SMC SAP and Company Consortium, the new operator of the Ninoy Aquino International Airport (NAIA), is anticipated to infuse over P202 billion for the 25-year concession, while the national government anticipates P900 billion in earnings.
The Department of Transportation (DOTr) and the Manila International Airport Authority (MIAA) on February 16 formally declared SMC-SAP and Company Consortium as the winning bidder for the rehabilitation and upgrade of NAIA after submitting the highest bid with its offer to share with the government 82.16 percent of future gross revenues, excluding passenger service charges (PSC).
Timothy John Batan, DOTr undersecretary for planning, said the winning consortium has committed to spend P122.3 billion in capital outlay over the entire 25-year concession period or an average of P4.9 billion per year.
The consortium will give government P30 billion in upfront payment and P2 billion fixed annual payment or P50 billion for the entire concession period. These amounts are on top of the 82.16 percent revenue share remitted to the government yearly.
Batan said while the concession period is 15 years subject to extension for another 10 years, the committed investment of the consortium covered the entire concession. This may also be increased depending on the requirement.
“There is a cost estimate for the capital expenditure for the duration period, this cost is P122.3 billion, it is not binding if for example during the implementation of the concession, additional capital has to be invested by the concessionaire to deliver the project…” Batan said.
Passenger charges excluded
Roberto Lim, DOTr undersecretary for aviation said the PSC which is over 40 percent of the entire revenues of NAIA, is not included in the revenue share that will be remitted to the government.
“The formula for the highest bid, which is based on the gross revenues, exclud(es) PSC,” Lim said.
This means means of the total gross revenues of NAIA, the 82 percent revenue share committed by the consortium that will be remitted to the government), will be coming from the 60 percent of the total revenues generated yearly by NAIA.
The revenues from PSC is excluded from SMC’s 82 percent committed revenue share. The PSC revenues will go directly to the winning bidder.
PSC comprises the terminal fees and other fees for both cargo and passengers. It is is the money that goes to NAIA for every passenger that uses the airport.
The gross revenues include aeronautical, and non-aeronautical.
According to data from DOTr, the aeronautical revenues include PSC for international and domestic passengers, landing and take-off charges, tacking fees, aircraft parking fees, cargo charges, and check-in counter-charges. Non-aeronautical revenues include commercial lease rental, parking, advertising, retail, and F&B and other identified commercial revenues.
Even with government’s 82 percent revenue share, Lim is optimistic the winning consortium will recover investment once it expands the airport and increases revenues.
Meanwhile, DOTr said the NAIA Public-Private Partnership (PPP) is expected to bring in P900 billion earnings to the national government.
The NAIA PPP, over the course of its 25-year agreement with the winning concessionaire, will allow the government to earn P36 billion annually and redirect its earnings to other social and infrastructure projects.
With Friday’s announcement of the winning concessionaire for the NAIA modernization, the government would secure from the SMC-SAP Co. Consortium a guarantee of P30 billion as upfront payment and P2 billion annual payments, according to the Department of Transportation (DOTr).
In comparison, MIAA alone has remitted P23.3 billion from the period of 2010 to 2023, or P1.78 billion annually.
Expansion scope
NAIA’s last major capacity expansion was in 2008, when Terminal 3 was operationalized, leading to its current capacity of 35 million passengers annually.
The project scope includes the operation of passenger terminals, and related facilities, airside facilities and commercial assets, cargo terminal facilities, maintenance of passenger terminal building, airside and CNS/ATM equipment, and capacity augmentation, including maximizing the utilization of the current airport facilities, enhancement of operational efficiencies and digitalization
With the entry of a new NAIA operator, MIAA general manager Eric Jose Ines said the rentals and navigation charges will increase,
MIAA has not increased these charges for the past 24 years or since April 2000.
The PSC will be the same.
Last Friday, DOTr issued the Notice of Award to the consortium composed of San Miguel Corp., RMN Asian Logistics, RLW Aviation, and Incheon International Airport Corp., for a P170.6 billion NAIA modernization project.
The signing of the concession agreement is set for March 15, and the turnover of the operation and maintenance is expected in the next three to six months or by September, according to DOTr.
Govt to benefit
“Our proposal is designed not only to elevate NAIA to world-class standards but also to ensure that the government benefits from the most advantageous revenue-sharing agreement. This aims to secure a favorable outcome for our shareholders while prioritizing fairness and long-term sustainability over immediate profits,” said SMC SAP and Co Consortium in a statement.
It added: “This aims to secure a favorable outcome for our shareholders while prioritizing fairness and long-term sustainability over immediate profits.
Government officials cheered the fast awarding of the project after the bids were opened.
National Economic and Development Authority Secretary Arsenio Balisacan said the project addresses the NAIA’s longstanding issues such as inadequate terminal capacity and restricted aircraft movement.
“The modernization drive aims to increase annual capacity from 35 to 62 million passengers and air traffic movement from 40 to 48 flights per hour,” Balisacan said.
“With the rollout of significant investments in the coming years, the Filipino people can look forward to shorter queues and waiting times, reduced flight delays, improved service quality, and better overall passenger experience.
Finance Secretary Ralph Recto noted that the NAIA-PPP is “the largest solicited Public-Private Partnership project under President Marcos.”
“This is certainly a welcome development for this long overdue project. NAIA has been operating beyond capacity for 9 years, leading to poor service and passenger inconvenience. The NAIA PPP project has been in the works for three decades, spanning six administrations,” Recto said.
