The best is yet to come

With the situation turning from bad to worse at the Ninoy Aquino International Airport (NAIA), it’s not surprising that there is growing anticipation for the takeover by the San Miguel Corp. (SMC) group of NAIA’s rehabilitation and operation.

Just last month, NAIA was named as the fourth worst gateway in Asia and the Middle East by business class travelers, according to a list drawn up by BusinessFinancing.co.uk. NAIA obtained a score of 2.78 on a scale of one to 10, with one being the highest.

Meanwhile, its Southeast Asian counterparts were adjudged as some of the best, with Noi Bai International Airport in Vietnam and Changi Airport in Singapore being ranked as the world’s best and second best with average scores of 6.8 and 6.6 respectively.

Then there is the pest problem.

NAIA passengers have posted photos and videos of bed bugs, cockroaches, and rats at the NAIA terminals on social media. And because of this, the Manila International Airport Authority (MIAA) warned the existing pest control and housekeeping contractors to improve their performance or risk getting blacklisted from future biddings, especially with most of their contracts due to expire this year.

Last Feb. 16, the SMC SAP & Co consortium received the notice of award for a 15-year concession to rehabilitate and operate NAIA. The contract can be extended by up to 10 years depending on the group’s performance, which would be tasked to invest at least P122.3 billion during a 25-year period.

 For the first six years of the concession, the group would be required to spend a minimum of P88 billion to upgrade the services of the airport.

SMC SAP & Co bagged the P170.6 -billion contract after offering the government the highest revenue share of 82.16 percent. GMR Airports consortium offered the government a 33.3 percent revenue share while the Manila International Airport Consortium pitched the lowest at 25.9 percent. 

The consortium is composed of San Miguel Holdings Corp., RMM Asian Logistics Inc., RLW Aviation Development Inc. and Incheon International Airport Corp. IIAC of course is the developer and operator of the Incheon International Airport, the largest airport in South Korea which opened in 2001.

In total, the government expects to raise more than P900 billion in revenues from turning over the operations and maintenance of the country’s premier gateway. Broken down, the government will receive over 82 percent share in earnings from NAIA’s operations excluding passenger service charges, an upfront payment of P30 billion and annuity cost of P2 billion.

The winning consortium is mandated to elevate the passenger capacity of NAIA to at least 62 million per year. According to Transportation Secretary Jaime Bautista, the Philippines would require an airport that can accommodate as many as 100 million passengers per annum by 2050.

Bautista emphasized that NAIA is a very congested airport with a capacity of 35 million passengers a year but handling almost 50 million.

Government plans to sign the concession agreement this month and give the group a maximum of six months to arrange financing. Turnover to the new operator is expected by the second half of 2024.

The P170.6-billion NAIA PPP Project will cover all facilities of the country’s main gateway, including its runways, four terminals and associated facilities. It is expected to improve overall passenger experience and increase the current annual passenger capacity of NAIA to at least 62 million from the current 32 million, as well as increase air traffic movement from 40 to 48 per hour. The project aims to address longstanding issues such as inadequate capacity of passenger terminal buildings and restricted aircraft movement.

Just how the consortium will achieve all these lofty goals while giving so much revenue share to the government remains to be seen.

But recently, SMC president and CEO Ramon Ang gave glimpses of what to expect.

 Ang recently told journalists that in 30 months or even less, the group will deliver a totally modern NAIA with a new terminal building, runway, taxiway, eight floors of parking space and new toilets, with the new taxiway to be built in 24 months and the new terminal to be completed in 30 months, The STAR columnist Tony Lopez revealed.

 Lopez said in the same column what Ang shared about NAIA having three runways soon. Runway 13/31 will be moved backward by 300 meters to provide elbow room for Runway 06/24 so that the two runways will no longer intersect and thus can operate independently of each other. “Separating the two runways plus an additional taxiway for 06/24 has the potential to double NAIA’s aircraft movements in three years. Meanwhile, part of the present Terminal I will be eaten up by expanded runways and a new taxiway. The existing Lufthansa Maintenance Apron will be converted into a Taxiway Lima. The three major terminals (I, II and III) will be connected by walkalators instead of buses,” he added.

Lopez also quoted Ang as saying that from year one, the group already expects to make money even after paying government its 82 percent share, with an EBITDA of P1.1 billion in the first year, P9.5 billion in the second, P10 billion in the third, P12 billion in the fourth and so on.

There is definitely no way to go for NAIA but up. But how high and grand it can soar is now in the hands of the SMC-led consortium. We have no doubt though that the best is soon to come for NAIA.

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