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Mactan airport operator aims to double number of airlines

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Mactan-Cebu International Airport is operated by GMR-Megawide Corp.

By Arra B. Francia, Reporter

DIVERSIFIED engineering conglomerate Megawide Construction Corp. expects to double the number of airlines flying in and out of the Mactan-Cebu International Airport (MCIA) in a span of less than three years, as it concludes construction for the airport’s second terminal in June 2018. 

“We have 22 now. Easily in the next two years, we expect another 15 to 20 airlines, flights to come in. We can double easily in less than three years,” Megawide President and Chief Operating Officer Edgar B. Saavedra told BusinessWorld at the sidelines of the company’s annual shareholders’ meeting in Ortigas last week.

He noted MCIA only had seven airlines when they took over operations alongside foreign partner GMR Infrastructure Ltd. in 2014. The Megawide-GMR joint venture company won the contract for the P17.52-billion MCIA Passenger Terminal Building project under the Aquino administration’s flagship public-private partnership (PPP) program and the concession to develop MCIA for a period of 25 years.

Mr. Saavedra said they are in talks with several Chinese airlines, which are interested in adding routes between China and Cebu amid strong interest from Chinese tourists.

“Mostly right now the routes in China, we are talking around four to five Chinese airlines. In MCIA, there are already direct flights from Cebu to Beijing and second-tier cities like Chengdu, Xiamen. And it can expand more, because the Chinese are very aggressive right now especially when the (Philippine) government approved the no-visa policy. We expect a huge influx of Chinese tourists,” Mr. Saavedra explained. 

In August, the Department of Justice issued a circular allowing Chinese citizens the visa-upon-arrival option in an effort to attract more tourists and investors from China. The government looks to double the number of Chinese tourists in the country in the coming years, which stood at over 675,000 in 2016.

In May 2017, Chinese arrivals were recorded at 73,649, 57.29% higher than year-on-year figures. This is also the third highest figure for international tourist arrivals after Korea and the United States.

Mr. Saavedra said Megawide is bullish on the airport sector as it provides higher margins. In 2016, the company’s airport segment contributed around 40% to its bottom line, despite only contributing around 10% to 15% in revenues. The company delivered a net income of P1.92 billion in 2016, while revenues stood at P17.92 billion. 

“Moving forward in the airport, we’re always bullish. In fact, the five airports which the government just unbundled and postponed, we are very bullish. So now since they rolled out the first project of this administration, the Clark airport, we will be joining the construction… the EPC (engineering, procurement and construction) and O&M (Operations and management). The bidding for EPC is ongoing and we are joining right now,” Mr. Saavedra said.

The P12.55-billion Clark International Airport passenger terminal is targeted to accommodate eight million passengers annually. The government looks to start its construction by December this year and complete the facilities by December 2020.

The government is expected to award the EPC contract to the winning bidder by November, while bidding for O&M will start a month after and will be awarded by the first quarter of 2018.

Megawide posted a 5.88% decline in attributable profit for the first semester of 2017 to P927 million, as revenues likewise slowed by 5.39% to P9.64 billion.

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