Review Urged on PPP Policy on Airline Entities

A HOUSE committee has advised the Department of Transportation and Communications (DoTC) and the Civil Aviation Authority of the Philippines (CAAP) to review the policy limiting the participation of airline-related entities in auctions for airport projects.

Bacolod Silay Airport

“The committee finds the need for DoTC and CAAP to revisit the provisions of the policy… imposing limitation on participation of airline-related entities in the bidding of regional airport projects and other future airport projects,” said Catanduanes Rep. Cesar V. Sarmiento, chairman of the House committee on transportation, in Committee Report 905 submitted early this month.

In August, the committee conducted an investigation into the alleged discrimination of airline-related entities in the bidding of airport projects.

In its report, the panel said the clear motive of the imposition of the 33% ceiling on the participation of airlines and airline-related entities in airport operations is to “prevent discriminatory practices against other airlines by the one which will be awarded with the concession agreement.”

“However, the DoTC and CAAP failed to show any basis for this fear during the deliberation,” the report said, adding that the situation the agencies seek to avoid is “precisely what the airlines and airline-related entities have been experiencing by the implementation of the questioned bidding rules.”

The report further noted that DoTC and CAAP’s “unsupported apprehensions are speculative and hypothetical whereas the discriminatory restrictions imposed on participation of airlines and related entities in the bidding of airport projects [are] crystal clear.”

There are ongoing procurement procedures for the regional airport projects — among them, Bacolod-Silay, Iloilo, Davao, Laguindingan and New Bohol — by the Public-Pivate Partnership (PPP) Center and DoTC.

The instructions to prospective bidders for the projects contain restrictions on the participation of airlines and their affiliates, such as the 33% ownership limit, among others.

The committee cited a report by the International Air Transport Association in May which showed that the restriction on ownership of airports by airline-related entities “unfairly discriminates against airline owners” and “there are already a number of cases globally where the airlines and the airport share the same ownership and the airport is considered world-class with no evidence of other airlines being subject to discriminatory practices.”

During the hearing in August, JG Summit Holdings, Inc. Vice-President Bach Johann Sebastian “averred that the restriction should be removed, emphasizing that airlines have inherent obligation to ensure fair and efficient operation of airports, and added that the fear of discriminatory practices could easily be addressed by the recently enacted Anti-Trust Law.”

Republic Act 10667 or the Philippine Competition Act prohibits all forms of anti-competitive agreements, abuse of dominant position and anti-competitive mergers and acquisitions, with the objective of protecting consumer welfare and advancing domestic and international trade and economic development.

Source: Kathryn Mae P. Tubadeza,

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