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Can a new mega-project solve the Philippines’ air congestion problems?


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Tue, 3 Sep. 2019
    Oxford Business Group

Plans for the construction of the Philippines’ largest international air gateway were recently given the green light, and the country is set to dramatically expand its air transport capacity.

On August 14 the Department of Transportation (DOTr) formally approved an application from Philippine multinational San Miguel Corporation (SMC) to oversee the construction of a new P375bn ($7.2bn) airport at Bulacan, around 35 km north-west of Manila.

The 2500-ha site will feature four parallel runways and have an annual passenger capacity of more than 100m, around three times the capacity of Manila’s Ninoy Aquino International Airport (NAIA), currently the country’s largest.

In addition, the project will include the construction of an 8.4-km tollway to connect the airport to the North Luzon Expressway. It will also be serviced by Metro Line 7, owned by SMC, linking it to central Manila.

Work is expected to begin before the end of the year, with construction to last between four to six years. SMC will fund, develop and operate the airport through a 50-year concession deal, and has hired the services of French Groupe ADP Ingénierie, Singapore-headquartered Meinhardt Group and US-based Jacobs for the design and construction process.

SMC lodged the unsolicited proposal for the new international gateway in 2017, shortly after President Rodrigo Duterte assumed office. The project was opened to a “Swiss challenge” process but received no counterbids from interested parties.

See also: The Report – Philippines 2018

Upgrades to ease congestion

The approval of the Bulacan project comes amid efforts to combat congestion by expanding air capacity across the country.

In June the president ordered that the P500m ($9.6m) commercial conversion of Sangely Point Airport – a former US military base – should be fast-tracked and completed by November, rather than the previous deadline of December.

Sangely, which is located 28 km west of NAIA near Cavite City, will become Manila’s second-biggest airport once completed.

Elsewhere, construction is underway on a new terminal at Clark International Airport, located some 80 km north-west of the capital. The P6bn ($114.6m) project, expected to be completed by June next year, will double the airport’s annual capacity to 8m.

Additionally, the construction of a P17.5bn ($334.4m) second international terminal at Mactan-Cebu International Airport was completed in June last year, while a second runway is being planned at the site.

These new developments are in part designed to ease pressure at NAIA.

“The goal is to fully develop the Sangley Point, Clark and Bulacan airports to relocate flight operations that are currently hosted by NAIA,” Eddie Monreal, general manager of the Manila International Airport Authority, told OBG.

Built to cater for 30m visitors per year, NAIA has been operating significantly beyond capacity with annual totals of around 43m passengers in recent years, causing many flights to experience delays.

To help address this issue, a consortium made up of seven of the country’s largest conglomerates have put forward a P102bn ($1.9bn) plan to rehabilitate, expand and operate the airport.

The proposal, based on a 15-year concessional agreement, is being assessed by the DOTr and would expand NAIA’s annual capacity to 65m.

Tourism to benefit from expansion

In addition to boosting connectivity and easing congestion, the expansion of air transport capacity is expected to have positive flow-on effects for the Philippines’ growing tourism sector.

The country received a record 7.1m international tourists last year, up 7.7% on 2017’s total, while officials are hoping to increase this figure to 8.2m this year and to 12m by 2022. Increased capacity and improved facilities across the country’s airports will help facilitate the tourism sector’s growth.

An expansion of routes should also drive tourism activity. The DOTr’s Route Development Team announced the opening of 40 new international air routes last year, increasing national air seat capacity to 1.6m.

This predicted expansion in tourism will open up more opportunities for investment in air travel, Adil Al Zadjali, Philippines country manager of Oman Air, told OBG. “With 10m Filipinos working abroad and remarkable tourism potential, the aviation industry has great potential for growth in the coming years,” he said.

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