GGRAsia – Andrew Tan-tied consortium a loser on Manila airport upgrade

Andrew Tan-tied consortium a loser on Manila airport upgrade

Feb 19, 2024 Newsdesk Latest News, Philippines, Top of the deck

A consortium involving a company linked to Philippine property and casino entrepreneur Andrew Tan was one of the unsuccessful bidders for a PHP170.6-billion (US$3.04-billion currently) public-private partnership project to upgrade Ninoy Aquino International Airport, known as NAIA, the main air hub for that country’s capital, Manila.

A San Miguel Corp (SMC)-led consortium clinched the bid, according to a Friday announcement by the country’s Transport Secretary Jaime Bautista, as reported by local media.

Manila, which hosts the Entertainment City cluster of private-sector casino resorts designed to draw foreign as well as domestic customers, last saw an upgrade to its main airport in 2014, when Terminal 3 (pictured) was opened, noted local media reports on Friday.

NAIA is said currently to be handling at least 50 million passengers annually despite its designated maximum capacity being 32 million passengers.

Once modernisation is completed, its runway capacity will increase to at least 48 air traffic movements in terms of peak hourly rate. Similarly, the airport’s passenger capacity is expected to grow to 62 million annually, said local media.

A Monday summary on Philippines-market developments, produced for investors by Maybank IB Research, observed that the consortium selected to carry out the upgrade “offered the highest percentage share of its future gross revenues to the government at 82.16 percent”.

Maybank added: “Following the awarding, the winning group would need to make an up-front payment of PHP30 billion to the government and another PHP2 billion in annual payments for the duration of the contract.”

The financial institution further noted the “concession period will be for 15 years, which can be extended by 10 years, if needed”.

A number of news outlets said – citing the country’s Department of Finance – that the 15-year concession for the airport was forecast to generate circa PHP900 billion in revenues, whereas total dividends remitted by the Manila International Airport Authority (MIAA) to the government from 2010 to 2023 had been PHP22.05 billion.

The winner, SMC SAP and Co Consortium, heavily outbid several other contenders, encompassing said Maybank, the GMR Airports Consortium, and the entity involving Mr Tan, called the Manila International Airport Consortium. The latter two had respectively “proposed a share of 33.3 percent and 25.91 percent” to the government in relation to future revenues, stated Maybank.

Mr Tan’s family-founded conglomerate Alliance Global Group Inc also has investment – via Travellers International Hotel Group Inc – in the Newport World Resorts casino complex next door to the airport, and which is linked to the air hub via a footbridge.