DOTR to call on firms to bid for NAIA privatization

Jacque Manabat, ABS-CBN News

Posted at Jun 09 2023 11:23 AM

MANILA — The Department of Transportation (DOTr) hopes to publish calls for interested firms to bid for the privatization of the Ninoy Aquino International Airport (NAIA) this September. 

If all goes well, DOTr sees that Manila's main gateway could be privatized by the first quarter o f2024. The NAIA Public Private Partnership (PPP) project will include operations, maintenance, and NAIA upgrades for 15 years.

DOTr Undersecretary for Aviation Bobby Lim said privatization would make NAIA more efficient and at par with its neighbors. He stressed that the procurement law slows down the much-needed rehabilitation of the airport.
"Replacing, repairs of certain items may take more than one month even though the cost is not expensive. Even though the operational impact of that spare part is not as critical, it will still be subjected to rigorous procurement rules," Lim said.

"The Public Private Partnership can lead to a faster rate of investment in modernizing the facility so that we can really introduce the needed innovations and technologies so that NAIA could level up with the neighbors' airports."

"Talagang naghahabol tayo. Speed is the key. Massive investment is also important," Lim added.

Lim clarified that NAIA assets belong to the government, with the private concessionaire limited to operations and management roles. Some of the employees of NAIA will be retained as part of the Manila International Airport Authority (MIAA), he said. 

"Remember, what we are doing here is a PPP. We are not selling off any assets. We are merely granting a concession to the private parties," he noted.

"MIAA will now perform its role together with DOTR as a regulator. As a regulator, it will make sure that the terms and conditions [of the project] are properly fulfilled - the service levels and the OPEX levels prescribed so that you can expand, rehabilitate and modernize NAIA and that the private concessionaire fulfills these."


Lim said digitalization is at the forefront of DOTr's laundry list of things NAIA needs.

"We would want to introduce digitalization as part of managing the airports. Digitalization means biometrics as a way of measuring and identifying passengers--measuring the movement of passengers so we would know where there will be congestion or where there will be queueing." Lim said.

Lim pointed out that one of the facilities that should be digitalized is the Manila Control Tower, which was completed in 1961.

"We need to make huge investments in the Manila [Control] Tower. Sadly, the equipment there is not up to date," he stressed.

"You need to put in digital equipment that will minimize the actual sighting of the aircraft needed to manage it. Once digitalized, It will not be in the tower but based on your laptop or computer," Lim said.

DOTr is looking at replicating the control tower of London Gatwick Airport, which President Ferdinand Marcos Jr. and DOTr Secretary Jaime Bautista visited on May 5 on the sidelines of the president's UK trip to attend the coronation of King Charles III. 

"That is one very good model of how the control tower can look and operate in the future. They only have a couple of people in their tower. In effect, ang tawag dyan ay digital tower," Lim said.

"You will put the digital tower in one room instead of a tower…. That high-level equipment is the key electronic naman yun. Ang gagawin naman sa existing tower natin, it will become a hub," he added. 

Other improvements eyed for NAIA upgrade include additional boarding gates, electronic check-in counters, an automatic visual backing system for aircraft, aprons expansion, and improvement of the passenger boarding bridges.

The capital investment for the NAIA's operations, maintenance, and upgrade is pegged at P 141 billion for a concession period of 15 years.

"If you average that, that would be P9.5 billion of investment yearly," Lim said.


The airport's privatization, however, may come with a possible increase in the passenger terminal fee. 

The current NAIA terminal fee is P550 for international and P200 for local flights. Overseas Filipino workers, which make up about 30 percent of NAIA's passengers, are exempt from paying the terminal fee.

DOTr explained that the terminal fee is shared among the agencies operating the airport.

"Even now, we are thinking of increasing it (terminal fee). Ang natitira sa NAIA ay small amount and not sustainable to maintain it at existing levels. Compare it with Pampanga; their terminal fee is P750, Mactan is P950. Medyo huli na talaga ang adjustment ng passenger service charge ng NAIA.” Lim said.

DOTr also said that part of the NAIA privatization project agreement includes the assurance that there will be no "immediate" increase for terminal fees.

“Wala munang immediate [increase] para makita muna ng sambayanan that there are visible improvement in the facility. We want to maintain as low as possible and realistic naman."


While the DOTr and MIAA submitted a joint proposal for the NAIA solicited PPP Project for approval by the National Economic Development Authority (NEDA) Board, the agency said they are open to unsolicited proposals.

DOTr will meet with a group of Filipino conglomerates to discuss the submitted unsolicited proposal for NAIA worth P100 billion next week. 

The six conglomerates or the Manila International Airport Consortium (MIAC) are 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.

The six also joined forces with Global Infrastructure Partners (GIP), one of the world's largest infrastructure investors in London and the company that co-manages Gatwick Airport. 

Marcos met with officials from the GIP in London and discussed the airport's exceptional infrastructure, cutting-edge technology, and operations.

The MIAC forecasts that the NAIA will have the ability to serve up to 62.5 million passengers per annum efficiently by 2028, or more than double its currently constrained design capacity, which stands at only 31 million passengers per annum.

DOTr is also evaluating the unsolicited proposal that the Philippine conglomerates and their foreign partner submitted.

"We will start to evaluate it. We are meeting with them next week. That's clearly the unsolicited proposal, and it is not identical to the basic terms and conditions we submitted to NEDA. They will not be identical," Lim said.

"What we submitted to NEDA is the baseline of what we believe are the investments needed for the PPP of NAIA. But at least it is a reference point for the government, and that will help us evaluate the unsolicited proposal," Lim added.