It doesn’t get any better than this. There are two good offers to rehabilitate NAIA, and one even better offer to build a brand new airport in Bulacan. All the offers are backed by project studies that prove not just feasibility, but urgent need.
A consortium of seven of our top taipans has submitted a P350-billion ($6.75 billion) proposal to make NAIA a regional aviation hub. It is difficult to get any bluer than this blue chip group composed of Ayala Corp., JG Summit Holdings, Aboitiz Equity Ventures, Alliance Global, Metro Pacific Investments, LT Group and Filinvest.
According to the masterplan they worked out with Changi Airport in Singapore, the capacity of NAIA will be increased from the current 40 million to 100 million passengers over a 35-year concession period.
It is a good business proposition for the taipans. The proposed expansion of NAIA should be profitable for them as a business. An efficient airport will also benefit their other businesses as our economy expands.
For two of the taipans, Lucio Tan and John Gokongwei, the sad state of NAIA is hampering the growth of their airline business and unnecessarily increasing their operating costs. Indeed, Lucio Tan tried to propose a modest upgrade last year to serve Philippine Airlines, but was ignored.
Lucio Tan was, until last Tuesday, not well liked at the Palace and that’s why no matter how worthy the PAL proposal was, it didn’t happen. But after PAL and Cebu Pacific brought back OFWs from Kuwait for free, the President said he would no longer speak ill of Mr. Tan.
As I had been telling the PAL people, their only hope to be heard is as part of a consortium of the most powerful business moguls. I am glad they are going in this direction.
With their names and reputations at stake, the consortium members will make sure their proposal delivers what it promises. Hopefully, the taipans are able to work well among themselves. That’s not a given. It didn’t work the last time.
The competitive proposal for NAIA led by Megawide may be more hopeful. Because only one group financed partly by SSS is involved, they can avoid conflicts of bloated egos.
I share the view that NAIA should be rehabilitated and made world class. Mar Roxas wanted to sell it to a private property developer to raise money to build a new airport elsewhere.
But the location of NAIA is perfect for Metro Manila. With the proper transport infrastructure in place from tollways (existing) and mass transport (proposed), visitors can be at the heart of the metropolis in less than 30 minutes.
But rehabilitating NAIA is not easy. First of all, it is an operating airport. Even now, constructing the rapid exit taxiways that would improve efficiency of the single international runway is taking longer as they can only work after midnight.
Secondly, there is the very serious problem of space limitations. Where will they get the land needed for the third runway? Can they decisively handle the legal problems on land now occupied by the abandoned Philippine Village Hotel and Pagcor? Can they shoo away the Marcos cronies “renting” land MIAA owns around the airport and paying peanuts for the privilege?
Thirdly, can government muster the political will to expropriate the land that is ideal for the third runway, but now occupied by subdivisions?
This is why I think the San Miguel proposal to build a totally new airport in land it already owns is the more practical option. Building the airport of that magnitude will take at least five years from groundbreaking. They don’t have time to waste trying to expropriate or recover land required at NAIA.
In any case, nothing should stop the Duterte administration from approving both proposals. We will need more than one airport in the metro area anyway. Competition is always good. Ramon Ang of San Miguel has already said he is ready to compete, and I hope the taipans are ready to do so too.
The good thing about the two proposals is that only private sector money is at stake, specially in the San Miguel offer. The taipans’ NAIA proposal will require government funds to expropriate land.
President Duterte should also reject any demand for a 35 year freeze on any other competitive airport. The taipans may claim to be free market spirited, but they will not hesitate to demand a monopolistic concession if they can get away with it. That should be a no-starter when the proposals are evaluated.
What we need to see in the next couple of weeks is some word from government – NEDA, DOTr or Malacanang – on how they plan to process the proposals. We need a definite timeline so a decision can be made within the first half of this year.
NEDA should not dwell too much on the nitty gritties of the business models behind the proposals. Let the proponents whose money will be at stake worry about that.
What NEDA and possibly the Philippine Competition Commission should work on is how to protect the public from potentially non-competitive practices of the proponents. This is particularly important if only one will be chosen.
Most important of all, we need President Duterte to put the same strong pressure that he is putting on DICT to get the third telco in business on DOTr and NEDA to decide quickly. Our sad experience with NEDA and DOTr is that they are allergic to private sector proposals and are prone to delay decisions.
The proposal of the taipans is along the lines of the previous NEDA approval for the privatization of NAIA’s rehabilitation and management. That approval was junked by DOTr Sec Art Tugade when he took office.
The enthusiasm of the private sector to invest in big ticket, long gestation infra projects should be appreciated by President Duterte. This is better than turn-key, Mr President!
Please lang, get going na!
Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco.