Incheon Airport consortium wins $3B bid to upgrade Manila airport

Industry

Published: 16 Feb. 2024, 18:22

Incheon Airport consortium wins $3B bid to upgrade Manila airport

Passengers queue at airline counters in Ninoy Aquino International Airport in Manila, the Philippines, on Jan. 2, 2023. [REUTERS/YONHAP]

A consortium of Incheon International Airport Corporation (IIAC) and Filipino firms won a 170.6-billion-peso ($3.05 billion) contract to oversee the operation and maintenance of Manila's main airport for up to 25 years, marking its largest-ever overseas project.

The consortium, which includes IIAC (with a 10 percent stake), San Miguel Holdings Corporation (33 percent), RMM Asian Logistics (30 percent) and RLW Aviation Development (27 percent), will undertake the privatized operation and maintenance of Ninoy Aquino International Airport in Manila, the Philippines, under a public-private-partnership.

Secretary of Transportation of the Philippines Jaime J. Bautista, center, awards the SMC-SAP Company Consortium for the NAIA Public-Private Partnership Project on Friday. The project is expected to improve the passenger experience at the airport, achieve more efficient operations and expand airport capacity. [DEPARTMENT OF TRANSPORTATION PHILIPPINES]

Their bid offered to share 82.16 percent of the revenue with the government, more than double what competing bidders offered.

The project includes the refurbishment of runways, passenger terminals and airside facilities to meet the growing demands of passengers and ultimately double the airport's annual passenger capacity to at least 62 million.

The winning bidder is required to invest a minimum of 141 billion pesos to upgrade NAIA. The government will receive an upfront payment of 30 billion pesos, along with fixed annual fees of 2 billion pesos and a percentage share of gross revenue over the concession period.

This achievement builds on IIAC's portfolio in the Philippines, following projects such as providing master plans for Mactan-Cebu Airport in 2011, nationwide airports master plans in 2015, and construction management for Palawan Airport in 2018.

The Korean operator of Incheon International Airport sees the contract as an opportunity to "diversify revenue streams and secure stable dividend income," with a 10 percent stake over 25 years, leveraging the robust aviation demand at Ninoy Aquino International Airport.

IIAC is currently engaged in overseas projects, including the consignment operation of Kuwait Airport's Terminal 4, the operation and maintenance of Batam Hang Nadim Airport in Indonesia and consulting for Poland's new airport project.

Looking ahead, the state-run corporation aims to promote the participation of domestic companies in the design and construction of future projects, thereby supporting their international expansion and contributing to the nation's economy.

"Exporting the 'K-Airport' platform opens the door for related industries, like engineering, procurement and construction, IT, duty-free and finance, to join in airport construction and operation ventures," an IIAC official told the Korea JoongAng Daily.

"Winning the NAIA development and operation project consolidates our position as a global airport operator in Southeast Asia," said IIAC President Lee Hag-jae. "We will continue to expand our overseas business worldwide based on the operational know-how accumulated at Incheon Airport."

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]