Manila Airport modernisation project bidders confirmed: part one – possible conclusion in 1Q2024


Manila's Ninoy Aquino International Airport is one of several around the world that have been badly in need of a makeover for years, with annual passenger numbers running at 50% over capacity.

A dreadful experience suffered by Fraport almost 20 years ago when its work on a new Terminal 3 was forcibly abandoned, well into the project, queered the pitch for external investment for many years.

But it picked up again from 2017, with several unsolicited bids made to modernise the facility.

Now the government of the Philippines has firmed up a formal bid procedure for a 25-year PPP contract to rehabilitate, operate, optimise, and maintain the airport, and this has attracted three bids, all from parties previously to have shown an interest. Each has its strengths and weaknesses.

Whichever of them wins will face hefty investment demands, an upfront payment, and annuity fees to rescue a creaking airport that before long will face direct local competition from three others.

This is part one of a two-part report.

  • Manila's Ninoy Aquino International Airport (NAIA) is in need of a modernization project due to overcrowding.
  • The government of the Philippines has initiated a formal bid procedure for a 25-year PPP contract to rehabilitate and operate NAIA.
  • Three potential bidders have shown interest in the project: GMR Airports, San Miguel Corporation, and the Manila International Airport Consortium (MIAC).
  • The winning bidder will face significant investment demands and will need to double the airport's capacity.
  • The current government is supportive of public-private partnerships (PPPs) and encourages private companies to invest in infrastructure projects.
  • MIAC is considered the favorite bidder due to its consortium members' experience and financial background, although the other bidders have their own advantages.


  • Three bids received to modernise Manila's Ninoy Aquino airport in a USD3 billion PPP project.
  • A lengthy project, where some aspirants have made unsolicited bids in the past.
  • Procedure could be finalised by 1Q2024, but history says it probably won't.
  • The president is in favour of PPPs.
  • Manila International Airport Consortium is marginally the favourite.

Manila Airport upgrade - three potential bidders: experience + well financed = likely winner

The Philippines' Transport Secretary Jaime Bautista said in early Sep-2023 that the USD3 billion project to modernise Manila's Ninoy Aquino International Airport (NAIA) had attracted three potential bidders.

Mr Bautista said the potential bidders were India's GMR Airports, the Philippines' own San Miguel Corporation and the Manila International Airport Consortium (MIAC).

He added: "We want somebody who has experience in operating an airport...and, of course, with a very good financial background. Those are two major requirements".

He might have added, 'and one that doesn't mind going through a decade-long battle for compensation if the project should fall through' in an oblique reference to the shambolic 2004 project: the consortium of Fraport and PIATCO (Philippine International Air Terminal Company) to build and operate a new USD650 million terminal which was cancelled by the government - on the grounds that the then president, Joseph Estrada, had illegally negotiated certain terms - and when it was already 90% complete.

It took Fraport 12 years of litigation and arbitration to get USD270 million back. Fraport, which has considerable experience of operating airports and a very good financial background, is not likely to be a bidder for this particular project.

The president gives the thumbs up to PPPs

But times have changed in the Philippines.

The new president, Ferdinand Marcos Jr, and his government, encourage public-private partnerships (PPPs) and have developed a strategy for Philippine airports as the revival of the travel and tourism industry continues after the COVID-19 pandemic. This was discussed in the Jan-2023 CAPA - Centre for Aviation report: Philippine government outlines five-year development plan to reasses airport infrastructure needs.

Similar proposals were made during former President Rodrigo Duterte's administration, which was averse to PPPs. Talks with the government collapsed on that occasion.

President Marcos Jr's administration, on the contrary, is pursuing PPPs, welcoming private companies to build infrastructure according to the government's limited budget.

MIAC consortium probably the favourite

The MIAC, which should probably still be considered to be the favourite at this stage, despite the rejection of an earlier unsolicited bid, consists of Aboitiz InfraCapital, AC Infrastructure Holdings, Asia's Emerging Dragon Corporation, Alliance Global-Infracorp Development, Filinvest Development Corporation, JG Summit Infrastructure Holdings and Global Infrastructure Partners (GIP) - all of them indigenous to the Philippines, apart from the US based fund manager, GIP.

A breakdown of the consortium members can be found in this CAPA - Centre for Aviation report from May-2023: MIAC consortium submits another unsolicited USD1.8 billion offer to upgrade Manila Airport.

A start-stop-start procedure since 2017, with MIAC heavily involved

This project has become something of a saga, and has been running since 2017 when MIAC launched an unsolicited pitch to develop the Ninoy Aquino airport.

The previous government again was averse to public-private partnership projects generally; it had downgraded the long-planned privatisation of NAIA to just an operations and maintenance contract rather than a long term PPP concession, and had rejected previous bids.

Whatever perceptions remain of the legacy of the previous Ferdinand Marcos (Snr) governments, this one at least has a definable strategy for the airport sector in the country.

That said, as recently as Jul-2023 the government rejected an unsolicited proposal for which the Asian Development Bank was the transaction advisor, for a 25-year PPP concession to upgrade and modernise the airport from MIAC, in tandem with the Philippines Department of Transportation (DoT). That rejection was based on the existence of privately financed airport projects elsewhere in the Manila metro area (see later).

Recent proposals have been more modest in scope

The aims of that project were modest compared to 2017 and to the Piatco fiasco - to increase the airport's capacity and reduce waiting and processing times through more modern facilities and better connectivity between terminals, but they did require a private concessionaire to invest in modern air traffic control equipment, to rehabilitate runways and taxiways and to improve existing terminal facilities.

The private concessionaire then would have had just 15 years to operate the airport and recover its investment; not an especially attractive proposition.

The government's philosophy hung heavily on the Mactan Cebu and Clark (to the north of Manila) airports, having shown that "when given the chance, private companies can provide excellent airport services to Filipino travellers and visitors to the Philippines", according to the Transport Secretary.

The winner will have a 25-year concession, but will have to double the capacity quickly

The winning bidder now will operate and maintain the airport, with the capacity to be doubled after the upgrade to around 60 million passengers per annum. The concession period will run for 25 years - a much more enticing prospect.

The DoT formally announced on 24-Aug-2023 that Manila International Airport Authority (MIAA) had opened bidding for a contract to rehabilitate, operate, optimise, and maintain Manila Ninoy Aquino International Airport (NAIA).

A single-stage process

MIAA and DoT invited interested parties to participate in a single-stage competitive bidding process for a Rehabilitate-Operate-Expand-Transfer (ROET) modality, in accordance with the country's Build-Operate-and-Transfer Law and its Revised 2022 Implementing Rules and Regulations (IRR).

The PHP170.6 billion (USD3.01 billion) project will cover NAIA's two runways (3,737m × 60m and 2,258m × 45m), four terminals and associated facilities.

The project is expected to improve overall passenger experience and increase the current annual passenger capacity of NAIA to at least 62 million, from the current 32 million. Passenger numbers in 2019 were 16 million over the present day capacity.

NAIA not in the same league as airports in Singapore, Hong Kong, Bangkok, Jakarta and Kuala Lumpur, but traffic growth has been consistent

Although previous CAPA - Centre for Aviation reports have demonstrated how NAIA has underperformed compared to most of its Southeast Asia principal peer airports, bearing in mind the large population in the country (115 million, and in Manila 15 million), and that there is no doubt that there has been consistent passenger growth in the decade before the COVID-19 pandemic, and notwithstanding the new airports that are planned for the region if it is to remain the main gateway - a makeover is the very least that is required.

The average growth rate in the 10 years 2010-2019 was 7.2%.

Manila Ninoy Aquino International Airport: annual traffic/growth, passenger numbers, 2009-2023

Passengers returning in big numbers to NAIA post pandemic; 2019 levels could be exceeded

The chart also shows after two terrible years - 2020 and 2021 - a close to 300% increase in passengers in 2022.

With a 92% increase in the first five months of 2023 recorded, passenger numbers could return to 2019 levels this year, which is indicative of the travel revival that prompted the government's airport strategy formulation in 2022.

Concession could be finalised in 1Q2024, but Aviation Secretary doesn't sound convinced

This most recent part-privatisation procedure is expected to be completed as early as 1Q2024, depending on the process of awarding the contract to the government's chosen concessionaire.

But that award is couched in 'Double Dutch' at best, and at worst - 'Newspeak'.

The Undersecretary for Aviation said recently, "That is a very tough and tight schedule, maybe we can say that [1Q2024], it is doable, that there will be a conclusion, meaning to say, an award that could possibly be proclaimed by the government", which amounts to nothing.

The concessionaire must commit to a USD2.5 billion investment, with a hefty upfront disbursement and annuity payments

More concretely, he added that the concessionaire would have to commit to investing PHP141 billion (USD2.5 billion) in NAIA facilities, along with an upfront payment of PHP30 billion (USD535.4 million), annuity payments of PHP2 billion (USD35.7 million), and a share of the airport's total revenue generated from commercial and non-commercial operations.

He clarified that NAIA's assets would continue to be owned by the Philippines' government, adding that it was not being sold, but instead was being offered to the private sector to rehabilitate, manage and operate under a concession.

That is quite a trade-off for a concession extension of 10 years.

An even higher amount was offered previously

Intriguingly, MIAC appeared to have offered a slightly bigger capital investment in Jun-2023 than is being sought by the government now.

Speaking on its behalf, Aboitiz Equity Ventures (AEV), the lead member of the consortium, had clarified that the projected capital investment proposed by MIAC to undertake a rehabilitation and development programme was PHP211 billion (USD3.79 billion) over the span of its proposed concession period.

AEV said this amount also excluded a proposed PHP57 billion (USD1.02 billion) upfront concession payment to government. Including the concession payment to government, the total aggregate investment under the consortium's unsolicited proposal was PHP267 billion (USD4.79 billion).

It had offered to double capacity at NAIA by as early as 2028.

MIAC benefits from GIP's financial clout with added operational experience

It is for those reasons that MIAC should still be considered the leading candidate.

What it lacks on the swings of airport management expertise in the Philippines (three of the seven consortium members have low key investments in smaller airports) it gains on the roundabout of GIP's access to funds (as well as having been an operator of numerous large and small airports in its time, some of which it retains).

GIP, incidentally, is the only western organisation involved in any of the bids.

The Philippine government may consider it can wring more out of the concessionaire bidders here, with MIAC the most likely to cough up.

But what of the others?

In part two of this report CAPA - Centre for Aviation further considers the the USD3 billion project to modernise Manila's Ninoy Aquino International Airport (NAIA), highlighting that bidder San Miguel Corporation has long coveted NAIA (but is also heavily involved with a new airport in Manila) and that the last bidder GMR's advantage lies in its existing management of Mactan-Cebu Airport.

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