Terminal Fee Bugs NAIA Consortium Proposal

NEDA Says Government Guarantee Not Allowed

19 February 2019

The National Economic Development Authority (NEDA) has formally returned the offer of NAIA Consortium to operate and expand Ninoy Aquino International Airport(NAIA) to the Department of Transportation (DOTr) DENYING THE OFFER due to perceived technical concerns on mandatory "Terminal Fee" structure proposal which according to the economy governing body is tantamount to a "Government Guarantee", in a meeting conducted on February 6.

DOTr is set to meet with the Naia Consortium this week to resolve some issues on its proposal to rehabilitate, operate and maintain the Ninoy Aquino International Airport.

The fact that it was denied by NEDA will entail the consortium to submit a new concession proposal to the government again otherwise decision will become final.

“NAIA Consortium may submit a new proposal to upgrade the country’s main airport again. There are provisions in the propose concession agreement that is questionable,” Transportation Undersecretary for planning Reuben Reinoso said.

The NAIA Consortium — composed of AC Infrastructure Holdings, Aboitiz InfraCapital, Inc., Alliance Global Group, Inc., Asia’s Emerging Dragon Corp., Filinvest Development Corp., JG Summit Holdings, Inc., and Metro Pacific Investments Corp. however argues that it’s not a government guarantee and it’s important for the bankability of the project. But NEDA doesn't think so.

The Naia Consortium secured an original proponent status from the DOTr in September 2018 for its ₱102-billion offer to expand, upgrade and operate NAIA airport under a 15 years proposed concession agreement. The concession offer was brought to NEDA which denied it due to questionable provisions.

Should NAIA consortium revised their concession agreement, the proposal will be endorsed back to NEDA Board for approval before it will be publish in a newspaper of general circulation to invite other bidders who wished to challenge the proposal through the mandated Swiss challenge.

Naia Consortium hoped to start work on the upgrades by September this year. The setback will have the consortium move their timetable by second half of next year.

Naia Consortium offers to increase capacity of NAIA airport to support 65 million passengers per annum. It will also buy navigational equipments to support increase of hourly takeoff and landing movements to 52 movements per hour. Among the offer includes plans to build a “people mover” to link Naia’s passenger terminals. ​

Terminal 2 Upgrade Completes In 2020

19 February 2019

The Manila International Airport Authority (MIAA) disclosed on Monday that the rehabilitation and upgrading of Ninoy Aquino International Airport (NAIA) Terminal 2 will be completed on the first quarter of 2020.

The 601 million pesos rehabilitation and upgrading project started in October 2018 and will take 1 and half year to finish.

"Construction will be completed by March 2020." MIAA General Manager Ed Monreal said.

Once completed, Terminal 2 will be converted back to domestic terminal for both Cebu Pacific and Philippine Airlines, while PAL international operations will operate exclusively at Terminal 1. International airlines operating at Terminal 1 will also complete relocation to vacated Terminal 3 which will revert back to purely international terminal.

Monreal said departure check-in hall and the arrival baggage areas are to be expanded as it removes immigration facility at the north wing.

MAIA said the project involves architectural face lifting, replacement of damaged floors, roofs, and restoration of 32 sets of skylight roofing, and chemical cleaning of stained floor finishes in the arrival and departure areas.

The aerobridge areas and elevated roadway will also be upgraded to accommodate higher volume of domestic traffic, Monreal added.

A people mover is also in the pipeline for construction linking Terminal 1,2,3 and 4. to benefit transfer passengers.

DOTr Prepares Swiss Challenge For Bulacan Airport

15 February 2019

The Transportation Department (DOTr) will publish the $10 billion offer of San Miguel Corporation (SMC) to build Bulacan Airport next month as it invite and solicit other bidders to match or excel the bid for the planned P735-billion New Manila International Airport project in Bulacan.

According to DOTr a "Swiss Challenge" will be made available next month, giving other companies opportunity to match or make better bids propose by the original proponent.

If there is no other bidder for the project, or San Miguel Corporation (SMC) offers better terms then award will be given to them on the second quarter of this year and notice to proceed on the third quarter.

SMC said they would start building the airport by fourth quarter should they win the contract.

San Miguel Corporation President Ramon Ang said the new Manila International Airport Project will be undertaken over a period of five to seven years to full completion.

National Economic and Development Authority (NEDA) records disclosed that the airport would have a single operating runway when it opens possibly by 2026 and a passenger terminal building that supports 20 million passengers per annum on its opening date.

The airport is designed to have a parallel runway with passenger terminal capacity of 100 million passengers when fully completed in 2036. The airport will connect NLEX and Manila Radial R-10 road and will have airport express train running all the way to Manila.

Baguio Airport Requires ILS To Open 365 Days In A Year

15 February 2019

Needs ₱500 million To Be Operational

Baguio's Loakan airport is the first destination Philippine Airlines flew on March 15, 1941, yet seventy eight years later was the farthest to being served by the airline that makes hub less than 100 kilometers away. From its opening in 1934 some eighty five years ago, the problem was the same then as it is now.

The problem was its location atop a mountain that limits its runway to a mere 1,600 meters. While long enough to being not a problem to turboprop and commuter planes, its altitude at 1,296 meters above mean sea level limits the potential of the airport to serve bigger aircraft like the Airbus A320's or the Boeing 737's for the sole reason that they need a longer runway at high altitude. Its operation at the airport is just not possible.

And while turboprop and commuter planes on the likes of Philippine Airlines Q400's and Cebu Pacific's ATR72-600 can land in Loakan, these airlines will then need to contend the terrain as visibility goes to zero in less than a minute while the aircraft is on final approach on some days.

The most important for airline operations though is making a fixed schedule for arrival and departure which is not feasible in this airport at this time. It is actually the main reason why airline such as Asian Spirit, the last operator to serve commercially at this airport left due to weather considerations resulting to numerous flight cancellations which when added up does not bid well for business. At this altitude, cloud ceiling is always the problem.

Still, If that safety issue does not trouble you, the runway is also nestled at the top of the plateau with a steep cliff at both ends that simple miscalculations to approach or engine trouble on take off roll can mean the runway or the cliff. Technologies can however solve some of the airport's problem.

The Civil Aviation Authority of the Philippines (CAAP) disclosed that as much as ₱500 million is needed to upgrade the navigational and lighting facilities of Loakan airport to meet international standards.

The airport already suffers from separation problems with the runway and its taxiway to its apron that even the passenger terminal building  will need to be dismantled and move all the way to Loakan road. A new road also needs to be open But the Department of Transport (DOTr) has not made progress to its development after the Baguio City government failed to relocate the informal and formal settlers that were required to move to safer grounds to make airport operations safer. A re-design of its perimeter was also made after typhoon induced flood water damaged building structures adjacent to the runway due to drainage design flaw, which would cost another ₱200 million to construct. A budget proposal for this project is scheduled to be included in the 2020 General Appropriations Act for implementation next year.

Meanwhile, the airport remains open to general aviation and military traffic, as well as some chartered flights.

Japan Airlines Opens Haneda

5 February 2019

Japana Airlines has commenced new midnight flight between Tokyo Haneda (HND) and Manila (MNL) on 1 February. The route will be flown with Boeing 737-800s daily. Japan Airlines also operates a twice-daily B787-800 connection from Narita to Manila.

ANA Closes Deal With PAL

As Clear As The Rising Sun

28 January 2019

ANA Holdings Inc. and PAL Holdings Inc. will seal an investment deal next week in Tokyo.

The equity investment will initially comprise 9.5 percent stake in Trustmark Holdings of the Lucio Tan Group which owns 97.71% of PAL Holdings and controls 84.67% of Philippine Airlines (PAL) valued at $95 million with options to take up to 40% share of the company and possible management contract in the future tailored in a similar fashion but tweaked investment agreement the company previously agreed with San Miguel Corporation.

PAL Holdings also control Air Philippines Corporation (APC) through Zuma Holdings and Management Corporation which holds 99.97% of PAL Express.

In April 2012, San Miguel Equity Investments Inc. (SMEII), a wholly owned subsidiary of San Miguel Corporation (SMC), acquired 49% equity interest in Trustmark. Trustmark then owns 97.71% of the Company, which in turn beneficially owns 84.67% of Philippine Airlines Inc.

Thereafter, San Miguel Corporation entered talks with ANA in November 2013 for possible investment stake with the airline but the talks did not pushed through after a falling out with the Lucio Tan Group in 2014.

PAL however entered code share agreements with ANA in November 2014, and Lucio Tan group continued negotiations with the Japanese carrier leading to PAL Holding's equity restructuring in 2018 to pave the way for the foreign investment this year. Additional paid-in capital of 25.340 billion from its 2017 financial statement was added to its equity to wipe out capital deficit of 29.074 billion in the same year.

PAL said the removal of its deficit was part of the company’s intentions to welcome a new strategic investor that will buy “less than 40% of the company.”

According to source, Trustmark will initially sell 10% of its share to ANA Holdings followed by more due diligence of the airline for the acquisition of additional shares up to 40% with management contract.

The Lucio Tan Group through Trustmark Holdings directly owns 84.6% of Philippine Airlines, while 5.4% belongs to the Government of the Philippines and 10% to private investors.

Collectively, the Lucio Tan Group owns 98.91% of PAL, through a direct ownership in 98.56% of PAL’s shares and an indirect ownership in 0.35% of PAL’s shares through an 82.33% direct ownership in PR.

Nikkei Asian Review earlier broke the news based on news leaks scooped by Philippine Daily Inquirer,  and reported ANA Holdings Inc. is considering investment in PAL Holdings.

"There is continuing discussion. Contract has not been signed yet. So there is nothing to disclose." PAL President and Chief Operating Officer Jaime Bautista said Monday.

Corporate insider however disclosed on condition of anonymity that some of its officers are already booked to fly Tokyo next week without elaborating further.

ANA reported last week it is in talks with PAL’s parent company PAL Holdings about making an investment in the Philippine’s flag-carrier, but stated that no concrete decision has been made yet.

Meanwhile, Lucio Tan did not confirm or deny the talks when interviewed by reporters on the sidelines of the Bangko Sentral ng Pilipinas’ annual reception for the banking community last week. PAL Holdings also denied in a disclosure to the Philippine Stock Exchange (PSE) that it has signed agreement with ANA.

PAL Holdings has market capitalization of US$3.11 billion with US$223 million subscribed shares. PAL assets are valued at US$3.2 billion (₱180 billion) while liabilities were reported at US$ 3 billion (₱166 billion) as of December 31, 2017 based on PSE disclosures.

CEB Upggrades Fleet

27 January 2019

Low Cost Carrier Cebu Pacific (CEB) is upgrading its fleet to A321Neo beginning this year as it takes first delivery of thirty two 236 seater A321Neo aircraft last January 20 from Ireland-based lessor Avalon.

Cebu Pacific would be receiving an average of nine A321Neo aircraft starting this year until 2022.

The new A321Neo fleet will replace all flight services at Ninoy Aquino International Airport (NAIA), and Mactan International Airport to major domestic and International points served by existing A320s as the airline adds capacity to the slot-restricted airport.

CEB earlier added seven A321ceos to its fleet in 2018 replacing the expiring leases of seven A320s to add capacity at NAIA.

The airline also operates a fleet of 35 A320-200s and eight A330-300s for intra-asia and Australia service. Its subsidiary CEBgo operates a fleet of ATRs consisting of eight (8) ATR 72-500, and 12 ATR 72-600 aircraft.

The ATR aircraft are used for cross inter-island destinations mostly operating at airport where jet operations are not possible.

CEB boasts as having one of the youngest fleets in the world, with an average aircraft age of five (5) years.