Monday, September 10, 2012

New Cebu International Airport

Conglomerates Ayala Corp. and Aboitiz Equity Ventures Inc. have forged a memorandum of agreement to establish a 50-50 joint venture company that will serve as their vehicle to bid for and develop the country’s second largest international airport and main gateway to the Central Visayas.

Identified as one of the priority projects under the government’s Public-Private Partnership program, the MCIA involves the construction of a new world-class passenger terminal building in Mactan, Cebu that can accommodate eight million passengers yearly as well as the operations and maintenance of airport facilities.

The airport is currently operating at over capacity with passenger volumes exceeding five million annually and is projected to grow at an even faster pace with the expected increase in tourist arrivals.

More than half of the flight operations at the decongested Mactan-Cebu airport are commercial carriers flying more than 10,000 passengers daily. Passenger traffic has increased at an average of 21 percent a year for international and around five percent for domestic routes.

Ayala Corp. president and chief operating officer Fernando Zobel de Ayala said: “We are excited about this partnership with the Aboitiz Group. Both groups strongly believe in the potential of the Mactan Airport to be a compelling gateway to the country for international passengers and to the Visayas for the growing domestic travelers. We share the vision of creating an airport that provides passengers an efficient and pleasant travel experience. We look forward to leveraging each other’s strengths in developing and running a modern airport facility that Cebu and our country can be proud of.”

“We cannot think of a better partner for this project than the Aboitiz group who has not only built a long history and heritage in Cebu but also has a successful track record in undertaking significant size projects in multiple industries,” Zobel de Ayala said.

For his part, AEV president and chief executive officer Erramon Aboitiz said the partnership gives the company the “opportunity to enter into a strategic new segment that is crucial to developing both the country’s transportation infrastructure as well as its tourism potential.”

The strategic partnership also allows the group to harness its competencies in construction, logistics, utilities, and real estate development and management, Aboitiz said.

“Combined with the Ayala group’s strengths and competencies that have also been honed over more than 100 years of doing business, we are very optimistic about the success potential of this project. Moreover, the fact that the project is in Cebu, which is home to the Aboitiz Group, gives it more special meaning to us,” Aboitiz said.

The Aboitiz clan traces its roots to the late 1800s as a simple family enterprise trading hemp in Leyte, an island northeast of Cebu. It expanded by venturing into other businesses such as power generation and distribution, banking, food and land development.

The Ayalas, on the other hand, have steadily built a significant presence in country’s second largest city through its property arm Ayala Land, which has amassed close to 200 hectares of land. These properties include some of the city’s landmarks such as the Cebu Business Park, the Ayala Center Cebu, the Asiatown IT Park and high-end residential developments.

Both parties will enter into a definitive agreement once the bid rules or the terms of reference for the project have been finalized and published by the government. The government is expected to announce the bidding for the project before the end of the year.

The Ayala/Aboitiz consortium may also take in experienced global airport operators as partners in the project.

The government wants to increase tourism arrivals yearly and by 2016, it aims to have ten million visitors a year compared with 3.5 million visitors last year.

The bid battle is expected to draw powerhouse companies such as Metro Pacific Investments Corp. of telecommunications magnate Manuel V. Pangilinan, taipan John Gokongwei’s JG Summit Holdings, and maverick businessman Ramon Ang’s San Miguel Corp., which is now operating Boracay Airport (the closest air gateway to the popular resort island).

The construction of the MCIA is likely to be undertaken in two phases with the first phase targeted for completion by 2015.

When completed, the MCIA is expected to immensely contribute to the government’s target of developing “safe, efficient, viable and strategic transport infrastructure in the country.” It is also seen to promote tourist access to Cebu Province and Central Visayas, thereby increasing local employment and income generation.

Ayala Corp. is one of the oldest and most respected conglomerates in the Philippines with a diversified business portfolio that includes real estate development, banking and financial services, telecommunications, water distribution infrastructure, automotive dealerships, electronics manufacturing services, business process outsourcing, and power, among others.

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