‘Cebu airport expansion comes late’

CEBU, Philippines – Officials of the Mactan-Cebu International Airport are thankful rules for bidding the contract to expand the country’s second busiest airport were finally approved, paving the way for the long-delayed project.

The P17.5-billion project, which involves the construction of a new world-class passenger terminal, among others, “should have been done 10 years ago,” said Nigel Paul Villarete, General Manager of the airport authority.

“The existing terminal was built in 1995 and it had a capacity of around 4.5 million passengers per year, which was breached in 2010 when we exceeded 5 million passengers,” said Villarete. “Looking at the timeline, it takes about 5 to 7 years [to build a new terminal].”

Still, better late than never, he said, noting it will greatly help in easing congestion at the airport.

The Aquino administration gave the go signal for the project to proceed in September 2012.

Pre-qualification for the airport project was supposed to have been held January 28, 2013 but it was moved to February 13 after the Department of Transportation and Communications (DOTC) agreed to review its original bidding rules, which barred companies with interests in airlines from joining.

Final rules released on Friday, February 1, allowed airlines to participate in the bidding but set “safeguards” to avoid conflict of interest.

Submission and opening of qualification documents will be held on February 27 instead of the initial February 18 schedule.

The first phase of the project will involve the construction of a new passenger terminal building with capacity of 8 million passengers a year as well as the operation and maintenance of the old and new facilities. Phase two, which will be done in 2023, will involve the expansion of the new and existing terminals.

Airport congestion

The expansion will allow the airport to accommodate more passengers.

The existing terminal building has a capacity of handling 4.5 million passengers annually on two wings—the domestic and international.

“The terminal right now sees up to 6.8 to 6.9 million passengers. So you can imagine how congested the terminal is. That’s the reason why we’re building a new terminal,” said Villarete.

Passenger traffic is growing at a rate of 14% for domestic and 11% for international.

“Projection for the next 10 to 20 years assuming that we have to be conservative in doing so, is roughly 7% for both domestic and international. For every 3 domestic travellers, we have one international traveller,” said Villarete.

According to the DOTC, this growing number of passengers has resulted in inconvenience and substandard service in the terminal, which also lacks the ability to handle more passengers in peak hours.

“Growth in aviation sector in the Philippines has largely moved in tandem with economic growth. In terms of distribution of passenger traffic, 4 major international airports handle more than 70% of total passenger traffic of the Philippines. Mactan-Cebu International Airport is the second most important airport for the Philippines in terms of passenger traffic,” the DOTC said.

Bidders

Several companies including diversified conglomerate JG Summit Holdings Inc., San Miguel Corp., the tandem of Ayala Corp. and Aboitiz Equity Ventures Inc., as well as Metro Pacific Investments Corp. expressed interest in the airport project.

“I’m happy with the kind of bidders we had. Looking back on the last two to 3 years you can really see that’s there’s a lot of liquidity in the economy right now and a lot of interest. I would attribute this because of the anti-corruption drive of the government,” said Villarete.

The bidding process suffered a delay after the DOTC decided to review the rules, which earlier disqualified JG Summit and San Miguel from bidding, as these companies own airlines Cebu Pacific and Philippine Airlines, respectively.

The main reason for the exclusion was conflict of interest. “An airline or airport operator can make availability of slots, gates, counters, lounges, baggage handling more difficult to their competitors,” explained DOTC Secretary Joseph Emilio Abaya.

However, Abaya overturned his decision after his peers in the Cabinet reminded him of the efforts to attract foreign capital in public-private partnerships.

The final bidding rules allowed airlines and airline-related entities to bid for the Mactan-Cebu airport expansion, but they cannot be directly involved in the entity that will eventually operate the airport.

Increasing tourist figures

This airport expansion is expected to boost Cebu’s tourism industry.

“Marketing efforts were not prioritized before. Clark has been marketing itself in the last few years. We only recently started marketing ourselves through the road shows because of that we saw the importance of marketing and targeting china India etc. in the next few years,” said Villarete.

The industry has been growing steadily over the last few years.

“One of the unique advantages of Cebu City, which has also contributed to rapid growth in air passenger traffic over the last few years, is the fact that it is a hub for industrial and tourism sectors and attracts both business as well as leisure travellers from across the world,” said the DOTC in a report.

Around 1.6 million tourists visit Cebu per year. Almost 50% of the tourists in Philippines from East Asia travel to Cebu for business or leisure purposes. Overseas Filipinos also travel extensively to this region. These travellers form the mainstay of passenger traffic for Mactan-Cebu International Airport, said the Department of Tourism (DOT).

The DOT is in the process of creating a new National Tourism Development Plan (NTDP), which will lay down the country’s tourism development plans and direction until 2016. In the NTDP, there are plans for improvement of tourism infrastructure, strengthening and development of new tourism destinations, divergence of tourism products and enhancement of tourism human resources.

The Cebu City Tourism Commission has also continued to focus on initiatives such as hosting annual festivals to enhance the tourist inflow in the region. Among the festivals planned are the Barangayan Festival, Chinese Moon Festival in September, Christmas Tree Festival during Christmas season, Food Festival, Flower Festival and Water Sports Festival in summer.

“If you go by the statistics of passenger arrivals the bulk still is coming from domestic passengers so safe to say to domestic tourist arrivals are very strong. We are also getting data telling us that there’s growth in terms of foreign arrivals. This is led by the Korean, followed by the Japanese, and then we’re seeing growth from non- traditional markets like Russia and Europe. And these are the markets we are trying to attract, the long stay big spender tourists,” said Francis Monera, VP, Visayas of the Philippines Chamber of Commerce and Industry. –Rappler.com