NAIA to emerge one of the world’s best airports

Finance Secretary Ralph G. Recto expressed confidence that the Ninoy Aquino International Airport (NAIA) is on its way to becoming one of the world’s best airports where all passengers will receive full VIP treatment following the signing of the NAIA public-private partnership (PPP) Concession Agreement on March 18, 2024.

“This project will ensure that only world-class service will be delivered to our people and international visitors, setting NAIA’s departure from its notorious reputation as one of the world’s worst airports to one of the best,” he said.

“Our people must receive full VIP airport treatment—no hassles, no long lines, and definitely no bed bugs and rats, just excellent service. After all, the Filipino people deserve nothing but the best,” Secretary Recto said.

With an estimated project cost of %u200B%u200BPHP 170.6 billion, the solicited proposal to rehabilitate NAIA aims to address the longstanding challenges of undercapacity, congestion, and underinvestment in the country’s main gateway.

The Finance Chief underscored that the NAIA PPP deal is a crowning achievement of the Marcos, Jr. administration, having achieved numerous unprecedented feats through a strong partnership between the government and the private sector.

The solicited PPP project for NAIA was evaluated within a record-breaking six weeks and was approved by the NEDA Board, chaired by President Marcos, Jr., on July 19, 2023.

“The NAIA PPP project sets the benchmark for efficiency for the government’s pipeline projects, being the fastest-approved PPP proposal in Philippine history,” Secretary Recto said.

“If we act with the same dispatch on all public projects, I am confident that we can sustain the momentum of growth necessary to deliver an inclusive economy for our people,” he added.

Secretary Recto said the groundbreaking deal also sets a precedent for future PPP initiatives, guaranteeing the greatest economic returns for all stakeholders.

On February 16, 2024, the MIAA board awarded the contract for the project to the SMC-SAC Consortium, which submitted the highest bid amount and is sharing 82.16% of future gross revenues with the government––passenger service charges not included.

The Consortium comprises San Miguel Holdings Corp., RMM Asian Logistics Inc., RLW Aviation Development Inc., and Incheon International Airport Corp.

The PPP deal is expected to generate around PHP 900 billion in revenues for the national government in the course of its entire concession period, which is 15 years with a provision for extension of another 10 years.

“This means that the government is assured a healthy income stream from the private sector operator amounting to 36 billion pesos annually to fund expanded social services in education, public health, and infrastructure,” Secretary Recto said.

The forecasted national government revenues from the said deal include payments from the winning bidder of the following: PHP 30 billion upfront payment, a fixed PHP 2 billion annual payment, and 82.16% national government revenue share, excluding passenger service charges.

The Finance Chief also called on the SMC-led consortium to maximize NAIA’s potential so that the country can reap the full benefits of the tourism industry to accelerate economic growth.

In 2022, the share of Tourism Direct Gross Value Added (TDGVA) to the country’s GDP was estimated at 6.2% while the tourism sector employed 11.4% of the total workforce.

“[T]he stakes are high. We cannot afford to falter in our efforts,” Secretary Recto stressed.

He emphasized that the signing of the NAIA PPP concession agreement is just the beginning of a series of pioneering PPP projects that the government aims to finalize in the coming months and years.

“Rest assured, every project, every contract undergoes rigorous scrutiny by the Department of Finance to ensure the utmost benefit for the Filipino people,” Secretary Recto said.

The concession agreement was signed between Department of Transportation (DOTr) Secretary Jaime Bautista, MIAA General Manager Eric Jose Ines, and San Miguel Corporation (SMC) President and Chief Executive Officer (CEO) Ramon Ang.