SBMA at odds on airport's future

Decoding Subic's financial woes

February 10, 2010

Subic — The Subic Bay Metropolitan Authority is at a loss on what to do with Subic Bay International Airport (SBIA), once the Asia Pacific home of US cargo giant Federal Express (Fedex) since 1996.

The airport, after Fedex left and transferred its Asia One logistics hub to China in February last year, has been losing 20 million not in pesos but in US dollars that should have gone to its loan amortization payments adding to its financial woes that ran in a billion pesos per year. Fedex paid $40 million (1.8 billion pesos) per year to SBMA.

With almost one billion pesos operational price tag deficit, Subic authorities are still reluctant to close it down. SBMA has been paying 500 million pesos annually to keep it open spending up to P250 million for airport operations, P150 million in debt servicing and another P100 million for maintenance cost. Now they have to pay 500 million pesos more coming from the taxpayers money.

Armand Arreza, administrator and chief executive officer of the Subic Bay Metropolitan Authority (SBMA), said that it doesn’t make sense anymore to continue its operations economically. He said that “It doesn’t even break even anymore, as it did when FedEx was still here.”

Arriza however said that they are still evaluating the airports viability and exploring alternatives for its use, which was then part of the U.S military base and formerly a Naval Station of the United States Navy before it was turned over to the Philippine government in 1994.

Subic airport serves as a secondary diversion terminal for the Ninoy Aquino International Airport in Manila with a 2,728-meter runway, modern navigational systems, and a 10,000-square meter passenger terminal that could handle 700 passengers at any given time. It has far better facilities than nearby Clark airport which is the main diversion route.

The airport can also handle 41 commercial civil aircraft from stand and remote parking locations, a capacity proven in the past few years when a fleet of Taiwanese airlines were diverted to Subic after the island-nation was buffeted by typhoons.

“There is no rush to close the airport,” Arreza said even if its losing money. “Actually, we are still marketing the airport and looking for other alternatives to make it useful.” Among the options being considered by SBMA is to turn part of the 200-hectare airport into a logistics area.

“If we convert 40 hectares of the airport’s 200-hectare area, then we can raise about $80 million for commercial development,” Arreza said.

The planned conversion of part of the Subic airport is consistent with the SBMA expansion program, which was meant to address the limited commercial and industrial space in Subic’s controlled area.

“The trend now in Subic is to move out of the central business district, and even outside the traditional boundaries, the fenced-in portion,” says Arreza.

“This 40-hectare portion could serve as an additional logistics area, while the rest could be used for commercial development,” he added.

The airport only now hosts a number of flight training schools, while its dream of attracting airlines for its hubs was largely a failure due to likability and connectivity issues to Manila, the same problems plaguing Clark's aviation growth potential. Some attempts by several airline firms failed and the airport is just servicing foreign charter flights for Subic bound tourists, particularly to its gaming and leisure industry.

SBIA records showed an aircraft movement in the airport significantly dropped from 108,686 in 2008 when FedEx still operated out of Subic, to just 57,246 in 2009. Passenger movement plummeted from 10,682 in 2008 to only 7,059 in 2009.

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