New Manila International Airport (NMIA)

[Arianespace]

What I was talking last week just came out now.

[Arianespace]

Airport construction is on as DOTr signs concession agreement with SMC for the building, operation and maintenance of Bulacan airport. Please remember that this airport is now owned by the government.

[Solblanc]

So, how big will phase 1 be? That’s the big question. If construction will start this year, then they’re probably going to freeze the design soon.

[Richard]

I suppose one runway - one terminal for initially 10 million passengers to begin with? I have no idea for how many pax the first phase will be built, before it needs expansion. Anyone?

[Arianespace]

And RSA was too smart to keep some facts away from the media.

Reporter: Can you give us details kung paano ang phases ng pag build ng airport?

RSA: Baka aabutin tayo ng magdamag dito.

He did promised the two runways.

A more serious question was asked to him during lunchtime about PAL or CEB after the prescon. He said wala pa. As to the airlines, marami na. Pero mas malaki pa rin ang PAL or CEB.

ADPI is designing for them 35 million PPA PTB for phase 1. And there is this 5-10 MPPA and 15-20 MPPA options. Of course he was prudent enough not to mention it in the Press Conference. At this time 5 MPPA is already committed so we might be looking at the next bigger design. If PAL or CEB or both says yes then we might be looking at the 35 MPPA design.

Personally, I believe they will end up building the second one for phase 1 opening in 2024. 60+30+8+2 MPPA PTBs for 2030 would be too much capacity.

So don't be fooled by the render in the contract cover. Its nothing. If you see the airport train there in the picture then start believing. Right now there is none yet.

Deme- land reclamation
Jacobs - landside engineering
ADPi- airport engineering
Meinhardt- interior designs

[Arianespace]

Also on Wednesday, Ang told reporters that SMC was in talks with international low-cost carriers to service flights at the NMIA.

“As early as now, as early as five years before the Bulacan airport opens, nandito na lahat ng low-cost carrier na kinakausap ako (there are low-cost carriers talking to me here),” Ang said on the sidelines of the inauguration of the Better World Tondo food bank in Manila, which took place before the agreement signing at Clark.

Among them were Indonesia-based PT Lion Mentari Airlines and Australia-based Jetstar Airways Pty. Ltd, Ang added.

According to him, these airlines were also asking for landing slots and even offering to build a terminal.

https://www.manilatimes.net/2019/09/19/business/business-top/dotr-smc-ink-deal-for-game-changer-airport/618551/?fbclid=IwAR0hOHVb5SWJPGFH2GEK5R-regWK_84uGyLGnHX9qhK0fsmf3ZOzI4Qz7bI

If you've been following, what his saying now was actually told page back of this thread. Even before the horse open his mouth.

What his not telling yet is about Air Asia. His really good at hiding marbles. There is only one airline that gives you 5 mppa traffic outside of PAL and CEB. Philippines third largest and fastest growing airline.

[Arianespace]

This should be a nice read.

Ramon  Ang on Airports and Philippine Airlines


The important bits are here

Would he buy back Philippine Airlines again?

And so I asked again, would he consider buying it back? RSA shakes his head.

Owning an airline

RSA says that in the Philippines, an airline is just as good as the airports. But if one has a new gateway with enough landing slots, it would be viable to own an airline, he says.

This means that with SMC’s New Manila International Airport in Bulacan, owning an airline may be the next big thing for RSA.

“Is that your plan, or just a dream?” I ask.

“Both!” he says.

I wouldn’t be surprised if that happens soon. Would he join his friend and fellow sports patron Mikee Romero -- himself an astute businessman – in acquiring majority ownership of AirAsia Philippines?

Rep. Mikee told me a few weeks back there are no other investors with him in his bid for AirAsia.

Only time will tell what RSA’s dream airline will be, if he indeed acquires one.

I hope you see the lines in between.

[Solblanc]

http://www.manilastandard.net/opinion/columns/virtual-reality-by-tony-lopez/305949/largest-project.html


That article says that phase 1 is 35mppa. I guess that's the best-case scenario?

[Arianespace]

Already answered. See post above. If you take a closer look, it does comes close to my projection. Only that he was an optimist and I am a realists. Of course he does not know what SMC is obligated to build for the government and how much. I do and its nowhere near the figures he cited. He should have asked those question. Very basic question in airport finance. Funny thing about it is nobody from the media cared to ask for that simple question. It would have given them idea what to expect 6 years from now.

[Arianespace]

This airport is still a go of course. The latest stops merely refer to concerns which was addressed by SMC. I will post the inside story while I complete the facts. In the meantime lets hear Boo:

Elastic Award

We read the headlines… we saw the photos. DOTr Sec. Arthur Tugade and San Miguel COO Ramon S. Ang both smiling and exchanging documents. Finally, we thought, the $15 billion Bulacan airport project is a go.

Indeed, DOTr gave San Miguel a notice to proceed. San Miguel has scheduled groundbreaking next month. Now it seems, DOF wants to hold everything back.

DOF, through DOTr, expressed concern on six points after the agreement was signed and delivered. Maybe they just wanted reassurance.

San Miguel has replied that all those points are covered by the concession agreement and there is nothing government should be concerned about.

Does this mean the groundbreaking next month will not push through? Who really knows? It is no secret that Finance Sec. Sonny Dominguez doesn’t like this project. He will probably try to wear RSA down until he just gives up.

 Sec. Sonny’s overriding concern is the impact of the Bulacan airport on the viability of Clark. But Clark serves another market. And if we are as bullish about the economy as government is, we will need those two civilized airports.

It seems until President Duterte says once and for all that San Miguel can start building that airport, the agreement will be nitpicked to eternity. In the meantime, we are losing precious time to build a facility we needed 10 years ago. Even a rehabilitated NAIA cannot provide the depth of service the Bulacan airport is designed to give.

Here are the not so new points raised by DOF and San Miguel’s response:

 Adjustment of regulated fees: SMC confirms that government is not liable under the CA in case the designated government airport regulatory body disapproves or fails to act on any application for increase of regulated aeronautical fees.

On extraordinary price adjustments (EPA): SMC points out that under the CA, ordinary inflation and normal exchange rate or foreign currency movements are not covered by the EPA. SMC accepts these as risks they assume.

On securing local consents: SMC accepts obligation to secure consents from LGUs. The executive branch will only assist in obtaining the consents.

 On financial close: SMC accepts obligation to achieve financial close within the periods set out in the implementation schedule and failure entitles government to exercise its rights.

On Material Adverse Government Action (MAGA): “Change in Law” in relation to MAGA is limited to events occurring as a result of the acts of the executive branch.

On cap on government’s liabilities to manage its contingent liabilities arising from its CA obligations: SMC reiterates that the project’s bankability hinges on government’s recognition that the investment in a greenfield project, with no government asset contribution, no existing cash flow and no guarantees on traffic and is protected through contractual mechanisms for compensation and/or termination in the event of specific defaults. The concession agreement provides for a termination payment formula which is consistent with existing government policy.

SMC has no objection to the principle of putting a cap on grantor’s (government) liability, consistent with the provisions of the CA, to cover consequential losses and damages arising from delays in government action, but not when government action constitutes default and San Miguel opts to exercise its right to terminate the CA.

 In his interview with Jake Maderazo over Radyo Inquirer, RSA expressed optimism they will be able to pursue the project. Hopefully, DOF will accept San Miguel’s acceptance of all the points they raised as finally sufficient.

Fat chance. Unknown to San Miguel, I just got word from a Palace source that Sec. Sonny sent a memo to the President against the construction of the airport. Attached is a personal note to “Rody” telling him that DOTr was wrong to have signed that contract and that the airport would be a white elephant.

No good intentions go without punishment, it seems. Assuming it ends up a white elephant, that’s the concern of San Miguel shareholders. No government money is at risk.

We can’t have an elastic approval of a major concession agreement. Government cannot sign a concession agreement and issue a notice to proceed only to come back and say mali pala. Ano ito, elastico? Government’s credibility is at stake. It is now a live contract.

Read more at https://www.philstar.com/business/2019/11/08/1966845/elastic-award#zudEL7gWdd0XhZLA.99

 

Note: DOF doesn't have authority to hold this contract back. Only the courts can make it so. SMC is just trying to be diplomatic with DOF.

The inside story however pertains to AirAsia's hub in Bulacan and how they plan to cut 2/3 of the fare from MNL once they start operating according to its boss Mikee Romero.  This might be an empty threat now considering slot restrictions at MNL but once Bulacan opens they will have unrestricted flight to where PAL and CEB jets fly in the country and that alarms NAIA consortium to which DOF Secretary is identified as belonging to one of its consortium.

Why the alarm?

Because it will truly disrupt the passenger throughput of MNL once this happens. Imagine what that would make? And the news there is that PAL and CEB can't match the offer of lower fares because overhead in MNL is already high while those in Bulacan is still low. Add the additional terminal fee that I mentioned and watch your pocket empty. Clearly, there is sense to all of it!

I was told that we are actually paying for additional 30 minutes airtime in MNL even if we don't use it. This is how airlines bill us, on time travel, not exactly nautical miles. When before your flight is just 30 minutes, your ticket says its an hour flight even if you arrive there in 30 minutes from rotation to landing.  But of course you are told that this was made so that your flight would never be late. RSA label it as congestion charge. They don't have it in Bulacan. See the connection?

[Solblanc]

DOF usually gets what it wants though. And that is a scary thought. The only ones that actually push back are in the other branches. The executive, including the Palace, pretty much lets DOF have its way.

[Arianespace]

Not this time since it doesn't involve government money or grant. DOF usually has its way prior to contract implementation not afterwards. Although it is not unusual for Philippine government to do this. The last contract our government did not honor was in 2011 and it cost us billions without benefiting from the project. You can look at the story here. Mind you our previous government never notified us about what really happen until Duterte announced that he will pay the Belgians in 2016 for unconstructed project. In fact some  government  agencies never had a clue whats happening. Our President is not that stupid to be swayed by partisan agenda like this one. For one, it is his legacy to the Filipino people.

Investment at Clark and NAIA will however be effected as AirAsia consolidates its operation in Bulacan reducing traffic at the affected airports by about 5-7 million. Not much but if some foreign carriers go with them that will easily translate to about 10 million passengers in 2025. If the scary thought about their fare comes true expect droves to use the airport depleting further NAIA traffic projections which of course affect viability of NAIA consortium's already questionable revised offer.

[Arianespace]

CNN Philippines accidentally leaked out the other design of NMIA.

[Arianespace]

Richard wrote

I suppose one runway - one terminal for initially 10 million passengers to begin with? I have no idea for how many pax the first phase will be built, before it needs expansion. Anyone?

Your question has officially been answered now. And you are more or less right on the buck.

[Eurest]

I'm interested to know what happens to existing ASAs with a hybrid open skies, does the NMIA fall under the scope of the open skies part or an extension of NAIAs slot restriction?

There may be investor opportunities from countries which have such an agreement. In fact, consider this a feeler for such an arrangement.

[Arianespace]

NMIA would fall to "other international airport" category similar to Clark. Only NAIA has slot and flight restrictions.

[Arianespace]

NMIA breaks ground January 15.

You can read the controversial backstory here

By the way, look for my answer to Richard's question above. Aren't they not the same, runway wise?

[ACarlo]

Do we have updates on the final design for NMIA? Are they going to release it this Jan 15?

[fd20]

Does anyone have any updates on this project? The groundbreaking was supposed to be on the 15th but I don't think that ever happened.

[Arianespace]

Because of very personal circumstances associated with RSA.