MANILA, Philippines – Aeronautical fees, unchanged since 2000, are set to increase as the rehabilitation of the Ninoy Aquino International Airport (NAIA) kicks off under the private sector.
Starting October 1, 2024, airlines will face higher costs, with some fees more than doubling.
“Basically, malaki ‘yung increase e (it’s a big increase), more than a 100% based on the existing rates,” Transportation Secretary Jaime Bautista told Rappler in an exclusive interview on Monday, October 7.
Landing and takeoff fees, which airlines pay every time a plane performs a landing or take-off movement, now have a minimum rate of $794 for international flights and P15,417 for domestic flights. More price hikes are scheduled for years 5, 10, 15, and 20 under the concession agreement with the San Miguel-led group.
Bautista also said that aircraft parking fees and tacking fees — applied when passenger boarding bridges are attached to the aircraft — have also doubled.
With aeronautical fees going up, should we brace for more expensive flight tickets, too? Airlines have warned that this could be the case.
“Passengers may expect adjustments in travel costs once new airport fees are implemented,” the Air Carriers Association of the Philippines and Board of Airline Representatives said in a joint statement on September 9.
However, Bautista tried to temper fears of an increase. According to a study by the government’s transaction advisor, the Asian Development Bank, the added fees would cause airfares to rise by an average of $10 per passenger — not the $20 claimed by certain players in the airline industry.
The transportation secretary told Rappler that representatives from the airline industry met with the President and his Cabinet members several times, arguing that the projected $20 increase to average airfares would “reduce the number of tourists by 500,000 to 2.2 million a year.”
Bautista, who should know a thing or two about the airline industry, having spent over a decade as the president of Philippine Airlines, was not convinced. The transportation secretary did not believe that this increase would substantially impact tourism, given that international tourists spend about $2,008 on average when visiting the Philippines.
“Sinabi ko (I said), ‘Mr. President, $20, it’s not even 1% of $2,008,'” he told Rappler. “It will not reduce [the number of visitor arrivals by] that much. There might be some [losses], but not 500,000 to 2 million.”
Meanwhile, Undersecretary for Aviation and Airports Roberto Lim also emphasized that all changes in fees and rate hikes at the country’s largest international gateway have been presented to and approved by the Cabinet.
Consultations with stakeholders regarding the updates were also done until June 2024.
“[The] amount of investments needed to improve the facilities and services of the airports, benchmarking with other international airports of other countries in the region, and other relevant factors were considered in coming up with the rates,” Lim said.
The full details of the updates were outlined in the revised administrative order published mid-September.
Passenger service charge (PSC), which is collected by the airport operator, is also set to increase beginning the second year of San Miguel taking charge of NAIA. Travelers heading to domestic destinations will be charged P390 from the current P200. Meanwhile, those bound overseas will have to cover P950 from the current P550 fee.
According to the order, the passengers service charge may also be adjusted after 6 years, 11 years, 16 years, and 21 years.
This will be based on a formula that takes into account, among others, value-added tax and the prevailing National Civil Aviation Security Committee charge for domestic passengers, while the computation for international passengers will also include the share of the government on passenger service charge.
Bautista emphasized that the increase in regulated fees — which include the PSC, landing and take-off charge, aircraft parking, tacking fees, cargo terminal fee, and passenger processing charges — will be implemented no matter who won the bidding to operate NAIA.
“Whoever won the bidding, they will have to implement that, hindi San Miguel ang ano diyan (San Miguel is not behind it)…. San Miguel will just follow [the order],” the secretary said.
Non-regulated fees and charges, which can be imposed and increased by the operator on its own but airlines, passengers, and other users of the airport are not required to pay for, include vehicle parking fees, commercial rental or leases within the NAIA compound, and other miscellaneous fees such as advertising fees and meet and assist service.
Control over NAIA officially shifted to San Miguel’s New NAIA Infrastructure Corporation on September 14. The NNIC will have the difficult task of rehabilitating an airport with a reputation marred by bed bug-infested chairs, air traffic management woes, and broken air-conditioning systems. Under the concession agreement, the NNIC is expected to invest about P122 billion in capital outlay to change that — all on top of sharing 82.16% of its gross revenue with the government.
In exchange, Ramon Ang’s group will have up to 25 years to recoup its massive investment. The upcoming terminal fee hike will undoubtedly help as these are excluded from the revenue share agreement. That means the NNIC can pocket 100% of what they collect from passengers. Bautista estimated that this could make up around 40% of the company’s total revenue — a tidy sum that might ease the burden of that multibillion peso investment. – Rappler.com
