Manila’s Airport Fiasco

Since 1989, there has been talk of rescuing its international airport. Keep hoping

For more than three decades, the Philippine government has been trying to do something — to do anything, in fact — about its shambolic international airport. The facility has been characterized by many as among the world’s worst, especially in Asia where those in Singapore, Hong Kong, Seoul and Beijing resemble luxury shopping centers as much as air terminals.

So far, authorities have failed. The most recent proposal collapsed last July when a consortium of six domestic conglomerates headed by some of the country’s biggest tycoons backed away, objecting to government restrictions.

For anybody who has gritted his or her way through Ninoy Aquino International Airport, universally known as NAIA, there is no way to describe it as anything other than an ordeal. NAIA’s shops are laughable. There’s almost no place to buy a newspaper or magazine. Food stalls are miserable. During peak times, the departure lounges are standing-room-only, and sitting – on bare metal chairs, if you can find one – isn’t much better. Internet service has only lately begun to improve, and not by much.

Landing is a cattle call, with immigration and customs a scrum that empties into cheerless halls where finding your luggage is a treasure hunt, especially in Terminal 3. It was originally designed as a domestic terminal but Philippine Air Lines took it over for international flights. Its baggage carousel was not designed for international capacity. If you’re switching to another airline, there is no direct service between the four scattered terminals, meaning it can take up to an hour to find a connecting flight

The original design capacity of NAIA, supposedly the country’s premier tourism destination, was 25 million passengers per year, reconfigured to handle 35 million. Prior to the onset of the Covid-19 pandemic, it was handling 46 million, a recipe for overcrowded misery. Despite burgeoning plans for airports all over the main Philippine island of Luzon, NAIA is slated to remain the Philippines’ primary destination. Arrivals are expected to mushroom to 50 million and more over the next decade or so.

Surfeit of proposed airports

That doesn’t mean there aren’t proposals flying around for new airports. There are three.

San Miguel Corporation, the country’s biggest private concern and the brewer of one of the most popular beers in Southeast Asia, announced unsolicited in 2019 that it intended to build a four-runway facility capable of handling 200 million passengers a year in Bulacan, 40 km northwest of Manila, costing PHP735 billion (US$15.28 billion). San Miguel envisions an “aerocity” that would include hotels, shops, mass transit systems, railway, aircraft service facilities and other amenities and services.

Unfortunately, it is to be built on 2500 hectares that flood regularly. The area is on Manila Bay, where climate change could raise the waters by anything from 1 to 2 meters according to a study by the Manila Observatory, inundating a large area of the region. Bulacan could lose as much as 41 percent of its land area. So the possibility is that in 50 years, when the new airport is due to be handed back to the government under a build-operate-transfer agreement, the government could inherit an underwater airport. San Miguel says that is an engineering problem that can be solved.

Complicating matters, the proposed Bulacan airport is designed as the catchment for the northern end of Manila and northern Luzon, the Philippines’ most populous island. Unfortunately, it’s also not far from Clark International Airport, the abandoned US Air Force base, which was just refurbished at a cost of PHP9.36 billion, increasing its capacity from 4 million to 12 million passengers annually and covering the same catchment area. Neither is reachable in practical terms by anyone living south on the other side of Manila, given the chaotic traffic situation.

Anyhow, if San Miguel wants Bulacan, it will probably get it. The company, which has branched into areas far afield from beer, was headed by Danding Cojuangco until he died last year and is now run by Ramon Ang. Danding, a member of one of the country’s most powerful oligarchical families, exerted enormous political clout, and the corporation still does under Ang.

There is yet another proposed alternative: at Sangley Point (south of Manila), a one-time military facility that was to be refurbished by a joint Filipino-Chinese consortium into a new international gateway to handle 150 million passengers annually. The consortium includes the giant China Communications Construction Company, which was recently blacklisted by the US government for its role in what the US says is the illegal construction of islets in the South China Sea into military bases.

The deal has since fallen apart for various reasons. Cavite Governor Jonvic Remulla says the bid will be reopened and the plan will go ahead. CCCC and its partner, MacroAsia, were the only ones to bid the last time, however, raising questions whether anybody else actually wants to bid. Critics say the airport is inaccessible by road given current traffic. The building of a serviceable access route is contingent on the rebuilding of the airport, and that is probably off for some time.

But in the unlikely event that all these airports get built around Manila, including NAIA, the city would have the capacity to handle at least 410 million passengers annually, or nearly four times the population of the country. That raises the bigger question of who in the government is coordinating all these airports and whether any of them is actually going to be built, or be viable. Terry Ridon, convener of the watchdog NGO Infrawatch PH, said in an interview that the Philippine approach to planning is scattershot at best. In other words, nobody is. And after that, there is the perennial question of corruption. One interested party seeking a contract to refurbish Terminal 4, the oldest at NAIA, said the standard backhander is 20 percent on all transactions.

NAIA to remain the main facility

What that means is that NAIA is likely to remain the main airport into the future, although there are real questions if anybody is going to fix it. What appeared to be the best solution, proposed in the wake of the collapse of the consortium fiasco, was a Filipino-Indian joint venture between the Quezon City-based Megawide Construction Corp. and GMR Construction Ltd. of India. The consortium turned around the moldering facility on the tourist-heavy island of Cebu and increased its capacity – profitably – from 8 million arrivals to 13 million over the next six years and making it attractive and cost-effective. It was also the GMR-Megawide consortium that just finished rebuilding Clark, increasing its capacity from 4 million to 12 million passengers annually, which is now threatened by San Miguel’s Bulacan plans.

The PHP109 billion (US$2.27 million) Megawide-GMR proposal envisioned a dramatically redesigned terminal incorporating spectacular designs patterned after the famed Banaue rice terraces tourist attraction, with reflecting ponds, built around Terminal 1, the original 1981 facility. It included modifying runway approaches to allow more and faster takeoffs and landings along with new electronic equipment and increasing passenger capacity to 60 million annually. A dedicated people-mover system would have connected to the other terminals, eliminating the time-consuming voyage to change airlines.

But the consortium, despite its enviable track record of rebuilding two of the country’s most important airports on time and under budget, ran into trouble from the start. GMR-Megawide isn’t part of the Philippine establishment. The consortium was given five months to submit its proposal and negotiate terms despite the fact that the now-departed NAIA consortium had been given two years before they gave up. The consortium got its proposal in, but last week was denied the chance to bid by the Manila International Airport Authority without comment. Although, Manuel B. Louie Ferrer, Megawide’s director and chief corporate affairs officer, said he was told it was because it hadn’t put together 100 percent of its financing up front – something Ferrer described as a pretext. The consortium has since given up and said it would move to other unspecified construction projects.

Immediately after the consortium launched its bid, the long knives came out. Lawmakers question the consortium’s financials. With considerable machinating behind the scenes that belie President Rodrigo Duterte’s stated ambition to clean up public projects, the consortium is now looking long in the tooth with five years and with little accomplished. In addition, critics mounted an attack on the GMR-Megawide rebuild of the Mactan airport, accusing Megawide of violating provisions that limit foreign ownership because of the presence of the Indian partner. Megawide director Ferrer said the accusation is nonsense.

The real competitors

Two other contenders want the bid who are considerably closer to power. The first shot at the job, after Megawide was eliminated, is Philippine Airport Ground Support Solutions Inc., the parent company to Philippine International Air Terminals Co., or Piatco, headed by Jeffrey Cheng, which with the German firm Fraport AG, built the current terminal 3 at NAIA, which handles a mix of domestic and other carriers, and which was called by one authoritative source “the most fucked-up air terminal in the world, but don’t use my name on that.”

For more than a decade, the Philippine government and Piatco fought a legal battle over the project, which was mothballed for six years amid allegations of financial irregularities after former President Gloria Macapagal Arroyo came to power, raising suspicions that payoffs hadn’t been made.

Cheng, however, has clout, according to one source, who said “Jeffrey Cheng is a known operator at the airport, it is almost a monopoly. He is the dominating factor in airport storage, receiving, and ground handling. He is close to the speaker of the house of representatives and any airline that might be interested in moving to another airport could be subject to lawsuits.”

Cheng’s concern “really wants the contract,” said a source with extensive knowledge of the airport negotiations. “But they are much smaller, mainly doing ground handling. In terms of financials, I don’t think they are going to qualify. If I were the authority, I wouldn’t consider them” unless they bring in a major partner.

That leaves the San Miguel conglomerate, which originally was fourth in line and may well end up being first. But a public statement said San Miguel’s proposal for NAIA is modest, and it appears little likely to alleviate the misery travelers face at NAIA. It plans only to take over operations and maintenance under a 10-year concession designed to “give the government a freer hand” to do what it wants with the NAIA, once the P740-billion Bulacan airport is completed and operational.” Ang’s preference appears to be to close NAIA as soon as Bulacan is ready and turn the land to other uses, which could set off the biggest free-for-all for influence in decades, since the airport is on the southern edge of Manila, virtually on Manila Bay next to the newly prosperous Pasay area, and ripe for development, if not inundation from climate change.

In all, the outlook is ominous. San Miguel, the bigfoot most likely to get the contract to rebuild NAIA doesn’t seem much interested in the job. Megawide, the consortium with the best track record and the deepest motivation, has already been eliminated. It may be a long time before passengers are going to find landing in Manila to be a pleasurable experience.

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