PAL eyes transfer to Terminal I when NAIA-3 opens

Flag carrier Philippine Airlines (PAL) may transfer to Ninoy Aquino International Airport’s old terminal once the government finally opens NAIA’s new but mothballed Terminal 3.

PAL is currently based at the NAIA’s Terminal 2 while all other airlines operate at the old terminal.

Sources at PAL said the airline is not inclined to join other carriers at the new Terminal 3, which the government wants to be operational by November to replace the old terminal.

PAL wants its international and domestic operations under one roof and the old terminal — although rundown — is bigger than Terminal 2, the sources said.

PAL will need more space because it plans to reopen flights to Europe soon, they explained.

The government could also use the NAIA Terminal 2 as a domestic airport, the sources added. The existing domestic airport — like the old NAIA terminal — is rundown and has been described by media commentators as an embarrassment to the country.

PAL officials and engineers from giant plane manufacturers Boeing and Airbus Industrie toured the old terminal last week to see if it would be right for the airline’s operations.

PAL’s fleet is mostly composed of Boeing and Airbus planes. Airline officials will submit their recommendations to PAL chief Lucio Tan in the next few days.

Alfonso Cusi, Manila International Airport Authority (MIAA) general manager, said the proposal opens "possibilities."

"If they choose to transfer their operations to Terminal 1 and leave Terminal 2, then we can transfer the domestic airport to Terminal 2," Cusi told The STAR.

It’s possible for PAL to transfer operations to the old terminal but "that depends on the terms and conditions," Cusi said. He did not elaborate. Cusi sees no problem if PAL does not transfer to Terminal 3, saying it would not seriously affect the new terminal’s financial viability.

Another Tan company, Asia’s Emerging Dragon Corp. (AEDC), is making a bid to operate NAIA’s Terminal 3 and has offered to buy out the stake of Philippine International Air Terminals Co. Inc. (Piatco) in the idle facility, which was built by the consortium. AEDC has offered to compensate Piatco for the cost it incurred in constructing the terminal.

Piatco is asking for over $600 million in compensation after the government expropriated the terminal in December 2004 but the government is contesting the figure.

The final figure is currently being determined by a Pasay City regional trial court, which gave the government permission to take control of the terminal.

AEDC made an unsolicited offer to build and operate the terminal but it failed to match Piatco’s offer.

It argues that it now has the legal right over the terminal following a 2002 Supreme Court ruling on a government petition that nullified Piatco’s "build-operate-transfer" contract because of provisions that the tribunal deemed were detrimental to the government.

AEDC vowed to bring in more huge investments from foreign and local businesses once it takes over the new terminal, AEDC legal counsel Perfecto Yasay said in a statement issued to the media yesterday.

Yasay said foreign business groups from Europe, the United States and China have expressed confidence in AEDC’s capability to run the terminal.

He declined to identify these investors. "They will only come in and invest hundreds of millions of dollars on condition that the government will recognize the right of the AEDC to operate and manage NAIA 3."

In a letter to Transportation Secretary Leandro Mendoza, Yasay had asked the government to resolve its legal dispute with Piatco, including AEDC’s claim to operate the terminal.

AEDC also views the inclusion of Piatco’s new management, Manila Hotel Corp., in the consortium with "grave concern," Yasay said.

He said Manila Hotel Corp.’s buyout of Frankfurt airport operator Fraport AG’s stake in the consortium undermines AEDC’s right to operate the terminal, being the "legitimate and unchallenged bidder of the project."

Manila Hotel Corp. gained control of Piatco after it bought the equities of Fraport as well as those of two other foreign partners of the consortium, which built the new terminal. Fraport’s decision to accept Manila Hotel Corp.’s $200-million offer for its stake in Piatco effectively ends its dispute with its local partners in Piatco and with the government.

The $650-million terminal had been mothballed since 2003 when President Arroyo revoked Piatco’s contract with the government on the grounds that certain terms were illegally renegotiated by her deposed predecessor Joseph Estrada in 1998.

Fraport, which had been seeking over $400 million in compensation for the terminal project, took its case to arbitration in Washington while Piatco has a separate arbitration case in Singapore.

Piatco’s new management and the government have begun talks over a possible settlement of their drawn-out legal battle to expedite government efforts to have it operational before the end of the year. — With Michael Punongbayan