‘The Deal of the Century’

San Miguel Corp. chair and CEO Ramon S. Ang (RSA) vows to make the New Ninoy Aquino International Airport (New NAIA) one of the best, if not the best, in Asia. By 2025. Asia is where the world’s best airports are.

On Sept. 14, 2024, the diversified beer, food, power and infrastructure conglomerate and the Philippines’ biggest company took over management and operation of NAIA from the government.

Operating NAIA for the next 15 years, with a 10-year renewal, SMC guarantees to pay the government P911.11 billion. Plus spend P170 billion in capital expenditures – a total of P1,081.1 billion or P1.081 trillion.

The P1.08 trillion makes SMC’s NAIA the “Deal of the Century.”

The NAIA privatization in March 2024 is the fastest ever privatization in Philippine history. It is also the largest in value. In terms of economic impact and in making life comfortable for the 50 million Filipinos who travel by air, New NAIA is the most profound, an unprecedented game changer.

Additionally, RSA has committed to spend, without cost to the government, P735 billion to build the New Manila International Airport (NMIA), in Bulakan town, Bulacan, ten minutes north of Manila, to service up to 100 million passengers a year.

Under a 25-year contract, SMC will also invest P8 billion to expand the Boracay airport in Caticlan to service seven million passengers a year.

By spending P1.08 trillion on NAIA, P735 billion for NMIA in Bulacan and P8 billion for Boracay’s airport, RSA is indisputably the Philippines’ biggest airport investor. He is also the biggest investor in the country, foreign or domestic, bar none, with his total airport investments alone of P1.82 trillion. SMC is already the Philippines’ biggest private infrastructure company.

New NAIA will service 62 million passengers a year, more than double its current design for 29.5 million passengers. This makes NAIA ASEAN’s biggest airport, and probably the best.

RSA guarantees to deliver a totally modern, almost new NAIA – with a new Terminal 5 (on the Philippine Village Hotel property), a new taxiway, eight floors of parking space and yes, new toilets, elevators, escalators and airport seats. RSA has built a VIP Lounge for OFWs with free meals, beds and showers. He also arranged a dedicated power line from Meralco (the P1.25-billion cost is courtesy of Manuel V. Pangilinan, now a strategic partner) to ensure no airport blackouts and shutdowns.

At NAIA, passenger fees, terminal fees, airline parking fees, car parking fees and rental rates are going up exponentially, commercial space from P23 per square meter to P700/sqm, overnight parking from P300 to P1,200. Cars pay P50 for the first two hours. Old fees were stagnant for 25 years.

Except for the passenger departure fees, SMC gets less than P18 for every P100 of NAIA revenues. More than 82 percent goes to the government.

The San Miguel Aeroport and economic zone will be partially operational in 2028, just as Ferdinand R. Marcos Jr. is winding down his six-year presidency. Thus, RSA will deliver to BBM three modern gateways – New NAIA, NMIA (Bulacan airport) and Boracay.

Why is RSA doing all these things? “It’s not for profit,” he demures. “It’s to help the Filipino enjoy a comfortable life. It’s for nation-building.”

In 2023, Singapore’s Changi serviced 58.94 million passengers; Bangkok’s Survarnahumi, 51/69 million; Jakarta’s Soekarno-Hatta, 49 million; Malaysia’s Kuala Lumpur, 47.24 million and NAIA, 45.3 million.

Domestic or Filipino passengers number over 50 million today. That could double in three years, with new and comfortable airports, cheap fares, better services and more destinations. Build the airports and the tourists will come.

RSA predicts with NAIA’s modernization and the new Bulacan airport, tourism volume could rise to 75 million airline passengers a year – 50 million domestic and 25 million international.

On average, each tourist creates three jobs. So 25 million foreign arrivals alone will create 75 million jobs, according to RSA’s math. That’s a great boost to employment and to the economy.

Each foreign tourist spends an average of $2,000 and stay in the Philippines an average of 11 days. So 75 million spending $2,000 is $150 billion, enough services income to wipe out the country’s foreign debts of $125 billion in one year, with still some money to spare.

RSA believes that with larger and modern airports, more airline frequencies and more choices for passengers, airline fares will be lower and the travel experience will be exceedingly pleasurable.

The cost of a round trip ticket to Boracay from Manila, for example, could be cut dramatically, from the present average of P15,000. In Europe, with huge airports and low-cost carriers, a two-hour plane trip could be bought for $100, discounted.

Using San Miguel’s expressways, RSA will connect the south and north of Manila regions within ten minutes of each other, from km zero, or the Manila Hotel, triggering a travel and logistics boom.

NAIA is the gateway to 90 percent of total departures and arrivals in the Philippines. At present, aviation, as a component of the Philippine Gross Domestic Product (GDP), contributes 3.4 percent ($10.4 billion, plus 1.2 million in jobs) in economic value added, according to IATA (International Air Transport Association).

With 62 million passengers from NAIA, 100 million from NMIA and seven million from Boracay, RSA will service up to 169 million passengers a year. Consequently, aviation’s share of GDP is expected to triple, to 10.3 percent of GDP. In three years, Philippine GDP will hit P32 trillion. A tenth of that is P3.2 trillion.

Already, SMC revenues are over five percent of GDP. Add the 10.3 percent economic contribution of NAIA operations and SMC will account for more than 15.3 percent of GDP, or P4.9 trillion of a P32-trillion GDP.

Happy New Year!

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