Taking Flight

Text size +-
Recommend
After enduring three presidential administrations, thousands of hours of negotiations, 60 resolved or ongoing court cases, a ceiling collapse, three casualties, and two botched openings, the Ninoy Aquino International Airport Terminal 3 (NAIA 3) finally opened on July 22, 2008.



The launch of NAIA 3 is important for two main reasons. First, the new terminal will give the Philippine airline industry some much needed capacity. Terminal 1 began operating in 1981 and 10 years later reached its design capacity of 4.5m passengers per year. Terminal 2 was brought online in 1999 to alleviate this situation and offered an additional capacity of 7.5m passengers per year.



At present, both terminals as well as the domestic terminal, which was built in 1948, are far past capacity and are hampering the industry's growth. Philippine Airlines (PAL), the national carrier, has long complained that Terminal 2 - which PAL has exclusive rights to operate in - is full. The north wing, which handles PAL's lucrative international flights, serviced more than 3m passengers last year despite its design capacity of 2.5m.



Cebu Pacific, the nation's premier low-cost carrier, is arguably the most affected. The airline has been forced to operate its flights out of two terminals - one for its domestic operations and the other for international flights. Operating in separate terminals means that Cebu Pacific misses out on operational efficiencies that PAL and others enjoy.



This may partly explain why Cebu Pacific was the first airline to migrate to the NAIA 3. Soon after the terminal was inaugurated, Lance Gokongwei, the budget airline's president, announced that all of Cebu Pacific's operations would be moved to the terminal, adding "NAIA 3 is heaven for us."



Secondly, and perhaps more significant, the opening of NAIA 3 is important because the project had become a stain on the country's reputation. When first announced in 1998, NAIA 3 was the country's flagship infrastructure project. The delays, cost overruns, lawsuits and other complications became a prime example for foreign investors of the problems and constraints of doing business in the Philippines.



"The airport is the first thing that investors see when they come into the country," said Jose Soler, president of Solorex, a local infrastructure company. "In Malaysia and Indonesia, visitors see spacious new terminals. In the Philippines, they see terminal 1 or 2, which are far behind the international standards. On the way out of these airports, they see terminal 3 and ask why it's closed. Then they hear the whole story. First impressions like these matter," he added.



President Arroyo was therefore eager to get the project back on track and publicly stated that she wanted to see it fully operational before she left office in 2010. "This airport is the gateway to our country from the rest of the world. It is our showcase for tourism and economic progress," Arroyo told aviation industry officials and the local press at the terminal's inauguration. "Today's commercial opening is a result of our resolve and determination to move this nation forward," she said.



While the opening and inauguration are an important step towards restoring the project and country's reputation, celebrations may be somewhat premature. The 2010 deadline will not be easy to meet. The airport still has many obstacles to overcome before becoming fully operational.



A full review of NAIA 3's structural integrity has yet to be undertaken. Such a review is crucial for large international carriers who are concerned about the level of maintenance over the terminal's five-year vacancy. Also in need of finalisation is a court case pending in Singapore deciding the legality of the government's 2004 expropriation of the airport and repairs connected to a 2006 ceiling collapse.



Large international carriers worry that difficulties connected to these unresolved problems could result in the re-closure of Terminal 3. Local airlines, with larger footprints and higher operational costs, have more to gain from the increased efficiencies that NAIA 3 offers - even with the estimated PHP5m ($112,900) price tag of transferring into the new terminal.



To convince the 25 international airlines that are crammed into the 27-year-old Terminal 1, the government will have to work harder and spend more money. Repairs alone are estimated to cost an additional $6m. Shelling out such amounts on a project that is already far over budget will be uncomfortable for many.

Read Next:

In Philippines

Loh Boon Chye, CEO, Singapore Exchange (SGX)

As regional exchanges become more mature, which factors make SGX a standout proposition for Asian companies seeking to list? 

Latest

México: Resumen del año 2019

El primer año completo de la administración del Presidente Andrés Manuel López Obrador, comúnmente conocido como AMLO, ha representado un desafío para la economía mexicana, aunque también ha visto...