Cebu airport off limits to groups with airline stakes

Posted on January 2, 2013


Two of the country’s top conglomerates have been automatically disqualified from bidding for the contract to expand and manage the new Mactan Cebu International Airport—one of the Aquino administration’s key infrastructure projects.

In the project’s prequalification terms of reference, published recently for interested bidders, all groups with minority or controlling interests in airline companies are being banned from bidding for the P17.5-billion Cebu project.

As a result, San Miguel Corp. and JG Summit Holdings, both of which had expressed interest in the deal, would not get a chance to vie for the contract under the government’s public-private partnership (PPP) scheme.

The project’s terms of reference, a 71-page document posted on the Department of Transportation and Communications (DOTC) website, said that a company vying for the deal “cannot be an entity providing air transport services in the Philippines, be they domestic or international.”

Having a stake in an airline, direct or indirect, and however minute, would also be grounds for disqualification.

“Any entity providing air transport services in the Philippines, be they domestic or international, for the duration of the Concession Period: cannot be the Facility Operator; cannot have any interest, direct or indirect, in the Project or the Facility Operator; or cannot be owned by the Project SPC or the Facility Operator,” the terms read.

The published terms did not give a reason for the exclusion of companies with investments in the airline industry.

The provision banning companies with airline investments was also included in the final terms despite the absence of local anti-trust legislation.

Other terms included a minimum capitalization of P2 billion and having adequate personnel with at least 10 years of experience in similar projects.

Asked to comment on the project’s published terms, San Miguel president and chief operating officer Ramon Ang said he had not yet seen the document, adding that he “hopes” his firm will not be prematurely disqualified.

San Miguel last year acquired majority control of flag carrier Philippine Airlines (PAL), the country’s oldest carrier and the largest in terms of revenue.

Apart from controlling PAL, San Miguel, through unit TransAire Development Holdings Corp., currently operates the Godofredo P. Ramos airport in Caticlan, the country’s gateway to tourist hotspot Boracay Island.

Officials from JG Summit, which owns the country’s leading budget carrier Cebu Pacific, were not available for comment.

Other firms that have expressed interest in the project are the groups of Manuel V. Pangilinan and Ayala Corp. The latter partnered with Cebu-based Aboitiz family to make a bid for the Cebu airport facility.

A DOTC source, who spoke on condition of anonymity due to the sensitivity of the issue, admitted that the terms were published without consulting industry stakeholders and prospective bidders.

The existing Mactan Cebu International Airport is the country’s second-largest air passenger facility.

In 2011, the airport handled more than 4.74 million domestic passengers and 1.47 million international travelers.

Passenger numbers have grown at the facility at a compounded annual rate of 14.47 percent for domestic traffic, and 11.02 percent for international traffic over the last five years./ Inquirer

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