aviation industry

Winning bidder for NAIA rehab expected in early 2024

Lance Spencer Yu

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Winning bidder for NAIA rehab expected in early 2024

AIRPORT. Passengers at NAIA 1 queue at Immigration on June 16, 2023.

Jire Carreon/ Rappler

The winning bidder will be decided based on which party can offer the most favorable revenue-sharing scheme with the government, after proving that they meet technical requirements

MANILA, Philippines – As the privatization and rehabilitation of the Ninoy Aquino International Airport (NAIA) picks up steam, the Department of Transportation (DOTr) announced that a winning bidder could be proclaimed as early as January 2024.

“The deadline for the submission of the bids is December 27, and the awarding is a month later,” Transportation Secretary Jaime Bautista said during the pre-bidding conference on Friday, September 22.

The winning concessionaire will be tasked to elevate the country’s ailing international airport to global standards, improving the processing time for passengers and upgrading infrastructure.

So far, there are six parties that have bought bid documents, signaling their interest in taking part in the rehabilitation. The six prospective bidders as of September 20 are the Manila International Airport Consortium (MIAC), San Miguel Corporation (SMC), India’s GMR, Turkey’s Cengiz Insaat Sanayi ve Ticaret A.S, Spark 888 Management, and the Asian Airport Consortium.

Bautista also promoted the airport to foreign investors during roadshows in Singapore and Paris, where they attracted around 200 and 50 attendees, respectively.

Who can join the bidding?

While the government is trying to court bigtime investors – both locally and abroad – to take on the project, they did add some restrictions to preserve competition in the aviation industry. For instance, there are ownership limitations for prospective bidders that also own airlines or operate airports in the Greater Capital Region, which include Clark International Airport, the New Manila International Airport, and Sangley Point International Airport.

For SMC, the operator of the New Manila International Airport in Bulacan, this may pose some problems. Although SMC has already bought bid documents, it cannot take on the rehab project alone. Instead, it will have to participate as part of a consortium that includes other companies, and its ownership in that consortium must be capped at 20%.

“There are no participants that are disqualified,” DOTr Undersecretary Roberto Lim said on Friday. “San Miguel is not disqualified for participating. We are encouraging them to. But we have, I think, to just as a safeguard for competition purposes, put a limit on their ownership.”

Once bidders submit their proposals, the government will conduct a technical evaluation on a pass-or-fail basis. The winning bidder will then be picked from those remaining, based on who offers the most favorable revenue-sharing scheme with the government.

In the end, ang talagang magiging determination is the sharing revenue with the government. Kasi naman, we will see to it all those we consider are qualified. May mga technical requirements naman e,” Bautista said on the sidelines of the conference.

(In the end, what will really be the determining factor is the revenue-sharing with the government. After all, we’ll see to it all those we consider are qualified. There are technical requirements anyway.)

How long will they operate the airport?

Meanwhile, bidders for the project can plan for the long term as they may operate NAIA for up to 25 years – given they meet certain standards. Initially, they will be given 15 years to operate, which may be extended by another 10 years. The government will decide whether to give the extension in the 8th year of the project.

How? Regulators will be employing a “mathematical formula” that takes into consideration several key performance indicators, including processing time for check-in, immigration, and security checks; the time it takes for the first baggage of arriving passengers to reach the conveyor belt.

“We have used these in the past in Mactan [Airport] and Clark [Airport]. These are internationally benchmarked based on other airport concessions around the world,” DOTr Undersecretary Timothy John “TJ” Batan said.

“If there is a flagrant violation of the concession, then there will be no extension. But if there is no flagrant violation, then there will be an extension,” he added.

In effect, this makes the concession period longer than that stated in the initial solicited proposal announced by the government. It now also matches the period indicated in the failed unsolicited proposal sent by MIAC earlier in 2023.

What happens to employees?

Bautista gave assurances that employees won’t simply lose their jobs once the privatization pushes through.

“There is a provision that all employees will be either retained by the Manila International Airport [Authority] as regulator and the winning concessionaire. They will be given a certain period of time for them to be able to show that they are qualified,” he said on Friday.

“The arrangement is that nobody should lose their job when we start the concession agreement with the winning bidder,” he added.

Meanwhile, it’s also possible that some functions could be taken by the concessionaire, like the responsibility of security screening. This comes in light of the controversy involving an airport security screening officer that swallowed $300 worth of bills reportedly stolen from a passenger. 

Bautista decried the incident as “very sad and disappointing considering we are in this process of attracting investors.” Manila International Airport Authority Officer-in-Charge Bryan Co also mentioned that charges will be filed against the erring security officers. – Rappler.com

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Lance Spencer Yu

Lance Spencer Yu is a multimedia reporter who covers the transportation, tourism, infrastructure, finance, agriculture, and corporate sectors, as well as macroeconomic issues.