Proposed Panglao International Airport makes no Sense
An international airport in Panglao makes no economic sense | Tourism at Panglao cannot increase six-fold | Alternatives | A new domestic airport in Bohol may make sense | Status updates 2006 | Status updates 2007 | Status updates 2008 | Status updates 2011 | Sources of Information
For many years, the possibility of an International Airport on Panglao has been under discussion, and it now seems closer to reality than ever before. The proposed airport has been promoted as a means to give Bohol an economic development boost, and in particular, to improve its attractiveness as a tourist destination. Since we exist to promote this wonderful island, it could be expected that this website applauds this project. However, this is not the case. We believe that there is no justification for a new international airport in Bohol: it would be a waste of resources that could be better spend otherwise, and that it will actually be a detraction for tourists and the development of Bohol.
Statistics are hard to get and not always reliable, but I’ll try to summarize and estimate what tourism is bringing to Bohol. Currently, Bohol welcomes about 35.000 foreign visitors a year, and a similar number of domestic tourists. The total number of visitors in 2004 was 162.000, but that figure probably includes some business visits and family visits from Boholanos working in Cebu and Manila. Visitors stay on average 4 nights. Bohol has about 3000 beds available in about 60 hotels, resorts, inns, and guest houses. The occupancy rate (in 2003) was 46 percent, which means in that year we had about half a million visitor-nights. Assume that each visitor spends on average 100 US dollar per night (US 50 room rate, and about US 50 for meals, excursions, etc.). This leads to a gross income of 50 million dollar, of which roughly 30% will return to the government in shape of various taxes, that is, 15 million dollar per year.
Most tourists come to Bohol to enjoy its natural resources: in particular scuba divers come here to admire the underwater coral reefs. Another significant group are foreigners and former Filipinos who have relatives on the island.
The peak season is around Christmas, during which most resort class facilities are fully booked. Virtually all foreign tourist visit the Philippines by air, and the most likely ports of arrival are Manila and Cebu. Even though there is a domestic airport in Tagbilaran City, a large number of foreign tourists arrive by (fast) ferry from Cebu, especially those arriving via Mactan International Airport near Cebu. Most tourist currently arrive on regular flights. Tourists that currently arrive on charter flights (mainly from Japan) come on a package deal, and stay in one of the larger hotels on Mactan.
The trip to Bohol by boat from Manila takes about 25 hours, and is not a realistic option for tourists. The flight takes between one and two hours, depending on aircraft type. Transfer from NAIA in Manila to the domestic airport takes about one hour. Currently, there are one or two flights per day directly to Bohol, but a number of visitors may also choose to go via Cebu, which is served by numerous daily flights.
The trip by fast ferry from Cebu takes about one and a half hour. Unfortunately, transfer from Mactan Airport to the pier also takes about two hours, and requires dealing with the rather hectic traffic situation between Lapu-Lapu city and Cebu. Finally, the transfer from both the pier and the airport in Tagbilaran city to the resorts in Panglao takes about half an hour.
In conclusion, foreign tourists have to spend at least four to five hours after arriving in the Philippines to reach their destination in Bohol. This assumes schedules match perfectly. In practice, many visitors will be forced to spend a night in either Manila or Cebu before they can continue their trip to Bohol. Obviously, this delay is the main argument in favor of an International Airport on Bohol.
However, in this article, we will show that this is not enough justification for the considerable investments required.
An international airport in Panglao makes no economic sense
The construction of an international airport will costs something between 4 and 10 billion peso, or 80 to 200 million US dollar. For arguments sake, lets be optimistic and use the lower figure. At current interest rates, borrowing 80 million dollars will cost at least 5 million per year in capital costs. In addition, by my rough estimate, another 5 million dollar will be required every year for operation and maintenance of the facility. All in all, we are probably looking at running costs of about 10 million dollar per year (without paying back anything on the loan).
An international airport on Panglao will have little attraction to business travelers, so it is unlikely international airlines will set up regular business flights to Panglao. All revenues have to come from tourist arrivals. Income will have to come from landing fees, parking fees, per-passenger arrival and terminal fees, and income from the rent of facilities, such as restaurants, souvenir shops, catering and maintenance facilities. If we estimate such income at about USD 10 (PHP 520) per arriving or departing passenger, we will at least 500.000 visitors (one million movements) per year to break even, or about 12 daily departures and arrivals of medium size passenger jets.
Now assume half of all current visitors to Bohol will start to use the new airport. This will lead to about 80.000 visitors (160 000 movements) per year, or some 1.6 million dollar income. We are thus facing a yearly deficit of over 8 million dollars. To break even, we need to increase that number at least six-fold. Otherwise, huge yearly government subsidies will be required. This increase will have to come from charter flights bringing in new tourists, and to welcome them, the tourist facilities in Panglao have to increase similarly.
Tourism at Panglao cannot increase six-fold
It is an often heard cliché that tourism destroys what it seeks, but it will be very well applicable to Panglao if this airport project takes off. Tourists visit Panglao to relax. To break free from the hustle and bustle of their hectic lives, and leave behind their worries for a couple of days or weeks.
As argued above, to recoup the huge investment made in the airport, the number of arrivals and visitor-nights in Bohol, and thus the number of rooms, have to be increased at least six-fold. This means further considerable investment in touristic infrastructure, such as hotels, roads, and so on. This will cost at least as much as the airport itself.
What will this mean for Panglao? For a six-fold increase in visitors, we need to add about 5000 rooms. Consider Shangri-La’s Mactan Island Resort in Cebu. This huge complex has 547 rooms. Imagine 10 of these on Panglao. You get the picture. All these people also need to come and go, so imagine on average 12 flights per arriving and departing every day. Instead of peace and relaxation, visitors will enjoy low-flying noisy airplanes 24 times a day. Also consider at further infrastructure, such as roads, shopping centers, entertainment facilities, and so on, required to support this influx of tourists.
All this is clearly beyond the capacity of Panglao. To list just a few of the bottlenecks:
- Water resources are already strained on Panglao. Most resorts can only offer brackish water for showers and baths. To resolve this issue, fresh water will need to be brought in (preferably by pipe) from the mainland, or a desalination facility will be required.
- Although attractive, the beaches are limited in capacity. Even the largest beach on Panglao is not as long, and half as wide as the beach on Boracay. In size, they are certainly no match for the beaches along the Spanish Costas. Their charm lies much in not being too large.
- The coral reefs can only handle a limited number of divers, snorkelers, and other water sports enthusiasts. Beyond that, they will irreparably be damaged, and loose their attraction for further visitors.
- The number of whale-watching and dive operator boats currently take up half the available space on Alona beach. Increasing this six-fold will make the beach look like Manila harbor rather than a relaxing stretch of white sand.
- Waste disposal is problematic. Just a few meters behind the beach, one can easily spot piles of rubbish. Stray waste and stray dogs flourish. Toilets, baths, and kitchen sinks need to empty somewhere, and cannot simply flow into the soil or sea.
This means most of all these new tourists will not be able to enjoy the peace and nature Panglao currently has to offer. So what will they do?
Problems also appear in other areas:
- Already today, resort owners have trouble finding skilled employees. Not that there is a lack of unemployed people, but for many jobs considerable social as well as business skills are required. Receptionists and other employees in the resorts need a certain level of professionalism to create and maintain a friendly atmosphere. Dive masters, guides, and other instructors need to master their subjects, and language skills are essential to welcome guests who do not know English, just as well as to deal with agents from the countries the tourists will come from.
- So far, Panglao has been reasonable successful to keep prostitution out. However, with a six-fold increase of tourists, this will become a real challenge. Some of the men among the visitors will seek this type of “entertainment,” which, given the social conditions in the country will attract plenty of young girls who see no alternative to earn a living and support their families. However, the effects will be devastating. It should also be remembered also that sex-tourism drives out all other tourists, who do not want to be confronted with it.
- Land prices in Panglao have sky-rocketed the last few years. Five years ago, a parcel not too far from Alona beach would fetch about 300 pesos per square meter. Today, asking prices are close to 2000 pesos, probably due to airport and tourism related speculation. This means that for locals, it is now virtually impossible to obtain land – and that some locals will be tempted to sell and consume ancestral lands, thereby giving up their source of livelihood for some short-lived luxury.
- Beaches become inaccessible for local fishermen. Traditional fishing communities can be locked out from their access to sea by various means.
Note also that large resorts tend to monopolize all potential tourist income, as they organize their own tours, have their own sports and entertainment facilities, and so on, and expatriate most generated income, whereas small scale resorts generate much more spin-off opportunities for the local entrepreneurs, and thus result in more income for local companies.
The conclusion can only be: an international airport in Bohol makes no economic sense, and is also irresponsible from an environmental and social point of view.
After concluding that an airport in Panglao doesn’t make sense, what alternatives can be proposed to develop tourism in Bohol in a economically, socially, and environmentally responsible way. I can think of a number of things that can better be done with the available funds.
Protect assets. The provincial government should guard its assets for future generations. It should not kill the goose with the golden eggs, nor allow commercial exploiters, or just sheer indifference or poverty to do the same. Support should given to grass-roots initiatives to protect the marine environment, such as the small marine sanctuaries that have started to appear around the coastline. Destructive fishing methods should be stopped. Historical buildings need proper attention and repairs to remain attractive. In tourist development zones, no buildings should be higher than the coconut trees.
Develop medium size resorts. Bohol can still offer space to a range of smaller and medium sized quality resorts, up to about 40 rooms, as long as each of these new resorts offer some unique selling points and a special atmosphere. Examples of such resorts with a special atmosphere may be Ananyana, or the Bohol Bee Farm. Such medium sized resorts offer much better opportunities for locals to be involved, and often offer better services to their customers.
Keep beaches free. Bohol should keep its beaches free. In all senses of the word: free for all visitors to enjoy, even if they cannot afford the high entrance prices of some of the resorts. This way, word-of-mouth advertising will have the widest reach. Even young backpackers traveling on a shoestring will grow older and return to stay in the better places. Beaches should also be free from stray waste, dirt and other annoyances. In particular, the province should create and strictly enforce a no-build zone for the first 50 or even better 100 meters from the high-water line on the beach. This will create a commons that can be enjoyed by all. It should also keep the beaches free from too many hawkers. People don’t mind watching somebodies wares once or twice during a beach holiday, but if they constantly have to send away over-zealous sales people, they will not return.
Streamline transfer from Mactan. As discussed above, the transfer time from Mactan to Cebu is currently at least 5 hours. In practice, visitors may even be forced to stay in Cebu overnight to get a reasonable connection to Bohol. To improve this, a fast ferry should be set up to go directly from Lapu-Lapu city to Bohol, with departure and arrival times synchronized with the arrival of charter or regular flights on Mactan.
Develop Tagbilaran City. Tagbilaran City as it is today is very unattractive. Streets are congested and polluted, and the city lacks attractions for visitors. Unlike Panglao, Tagbilaran is the place to develop a night-life with restaurants, discos, and other urban attractions. It would be really wonderful if Tagbilaran would open-up its sea front, and create a boulevard similar to that in Dumaguete City (and many foreign tourist destinations).
Improve tourism education. New resorts and hotels need employees, from the management level all the way down to the janitor. These skills need to be learned. Probably it is wise here to seek cooperation with an international educational institutions in this field. Ultimately, the aim should be that all jobs in tourism can be filled with qualified people from the local communities.
Spread tourist influx. Bohol is not just Panglao. Many other areas of Bohol can be developed, on a small-scale environmentally and socially sound base. The western coastline has many attractive spots. Northern Bohol has many reefs and islets that may offer opportunities. The Anda peninsula in the east has a wonderful beach, and so on.
Increase visa-on-arrival duration. Currently, tourists from western countries receive a visa-on-arrival that is valid for 21 days. For most tourists from Europe, this is just a little too short, as holidays tend to last 4 to 6 weeks. Most people don’t like having to apply for or to extend visa, and may choose another destination instead. By extending that period to 42 days, more visitors may choose to come to the Philippines, and the benefits will probably exceed the loss in income from visa fees. Naturally, this is not something Bohol can do, but should it be lobbied for with the central government.
Develop out-door activities. Bohol offers plenty of opportunities for trekking, biking, camping-out, sailing, canoing, spelunking, and other out-door sports activities. Unfortunately, except for scuba diving, nobody is currently developing or promoting such activities. Who is going to jump into this opportunity?
Promote the Region. Bohol is part of a larger area with tourism potential, and should be included in prearranged tour itineraries that also include Cebu, Negros Oriental, Siquijor, and Camiguin, all easily reached by sea from Bohol. Together, these destinations can offer a varied set of attractions, both on the natural and cultural field, which will encourage visitors to come and stay longer in the Philippines.
When these recommendations are taken into account, tourism can develop gradually to levels that the island can sustain and absorb in its over-all development. This will also much better guaranty that economic benefits of tourism end up with the local population, and its ill-effects are avoided.
A new domestic airport in Bohol may make sense
One of the few valid arguments I heard for constructing a new airport in Bohol is that the current airport is reaching its limitations, and is being surrounded by residential buildings. The root cause of this problem is the lack of proper zonal planning, but that has already happened, and, with the current growth rate, is only expected to get worse.
Panglao may be a potential location for such a new airport, but other locations should also be considered, as long as they are within a reasonable distance from Tagbilaran. This way the domestic airport can serve as entry-point for domestic tourists, as well as foreign tourists who visit more places in the Philippines, without incurring the high costs of an international standard run-way and facilities for long-distance jet liners.
Status Update, 27 April 2006
In response to the issues raised by a number of opponents of the Airport project, including Panglao Municipal Tourism Council Vice Chair Agustin Cloribel and Provincial Environment and Natural Resources Officer Arius Ilano, Governor Erico Aumentado has hired a Japan-based infrastructure consulting firm to render feasibility studies. These studies should in particularly address the susceptibility of the airport to ground collapse on the karst soil of Panglao. (See the Bohol Times, 23 April 2006 issue.)
Although ground collapse is a potential risk when building on karst soil, I believe this can be addressed with technical measures, such as using an underground radar to locate cavities and re-enforce them where required, using concrete constructions. As a result, this study diverts the attention from the economical, environmental and social issues raised in this article, which are far more difficult to resolve.
Status Update, 25 May 2006
With some amazement, I read in the Bohol Sunday Post that just a meagre one percent of the Boholano’s in the first district oppose the Panglao Airport Project, according to an opinion poll conducted by the HNU. To quote:
Only 1% was braved [sic] enough to register its opposition to the Panglao International Airport with a whooping 99% saying yes to the same project. Translated into the lowest terms, this means that Boholanos in the first district stood as one behind the planned airport in Panglao.
I can’t say I’m impressed. Such results call into memory the former Soviet Union, were leaders too were elected with such unrealistic margins–and I hope we all remember how the Soviet Union ended. Curiously, the comments under this article give a completely different picture. Of course the people commenting here are self-selected, and, after reading through this rather lengthy article, they are probably more aware of the repercussions of the project–but still I would expect a few more comments by people in favor of this Airport. Hereby, people who are in favor of the Panglao Airport are invited to give their opinion here.
In the end, however, you can’t decide on the sensibility of a project through an opinion poll with 200 people, who probably haven’t studied the issue at hand. Before a democratic decision can be made, it is essential that all people who have a vote on the issue are well informed and can make an informed decision. This is exactly what is missing in this entire process: clear information and transparency.
Status Update, 14 March 2007
Not much news for the last half year or so on the airport front. However, the following article appeared on ABS-CBN Interactive:
President Arroyo announced Saturday that one of the world’s richest men, Saudi Prince Alwaleed Bin Talal Alsaud, is planning to build one of his Raffles resorts in Panglao, Bohol.In a speech at the Bohol Youth Day celebration, the President said that Prince Alwaleed intends to bring in another $150 million for the project. Earlier, Prince Alwaleed’s Kingdom Hotel Investments forged a tie-up with Ayala Land Inc. (ALI) for a $153-million hotel project at the Makati Central Business District.
Mrs. Arroyo said that the “decision of Prince Alwaleed to invest in Panglao was a result of her discussions with the heads of the oil-rich Kingdom of Saudi Arabia during her state visit last year.
The President said the Saudi Prince has expressed interest in buying the entire property in Panglao held by the Fonaciers, with the help of ALI.
“They would like to buy the whole Fonacier property in Panglao to put up a six-star (luxury) resort,” the President said.
The resort would carry the famous Raffles name of Kingdom Hotel Investments, which is chaired by Prince Alwaleed.
Panglao Island in Bohol is one of the most popular tourist destinations in the country, particularly for beach and diving enthusiasts.
The Arroyo administration has made the promotion and development of the tourism industry as among its priorities.
A bill that would provide fiscal and non-fiscal incentives for investments in tourism has been passed in the Senate but is still pending in the House of Representatives.
Once passed into law, the Tourism Act would pave the way for the establishment of tourist enterprise zones where investors would be given a package of fiscal and non-fiscal incentives.
The original source for this is on the president’s website, in Cebuano. The relevant paragraph:
[...] I wonder Ace if I can announce…? May I announce the Kingdom Holdings? Tungod kay gwapo kaayo ang inyong mga baybay, inyong mga coral reefs, inyong hospitality, mga katawhan, I would like to announce that as a result of my state visit to Saudi Arabia last year, when I had a talk with the fourth richest man in the world, Prince Al Waleed of Saudi Arabia who invest the money of the royal family. Kingdom holdings headed by Prince Al Waleed has entered into a partnership with Ayala land and they would like to buy the whole Fonacier property in Panglao to put up a six-star resort, Raffles family. Ang ilang investment 150 million dollars diri sa Pilipinas ug sa Bohol.
What such a huge project will mean for Bohol remains to be seen. I will try to obtain more information on this issue.
I am much in favor of further development of Bohol. The future generation of Boholano’s do need employment and opportunities. But it remains wise to be skeptical. Just looking at the amount, being talked about. No investor will invest such amounts without a solid business plan and a good prospect of return on investment. An investment of $150M will require a return of at least $15M annually, as otherwise it would be better to put the money on the bank for interest. Translating that to reasonable business figures, that is a margin of about 20 percent of $75M turn-around, which, looking at a rate of $200 per night per person translates to a staggering 375000 paid-for nights per year. To accommodate this, you need, taking into account seasonal variations, at least 2500 beds, or five times the Sangri-La in Mactan. All these figures are very rough estimates at the least, and only provided to give some idea of the scale involved.
Status Update, 19 May 2008
Coming Thursday, May 22, 2008, President Gloria Macapagal-Arroyo will be present at a ground-breaking ceremony that will mark the beginning of the construction of this airport.
Although this is a serious set-back for those who oppose this project. It is not the end. Philippine history is filled with canceled projects. Again we see figures in the press that 99 percent of the population of Panglao support the project, figures that certainly do not match my informal asking around the last time I was in Panglao. Furthermore, this support certainly does not extend to many hotel owners on Alona Beach (those who are supposed to be rejoicing with the influx of new tourists), but who instead mourn in silence, realizing that the runway (located in Tawala, near the spot of the former Panglao airstrip which was decommissioned in the seventies) will force airplanes to fly straight over Alona Beach, causing unprecedented levels of noise on this once peaceful beach.
It is to be hoped that the start of construction will finally wake up the people affected to the disaster in the making, and will finally lead to some kind of coordinated opposition to this project that will dwarf both the Agora market complex and Loboc bridge as monuments of political mismanagement.
For me, Thursday marks a sad day, but then, I am sitting in a far away country, and can only provide arguments and reasoning. It is up to the people directly hurt, it is up to the grass-roots, to step up and prevent it.
Please read: this coverage of opposition to the project.
Status Update, 7 January 2011
Little news on the Airport for a while, however, this is an interesting link, showing that progress is quite stalled (luckily), but unfortunately not yet dead: Inquirer.net article on Panglao Airport.
Status Update, 14 June 2011
I’ve finally found some further information. Now renamed “Bohol International Airport”, the current government seems to be determined on completing this project by 2015. A feasibility study is now available on-line (although it dates back to 2007). I still have to study this report in detail, and update the many assumptions I’ve made above (more than five years ago). Interestingly, the 4 billion pesos I mentioned in my article back in 2006 is almost exactly the amount given in this study.
Sources of Information
Information on the project is very difficult to obtain. Plans and feasibility studies are not available to the public. As a result, I have to use various public sources not directly related to the Panglao Airport to base my conclusions on. Since I believe transparency is vital to make a good decision on this project, I call upon the authorities to release feasibility and technical studies, etc., to the public.