EXPLAINER: How NAIA, EDSA Carousel privatization could affect travelers

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Metro Manila (CNN Philippines, January 6) — The administration is eyeing the privatization of two main transportation systems in Metro Manila – the EDSA busway and the Ninoy Aquino International Airport (NAIA).

The Department of Transportation (DOTr) announced in November plans to privatize the EDSA busway by this year. 

Meanwhile, Transportation Secretary Jaime Bautista revealed in December the administration’s intent to privatize NAIA, the country’s main airport.

Aside from the carousel and the airline terminal, proposals to privatize other transportation means such as the Metro Rail Transit (MRT) and the Philippine National Railways (PNR) have also floated in the past years.

What exactly does this mean for Filipinos?

Higher fare rates likely

Privatization means a state-owned asset or agency which provides public services, like transportation, is converted to become owned by private institutions.

When private companies or developers invest in their assets, they usually need to redeem the costs. This likely means higher commuter fares for the busway and higher airline fees.

Transportation groups earlier warned that privatization could work “against the people” as the fare increase does not guarantee improved services.

Added earnings from increased fares, however, could also be used to rehabilitate the government-owned assets.

RELATED: EDSA bus rides to charge passengers starting Jan. 1 

Additional financing

A main part of privatizing government assets is to lighten the financial load from the administration as a public-private partnership means private industries also shoulder expenses for maintaining and upgrading the systems.

Budget for the public transportation system in the country has been affecting its path to improvement, becoming a roadblock to improved services.

The Libreng Sakay program for the EDSA busway, for example, could not continue as officials cited losses and lack of funding.

Bautista previously told reporters that the allotted funds for service contracting would not be enough to continue the Libreng Sakay program.

“[For the] EDSA busway, we spend around ₱10 to ₱12 million a day. So ang ₱1.2 billion, ilang buwan lang ‘yun, (so the ₱1.2 billion would only last for a few months),” he said.

Aside from this, investors offering funds could also mean having a say in the system’s operations.

While open privatization for some parts of NAIA could help improve services, Senator JV Ejercito warned that it could also have an effect on national security. 

For Ejercito, privatizing the whole NAIA could allow a single entity to control the operations of the airport and suggested it should remain under the government's control.

Apart from this, additional budget could also mean Filipinos could also expect better facilities and improved services for the transportation systems.

‘Global standard’

Privatizing public transportation systems could make its services more efficient as private industries could pitch in to improve facilities and management.

According to Bautista, privatizing the busway could mean less competition among bus operators.

“They can increase efficiency of the operation and make it profitable,” he noted in an earlier interview with CNN Philippines.

“If all the stakeholders cooperate, there will be efficiency in the operations, so instead of the bus operators competing with each other, it will be one group operating as one,” he explained.

In an earlier interview with CNN Philippines, the Management Association of the Philippines (MAP) proposed to privatize the EDSA busway system to solve passenger congestion.

MAP Infrastructure Committee Chair Eduardo Yap said adding more buses will not be enough to improve the system.

“It’s not just a question of more buses," he argued. "The stations must be adequate to accommodate buses. Otherwise [the buses] will just line up."

For NAIA, privatization means an upgrade in amenities and systems as many possible investors have proposed intentions to rehabilitate its facilities.

Business groups have previously called on privatizing systems in the transportation sector to help them become “up to par” with global standards.

Privatization for the airline terminal could mean additional budget to help “modernize” the airport.

"When we modernize our airport, it should conform with global standards,” Bautista previously said, citing air hubs of major Asian countries like Singapore and Hong Kong.

RELATED: Revive 2018 consortium proposal for NAIA privatization upgrade – Concepcion