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By February 15, we would already know which bidder won the right to rehabilitate the much-maligned Ninoy Aquino International Airport (NAIA). On March 15, if everything falls smoothly into place, that bidder would be signing the concession agreement.
I can only keep my fingers crossed. This project could still be held hostage by lawsuits filed by a losing bidder. This has been a major headache faced, time and again, by the government’s infrastructure projects put up for bidding. Everybody wants to win. In many cases, there are no losing bidders; just bidders who believe they were cheated.
The rehabilitation of the NAIA has been tossed around for years, it never got off the ground due to selfish reasons by those who benefit from keeping our international gateway to the world a decrepit airport, but that is an entirely different story.
Even this latest iteration of airport privatization went through the wringer. Fortunately, efforts to delay it have proved futile. Department of Transportation (DOTr) Secretary Jaime Bautista stuck to a tight deadline to prevent any delays. His marching orders to his people: NAIA must be a better airport ASAP, keeping in focus the economic benefits that such an undertaking will bring to the country. For one, it will stoke tourism, which accounts for about 12% of our gross domestic product (GDP), which in turn will generate innumerable jobs across the archipelago.
Preferring to conduct a bidding, rather than accept a lone proponent/unsolicited proposal for the NAIA’s rehabilitation, has turned out to be a smart move. On January 15, four bidders hurdled the completion check for their technical proposals. They now have to wait for 20 days to see if they pass the third and final round of the whole exercise.
The DOTr has qualified the proposals submitted by four bidders – the Manila International Airport Consortium, (MIAC); Asian Airport Consortium (AAC); GMR Airports Consortium, and the San Miguel Corporation SAP & Co. Consortium. According to the project’s Pre-qualifications, Bids and Awards Committee (PBAC) chief, DOTr Undersecretary Timothy John Batan, the agency will release on February 5 the results of the detailed evaluation of the technical proposals.
If a proponent passes the technical assessment, it will now be allowed to file its financial offer, a step seen as the crucial and deciding factor in the bidding. Since the DOTr is keen on awarding the contract to the bidder with the highest offer on income share, each bidder has to make a case of its financial capability and how much of its projected revenues it is willing to share with the government.
The winner among the four bidders of the P170.6-billion project is expected to double the airport’s yearly passenger capacity to 62 million. It will be given a minimum of 15 years to upgrade the airport’s gateway and its facilities, and an additional 10 years, if needed.
- MIAC is composed of GIP EM MIAC Pte. Ltd., Aboitiz InfraCapital, Incorporated; AC Infrastructure Holdings Corporation; Asia’s Emerging Dragon Corporation; Alliance Global-Infracorp Development, Incorporated; Filinvest Development Corporation; and JG Summit Infrastructure Holdings Corporation.
- AAC consists of Asian Infrastructure and Management Corporation, Cosco Capital, Incorporated; Philippine Skylanders International, Incorporated; and PT Angkasa Pura II.
- GMR is composed of GMR Airports International B.V.; Cavitex Holdings, Incorporated; and House of Investments, Incorporated.
- SMC SAP consists of San Miguel Holdings Corporation; RMM Asian Logistics, Incorporated; RLW Aviation Development Incorporated, and Incheon International Airport Corporation.
Questions on financial capability
Of the four bidders, the financial capabilities of SMC SAP look puny. Two companies in the consortium, which were formed only on December 15, 2023, have only P6.25 million in capitalization. RMM Asian Logistics’ president is Raymond Miller Moreno, former owner of the defunct Liberty Telecom, while RLW Aviation Development is headed by a certain Robert Lee Wong. As newly registered companies which together supposedly control 57% of the SMC consortium, questions were raised on its technical and financial capability. It would appear that the two companies in the SMC SAP consortium have no track record, funds, and technical experience.
On January 18, Vantage Point texted SMC president and vice chairman Ramon S. Ang for clarification, but did not receive a response, while the SMC’s communication department said it will consult with the company’s airport division for explanation.
A PBAC source, however, sees no problem with the SMC SAP consortium’s financial standing since it could easily be backed up by its credit line. “We will conduct due diligence for each of the qualified bidders,” the source said. “We will ensure that this privatization exercise will not suffer the same fate as those of early attempts to rehabilitate it. Bidders who want to engage with government must have a clean record.”
The NAIA privatization is long overdue. The government must do everything to ensure its success. There are fears that the country might, in the future, be hosting multiple airports to its detriment. SMC is in the thick of building its Bulacan International Airport, while there are groups interested in expanding and sprucing up the Clark airport. Some argue that the country is better off hosting just one international airport because it will be uneconomical to have more than one. Competition, they say, could kill one of the two which could lead to economic losses for the country.
From my vantage point, however, the competition created among multiple airports encourages efficiency, innovation, and improved services. Airlines and airport authorities strive to attract passengers and businesses, resulting in the development of state-of-the-art facilities, enhanced connectivity, and cost-effective travel options. This competitive environment not only benefits consumers but also stimulates economic growth by attracting investments and promoting tourism.
More airports needed
Our country needs more than two airports. Most of the major cities in the world today have two, even three or more, major airports actively servicing its people. The development and maintenance of multiple airports within a country offers a myriad of advantages that extends beyond mere convenience for air travelers. These advantages encompass economic, logistical, and strategic benefits that contribute to the overall growth and resilience of a nation.
One of the primary advantages of having multiple airports is the positive economic impact they generate. Airports serve as crucial hubs for transportation, fostering trade, tourism, and business activities. With several airports distributed across a country, there is a decentralization of economic activities, leading to increased job opportunities and a more balanced regional development.
The strategic placement of multiple airports contributes to improved accessibility, reducing the burden on a single major airport. This decentralized approach makes air travel more convenient for a larger population, as people from various regions can access airports without enduring long journeys to a centralized location. Enhanced accessibility leads to increased air travel, fostering greater connectivity between cities and regions.
Furthermore, multiple airports cater to the diverse needs of passengers, with some focusing on domestic flights, others on international routes, and some serving as hubs for specific airlines. This specialization allows for optimized travel experiences, shorter travel times, and increased options for passengers, thereby contributing to a more efficient and user-friendly air transportation network.
The establishment of airports in different regions of a country promotes regional development by stimulating economic activities in previously underserved areas. Improved transportation infrastructure facilitates the movement of goods and people, encouraging investment, tourism, and business development in these regions. As a result, smaller towns and cities near airports experience increased economic opportunities, job creation, and a higher quality of life for their residents.
Moreover, airports often serve as catalysts for the development of surrounding areas, attracting businesses, hotels, and other amenities that contribute to the overall growth of the region. This decentralized development approach helps bridge the urban-rural divide and fosters a more equitable distribution of resources and opportunities.
From a strategic standpoint, having multiple airports enhances national security by reducing the vulnerability associated with a single major airport. In the event of emergencies, natural disasters, or security threats, having alternative airports allows for the continuity of air travel and ensures the resilience of the transportation network. Additionally, the dispersion of air traffic across multiple airports makes it more challenging for potential threats to target a single critical infrastructure, thus enhancing overall national security. – Rappler.com
Val A. Villanueva is a veteran business journalist. He was a former business editor of the Philippine Star and the Gokongwei-owned Manila Times. For comments, suggestions email him at firstname.lastname@example.org.