SUBIC BAY—The mighty FedEx birds have flown, and Subic might never be the same again. On Friday, February 6, starting at 2 a.m., a fleet of eight Airbus-A310s and four MD-11 aircraft made a beeline to Taxiway C of the Subic Bay Airport. Hours before, the planes were topped off with fuel, checked by technicians and loaded by hub operations agents with cargoes bound for destinations like Taiwan, Vietnam and Hong Kong.
It was a reprise of what has become a daily routine in Subic since the air cargo giant Federal Express (later to become FedEx Corp.) established its Asian hub here in 1995. Except that this time, the planes were not coming back, perhaps for good.
As the aircraft taxied for takeoff, their familiar bulk nosed through a curtain of water sprayed by a fire truck on standby—a farewell gesture that signaled the end of an era at the Subic Bay Free P wort.
The last cargo flights out of Subic on Friday actually started the transition period for FedEx’s transfer of its Asia-Pacific hub from here to Guangzhou, China, said Armand Arreza, administrator and CEO of the Subic Bay Metropolitan Authority (SBMA).
FedEx, Arreza said, has started to test-run its new facilities at the Baiyun International Airport, the main airport of Guangzhou, the capital of China’s Guangdong province, after operating in Subic for 13 years.
But the pullout, Arreza explained, was borne out of competition—not by the ongoing global recession.
“The decision was made as early as 2004, even before the global economic slowdown last year began to affect Asian economies,” Arreza pointed out.
“The market condition in China dwarfs that of the entire Southeast Asia combined,” he said, citing that China accounts for some 60 percent to 70 percent of Asia’s cargo traffic.
Moreover, China dangled to FedEx the incentive of cabotage, which would allow the American firm to handle domestic cargo in China.
“Here, the Philippine Constitution allows cabotage for domestic companies only,” added Arreza.
CARGO trolleys lay idle at the FedEx Subic hub after operations crew fi nished loading the last planes to fl y out of the Subic Bay International Airport. HENRY EMPEÑO
Lost income, lost jobs
The decision, nonetheless, would result in the contraction of SBMA’s income by about P150 million annually—the fees paid by FedEx for landing rights and warehouse rentals.
Landing fees by FedEx, in particular, made the bulk of revenue generated by the Subic Bay International Airport (SBIA), which was practically rehabilitated in 1994 to accommodate FedEx’s cargo flights.
According to SBIA records, FedEx logged in an average of 1,000 flights a month, with international flights almost double the domestic runs.
At its heyday here, the cargo firm had 12 inbound and 12 outbound flights on a regular night, with its fleet of Airbus A310s carrying as much as 35 tons each and the wide-bodied MD11s loaded with up to 89 tons of cargo each.
FedEx’s transfer to China also displaced more than 500 workers, mostly from Olongapo City, who were variously employed in sorting documents and freight, warehousing, ramp operations, as well as in aircraft maintenance, logistics distribution and ground support.
Earl Esmane, a part-time hub-operations agent from Olongapo, said the part-timers, who composed of about 70 percent of the FedEx hub crew, were paid P60 an hour for the usual four-hour nighttime shift.
The full-timers, however, received higher base pay, he said, adding that some regular employees had received offers to relocate to FedEx hubs in Hong Kong and Taiwan.
Esmane, who had completed his clearance with the company as early as last month, has yet to receive his separation pay.
However, a FedEx official said on Friday some officials would remain in Subic to oversee the completion of the firm’s reintegration program for its workers.
Farewell regrets
As the last FedEx plane took off on Friday, FedEx assistant chief pilot Joel Edmondson expressed some regrets about pulling out of Subic, saying that the FedEx hub here has been “very successful” since it was established in 1995.
He reiterated, however, that global economics dictated that FedEx had to relocate to China.
“It’s not a matter of Subic being not good enough to [FedEx],” Edmondson said. “This is an economic decision that puts us in a better position to move forward in the market.”
Ironically, it was the same market force that had brought FedEx to Subic Bay in the first place.
Noting the significant increase in the cargo market in Asia in the late ’80s and early ’90s, FedEx reportedly decided to establish a strong presence in the Asia-Pacific region, with the strategy to build an “Asia One” hub in Subic and, thereafter, adding more “spokes” to the hub.
In 1993 FedEx began negotiating with the SBMA for the use of the former US Naval Air Station in Subic—a year after it closed down as a result of the Philippine Senate’s rejection of the treaty extending the stay of US bases in the country.
The following year, FedEx signed a contract with the SBMA and the latter began rehabilitating the airport runway and procuring international-standard navigational equipment to meet its client’s requirements.
On September 1, 1995, FedEx launched the Asia One network in Subic, thereby setting up an overnight intra-Asian delivery network connecting 11 major Asian centers.
The following year, FedEx expanded its operations to include regular all-cargo flights directly linking Shanghai with its Asia-Pacific hub, thus getting the first taste of the burgeoning Chinese market.
FedEx would soon expand in 1999, adding eight more aircraft to its 12-plane fleet and signing an extension of its lease agreement from 2002 to 2007.
By 2001 the FedEx Asia One network in Subic has grown to include 19 destinations in Asia, so that in May 2004, it opted to extend its contract with the SBMA for up to August 2010, with options for three successive renewals of one year.
However, in July 2004, FedEx announced it has opted to transfer to Guangzhou by 2008, a decision that, it said, was based on an exhaustive series of feasibility studies that recognized the tremendous business potentials in China.
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