The Department of Transportation (DOTr) on Wednesday said the increase in airport and terminal fees is unlikely to lead to a substantial increase in air fares, which could harm the tourism industry.
On the sidelines of the 2024 Aviation Summit, Transportation Secretary Jaime Bautista said the increase in airport charges and passenger terminal fees is part of the terms and conditions outlined in the government’s concession agreement with the new NAIA operator.
“It’s in the AO [administrative order]. The AO is part of the concession agreement. But, as I mentioned earlier, we can review it … [But] let’s give it a chance, muna, siguro?” Bautista said, adding that the government is ready to discuss the matter with the airlines and stakeholders.
“Part of the process is a continuing dialogue with the stakeholders,” he added.
The DOTr chief explained that the higher airport fees might not necessarily result in higher fares, and if it does, the increase should be minimal.
“Because the airlines can absorb part of it, can repass one to the passenger. But passengers won’t mind paying a little bit more than what they are paying now if you have very good airport experience,” Bautista said.
“And for a small amount of increase in the cost, I think it will not affect the tourist arrival,” he added.
Bautista stressed that the higher airport charges and passenger terminal fees would enable the San Miguel Group, the new concessionaire, to recover some of its investments.
He said the airport charges, which include landing and take-off as well as parking fees, would increase before end-2024, while passenger terminal fees would also increase by 2025.
The government formally handed over the operations and maintenance of NAIA to the New NAIA Infrastructure Corp, (formerly SMC SAP & Co. Consortium) last September 14, 2024.
The NNIC signed a P170.6-billion contract in March 2024 to operate, maintain and upgrade NAIA for 15 years, extendible for another 10 years.
San Miguel Group earlier said it is mobilizing at least P88 billion in capital investments within the first six years and at least P122.3 billion in capital investments for its entire 25-year concession period.
The government expects to generate P900 billion in revenues in the course of the 25-year concession period, inclusive of the P30 billion upfront payment, P2 billion annual payment and 82 percent government revenue share.
