By Tony Lopez
In two years or less, vows Ramon S. Ang (RSA), Manila’s Ninoy Aquino International Airport (NAIA) will be rated one of the best, if not the best in Asia. And Asia is where the world’s best airports are. So confident in reengineering NAIA’s massive transformation, RSA makes an even bolder promise— deliver the best airport in Asia in 2025.
RSA is the chair and CEO of San Miguel Corp. On Sept. 14, 2024, the diversified beer, food, power, and infrastructure conglomerate and the Philippines’ biggest company, which took over the management and operation of NAIA from the government.
For the right to upgrade and operate NAIA for the next 15 years, renewable for 10 years, SMC has promised to pay the government P911.11 billion. Plus P170 billion in capital expenditures. That’s a total of P1,081.1 billion or P1.081 trillion.
This makes the P1 trillion SMC NAIA project the Deal of the Century. The NAIA privatization in early 2024 is the fastest-ever privatization in Philippine history. It is also the largest. And in terms of economic impact and in making life comfortable for 50 million Filipinos who travel by air, the NAIA modernization under SMC is the most profound. An unprecedented game changer.
The best and biggest
The new NAIA will service 62 million passengers a year, more than double NAIA’s current design for 29.5 million passengers. At 62 million passengers a year, NAIA could become the ASEAN’s best and biggest airport.
In 2023, Singapore’s Changi serviced 58.94 million passengers; Bangkok’s Suvarnabhumi 51/69 million, Jakarta’s Soekarno-Hatta 49 million; Malaysia’s Kuala Lumpur 47.24 million, and NAIA 45.3 million.
Additionally, RSA has committed to spend, without cost to the government, P735 billion to build and manage the Bulacan Airport or the New Manila International Airport, ten minutes north of Manila in Bulakan town, to service up to 100 million passengers a year by 2029.
Biggest airport investor and operator
By spending P1.01 trillion on NAIA in payments to the government, plus P735 billion for the Bulacan airport, and P8 billion for Boracay airport, SMC becomes the Philippines’ biggest airport investor. And the biggest investor in the country, foreign or domestic, bar none, with total investments of P1.8 trillion.
The San Miguel Aeroport and economic zone will be partially operational in the first half of 2028, just as Ferdinand R. Marcos Jr. is winding down his six-year presidency. Bulacan’s New Manila International Airport is designed for six runways, with two operational by late 2028.
In effect, RSA will deliver to the BBM administration three modern gateways – NAIA, the NMIA (Bulacan airport) and Boracay.
For nation building
Why is RSA doing all these things? “It’s not for profit,” he demures. “It’s to help the Filipino enjoy a comfortable life. It’s for nation-building.”
Domestic or Filipino passengers number over 50 million today. That can easily double in three years, with new and comfortable airports, cheap fares, better services and more destinations. Build the airports and the tourists will come.
RSA predicts with NAIA’s modernization and the new Bulacan airport, tourism volume could rise to 75 million airline passengers a year—50 million domestic and 25 million international.
75 million jobs from tourism
On average each tourist creates three jobs. So 25 million foreign arrivals alone will create 75 million jobs, according to RSA’s math. That’s a great boost to employment and to the economy.
Each foreign tourist spends an average of $2,000 and stay in the Philippines an average of 11 days. So 75 million spending $2,000 is $150 billion, enough services income to wipe out the country’s foreign debts of $125 billion in one year, with still some money to spare.
Better travel experience
RSA believes that with larger and modern airports, more airline frequencies and more choices for passengers, airline fares will be lower and the travel experience will be exceedingly pleasurable.
The cost of a round-trip ticket to Boracay from Manila, for example, could be cut dramatically, from the present average of P15,000. In Europe, with huge airports and low-cost carriers, a two-hour plane trip could be bought for $100, discounted.
Using San Miguel’s expressways, RSA will connect the south and north of Manila regions within ten minutes of each other, from km zero, or the Manila Hotel, triggering a travel and logistics boom.
At Caticlan’s Boracay Airport (Godofredo Ramos Airport), SMC is building, in three years, a terminal with a seven-million-a-year passenger capacity (from 2.3 million in 2022), complete with eight passenger boarding bridges and a runway to accommodate big jets.
So there, are three major airports – new NAIA, New MIA and Boracay. NAIA is the gateway to 90% of total departures and arrivals in the Philippines. At present, aviation, as a component of the Philippine Gross Domestic Product (GDP), contributes 3.4% ($10.4 billion, plus 1.2 million in jobs) in economic value added, according to IATA (International Air Transport Association).
In Singapore, air transport contributes 11.8% ($36.6 billion) and 375,000 jobs. Singapore’s Changi currently handles 58.9 million passengers. In the US, the share of aviation to GDP is 5%, $1.25 trillion, and 666 million passengers in 2022.
With 62 million passengers from NAIA, 100 million from NMIA and 7 million from Boracay, RSA will service up to 169 million passengers a year. Consequently, aviation’s share of GDP is expected to triple, to 10.3% of GDP. In three years, the Philippine GDP will hit P31.55 trillion. A tenth of that is P3.1 trillion.
Currently, with its products and services – beer and beverages, foods, packaging, petroleum, tollways, cement, infrastructure and power – SMC already contributes 5% of Philippine GDP. Add the 10.3% GDP share of aviation, SMC will account for more than 15.3% of a P31.5-trillion GDP, or P4.83 trillion.
At NAIA, passenger fees, terminal fees, airline parking fees, car parking fees and rental rates are going up exponentially. Most of the fees were stagnant for nearly a quarter century.
In Makati, a shop locator pays P700 per square meter on average for commercial space. In NAIA, before SMC, prime space could be had for as low as P23/sqm. Certain government agencies even got free parking, forever.
SMC will gain a pittance from the increases. About P82 of every P100 of the fees and rates of all kinds collected by SMC are guaranteed by SMC to be remitted to the government. SMC spends for everything – capex, maintenance and operating costs, but 82% of revenues goes to the government. SMC gets only less than 18%, and yet gets all the flak.
In 30 months, if not less, SMC CEO Ang guarantees to deliver a totally modern, almost new NAIA – with a new Terminal Building 5, a new taxiway, eight floors of parking space and yes, new toilets, elevators, escalators, and airport seats.
The new taxiway will be built in 24 months; the new Terminal 5 will be completed in 30 months. The present Philippine Village Hotel will give rise to a new terminal building.
Separating the two runways, plus an additional taxiway (for 06/24) have the potential of doubling NAIA’s aircraft movements in three years. Currently, NAIA’s capacity is hitting 42 takeoffs and landings per hour. RSA thinks takeoffs and landings could be 48 an hour, safely.
Congrats RSA, the Airport King. And greatest Filipino investor.