SM Group not keen on Naia deal without land dev’t component

SOME of the country’s biggest companies have expressed interest to bid for Manila’s Ninoy Aquino International Airport—the crown jewel of Philippine airport operation deals eyed for privatization—but Henry Sy’s SM Group may not be among these.

Hans Sy, president of SM Prime Holdings Inc., said in an interview last week that an SM bid would only make sense if there were additional land components that could be packaged into the Naia public private partnership contract.

That would help the group, which owns the country’s biggest shopping mall franchise and its largest bank, stay within its core business lines, Sy said.

“If it’s just airport operations, then frankly [we are] not interested,” Sy said, referring to a possible Naia PPP deal that has caught the eye of active investors like San Miguel Corp., Ayala Corp. and Megawide Construction Corp.

“What would be interesting to us is what comes with it, the land and if there is room for expansion,” Sy said. “If it’s purely airport operations that the government wants us to improve, then that’s not really our business.”

The Naia project’s structure has yet to be finalized, but there is so far “no plan” to include any land development apart from projects directly related to the airport business, PPP Center executive director Cosette Canilao said in a separate interview on Friday.

Canilao said such expansion projects include a new Naia passenger terminal and additional parking lots to help address the worsening congestion in the facility.

The SM Group had bid for an airport deal under the PPP Program in the past, attracted by a growing global trend of airports getting a larger share of their revenues from non-aviation sources, like retail and duty-free shopping.

A 2013 study by the Airports Council International showed that these non-aeronautical revenues accounted for almost half of the total amount, among air gateways surveyed.

Lured by an adjacent six-hectare property that can be developed into a retail complex, SM Investments Corp. teamed up with the operator of Zurich Airport in Switzerland, Flughafen Zurich AG, for the P17.5-billion Mactan Cebu International Airport PPP deal in 2013. It lost to an aggressive offer by Megawide and India’s GMR Infrastructure.

Canilao said a proposal on Naia, which handles more than 32 million passengers annually, could be made to the Department of Transportation and Communications in coming weeks.

This will be followed by a presentation to the Investment Coordination Committee of the National Economic and Development Authority, possibly by May this year, she said.

The DOTC is currently auctioning off the Bacolod-Silay, Iloilo, Davao Laguindingan and New Bohol airport contracts.

Prospects for a Naia airport bid would be affected by the government’s plan to build a new international airport nearby with the aim of eventually replacing Naia. The DOTC earlier said a likely site was Sangley Point in Cavite province.

The original assumption was to finish the new air gateway by 2025, according to the DOTC. However, the timing would also depend on how soon approvals are given, and when a final study is released by the Japan International Cooperation Agency.