of independence.

b. In an Ordinary Stockholders’ Meeting held on April 23, 2014, the stockholders approved a dividend payment of Ps. 1,590,000 to be divided between the shares outstanding at the date of each payment, excluding shares repurchased in accordance with Article 56 of the Securities Market Law. The first payment was in cash on May 22, 2014 of Ps. 1,192,500 and the second payment was made on July 4, 2014 of Ps. 397,500. In the same stockholder´s meeting the reserve for repurchase of shares approved at the Stockholders’ Meeting held on April 16, 2013 of Ps. 293,928 was canceled, and simultaneously shareholders approved a maximum amount of Ps. 400,000 for the reserve for repurchase of shares to be executed in the next twelve-month period.

c. In an General Extraordinary Stockholders’ Meeting held on April 23, 2014, the stockholders approved a capital reduction for Ps. 1,510,000. The payment was made on May 8, 2014.

d. During 2014, the Company repurchased a total of 1,017,561 shares, for Ps. 69,340 which represented 0.2% of outstanding shares at such time. The weighted average shares outstanding as shown in the consolidated statement of profit or loss and other comprehensive income, includes shares repurchased, It does not include in its calculation all repurchased shares.

F-59

e. In an Ordinary Stockholders’ Meeting held on April 21, 2015, the stockholders approved a dividend payment of Ps. 3.32 per shares outstanding at the date of each payment, excluding shares repurchased in accordance with Article 56 of the Securities Market Law. The first payment for Ps. 1.82 per share was in cash on August 21, 2015 of Ps. 956,547 and the second payment for Ps. 1.50 per share was made on November 4, 2015 of Ps. 788,364. In the same stockholder´s meeting the reserve for repurchase of shares approved at the Stockholders´ Meeting held on April 23, 2014 of Ps. 400,000 was canceled, and simultaneously the stockholders approved a maximum amount of Ps. 850,000 for the reserve for repurchase of shares to be executed in the next twelve-month period.

f. In an General Extraordinary Stockholders’ Meeting held on April 21, 2015, the stockholders approved a capital reduction of Ps. 2.68 per share outstanding for Ps. 1,408,542. The payment was made on May 15, 2015.

g. In an Ordinary Stockholders’ Meeting held on April 26, 2016, the stockholders approved a dividend payment of Ps. 4.07 per shares outstanding at the date of each payment, excluding shares repurchased in accordance with Article 56 of the Securities Market Law. The first payment for Ps. 2.28 per outstanding share was in cash on August 25, 2016 of Ps. 1,198,312 and the second payment for Ps. 1.79 per outstanding share was made on November 18, 2016 of Ps. 940,780. In the same stockholder´s meeting the reserve for repurchase of shares approved at the Stockholders´ Meeting held on April 21, 2015 of Ps. 850,000 was canceled, and simultaneously the stockholders approved a maximum amount of Ps. 950,000 for the reserve for repurchase of shares to be executed in the next twelve-month period.

h. In an extraordinary Stockholders’ Meeting held on April 26, 2016, the stockholders approved a capital reduction of Ps. 3.33 per share outstanding for Ps. 1,750,167. The payment was made on May 9, 2016.

i. The General Corporate Law requires that at least 5% of the consolidated comprehensive income of the year, be transferred to the legal reserve until the reserve equals 20% of capital stock at par value (nominal pesos). The legal reserve may be capitalized but may not be distributed, except in the form of stock dividends, until the entity is dissolved. The legal reserve must be replenished if it is reduced for any reason. At December 31, 2014, 2015 and 2016, the legal reserve, in nominal pesos, was Ps. 735,491 Ps. 840,743, and Ps. 960,943, corresponding to 5.3%, 6.7%, and 8.9%, respectively of the common stock, respectively.

j. At December 31, 2016, the Company has a maximum amount of funds approved to repurchase shares of the Company for Ps. 2,683,374. From the approved amount, 35,424,453 shares have been repurchased for a total of Ps. 1,733,374, corresponding to repurchases made from September 2010 to February 2014. The remaining balance of Ps. 950,000 is available to repurchase shares. During the years 2015 and 2016 no repurchases were made.

k. Stockholders’ equity distribution, except for the restatement amounts of the common stock contributed and the Net tax income account, will be subject to an ISR tax, calculated at the tax rate applicable to the distribution year. This corporate level dividend income tax on the distribution of earnings may be applied as a credit against ISR corresponding to the fiscal year in which the dividend was paid and the subsequent two fiscal years following the date in which the dividend was paid. Starting in 2014, dividends distributed to shareholders and coming from tax retained earnings generated from 2014 and later, will generate an additional income tax of 10% directly attributable to shareholders receiving the dividend.

l. The balances of stockholders’ equity tax accounts as of December 31, were as follows:

	2014		2015		2016
Contributed capital account	Ps.	28,253,303	Ps.	27,415,833	Ps.	26,540,780
Net tax income account		1,827,183		2,147,169		3,232,321
Total	Ps.	30,080,486	Ps.	29,563,002	Ps.	29,773,101

m. In the year 2015 the balance of other comprehensive income consists of the reserve for foreign currency translation of DCA and MBJA from functional currency (euro and US dollars respectively) to the reporting currency (peso) and from the year 2016 also the effects of the remeasurements of the labor liabilities, net of taxes

F-60

20. Non-controlling interest (NCI)

On April 20, 2015 the Company acquired 100% of the shares of DCA, which owns 74.5% of the shares of MBJA and the remaining 25.5% is Vantage as a non-controlling shareholder.

The following table summarizes the information relating to DCA that has material NCI, before any intra-group elimination:

NCI percentage	2015 25.5%			2016 25.5%
Non-current assets	Ps.	5,239,086		Ps.	6,117,021
Current assets		529,288			1,155,778
Non-current liabilities		(2,073,551	)		(2,590,361	)
Current liabilities		(325,640	)		(480,267	)
Net assets		3,459,183			4,202,171
Net assets attributable to NCI		882,092			1,071,554
Revenue	Ps.	995,707		Ps.	1,622,033
Profit		175,518			281,078
OCI		482,394			773,453
Total comprehensive income		875,237			992,944
Profit allocated to NCI		44,757			71,675
OCI allocated to NCI	Ps.	66,901		Ps.	117,787
Net cash provided by operating activities		761,724			729,858
Net cash provided by investment activities		7,959			13,673
Net cash used in financing activities		(346,807	)		(156,099	)
Net increase in cash and cash equivalents	Ps.	422,876		Ps.	587,432

21. Revenues

According to the General Law on Airports and its regulations in Mexico, certain of the Company’s revenues are classified as airport, complementary and commercial services. Airport services generally include the use of airport runways, taxiways and parking areas for arriving and departing planes, use of passenger walkways, security services, hangars, and, in general, use of the space inside the terminal and other infrastructure by aircraft, passengers and cargo services. These services include rental of space that is vital for the operation of airlines and complementary service suppliers. Complementary services are ramps and handling services, catering, maintenance and repairs, and traffic and dispatch services. Commercial services include services that are not essential for the operation of an airport; therefore, these revenues are not regulated by TM, such as car parking services, lease of space to retailers, restaurants and banks, among others. The revenues of the subsidiary MBJA have the same classification, therefore consolidated in the area that correspond to the numbers of airports in Mexico.

A price regulation system establishes in Mexico a TM rate for airport services and complementary services for each airport for each year in a five-year period. The maximum rate is the maximum amount of revenues per “workload unit” that may be earned at an airport each year from regulated sources. Under this regulation, a workload unit is equivalent to one passenger (excluding transit passengers) or 100 kilograms (220 pounds) of cargo. As of December 2014, SCT authorized the Company’s maximum rates applicable for the period 2015-2019.

The maximum rates of the Montego Bay Airport, were approved in November 2014 and are applicable from April 1, 2015 to March 31, 2020.

During the periods ended December 31, 2014, 2015 and 2016, the compliance with the TM by the Company’s Mexican airports was 99.9%, 100.0%, and 99.9%, respectively.

F-61

The table below presents a summary for the years ended December 31, 2014, 2015 and 2016, of the Company’s revenues (these do not include revenues related to improvements to concession assets under IFRIC 12). Using the Airports Law classification, the information is sent to the SCT to comply with the Company’s reporting obligations with respect to regulated and unregulated revenues, which are classified as either aeronautical or non-aeronautical revenues. For this presentation, access fee are classified as airport services.

	2014		2015		2016
Regulated revenues
Airport operating services to airlines:
Landing	Ps.	179,862	Ps.	284,275	Ps.	518,404
Charges for not canceling extended stay reservations		1,849		3,412		3,601
Parking on embarking/disembarking platform		135,102		135,701		66,563
Parking on extended stay or overnight platform		29,965		35,663		45,274
Passenger walkways and shuttle buses		—		18,346		31,217
Airport security charges		52,475		113,579		160,986
Airports services		—		34,540		—
Airport real estate services to airlines:
Leasing of hangars to airlines		6,438		7,011		20,257
Leasing of shops, warehouses and stockrooms to airlines (operating)		2,318		3,884		4,045
Leasing of space and other terminal facilities to airlines within the terminal (operating)		40,071		43,559		53,095
Leasing of land and other surfaces to airlines outside the terminal (operating)		3,179		3,154		6,013
Leasing of check-in desks and other terminal space		7,559		4,090		809
Leasing of desks and other terminal space for ticket sale.		6,212		6,294		5,764
Airport passenger services:
Domestic passenger charges		1,823,481		2,078,059		2,552,169
International passenger charges		1,548,455		2,404,331		3,210,822
Airport real estate services and rights of access to other operators		28,882		28,709		33,192
Complementary services:
Catering services		8,352		16,601		21,286
Other third-party ramp services rendered to airlines		25,746		35,670		42,283
Traffic and/or dispatch		18,868		37,362		55,402
Fuel supply or removal		1,672		117,162		195,458
Third-party airplane maintenance and repair		5,250		7,620		11,280
Total regulated revenues included in the maximum rate		3,925,736		5,419,022		7,037,920
Regulated revenues not included in the maximum rate:
Car parking charges		230,039		251,468		254,108
Recovery of cost over aeronautical services		136,891		115,273		126,513
Recovery of cost over non-aeronautical services		17,364		31,976		35,721
Total regulated revenues not included in the maximum rate		384,294		398,717		416,342
Total regulated revenues		4,310,030		5,817,739		7,454,262

F-62

	2014		2015		2016
Unregulated revenues(1)
Commercial concessions:
Retail operations		78,924		125,481		186,849
Food and beverages		76,927		118,910		138,664
Duty free		103,857		226,226		312,569
VIP lounges		7,403		21,021		28,418
Financial services		17,873		28,671		36,537
Communications and networks		11,288		10,202		12,528
Car rentals		99,371		138,532		177,807
Commercial leasing		20,467		22,912		22,802
Advertising		100,190		129,244		169,762
Time sharing developers		109,297		139,124		172,660
Leasing of space to airlines and other complementary service providers (non-operating)		144,534		205,891		241,025
VIP Lounges		38,296		65,045		112,042
Royalties		—		—		532
Revenues from sharing of commercial activities:
Retail operations		24,277		50,432		87,845
Food and beverages		35,434		50,537		81,455
Duty free		11,382		21,391		36,331
Financial services		297		721		726
Car rentals		6,185		8,904		20,914
Access fee for ground transportation		28,154		46,145		61,267
Non-airport access fees		21,571		28,696		60,128
Services rendered to ASA		21		3		82
Various commercial-related revenues		18,425		12,447		16,319
Others		75		—		—
Total unregulated revenues		954,248		1,450,535		1,977,262
Total aeronautical and non-aeronautical services	Ps.	5,264,278	Ps.	7,268,274	Ps.	9,431,524

(1) Unregulated revenues are earned based on the terms of the Company’s operating lease agreements. Lease agreements are based on either a monthly rent (which generally increases each year based on the National Consumer Price Index (INPC) or the greater of a monthly minimum guaranteed rent or a percentage of the lessee’s monthly revenues. Monthly rent and minimum guaranteed rent earned on the Company’s operating lease agreements are included under the caption “Commercial concessions” above. Revenues earned in excess of the minimum guaranteed rent are included in the “Revenues from sharing of commercial activities” caption above (Note 33).

Revenues from improvements to concession assets are recognized with respect to the additions and improvements made for the Company, which are committed under the MDP, and is a requirement of fulfillment. Revenues for the years ended as of December 31, 2014, 2015 and 2016 accounted for Ps. 281,874, Ps. 838,635 and Ps. 1,676,037, respectively.

22. Cost of services

Cost of services for the years ended December 31, 2014, 2015 and 2016 was composed of the following:

	2014		2015		2016
Employee costs (Note 24)	Ps.	393,537	Ps.	502,794	Ps.	584,560
Maintenance		223,687		302,203		346,805
Safety, security and insurance		192,932		249,752		282,310
Utilities		147,793		192,158		222,891
Other		203,639		311,351		345,805
	Ps.	1,161,588	Ps.	1,558,258	Ps.	1,782,371

F-63

23. Depreciation and amortization

Depreciation and amortization for the years ended December 31, 2014, 2015 and 2016 were composed of the following:

	2014		2015		2016
Depreciation	Ps.	183,207	Ps	206,724	Ps	300,880
Amortization		742,013		949,711		1,047,507
	Ps.	925,220	Ps.	1,156,435	Ps.	1,348,387

24. Employee Cost

Employee Cost for the years ended December 31, 2014, 2015 and 2016 was composed of the following:

	2014		2015		2016
Wages and salaries	Ps.	257,824	Ps.	341,134	Ps.	403,312
Other remunerations		43,238		47,612		50,709
Social benefits		39,812		42,354		44,967
Severance payments		4,343		5,102		6,479
Labor union fees		14,887		14,842		15,421
Taxes on employee benefits		5,716		6,053		6,483
PTU		3,882		2,917		10,337
Employee benefits		11,736		13,352		14,598
Others		12,099		29,348		32,254
	Ps.	393,537	Ps.	502,794	Ps.	584,560

25. Cost of improvements to concession assets

As disclosed in Note 3.o, in conformity with IFRIC 12, the Company must recognize the revenues and costs of additions and improvements to concession assets, which they are obligated to perform at the airports as established by the MDP. The cost for such additions and improvements to concession assets is based on actual costs incurred by the Company in the execution of the additions or improvements, considering the investment requirements in the MDP. Through bidding processes, the Company contracts third parties to carry out such construction. The amount of revenues for these services are equal to the amount of costs incurred, as the Company does not obtain any profit margin for these construction services. The amounts paid are set at market value.

Cost of improvements to concession assets are comprised of the following at December 31, 2014, 2015 and 2016:

	2014		2015		2016
Cost of improvements to concession assets	Ps.	281,874	Ps.	838,635	Ps.	1,676,037

26. Other income – Net

Other (income) expenses is comprised of the following at December 31, 2014, 2015 and 2016:

	2014			2015			2016
Recovery insurance	Ps.	(76,192	)	Ps.	(200,884	)	Ps.	(2,903	)
Bargain purchase gain		—			(189,744	)		—
Other services provided by DCA		—			(30,418	)		—
Sale of fixed assets		(433	)		(5,672	)		(4,493	)
Other income		(17,888	)		(14,150	)		(11,021	)
Total other income	Ps.	(94,513	)	Ps.	(440,868	)	Ps.	(18,417	)
Repair of damaged by natural disasters		43,822			176,073			—
Loss on sale of assets		1,241			4,310			5,566
Other expenses		6,026			5,873			12,556
Total other expenses		51,089			186,256			18,122
Other income – Net	Ps.	(43,424	)	Ps.	(254,612	)	Ps.	(295	)

F-64

In 2015 repairs due to Hurricane Odile at airports in San Jose del Cabo and La Paz, Baja California Sur were completed and the amount insured were received.

27. Finance cost – Net

The net finance (cost) income is comprised of the following for the years ended December 31, 2014, 2015 and 2016:

	2014			2015			2016
Interest income from cash equivalents	Ps.	51,782		Ps.	81,489		Ps.	182,426
Interest on recovered taxes		4,113			3,465			16,199
Gain on financial investments held for trading purposes		3,375			—			68,261
Other		12,106			5,935			12,684
Total interest income		71,376			90,889			279,570
Interest cost from bank loans		(65,730	)		(71,881	)		(107,680	)
Loss on financial investments held for trading purposes		(10,396	)		(242	)		(2	)
Loss on derivative financial instruments		(340	)		—			—
Commissions for bank loans		(2,617	)		(1,901	)		—
Other financing costs		(7,518	)		(8,594	)		(24,620	)
Interest cost for debt securities		—			(126,686	)		(249,406	)
Total interest expense		(86,601	)		(209,304	)		(381,708	)
Foreign exchange gains		15,868			222,292			759,965
Foreign exchange loss		(8,633	)		(560,687	)		(1,260,859	)
Foreign exchange gains (loss) – Net		7,235			(338,395	)		(500,894	)
Finance cost – Net	Ps.	(7,990	)	Ps.	(456,810	)	Ps.	(603,032	)

28. Commitments

a. On December 28, 2009, the SCT authorized the Company’s MDP update for the five-year period from 2010-2014. As of December 31, 2015, the SCT confirmed compliance with 100%.

b. On December 16, 2014, the SCT authorized in Mexico the Company’s MDP for the five-year period from 2015-2019. The table below shows the investments to be made during this period, as approved by the SCT:

Year	Amount committed
2015	Ps.	1,412,232
2016		1,842,569
2017		1,157,684
2018		759,337
2019		306,792
	Ps.	5,478,614

The amounts committed above are expressed in pesos of purchasing power as of December 31, 2012.

In March 2016 the Mexican Directorate General of Civil Aviation (DGAC) approved the MDP committed of 2015.

c. In November 2014, the airport authority in Jamaica, approved capital investments to be made of USD$ 37,940,000 for the period April 2015 to March 2020. Compliance with MBJA capital investments must be made for the period rather than annually. During 2015 and 2016 capital investments were USD$ 659,000 and USD$ 768,832, respectively.

F-65

29. Contingencies

a. Several municipalities have filed real estate tax claims against some airports in Mexico related to the land where the airports operate. Based on the opinion of its external legal counsel, the Company believes that there are no legal grounds for such claims. Therefore, the Company has initiated legal proceedings to invalidate the claims, and, where applicable, related foreclosures or other actions. Although no assurance can be given, the Company does not expect the resolutions to have any adverse effects on its consolidated financial position or profit or loss and other comprehensive income.

On November 26, 2014, the Tijuana municipal authority issued a requirement for payment of property tax for the period from 2000 to 2014 in the amount of Ps. 234,780, which was challenged again by the Company on December 19, 2014. A jurisdictional court granted the Company the suspension against acts of municipal authority establishing the amount of Ps.234,780 for a bond as collateral, which has been challenged by judgment of invalidity as the Company believes that in previous proceedings it is already guaranteeing part of the amount set by the Court.

On February 26, 2013, the municipal authorities of Manzanillo, required the Manzanillo airport to exhibit several documents and answer several questionings in order to require a property tax payment for the past five years, related with commercial areas and parking lot. On March 20, 2013, the Manzanillo airport filed a judicial annulment lawsuit against this requirement. On June 3, 2015 the Administrative Court declared null and void the litigation procedure and the Company is waiting for the authority to comply with the final judgment. This matter has not yet been resolved by the courts. On August 24, 2015, the Company received a requirement from the respondent authority stating that it has rendered invalid the 020/2013 requirement dated February 26, 2013, for which reason the decision rendered in this proceeding was favorable.

As the Company and its legal counsel believe that these tax claims are not in accordance with the law, GAP proceeded to file an annulment against the municipal authorities, which is pending resolution. Because, previous judgments in this and other airports have been resolved favorably for the Company, GAP and its legal counsel believe that no present obligation currently exist, therefore the Company has not recognized any provision regarding these matters.

b. In 1970, the Mexican Government expropriated a portion of land occupied by the Tijuana Airport, whereas in Guadalajara airport it occurred in 1975. Before such expropriations, a group of farmers called ejido, one in Tijuana and other different in Guadalajara, owned these lands. The farmers have raised claims against the indemnity payments received from the Mexican Government, and in Tijuana airport requested the reversion of the expropriation. During 2008, the Ejido Tampico in Tijuana airport received an unfavorable resolution, which was appealed. Subsequently the Ejido received a favorable resolution, which may affect the perimeter of the airport, due to the lack of information about the shape of the surface reverted in favor of the Ejido. At the date of these consolidated financial statement, the judgment is still pending to be resolved.

F-66

In the case of Guadalajara airport, the Ejido El Zapote and Santa Cruz del Valle presented an appeal with jurisdictional authorities against the SCT and the Reforma Agraria, regarding the expropriation decrees issued to build the airport. In November 2010, the Court granted the protection of the federal justice to the ejidos El Zapote and Santa Cruz del Valle, in Guadalajara airport, instructing to replace the administrative procedure of expropriation due to a lack of notification to these Ejidos and declared unsubsistence the Concession granted to the Guadalajara airport in 1998, in reference to manage, operate and develop the airport facilities. On July 10, 2012, the Court revoked this resolution and ordered the reinstatement of the actions in order to obtain more documentary evidence, for the trial with the Ejido El Zapote, the trial is ongoing. However, on July 31, 2014, the court issued a favorable sentence for the Ejido El Zapote, which was challenged by the Company. On April 14, 2016, the appellate Court determined conclusively that, while it was true that the right of the ejido to contest the appraisal with which it was compensated had been violated, it also determined that the land could not be returned to the complainant Ejido, as “incongruous” the declaration of invalidity of the concession granted to Guadalajara airport; Currently this procedure is in the execution period pending resolution. In February, March, and September 2016, members of the El Ejido Zapote blocked the access to the Guadalajara airport parking lot, representing a loss of commercial revenues of approximately Ps. 4,100 during the first two months. As first mentioned is pending quantification the loss of income from the blockage generated in September. On the occasion of the granting of amparo, the competent Government Institute based on the expropriation decree of 1975 issued an appraisal of the land, which was notified to ejido El Zapote on January 13, 2017. In case of the Ejido Santa Cruz del Valle the district court determinate the illegality of the expropriation decree against the Federal Government, which was confirmed by the appellate court and is currently under implementation. The legal advisors of the Company considered the Federal Government is working in a substitute compliance, consisting of the payment of compensation in favor of the ejido Santa Cruz del Valle. Once it is completed the implementation process by the Government, the Company will not have any affectation in the operation or in the results of operations of the airport. The ejidos manifestation have not affected the operation of the airport, only loss in come in the parking lot of cars and annoyance to the entire airport community.

On October 1, 2013, the Company received notices for Grupo Aeroportuario del Pacífico, S.A.B. de C.V. and Puerto Vallarta airport and various federal authorities in connection with three legal proceedings filed by the participants in the Ejido Valle de Banderas. The Ejido is claiming the restitution or payment as a compensation in respect of 154 hectares of land comprising this airport, besides the partial cancellation of the concession granted to Puerto Vallarta airport. The Company attended the initial appointment on October 8, 2013, at which obtained a deferral until December 2, 2013 due to the lack of formal notice, which was again deferred, having the first audience on January 24, 2014, where the Ejido ratified the lawsuit and the Company demanded the suspension of this process due to the incompetence of jurisdiction. Therefore, the audience was delayed for three days, in order to give time to the Ejido to provide a rebuttal. The Company estimates that the court involved in this proceeding, located in the State of Nayarit, does not have jurisdiction, because the airport is located in the State of Jalisco, besides this court is not competent to nullify an administrative act, as it is related to the concession of title. The High Court declared competent the Court of Nayarit, sentence which was favorable but currently challenged by the higher federal court and is still pending to be resolved.

If the legal proceedings are resolved in such a way that adversely impact any of our airports, the Company’s management has other legal resources to challenge such resolutions. Additionally, under the Concession agreement, the Company has guarantees providing it with access to the airport’s land, and the Mexican government would be liable for any operating disruption caused by the Ejidos and would have to restore the concessionaire the rights to use public property, and compensate any economic damage to the airport. Thus, in the opinion of the Company and its legal counsel, no present obligation currently exists, therefore the Company has not recognized any provision regarding this matter.

c. Federal, state and environmental protection laws regulate the Company’s operations. According to these laws, the passing of regulations relating to air and water pollution, environmental impact studies, noise control and disposal of dangerous and non-dangerous material has been considered. The Federal Environmental Protection Agency has the power to impose administrative, civil and criminal penalties against companies violating environmental laws. It is also entitled to close any facilities that do not meet legal requirements. As of the date of these consolidated financial statements, the Company does not have any environmental sanctions against it.

d. On April 25, 2011, the Company received a notice from the CNBV in which it initiated a proceeding for alleged violations of Mexican disclosure statutes primarily in connection with disputes among AMP’s Stockholders during 2010. This notice is the first stage of the procedure to impose a fine on the Company. On June 3, 2011, the Company exercised its right to appeal the determination of the CNBV and to file evidence to contest this determination. The authority determined unfavorable judgment and the Company made the payment for Ps. 5,936 and the procedure has been concluded.

F-67

e. On June 17, 2015, the Mexican Supreme Court issued an amparo to the Company upholding the validity of Articles X and XII of the Company’s bylaws regarding the limitations on ownership of its capital stock. Consequently, the challenge initiated by Grupo México and ITM against these articles has been definitively concluded, with the ruling confirming the validity and effectiveness of these articles. On December 11, 2015, both parties were notified of the final judgment, ordering them to refer to the collegiate court of origin to the effect that the Second Civil Chamber of the High Court of Mexico City, who is ordered to confirm articles X and XII of the bylaws of the Company are valid based on Article 48, section III of the Mexican Securities Market Law. In February 2016, the Company was notified of the resolution issued by the Superior Court of Justice of Mexico City, pursuant to the judgment of the Supreme Court of Justice of the Nation, which declared the validity of the company’s by-laws Company, which states that Grupo México, S.A.B. de C.V. and Infraestructura y Transportes México, S.A. de C.V. violate the bylaws by maintaining jointly a percentage higher than 10% allowed in Article X of the Company’s by-laws, therefore, is order of Grupo México, S.A.B. de C.V. and Infraestructura y Transportes México, S.A. de C.V. The sale of the Series “B” shares which exceed 10% of the share capital and instructs that the sale must be made through a procedure called “Public Offering” under the terms of the law and in accordance with Article XII of the statutes. As of the issuance date of the consolidated financial statements, the Company is still awaiting final resolution by the court. In February 2016, the Company, Grupo México, S.A.B. de C.V. and Infraestructura y Transportes México, S.A. de C.V. filed claims of direct amparo against the ruling of the Superior Court of Justice, the essence of both claims for amparo corresponds to that; Grupo México, S.A.B. de C.V. argues that a proceeding was not granted for the sale of the excess shares, the Company argues that Grupo México, S.A.B. de C.V. The payment of costs in favor of GAP, however both claims for appeal have not been resolved at the date of the consolidated financial statement. In the opinion of the Company and its legal counsel, no present obligation currently exists, therefore the Company has not recognized any provision regarding this matter.

30. Operating segment and geographic information

All airports provide similar services to their customers as described in Note 21.

The elimination of the investment of the Company in its subsidiaries is included under “Eliminations” along with any intersegment revenues and other significant intercompany operations.

Following are the segment results, segment asset and segment liabilities for the years ended December 31, 2014, 2015 and 2016.

December 31, 2014	Guadalajara			Tijuana			Puerto Vallarta			San José del Cabo			Hermosillo			Bajío			Other Airports			Other Companies			Eliminations			Total
Total revenues	Ps.	2,053,413		Ps.	737,619		Ps.	760,177		Ps.	977,427		Ps.	235,338		Ps.	264,324		Ps.	517,855		Ps.	—		Ps.	—		Ps.	5,546,152
Total intersegment revenues		—			—			—			—			—			—			—			2,471,308			(2,471,308	)		—
Income from operations		1,171,903			354,217			398,540			513,961			90,660			132,200			95,620			2,145,127			(2,137,139	)		2,765,089
Interest income		25,042			7,445			5,641			8,877			2,864			1,926			5,670			26,829			(12,918	)		71,376
Interest expense		(20,454	)		(5,854	)		(14,448	)		(33,207	)		(4,742	)		(4,097	)		(9,715	)		(7,002	)		12,918			(86,601	)
Depreciation and amortization for the year		(246,144	)		(135,101	)		(127,914	)		(187,048	)		(43,985	)		(41,806	)		(133,536	)		(9,686	)		—			(925,220	)
Income before income taxes		1,178,771			358,343			391,236			492,869			88,856			130,060			91,556			2,162,547			(2,137,139	)		2,757,099
Income tax expense		(243,267	)		(31,950	)		(71,543	)		(112,401	)		(8,902	)		(25,633	)		9,087			(29,969	)		—			(514,579	)
Total assets		7,369,286			4,406,170			3,287,883			3,140,330			1,161,357			1,036,630			3,073,329			26,878,666			(26,067,444	)		24,286,207
Total liabilities		1,037,484			191,378			454,079			690,460			103,823			125,937			285,208			1,415,500			(1,303,553	)		3,000,316
Net cash flows provided by operating activities		1,238,068			386,214			462,926			671,961			114,391			151,921			231,456			203,293			—			3,460,230
Net cash flows used in investing activities		(245,676	)		(108,031	)		(43,649	)		(113,894	)		(21,410	)		(12,240	)		(76,932	)		3,088,792			(3,100,000	)		(633,040	)
Net cash flows used in financing activities		(1,206,521	)		(550,000	)		(422,659	)		(653,959	)		(165,678	)		(154,538	)		(164,000	)		(3,182,519	)		3,100,000			(3,399,875	)
Adittions on non-currents assets		5,432,563			3,038,143			2,465,765			2,589,679			845,792			759,490			2,206,645			34,395			—			17,372,472

December 31, 2015	Guadalajara			Tijuana			Puerto Vallarta			San José del Cabo			Montego Bay			Hermosillo			Bajío			Other Airports			Others Companies			Eliminations			Total
Total revenues	Ps.	2,265,398		Ps.	1,171,362		Ps.	986,010		Ps.	1,240,376		Ps.	995,707		Ps.	315,929		Ps.	374,387		Ps.	757,740		Ps.	—		Ps.	—		Ps.	8,106,909
Total intersegment revenues		—			—			—			—			—			—			—			—			2,869,819			(2,869,819	)		—
Income from operations		1,351,741			483,094			576,686			663,087			531,608			110,333			205,163			117,646			2,552,892			(2,503,650	)		4,088,600
Interest income		23,683			351			14,533			11,409			28,625			8,319			5,427			13,882			165,823			(181,163	)		90,889
Interest expense		(60,567	)		(7,965	)		(25,625	)		(38,980	)		(65,446	)		(10,042	)		(8,757	)		(19,317	)		(153,768	)		181,163			(209,304	)
Depreciation and amortizacion for the year		(264,975	)		(133,100	)		(132,076	)		(169,624	)		(220,601	)		(45,364	)		(43,391	)		(137,814	)		(9,488	)		—			(1,156,435	)
Share of loss of associate		—			—			—			—			—			—			—			—			(13,704	)		—			(13,704	)
Income before income taxes		1,317,731			477,628			573,763			651,470			425,071			109,166			202,117			109,591			2,255,199			(2,503,650	)		3,618,086
Income tax expense		(342,702	)		(96,375	)		(144,532	)		(143,253	)		(73,513	)		(39,829	)		(53,423	)		(10,180	)		56,500			—			(847,309	)
Total assets		7,721,569			4,678,483			3,451,306			3,574,307			3,268,824			1,336,608			1,194,583			3,505,736			31,013,292			(28,271,310	)		31,473,399
Total liabilities		1,568,853			482,440			693,596			1,085,814			1,733,160			274,784			290,126			595,828			6,328,704			(3,735,947	)		9,317,356
Net investment in equity investees		—			—			—			—			—			—			—			—			92,232			—			92,232
actividties		1,030,285			395,064			476,215			624,153			716,970			158,785			227,176			359,969			628,116			288,020			4,904,753
Net cash flows used in investing activities		(216,928	)		(190,172	)		(110,996	)		(162,116	)		(20,744	)		(75,239	)		(59,393	)		(331,656	)		901,976			(3,404,661	)		(3,669,927	)
Net cash flows used in financing activities		(540,728	)		(221,647	)		(292,556	)		(189,722	)		(761,266	)		33,105			(72,934	)		118,811			(1,234,888	)		3,327,995			166,171
Additions on non-current assets		5,397,740			3,125,835			2,447,205			2,608,721			5,322,545			891,345			788,939			2,334,419			144,514			—			23,061,263

F-68

December 31, 2016	Guadalajara			Tijuana			Puerto Vallarta			San José del Cabo			Montego Bay			Hermosillo			Bajío			Other Airports			Other Companies			Eliminations			Total
Total revenues	Ps.	3,126,311		Ps.	1,616,014		Ps.	1,251,283		Ps.	1,605,558		Ps.	1,622,031		Ps.	447,451		Ps.	502,340		Ps.	936,040		Ps.	532		Ps.	—		Ps.	11,107,561
Total intersegment revenues		—			—			—			—			—			—			—			—			3,722,428			(3,722,428	)		—
Income from operations		1,735,192			765,929			729,952			893,382			524,139			152,921			251,071			195,508			3,484,359			(3,497,562	)		5,234,892
Interest income		71,363			11,374			25,813			34,894			—			15,414			11,819			20,509			451,089			(362,705	)		279,570
Interest expense		(96,434	)		(36,905	)		(32,977	)		(56,233	)		(142,405	)		(19,624	)		(15,460	)		(36,374	)		(308,004	)		362,705			(381,708	)
Gain on financial investments held for trading purposes		—			—			—			—			—			—			—			—			68,261			—			68,261
Depreciation and amortization for the year		(268,391	)		(153,645	)		(139,500	)		(188,376	)		(333,924	)		(49,111	)		(47,960	)		(159,275	)		(8,205	)		—			(1,348,387	)
Share of loss of associate		—			—			—			—			—			—			—			—			(11,728	)		—			(11,728	)
Income before income taxes		1,712,126			740,569			731,710			894,925			366,464			148,283			244,333			160,475			3,118,808			(3,497,562	)		4,620,132
Income tax expense		(430,926	)		(175,261	)		(181,021	)		(278,486	)		(97,113	)		(31,073	)		(59,545	)		(22,028	)		8,881			—			(1,266,573	)
Total assets		8,602,939			5,322,674			3,589,999			4,042,519			4,017,963			1,629,746			1,308,647			3,762,056			33,785,689			(30,010,770	)		36,051,462
Total liabilities		2,483,043			1,063,332			893,123			1,507,615			2,000,593			539,716			418,405			899,060			10,226,807			(6,384,800	)		13,646,893
Net investment in equity investees		—			—			—			—			—			—			—			—			21,636			—			21,636
Net cash flows provided by operating activities		1,612,152			444,953			743,818			1,028,391			753,970			176,530			220,897			326,250			334,240			—			5,641,203
Net cash flow used in investing activities		(555,859	)		(427,335	)		(93,100	)		(208,502	)		(45,195	)		(132,778	)		(103,264	)		(278,412	)		3,546,981			(3,519,092	)		(1,816,557	)
Net cash flow used in financing activities		(616,854	)		(15,492	)		(506,223	)		(380,419	)		(272,823	)		125,786			(88,231	)		75,641			(3,611,664	)		3,519,092			(1,771,185	)
Additions to non-current assets		5,757,015			3,411,502			2,456,977			2,638,572			6,117,021			1,002,690			859,982			2,465,893			178,302			—			24,887,954

Non-current assets are comprised of Machinery, equipment, Improvements to leased buildings, Improvements to concession assets, Airport concessions, Rights of use of airport facilities, Other acquired rights and Other assets.

The unrealized exchange loss, net amounts (a non-cash item) disclosed in the consolidated statements of cash flow relates mainly to Other Companies segments, and comes from bank loans denominated in foreign currency

The amounts shown in the eliminations column relates to the intercompany transactions and balances being eliminated to arrive at consolidated figures, such as, personnel services, parking operations, income and financial expenses, equity method, investments in subsidiaries, reimbursements of equity from subsidiaries, dividends received, amongst the most important.

• Geographic information – All business units of the Company are operating in Mexico and Jamaica. The financial information presented above covers the different regions in which these airports operate. Geographic revenue has been based on the geographic location of the customers and geographic non-current assets were based on the physical location of the assets. Montego Bay airport corresponds to the Region of Jamaica with geographic revenue of Ps. 995,707 and Ps. 1,622,031 during the years ended December 31, 2015 and 2016 respectively and non-current assets of Ps. 5,322,545 and Ps. 6,117,021 as of December 31, 2015 and 2016 respectively. Geographic revenue from customers located in Mexico amounted to Ps. 5,546,152, Ps. 7,111,202 and Ps. 9,485,530 for the years ended December 31, 2014, 2015 and 2016 and non-current assets physically located in Mexico totaled Ps. 17,372,472, Ps. 17,738,718 and Ps. 18,802,570 at December 31, 2014, 2015, and 2016 respectively. In 2014, all revenue was generated from customers located in Mexico and all non-current assets were physically located in México. There are no revenues generated from and no non-currents located in Spain

• Major Customers – The Company has no dependence on a particularly customer, as 60.8%, 55.3%, and 51.9% of the total revenues for 2014, 2015 and 2016, respectively, corresponds to the passenger charges that are paid for by passengers upon use of the Company’s airport facilities, that is collected by the airlines to be subsequently reimbursed to the airports, and are covered by the airlines through guarantees issued in favor of the airports. Without the revenues from passenger charges that airlines collect on behalf of the Company, no one customer represents more than 10.0% of the consolidated revenues.

• Major suppliers – The Company has no dependence of particularly supplier, due to, no one supplier represents more than 10% of its capital investments in productive assets and/or of the total operating costs.

31. Foreign currency transactions

a. Transactions denominated in foreign currency for the years ended at December 31, 2014, 2015 and 2016 were as follows:

	2014		2015		2016
	(In thousands of U.S. dollars)
Revenues from aeronautical and non-aeronautical services		29,564		93,431		121,137
Revenues for recovery expenses		287		774		923
Technical assistance fee		5,539		5,682		5,622
Other expenses		4,610		36,616		55,723

F-69

The amounts for 2015 and 2016 include the operations of MBJA.

b. The exchange rates in effect at the dates of the consolidated balance sheets and the issuance date of the consolidated financial statements were as follows:

	December 31,						February 22,
	2014		2015		2016		2017
Mexican pesos per one U.S. dollar (Note 3.p)	Ps.	14.7180	Ps.	17.2065	Ps.	20.6640	Ps.	20.4059

32. Transactions with related parties

According to the definitions of control established in IFRS, the Company does not have a company controlling its operations, however, and according to these definitions, they are considered related parties the following companies:

a. Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V.

AMP represents an entity with significant influence over the operation of the Company, as it has representation on the Board of Directors, participates in the policy-making processes, maintains material transactions, appoints officers and provides essential technical information, but without exercising control over the Company, no other Stockholder fulfills this definition.

Transactions with AMP, carried out in the ordinary course of business, were entered into at prices comparable to those for transactions with independent parties and were as follows:

	2014		2015		2016
AMP, entity with significant influence Expenses:
Technical assistance fees	Ps.	194,228	Ps.	234,867	Ps.	301,820
Services received	Ps.	—	Ps.	2,289	Ps.	2,260

In 1999, GAP and AMP entered into a technical assistance and transfer-of-technology agreement whereby AMP and its stockholders agreed to render administrative and advisory services and transfer industry technology and know-how to GAP in Mexico in exchange for consideration. The agreement’s original 15-year term may be automatically renewed for successive five-year terms, with the approval of the stockholders, unless one party gives a termination notice to the other at least 60 days prior to the effective termination date. Only the Stockholders’ Meeting has the authority to decide the non-renewal or deny the renewal of the agreement. If GAP decides to cancel or renew the agreement, GAP needs the approval of at least 51% of the holders of Series B shares other than AMP or any party related to AMP, accordingly to the participation agreement signed on August 25, 1999 among the SCT, GAP in Mexico, its strategic partner and the Stockholders of the strategic partner.

On August 25, 2014, the initial term of the Technical Assistance agreement between the Company and Aeropuertos Mexicanos del Pacífico, S.A.P.I. de C.V. expired. However, the agreement was automatically renewed for an additional five years, pursuant to Clause 5.2 of the agreement. In relation to the agreement renewal, at a Board of Directors Meeting held on April 23, 2014, the opinion of each of the board’s independent directors was requested with respect to the continuation of the agreement, and the majority voted for the automatic renewal option.

According to the agreement, as of January 1, 2000, the Company committed to pay AMP annual consideration of USD$7,000,000 for the years 2000 and 2001 and, beginning in 2002, the greater of USD$4,000,000 (these amounts are subject to adjustment based on the CPI) or 5% of GAP’s consolidated operating income, defined as earnings before interest income or expense, calculated prior to deducting the technical assistance fee, income taxes, depreciation and amortization.

AMP is also entitled to the refund of expenses incurred in the rendering of services provided for in the agreement.

F-70

b. Otay-Tijuana Venture, L.L.C. (OTV)

On December 9, 2015 the accesses to the new border crossing between Otay, USA and Tijuana, Mexico began operating at the airport in Tijuana. Facilities CBX terminal on the side of the United States of America, are operated by OTV, a related company, which is temporarily paying compensation for the loss of non-aeronautical revenue at the airport. Transactions in the normal course of business were made at prices comparable to those with independent were as follows:

	2015		2016
Non-airport Access rights	Ps.	678	Ps.	33,138

c. The total amounts paid to key management personnel or directors, for the years ended at December 31, 2014, 2015 and 2016 were as follows:

	2014		2015		2016
Management	Ps.	25,328	Ps.	28,001	Ps.	27,704
Independent directors (7)	Ps.	4,366	Ps.	5,168	Ps.	5,779

33. Operating lease agreements

Leasing as the lessee – The rents of operating leases are payable as follows:

	2014		2015		2016
Less than one year	Ps.	9,314	Ps.	18,306	Ps.	18,550
Between one and 5 years		15,537		47,829		39,815
	Ps.	24,851	Ps.	66,135	Ps.	58,365

The Company has leased office space under one five-year operating lease agreement, which was renewed in February 2013 and concludes in January 2018. The monthly rental payments are USD$ 38,277. Base rent is subject to increases according to the NCPI and the CPI.

Rental expense in Mexican pesos amounted to Ps. 5,335, Ps. 7,205 and Ps. 8,837 for the years ended December 31, 2014, 2015 and 2016, respectively.

In addition to the monthly rent described above, the Company has entered into rental contracts for other assets, whose amounts are not material.

Leasing as the lessor

a. The Company receives payments from leasing of spaces inside the commercial area of the airports, which have been classified as operating leases. The future minimum lease payments associated with such leases is as follows:

	2014		2015		2016
Less than one year	Ps.	556,261	Ps.	554,505	Ps.	656,672
Between one and 5 years		857,782		714,262		728,712
More than 5 years		54,200		35,452		1,560
	Ps.	1,468,243	Ps.	1,304,219	Ps.	1,386,944

b. Future minimum rental payments under non-cancellable leases in MBJA are as shown in the following table:

	2015		2016
Less than one a year	USD$	1,223	USD$	10,022
Between one and five years.		5,374		28,193
More than five years		—		6,198
	USD$	6,597	USD$	44,413

F-71

During the years ended December 31, 2014, 2015 and 2016, the Company recognized income from leasing activities of Ps. 809,714, Ps. 1,244,644 and Ps. 1,736,237, in the consolidated statements of profit or loss and other comprehensive income, respectively.

Future minimum rentals do not include the contingent rentals that may be paid under certain commercial leases on the basis of a percentage of the lessee’s monthly revenues in excess of the monthly minimum guaranteed rent. Contingent rentals for the years ended December 31, 2014, 2015 and 2016 are disclosed under the caption “Revenues from sharing of commercial activities” in Note 21.

34. New accounting principles not yet in effect

The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective:

IFRS 9	Financial Instruments2
IFRS 15	Revenue from Contracts with Customers2
IFRS 16	Leases3
Amendments to IFRS 7	Breakout initiative1
Amendments to IFRS 12	Deferred tax assets for unrealized losses1

1 Effective for annual periods beginning on or after 1 January 2017, with early adoption permitted.

2 Effective for annual periods beginning on or after 1 January 2018, with early adoption permitted.

3 Effective for annual periods beginning on or after 1 January 2019, with early adoption application permitted.

IFRS 9 Financial Instruments

IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition and in November 2014 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments.

Key requirements of IFRS 9:

• All recognized financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are generally measured at FVTOCI. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in net income (loss).

• With regard to the measurement of financial liabilities designated as of fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.

F-72

• In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognized.

• The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced.

At the date of these consolidated financial statements, the Company is in the process of performing an assessment on how IFRS 9 Financial Instruments will impact the consolidated financial positions and results of operations. Once such assessment is concluded, the Company will have a reasonable perspective as to what specific impacts this new standard will bring up on the consolidated financial statements.

The Company plans to take advantage of the exemption allowing it not to restate comparative information for prior periods with respect to classification and measurement (including impairment) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 generally will be recognized in retained earnings and reserves as at January 1, 2018. Therefore the financial assets and financial liabilities before January 1, 2018 will keep been accounted under the previous revenue recognition standard.

Even though the impact analysis mentioned above is in process of completion at the date of these consolidated financial statements, the Company believes that, apart from the additional disclosure requirements to be fulfilled, there will not be significant changes on its consolidated financial position and results of operations as compared to the financial information currently reported under the effective accounting standards as of today.

IFRS 15 Revenue from Contracts with Customers

In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective.

The core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:

• Step 1: Identify the contract(s) with a customer

• Step 2: Identify the performance obligations in the contract

• Step 3: Determine the transaction price

• Step 4: Allocate the transaction price to the performance obligations in the contract

• Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation

Under IFRS 15, a Company recognizes revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15.

The Company plans to use the practical records for completed contracts. This means that completed contracts that began and ended in the same comparative period, as well as contracts that are contracts terminated at the beginning of the earliest period presented, are not restated.

F-73

At the date of these consolidated financial statements, the Company is in the process of performing an assessment on how IFRS 15 will impact the consolidated financial positions and results of operations. Once such assessment is concluded, the Company will have a reasonable perspective as to what specific impacts this new standard will bring up on the consolidated financial statements.

Company has recently made a decision to apply the “cumulative effect approach” for purposes of transition to the IFRS 15, which means that the comparative periods presented on the consolidated financial statements will remain unmodified and the Company will only start applying IFRS 15 as of January 1, 2018 and going forward. Therefore the contracts and related revenues before January 1, 2018 will keep been accounted under the previous revenue recognition standard.

Even though the impact analysis mentioned above is in process of completion at the date of issuance of these consolidated financial statements, the Company believes that, apart from the additional disclosure requirements to be fulfilled, there will not be significant changes on its consolidated financial position and results of operations as compared to the financial information currently reported under the effective accounting standards as of today.

IFRS 16, Leases

IFRS 16 “Leases” was issued in January 2016 and supersedes IAS 17 “Leases” and related interpretations. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor accounting, however, remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 is effective for periods beginning on or after 1 January 2019, with earlier adoption permitted if IFRS 15 ‘Revenue from Contracts with Customers’ has also been applied.

Under IFRS 16 a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly and the liability accrues interest. This will typically produce a front-loaded expense profile (whereas operating leases under IAS 17 would typically have had straight-line expenses) as an assumed linear depreciation of the right-of-use asset and the decreasing interest on the liability will lead to an overall decrease of expense over the reporting period.

The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if that can be readily determined. If that rate cannot be readily determined, the lessee shall use their incremental borrowing rate.

However, a lessee may elect to account for lease payments as an expense on a straight-line basis over the lease term for leases with a lease term of 12 months or less and containing no purchase options (this election is made by class of underlying asset); and leases where the underlying asset has a low value when new, such as personal computers or small items of office furniture (this election can be made on a lease-by-lease basis).

IFRS 16 establishes different transitional provisions, including retrospective application or the modified retrospective application where the comparative period is not restated.

At the date of these consolidated financial statements, the Company is in the process of performing an assessment on how IFRS 16 Leases will impact the consolidated financial positions and results of operations. Once such assessment is concluded, management of the Company will have a reasonable perspective as to what specific impacts this new standard will bring up on the consolidated financial statements.

Company has recently made a decision to early adopt IFRS 16 on January 1, 2018 and to apply the “partial retrospective approach” for purposes of transition to the IFRS 16, which means that the comparative periods presented on the consolidated financial statements will remain unmodified and the Company will only start applying IFRS 16 as of January 1, 2018 and going forward. Therefore the leases before January 1, 2018 will keep been accounted under the previous standard.

F-74

Even though the impact analysis mentioned above is in process of completion at the date of issuance of these consolidated financial statements, the Company believes that, apart from the additional disclosure requirements to be fulfilled, there will not be significant changes on its consolidated financial position and results of operations as compared to the financial information currently reported under the effective accounting standards as of today.

Amendments to IFRS 7 Breakout initiative

These amendments, which form part of the IASB breakdown initiative, introduce additional disclosure requirements to those already in place in order to improve the information provided to users of the financial statements on financing activities. The amendment requires entities to disclose information that allows users of financial statements to evaluate changes in the liabilities arising from financing activities, and although it does not require a specific format, it is indicated that a reconciliation of the liabilities at the beginning and at the Closing with cash flows from financing activities is one way to do this.

The modification will be applied prospectively in the annual periods beginning on or after January 1, 2017, with early application allowed and companies are not required to submit comparative information for prior periods.

Amendments to IFRS 12 Deferred tax assets for unrealized losses

These amendments clarify the principles established regarding the recognition of deferred tax assets for unrealized losses, basically in relation to the following three aspects:

• Unrealized losses on debt instruments measured at fair value whose tax base linked to their cost may give rise to a deductible temporary difference, regardless of whether it is expected to recover the book value by holding the debt instrument to expiration (in other words, assuming a recovery above its fair value) or selling it.

• When estimating probable future taxable profits, it can be assumed that an asset is recovered at a higher value than book value, if such a recovery is probable and is not a deteriorated asset. In any case, in making such an estimate, their have to consider all relevant facts and circumstances, as well as whether there is sufficient evidence.

• To analyze the recoverability of these deductible temporary differences and compare them with future taxable profits, they do not have to include the taxable income resulting from the reversal of such temporary deductible differences.

35. Authorization to issue the financial statements

On February 22, 2017, the issuance of these consolidated financial statements, was authorized by Fernando Bosque Mohíno, Chief Executive Officer, and Saúl Villarreal García, Chief Financial Officer. Consequently, these consolidated financial statements do not reflect events after that date (except for the subsequent event described in Note 36 hereto) and are subject to approval at the ordinary general stockholders’ meeting, where they may be modified based on provision set forth by the Mexican General Corporate Law.

36. Subsequent events

On April 6, 2017, the Company issued fifteen million new five-year debt securities under the ticker symbol “GAP 17” at a nominal value of Ps.100 each, for a total value of Ps.1,500,000, on which interest is payable every 28 days at a variable rate of TIIE-28 plus 49 basis points, and the principal payable at maturity on March 31, 2022. The proceeds from the issuance were allocated to financing the investments set forth in the Master Development Programs for 2017.

* * * * * *

F-75