MANILA, Philippines – The long-overdue rehabilitation of the Ninoy Aquino International Airport (NAIA) is officially kicking off under its new operator, San Miguel’s New NAIA Infrastructure Corporation (NNIC), starting Saturday, September 14.
As a government-run airport, NAIA has long languished as one of the worst and “most stressful” in the world — its reputation marred by bed bug-infested chairs, air traffic management woes, and broken air-conditioning systems. Now, Ramon Ang’s San Miguel Corporation and his Korean partner Incheon International Airport hopes to change that by modernizing its aging facilities and increasing the passenger capacity of the overloaded airport.
Under the terms of the P170.6-billion deal, San Miguel’s group will serve as the operator of NAIA for the next 15 years, with a possible 10-year extension.
The new operator will be sharing 82.16% of its gross revenue to the government, on top of an upfront payment of P30 billion and a fixed annual payment of P2 billion. The government stands to earn approximately P900 billion in its share of revenue over 25 years.
NNIC is expected to almost double airport capacity, from an annual passenger count of 35 million to 62 million. Air traffic movement should also improve from 40 movements per hour to 48.
Finding someone willing to meet such demands was no small feat. The Philippine government has long tried to bring the private sector in to help improve NAIA, with public-private partnership (PPP) plans for the airport starting as long as three decades ago.
The previous Duterte administration received a total of five unsolicited proposals for the airport, but all of them failed. Meanwhile, this successful bid for NAIA will now go down as the fastest PPP project in Philippine history, finishing in just eight months, from its approval in July 2023 to the awarding of the concession agreement in March 2024.
So, what exactly can passengers expect as NAIA gets its much-needed upgrade?
No terminal reassignments — yet
Days before NNIC was set to take over, its general manager, Angelito Alvarez, promised that the turnover would not disrupt current operations. It would be business as usual as changes are gradually introduced.
Among those changes will be an eventual reassignment of terminals. NNIC is proposing the following terminal reassignments:
- NAIA Terminal 1 will exclusively serve Philippine Airlines’ international flights
- NAIA Terminal 2 will serve domestic flights, including those of Philippine Airlines and Cebu Pacific
- NAIA Terminal 3 will serve all other international flights, including those of Cebu Pacific and AirAsia Philippines
- NAIA Terminal 4 will serve AirAsia Philippines’ domestic flights
There is no timeline yet for the implementation of the proposed reassignment, and the plan may still change as airlines are seeking a consultation with NNIC over it.
“Cebu Pacific fully supports the long-term vision of the NNIC, including the planned terminal re-assignments. However, it is vital that all necessary operational support and systems are in place before any terminal changes are implemented,” the budget airline said in a statement on Tuesday, September 10.
Cebu Pacific highlighted that in Singapore, it took a year of discussions and coordination before they moved terminals in Changi Airport.
AirAsia Philippines likewise said that it awaits “further thorough consultation with NNIC and other airport stakeholders.”
“Such terminal reassignment requires careful planning, including time and motion studies, consideration of environmental factors, and adequate time for implementation to minimize disruptions, especially as we are also nearing the peak season,” AirAsia Philippines said on Tuesday.
NAIA implemented a terminal reassignment just a year prior, which the government said would increase the capacity of certain terminals and decongest others. For now, this terminal assignment still stands. (READ: NAIA terminal reassignments set to begin in April 2023)
Upgraded facilities
NNIC plans to roll out quick fixes over the first few months, improvements which include new toilets, added seating capacities in terminals, additional air-conditioning units, and a more reliable high-speed internet.
There are also plans to ensure power redundancy, which includes adding uninterrupted power supplies (UPS), generator sets, and batteries. Recall that a faulty UPS was one of the causes of the air traffic fiasco on January 1, 2023 that paralyzed Philippine airspace for hours.
The new operator also wants to upgrade the retail and food and beverage experiences in terminals. Rappler earlier learned that San Miguel’s group will do a “review” of current airport concessionaires, with the idea of setting up a food court centered on Filipino cuisine.
Other quick fixes include upgrading x-ray machines so that passengers don’t have to remove tablets and laptops from carry-ons, and repairing existing walkalators, escalators, and elevators.
Meanwhile, San Miguel intends to improve annual passenger capacity to the 62 million level over the next four to five years. These include landside and airside road improvements, passenger terminal expansions, improvements to existing terminals, and the construction of new parking facilities that would more than double the vehicle parking spaces of Terminals 1 and 3.
The abandoned Philippine Village Hotel, which was seized back by the government in late 2023, will also be torn down to make way for a new passenger terminal building.
Other long-term improvements include connecting Terminal 3 to the Metro Manila Subway, upgrading the baggage handling system, and adding self check-in, self bag-drop, and biometrics systems.
Higher terminal fees, airfare
But let’s not forget: San Miguel is not doing this for free, and modernization certainly comes at a price. Ang will recoup the enormous investment that he’s sinking into NAIA by hiking terminal fees, also known as passenger service charge.
By October 2025, the passenger service charge will go up to P950 for international flights and P390 for domestic flights, according to a report by The Philippine Star. Further hikes could come in the 7th, 12th, 17th, and 22nd year after the new operator takes over.
Besides this, airlines will also have to pay higher takeoff fees for both their international and domestic flights. While this does not directly increase airfares, these fees will almost certainly be passed on to passengers through higher ticket prices.
“Determining the fare is really up to the airline,” Department of Transportation (DOTr) Secretary Jaime Bautista earlier told reporters. “DOTr has no say when it comes to raising fares. It’s the call of the airline.”
In fact, airlines are already advising passengers to brace for higher prices. Both the Air Carriers Association of the Philippines (ACAP) and Board of Airline Representatives (BAR) have stated that “passengers may expect adjustments in travel costs once new airport fees are implemented.”
“We look forward to positive outcomes for all stakeholders in the course of the transition to privatized airport management and we earnestly await the holding of consultation meetings by NNIC that will clearly outline the steps to be taken for the upcoming transition on September 14,” ACAP and BAP said in a joint statement on Monday, September 9. – Rappler.com
