Full-fledged operations 17 years after project award-
Seventeen years after the project was awarded, Manila’s Ninoy Aquino International Airport (NAIA) finally has a fully functional Terminal 3, the largest terminal serving the airport. The contract was awarded in 1997 and was supposed to be completed in 2002. However, after being mired in a plethora of legal and safety-related issues, the terminal finally became fully operational on July 31, 2014 – after a staggering delay of 12 years. The airport serves Metro Manila, the capital of the Philippines.
Project background: Terminal 3 at NAIA was conceived as part of a master plan to give the Philippines a modern, internationally competitive air transport hub in Southeast Asia. Developed as one of the region’s first build–operate–transfer (BOT) projects, the new terminal should have been the Philippines’ ticket out of Third World status.
The project was awarded to a consortium – Philippine Air Terminals Company Incorporated (PIATCo) in 1997. PIATCo comprised Philippines-based Paircargo, Security Bank and Trust Company, Equitable Banking Corporation, Chuah Huh Holdings Company, and Philippine Airport Ground Services, together holding 60 per cent stake; Germany-based Fraport AG with 30 per cent; and Japanese Nissho Iwai owning the remaining 10 per cent stake. The ownership of PIATCo thus reflected – on paper at least – the constitutionally required 40 per cent limit on foreign equity in Philippines businesses.
However, the consortium was soon entangled in legal hassles, as the Philippines government claimed that PIATCo had breached the Anti-Dummy Law in the contract to operate NAIA Terminal 3. The Anti-Dummy Law provides that only Filipinos should operate, manage, and control public utilities such as the airport terminal. The Philippines government claimed that through secret shareholder agreements, PIATCo had effectively allowed Fraport AG to gain control of operating the facility.
Thus in 2003, the Supreme Court of the Philippines ruled that the pre-qualification and award of the project and the concession agreements six years earlier were null and void for violating the Constitution, the BOT law, and the rules on public bidding. Thereafter, the government moved to take over the nearly completed facility a year later as compensation talks broke down.
After the Supreme Court ruling, in 2004 Fraport AG exited from PIATCo to file a claim against the government for $425 million at the World Bank’s International Center for the Settlement of Investment Disputes (ICSID) in Washington, DC, in accordance with an established German–Philippines agreement that investment disputes should be handled by the ICSID. PIATCo, meanwhile, filed its own $564 million claim at the Singapore-based International Chamber of Commerce Court of Arbitration.
Partial operations: The Manila International Airport Authority (MIAA) was finally allowed to take over NAIA Terminal 3 in 2006, after the government paid the initial $66 million compensation to PIATCo in September 2006.
The MIAA officially opened the 52 per cent completed NAIA Terminal 3 for partial operations on July 22, 2008. However, Cebu Pacific, and Philippine Airlines’ subsidiary Airphil Express (then Air Philippines) remained the only tenants for the first two years of its operation.
Final phase: Finally, after years of partial operation, in August 2013, the Philippines’ Department of Transportation and Communications (DOTC) signed a $40 million construction work agreement with Japan-based Takenaka Corporation to complete and integrate the system works of NAIA Terminal 3.
Under the terms of the agreement, Takenaka was to complete the works within 12 months, for Terminal 3 to be fully operational by the third quarter of 2014. These works included baggage handling, flight information displays (FIDs), computer terminals, gate coordination and fire protection systems, among others.
Takenaka was the original contractor commissioned by PIATCo in 1998 to build NAIA Terminal 3. However, construction of the new terminal was halted in 2002 after allegations of anomalies cropped up.
Installed infrastructure: Terminal 3 has been constructed over 63.5 hectares and has a total floor area of 182,500 square metres. It has a total length of 1.2 km.
The terminal has been installed with 34 aerobridges and 20 contact gates, with the capacity to service 28 planes at a time. It has been fitted with state-of-the-art electronic systems, with 70 FIDs and 314 LCD display monitors. The departure hall’s five entrances are equipped with X-ray machines.
The final security check area before the boarding gates has 18 X-ray machines to minimise inconvenience to boarding passengers. The baggage claim hall has seven large carousels, each with an FID.
A four-level shopping centre connects the terminal to a 2,000 capacity multi-storey car park. Outdoor parking is also available for 1,200 cars.
Current scenario: With the terminal now fully operational, five international airlines are shifting operations to it. Delta Airlines shifted operations to Terminal 3 on August 1, while KLM Royal Dutch Airlines moved on August 4. Singapore Airlines, Emirates, and Cathay Pacific will follow suit by the end of September.
The transfer of the five airlines will reduce Terminal 1’s annual passenger throughput from the current 8 million to its design capacity of 4.5 million. This will free up more space at Terminal 1 and reduce the number of travellers affected by the ongoing rehabilitation works.
Conclusion: The terminal, awarded in 1997, due for completion in 2002, finally became fully functional in 2014. The delay is symptomatic of one of this country’s biggest problems – the inability to resolve complex issues that fester for years. With the terminal now fully operational, it remains to be seen whether it will be utilised to its full capacity.
