Ex-Post Monitoring Report
Port Moresby International Airport Redevelopment Project (I) and (II) in Papua New Guinea
Evaluator：Atsushi Hashimoto (Maenam Advisory)
Field Survey：June 2008
1.

Outline of the Project

Project Site

Air traffic control tower of the airport

1.1 Project Objective
The objectives were to improve and expand the terminal facilities of the Port Moresby
International Airport (PMIA) and also improve its aviation safety facilities, thereby promoting
both domestic and international flows of people and goods in order to vitalize the country’s
economy.
1.2

Outline of the Project (Outline of Loan Agreement etc)
Loan

Amount/Disbursed Amount

Loan Phase I: 8,454 million yen / 8,312 million yen
Phase II: 4,309 million yen / 3,577 million yen

Signing of Loan Agreement Phase I: November 1988 / July 1998
Phase II: February 1996 / April 2001
/ Final Disbursement Date
Ex-post Evaluation

Fiscal 2002

Executing Agency

Civil Aviation Authority (CAA), Papua New Guinea

Main Contract

Fletcher Morobe Construction Pty. Ltd. (PNG), etc.

Consultant Contract

Pacific Consultants International (Japan)

1.3 Background and Reasons for Conducting Ex-post Monitoring Study
This project was subjected to a monitoring study because of the following reasons.
(Effectiveness) The effect of the project did not appear as much as originally expected.
Airport traffic (number of passengers, volume of cargo and mail) and number of arrivals anddepartures began to decline in 1998. Thus, the subsequent effect needed to be found out.

1(Sustainability) Since the operation system was weak, it was necessary to examine its
improvement. It was also necessary to obtain financial data and examine the sustainability ofthe management authority.
(Follow up Situation of Recommendations) In the evaluation, it was recommended to takethe following financial measures urgently in relation with the Civil Aviation Authority (CAA):(1) introduction of corporate accounting, (2) monitoring of current financial conditions to ensureprofitability in the future, and (3) measures to strengthen its financial structure. It was also
proposed that JBIC needs to examine the change of yen loan borrower (whether it is changed or
not by 2005) and follow up how the SAPS' recommendations are realized.
2.

Monitoring Results

2.1

EffectivenessEconomic improvement of Papua New Guinea after 2002 led to an increase of flows of people
and goods and the number of passengers of the Port Moresby International Airport is on the rise.
The number of passengers of domestic flights is significantly increasing and the airport is usedas the hub for domestic air transport.
2.1.1 Traffic Volume and the Number of Departures and Arrivals
The number of passengers at the Port Moresby International Airport has increased since 2002,
as shown in Table 1. The number of passengers of domestic and international flights wasestimated to be 630,000 and 209,000, respectively, in 2001 when the evaluation was conducted.
In 2007, the number of passengers of Air Nuigini's domestic and international flights was
843,000 and 167,000, respectively, up 48 percent and 33 percent, respectively, from 2003.
This shows a steady rise. Although the evaluation in 2001 reported a decline trend of thenumber of passengers, cargoes and flights after 1998, the trend had been already reversed whenthe monitoring study was conducted.
Table 1: Number of Passengers, Cargoes and Flights
Plan
Actual
2001*
2001*
2003
2004
2005
2006
2007
Passenger (unit: person)
Domestic
800,000
630,000
570,660
617,795
674,050
737,129
843,323
Increase rate
100
108
118
129
148
International
226,000
209,000
126,212139,269
142,567
153,226
167,408
Increase rate
100
110
113
121
133
Cargo (unit: kg)
Domestic
4,303,977 4,499,831 5,348,879 5,986,569 6,405,314
17,700,000 11,000,000
International
5,344,717 6,797,005 6,372,014 6,224,521 5,543,055
Flights
Domestic
14,09016,401
17,521
18,24018,83246,00037,000International
2,355
2,264
2,267
2,368
2,520
Source: The figures of 2001 (plan and actual) are from the ex-post evaluation report.

(*The 2001 plan2

is the figure of 2000.) Figures in 2003 and thereafter are those of Air Nuigini only.

Other than Air Nuigini, Airlines PNG operates domestic flights and international flights toand from Cairns and Brisbane, Australia. However, Air Nuigini accounts for 90 percent ofdomestic flights and 80 percent of international flight passengers in the country.
The PMIA projected 220,000 passengers of international flights and 770,000 passengers ofdomestic flights in 2000 and the current number of passengers has reached the projection. The
maximum handling capacity at the peak time is 400 for international flights and 440 for
domestic flight. Three international flights arrive on Monday, Friday and Sunday afternoons
and the arrival area (passport control, baggage claim and customs) are quite crowded in those
hours.
The major means of entry and departure into and from PNG are by air and sea and more than90 percent use air. The combined number of entry and departure in 2003 was 182,000 in 2003,
which increased to 242,000 in 2007. This is due to an increase in the number of passengers ofinternational flights, which is a result of healthy economy of the country in recent years. Entry
and departure of business people and their families are on the rise.
Table 2: Entry into and Departure from PNG (unit:
2003
2004
2005
Entry
95,722
98,250101,711
Departure
86,05882,917
95,669
Total
181,780 181,167
197,380
Increase
∆0.3%
8.9%
rate
PMIA
167,238 166,674
181,590

person)2006
107,654
103,390
211,044
6.9%

2007
126,168
115,986
242,15414.7%

194,160

222,782

Source: National Statistics Office; estimate based on an estimate that 92 percent of passengers use the
PMIA (estimated based on the actual figures in 2006).

2.1.2 Numbers of Accidents, Fatalities and Near-Misses
There has been no fatal accident or near-miss at the PMIA after the ex-post evaluation.
detailed data is accumulated.)(No

2.2 Impact
2.2.1 Impact on Economic Development
Although economy of PNG declined from 1998 to 2002, it has been growing since 2003.
The economic growth rate in 2005 was 2.8 percent and 3.5 percent is forecast for 2006 to 2008.
The average GDP growth rate for 10 years from 1994 to 2004 was 0.5 percent, which was
pulled by agriculture and mining that each grew 2 percent annually during the decade. In
mining, petroleum and natural gas drilling is in progress and business people from overseas visit
PNG for mining development, production management and product distribution. The recent
growth in air traffic is backed by these business people.
Table 3 shows the number of tourist. It almost doubled from 15,000 in 2003 to 27,000. It
is another reason for the increase in air traffic. Major tourism resources are diving and3

trekking. Although the number of tourists is on the rise, the average spending per tourist isabout 2,200 dollars, which tells that PNG is a more expensive tourist destination than other
South Pacific countries such as Fiji.
Table3: Number of Tourists (unit:
Tourists

person)

2003

2004

2005

2006

2007

15,112

17,28017,584

20,58427,2982.2.2 Impact on Environment and Local Communities
No negative impact on environment and local communities, such as noise and air pollution,
has been reported. Wastewater from the airport is treated at the adjacent sewerage plant before
discharged in the nearby river.
2.2.3 Questionnaire and Interview Survey with Passengers and Airport Workers and other
Aviation-related Personnel(Interview with airliners)
Interview with airport workers and other aviation-related personnel was conducted as part ofthe ex-post evaluation. Interviewees pointed out some problems, which include unstable
power source for aviation systems. When we checked the power source in the monitoring
study, power was distributed from three systems and thus there is a backup system. However,still, power outage occurs and it takes seven seconds until the backup system starts after the
power goes out. This sometimes interrupts airport and runway lighting and supply of weather
information. The radio system is not working partially, which sometimes interrupts
communication with the control tower. PNG Air Service in charge of air-traffic control said
that it has a plan for rehabilitation and maintenance of existing control facilities including theradio system and retraining of air-traffic control personnel.
(Interview with Passengers)
As part of monitoring, we conducted an interview survey with passengers who were waitingfor departure of domestic or international flights at the lounge (173 interviewees). Althoughalmost all interviewees gave good answers about the airport facility in general, some people
voiced the following complaints: (1) The process of visa issuance, passport control andbaggage claim is too time consuming when arriving flights concentrate; (2) Flight information is
hard to see; (3) Indoor announcement is hard to hear; and (4) There are not enough stores in the
airport building. Although the PMIA recognize such problems and intends to improve thesituation, maintenance and management of current facility is the utmost of what they can dowith the budget and it is not capable of make further improvement that requires additional
investment.

2.3

Sustainability4

Although there is room for improvement of maintenance and management of airport facility,
technical improvement by providing them with training, and improvement of safety measures, it
can be well evaluated that the airport is operated with no accident with a limited budget.
Organizational reform is underway for ensuring financial sustainability and clear distinction
between aviation business and administration.
2.3.1 Technical Capacity
Operation and maintenance of air side facilities (runway, apron, boarding bridge, and lighting
control) is well conducted in general at the PMIA. However, due to a lack of budget, almost
no improvement has been made as they cannot replace existing technologies and know-how.
There is no fixed concrete training program or manual. Systematic knowledge is acquired inirregular overseas training in such countries as Australia, New Zealand and Singapore.
PNG Air Service (air-traffic control operator) continues to use the technology it acquired five
years ago with no upgrading. It has no fixed concrete training program or manual. It
recognizes the need for retraining and reinforcement training and is now planning suchprograms. PNG Air Service is an independent corporation in charge of air-traffic control andreceives technical support from AusAID.
2.3.2 Structural Organization
CAA was reconstructing its organization when the monitoring was conducted. The
air-traffic control section separated from CAA and PNG Air Service (PNG ASL) wasestablished. There is a plan to include the aviation regulatory authority as an organization
within the ministry of aviation and transport and to separate the airport operation andmanagement section including PMIA as a private company. Currently, CAA has a total of 610
employees (no distinction of full-time and part-time staff), which is less than when theevaluation was conducted. The PMIA has 92 full-time and 5 temporary workers.
The PMIA is mainly in charge of the management of the air-side facility and the airline
companies are responsible for the land side (boarding, baggage sorting and loading). Checkingof carry-on luggage and security management of departure gates are outsourced.
2.3.3 Financial Status
CAA is not likely to financially viable. Although PNG ASL and PMIA can be financiallysustained separately as a single entity, it is not possible to do so as CAA as a whole. The
aviation administration has no revenues and local airports are constantly in red. When they areincluded in CAA as a whole, there is more spending than income constantly. Future structuralreform is expected to change the financial structure and the new company is expected to befinancially viable. The revenue was 84.7 million kinas and the spending was 82.3 million
kinas, with a surplus of 2.4 million kinas, in 2007. However, 46.3 million kinas of the revenue
were governmental subsidies. When the subsidies are subtracted, it is a deficit of 43.9 million
kinas.

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2.3.4 Operation and Maintenance (subsequent state of output and maintenance andmanagement)(1) Airport Operation
Airport facilities are maintained and managed adequately for the airport operation. The
PMIA and airliners have meeting frequently to share problems and improvements of the facility
and operation. Although information is managed qualitatively, information on flights,
passengers and operation costs is not understood in its entirety, which makes it impossible to
make a specific plan to improve the services. On the other hand, Air Nuigini praised the
airport operation, saying that it is operated well with a limited budget.
(2) Air Side Management
Airliners are in charge of boarding of passengers and loading of checked luggage. There isno serious management problem in international flights because the traffic volume is small.
On the other hand, domestic flights are crowded and efforts need to be exerted for efficientmanagement, which the airport depends on the airliners. The airport is also struggling withbird damage.
(3) Passenger Service Management
No improvement after the evaluation has been recognized. Mo sufficient measure is taken
to handle the crowd when international flight arrivals concentrate. Immigration control andvisa issuance systems are inefficient. (For example, fees for the visa issuance are required tobe paid in kina, passengers have to go to the bank counter for money exchange and go back to
the visa issuance counter.)(4) Safety Management
One of the serious problems is the theft of airport equipment and machinery regardless of thelocation, whether it is air side, land side or air-traffic control. The situation has improved to acertain level as a result of such efforts as placing reinforced fence around the airport to prevent
entry and assigning guards regularly at the guard station outside the airport to toughen access
control to the airport facility. Security check of checked luggage and carry-on luggage is often
pointed out to be insufficient.
3. Conclusion, Lessons Learned and Recommendations
3.1 Conclusion
Effects of the project were significant in comparison with the time when the evaluation was
conducted. The airport is playing its role as the gateway to the country and as the hub airportof the country. However, problems that were pointed out at the evaluation were yet to be
overcome and thus efforts need to be exerted for safer, more efficient and financially healthy
operation. Since the airport facility has begun to be outdated, it needs to be improved and its

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function needs to be recovered.
3.2 Recommendations and Further Follow up Items (to be summarized for each executing
body)
The following financial recommendations were made in the evaluation: (1) introduction of
corporate accounting by accounting experts (in particular, determination of debts and credits,
including accrued income and accrued expenses), (2) understanding of current financial
conditions for ensuring profitability in the future (particularly, future expenditures and theirtiming) and (3) measures to increase financial strength (particularly, stepping up its efforts tocollect airport facility use fees). These measures are all implemented. The balance sheet
should be compiled per section for future organizational reform. The principal and interest of
the JBIC yen loan is paid by the Papua New Guinean government and no change has been madein the borrower. The SAPS recommended (1) CAA's organizational reform and (2) PMIA'sorganizational reform and formulation business plan, establishment of independent financial
section and securing profitability by itself, (3) human resources development, (4) improvementof legal system, and (5) reform of maintenance and management structure. Although theformulation of an action plan and monitoring was pointed out, reform based on the SAPS
recommendation is yet to be implemented. Experts from AusAid were dispatched to PNG
ASL, newly established in line with the structural reform, in order to improve personnel
capabilities and strengthen its financial structure. Although it is conducted in a different form
from the SAPS recommendation, their objectives are the same: ensuring profitability
independently, human resources development and improvement of legal systems.
The issues below are to be followed up after the monitoring: (1) organizational restructuring,(2) personnel training and improvement of safety management, and (3) understanding of
renewal of equipment and facilities.
3.3 Lessons Learned (by executing body)None.

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