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How the New MCIA Terminal Will Help Decongest PH's 2nd Biggest Airport

The MCIA Terminal 2 was a PPP project that almost didn’t push through because of legal challenges
By Lorenzo Kyle Subido |



The Department of Transportation (DOTr) has confirmed that Terminal 2 of the Mactan-Cebu International Airport (MCIA) will be completed and inaugurated by June 7, with commercial operations commencing on July 1.


Touted as the Philippines’ first “resort airport,” the MCIA Terminal 2 has already received global recognition for its architecture and design, which is inspired by various elements of Cebuano culture. A article listed world-renowned Filipino architects and designers Kenneth Cobonpue, Budji Layug and Royal Pineda as some of the big names tasked to design the new airport terminal.




Related story: (LOOK) The Making of the Country's First Resort Airport in Cebu



The new terminal, which will consist of a three-storey building that spans 65,500 square meters, is expected to handle around eight million passengers a year. This would increase passenger capacity of the MCIA from 4.5 million to 12.5 million per annum.


That should not only be able to cover current demand, but also decongest the country's second largest airport by passenger volume. The MCIA saw 10.1 million passengers depart and arrive from its airport last year, a 13.8-percent increase from the year prior and more than double its current passenger capacity. (See infographic)


But how did the project come to be in the first place? And why is it being built by a joint venture of Philippine and Indian companies rather than by the government?


The construction of MCIA Terminal 2, and the operation of the airport as a whole, is a public-private partnership (PPP) project implemented by the DOTr and the Mactan-Cebu International Airport Authority. Bidding for the project happened in November 2013, and it was subsequently awarded on April 2014 to a joint venture of two infrastructure firms: Philippine-based Megawide Construction Corp. and India-based GMR Infrastructure Ltd., operator of the Delhi International Airport and the Hyderabad International Airport in India.



The consortium, called GMR Megawide Cebu Airport Corp. (GMCAC), offered a premium of Php14.4 billion to the Philippine government for the exclusive contract to build and operate the MCIA Terminal 2 for 25 years. That’s on top of the estimated project cost of Php17.5 billion, according to the Public-Private Partnership Center.


Shortly after the award, however, several cases were filed with the Supreme Court seeking to nullify the contract between the government and GMCAC. The high court dismissed the cases filed by former Senator Sergio Osmeña III and the Business for Progress Movement, a non-governmental organization, in January 2016.


But well before that, on June 29, 2015, GMCAC already began construction of MCIA Terminal 2, a move that entailed some risk because of the pending cases but which helped ensure the timely completion of the project.



Forty-two-year-old Edgar Saavedra is the president of Megawide, which entered into a joint venture with Indian company GMR Infrastructure Ltd. to construct the new terminal of Mactan-Cebu International Airport



As well, the PPP project awarded to GMCAC consists of other ventures beyond the construction of a new airport terminal. These include: (1) the renovation and expansion the existing Terminal 1 of the MCIA; (2) reconstruction of the Terminal 2 apron, or the area where aircraft are parked while passengers and/or cargo are being loaded or unloaded; (3) augmentation of the MCIA’s passenger capacity; and (4) development, operation and maintenance of commercial assets within the airport.


In addition, GMCAC also submitted a Php208-billion unsolicited proposal in June 2017 that outlined a 50-year masterplan for the MCIA. Aiming to increase the airport’s capacity to 50 million passengers per year, the proposal involves building a second parallel runway for the MCIA as well as building a third airport terminal.



Megawide is no stranger to PPP projects, having acquired contracts to build other major infrastructure developments around the country. Among these are the new terminal of the Clark International Airport, which it is also developing with GMR Infrastructure; the Southwest Integrated Transport System, which will connect various transportation networks in the Parañaque area; and the Philippine School Infrastructure Project, of which the first phase was the first completed PPP project in the country.


After MCIA and the Clark International Airport, Megawide and GMR partnered again to submit an unsolicited proposal worth $3 billion (Php156 billion) to rehabilitate the Ninoy Aquino International Airport in Manila last March. The two developers challenged a similar proposal submitted by a superconsortium of seven of the country’s biggest companies.



Related story: Megawide Vs Superconsortium: Upstart Builder Challenges 7 PH Tycoons For NAIA Upgrade Project



Megawide is headed by Edgar Saavedra, the country’s 31st richest person with a net worth of $375 million in 2017. Only 42 years old, he is among the youngest tycoons to be included in business magazine Forbes’ exclusive list of the Philippines’ 50 richest people.







Lorenzo Kyle Subido is a staff writer of Entrepreneur PH

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