SMC transforming NAIA into a global airport

Being a constant traveller, I always lament silently on how our government, for the longest time, has been too negligent in the upkeep of our gateway to the world, the international airport. Ours are a cacophony of disjointed, pitiful, topsy-turvy, congested, and poorly-maintained terminals and limited runways, compared to Hamad in Qatar, Incheon in South Korea, Haneda and Narita in Japan, Changi in Singapore, JFK in New York, Charles De Gaulle in Paris, and those in Dubai, Zurich, and Istanbul.

And having worked for San Miguel Corp. for 12 years, I applaud the biggest deal in history, when Mr. Ramon S. Ang won for SMC in the bidding for the renovation, management, and operations of the Ninoy Aquino International Airport. The two losers were two giant consortiums. The first was the MIAC composed of the groups of Aboitiz, Ayala, Gokongwei, Lucio Tan, Megaworld, and Gotianun Filinvest, and the second the Yuchengco-led GMR of the RCBC Group. Well, let Ayala and the rest of the taipans focus on baking and finance. RSA is the most qualified.

MIAC only promised the government a measly revenue between ?6 to ?15 billion a year, while GMR offered ?7 billion to ?19 billion annually. RSA made a whopping bid of ?1.034 trillion over a period of 25 years consisting of ?80 billion upfront to be delivered immediately, and a fixed yearly annuities of ?30 billion now plus ?2 billion per year for 25 years. Such revenues to the government represent 82.16% of the total airport revenues for the next 25 years. RSA committed a capex of ?123.5 billion to be spent in acquiring equipment, machinery, software, roads, and buildings in the next 15 years. How can such an offer be rejected?

The current NAIA operations only earn a gross revenue of ?14 billion at the most during its best year which was 2023. Its net revenue was only ?4 billion or a profit margin of 28.57%. The bid made by RSA on behalf of SMC was 4.5 times higher as he guaranteed the government no less than ?18 billion each year. RSA will raise the revenues and profits levels of NAIA to heights that can be comparable to the best profit-earning airports in the whole world. Mr. Tony Lopez of BizNews Asia reported on the ASEAN trends of net profit margins for airport operations, specifying that Vietnam has a profit margin of 45%, Thailand 40%, and Singapore, 19%.

I can just imagine NAIA being transformed into a world-class airport servicing 62 million passengers annually, boosting our economy, leapfrogging Philippine tourism, helping create high-quality jobs, and improving the quality of life in our country. SMC is at its best when it enters into collaboration with global experts and the world's more experienced business operators. Hence, in this biggest deal involving NAIA, RSA led SMC in partnering with Incheon International Airport Corp. of South Korea to help manage NAIA starting this coming September. Lopez reported that South Korea has the fourth best airport in this part of the world, following Singapore's Changi, Qatar's Hamad, and Japan's Haneda.

Knowing RSA and his very impressive business track record, I am sure that NAIA will no longer be very far behind among the best airports with highest revenues and net profit margins. Such best performers are Changi, with annual revenues of $2.228 trillion and 19% profit margin; the airports of Thailand, with $2.123 trillion and 40% profits; Malaysia Airport Holdings, 10% profits out of revenue of $1.259 trillion; Vietnam, $789 billion and 45% net profit margin; Indonesia's PT Angkasa Pura I, $610 billion with 17% profit; and PT Angkasa Pura II with $784 billion annual income and 9% margin.

I really cannot imagine how a beer manufacturing company where I used to work can ever transform itself into a diverse operation of multiple portfolios of businesses ranging from food and beverage, packaging, logistics, cement industry, tollway operations, building of highways and now building, managing, and operating international airports.

And what matters most is that SMC has remained faithful to its core philosophy and values started by its founder, Don Andres Soriano Sr., of profit with honor. That is why RSA is pro-people, pro-labor, and pro-environment. I salute RSA and applaud my former employer, SMC. I hope I will live to see the day when our airports will cease to be the laughing stock of Asia and the headache of world travellers.