Congestion problems dim Naia’s chance to become global hub

Congestion woes in Manila’s Ninoy Aquino International Airport (Naia) remain a formidable barrier to flag carrier Philippine Airlines’ goal to transform the country’s main gateway into a global transit hub, think tank Capa Center for Aviation said.

Brendan Sobie, chief analyst at Capa, said in a report PAL would struggle in its strategy to increase connecting traffic from North America and Australia to Asia via Manila.

This was part of PAL’s underlying goal to launch flights to Phnom Penh, Hanoi and Delhi by summer of this year. That plan faces challenges due to low yields and stiff competition from other airlines and better-equipped international airports.

“Manila is a very congested airport with subpar services compared to other Asian hubs,” Sobie said.

“PAL is trying to improve its transit product at Manila but significant upgrades could take years to implement,” he added.

PAL is owned by taipan Lucio Tan, whose group joined the Naia Consortium that proposed to modernize and upgrade Naia—a plan that would start in the latter part of this year.

Naia Consortium offered to spend P102 billion to increase Naia’s design passenger capacity by 60 percent and takeoff and landing movements by 30 percent in four years. Naia’s passenger volume is already about 40 percent above its design capacity of 31 million passengers yearly.

Sobie said better connectivity within Naia was also needed since PAL’s operations were spread out over three terminals, “making connections inconvenient for passengers.”

Naia Consortium earlier said its offer also included a “people mover” that would link the passenger terminals.

Sobie said PAL was eyeing more transit traffic to help boost the bottom line in its international operations, parts of which were losing money.

“PAL’s operation to Australasia, Europe, the Middle East and North America has been unprofitable over the past two years, whereas the group has continued to perform relatively well in the domestic and regional international markets (Southeast Asia and North Asia),” he said.

He said the entry of Japan’s ANA Holdings, which would acquire a 9.5-percent stake in PAL operator PAL Holdings for $95 million, would help PAL reverse recent losses.

“With relatively conservative ANA on board as a new investor, a focus on profitability and rational growth is likely,” he said. The transaction will also provide a boost to PAL’s international expansion and opens up the prospect of membership in a global airline alliance, which offers benefits such as an expanded network and cost savings.