Lost ad revenues for NAIA-2 could have gone to airport maintenance

There was big money after all. (reposted from http://www.thepoc.net)

Lost ad revenues for NAIA-2 could have gone to airport maintenance

Tuesday, 08 January 2013 13:33 Noemi Lardizabal-Dado

A travel bloggers’ website “Sleeping at Airports” placed Ninoy Aquino International Airport Terminal (NAIA) 1 as one of the worst airports in Asia in 2012 following a year-long survey of budget travelers on their website. NAIA 1 got the same rating in 2011 by the site. It must be noted that airport’s management started a major refurbishment program early in 2012 that “include the repair and improvement of all toilets, the expansion of both the departure and arrival lobbies, the widening of the passenger areas, the addition of Immigration counters, and the installation of a new Flight Information Display System.” Unfortunately, the repairs were not finished in time of the conduct of the survey. Despite the dismal rating, the Philippines is listed as a highly-recommended destination by many travel magazines

Philippines ,a highly-recommended destination for 2013

Condé Nast Traveller recently listed the Philippines as one of the destinations to watch in 2013. They say “It's still not the most obvious beach-holiday destination, but it soon will be.” Ivan Henares shows a list that place Philippines as one of the highly-recommended destination by travel magazines for 2013. With great recommendations from these reputable travel magazines, the Philippines will surely see more tourists.

Manila as the gateway to our beautiful private-island retreats needs to have an efficient airport to accommodate the influx of tourists. Being labeled as one of the worst airports in Asia prodded President Noynoy Aquino to earmark the release of the P1.16 billion for the rehabilitation of NAIA Terminal 1 in a bid to make the airport a world-class facility. It makes me wonder why the airport itself could not earmark maintenance expense through the years.

Let’s watch the recent news unfold.

Ad placements , a source of MIAA revenues

One source of revenue for our airports are terminal fees. The Manila International Airport Authority (MIAA), the Department of Transportation and Communications-attached agency that operates NAIA’s four terminals reported that net income from operations totaled P3.21 billion, an increase of P1.14 billion over 2010. Of the 2011 gross revenue, P937 million went to the national government. It is clear that MIAA revenues come from the increase in flight and passenger figures in both international and domestic operations.

What most of us are not aware is that revenues can also come from ad placements. Advertisements play a vital role in driving revenue for NAIA Terminals 1, 2, and 3. Do you recall seeing those ads as you step down from the plane and walk the immigration counter till you  leave the terminal? Well, MIAA General Manager Jose Angel Honrado ordered a bidding on August 2012 as soon as the five year NAIA-2 contract from Digichive Philippines (Digichive) expired. Digichive , a company in advertising services based in San Juan ia responsible for managing the placement of ads at the Ninoy Aquino International Airport . News reports show that Digichive only gave MIAA P13.5 million each year from NAIA-2 ads. If you take a cursory look at all the ad boards in NAIA-2, is it imaginable to derive 13.5 million pesos each year? The bidding for NAIA 2 ad placements showed Digichive offered P101.5 million which translates to P8 million a month, which is much more the the P1 million monthly MIAA used to receive from for the past five years.

The winning bid amounted to P126 million per year for the next three years. That should have been good news for MIAA but another hurdle faces them.

Injunction, a loss of advertising revenues for NAIA-2

Last Friday, the Office of San Juan Regional Trial Court (RTC) Judge Leoncio Janolo, Jr. issued an injunction that stops the awarding of a P126-million contract for advertising spaces at NAIA- 2.

Though the MIAA board favored the higher offer,it is now “restrained from awarding the contract to the winning party following the temporary restraining order, paving the way for DPC to continue doing business at NAIA-2. The board said the premier airport would continue to lose P88 million annually from advertising revenues at NAIA-2 as a result of the injunction.”

Horado added “that the government lost a total of P440 million in potential advertising revenue over the past five years.“ Imagine how this potential advertising revenue could have paid one-third of the 1.16 billion of upgrading NAIA 1. Taxpayers money could have been used for other worthwhile projects.  It is also high time for the government to check on old MIAA contracts and subject them to reasonableness tests.

If you think about it, this amount could have gone a long way in funding major renovations and upgrading of facilities for all of the four passenger terminals managed by MIAA. The plan of Honrado for NAIA-2 to earn much more from its advertising spaces is now placed on hold. The Miaa estimated that, “because of the TRO, it would fail to increase its advertising revenues, foregoing monthly income of about P11 million, which surely could help finance facility upgrades at the terminals.”

 

Better airports needed

The injunction against the MIAA Board’s decision means that Digichive continues to provide ad placement at the NAIA Terminal 2 at the old contract price to the detriment of the government. Let me emphasize again that the old contract price is 13.5 million pesos versus the winning bid of 126 million pesos.

Digichive might want to air their side to explain the great disparity from their old contract price of 13.5 million and their current bid of 101.5 million pesos per year.

Efforts to increase airport revenue without adding more burden to the citizenry should be encouraged as this can greatly improve services and maintain airport facilities. My question is why is there a need to ask for an injunction which was granted by the San Juan Regional Trial Court when the winning bid will clearly benefit MIAA in the tens of millions of pesos? Each day means a loss of ad revenues that can go a long way in improving our airport facilities.

We want to "impress travelers with our cleanliness, efficiency and well thought of design, so that even if there is a flight delay, they won’t necessarily mind being stuck in a safe, beautiful and efficient airport."

Let's make our tourists experience that it is more fun in the Philippines.

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