Unless the Department of Transportation and Communications changes its mind, two of the country’s most profitable business conglomerates—San Miguel Corp. and JG Summit Holdings—would be barred from participating in the bidding for the expansion and operation of the Mactan-Cebu International Airport.
The terms of reference of the project’s prequalification requirements state that, among others, groups with controlling or minority interests in airline operations cannot join the bid.
Possible conflict of interest by the winning bidder has been cited as the reason behind the prohibition.
Since San Miguel and JG Summit operate full-service carrier Philippine Airlines and budget airline Cebu Pacific, respectively, they would not get the chance to expand, operate and maintain the country’s second-busiest international gateway.
If the ban is not lifted, only the Ayala Corp.-Aboitiz Equity Ventures consortium and Metro Pacific Investments Corp. will be left in the running for the project.
Not wanting to be left out of the lucrative business venture, San Miguel and JG Summit have taken the appropriate steps to convince the DOTC to drop the disqualifying provision.
Operation
Conflict of interest has been defined as “a situation that has the potential to undermine the impartiality of a person because of the possibility of a clash between the person’s self-interest and professional interest or public interest.”
Going by this definition, apparently, the DOTC is apprehensive that if either San Miguel or JG Summit bags the project, the winner may give preferential treatment, directly or indirectly, to their respective airlines in the use of the airport’s facilities.
The special treatment can be made, for example, in the assignment of check-in, pre-departure and arrival areas; allocation of aircraft repair and maintenance premises; and priority in passenger and cargo handling.
This assumes that the winning bidder will have total or unrestricted control over the operation of the airport as if it were a personal property it can freely enjoy or use as it pleases.
That’s not the case in public airports in the United States and Europe that are run by private companies. Although their operation is in private hands, they remain to a certain degree under government supervision to protect the interests of the riding public.
In our jurisdiction, it is basic law that whenever a facility or structure is made available to or offered for use by the public for a fee or any material consideration, its operation is always subject to government regulation.
Conflicts
While it may be ideal to avoid conflict of interest situations in public activities, the government has not been exactly virtuous on this aspect in the performance of its duties and responsibilities.
Take the case of the National Food Authority. It is tasked with ensuring the country’s food security and stabilizing the supply and pricing of our staple food—rice. For this purpose, it assists farmers in the sale of their harvests and organizes market outlets so they can get the best prices for their products.
But when the NFA anticipates a possible rice shortage in the country, it imports rice from abroad to prevent the prices of rice from going up as a result of inadequate supply. Thus, in an effort to make reasonably priced rice available to the public, it is often forced to work against the interests of the farmers it is supposed to protect by buying foreign rice, which competes with the farmers’ produce.
A similar conflict of interest situation exists in the case of Philippine Amusement and Gaming Corp.
It operates gambling casinos and slot clubs in tourist spots and select urban centers and, at the same time, licenses and regulates bingo parlors, games cafes and other gambling centers in various parts of the country. In its dual capacity as operator and regulator of gambling activities, Pagcor, in effect, competes with the entities that provide it additional revenue by way of licensing fees and other impositions.
Compromise
Despite the incongruous situation that the government finds itself in the two cases mentioned, it has managed to reconcile the competing interests it represents to serve the public interest.
Although there had been instances of one interest being served better than the other, by and large, the objectives for which the two government offices were created have been accomplished.
Going back to the case of San Miguel and JG Summit, the perceived conflict of interest that may have given rise to their disqualification from the bidding for the expansion and operation of the Mactan-Cebu airport should be reviewed and realistically assessed.
The possible conflict of interest that may arise if any of them bags the project is manageable. In case either of them wins, the DOTC is not helpless or impotent to make sure the winner does not use its vantage position to favor its own airline or discriminate against its competitors in the use of airport facilities.
The DOTC’s regulatory authority, backed by the licensing powers of the Civil Aviation Authority of the Philippines, and the involvement of the Department of Trade and Industry on matters relating to fair trade and commerce are sufficient to knock sense into the head of the winning bidder to operate the airport for the public’s interest, not for their stockholders’ benefit alone.
In any bidding contest, the more participants there are, the better. It is in the country’s best interests that San Miguel and JG Summit are allowed to participate in the bid to expand and operate the Mactan-Cebu airport.
Past events have shown that when the country’s business titans battle it out in a bidding war, the government often comes out the winner many times over.
For comments, e-mail “rpalabrica@inquirer.com.ph.”