On time delivery

Last Monday, Megawide-GMR held what it called the Final Countdown to mark the last 111 days before the grand opening of Mactan’s Terminal 2. They invited the airport’s closest stakeholders, including members of the Cebu business, travel and tourism sectors, the provincial and local government, media, regulators, and members of the airport family to the event.

As I walked through the new terminal, now over 90 percent completed, I think it will definitely be the country’s best looking airport. I felt glad that Megawide-GMR proved wrong the folks in government who say Public Private Partnership or PPP is slower to deliver than Official Development Assistance (ODA) and GAA, or projects funded directly by the General Appropriations Act.

Indeed, the only reason some past PPP projects took time to take off was government red tape. A case in point is MRT7 which took over eight years to get bureaucratic approval.

The Mactan project almost suffered a serious delay because of a lawsuit from a losing bidder and the transport department’s failure to tell the Air Force they had to vacate a portion of the airport where Terminal 2 would rise. The delay was about a year.

To the credit of Megawide, they successfully caught up with the original schedule as if the one year delay didn’t matter. When they inaugurate the terminal this June, they would be delivering the completed project as originally scheduled.

I understand the PPP contract won by Megawide-GMR for the Mactan terminal has a provision that penalizes them in case of failure to deliver to the tune of P330,000 a day. And even if it was DOTC’s fault that construction was delayed, the deadline was not moved. I don’t think delayed delivery of projects funded by ODA or GAA are similarly penalized.

Indeed, a report prepared by Castalia Strategic Advisors for the Philippines-Australia Partnership for Economic Reform and the National Economic and Development Authority is revealing.

The report covered several projects, but the relevant one is the case study comparing the New Iloilo Airport Development Project funded by JICA and the Mactan Cebu International Airport Project funded by the private sector via PPP.

The consultants noted that the Iloilo airport project took nine years and two months from NEDA ICC submission to project completion. This was from January 1998 to March 2007. The size of the new passenger terminal was 13,700 sqm. While the financing cost is significantly lower compared to commercial loans, the final all-in project cost ballooned by 42 percent due to cost overruns and variation orders.

The Mactan Cebu International Airport Project, on the other hand, will be delivered in three and a half years from NEDA ICC submission to target completion in June 2018.

Additionally, consider the following points a Megawide official made:

“The size of our new passenger terminal 2 is 3.75 times larger than the New Iloilo Airport. In terms of the cost overrun risk, the government is protected as defined in the concession agreement, project cost overruns are solely shouldered by the private proponent. And lastly, the private proponent paid the government an upfront premium of P14.4 billion for this project.”

Even while the new terminal was being built, the Megawide consortium instituted wonders in managing the old terminal. It is amazing what can be done if a professional airport manager is harnessed.

Megawide-GMR assigned an airport manager who has airport management experience in New York’s JFK and other major international hubs. None of the guys managing our airports now, and in the past, has comparable experience and expertise.

Simple, but effective things were introduced like improving the flow of passengers inside the terminal. They cleaned up the old airport terminal, removed all offices in the ground floor and used the vacated areas to rationalize the flow of passenger traffic, improve check-in counters and even the food and souvenir concessions, fix taxi/bus stands and give an overall cheery atmosphere that harassed travelers appreciate.

It is amazing how Megawide was able to improve service quality by so many notches. Improvements made in the old terminal was enough to make Mactan Cebu International Airport the 18th best airport in Asia by the same website that once rated NAIA as the world’s worst. Airports earn their ranking based on responses from travelers.

NAIA is no longer on the list of lousy airports, but the short review of NAIA is still pretty bad. It opens with a traveler’s review: “Absolutely horrible to connect through this airport if you arrive in one terminal and need to get to another (particularly between Terminals 3 to 1). Shuttle buses are infrequent and can take over an hour in the traffic. And forget about taxis, the lines take even longer.”

The Megawide people have also been organizing and joining tourism promotion missions to Japan, South Korea and China to encourage more airlines to use Mactan. Among others, six Chinese airlines now fly directly to Cebu bringing in tourists. Government bureaucrats running other airports don’t care if they deliver the quality of service that would encourage more airlines to use the facility.

According to a presentation by a Megawide official, they have improved the key performance indicator statistics since they took over the Mactan Cebu Airport last November 2014.

Checking-in time has been reduced from 10.5 minutes to 6.85 minutes. Getting your luggage from the plane, reduced from 11 minutes to 6.5 minutes. Getting through airport security from pre check-in, reduced from nine minutes to 3.9 minutes. And, final security check, reduced from six minutes to 2.76 minutes.

From what I saw last Monday, Mactan Cebu Terminal 2 will be an airport every Filipino can be proud of. It enhances the tourism nature of Mactan and Cebu... truly the fiesta islands.

Best of all, we will no longer cringe in shame as we arrive at a Philippine airport in the company of foreign guests.

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