Citing unclear govt policy, PAL shelves airport project

MANILA, Philippines – The government’s recent rule on ownership of an airport project up for auction may have claimed its first casualty.

Flag carrier Philippine Airlines (PAL) shelved indefinitely its planned $6-billion international airport that would serve as an alternative gateway to the Philippines, due to what it said was an “unclear” policy issued by the Department of Transportation and Communications (DOTC).

The DOTC through Special Bid Bulletin 02-2013 prohibited any airline-related company in a consortium bidding for the Mactan-Cebu International Airport expansion from owning more than 33% of the consortium. The order was actually less strict than the first issued by the agency, which altogether barred airline companies from bidding for the airport project.

PAL President and CEO Ramon Ang said they were serious about presenting a proposal to government for an international airport, but decided to put this on hold due to DOTC’s new rule. The airport was aimed to ease congestion at the main Ninoy Aquino International Airport (NAIA) in Manila.

Ang said, “Our project can coexist with NAIA and even the Clark international airport. I cannot understand the 33% restriction,” he said. The government had long wanted to develop Clark as the Philippines’ next premier gateway.

Ang said they would shelve their project until “everyone puts their cards down.”

He said PAL—jointly owned by tobacco magnate Lucio Tan and diversified conglomerate San Miguel Corp., which Ang also heads—would wait for clear policy from the Aquino administration on the establishment of airports.

Rule on Cebu airport relaxed

DOTC Secretary Joseph Emilio Abaya earlier explained their decision to ban airlines from joining the bidding for the P17.5-billion expansion of the Cebu airport.

His main reason was inherent conflict of interest. For instance, he said a winning airline bidder might assign its rival carriers airport facilities located in the worst areas.

Abaya softened his stance after airline companies raised howl over the rule and his fellow Cabinet members expressed concern over the rule’s effect on foreign investments.

San Miguel, which owns PAL, and JG Summit Holdings Inc., which owns budget carrier Cebu Pacific, were competing for the Cebu airport.

Ang however was still concerned even if DOTC relaxed the rule, citing the limitation on ownership of the winning consortium.

If not Clark, then what?

The government was eyeing to develop the Clark international airport to shift traffic away from NAIA. However, several concerns such as the absence of a rail system that would speed up travel time between Clark and Manila, were in the way.

As government waivered on its plan, PAL disclosed it wanted to build its own airport, which was projected to handle about 4 times the number of NAIA flights per hour.

Ang said this was part of their group’s aggressive expansion in the infrastructure sector. – Rappler.com