CEBU -- The Cebu City Council asked the Mactan Cebu International Airport Authority (MCIAA) and the Department of Transportation and Communication (DOTC) on Wednesday to delay a planned increase in the passenger service charge, fearing it will dampen tourism.
The councilors also asked the Office of the President to let MCIAA retain the P14.4-billion premium GMR-Megawide paid earlier this year for the airport expansion project.
In a privilege speech during the council’s session Wednesday, Councilor Nestor Archival said that MCIAA should use the P14.4 billion so it won’t have to increase the service charge, commonly known as the terminal fee, collected from all departing passengers, except overseas Filipino workers.
Archival, chairperson of the committee on energy, transportation and communications, also expressed his opposition to the increase during a public hearing last Tuesday.
“The P14.4 billion is an enormous amount of money. It is approximately the entire budget of Cebu City for three years. That money is sitting in the Cebu airport’s bank account, in cash,” he said.
Archival said the proposed increase in the passenger service charge (PSC) is huge.
For domestic passengers, the proposed rate is P300, from the present rate of P200. For departing passengers of international flights, the terminal fee will be increased from P550 to P750 if the proposal is approved without changes.
As stated in the concession agreement between the government and GMR-Megawide, the PSC will be increased by 10 percent every five years, on top of the one-time increase upon the completion of Terminal 2.
The GMR-Megawide Cebu Airport Corp. (GMCAC) will take over management of the existing terminal on November 1 and has announced it will begin constructing the new terminal in early 2015. The projected construction cost is P17.5 billion. Its contract to manage both terminals is good for 25 years.
“If the MCIAA proceeds with these increases, we, the passengers from Cebu, will be paying terminal fees higher than those in Manila,” Archival said.
He pointed out that the Ninoy Aquino International Airport (NAIA) imposes only P200 as terminal fee for domestic passengers and P550 for international passengers.
The increase, he said, will discourage passengers and tourists from flying from or through Cebu.
Also on Wednesday, Archival questioned why, out of the proposed PSC increase, GMCAC will be getting more than 50 percent of the new rate.
It was earlier reported that GMCAC will get P181 and P383 from the service charges of domestic and international flights, respectively.
“Why are they getting such amounts when, in fact, the new airport infrastructure that GMR will be operating is not even in place? Would that not seem like the passengers will be the ones paying for or investing in the airport expansion rather than GMR?” Archival said.
Moreover, Archival said his committee doesn’t subscribe to the reasoning of MCIAA that it needs to increase the fee to compensate for the loss of revenue, as a result of the takeover by GMCAC.
He believes the MCIAA should explain their basis for saying their revenue will drop from P1.5 billion to P500 million, and open to the public their previous year’s financial statements.
During the second public hearing on the proposed PSC increase last Tuesday, MCIA General Manager Nigel Paul Villarete said the increase is needed to cover the decrease in the airport authority’s revenues as a result of the privatization of some airport operations.
He said that in 2013, the MCIA had gross revenues of about P1.5 billion, half of which was for operations and maintenance expenses. After income tax and value-added tax deductions, MCIA’s net operating income was about P300 million. Some P150 million was remitted to the National Government for its dividend.
This means that the MCIAA only has P150 million left for all expenditures, capital and otherwise, for the passenger terminal and airside, the airport manager said.
“Once the concession agreement is in effect, the only remaining revenue we have is less than P500 million, which will be almost equal to or just a little more than our personal services and maintenance and other operating expenditures, without anything for capital expenditures or even income taxes,” he added.
After the turnover, the MCIAA will remain responsible for the airside operations, including the maintenance of the three-kilometer runway, taxiway and general aviation services, among others.
If MCIAA decides to push through with the planned increase in the PSC because it is “very necessary”, Archival is asking the authority to impose it in tranches to ease its impact on passengers and tourism.
The council has scheduled an executive session with the MCIAA so the legislative body will be enlightened on the increase in the passenger service charge. (Sun.Star Cebuj)