FOR those used to air travel, it’s easy to doze off on your seat, especially if you know it’s going to be a long flight. But when you wake up only to find out that you’re still on the tarmac you should have left an hour ago, you just know that your flight is already delayed.
Even more worrisome is if you see several planes in front of you queueing to take off—that is one of the most irritating aspects about flying from a congested airport apart from losing your luggage.
The traffic on the tarmac at the Ninoy Aquino International Airport (Naia) is one of the most visible signs of congestion, and highlights the need to build another airport in or near Manila soon.
With the current administration’s openness to unsolicited projects, there are at least five groups keen on undertaking the New Manila International Airport (NMIA).
These groups include San Miguel Corp., which is reviving its $13-billion-worth airport proposal in Bulacan under the Aquino administration; the DM Wenceslao group, which is proposing a combined airport and shipping port project in Sangley; and the Sy and Tieng group, which is proposing a $50-billion-worth airport and economic zone in Sangley.
The National Economic and Development Authority (Neda) also said the New San Jose Builders Group has also proposed to include an airport in its Manila Bay flood-defense project, while the Okada group is looking to increase its investments in the country by participating in the bidding for the NMIA.
Attraction
WITH all the interest that the NMIA is attracting, the Neda told the BusinessMirror that it has already written the Department of Transportation (DOTr) to reconsider its decision to accept unsolicited proposals for the project.
“Given the numerous proposals received with regard to the development of [the] NMIA, you may wish to subject the project to a competitive bidding rather than through unsolicited mode, unless SMCH [San Miguel Holdings Corp.] has been accorded by your department an original proponent status,” the Neda said in a letter to Transportation Secretary Arthur P. Tugade dated October 27, 2016. The letter was signed by Neda Undersecretary and, at that time, Officer in Charge Rolando G. Tungpalan.
While there is no cap or threshold on the number of proposals it will take before the government can decide to conduct competitive bidding, the sheer number of interested parties in the NMIA, in the Neda’s opinion, can make the NMIA a solicited project.
Concept
A document by multidonor technical-assistance facility called Public-Private Infrastructure Advisory Facility (PPIAF) explained that the concept of unsolicited proposals in build-operate-and-transfer (BOT) projects was introduced in Republic Act 7718 of 1994 and its implementing rules and regulations (IRR).
The law and the IRR stipulate that unsolicited proposals should involve a new concept or technology and not be part of the agency or local government unit’s (LGU) list of priority projects, as consolidated under the medium-term public investment program for national government agencies. Likewise, RA 7718 and its IRR stipulate that unsolicited proposals should not require any direct government guarantee, subsidy or equity.
“In addition, any component of an approved solicited project will not be eligible as an unsolicited proposal,” the PPIAF document said.
The South African Development Community (SADC) Public Private Partnership Network (SADC 3P Network) has described unsolicited bids as “unique in nature and are bound to differ in how the private sector wants to deal with the government or the general public.”
“Therefore, variations of the proposals for partnership with the government might include requests for the government to borrow money, issue securities, invest public money, give guarantees or indemnities or operate bank account,” the SADC 3P Network said in a report. “Consequently, the government has to clearly state its position on which modalities will be accepted.”
The report that evaluated the case for the Botswana government to adopt unsolicited proposals cited as an example the Philippine government, which the report said “does not allow direct sovereign guarantees, equity, or subsidies. It does not include market risks or revenue streams.”
Actors
IF the DOTr decides to conduct competitive bidding for the project, this means that the performance requirements or project specifications will be drawn up by the government.
These requirements may include components, such as the capacity of the terminal, the number of runways, access to and from the airport, and other key aspects that will allow the NMIA to meet the country’s needs.
The DOTr will also have to finalize the bid parameters, such as sovereign guarantees or premium payments, and the award will be granted to the group that offers the highest net present value.
This means that if sovereign guarantees were chosen, the government will award according to the lowest subsidy sought. In terms of premium payments, the award will go to the company/group that will provide the highest offer.
Going through a competitive bidding for a project will also promote transparency and prevent naysayers from claiming that the choice of the unsolicited proponent was made through a “sweetheart deal.”
The unsolicited proposal, if the DOTr will push through with this mode, will still require a Swiss Challenge. The latter is a process by which other private groups could still come forward to make an offer to match the bid of the proponent.
However, the primary actor in the NMIA is still the DOTr. Whether it decides to implement the NMIA through unsolicited or solicited mode, the fact remains that the country is already in dire need of a new international airport to decongest the Naia.
“They have not made a decision yet, that’s the problem. In the last two Infracom meetings, we were forcing the issue already because we need to decide on an international airport because we need one,” a Neda insider told the BusinessMirror.
Tabled
THE Neda said the development of the NMIA was identified by the DOTr as one of its Core Investment Programs and Projects through the Public Investment Program Online.
But the Neda estimates that building a brand-new international airport will take over 15 years to complete and be up and running. This is mainly because of the extent of civil works and the standards needed to be met to make the airport up to code.
Persons working at the Neda told the BusinessMirror that other airport-development plans, such as expanding the Naia, have been thrown on the table. But the high cost of properties in the airport area makes this a costly venture.
Assuming the government has the financial capability to obtain the land needed to build another runway for the Naia, the next problem is connectivity. Since the available land that could be expropriated will necessitate crossing the South Luzon Expressway (Slex), the only option for connectivity is underground, which is not feasible.
Neda sources explained that an underground connection between Naia 2 and Naia 3 was initially explored. While the numerous underground utilities and the condition of the soil in the area because of groundwater sources could be addressed by modern technologies, the endeavor could be financially draining.
The expansion of the Naia, Neda sources admitted, has been studied as early as the 1970s during the time of former President Ferdinand E. Marcos. But even at that time, expanding the Naia by adding more runways was not feasible due to the costs.
In the absence of a new international airport, the Neda said the government can choose to divert flights 80 kilometers north to Clark International Airport (CIA) in Pampanga or other airports that are farther away from the Philippines’s capital.
Crucial
DIVERTING flights is crucial, since placing a new airport near the Naia could spell disaster for airlines’ flight paths. Having an airport with a different flight path will prevent disasters and the closure of the existing Naia airport.
Neda sources said Clark could be a good option for a dual airport system. But unless the number of passengers using the airport could reach 10 million, it will not be economically viable. The Philippines cannot risk this, because it will surely cause the airport losses, the same thing that happened in London in the United Kingdom and Montreal in Canada.
When a second airport was opened in London, Gatwick airport, it initially booked losses because it competed with the same passengers going through Heathrow airport. Neda sources also recalled the time of the Montreal Olympics in 1976, when the Canadian government opened a new international airport. Right after the Olympics, the new airport and the existing airport experienced financial losses due to the lack of passengers.
Options
TUGADE has said that all unsolicited projects were welcome, but only if they met certain conditions.
He echoed the SADC 3P Network view said that the government would give no subsidies or sovereign guarantees. For airports, he said the government should not be compelled to provide support in terms of encouraging airlines to locate at the new facility.
The Clark International Airport (CIA) was the most viable Naia alternative, but even DOTr officials admitted that luring traffic there would be challenging without first building a mass-transit connection like a train system.
Still, the Duterte administration said it is studying a plan to revive the operation of the Subic Bay International Airport (SBIA).
“Subic Airport is a very good airport, but its equipment were no longer there,” Tugade said. “Maybe one possibility is to look into the revival of the airport, and we are ready for that possibility.”
During the BusinessMirror Coffee Club forum last year Transportation Assistant Secretary Cherie Mercado-Santos confirmed there is a proposal of having a Naia “twin”.
When asked about an alliance of businessmen interested in the airport project, Mercado-Santos said, “As far as the DOTr is concerned, there’s a process; you have to follow the process: Give a proposal.”
She added that the DoTr is definite about its plan to build another airport apart from Sangley and the Naia.
Viability
MERCADO-SANTOS last year banked on the viability of the CIA as a fresh alternative to the Naia.
She said during the BusinessMirror forum that Quezon City residents and northward would rather opt for CIA rather than battle the traffic on Edsa on the way to the Naia. According to Mercado-Santos, “Tugade would like to expand and improve Clark and he wants to be a guinea pig for decongesting the Naia.”
“While doing that, [the secretary] is also pressuring himself to make the interconnection to Clark by means of a railway,” she added.
Asked if the DOTr meant that there should be three airports—the Naia, Sangley and Clark, Mercado-Santos said: “The [DOTr’s] belief is we’re open to more than two airports.”
She said the SMHC’s proposal to build an airport in Bulacan would be viable because early study showed it is too far from Clark to affect its flight patterns.
Aviation experts have said no two international airports should be closer than 25 miles. Otherwise, both of their traffic patterns would overlap.
However, CIA Corp. (CIAC) CEO Alexander Cauguiran said in an interview that SMHC’s airport would be a losing proposition in Bulacan.
“I doubt if the proposed airport in Bulacan would be viable,” he said at the signing of a memorandum of agreement between the Philippine Airlines and CIAC. “It is hemmed in by the Naia and Clark.”
Constraints
BUT given the constraints of Clark, as well as the fact that most travelers need to go to and come from Manila, they will not be able to address the needs of local and foreign travelers.
Whether the DOTr decides to build a new airport through competitive bidding or unsolicited mode or operate a dual airport system with Clark, Sangley, or another airport somewhere in Bulacan, it cannot be denied that something has to be done about the congestion at the Naia.
The current administration, given its promise of change, could do well to clear the path for better airport facilities. This will not only give local and foreign passengers comfort whenever they leave or arrive at the Philippines’s primary gateway but also boost the country’s chances of increasing tourist arrivals in the long term.
Policy-makers should come onboard to the idea that the time to decide on the airport infrastructure issue is now.
With additional reports by Recto Mercene
1 comment
Subic is not such a good airport. it has just one runway. Any decent international airport must have at least 2 parallel runways to allow simultaneous take-offs and landings, as it is done now in Hong Kong for example. A facility with 3 or 4 runways (Paris CDG, Los Angeles LAX, Atlanta ATL) would be even better. Having more runways as in Chicago ORD, Dallas DFW or Denver DEN is not necessary. Runways must also be oriented according to dominant winds habagat and amihan. It is not so in Subic.