CONCESSION TERM
On an investment perspective, both proposals can be deemed within range of each other given that the NAIA Consortium proposes to invest $2 billion to expand capacity to 65 million passengers over four years while Megawide- GMR intends to spend $2.9 billion to scale-up capacity to 72 million within the same amount of time.
The principal difference between the two is the concession term. The fact that MegawideGMR proposes a concession period of only 18 years, half of what is asked for by NAIA Consortium, works to its advantage. A shorter concession period gives government the flexibility to pursue other capacity- building endeavors in less than two decades instead of being locked-in for three and a half. As we all know, flexibility is key given the rapid pace in which trends in air transport evolves. A shorter term will give government the latitude to shift strategies sooner to better serve the riding public.
STRATEGIC PARTNER
The NAIA Consortium has tapped Changi Aiports of Singapore as its strategic partner while Megawide is aligned with the GMR Group of India.
To many, Changi may be the more impressive partner given its renowned facility in the Lion City. What many may not realize is that Changi Airport operates much like the Singapore government in that the airport authority has sway over all facets of operations including baggage handling, immigration, customs, and air traffic control. In short, it operates with quasai-autocratic control. It has no experience operating in an environment where the Bureau of Immigration works with absolute autonomy, as does customs, quarantine, security, and other airport services.
This lack of multi-agency management experience is Changi’s Achilles heel. In fact, this was the reason why the government of Saudi Arabia terminated its contract to manage the new King Abdulaziz International Airport (KAIA) in Jeddah.
Changi operates a single airport facility with a passenger traffic of 62.7 million while GMR manages three airport facilities — in New Delhi, Hyderabad and Mactan — with a collective passenger flow of 94 million. What is notable about GMR is that it orchestrated one of the most dramatic airport transformations in history.
I still recall how the New Delhi Airport was a madhouse when I visited the Indian capital back in 2004. It was one of the worst airports I had been to. Fast forward to 2014 and it was voted the best high-volume airport in the world according to the Airport Service Quality (ASQ) rankings, considered the “Oscar Awards” among airports. The New Delhi airport was ranked number one in 2015 again, and number two in 2016, tied with Changi.