BATTLE OF AIRPORTS

The world’s best two airports, Changi of Singapore and Incheon International Airport of South Korea, will operate in the Philippines to help manage the country’s future two best airports –Clark International in Pampanga and the New Manila International Airport (NMIA) in Bulacan.

Changi is the partner of Filinvest Development Corp. and JG Summit Holdings (owner of Cebu Pacific Air) to operate and maintain Clark International Airport for 25 years.

Incheon Airport is the partner of San Miguel Holdings Corp., the airport subsidiary of San Miguel Corp., which is putting up the $15-billion NMIA, in Bulakan town, Bulacan province, 40 kms northwest of Manila and will operate it for 50 years.

The Clark contract awarded Filinvest-JG Summit’s North Luzon Airport Consortium on Dec. 21, 2018 will also develop the commercial assets, operate and maintain project facilities and fit-out the new terminal. 

“We are confident that with the vast experience of each member of the consortium in terms of property development, air transportation and airport operations, NLAC will be able to reinvent Clark International Airport to a world-class airport, meet the continued growth of international and domestic air travel, and deliver its commitment to the government and the public,” said Josephine Gotianun-Yap of Filinvest Development Corp., the lead consortium member.

NLAC vows to establish “a new reputation” for the Philippine international airports with its technical partner Changi Airport Philippines—part of the Changi Airport Group that operates Singapore Changi Airport.

Skytrax has named Changi Airport as the world’s best for six consecutive years, including 2018 when Incheon placed second.

Meanwhile, on Nov. 23, 2018, in Tokyo, Japan, San Miguel Corp. President Ramon S. Ang signed a memorandum of understanding with Incheon International Airport President Chung Il-young for a cooperative partnership with SMC subsidiary, San Miguel Holdings to develop and manage the proposed New Manila International Airport (NMIA).

In terms of quality of management, efficiency, and scale of markets, Incheon and Changi airports are on the same level, according to industry insiders.  Ang likes the Koreans.  “They are easier partners,” he volunteers.   Bulacan will be the largest airport outside Seoul in which Incheon Airport will get involved. 

The Airports Council International (ACI) named Incheon International Airport “Best Airport Worldwide for a record seventh year in a row, from 2005 to 2011.  At Incheon airport, it takes only 16 minutes processing for departure and 12 minutes for arrival—far above the global standards of 60 and 45 minutes, respectively.

From 2005-2011, Incheon has also regularly won ACI’s awards for Best Airport Worldwide, Best Airport in Asia Pacific, and Best Airport with 25-40 million passengers per year.

The ACI Best Airport award is considered the “Nobel Prize of the Aviation Industry”, and is determined through the survey of 1,700 airports by 350,000 passengers.

The Clark International Airport (CRK) claims to be one of the biggest aviation complexes in Asia.  It has  two  runways parallel to each other but because the facility used to be for military purposes, the distance between them is narrow, virtually making Clark a single runway airport.  The runway can be extended to 4 kms to accommodate new generation wide-bodied aircraft.

The primary runway (Runway 02R/20L) has a length of 3,200 meters and a width of 61 meters and is fully equipped with all navigational aids and lighting facilities, with Category 1 rating for precision approach.

The secondary runway (Runway 02L/20R) has a length of 3,200 meters and a width of 45 meters.  Not yet equipped with navigational aids and lighting facilities, it is for Visual Flight Rules (VFR) only.

San Miguel’s NMIA will have four runways good for 100 million passengers—Runway 1 (45m x 3500m); Runway 2 (45m x 2600m); Runway 3 (45m x 3500m); and Runway 4 (45m x 2600m).  Ramon Ang promises to build additional two runways (to make it six) to service up to 200 million passengers.

Ang says with the NMIA, tourist arrivals will increase to 20 million, from barely 7 million at present.  Assuming two workers per tourist, 20 million translate into 40 million jobs.  Aviation contributes 9% of economic activity or GDP which amounts to P17 trillion.  Of P1.53 trillion aviation GDP, 70% or P1.07 trillion is contributed by NAIA. 

If NAIA is phased out, that P1.07 trillion (6.3% of GDP) contributed to the economy will come from San Miguel’s NMIA.  Commercial aviation grows by 4%-5% yearly so that in 10 years, NMIA’s contribution to the economy will be P1.6 trillion.

In Clark, Changi has the advantage of helping manage an existing airport undergoing expansion.  Its capacity will be limited – 4.1 million passengers per annum (ppa) at the old terminal, eight million ppa at the new terminal (completed in 2020),  22 million in the second phase, and 46 million in the third.

In Bulacan, Incheon Airport has the advantage of helping develop a brand-new airport from the ground up, using its experience and technology developing and managing Seoul’s Incheon which was also built on reclaimed land. 

Also, with Incheon partnering with San Miguel, other South Korean industrial giants could be enticed to come to the Philippines.   

The Land of the Morning Calm is the world’s 11th largest economy which is worth $1.645 trillion.  It is the world’s sixth largest steel producer and third largest in cement.  Korea’s R&D spending, at 3% of GDP,  during 2000 to 2006 exceeded that of China, Russia, and the US.  Its top exports are:  electrical machinery, machinery (including computers), vehicles, and ships.

San Miguel is keen to go into integrated steel mill to produce high grade steel and is expanding its cement production exponentially to make it a cement export powerhouse.

Commercial aviation is booming in Asia.   There were 8.2 billion air passengers in 2017, according to the Airports Council. They will swell to 20.9 billion by 2040, at an annual growth rate of 4.1%. Of the 12.7 billion increase, from 8.2 billion to 20.9 billion, half or 6.35 billion will be handled by Asia Pacific airports.  About 4 billion (19%) of the 20.9 billion air passengers by 2040 will be Chinese. 

Four billion Chinese will fly by air in 22 years.  Indeed, over 60% of air passengers will come from emerging and developing economies like the Philippines.  Vietnam, India, Saudi Arabia, the United Arab Emirates, and China will be the fastest growing in air passenger traffic from 2017 to 2040.

Transportation Secretary Art Tugade is right in promoting the multiple airport strategy for Manila. 

South Korea has a population of 51 million.  It gets 13.3 million tourists yearly.  Singapore has a population of 5.6 million.  It gets 17 million tourists.   The Philippines has a population of 110 million.  It gets just below 7 million arrivals a year.  Using the South Korea ratio of one tourist for every four South Koreans, the Philippines should easily attract 27 million tourists a year – thanks to San Miguel’s Bulacan airport, and of course, Clark.

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