Government steps in to keep Lufthansa operating in Philippines

March 6, 2025 | 12:00am

Amid higher airport lease

MANILA, Philippines —  The government is exploring ways to convince a prized investor at the Ninoy Aquino International Airport (NAIA) to stay, as it reportedly considers exiting the Philippines after its lease ballooned by 11 times.

Transportation Secretary Vince Dizon is working with aircraft maintenance, repair and overhaul (MRO) provider Lufthansa Technik Philippines (LTP) to address its issues on lease rates, which have gone up since NAIA was privatized last year.

Under the Manila International Airport Authority’s Administrative Order 1, land lease in NAIA was raised to P710 per square meter per month.

LTP operates a 226,000-square-meter facility at the MacroAsia Economic Zone in Villamor Air Base, so it spends P160 million monthly for lease. Aviation industry sources told The STAR that LTP used to pay just P14 million a month for lease.

Given this, there are concerns that LTP may eventually pack up operations in NAIA and relocate business elsewhere. This will be particularly painful for carriers requiring regular MRO for their fleet since currently, LTP can repair six widebodies and three narrowbodies at the same time.

Likewise, LTP is a valued employer in NAIA with more than 3,000 personnel trained to maintain Airbus A320s, A330s, A340s and A380s, as well as Boeing 777s.

LTP’s base in NAIA attracts airlines operating in major gateways like Changi Airport and Hong Kong International Airport to consider the Philippines for their MRO requirements.

Dizon committed to honor the concession signed with NAIA operator New NAIA Infrastructure Corp. (NNIC), but also promised to work with investors affected by the rate hikes.

“I have spoken to Lufthansa and we are trying to find a solution to the situation. I cannot speak [of the details] right now, but we are studying it,” Dizon told The STAR.

“Definitely, we will listen to the locators in NAIA and we will try to assist them as much as we can. We have to understand there is a contract that was entered into by the concessionaire and the government, so we have to make sure everything is in line with its provisions,” he added.

Further, the STAR learned that the Airline Operators Council (AOC) wrote a letter to the NNIC asking it to defer the lease adjustments that would take effect on March 14.

The AOC, chaired by Edgar Allan Nepomuceno, said the lease increase would distort the financial plans of airlines, which have already firmed up their budgets for the year.

The AOC said the lease hikes could disrupt business operations at the airport, noting that airlines are still reeling from the impact of the first round of price increases in 2024.

In the letter, the AOC submitted three proposals to the NNIC, the first of which is to do the lease adjustments on a gradual basis. The AOC also wants to arrange a meeting with the NNIC on the lease issue, and the operator is also asked to share future plans.

Apart from lease rates, passenger service charges (PSC) are also scheduled to go up in NAIA. By September, PSC will rise by 72 percent to P950 for international passengers and by 95 percent to P390 for domestic travelers.

The NNIC is authorized to jack up service fees in NAIA as part of its P170.6-billion concession to operate and maintain the airport.

In turn, the concessionaire led by San Miguel Corp. is tasked to raise NAIA’s passenger capacity to 62 million per annum and its aircraft movement to 48 per hour.