In particular, the aviation think tank said in a Jan. 25 report that it is better to build a new international airport than bid out the present Ninoy Aquino International Airport (NAIA), “retain its ownership and invest in upgrades” under the current structure while proceeding with a PPP (public-private partnership) scheme for the new airport.
“Manila will eventually require a new airport because NAIA is space-constrained and has no room for new runways or terminals. However, there are opportunities to increase capacity of the existing four terminals while significantly improving the customer experience. Runway capacity may also increase through a transition to a single runway operation,” CAPA said in its report.
The think tank said currently, “NAIA is still providing passengers with a service level far below that of its Asian peers” and is also operating above its designed capacity, and congestion has frequently led to one of the lowest on-time performance in Asia.
“A new airport for Manila is required, but the reality is it could take a decade before the new airport is opened. In the meantime, the government has an opportunity to improve service levels further and increase capacity,” the report read.
“A single runway system should be adopted and all four terminals expanded. A privatization can be considered, but the Philippine government should be careful and only proceed with the PPP scheme if it can be ensured that the new owners will make the appropriate investments without significantly raising the costs for airlines or passengers,” it added.
CAPA said infrastructure constraints have “limited growth” at Manila in recent years, but again has the opportunity to increase slots as general aviation operations move out to Sangley and air management improves. Closing NAIA’s smaller intersecting runway, CAPA said would also improve air traffic management.
“The new airport is still in the study phase and is at least several years away from opening. In the meantime, it is imperative for authorities to invest in upgrading and improving the existing airport. While there is no space at NAIA for new terminals or runways, upgrades to the existing terminals are planned, along with the anticipated air traffic management improvements,” the report read.
Citing Civil Aeronautics Board data, it added that in 2015, total passenger growth in the country was 10%, to 42 million passengers as annual aircraft movements at NAIA were “flat” from 2012 through 2015.
NAIA -- which is the fifth-largest airport in Southeast Asia -- accounts for nearly 90% of all domestic passengers in the Philippines and more than 80% of all international passengers. NAIA recently reported that it handled 39.5 million passengers in 2016, including 20.6 million domestic and 18.9 million international passengers.
Passenger growth at NAIA in 2016 was 8%, including 6% domestic growth and 10% international growth. CAPA, quoting NAIA, noted that growth in 2015 was at 7%, including 8% domestic growth and 7% international growth.
CAPA said because of congestion at NAIA, passenger growth, which as a rule of thumb is equivalent to about double economic growth, has fallen short “over the past few years” because airlines could not mount additional flights.
To cope, airlines use bigger planes but NAIA is “not capable of accommodating A380s which some of the Gulf airlines would like to use in Manila given the current level of demand and the slot constraints.”
“The inability to add flights has hampered growth. NAIA would have experienced much faster passenger growth over the past few years, given the rapid growth in the Philippine economy, if airlines had been able to add more flights,” CAPA said.
The government’s plan to implement a total ban on general aviation operations at NAIA from February, in a bid to decongest NAIA “will likely have a relatively limited impact on slots,” the report added, although it noted that a much more significant number of slots could be made available following the potential implementation of new air traffic control procedures through UK-based air traffic management expert National Air Traffic Services (NATS) which is expected to recommend a single-runway air traffic management system, which authorities “will likely adopt.”
NATS has been assisting Manila Airport with a runway optimization project under a consultancy contract that was initially awarded in late 2015.
“Economic growth in the Philippines was over 6% in 2016, and annual growth of at least 6% is projected over the next few years. Typically, passenger growth is at least double GDP growth, but the Philippines has fallen short of this metric over the past few years due to the congestion at Manila.
Growth at regional airports can only partially make up for the slower growth in Manila as a large part of the Philippine market consists of traffic to and from the capital.
Attempts by Philippine carriers to expand at the alternative airport, Clark “have also generally been unsuccessful” as Clark is too far from central Manila and is not well connected by public transport, CAPA added.
Meanwhile, CAPA said that if NAIA’s operations and maintenance is bid out late this year at a projected cost of P75 billion and the concession agreement is too short -- 15 to 20 years -- “the private new operator may not implement all the needed upgrades, or could raise charges significantly in order to recoup the investment quickly.”
The government has moved to upgrade NAIA, approving a P74.56-billion Development Project to upgrade all four terminals of the country’s main gateway.
“Extending the concession period to 25 years may the best solution as it could provide the right mix of benefits for all stakeholders. However, a longer concession at NAIA could impact investor appetite in the new airport project. The Philippines may ultimately be best to retain ownership in NAIA and invest in upgrades under the current structure, while proceeding with a PPP scheme for the new airport,” the aviation think tank added.
Currently, there are unsolicited proposals to build a new airport from two groups, one led by All-Asia Resources & Reclamation Corp., (ARRC), which teamed up with the Sy family’s Belle Corp., for a $50-billion proposal to develop an airport and economic zone at Sangley Point. Another group led by San Miguel Corp.’s Ramon S. Ang had earlier proposed a $10-billion airport on reclaimed land in Manila Bay.
The main gateway, the Ninoy Aquino International Airport suffers from congestion constraints with 36 million people passing through the airport, well over its designed capacity of 30.5 million passengers per annum, the Civil Aviation Authority of Philippines (CAAP) said in June.