The Supporting Information Why MCIA is increasing its Passenger Service Charge (PSC)

Upgrading our airportThe passenger service charge

Mactan-Cebu International Airport

OUR NEIGHBORS ARE UPGRADING

International airports in Singapore, Indonesia, Thailand, and Vietnam are being improved. To pay for the facilities being built and for the maintenance, the passenger service charges have also been increased.

Note the increases in the passenger service charge at the Changi international airport in Singapore

2010 news item

2012 announcement

Indonesia

In Thailand

In Vietnam

WHY ARE THEY INCREASING FEES?

Based on policies of the International Civil Aviation Organiztion (ICAO), users of the airport, meaning the passengers, shall bear the cost of the improvements and the airport maintenance.

SECTION II. ICAO’S POLICIES ON AIRPORT CHARGES

The cost basis for airport charges

•1. As a general principle it is desirable, where an airport is provided for international use, that the users shall ultimately bear their full and fair share of the cost of providing the airport. …

•... In determining and allocating the total cost to be met by charges on international air services, the list in Appendix 1 may serve as a general guide to the facilities and services to be taken into account.

SECTION II. ICAO’S POLICIES ON AIRPORT CHARGES

The cost basis for airport charges

•“2. In determining the cost basis for airport charges, the following principles should be applied: i) The cost to be allocated is the full cost of providing the airport and its essential ancillary services, including appropriate amounts for cost of capital and depreciation of assets, as well as the costs of maintenance, operation, management and administration.“

•ICAO further recommended that … the States: i) Permit the imposition of charges only for services and functions which are provided for, directly related to, or ultimately beneficial for, civil aviation operations;"

WHAT ARE THE PLANS FOR MCIA?

Under PPP agreement, the GMR-Megawide will build a new international terminal and expand the existing one. The concessionaire will also operate the landside. MCIAA will take care of airside operation.

The Masterplan

GMR-Megawide

Board Resolution

NumberDate Increase of the Terminal Fees Date of

Effectivity

94-158 March 18, 1994 IPT – P 300 per pax to P 350.00

DPT P 10.00 per pax to P 15.00 per pax

May 1, 1994

94 – 189 October 21, 1994 Increase in the Domestic Terminal, Fee from P 15.00 to P 25.00 per passenger

October 21, 1994

98-417 March 23, 1998 Increase of Terminal Fee for International Passenger from P 400 per pax to P 500.00 per pax

May 4, 1998

99-478 May 28, 1999 Increase of Terminal Fee for International Passenger from P 500 per pax to P 550.00 per pax

July 1999

2005-1017 December 12, 2005

Increase of Domestic Terminal fee from P 100.00 to P 200.00

January 1, 2006

Chronological List of MCIAA Terminal Fee Increase

Comparison with Other Countries(2010 Data)

In Philippine Peso

Airport International Passenger Charge Domestic Passenger Charge

Changi Airport, Singapore 925 925

Suvarnabhumi Bangkok, Thailand

926 132

Cambodia 1049 252

Kuala Lumpur, Malaysia 855 118

Vietnam 755 88

Bali, Indonesia 755 200

Jakarta, Indonesia 755 200

Taiwan Taoyuan International Airport

420 Cannot find any information

Seoul Gimpo International Airport, Korea

1028 147

Kansai Airport, Japan 1397 Cannot find any information

Narita, Japan 1339 Cannot find any information

Passenger Service Charges - Worldwide

Airport International ($) Domestic ($)

Bali 16.9 6

Jakarta 16.9 6

Cambodia (All) 25 6

Hong Kong 15.6 -

Singapore 27.2 -

Macau 13.75 -

KLIA 20 -

Istanbul 19.4 5.2

Bangkok 21 3

Narita 24.4 -

Wellington 19.89 8.9

Inflation

P550.00 international rate set in July 1999 P200.00 domestic rate set in January 2006

And we complain that we are behind our neighbors.

Particular PHP

Charge to MCIA 171.57

Airline Collection Charge (3.5%) 7

VAT at 12% 21.43

Total 200

Domestic - Existing

Particular PHP

Charge to the Concessionaire 181

Charges to MCIAA 76.4

Airline Collection Charge (3.5%) 10.5

VAT at 12% 32.1

Total 300

Domestic - Proposed

Particular PHP

Charge to MCIA 348.21

VAT 12% 41.79

National Govt. Tax 100

NACAHT Charges 60

Total 550.00

International - Existing International - Proposed

Particular PHP

Charge to Concessionaire 383

Charges to MCIAA 143.8

VAT 12% 63.2

National Govt. Tax 100

NACAHT Charges 60

Total 750.00

MCIAA’s financial revenue stream decreases from about P1.5 Billion a

year to only P500 Million after the Concession Agreement

Grantors (government) shall be responsible for the Airside Operations

and Maintenance (O&M) Services. The Concessionaire shall be

responsible for Landside O&M Services.

MCIAA’s revenue stream will not be sufficient to undertake all the major

rehabilitation and improvements, and maintain its status as a duly

certificated Aerodrome of the Republic of the Philippines.

It is preferable to comply with ICAO’s Policies on PSC than to depend on

annual appropriations from the National Government. Our experience

with the latter shows us the disadvantages of this scheme, resulting to

delays and congestions in many of our airports.

Why do we need to increase the PSC?

Thank You