DOTr open to flexible lease to retain LTP at NAIA

Government is willing to support Lufthansa Technik Philippines (LTP) through possible lease options to convince the world leading Maintenance, Repair and Overhaul (MRO) service provider to stay in Manila.

Transportation Secretary Vince Dizon will be talking with LTP, one of the biggest locators at the Ninoy Aquino International Airport (NAIA), to resolve lease concerns after NAIA’s operator, New NAIA Infrastructure Corporation, raised lease rates at the airport.

Dizon emphasized the valuable role that LTP plays in Philippine aviation – employing more than 3,000 Filipinos who can do aircraft MRO.

“We are in the process of talking and working with Lufthansa, but suffice it to say we are trying to find a solution. Lufthansa is important for the Philippine aviation sector, so we are going to do everything that we can to make sure Lufthansa stays in the Philippines,” said Dizon.

LTP was reported considering closing its operations at NAIA if it fails to secure a preferential rate. NAIA was turned over to a private operator last year, and the concession led to rate hikes.

Under the Manila International Airport Authority’s Administrative Order no. 1, series of 2024, land lease at NAIA was increased to P710 per square meter per month.

LTP currently pays a monthly lease of just P14 million as provided in its 25-year contract with government, which will expire this year.

Since LTP manages a 226,000-sqm base at the MacroAsia Special Economic Zone in NAIA, its lease will go up 11 times to over P160 million per month.

LTP’s parent company, MacroAsia Corp. said it can pass on the additional costs to its clients, but this may force airlines to move their MRO requirements elsewhere. This is painful for LTP’s 3,112 employees, all of whom are experts in maintaining Airbus and Boeing aircraft.

DOTr Undersecretary Capt. Jim Sydiongco said DOTr is trying to find a way to address LTP’s issues on lease. But DOTr wants to honor the contract signed with NAIA operator New NAIA Infrastructure Corp. (NNIC).

One of the options being explored by the DOTr is spreading out the lease hike in such a manner that LTP can keep up financially and NNIC still recovers its investments in NAIA.

“There could be other creative ways of implementing [the lease increase]. It could be staggered; it could be different things. All of this will undergo proper consultation with NNIC and be subject to the approval of the (DOTr) secretary,” Sydiongco said.

DOTr awarded the P170.6-billion concession to operate and maintain NAIA in 2024, when the agency was still led by former transport chief Jaime Bautista. Since then, the DOTr has gone through a massive shakeup, leading to Dizon’s appointment as secretary.

NNIC is authorized to increase service fees at NAIA to fund projects that will improve the airport’s passenger capacity to 62 million a year and aircraft movement to 48 an hour.

Although the NNIC’s goal is to upgrade NAIA, it still has to earn enough yields from the project, especially as it promised to remit 82.16 percent of its revenue to government.

LTP attracts foreign carriers to go to the Philippines for MRO needs, serving 44 aircraft fleet for line maintenance and 1.3 million engineering hours for base maintenance last year.