Airlines raise concerns on Naia PPP

International carriers operating in the Philippines urged the government to ensure that regulatory safeguards would be in place when it privatizes the operations and development of its main air gateway, the Ninoy Aquino International Airport (Naia).

The Board of Airline Representatives, whose members include the country’s three domestic carriers as well as global giants like Delta Air Lines, Etihad and Singapore Airlines, outlined its concerns in a position paper to the National Economic and Development Authority (Neda).

The paper, signed by executive director Samuel David and addressed to Economic Planning Secretary and Neda Director General Ernesto Pernia, broadly outlined how airport privatization for a crucial gateway like Naia had “significant effects” and it was the government’s role to ensure that public and airport stakeholders were “protected.”

“The public-private partnership (PPP) to operate and maintain airports, especially where a majority of tourists transit, can succeed only if government exercises adequate regulatory powers in ensuring the interest of passengers, airlines, other airport stakeholders and the surrounding communities are protected,” the board said.

The position paper was asking Neda to look closer into three aspects.

First, it wanted the government to guarantee that controls were in place to prevent any “monopolistic” practices in terms of services being rendered to airlines or passengers by the eventual PPP deal winner.

Moreover, the board said airlines should be free to either “self-handle” airport operations or select their service provider as long as these comply with government-set guidelines.

“Doing so ensures a level playing field and free market rates to the airlines and the traveling public,” the carriers said in their paper.

“To this end, qualified concessionaires should be allowed to operate under equal terms, including their length of service, without one concessionaire being granted undue privileges at the expense of others,” the paper read.

A final request made by the board was for the government to reserve authority to regulate prices for airport services, making sure these are “reasonable” to all stakeholders.

It was not immediately clear what prompted the position paper by the board of airline representatives.

Thus far, the Department of Transportation has yet to formally invite bidders for the the P74.6-billion PPP contract to modernize and operate Naia, considered the “crown jewel” of Philippine airports.

Naia’s four passenger terminals already handled more than 36 million passengers last year, well above its design capacity of 31 million, making it an attractive bid target.

So far,  some of the country’s biggest conglomerates have expressed their interest to participate. These included Ayala Corp., SMC, JG Summit Holdings, Metro Pacific, the Lucio Tan group and Megawide Construction Corp.