50-year Franchise for San Miguel Aerocity approved

San Miguel Aerocity

The Senate on Monday, October 12, 2020, approved on third and final reading the bill allowing San Miguel Aerocity Inc., a subsidiary of San Miguel Holdings Corp., a 50-year franchise to construct and operate the New Manila International Airport and an adjacent Airport City in Bulacan.

The proposed P1.5-trillion Bulacan airport and airport city are anticipated to accommodate 100 million passengers annually. It is also expected to generate jobs that could benefit up to a million Filipinos.

With 22 affirmative votes and zero negative, the Senate on Monday approved the franchise bill, which adopted House Bill No. 7507, for the operation of a new domestic and international airport, seen to decongest the Ninoy Aquino International Airport.

“The San Miguel Airport alone will provide 450,000 jobs during the construction phase, and then after that upwards of a million people will be able to benefit from this undertaking,” Senator Grace S. Poe-Llamanzares said during the session. “Not to mention, the hundreds of thousands of passengers that will fly in and out of the country every day.”

San Miguel Aerocity
New Manila International Airport exterior design study.

San Miguel Aerocity will also build an expressway that will link it to North Luzon Expressway and a rail link through Metro Rail Transit-7. The 50-year franchise is inclusive of a 10-year maximum period for the design, planning, and construction of the airport and airport city.

The franchise provided that San Miguel Aerocity should be able to commence development plans within one year from the signing of the franchise into law. Otherwise, the franchise may be revoked.

Other conditions for the revocation are the failure to start operation within one year after securing a permit from the Civil Aviation Authority of the Philippines and within 12 years from the enactment. The airport is also required to function continuously for two years.

Once the franchise expires, the grantee is mandated to turn over the ownership of the airport to the Department of Transportation (DoT).

Moreover, the franchise exempts the grantee from direct and indirect taxes during the 10-year construction period after which an income tax and real estate tax exemption will be awarded.

San Miguel Aerocity

The exemption, however, will expire once the Bureau of Internal Revenue finds the investment expense of the airport and airport city has been recovered.

Upon expiration, San Miguel Aerocity will then be qualified for a revenue share worth 12% of the internal rate of return (IRR) annually. The amount in excess of the 12% IRR will be remitted to the government. 

Source: BusinessWorld ; BusinessMirror; Sunstar

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San Miguel Aerocity