NAIA overhaul about to start
SAN MIGUEL-LED New NAIA Infrastructure Corp. (NNIC) will take over operations and maintenance of the Philippines’ main airport starting Sept. 14, kicking off modernization efforts that include road improvements, terminal expansion, and new parking facilities to improve passenger experience and airport capacity.
“In a few days, NAIA (Ninoy Aquino International Airport) operations will be turned over to us to manage. We can begin the work of modernizing our airport. We know this is a big responsibility and there will be challenges, but we are committed to delivering on our promise,” SMC President and Chief Executive Officer Ramon S. Ang said at the Economic Journalists Association of the Philippines Aviation forum on Monday.
The NNIC is composed of San Miguel Corp. (SMC), one of the Philippines’ largest and most diversified conglomerates; RMM Asian Logistics, Inc., a logistics company involved in infrastructure projects; RLW Aviation Development, Inc., a Filipino firm specializing in aviation development; and Incheon International Airport Corp., the operator of South Korea’s main international airport.
The Manila International Airport Authority (MIAA) will continue to serve as the airport’s regulator.
Upon takeover, the group will begin the rehabilitation, upgrade, and expansion of the airport, according to NNIC General Manager Angelito A. Alvarez.
The upgrade and expansion of NAIA will take time, Mr. Ang said, adding that the company is committed to delivering improvements within the first six months.
Mr. Alvarez outlined the group’s plan for NAIA which is divided into three main aspects: the initial work which will happen in a four-year period; mandatory works which will take place within five years; and Civil Aviation Authority of the Philippines (CAAP) works taking place within six years.
The initial work for NAIA includes rehabilitating and enhancing existing facilities, with projects such as road improvements, terminal expansion, and new parking facilities.
SMC previously said that it would be spending between P3 billion and P5 billion on the construction of a new off-ramp from the NAIA Expressway to Terminal 3, while also considering the implementation of curb pricing at the airport.
The mandatory works for NAIA, as outlined in its concession agreement, also include safety and security upgrades and the installation of new systems like pre-departure sequencing and a lightning warning system.
“In terms of CAAP work, over the next six years, we will upgrade CAAP systems,” Mr. Alvarez said.
The planned CAAP upgrade aims to enhance air traffic control facilities, communication, navigation surveillance, and air traffic management systems.
“We will also be investing in training and documentation support for the traffic controllers. This is one of the problems that the government is facing because our air traffic controllers are being pirated in other countries,” Mr. Alvarez said.
“We are eager to engage with NNIC and the government to address the potential adverse effects on travel demand and to ensure that the interests of both airlines and passengers are represented,” Air Carriers Association of the Philippines and Board of Airline Representatives said in a statement.
“I believe SMC has the competence and the capability to modernize NAIA and make it at par with other modern airports worldwide. But that’s not easy and requires considerable investment over the medium and long term, which is a decision they have to make in time,” said Nigel Paul C. Villarete, senior adviser on public-private partnership (PPP) at the technical advisory group Libra Konsult, Inc.
For Rene S. Santiago, former president of the Transportation Science Society of the Philippines, SMC and its partners are expected to deliver on their commitments under the agreement with the government.
“However, I anticipate slow progress,” he added.
TRANSFERS, HIGHER FEES
SMC is also working on airline reassignment, which aims to improve passenger queues.
“We have engaged several consultants already for terminal reassignments. This is something that will surely happen,” Mr. Alvarez said.
He said the plan is to designate Terminal 1 for Philippine Airlines, Terminal 2 for domestic flights, Terminal 3 for all foreign airlines including Cebu Pacific and AirAsia Philippines’ international flights, and Terminal 4 for AirAsia Philippines’ domestic operations.
“We’re now currently in Terminal 3, that’s international. We will keep it. And then we are now currently in Terminal 2 for domestic, which we are moving to Terminal 4,” AirAsia Philippines President and Chief Executive Officer Ricardo P. Isla said.
Mr. Alvarez said the administrative order mandating the increase in passenger service change has been signed and will take a year to be fully effective.
He said the passenger service charge will be important to NNIC, as its 82.16% gross revenue share to the government excludes passenger service charge.
“These adjustments were determined by the government together with the Asian Development Bank and benchmarked against global standards. Long before the bidding for the NAIA PPP project even began, whoever won the bidding would have to implement this,” SMC’s Mr. Ang said.
To recall, the Department of Transportation said that the planned rate hike is within the approved parameters, terms, and conditions specified in the tender documents for the NAIA rehabilitation project.
Passenger service charges, also known as terminal fees, are imposed on departing passengers.
Currently, domestic travelers pay a passenger service charge of P200, while foreign travelers pay P550. These fees are expected to rise to P390 and P950, respectively.
Further, Transportation Secretary Jaime J. Bautista said previously that other planned increases will happen before yearend.
This means that landing and take-off fees levied on airlines will also increase by the end of the year.
Landing and take-off fees, on the other hand, are charges levied for airport facilities and services during aircraft landings and takeoffs. Both fees contribute to the total cost of airfares paid by passengers.
The upgrade of NAIA is expected to boost its capacity from the current 35 million passengers per annum to about 62 million passengers per annum.
For this year, Mr. Alvarez said the total passenger volume for NAIA is expected to be around 51 million for this year.
Data from CAB showed that air passenger volume increased by 25.6% to 29.52 million in the first semester from 23.5 million a year ago. Of this, 15.77 million were domestic passengers, while 13.75 were international passengers.
“Well, in terms of the 7.7 million tourist arrivals, as you know at the moment, there are quite a number of headwinds that we are experiencing,” Tourism Undersecretary Verna C. Buensuceso said.
She said the government is still hoping to achieve 7.7 million international visitors within the year despite headwinds like geopolitical tensions between countries through the modernization of the country’s main airport.
The government anticipates earning P900 billion from the NAIA landmark project, equating to P36 billion per year. This figure is 20 times larger than the P1.17 billion annually remitted by the MIAA over the 13 years through 2023, according to the Transportation department. — Ashley Erika O. Jose