Philippines Looks to Public-Private Partnerships for Airports

 - August 4, 2015, 1:00 PM
A cargo handler loads a Philippine Airlines Airbus A330. The Filipino government hopes to fast-track airport development. (Photo: Airbus)

At least six firms are in a race to win operations and maintenance contracts at five regional airports in the Philippines under a public-private partnership (PPP) scheme worth $2.4 billion. The government-led auction comes at a crucial time for the Philippine tourism industry, which has consistently underperformed due to safety issues and a lack of airport infrastructure.

With the recent removal of the Philippines from the European Union's so-called black list, however, European insurance companies will again cover passengers flying on Filipino airlines, and travelers are now being encouraged to use the country’s low-cost carriers to hop from island to island.

The Philippines now anticipates an increase in international tourist arrivals, especially from Europe. To keep pace with expected growth, the Department of Transportation and Communications (DOTC) is banking on the success of its current PPP projects after awarding its first airport contract to the GMR-Megawide Consortium in April 2014. Valued at $305 million, the group holds responsibility for operating and maintaining Philippines’ second busiest airport, Mactan-Cebu International. In June, GMR Megawide Cebu Airport Corp. broke ground on construction of a new Terminal 2, which it expects to complete by 2018.

The current airport projects up for bidding will come bundled in two packages. The government will auction off Bacolod-Silay International Airport with Illoilo International Airport, while the contract for Davao International Airport will include Laguindingan and New Bohol airports.

So far, six companies have applied to the DOTC to pre-qualify and bid for the projects ahead of the August 10 deadline, a date that has moved several times. The department hopes to award project contracts by March 2016 for a concession period of 30 years.

The highest bidder take responsibility for operations and maintenance of the airports along with the immediate expansion of passenger terminal buildings and various facilities covering both landside and airside. ATC services will continue to fall under the responsibility of the Civil Aviation Authority of the Philippines.

In addition to the current airports program, the DOTC plans to auction off Ninoy Aquino International Airport, valued at $1.6 billion; Clark International Airport, worth $1.2 billion; and three airports in Palawan under a bundled bidding process.