DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - January 3, 2020 - 12:00am

Those of us who travelled abroad for the holidays are likely to have stories to tell about the airports we used. Those who went through airports like Singapore’s Changi or Qatar’s international airport cannot help but be impressed.

Indeed, those who travelled in our region will likely have good stories to tell about how well designed and passenger friendly airports the airport are.

Those who travelled through US airports will likely wonder what’s going on because their airports are nothing in comparison to the new airports in Asia and the Middle East.

In my case, I had to endure three hours in the immigration line at LAX waiting for my turn to be processed by an immigration officer. At least, I was not a transit passenger trying to catch a connecting flight. On the same line with me was a group of passengers from a London flight trying to catch a flight to New Zealand.

Apparently, LAX is a bad airport to connect to other international flights. It is a very busy airport. At least six flights arrived on the hour my PAL flight did. All those passengers must go through a handful of immigration officers. Transit passengers suffer the same long wait as everyone else.

That’s a pity because the Americans have taken serious steps to modernize the appearance of the Los Angeles international terminal. I have been using the  LAX terminal for years. Over the last few visits, I noticed the passenger waiting area is starting to look like one of the nicer airports in our region.

Indeed, a visitor’s first impression of a country is formed by the airport experience. And if a country has a serious tourism program, a decent airport both in looks and services is a must.

This is why Indonesia announced last week they will offer more airport management projects to foreign investors after awarding its first to a foreign company last Dec. 26. The country handed over development and operations of Komodo airport for 25 years to the consortium of PT Cardig Aero Services and Singapore’s Changi Airports International Pte Ltd. The  consortium will make substantial investments to expand and operate the airport, while the Indonesian government will provide a guarantee through a state-owned financial company.

That’s interesting for us because while the Indonesian government issues guarantees, our guarantee limit MAGA to executive actions only. The other interesting thing is that we have also awarded an operations and management contract to a consortium that includes Changi for Clark. Another consortium that also includes Changi is about to win O and M of NAIA after it undergoes a Swiss challenge.

We should have given our airports more attention, but better late than never. Good airports are vital to an economy’s growth. Our local airline industry has been bullish and has been investing huge amounts of capital on expanding their fleet of modern aircrafts. Unfortunately, government has failed to keep pace through airport modernization.

Historical growth rates for the airline industry indicate that demand for air travel grows at a multiple of GDP growth. Rates of approximately 1.5 to two times GDP growth are common.

That is why it is difficult to understand why our past administrations neglected the development of our airports. They were pretty obsessed about GDP growth, so why didn’t they see can the importance of  adequate  infrastructure like airports.  

For the Philippines, the expectation is that air travel should grow at anything between nine to 12 percent annually for a decade. The Philippine economy is expected continue to grow at 6+ percent per annum, leading to an expectation for air traffic growth of in the range of 10 percent. Given the archipelagic geography, the propensity for air travel is even higher!

Indeed, the growth of demand for airport services was spurred in the past decades by budget carriers like Cebu Pacific and Air Asia. Even a legacy carrier like Philippine Airlines invested so much on a modern fleet. More prople are flying than ever and our airports are not coping with this trend.

The main gateway, NAIA, is badly congested and it will worsen till the end of the Duterte term. Even if the consortium of taipans manages to win award of their unsolicited proposal to modernize NAIA early this year, it will take more than three years before the public feels any improvement.

Outside of NCR, the situation is more dire. As our tourism promotion efforts start delivering more visitors, gateway airports to tourism sites will increasingly show an inability to handle increased load.

Privately managed Cebu Mactan International Airport is the best prepared to handle more traffic. But even Mactan must start building its second runway or suffer the same problems as NAIA.

Bohol Panglao International is the newest airport to be put into service. But unless the privatization of its management is fast tracked, the JICA funded airport will be under-utilized and may start deteriorating.

Davao, Cagayan de Oro and Iloilo all require upgrades and professional management to deliver optimum performance. I don’t see DOTr moving with more speed to make those upgrades possible.

Clark will soon inaugurate a new terminal and construct a second runway. But its ability to divert more traffic from NAIA depends on how serious the administration is in moving government and business offices from Metro Manila.

Indeed, the quality of a country’s airports has been looked at as an indicator  of a country’s determination to develop its economy. Singapore, a city state with a population less than half of Mega Manila, has been running the world’s best airport for over decades now.  It has also never stopped improving and expanding its terminals and other facilities.

With Singapore Changi’s managers set to take over management of Clark and NAIA, perhaps there is hope for us. This new year, we simply have to make sure  there will be no more delays in our airport projects. We must keep up with the region at last.

Boo Chanco’s email address is bchanco@ Follow him on Twitter @ boochanco

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