Not so ‘tender’ takeover

INVESTOPEDIA – Definition of “Tender”: To invite bids for a project, to accept formal offers such as a takeover bid. “Tender” usually refers to the process whereby government and financial institutions invite bids for large projects.

Generally speaking when government announces a tender, those concerned are interested, excited and actively make bids to pursue a project. But the “tender” I recently heard of is not so tender, apparently distasteful, and will most likely raise another storm down in the Queen City of Cebu. If and when it happens, it could possibly result in some people losing their business, losing their place of business, offices or outlets, it could result in airlines having to pay higher charges for services and ground handling, all of which will ultimately increase what customers of airlines have to pay when they fly in and out of Mactan – Cebu International Airport. In the worst case scenario, it could disrupt airline operations and place airport and airline security at great risk.

When the Department of Transportation and Communication (DOTC) announced the bidding for the development of the Mactan – Cebu International Airport (MCIA), one of the most controversial rules they laid down was that no airline could participate in the bidding because the DOTC did not want any airline to have the power to dictate, increase or monopolize prices in a major airport such as Mactan – Cebu International Airport. In fact this was the same argument the DOTC and CAAP cited in their opposition to the offers made by SMC president Ramon Ang who generously offered to build a modern world-class airport next to Metro Manila.

Ironically the very thing that the DOTC tried to avoid early on, may soon become a reality for business owners and airline operators operating at the Mactan – Cebu International Airport. I’ve just been informed that the current operator developers GMR-Megawide have verbally announced that they will be offering a “tender” for service providers or ground handlers for the MCIA, that will effectively open up all the ground handling businesses and service providers to poachers or hostile take over bids from none industry players who want a cut of the growing airline servicing business at the Mactan – Cebu airport. Whoever does not fall prey to takeover bid will have sleepless nights ahead of them as they face the high probability that the GMR-Megawide consortium will most likely raise fees, rents and franchises at a much higher rate than present.

Based on the letter sent out by the Mactan Airline Operators Council, a combined group of foreign and local airline companies operating out of MCIA, “there should be no monopoly or arbitrary decision-making in choosing which service provider should be allowed to stay or go.” I always assumed that the CAAP or Civil Aviation Authority of the Philippines is the governing body or regulatory agency that controls policies and prices of any thing related to airports and aviation, but sources inform me that the CAAP is generally ministerial in its functions or conduct while the persons in authority don’t have much authority due to the nature of their being “Political Appointees,” often referred to as “X-gen” or Ex-Generals.

With the unsavory “tender” being launched almost like a trial balloon, I hope that guys like Senator Serge Osmeña seriously look into this because there maybe more than meets the eye. It is not an uncommon thing to observe that every time a President or his administration reaches the last year in office, some enterprising individuals or groups always come up with a commercially based “exit plan” that involves acquiring businesses, outlets or contracts just before their patron leaves office. To be fair the MAOC has not cited any political angle but they do emphasize the need for a genuine regulatory body to look after how airport businesses are managed and regulated by private sector developers and operators.

While GMR-Megawide has won and has the legal right to find ways and means to increase their revenue stream from the project, there should be a serious amount of regulation to insure that it does not interfere with how airlines conduct business and whom they choose to conduct business with. In their letter to Mr. Louie Ferrer of GMR-Megawide, the MAOC group cited that before they choose a service provider or ground handler, these firms and their personnel undergo strict security and technical scrutiny because they effectively become extensions of the airline’s operations as well as reputation. In this day and age of heightened security and extreme market competitiveness, airlines are very particular with whom they partner with on the ground.

Knowing how Cebuanos speak their minds in politics and elsewhere, I have no doubt that the “Not so tender” tender of GMR and Megawide will soon be cannon fodder for Cebu media, legislators and businessmen. If GMR-Megawide is being strategic or tactical by choosing to talk about the tender instead of officially putting it in writing, then they would do well to take out all the hot air in their trial balloon because all it’s doing is creating a lot of hot heads among their stakeholders. Like I always advise clients, do the consultations ahead, talk to the community and stakeholders because chances are they could come up with better ideas and make the process a lot more sensible and eventually profitable for everyone and not just operators.

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