Pagcor wants higher lease rates from PAL

The Philippine Amusement and Gaming Corp. (Pagcor), the gaming regulator, had tried to renegotiate with Philippine Airlines (PAL) in May last year to increase the lease rates for a 10-hectare property leased by the airline.

The renegotiations, however, were overtaken by the change in administration upon the election of President Duterte, Pagcor sources said.

But the source said Pagcor, at the time, opted to renegotiate rather than automatically rescind the contract because the area was best suited for an airline-related purpose such as what PAL intended because of its proximity to the airport and the lack of access road to the main thoroughfares.

“That area is best suited for an airline-related purpose. There can be no other use for that because it’s just within the airport and there is no access road. Nobody else can use that except an airline,” said a Pagcor source privy to the matter.

The same source said that in 2014, Pagcor and PAL agreed to the P40 per square meter lease rate because of the urgency of the matter as the Philippines was preparing for the Asia Pacific Economic Cooperation the following year.

During the APEC Economic Leaders Meeting in Manila in November 2015, the Ninoy Aquino International Airport (NAIA) had to accommodate the private jets of the different heads of states coming to the Philippines.

To prepare for it, PAL approached Pagcor to lease the property. Due to the urgency of the matter, both parties had agreed to the lease rate, which was ideal at the time, the source said.

The source said both Pagcor, now headed by chairman Andrea Domingo, and PAL should just renegotiate for a new contract to update the lease rates.

PAL recently unveiled a P20 billion plan to expand the NAIA Terminal 2, its current hub for local and international flights. It proposed to use the property leased from Pagcor but the regulator said it still needs to get an opinion from the Office of the Solicitor General on the matter.

The flag carrier said it “recognizes the role of Pagcor and reiterates its willingness to engage with Pagcor and other stakeholders in pursuit of its goal to work with government in building, developing, enhancing and upgrading airport infrastructure.”

The P20-billion airport proposal is aimed at decongesting traffic at the NAIA, which has been running above capacity.

PAL stressed that it had entered into the lease agreement “in good faith. It cited a portion of the deal, wherein Pagcor “warrants it is the lawful owner of the leased premises; that is free from all encumbrances.”