MIAC bares P267B three-phased master plan for NAIA

• The Manila International Airport Consortium unveiled its P267-billion three-phased master plan for Ninoy Aquino International Airport

• The unsolicited proposal to rehabilitate the country’s premier gateway aims to more than double passenger airport capacity from 31 million passengers per annum (MPPA) to 70 MPPA by 2048

• MIAC’s P267-billion proposal includes P211 billion of capital investments–P57 billion of which will be rolled out over the first five years

• The remaining P154 billion will be invested over the remainder of the 25-year concession period

• The consortium plans to increase passenger terminal fee but the move will be linked to deliverables and timeframes

The Manila International Airport Consortium (MIAC) unveiled on June 19 its P267-billion, three-phased master plan to rehabilitate and develop Ninoy Aquino International Airport (NAIA).

Under the master plan, which is at the center of MIAC’s unsolicited proposal to the government, the passenger airport capacity will be doubled from 31 million passengers per annum (MPPA) to 70 MPPA over the long term.

In a statement, MIAC said the NAIA upsizing will play a key role in enabling the transformation of the Philippines into a regional economic hub.

The three-phased plan will feature increases in capacity and reliability, and overall improvements in passenger experience, MIAC said.

Phase 1, which the consortium called “quick wins,” will be implemented over the first two years and is intended to quickly increase airport capacity to 54 MPPA by 2025 and improve reliability, while reducing queuing times at various bottlenecks throughout NAIA.

Phase 2 will grow airport capacity to 62.5 MPPA by 2028 through expansion and development of the terminal floor area, addition of airfield facilities, and improvements in cross-terminal transportation.

Phase 3 will further raise NAIA’s capacity to about 70 MPPA by 2048, and consists of long-term expansion and development projects to further expand terminal space and airfield capacity.

“The Manila International Airport Consortium recognizes the immense task of transforming NAIA to meet the exponentially growing demands of Mega Manila air travel, not only in the here and now but also in the future,” said Kevin Tan, chairman and president of Alliance Global – InfraCorp Development, Inc.

“It is because of this that the members of the Consortium have pooled together its significant resources, technical expertise and operational experience to put forward a NAIA master plan.”

MIAC last April submitted its unsolicited proposal to the Department of Transportation (DOTr) and Manila International Airport Authority (MIAA) under the public-private partnership (PPP) framework to introduce technological, structural and operational changes to NAIA under a 25-year concession.

DOTr earlier said MIAC’s unsolicited proposal has complied with the checklist under the Build-Operate-Transfer Law and that it is now evaluating the proposal.

READ: DOTr, MIAA move to evaluate unsolicited proposal to rehab NAIA

MIAC’s proposed concession period is longer than the 15 years that DOTr and MIAA are proposing under a solicited PPP project to rehabilitate and modernize NAIA.

Through the implementation of the master plan, MIAC said it envisions a NAIA that will serve as an engine of growth for the Philippines, especially in the tourism and economic sectors as the country aspires to position itself as a regional powerhouse.

“Human capital, access to financial capital, strong government leadership, and reliable transport infrastructure are key enablers of any regional economic hub,” said Dr. Jim Yong Kim, vice chair and partner of Global Infrastructure Partners (GIP).

“Reliable transport infrastructure is a key challenge for the Philippines and the rehabilitation of NAIA for the long-term is essential if Manila is to become the regional economic hub we know it can be,” Kim said.

GIP partner and head of transport Philip Iley, in a presentation during the unveiling of the masterplan on June 19, said NAIA “isn’t full.”

He explained: “It has plenty of room capacity, plenty of terminal space. What it has is incredibly inefficient and low tech passenger processing.”

He added that GIP will be replicating in NAIA solutions and technology provisions that GIP has implemented in its other airports.

GIP is one of the leading infrastructure investors and airport operators in the world, whose portfolio of airports includes international hubs such as London Gatwick Airport, Sydney Airport, and Edinburgh Airport.

It is the technical partner of MIAC, whose other members include six of the Philippines’ largest conglomerates: Aboitiz InfraCapital, Inc., AC Infrastructure Holdings Corporation, Asia’s Emerging Dragon Corporation, Alliance Global – Infracorp Development Inc., Filinvest Development Corporation, and JG Summit Infrastructure Holdings Corporation.

MIAC said NAIA’s rehabilitation is critical for the airport to meet the projected explosion in travel demand.

By 2028, it is projected that NAIA will welcome 55 million passengers—well above its declared capacity of 31 MPPA. Before the pandemic, NAIA had already breached this ceiling when it registered a peak of 47.9 million passengers in 2019.

Given that the MIAC unsolicited proposal has already completed its technical, economic, financial, value-for-money; and environmental, social, and governance studies, the consortium said that if the concession is awarded this year by the Philippine government, the master plan can be implemented immediately and improvements realized shortly thereafter.

Cosette Canilao, president and chief executive officer of Aboitiz InfraCapital, Inc., said the MIAC unsolicited proposal is “the fastest route to the rehabilitation and modernization that NAIA urgently needs.”

Canilao explained: “The unsolicited procurement mode of the BOT Law is a powerful tool of the government to fast track infrastructure development provided the proposal is properly prepared, backed by credible and qualified proponents, and adheres to the rules, policies and guidelines of the government. MIAC’s unsolicited proposal unequivocally meets all those criteria.  We have done the homework: it is a turnkey proposal ready for government evaluation, and has the financing to get boots and shovels on the ground.”

Apart from this, MIAC said its unsolicited proposal is committed to the comprehensive development of NAIA, which is expected to remain at the critical core of Mega Manila’s–and the country’s–airport strategy for decades to come, given that it is currently the only large-scale operating airport serving the region.

“NAIA’s importance and economic impact cannot be overstated, especially since it has an ecosystem of supporting infrastructure that would take decades for greenfield airport developments to replicate,” said L. Josephine Gotianun-Yap, president and CEO of Filinvest.

Concession period

MIAC said its unsolicited proposal under a 25-year concession period will allow the private sector to invest extensively in NAIA’s infrastructure and technology as well as to institutionalize the superior level of service expected of an international gateway.

Moreover, the 25-year period will allow the consortium to take into account the increased demand forecast and help facilitate a smooth transition into a multi airport system, it said.

“A government decision favoring a 25-year concession plan will show its commitment to attract strong foreign and local players for future PPP projects,” said Jose Gabriel Olives, chief financial officer, LT Group, Inc.

“An effort to ensure meaningful private sector participation in PPPs will benefit other projects in the future, as more private sector players will be enticed to participate,” Olives added.

Iley, for his part, said the shorter the concession, “the higher charges are required … in order to pay for that investment, which is something that we’re desperately trying to avoid in order to keep this airport as competitive as possible for the Filipino people.”

Iley noted that airport concessions are typically more than 20 years.

Higher passenger terminal fee

He said the consortium has plans to increase passenger facility charge (PFC) or passenger terminal fee, but will “link it to certain deliverables and timeframes within the concession.”

“… linking PFCs (passenger facility charge) to deliverables is essential and keeping PFCs as low as possible to keep NAIA competitive, is a direct result of the duration of the concession. The longer, the concession, the lower the fees,” he added.

Investment breakdown

MIAC’s P267-billion proposal includes P211 billion of capital investments–P57 billion of which will be rolled out over the first five years with the remaining P154 billion to be invested over the remainder of the proposed 25-year concession period.

The proposal includes P57 billion concession payment to the government—the largest-ever upfront concession payment offered for a transportation PPP project in the country, whether solicited or unsolicited.

Beyond the P267 billion of upfront payment and capital investments, the government is projected to receive an additional P280 billion over the course of the concession period from revenue sharing and taxes.

The planned rehabilitation of NAIA is likewise projected to generate P446 billion in gross economic value, the consortium said. This includes, in gross value basis, P100 billion from gross value-add in tourism activities, P152 billion from increased passenger comfort, P60 billion from passenger time savings, P65 billion from aircraft decongestion savings, and P65 billion from new local jobs.

Aboitiz’s Canilao, in an interview with media at the sidelines of the launch, said they are now in the process of finalizing the financing arrangement so if government approves the plan, “we’re ready to work.”

No increase in project cost

She clarified the project cost has not been increased to P267 billion from P100 billion, the former figure being what was indicated in the original proposal.

But MIAC in a press statement last April said their unsolicited proposal cost P100 billion. Canilao said there may have been a “confusion on the project cost”.

In separate regulatory disclosures on June 19, MIAC members said the initially communicated amount of P100 billion referred to the approximately US$1 billion in initial capital investments over the first five years in addition to the $2 billion in upfront concession payment to the government.

Solicited proposal

While reviewing MIAC’s unsolicited proposal, DOTr and MIAA had also submitted to the National Economic and Development Authority for approval their proposed terms of reference for the solicited PPP project to modernize NAIA.

DOTr earlier said they are looking into both the solicited and unsolicited modes to rehabilitate NAIA.

Submitted on June 2, DOTr and MIAA’s proposal involves a 15-year concession period to invest in modern air traffic control equipment, rehabilitate runways and taxiways, and improve existing terminal facilities.

Part of the proposal includes the introduction of digitalization in NAIA’s operations, increase in boarding gates, check-in counters and self-service kiosks; development of the runways and rapid exit taxiways; and investments in the Manila Tower’s equipment.

Under the proposal, the total cost to upgrade and rehabilitate NAIA is P141 billion. The government is also proposing an upfront payment of P30 billion, annuity payments of P2 billion, and a government share in revenue from both commercial and non-commercial operations. – Roumina Pablo