DOTC Bids Tacloban and Dipolog Airport

In a Contract worth 319 Million Pesos

August 31, 2012

Tacloban Airport to construct new apron for new terminal
The Department of Transportation and Communication (DOTC) is inviting Bidders for the improvements of Tacloban and Dipolog Airport in a contract valued at 319 Million Pesos.

Tacloban Airport was funded with an Approved Budget Contract (ABC) in the amount in excess of 251 Million Pesos while Dipolog Airport has an ABC valued at almost 67 Million Pesos. Total contract cost for Dipolog Airport Project amounts to 122 Million Pesos to include the P55. million construction of a new Dipolog Aiport passenger terminal building.

Improvement project at Tacloban covers construction of new 33,332.00 sq. m. apron and 17,098.00 sq. m. taxiway in preparation for the construction of new terminal building which will rise at  the 8th busiest airport in the country. Also for completion is the shore protection in the northeast side with 622 linear meters as well as drainage system. 

DOTC and City Engineers during actual survey for the 67 Million Dipolog Airport landside development project

Meanwhile, Dipolog Airport will see its apron expanded to more than 8,000 square meters, while its taxiway expanded by 23.00 m. to conform to international ICAO standards. The ramp will also be expanded by 2,673 sq.m. Also for construction is shoulder widening and river control protection equivalent to 164 linear meters as well as drainage system.

Tacloban registered 1,008,553 passenger traffic from Manila and Cebu. It is expected to handle flights from Iloilo later this year, while Dipolog registered a total of 165,163 passengers in 2011 from both Manila and Cebu, and is poised to reach the 200,000 mark this year, with the introduction of Davao as its third route.

Airphil Express to Take Over PAL Domestic

As PAL intends to build new airport

August 31, 2012

Philippine Airlines (PAL) is set to surrender most domestic operations to its low cost subsidiary in a major relaunch to be announce soon, says airline president Ramon Ang after the company’s stockholders’ meeting yesterday at the Century Park Hotel.

Airphil Express will be be re-branded to carry the airlines name. “It will be called PAL Express. There won’t be Airphil Express anymore,” said Ang at the press conference.

PAL Express will be flying all the routes of PAL effective October 29, except seven major points in the country. Dubbed as "Project winter", PAL will fly only to Cebu, Davao, Bacolod, Iloilo, Kalibo, Laoag, and General Santos from Manila.

He said the board has approved the rebranding of Airphil Express to PAL Express in consonance to the investment agreement with conglomerate San Miguel Corporation (SMC) which Ang heads.

The Airphil Express brand is owned by Air Philippines Corp., which used to be 99% owned by the Lucio Tan group before substantial shares were brought by San Miguel in April, while PAL Express is owned by Philippine Airlines. Both airlines used to be controlled by PAL Holdings of Lucio Tan before the entry of SMC. San Miguel paid $500 million for a management control 40-percent stake in PAL and 49-percent stake in Air Philippines.

The Board Resolution is awaiting regulatory approval from the Securities and Exchange Commission (SEC).


Meanwhile, the flag carrier has dropped its plans to move to Clark International Airport due to infrastructure inadequacies which when build now would be ready only in 2030 at the earliest possible time, thereby limiting the growth potential not only of the airline but to the entire aviation industry in an island archipelago with 105 million people.

To address the government shortfall, SMC contemplates plan to put up a new international airport in Bulacan faster than how Clark is being built to accommodate its massive fleet of 100 planes by 2020. The proposal will be submitted to the President by the first quarter of next year for regulatory approval.

The airline believes that relocating to another airport outside Clark International Airport, funded by them is a better option for the company' s growth as Clark suffers from arrested development brought by project delays and cancellations.

Ang said that their envisioned international airport would be situated in a 2,000-hectare property capable of four parallel runways with maximum capacity of 100 million passengers housed in the most modern designed terminal following the footprints of Incheon Airport in South Korea, voted as the best International airport in the world by Airports Council International (ACI).

It is projected to be finished within 3 years from regulatory approval and should be ready by 2016 with two  initial runways 4K in length capable of 62 landings and take-off every hour, or 31 landings or take-off at either runways. The terminal is expected to accommodate 30 million PAL passengers.

"The proposed international airports could handle 1,500 events per day putting the Philippines at par with the airports in Sydney, Australia as well as Heathrow in London." says Ang.

PAL said that NAIA will not be a better place by 2016 if the growth projections at the premiere airport continues. The airline exclusively occupies Terminal 2 which is already suffering from over capacity.

Ang clarified that the proposed international airport would co-exist with Clark and Ninoy Aquino International Airport (NAIA), saying it will be up to Department of Transportation and Communications (DOTC) how they make use of Clark after their proposal is approved.

Ang revealed that the company would spend US1 billion to put up just the airport alone with additional equity infusion of $500 million to be taken from existing shareholders which would be enough to raise the financial requirement of the project.

Ang hinted the financing of the airport to be funded by soft loan from the Export-Import Bank of Korea with Korean contractors preparing detailed engineering and building of the proposed international airport.

San Miguel Corporation operates Caticlan Airport, the country's busiest domestic airport by traffic movements. It is also the Philippines largest conglomerate with more than US$600 million in net revenues.

5J Slipping fast against 2P Onslaught

As Domestic Traffic grew 13% on First Half

August 28, 2012

The JG Summit controlled airline accounted for a total of 4.99 million people in the first half, up 17 percent over last year. San Miguel Corporation's Airphil Express is shadowing closer at a fast 29 percent surge in domestic passengers to 2.39 million with seat increase at 36 percent to 3.286 million.
Low Cost Carrier Cebu Pacific may be the market leader today but its dominance is being eaten slowly by its fiercest rival Air Philippines as both airlines define the future of Philippine skies.

Cebu Pacific airline CEO Lance Gokongwei is feeling the heat as shares of Cebu Air slid by 2.22% to P61.40 a piece after Philippine Airlines (PAL) up the tempo on domestic supremacy ordering 36 narrow-body jets for its subsidiary Airphil Express. They got delivery schedule as close as January 2013 while Cebu Pacific is withdrawing A319 on its fleet sold to Allegiant Air.

The airline said that it needs to rethink its strategy to secure more narrow body jets, a tactic it believes could be needed to defend its position against a resurgent PAL.

"Cebu Pacific will revisit its fleet plans to determine what additional lift it may need to supplement its existing orders,” CEO-advisor Garry Kingshott said.

Philippine airlines ordered 56 narrow and wide bodies from Airbus aimed to upgrade services amidst slot restrictions at Manila's Ninoy Aquino Airport. 

The number of passengers on domestic flights is expected to grow further and with slotting problems, upgrading the fleet is the only option to serve more amidst aggressive airline expansion that resulted to lower ticket prices.

The Civil Aeronautics Board (CAB) showed that there were 11.017 million domestic passengers using NAIA from January-June period of 2012, equivalent to 13.33 percent year on year growth. A total of 14.64 million seats were offered by airlines during the six-month period, up from 12.12 million last year.

Despite fierce competition domestic airlines manage to grow the market giving the industry an average load factor of 75 percent, which means three of every four seats on every flight was occupied.

Garry Kingshott expressed concern that they failed to grow with the market and is now rethinking its strategy as it may try to secure more narrow body jets, to defend its market share against Philippine Airlines low cost subsidiary.

While Cebu Pacific added 25 percent more seats in the first half of 2012 equivalent to 6.37 million their load factor fell from 84 percent to 78 percent. Its average ticket prices also fell 3.7 percent to P2,257 per person due to stiff competition among airlines.

Philippine Airlines meanwhile continued to lose market share as its passenger count fell 3.8 percent to 2.29 million in the six-month period. The company also reduced its number of seats to 3.046 million from 3.101 million. Load factors were also down 2 percentage points to 75 percent.

But PAL’s lower numbers resulted to positive return earning them $1.7 billion in gross revenues last year while Air Philippines hauled in $270 million. PAL passenger deficit was also offsetted by the tremendous growth of passengers served by its low cost subsidiary, Airphil Express in the first half of 2012.

The PAL unit reported a 29-percent surge in domestic passengers to 2.39 million as seats increased by 36 percent to 3.286 million.

On the other hand, Southeast Asian Airlines posted a steep decline in domestic passengers to 17,565 in the first half from 97,326 last year, mainly from turbo prop operations as it abandon non-profitable routes. Its services to trunk line routes in the second half is expected to go up with the arrival of three A320's for domestic run.

Zest Airways meanwhile had 1.26 million domestic passengers in the period, up slightly from 1.14 million last year.

AirAsia Philippines on the other hand carried 60,381 passengers in the first half after starting operations in March at Clark. CAB notes that AGP had the industry’s worst load factor at 45 percent.

PAL Orders Airbus

As Boeing Offer Crumbles

August 28, 2012

Philippine Airlines announced orders for 10 new generation Airbus A330-300, 10 new generation Airbus 321 neo jets, and 34 Airbus 321 in a deal valued at US $7 billion, Ramon Ang, President of Philippine Airlines said in a press briefing today.

"The aim is to purchase 100 new aircraft in total", PAL president Ramon Ang said. Ten new aircraft has been delivered to the airline with the latest addition being the Boeing 777-300ER. Another one is set for arrival in November and 2 more 777 will join the fleet in 2013.

The 54 aircraft orders are part of the first phase of a multi-year refleeting and modernization plans, which involve the purchase of up to 100 new planes.

"We still have about 46 aircraft to go, we have the option about whichever types of aircraft to go. The capacity of the initial 54 aircraft is already more than what Philippine Airlines and Air Philippines today's capacity" said Ang.

Another deal for twenty long range wide body jets are expected to be announce soon with both Airbus and Boeing tightly on a race between Triple Seven and Three Fifty.

PAL is currently looking at are the 777-300 ER and the upcoming 777-X as well as the Airbus 350-900 and 350-1000 programme.

"Our intention is to buy up to 100 aircraft, 26 of that will be long range wide body," Ramon Ang said.

The new generation 240-tonne A330-300 recently announced at the 2012 Farnborough Airshow will start delivery next year as Boeing failed to sell its latest plane, the Boeing 787 series planes due to delivery issues with the aircraft manufacturer.

PAL has been looking closely at the Boeing 787-900 which they intend to buy rather than lease but suffered setbacks on its waiting time. Boeing also failed to win orders for its Boeing 737-900 planes as Airbus jockeyed its position to convince PAL to buy its narrow-body jets instead.

A source inside the airline disclosed that Airbus secured delivery slots in 2013 for PAL and that spells a huge difference. Consequently, Ang announced the first delivery to be done in January 2013 consisting of 4 A330s and 6 A321s.

“We are extremely pleased that PAL has placed its confidence in our aircraft to meet its future requirements,” said John Leahy, chief operating officer, Customers, Airbus.

“This announcement demonstrates once again the popularity of both the A320 Family and the A330, which remain leaders in their size categories in terms of operating economics, reliability and passenger comfort.” says Leahy.

Airbus said the A320neo Family incorporates latest-generation engines and large wingtip device called the"Sharklet" to deliver 15 percent fuel savings as compared to its old model.
Philippine Airlines today inked with Airbus the biggest aircraft deal in Philippine history involving a firm order for more than 50 single-aisle and wide-body jets, with a list price of approximately US$7 billion. Photo shows PAL and Airbus officials during the signing ceremony at Century Park Hotel, from left, PAL vice chairman and treasurer Harry C. Tan, PAL Chairman Dr. Lucio C. Tan, Airbus Senior VP for Asia Jean Francois Laval and PAL President Ramon S. Ang.

Ang said that both Airbus and Boeing was in a tight contest until delivery schedule was laid in the table. The PAL CEO expects delivery of the airline's new order to be completed in three years with the new generation A330 joining next year. 

The A321-200 jets are expected to join the fleet of Airphil Express also starting in the second half of 2013 for trunk-line upgrade and regional destinations as Manila Airport closes airport slots for new aircraft. The A321 neo for PAL is expected for delivery in 2016. Engine selections for the aircraft is heavily favored on CFM International LEAP-X although have not been announced.

Meanwhile,  the new A330-300 will wear PAL colors to fly to "Hong Kong, Australia, Japan, Singapore, Thailand, The Middle East and India.

The carrier will start retiring its old Airbus wide bodies starting next year and replace them with a new fleet to compete more effectively on the long-haul markets. 

Listed PAL Holdings Inc.recently approved a capital increase that would allow it to issue new shares to raise 17 billion Philippine pesos ($403 million) for fleet acquisition. It re­ported a com­pre­hen­sive net in­come of P489.2 mil­lion. To­tal rev­enues for the first quar­ter of the cur­rent fis­cal year amounted to P20.8 bil­lion or 5.8 per­cent higher than last year’s P19.6 bil­lion.

PAL prods gov’t for Canada air talks


By Cliff Harvey C. Venzon

August 22, 2012

The flag carrier aims to offer flights to Toronto by October and has asked for air talks to be conducted.

FLAG CARRIER Philippine Airlines (PAL) has asked the government to conduct air talks with Canada, firming up preparations for earlier announced plans to launch more flights to the North American country by October.

“PAL asked us as if we can conduct air talks with Canada,” Civil Aeronautics Board Executive Director Carmelo A. Arcilla said in a telephone interview last week, noting that the request was made by PAL’s representatives. “Well, Canada has always been a growing market for us.”

This, after PAL President Ramon S. Ang told reporters last month the airline is looking to launch more flights to Canada by October, which is one of the ways seen to revert back the company to profitability.

Already, the country has seven frequencies to Canada, which are used by PAL for its daily flights to Vancouver.

Air rights negotiations with Canada is not the regulator’s priority this year, Mr. Arcilla said, but it is possible to seek temporary additional frequencies.

“Our priority for this year is South Korea, Singapore, Australia, United Arab Emirates, Kingdom of Saudi Arabia, and Thailand,” Mr. Arcilla said. “We may conduct an air talks with Canada early next year.”

The government might instead ask for “extra section flights” from Canadian aviation authorities in the meantime, to give PAL temporary frequencies.

In any case, Mr. Ang had said that PAL might just adjust its offerings to four flights to Vancouver and three flights to Toronto per week in case frequencies will remain at just seven per week by October.

Aside from Canada, Mr. Ang earlier said that PAL will be launching more flights to US and revive flights to Europe, such as Paris and London by next year, as the company is upbeat that Philippines will soon regain its Category 1 status.

In January 2008, US-based Federal Aviation Administration (FAA) downgraded the Philippines to Category 2 from Category 1 following a safety audit on November 2007, thus prevented local carriers from expanding operations abroad, such as in the United States.

In the wake of the FAA downgrade, the International Civil Aviation Organization designated the country as “a significant safety concern” in December 2009. The following year, the European Union banned Philippine carriers from flying to Europe.

PAL had further said it will implement a massive aircraft-route realignment to match the aircraft capacity with the carrying requirements of various destinations.

The move, Mr. Ang said, is expected to result in $300 million worth of annual fuel savings particularly as the company aims to narrow its deficit by yearend.

For its fiscal year ending in March 31, PAL Holdings, Inc., the flag carrier’s parent, posted a P3.63-billion loss attributable to equity holders of the parent company, a reversal from a P2.533-billion income realized last year due to rise in fuel cost.

To prepare for the long-haul flights to key cities in the world, the company has acquired its third Boeing 777-300ER worth $247 million, while another will come in December and two more next year.

Shares of PAL Holdings fell by 1.41% to P6.95 each on Friday.

Rescuers Rescued

Navy chopper in search ops force-lands

By Florante S. Solmerin 

August 23, 2012

Engine trouble on Tuesday struck a Navy helicopter helping in the search for Interior Secretary Jesse Robredo, forcing its two pilots to execute an emergency landing at the shoreline in Buenavista village in Donsol, Sorsogon, Navy spokesman Col. Omar Tonsay said.
Diving helicopter. Fishermen help Navy servicemen salvage a Bulco attack helicopter that crashed into the waters near the shoreline in Sta. Cruz, Donsol, Sorsogon, while searching for the wreckage of the plane carrying Interior and Local Government Secretary Jesse Robredo. DANNY PATA

“It was a precautionary landing. The helicopter had some engine trouble,” Tonsay said.
The chopper was part of the aircraft deployed in the search for Robredo and Jessup Bahinting and Napalese Kshitz Chand, the pilots of the ill-fated  Seneca Piper plane that crashed on Saturday off Masbate.

“The two pilots and their passengers were unhurt,” Tonsay said.

“The chopper landed safely and remains intact. It was already inspected to determine the cause of the precautionary landing.”

Aviatour Piper Down

DILG Secretary Dead, Aide survive

August 18, 2012

A Piper Seneca PA 34-200 (RPC-4431) plane owned by Aviatour, a Cebu-based aviation company crashed Sunday off the waters of Masbate killing all but one passenger.

The plane was piloted by Jessup Bahinting, Aviatour chairman and CEO, and Kshitiz Chand, a Nepalese national, and was supposed to fly to Naga City frorm Mactan Cebu International Airport. The secretary’s aide, Senior Inspector Jhun Abrasado survived and was rescued.

The plane was on final approach to Masbate Airport before it fell short of the runway after declaring distress call and emergency landing around 4:30 PM.

New Singapore ASA talks fails

As Philippines refused further grant of fifth freedom rights out of Manila

August 17, 2012

Air talks between the Philippines and Singapore bogged down Thursday because of unresolved issues involving fifth freedom rights particularly to North Asia.

"Parties could not agree on 5th freedom traffic rights. The parties adjourned tonight and agreed to resume talks after six months," Carmelo Arcilla, Civil Aeronautics Board executive director said.

Arcilla said neither the Philippines nor Singapore was opposing the enforcement of Fifth Freedom Rights but both countries feel that “there is no balance to both interests.”

“The parties feel they need to come up with a better balancing package that would result in a better balancing of rights. What value would it give us? Will the operations of our airlines be affected if their carriers would fly to those countries when in fact our local carriers are already flying to those destinations?”

Fifth Freedom refers to the right to carry passengers from a carrier’s own country to a second country, and from that country to a third country.

As of late only Singapore based - Jetstar Asia is utilizing the fifth freedom rights for flights from Singapore-Manila to Tokyo and Osaka.

At present, there are 43,487 seat entitlements granted to Singapore and another 43,487 for the Philippines.

The Singapore air panel wants all Singaporean carriers to transport passengers from Singapore to Manila and pick up passengers to China, Japan and Korea and vice versa.

The Philippines, for its part, is asking that local carriers be allowed to fly to some parts in Europe, India and Middle East after they have mounted flights to Singapore from Manila.

Singapore also wanted the early implementation of the Open Skies Agreement between the two state capitals but the Philippines declined to open Manila airport further.

Skyjet test Philippine Skies

As CAB Grants it TOP

August 17, 2012

SkyJet Airlines, of Magnum Air Inc., has been granted Temporary Operating Permit (TOP) on August 3 by the Civil Aeronautics Board (CAB) to start flying the Philippine Skies on regular scheduled flights.

The airline has pending application for regular flights to Basco in Batanes which remained frozen for lack of necessary permit from CAB and oppositions by Seair. It can however ferry passengers on chartered flights.

Skyjet operates a lone BAe 146-200 RP-C5525 (msn E2031, ex EI-CNQ of Cityjet) under wet lease arrangements with Lionair Subic Philippines. It has options to expand fleet courtesy of Lionair which has two BAE146-200s,  72-seater BAe 146-100 aircraft, and a Dornier 328 jet.

The original flight scheduled to start on April 8 was pushed back to start on the first week of October 2012 to comply flight requirements mandated by the Civil Aviation Authority of the Philippines (CAAP).

Magnum Air Chief Executive Officer Dr. Joel Mendoza said that they will also fly the plane to Virac in Catanduanes; Catarman, Northern Samar; and Surigao in October.

Clark, from Gateway to LCC port

Clark: shifting from air gateway status to top low cost airport for Manila

Luc Citrinot

16 August 2012

With Cebu Pacific, AirAsia Philippines, AirPhil Express and SEAir adding capacities at Clark Airport (Philippines), the rather modest airfield is on the verge of a boom in passengers’ traffic.

CLARK FREEPORT – Victor Jose Luciano dreamed it for a long time. The hopes of  Clark International Airport Corporation (CIAC) President and CEO are now turning slowly into reality. The Filipino airport is in the midst of an unprecedented traffic boom due to the arrival of AirAsia Philippines and the strengthening of SEAir’s (Southeast Asian Airline) network following its take-over by Singapore-based low cost airline Tiger Airways. Numbers speak for themselves: last year, passengers at Clark-Diosdado Macapagal International Airport (DMIA) reached 767,000 passengers including 725,023 on international flights. This was a growth of or a 19-percent increase for the year 2011. Growth is accelerating this year, following the arrival of AirAsia Philippines.

The total number of passengers at Clark International Airport (CIA) increased by 54% in the first half of 2012 to 548,000 passengers, authorities revealed a few weeks ago. For the first time, Clark will overpass the million mark with numbers likely to range between 1.1 and 1.25 million passengers. According to seats capacity data, low cost airlines account already for about 90% of total capacity at Clark with the largest share being taken by the AirAsia Group (AirAsia Philippines has 33% of all capacities while AirAsia Bhd from Malaysia adds another 10% to the total). It is followed by SEAir (17%) and AirPhil Express- a subsidiary of Philippine Airlines (16%). Cebu Pacific has only 13% as it main operation to Manila is at the main airport NAIA. Clark welcomes for now only two legacy full-service carriers, Dragonair and Asiana.

AirAsia is also now present on international routes with flights to Hong Kong, Macau and Kuala Lumpur. The airline is likely to add flights to other AirAsia major gateways such as Bangkok, Jakarta as well as Singapore. The airline flies also to Puerto Princesa, Kalibo and Davao. SEAir stepped up its presence at Clark Airport at the end of July. The carrier fliers currently five routes (Bangkok, Hong Kong, Kalibo, Kuala Lumpur and Singapore) and will increase its presence during the winter timetable.

Victor Jose Luciano is now confident that Clark Airport is likely to reach 5 million passengers a year before the end of the decade. It will then request to expand the terminal which currently has a capacity for 2.5 million passengers. The CEO unveils that plans have been approved to construct a low cost terminal inspired from the LCCT terminal in Kuala Lumpur. The terminal would be able to accommodate ten million passengers a year to a cost estimated at US$ 47.5 million dollars. The bidding process for the second phase of the expansion of the existing terminal already started with a completion of the new facility due by 2015.

Clark Airport has been long seen as Manila new international gateway replacing overcrowded NAIA, Manila’s main international airport. Grand plans in the previous Filipino administration predicted a future development for 50 million passengers. But plans have now been scaled back as they are deemed as unrealistic due to financing constraints. A major handicap for Clark Airport to become Manila’s principal gateway is its distance to the city. Clark is located some 85 km away from Manila city centre. Although, a brand new highway links the airport to the outskirts of the city in less than an hour, congestion on Manila roads is so horrendous that it takes another hour and a half to reach Manila city centre or Makati. Busses commuting between Clark and Manila generally tell their passengers that the ride would last up to two hours and a half on average.

For long, Mr. Luciano talked about a dedicated high-speed rail link. Five years later, not a single rail track has been laid to Clark Airport and the rail remains a distant dream. The access issue will still determine for long the fate of Clark as Manila’s new international gateway. However, it will not hamper anymore DMIA transformation into the largest low cost airport of the Philippines.

Philippines confirms T/A-50 purchase

JDW Correspondent


The Philippine Department of National Defense (DND) has chosen the Korean Aerospace Industries (KAI) T/A-50 to fulfill the Philippine Air Force's (PAF's) requirement for a light attack Trainer.

Philippine officials said they would like to have two of 12 T/A-50s in country immediately to begin pilot training.
  • The Philippines has announced the acquisition of 12 KAI T/A-50 light attack/ lead-in-fighter trainers in its first fast jet procurement in years

  • Manila is also in negotiations to buy second-hand Italian Navy frigates and corvettes and utility/light attack helicopters from France and Italy

The government has requested the delivery of 12 aircraft from KAI, the DND said in an announcement on 1 August in Manila. It also announced that negotiations had almost finished for the purchase of two Maestrale-class frigates from the Italian Navy and released details of plans to procure four Eurocopter AS 550 Fennecs for the PAF, with an option for a further six.

Defense Secretary Voltaire Gazmin said the Philippines would request the immediate delivery of two T/A-50s to expedite training.

"We plan to negotiate so we can get the immediate delivery of two airframes to start the long-overdue process for training so that when the rest of the 10 arrive, our pilots get out there and start training,"Gazmin said.

The T/A-50 is an armed version of the T-50 Golden Eagle lead-in fighter trainer.It is equipped with a General Dynamics M197 20mm three-barrel Gatling-type internal cannon and an ELTA EL/M-2032 fire control radar, and has achieved weapons certification for the Raytheon AGM-65 Maverick air-to-ground and AIM-9 Sidewinder air-to-air missiles.

The terms of the deal were not announced. However, Indonesia signed a contract for 16 T/A-50s in May 2011 valued at approximately USD400 million.

Gazmin said the Maestrale-class frigates to be retired by Italy will boost Manila's ability to defend its territorial waters, particularly the South China Sea (West Philippine Sea). The two Italian vessels, which would be the Philippines's first missile-armed and modern anti-submarine warfare (ASW)-capable ships, are expected to be part of the government-to-government agreement that is now being finalized. Gazmin said the frigates could arrive in the country after being refurbished in late 2013.

Officials are waiting for the enactment of the PHP75 billion (USD1.7 billion) Armed Forces of the Philippines (AFP) modernization law -  which has already been passed by both houses of Congress and is now awaiting specific stem selection, Which Gazmin said is expected by the end of 2012 - to continue negotiations with Italy. Along with the two frigates, which are worth PHP 11.7 billion, negotiations are under way for two Minerva- class corvettes or other offshore patrol craft, which the Italians are also offering to Manila.
Employees work on a TA-50 trainer jet on the production line of the Korea Aerospace Industries Ltd. plant in Sacheon, South Gyeongsang Province. (Bloomberg)

IHS Jane's has also learnt that the Philippine Navy is evaluating Oto Melara's advanced 76mm smart munitions, such as the DART (Driven Ammunition Reduced Time of Flight) guided projectile, for its fleet of former UK Royal Navy Peacock-class patrol vessels and its ex-US Coast Guard Hamilton-class cutter.

DND spokesman and Assistant Secretary of Defense Paul Galvez said that due to availability issues with the preferred option - the AW109E Power Attack Helicopter - Manila had chosen to procure four AS 550 Fennecs this year. The Fennecs are reportedly part of a cancelled or reduced order from an unspecified Middle Eastern Country that IHS Jane's believes could be Libya. In 2007 Paris said it was in negotiations to sell 10 Fennecs to Tripoli as part of a EUR4 billion (USD4.8 billion) package that also included 14 Dassault Rafale multirole fighters, eight Eurocopter Tiger combat helicopters and 15 EC 725 transport helicopters.

Galvez said the Fennecs were needed urgently to provide air cover for Philippine forces conducting counter-terrorism and insurgency operations while the PAF's McDonnell Douglas MD530 Defender light attack helicopters are upgraded under a service-life extension programme (SLEP).

The commander of the PAF said the AW109s would be procured at a later date and would be operated by the Philippine Marines/Navy.

Gazmin said that 60 per cent of 140 contracts negotiated under the AFP's recapitalization programme have been agreed, with the rest dependent on the enactment of the AFP modernization law. According to the spokesman, by the end of 2012 Manila also expects the delivery of 21 refurbished UH-1H helicopters, "two to four"attack helicopters and two multipurpose assault craft.

A version of this article appeared August 8, 2012, on page 4 in the U.K. edition of IHS Jane's Defense Weekly, with the headline: Philippines confirms T/A-50 purchase.

Turbulent Times at Manila's International Airport

August 14, 2012

Philippine President Has Vowed to Upgrade Capital's Much-Loathed Air Hub, but Challenges Could Keep Some Overhauls on Standby

Travelers wait for flights at Manila's Ninoy Aquino International Airport. The run-down and underfunded air hub is routinely mired in delays and is overly congested. The government is working on an array of overhauls.

MANILA—The airport code "MNL"—for Manila's Ninoy Aquino International Airport—can strike fear into the hearts of even the most hardened business travelers.

With its long snaking lines, tatty departure lounges and congested, overlapping runways, Terminal One at Ninoy Aquino is regularly voted as one of the world's worst airport terminals in online polls. It didn't help that two people were injured when part of the terminal's ceiling collapsed last year.

Now, sorting out the problems at Manila's international gateway—along with many of the Philippines' other notorious infrastructure problems—is emerging as a top policy priority for President Benigno Aquino III as he tries to propel his country onto a faster growth track to compete with better-equipped rivals such as China, Thailand and Malaysia.

The congestion crisis at NAIA partly reflects a boom in air travel across Asia. Budget carriers such as AirAsia and Cebu Pacific have opened up foreign travel to legions of first-time passengers.

Bumpy Ride

Manila's airport has a rocky past and an uncertain future.
  • 1981: Terminal One opens.
  • 1983: Activist Benigno "Ninoy" Aquino Jr. is shot and killed after arriving at the airport.
  • 1991: Terminal One reaches full capacity. Passenger levels continue to grow.
  • 1995: Construction begins on Terminal Two.
  • 1997: Construction begins on Terminal Three, but is soon bogged down by corruption allegations and legal disputes.
  • 1999: Terminal Two opens but is used exclusively by Philippine Airlines.
  • 2003: The former air-transport chief seizes the control tower in a protest. He is killed by police.
  • 2008: Terminal Three opens for some flights but most international carriers remain at Terminal One as congestion worsens.
  • 2012: President Benigno Aquino III announces plans for a fund to help finance improvements at the airport and elsewhere.
Source: WSJ research

But the delays—around a third of flights leave behind schedule—also expose chronic underinvestment in the Philippines economy, which analysts say Mr. Aquino and his government will have to fix in order to build on the country's strong performance in recent months. Gross domestic product grew 6.4% in the first quarter from the year-earlier period and the benchmark stock-exchange index breached records.

For years the Philippines lagged behind China and most of the rest of Southeast Asia in posting rapid growth. Corruption, bureaucratic red-tape and poor infrastructure deterred local and foreign investment, economists say.

Over the past several months, though, Mr. Aquino's efforts to trim out graft and waste from government spending have helped secure a series of credit-rating upgrades. Those efforts have reduced borrowing costs and freed up more government cash to improve rundown infrastructure, much of which was built during earlier eras of growth in the 1960s and 1970s.

In May, Mr. Aquino announced plans for a new government-backed fund to help finance infrastructure projects. The Philippines' state-run pension fund this week said it is ready to pump 50 billion pesos, or $1.2 billion, into the fund to help build rail links, expressways and new airports. Another pension fund for state workers aims to contribute another $300 million to the fund, which will be managed by a unit of Australia's Macquarie Group. The idea is to select projects that deserve investment and then use the government funds as a starting point to attract more private cash, with Macquarie helping spur the projects along.

Earlier efforts by Mr. Aquino to promote infrastructure—including other public-private partnerships—have moved slowly. Just one project for 2 ½-mile road has been bid out since Mr. Aquino was elected in 2010. The government aims to get the ball rolling on eight other projects this year, however.

That Manila is even in a position to contemplate accelerating construction of flyovers and train networks is a sign of fresh confidence, analysts say. "Our usual limits to growth in the past have revolved around the government's budget deficit," says Luz Lorenzo, a Manila-based economist with Maybank Investment Bank. "Now it's the speed of implementation."
Sorting out the Philippines' air links—especially its international terminals—is one of the biggest challenges.

Its main international airport has been the setting for some of the most dramatic events in the country's recent history. Mr. Aquino's father was shot and killed at Terminal One of the international airport—built three decades ago—in 1983 in still-unexplained circumstances when he returned to the country to challenge late dictator Ferdinand Marcos. The airport was later renamed in his honor. Last year, airport authorities refused to let former President Gloria Macapagal Arroyo board a plane here. She is now facing trial on corruption charges, which she denies.

In 2003, the Philippines' former air-transport chief seized the airport's air-traffic control to support a failed coup attempt, and was shot dead by a SWAT team. That fiasco contributed to Manila airport losing its Category 1 status with the U.S. Federal Aviation Administration, effectively preventing new routes from opening between the Philippines and the U.S. Other international agencies quickly followed suit, limiting the Philippines' direct air links with the rest of the world. 

The airport's physical appearance and amenities, meanwhile, have continued to deteriorate. The website "The Guide to Sleeping in Airports" ( listed Terminal One as the worst airport terminal in the world for long transits in 2011. According to the site, passengers complained about long lines and a vendor who reportedly was selling water out of used containers and pretending to break fake seals on the bottles when opening them. "The current administration should hire a bulldozer and a ramming team and start tearing it apart," said one reviewer on the site. 

Airport officials note that refurbishments have begun and that they are doing the best they can with the funds they have at their disposal. 

There are two other terminals. One is reserved solely for use by unprofitable Philippine Airlines, while the other is only partially completed after a long-running corruption scandal and is mostly used for domestic flights.

"It's all so disorganized," said Brian Miller, who was hoping to make a Thai Airways flight at Terminal One recently after waiting to check in for more than an hour. "It's like nobody thinks we have planes to catch."

Aviation authorities are now improving computer systems to handle tasks such as tracking the number of hours pilots have flown and stepping up security to help regain coveted Category 1 status at MNL. The government is also encouraging airlines to stagger flights where possible to reduce congestion on Manila's runways, which unlike the runways at most airports, intersect. That prevents planes from landing and taking off at the same time, even as demand for air travel surges.

Transport Secretary Mar Roxas says the government has given the go-ahead to construct two new rapid-exit taxiways to help quickly clear aircraft from the runway at a cost of about $14 million. Longer term, though, both the government and Philippine-based carriers are looking at clearing out from Ninoy Aquino International Airport. Already under way: A $1 billion expansion of Clark International Airport in the site of an old U.S. Air Force base.

"The airport sits on a 2,000-hectare area compared with NAIA's 440 hectares and already has two existing parallel runways. Clark would be able to handle more passengers and aircraft at any given time," Mr. Roxas wrote in a recent primer on Manila's airport dilemma. Already, budget carrier AirAsia's Philippines unit and other smaller airlines are flying from Clark.

To help get passengers out to the airport at Clark, which is about 50 miles from Manila's Makati financial district, a journey that can easily take over two hours, the government is laying plans for a high-speed rail system. But some analysts say that project could take years to complete given the difficulty of executing the necessary land appropriations. Philippine Airlines, meanwhile, is looking at another alternative: building its own dedicated air hub.Now half-owned by industrial conglomerate San Miguel Corp., Asia's oldest airline is looking at investing in an entirely new airport complex on some of San Miguel's land just south of Manila's city center.

A version of this article appeared August 13, 2012, on page A9 in the U.S. edition of The Wall Street Journal, with the headline: Turbulent Times at Manila's International Airport.
Bell 412s of the Presidential Airlift Command (PAF) carrying President Aquino made a diversion landing at SCTEX exit due to lowering cloud visibility. The choppers were supposed to land at the AFP Northern Luzon Command headquarters in San Miguel, Tarlac. The President proceeded by land to flood stricken areas in Tarlac and Pampanga.

CAB sets Mideast talks

For 5J, Z2 Regional Expansions

August 7, 2012

The Civil Aeronautics Board (CAB) is set to conduct air talks with United Arab Emirates on September 5 and 6 and Kingdom of Saudi Arabia on September 24 and 25 to get additional seats for the middle east as Cebu Pacific and Zest Air failed to grab entitlements from legacy carrier Philippine Airlines.

CAB Executive Director Carmelo A. Arcilla said the UAE is also interested for the talks as they want to bring in the first commercial A380 operations into the country as early as next year.

The current Air Services Agreement (ASA) with the UAE limits the seat allocation equivalent only to daily Boeing 777-300 services. Both Etihad and Emirates airlines intend to add third daily flights to Manila.

CAB will also have air talks with Singapore on August 15 and 16.

Meanwhile, Zest Airways was granted additional weekly allocations to South Korea equivalent to 3,060 seats, while Cebu Pacific and Philippine Airlines (PAL) were each allotted 3,220 more per week.

The Philippines and South Korea successful conducted air talks on April 2 and 3, expanding ASA entitlements to 28,500 from the existing 19,000 seats.

PAL previously asked CAB for additional 3,500 seats per week on top of an existing 7,550-seat allocations on April 18, while Cebu Pacific sought an additional 3,780 seats per week on April 20 to add to its existing allocation of 5,760 seats per week and Zest Airways applied for  for additional 5,596 seats per week on April 24 on top of the existing 2,700 seats.

Malaysia, Sri Lanka, Papua New Guinea and Vietnam enjoys unlimited air rights to carriers from all points in the country except Manila pursuant to Executive Order No. 29 signed last year further liberalizing the air industry.