Terminal failure

Are you flying to Manila? You might notice that after your plane lands, it will taxi towards a compact, modern-looking structure. That is our nifty new US$650 million Ninoy Aquino International Airport (NAIA) Terminal 3, completed just two years ago and capable of handling 13 million passengers a year.

You might then notice that your plane taxis past our spanking new terminal and stops in front of an old, squat structure. That is the old airport, built in 1982 - the one you will actually use.

You see, the new terminal is closed, and has not handled any passengers since its completion. Fought over by government and its builders, NAIA-3 is a massive monument to the dubious way business is done here, and a testament to the government's failure to muster the political will to break a logjam. NAIA-3's origins date back to the 1990s, when it was clear that the old terminal was creaking at the seams. The then president, Fidel Ramos, offered a build-operate-transfer contract, won by a Filipino-German consortium that eventually called itself the Philippine International Air Terminals Co (Piatco).

When Joseph Estrada became president, Piatco secretly revised the contract to give it favourable terms, among them a monopoly on catering, aircraft repair and maintenance, and cargo handling.

Not only did this rewritten contract hold the government responsible for Piatco's debts, it also forbade a takeover if the builder went under. The new terms increased the consortium's return on investment from the 12 per cent set by law, to 30 per cent.

Unfortunately for Piatco, the revisions came to light when Estrada was kicked out and Gloria Macapagal-Arroyo took office. The Supreme Court nullified the contract, but Piatco sued the government. Its German partner, Frankfurt Airport Services Worldwide (Fraport), vowed to blacken the image of the Philippines as a place for doing business.

There is more to it than meets the eye. It has been claimed that the contract amendment was made possible through judicious payoffs. A recent survey shows that many companies in the Philippines routinely use bribes to get public contracts. Fraport itself has had its home offices raided by German police, and its executives have been charged with corrupt practices in connection with NAIA-3.

The government has appeared stymied in opening the terminal, leading to suspicions it might also have its own secrets to hide. In the meantime, instead of taking passengers, NAIA-3 is gathering dust and slowly deteriorating. Perhaps they should call it Mothball International Airport.