Manila Wants the Planes to Run on Time for Once

Egregiously long queues, regular delays, confusing signage, and poor amenities. When seasoned Southeast Asian travelers debate the region’s worst airport, Manila’s Ninoy Aquino International Airport (NAIA) invariably has its champions.

The 75-year-old airport is designed to accommodate 32 million passengers annually. Pre-pandemic, it was handling nearly 50 million. Plans to increase capacity and modernize facilities have been floating around for decades, but past attempts have failed to keep up with demand. Now the Philippines government is determined to finally fix the country’s national gateway with a huge tender to refurbish and operate the airport. In return for undertaking the project—which is expected to cost around $3 billion—the winners of the bid will operate the airport as a concession for 15 years, with the option to extend for another 10.

The project is a symbolically potent one for President Ferdinand “Bongbong” Marcos Jr. The president has repeatedly stated his intention to upgrade the Philippines’ often inadequate infrastructure and attract foreign investment. The airport tender will test the credibility of these promises—and whether it can avoid the corruption and political chaos that have doomed past attempts.

The last attempt to involve foreign firms in upgrading NAIA ended with the government nullifying the contract in 2002 and then seizing the half-built Terminal 3 in 2004, alleging that former President Joseph Estrada—then under house arrest for plunder and perjury—had improperly influenced the awarding of the tender. The terminal would only open at full capacity in 2014. And in 2015 the country’s Supreme Court ruled that the Philippine government had to pay $510.3 million to the companies in the consortium affected—including $243 million in interest.

The Philippines is a tricky place for foreign companies to operate in. GMR, one of the companies now bidding on the NAIA tender, faced numerous challenges when it first entered the Philippines, said Puvan Sripathy, CEO of GMR International Airports, a branch of the Indian infrastructure conglomerate. “Local conglomerates are pretty powerful and pretty protective of their turf.”

Tying up rivals in long court cases was a common tactic, he said. “For these sorts of tenders, somebody will always challenge [in courts]. There’s a very popular saying: ‘There’s no losers in the tender.’ The losers always think the winner has cheated them.”

Sripathy attributes GMR’s ultimate success partly to the fact that it was used to operating in developing markets such as India, Indonesia, and Greece. As such, it had prior experience dealing with issues that included not just connected business rivals but also dealing with unions, finding suitably trained staff, and navigating local politics.

Marcos’s attempts admittedly build on policies pursued by his predecessor, President Rodrigo Duterte, who also attempted to upgrade the country’s infrastructure. But while there were some notable successes—including expanding Clark International Airport—reporting by the Filipino outlet Rappler found that by the end of Duterte’s term in 2022, only about a dozen of 119 projects had been completed. Poor prioritization and execution, as well as persistent corruption, are seen as having undermined Duterte’s promise to “Build, Build, Build.”

The upgrade of NAIA is an inherently difficult project. Capacity is supposed to nearly double from 32 million to 60 million, but there are few easy ways to do this. “There’s practically no space to build another runway or further extend the existing runways,” said Timothy Batan, undersecretary for planning and project development in the Department of Transportation. The concessionaire will therefore have to focus on upgrading existing services. “The major challenge is how do you do all of this in the middle of an airport operating day in day out? And not just operating but operating beyond capacity.”

Still, Batan is adamant that this time things will go better. The government has been careful to try to ensure the tender process is transparent and competitive. Mabel Kwan, managing director at Alton Aviation Consultancy, noted that unlike previous attempts at upgrading NAIA, this tender involves solicited bids only, the parameters are clearer, and the government has brought in outside experts from the Asian Development Bank (ADB) to advise on the process.

Speaking to Foreign Policy, Sen. Grace Poe, the independent chair of the Committee on Public Services, praised the role of the ADB. Notably, she suggested that the ADB’s expert advice and credibility could help brush aside not just technical but legal challenges as well. While the government may be more friendly to foreign investment, local companies may be as sharp-elbowed as ever. The Manila International Airport Consortium—which consists mainly of established Filipino companies—has already filed a manifestation laying the groundwork for a potential legal challenge to the government’s decision on the tender.

Marcos has also built on policies friendly to private and foreign investment passed in the final year of the Duterte administration. Batan cited new rules that let foreign companies own up to 100 percent of various public utilities including airport operations—foreign ownership having been previously capped at 40 percent. The NAIA tender has duly attracted not just GMR but also South Korea’s Incheon International Airport Corporation and Indonesia’s PT Angkasa Pura, who are major players in two of the conglomerates that are involved in the airport bid.

The move will be a welcome vote of confidence from foreign capital for the government at a time when funding from China may be drying up. Duterte’s administration tried to lean heavily on China’s Belt and Road Initiative to meet its infrastructure ambitions. However, spiraling tensions between the two countries prompted the Marcos administration to exit the initiative. While Filipino politicians are sanguine about this, claiming a number of Chinese companies had a patchy record on delivery anyway, a successful bid will be a good sign of the country’s ability to attract other funding.

Political will from the very top will hopefully help smooth things along, suggested Poe, who is broadly aligned with Marcos politically. Poe said the president has successfully impressed his sense of urgency on civil servants. “I feel that usually the bottleneck is always the bureaucracy. But right now I feel a bit more optimistic because I’ve seen that there’s really movement. This time they’ve actually submitted an actual deadline to our office.”