Grab some popcorn: SMC proposes new airport

Ben D. Kritz

Ben D. Kritz

According to a number of reliable sources, Chairman Ramon Ang of San Miguel Corporation was granted an audience with President BS Aquino 3rd last Wednesday to present a proposal for a $10 billion replacement for the ill-starred Ninoy Aquino International Airport, the toasty comforts of which have greeted delegates to the 23rd World Economic Forum on East Asia being held here this week.

The new airport, which would be built on a tract of land to be reclaimed from Manila Bay along the shoreline of Parañaque, Las Piñas, and Bacoor, would rival airports in Hong Kong and Singapore in size and sophistication, and boast a traffic capacity more than six times greater than the hopelessly outdated NAIA. And the best news of all is it would not cost the government a single centavo; SMC would finance the construction of the massive complex and turn it over to the government on completion, remaining just to operate the airport on a long-term contract at the reasonable rate of return of 10 percent.

Grab some popcorn and a beverage of your choice and find a comfortable seat, because this ought to be a good show. Whether it will be a comedy or a horror movie is anyone’s guess.

That Metro Manila needs a new airport is a gross understatement, and with the prospects of any serious action being taken to make the obvious existing alternative, Clark International in Pampanga, the replacement for NAIA rapidly fading, SMC’s plan at first glance seems like a welcome suggestion. As plans go, the airport proposal is surprisingly ambitious, even audacious, and if it was actually completed would easily be the biggest public works project ever undertaken in this country. The problems that will likely lead to it remaining where it is now—on paper—are not with the plan itself, but with the legal and regulatory tar pit many good infrastructure ideas become permanently mired in here.

For starters, this is actually the second time SMC has advanced an airport proposal. This one is a somewhat modified version of a $6 billion proposal offered last March, which was angrily shelved “indefinitely” by Ang after the Department of Transportation and Communications (DOTC) made a change to the terms of reference of the Cebu-Mactan International Airport project. Under the revised rules, no owner of an airline or airline-related business could bid for the airport project of its own, and would be limited to a 33 percent stake in any consortium bidding for the project; furthermore, the 33 percent limit on consortium participation was made a hard cap—if two or more airline owners were involved, then their collective stake would be limited to 33 percent. SMC, with a 49 percent ownership stake in Philippine Airlines, would therefore be limited to a minority share of its own proposed project.

While there is some logic in not allowing an airline owner to have a controlling stake in an airport (and in any case, other examples of the arrangement, most recently in Foshan, China, and Coventry, England, have been financial flops), the DOTC parameters could be easily adjusted. Finding a place to put the massive development might prove significantly more difficult. SMC’s proposal sites the airport on 1,600 hectares of land to be reclaimed from Manila Bay where the controversial Cyber Bay project is now located. That project was originally planned to cover 750 hectares, but ran into trouble when the Supreme Court ruled the original contract illegal back in 2002 on the grounds that it had not gone through a proper bidding process. As recently as the middle of last year Cyber Bay (which is co-chaired and controlled by Ramon Ang) was seeking P11 billion in compensation from the Philippine Reclamation Authority for costs associated with the part of the project (an estimated 150 hectares) already completed.

The area where the proposed reclamation would be built has also been the target of anti-reclamation activists, and not without some justification, as it is currently managed as a wildlife preserve, one of the few natural areas left close to the city. So far, the dissenters led by Senator Cynthia Villar have not been successful in getting the area declared off-limits to development, but if the airport proposal is seen to be making some headway, it will likely encourage the participation in the anti-reclamation drive of people who actually know what they’re doing; at a minimum, they will be able to impose lengthy delays to any progress the project makes through the labyrinthine Philippine legal system.

Finally, we have to wonder if Ramon Ang’s confident assertion that SMC would welcome the project being subjected to a bidding process gave former PAL overlord Lucio Tan—who has been diligently trying to unload his remaining stake in the airline—a feeling of déjà vu. Back in 1996, the Asia’s Emerging Dragon Corporation, a consortium including heavyweights Tan, Henry Sy, Alfonso Yuchengco, Andrew Gotianun, George Ty, and John Gokongwei, Jr., figured to have a lock on the project that would eventually become the disastrously controversial NAIA Terminal 3. After all, they had been encouraged by then-President Fidel Ramos to put together a plan, had his endorsement as the ex-officio head of the National Economic Development Authority Board, and had the inside track in the Swiss challenge process as the project’s original proponent. None of that mattered, however, when their bid was blind-sided by a late offer from the consortium—led by Tan’s former college classmate Vic Cheng Yong—which would eventually become the Philippine Air Terminals Co., Inc., otherwise known as PIATCO.

The phrase, “ . . . and we all know how well that turned out” could be used here, except not really, because 18 years later, the fallout from the NAIA-3 project is still mired in legal proceedings, with a resolution due—if we’re lucky—sometime in the latter half of this year. What happens if the regulatory hurdles of the DOTC terms of reference are overcome, and if the nagging legal and social issues of the reclamation project are resolved, and then SMC finds itself ambushed by a competitor it never saw coming? Will the metropolis get the new airport it desperately needs, or will it get another expensive might-have-been that keeps lawyers busy long after babies born today graduate from college? We hope not; but we’ll have to stay tuned to find out.


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