The new NAIA

Six of the country’s richest families or largest conglomerates have joined forces. The Manila International Airport Consortium (MIAC) has offered to modernize and manage the present Ninoy Aquino International Airport for 25 years until 2048. 

MIAC has offered $5 billion – $1 billion (P57 billion upfront) to the government, $1 billion (P57 billion) to rehab NAIA’s three terminals (they will be conjoined) and $3 billion over the next 25 years or $120 million per year.  Effectively, MIAC will just be spending $2 billion; the promised $3-billion balance will come from operating the NAIA itself for 25 years. 

NAIA sits on 63 hectares of prime land that is cheek by jowl to Makati, the business capital. I value the vast airport land at $4 billion, as land per se; its value rises as an aviation hub.

MIAC claims that in 25 years, they will bring benefits to the economy of P446 billion or $7.82 billion in “gross economic values.” 

I find the $2-billion offer dirt cheap. And the P446-billion or $7.8-billion economic benefits even cheaper. The P446 billion includes: P100 billion from gross value-added in tourism activities, P152 billion from increased passenger comfort, P60 billion from passenger time savings, P65 billion from aircraft decongestion savings and P65 billion from new local jobs.

Aviation already contributes 3.4 percent of GDP or P840 billion out of a normal year GDP of P24 trillion. Of that P840 billion, 60 percent or P504 billion is contributed by NAIA’s three terminals and ancillary industries. 

This implies that even without improving NAIA, the economy already gets P506 billion in “gross economic benefits.” So why does MIAC offer only P446 billion for 25 years when even with nobody lifting a finger, the present NAIA already makes for the economy P504 billion every year?

Which means the consortium in its first year of operating the NAIA will get back its $2-billion investments – $1-billion cash to the government and $1 billion in cash to fix its airport facilities to improve passenger “comfort” and reduce passenger “stress.”

Kevin  L. Tan, CEO of the Alliance Global Group, Inc. of Andrew Tan; Cossete Canilao, CEO of Aboitiz InfraCapital of the Aboitiz Group; Cezar Consing, president and CEO of Ayala Corp.; Josephine Gotianun Yap, CEO of Filinvest Development Corp.; BJ Sebastian, treasurer of JG Summit Infrastructure (whose airline is Cebu Pacific) and Jose Gabriel D. Olives, CFO of LT Group (whose airline is PAL) gave a press conference yesterday to explain their unsolicited proposal.

I was asking the group if they could kindly increase the value of their proposal. Before any of them could make a sensible answer, somebody who looks like an Indian grabbed the mike from me. And the open forum was terminated abruptly.

Under its so-called P267-billion masterplan or unsolicited proposal, the consortium aims to more than double NAIA’s passenger capacity, from 31 million passengers per annum (MPPA) to about 70 million by 2048, “enabling the Philippines to transform itself into a regional economic hub.”

Rehab will be in three phases. Phase I, called “Quick Wins,” is to increase capacity to 54 million by 2025 or two years; Phase 2 to 62.5 million by 2028 and Phase 3 to 70 million by 2048.

Phase 2 involves development of the terminal floor area, additional airfield facilities and improved cross-terminal transportation. Phase 3 merely talks of “long-term expansion and development projects to further expand terminal space and airfield capacity.”

There is no talk or plan about NAIA’s two biggest problems – its having only one runway, with a secondary runway forming a letter T to the main runway, and its limit of maximum aircraft movements per hour – 42 planes taking off and landing in 60 minutes, with one runway. The consortium promises to improve aircraft movement to 50 but that is not a firm plan.

In comparison, Ramon Ang’s 2,500-hectare San Miguel International Airport in Bulacan promises to service in five years 75 million passengers with 120 per hour aircraft movements using initially two runways. “The runways are parallel and zero/zero both ends of the runways. There is no restriction in height and noise,” RSA points out.

San Miguel Aerocity’s New Manila International Airport (NMIA) will cost $14 billion to build and involves no tax money in its development.

“The Manila International Airport Consortium recognizes the immense task of transforming NAIA to meet the growing demands of Mega Manila air travel, not only in the here and now but also in the future,” says Kevin Tan, in their press handout.

MIAC Consortium submitted its masterplan to DOTr and MIAA as part of its USP (unsolicited proposal) under the Public-Private Partnership (PPP) program.

The rehabilitation of NAIA is critical to meet a projected explosion in travel demand, the proponents claim.

By 2028, NAIA could see 55 million passengers – well above its declared capacity of 31 MPPA. Before the pandemic, in 2019, NAIA had already registered a peak of 47.9 million.

“The MIAC USP is the fastest route to the rehabilitation and modernization that NAIA urgently needs,” says Canilao, of Aboitiz.

“NAIA’s importance and economic impact cannot be overstated, especially since it has an ecosystem of supporting infrastructure that would take decades for greenfield airport developments to replicate,” says Gotianun-Yap of Filinvest.

“A 25-year concession will show government’s commitment to attract strong foreign and local players for future PPP projects,” notes Olives of the LT Group Inc. “More private sector players will be enticed to participate.”

“The upfront concession payment will strengthen the government’s fiscal position and address other critical priorities such as ongoing pandemic recovery efforts; growing consumer demands for safer, more convenient and efficient travel services and tightening global financial conditions,” says JG Summit’s BJ Sebastian.

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