PAL offers P20B NAIA T2 expansion

Again, I complained to PAL president Jimmy Bautista about my experience in Terminal 2 during my last trip to Singapore. So I asked him what has happened to his plans to invest in a terminal upgrade. Well, he softly said he is waiting for a response from DOTr and MIAA.

Jimmy wouldn’t go further because as he said, he is waiting for a response. But waiting for a response from a government agency like DOTr is like waiting for Godot. I honestly thought Sec Tugade would be different, but I have yet to see evidence to justify my high expectations of him.

Since Jimmy won’t give details, I have to go find out from sources inside the transport offices who are also frustrated with how they are handling things. All I got this time was a copy of a letter Jimmy wrote to MIAA GM Ed Monreal dated May 10, 2017. It is enough.

This letter was following up on previous meetings with transport officials, the latest being Feb. 15, 2017. That meeting was attended by Sec Tugade and Aviation Usec Skee Tamayo.

I am sure Sec. Tugade was enthusiastic about the PAL proposal. He is always enthusiastic about projects like this, as he should be. The problem is translating that enthusiasm into action. February to May should be enough time for a feedback. According to Usec Skee, he just received the letter from Monreal the other day. Bagal ng mail service nila.

According to the letter, Philippine Airlines presented to Tugade and Tamayo preliminary development plans for improving T2 and the expansion to the north of T2 to develop a modern passenger terminal complex. This will accommodate more than a dozen new long-range wide-body aircraft that PAL has ordered and will be delivered later this year.

The proposed new terminal complex is estimated to cost P20 billion. It will have 18-17 gates and its construction is of utmost urgency to PAL and the airline’s passengers. Bautista is confident that with government support, they can break ground by December 2017 and complete the new terminal by December 2020.

The proposal involves MIAA leasing needed properties to PAL. The request was made as early as March 13, 2015, followed up April 10, May 22 and October 21 in 2015 (all during Abaya’s watch at DOTC) and on Feb. 17, 2017 to Tugade.

For background, T2 was built in 1999. Its original design capacity is nine million passengers annually (MPA) and intended for domestic operations. It was converted to handle international passengers with design capacity modified to handle 7.5 MPA or five million for domestic and 2.5 for international.

As of 2016, PAL handled 13.2 million passengers – 6.2 million international and seven million domestic. About three million of PAL’s domestic traffic went through T3 while 400,000 international passengers went through T1. Arrival of trans-Pacific flights use T1 as T2 can no longer handle the volume.

 With the design capacity significantly breached, the resulting congestion has been affecting PAL’s service quality.  The image of both PAL and the country is adversely affected. This is likely to persist as the economy grows and government can’t figure out what to do next. Not a good way to “Experience the Philippines.”

 Jimmy’s letter to NAIA’s Monreal pointed out that “the design capacity of the entire NAIA (T1 to 4) has actually reached its limit of 31.5 MPA. The total passenger throughput is 39.6 MPA as of 2016.” Additional constraint is the runway capacity.

 The long term plan is to have a new alternate major entry port or ports in Luzon. But based on what we are seeing now, nothing will happen in the near term to alleviate a deperate situation...

 In its recent presentation of its mid term plan (2017-2025), DOTr talks of expanding NAIA so it can accommodate up to 50 MPA. Pero puro Power Point Presentation (PPP) pa lang.

PAL is desperate, as it should be. It talks of wanting to be a five star airline but instead is listed among the region’s more undependable due to frequent delays owing to NAIA congestion. Jimmy says PAL wants to be part of the solution and this is why they offered to bankroll this expansion.

We can only agree with the objectives of PAL’s proposal that Jimmy outlined in his follow-up letter to Monreal. First is to maximize passenger comfort and convenience while easing congestion at T2; optimize the limited resources available for airport users; maximize assets to expand NAIA capacity; enhance NAIA as the Philippines primary international gateway and accommodate more than a dozen of PAL’s new wide-bodied aircraft to be delivered starting late 2017.

By doing nothing, quality of service will worsen as traffic increases. PAL expects its passenger growth to average 7.3 percent for international and 8.7 percent for domestic between 2016 and 2020. They estimate this will mean about 13 MPA in 2016, growing by an estimate of 40 percent by 2020 or approximately 20 MPA.

PAL now has 81 aircraft in operation and has 40 new ones on order. This is why PAL is extremely worried about where to even park these planes.

Jimmy said in his letter that “PAL had taken a look at the available options and found out that there are still sizable idle properties adjacent to T2 which can be used to expand the terminal building and increase its capacity, including the number of gates.

“These are the 12.9 hectares that incorporates what was formerly occupied by Nayong Pilipino where the Philippine Village Hotel is. It also includes the 9.8 hectares that is considered Pagcor property. PAL is offering a long term lease from the government of these adjacent lands for the expansion proposal.”

Preliminary studies done by PAL depicts a passenger-friendly terminal building with a total floor space of approximately 90,000 square meters for the T2 Annex designed with 11-12 wide-body aircraft gates. The proposed T2 annex is intended to handle approximately 14 million passengers yearly.

Currently, T2 has 73,000 sqm in floor area with 12 bays with aerobridges. In addition there are remote parking bays. For the vacant land that is currently used as parking lot by MIAA, PAL plans to redevelop it as a parking building with facilities and amenities to enhance convenience of travelers.

They are looking at leasing the 12.9 hectares for 30 years, exclusive of 3.5 years for construction period.

I think PAL’s proposal makes sense.  Aside from the public convenience offered by new facilities, it makes productive use of idle assets, increases the capacity of NAIA without cost to the government and it will be made available in the next 3-4 years.

From what I have heard, there are some legal problems with the owners of the old Philippine Village Hotel which had been non-operational for a long while. Sec. Tugade has to use the much promised Duterte political will and use all the coercive powers of the state to reclaim the property so it can be used for public good.

The hotel’s owners were Marcos cronies and probably got a sweetheart deal anyway.  And they owe the government a bundle in unpaid taxes. The Pagcor property acquisition only requires a memo from Malacanang.

The need is obvious (an emergency, even) and the solution is being offered on a silver platter to government. If Sec. Tugade cannot act on this wonderful proposal speedily, we should perish the thought he can fix MRT 3 and implement more complicated projects like subways and pioneering long distance train lines.

It is time for Sec Tugade to show what he can do… what he is made of. I had high hopes for him. I don’t want to be proven wrong.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco