Manila ACC Blind

May 2, 2011

By Rainier Allan Ronda

MANILA, Philippines - An air traffic management system installed at the Ninoy Aquino International Airport (NAIA), worth P511 million, does not meet international civil aviation standards, according to the results of a technical audit made by the Department of Transportation and Communications (DOTC).

The audit, presented to the DOTC’s civil aviation officials during a meeting Friday, said the system has at least 20 major deficiencies or “non-conformity” to international aviation standards.

Technical personnel from the Civil Aviation Authority of the Philippines (CAAP) Aerodrome and Air Navigation Safety Oversight Office, who conducted the audit, warned DOTC officials that using the new Manila Area Control Center (ACC) may result in a disaster at the country’s major airports.

Two major airlines have alerted the CAAP to two “near-collisions” when the CAAP tested the system and used it to direct air traffic at the NAIA last March, they said.

The NAIA is currently using the old air traffic system, installed in the 1980s. When the old system broke down in 2009, the DOTC set up a $200-million Communications, Navigation and Surveillance/Air Traffic Management (CNS/ATM) systems for the Philippine airport network, with the Manila ACC as the backup. Neither system is in use.

The CAAP Employees Union (EU) earlier said the Manila ACC project is one of the graft-ridden projects undertaken by the DOTC during the Arroyo administration.

“Our air controllers don’t want to use it because it is not working and is problematic and they don’t want to be responsible if a tragedy occurs in the NAIA or in the other airport when they use it,” a source said.

No safety, error checks

Among the serious deficiencies cited in the audit report is a lack of provisions to make the system “error-tolerant.” The system was never assessed for safety nor was it checked if it met the strict standards of the International Civil Aviation Organization, the CAAP auditors said.

The CAAP-EU said there were serious irregularities in the project, and money was wasted in funding the Manila ACC, a system found to be unserviceable and lacking in vital “interconnections.”

The CAAP-EU urged the Aquino administration to investigate the original P291-million contract to set up the Manila ACC in 2010. The group said the DOTC allegedly paid for additional revisions that added P220 million to the project cost.

The Aquino administration should scrutinize the contractor that bagged the project, the Revere Construction and Supply-CS Soft, Inc.-Enhanced Electronics Communications Services joint venture, based in San, Juan, Batangas, the CAAP-EU said.

The workers said the DOTC, at the time of the bidding for the project, was headed by Secretary Leandro Mendoza, a resident of San Juan, Batangas.

The CAAP-EU provided The STAR a copy of the notice issued by the DOTC for a public bidding of the project in June 2009, noting that the DOTC’s special bids and awards committee was headed by Mendoza’s classmate in the Philippine Military Academy (PMA) and fellow retired police general, Doroteo Reyes II, who he appointed as undersecretary for civil aviation.

Before he was appointed to the post of undersecretary post, Reyes served as Mendoza’s head executive assistant at the DOTC.

Reyes’ brother, Domingo Reyes Jr. – another PMA graduate and retired police general – was appointed by Mendoza and served for several years as DOTC assistant secretary for finance and comptrollership.

The Commission on Audit, in their 2009 audit of the DOTC, aired concerns on unnecessary costs of setting up the CNS/ATM and the new Manila ACC.

A380 Hangar to rise in the Philippines

5th in the World

April 30, 2011

German aviation services firm Lufthansa Technik (LTP), conducted a ground breaking ceremony yesterday for its repair air dock facility in the Philippines dedicated to its Airbus A380s.

Airbus A380 is the world's largest commercial passenger jetliner which first entered commercial service in 2007 through Singapore Airlines.

LTP said the $30 million facility will rise at the Ninoy Aquino International Airport Complex.

“The new $30 million hangar indicates the continuing commitment of Lufthansa Technik Philippines to build up its investment in the Philippines and create hundreds of high-tech, high-skill jobs for Filipinos,” the firm said in a statement.

No other project details were disclosed however.

But customers Lufthansa and Qantas airways are already lining up its cue to use the facility. The company already provides services for Qantas, Qatar Airways, and Cathay Pacific as well as several regional airlines.

“There are only four locations worldwide where the A380 can be maintained and the Philippines hopes to join this rank,” the firm added. They are currently found in France, Germany, China, and Singapore.

Recently, AirAsia X, the world’s first successful long-haul, low-cost airline, has renewed its contract with the Manila-based maintenance, repair and overhaul (MRO) company to AirAsia X’s Airbus fleet of nine A330s and two A340s.

Lufthansa Technik Philippines is a joint venture between Lufthansa Airlines and local company MacroAsia Corp.

$50 Million Deal for PAA?

Clark for Free!

By Tonette Orejas
PDI

April 29, 2011

CLARK FREEPORT—An airline partly owned by President Benigno Aquino III’s cousin has decided to locate its hub at Diosdado Macapagal International Airport (DMIA) in a major step toward the facility’s transformation as the nation’s premier airport.

The move last March by Philippine AirAsia (PAA) of businessman Antonio “Tonyboy” Cojuangco was hailed by Victor Jose Luciano, president and chief executive officer of Clark International Airport Corp. (CIAC).

But not everyone is happy with the PAA’s move under what was described by critics as a $50-million “sweetheart” deal that includes, among others, waiving fees and the priority use of a new terminal building.

Luciano said the waived fees are an incentive given to other airlines. “It’s not a new thing,” he said.

He said the decision of PAA, which is 40 percent owned by Asia’s biggest low-cost carrier, the Malaysia-based AirAsia Berhad, finally gave the DMIA an “anchor airline,” or a carrier headquartered elsewhere but using the Clark facility as a major base.

Cojuangco, PAA chief executive officer Marianne Beloso Hontiveros and Harbour Centre chair Michael Romero each own 20 percent of the airline. Cojuangco was the biggest contributor to his cousin’s presidential campaign in last year’s election.

Luciano said getting AirAsia to become an anchor airline took five years, or almost the length of time it served the Clark-Kuala Lumpur and Clark-Kota Kinabalu routes, despite the DMIA’s attractions: an executive order designating it as the country’s premier international airport, its strategic location, upgrades in facilities at the former US air base and other incentives.

‘Sweetheart deal’

CIAC could not get the country’s flag carrier, Philippine Airlines, into DMIA because “it simply did not want to,” Luciano said.

CIAC wooed AirAsia in the third quarter of 2010. Tony Fernandes, AirAsia’s group chief executive officer, announced the joint venture in December 2010. A memorandum of agreement (MOA) was signed on March 24 and Malacañang announced the CIAC-PAA deal.

A “$50-million sweetheart deal” for Cojuangco is how a Philippine Daily Inquirer source described the arrangement.

Sources among CIAC employees who asked not to be named for fear of losing their jobs said they were afraid the deal put the DMIA at a disadvantage.

Under the MOA, a copy of which was secured by the Inquirer, the signatories—CIAC, through Luciano, and PAA, through Hontiveros—agreed on 15 terms.

They include PAA’s commitment to dedicate 13 aircraft within five years until 2015, CIAC’s waiving of aeronautical fees (landing, take off, parking fees), CIAC’s setting aside 10 to 30 percent of passenger terminal fee for AirAsia Group’s marketing fund, and PAA’s priority use of a new budget terminal and the need to consult it on the design and development of the facility.

Inquirer sources were asking if the deal was clinched by PAA because Cojuangco is Mr. Aquino’s relative.

“Is the open skies policy of [Mr. Aquino] connected to the entry of his cousin in the airline industry and airport?” asked one of the sources in an e-mail to the Inquirer last week.

Talks long before P-Noy
Cojuangco dismissed suggestions of irregularity. He said talks with the Malaysian budget airline “started way back in 2006.”

“We helped them set up in Clark where they have been operating at least two years now,” Cojuangco told the Inquirer. “That was way before P-Noy even considered running for the presidency.”

Luciano said there was no time that Mr. Aquino, his economic advisers, friends or relatives had called him to favor PAA. He said Cojuangco was “not involved” in negotiations with CIAC.

“A representative of AirAsia Berhad was more actively engaged. But I learned that Tonyboy wants the hub in Subic [Bay Freeport in Zambales] because he has invested in a resort there. He was cold to the idea of Clark and since he was a minority [owner], he had to follow the majority’s decision, which is Clark,” Luciano told the Inquirer on Wednesday.

Cojuangco, he said, relayed this message to CIAC officials, through Hontiveros: “This is good for the country.”

Best hope for DMIA

The $50 million, supposedly the contract’s worth, is not mentioned in the four-page MOA notarized in Makati City. “That’s an invention,” Luciano said.

An Inquirer source said the $50 million is a “conservative projection” based on total departing passengers of PAA within 11 years from 2015 to 2026.

The amount is reached, the source said, if the total of 27.5 million departing passengers is divided by 117 passengers per Airbus 320 at 65 percent load factor. This is equivalent to 235,000 flights multiplied by $216 per flight, the current fee paid by AirAsia at DMIA.

“To think that fee is already a discounted rate,” the source said.

But to Luciano, the issue is not Cojuangco or his blood ties with the President.

It all boils down to what is the “best hope” for the DMIA so it can evolve into a competitive international services and logistics center in the Asia-Pacific region and become the premier international gateway as envisioned by Executive Order No. 174 signed by former President Fidel Ramos.

“This is a case of giving up this much to be able to obtain more,” he said.
Revenue projection

For instance, an AirAsia medium revenue projection showed that from 2.2 million passengers, DMIA can raise fees and revenues worth P1.7 billion within five years. The waived fees and marketing funds collected consist only of 7.5 percent and 6.45 percent, respectively.

The financial study also showed that without an anchor airline, traffic at DMIA in 2007 up to 2010 grew at 7 percent yearly among international passengers and 41 percent yearly among domestic passengers.

AirAsia, he said, showed a remarkable growth, which can be done by its subsidiary in DMIA.

Carrying only 200,000 passengers in 2001, AirAsia shuttled 31 million passengers in 2010.

A CIAC report said PAA’s hub operations will start in December this year, targeting 5 million passengers in three years to short and long-haul flights to Japan, Iran, France and New Zealand.

Luciano said the marketing fund, to be used for local and global promotions of DMIA, is not an expense because it brings returns.
Budget terminal

The MOA’s provision on the development and operation of a new budget terminal said “priority shall be given to [PAA] for its use in a designated area within the new budget terminal.”

“For this purpose, [PAA] will be consulted [on] the design and development of the building of the budget terminal, incorporating therein the airline’s requirements throughout the development phase,” the MOA said.

Luciano said the preference is given to help PAA fit its operations in the new facility.

MOA being reviewed

CIAC Chair Nestor Mangio, in a separate interview, said the MOA has yet to be presented to the board.

DMIA’s financial and legal officers were involved in the crafting of the MOA, Luciano said. He said this would be presented to the new CIAC board after the May 2 stockholders’ meeting.

The MOA is being reviewed by the Office of the Government Corporate Counsel, he said.

Luciano urged detractors within and outside CIAC to “give the DMIA a chance so that Clark, as an engine for economic growth in the [base] conversion process, would really deliver.” With a report from Daxim L. Lucas

Another S-211 Down

The Last of its Breed

April 29, 2011

Another Philippine Air Force (PAF) S-211 trainer plane crashed in Bagac Town, Bataan, moments after it took off from Basa Airbase in Floridablanca Pampanga around 2:32 p.m. killing its pilots, a military official said.

The two seater Italian made Aermacchi S-211 trainer jet crashed at 3:15 p.m. in Banawang village near the Stela Mariz Beach resort killing its pilot identified as Capt. Raymond De Leon and Maj. Ephraim Gatus Suyom, a valedictorian of Philippine Military Academy (PMA) class of 1997.

Armed Forces' Northern Luzon Command chief Lt. Gen. Gaudencio Pangilinan said the S-211 plane was on a routine proficiency flight before its disintegrated on impact. Cause of the crash is unknown.

"[The] aircraft disintegrated upon impact," Pangilinan said. "One confirmed dead, identification still for confirmation."

He said elements of the Army's 24th Infantry Battalion are now on site, security the crash site.

The ill-fated aircraft was one of the six S-211 trainer jets that were left operational from the total of 25 aircraft in the PAF inventory purchased since 1991. Last year, an S-211 plane belonging to the Air Defense Wing’s 7th Tactical Fighter Squadron crashed in July while engaging in a training exercise in Conceptcion town in Tarlac. The two pilots were unharmed as they were able to eject from the totally-wrecked plane before hitting the ground.

In 2002, another S-211 jet crashed due to mechanical failure, killing five people, including the pilot and his co-pilot, in Barangay Garcia in Cabanatuan City where 15 houses were also destroyed. The aircraft was reported to be on proficiency flight. Caused of accidents were never published.

PAF spokesman said the remaining five other still functioning S-211 trainer jets of the Air Force would remain grounded until the cause of last Thursday’s accident is known.

Reciprocity should be key aspect of EO 29

By Lance Y. Gokongwei
CEO, Cebu Pacific

First Posted on the
Philippine Daily Inquirer

WE HAVE always been supportive of Aviation liberalization including “open skies” agreements with other countries. Why wouldn’t we be? We were a major beneficiary of domestic aviation de-regulation. And we have never been shy telling media about our support for a liberalized aviation industry.

But a few weeks ago, we broke corporate tradition at Cebu Pacific, and went public with our concern over the lack of reciprocity under EO 29. It was a first in CEB’s 15-year history.
We decided to come out and engage the issue constructively so there would be a better understanding of why reciprocity based on equal opportunity is extremely important not just to Cebu Pacific but also to the public in general.

We agree with the objective of EO 29 to bring in more tourists. It is posited that if foreign carriers are allowed to compete and freely fly to the Philippines the tourists would come.

There are two key aspects introduced in EO 29: increased competition and unlimited access to our skies by foreign carriers. We have no issues with these.

We would like to add a third aspect: reciprocity. We would like to be part of this competition. If foreign carriers are given unlimited access on routes to and from the Philippines, we believe it is only fair, that CEB and other local airlines be given unlimited access to and from the Philippines to these carriers’ home countries, on an equal opportunity of access; on a level playing field.

Reciprocity will keep all airlines on their toes and allow Filipino carriers like CEB to compete with foreign carriers. Ultimately, more competition leads to lower fares, benefiting not only CEB but the whole tourism industry, here and abroad.

We are very proud to say that Cebu Pacific’s low fares played a major role in spurring growth in tourism as shown by the 127 percent growth in domestic tourism in the last five years. From 7.3 million in 2006 to 16.6 million passengers in 2010.

International tourism from the markets we serve has grown much faster than from the markets we do not fly to. Last year alone we grew our International traffic by 39 percent. That’s 2.2 million passengers in 2010 alone.

Further examination of the data will prove the case. In 2005, a year before we started flying CEB planes to Singapore, tourist arrivals were estimated at 69,435. Since we introduced lower fares to Singapore in 2006, that rate has grown by 74 percent, resulting in 121,083 tourist arrivals from Singapore last year.

Perhaps, at the risk of sounding immodest, these facts show we have championed tourism and will continue to do so wherever we are allowed to fly and compete.
Examples of lack of reciprocity

Now, let me cite a few examples of the consequences of non-reciprocity:

Seat limitations skewed to favor foreign carriers over local carriers. The existing agreement between the Philippines and Hong Kong limits local carriers to only 2,500 seats per week on the Hong Kong-Cebu route; Hong Kong carriers get the same number. Under EO 29, Philippine carriers will still be limited to 2,500 per week but all Hong Kong carriers can now fly this route without any limit.
Exhaustion of air rights in major destinations and routes.

An early EO in 2008 declaring “open skies” sans reciprocity in Clark resulted in Hong Kong Express flying into Clark without limitations. CEB was unable to compete because air rights to Hong Kong were fully utilized at that time. CEB could not use Clark unless it reduced its HK services from Cebu. This was solved only after subsequent bilateral air talks resulted in additional air rights. This undue delay in CEB’s ability to compete with a foreign carrier should not have happened if reciprocity was in place. CEB has been flying to HK everyday since and offering the lowest fares out of Clark.

Inability to offer lower fares to potential high yield tourist markets. Japan has always been considered a major tourism market. Currently CEB flies to Osaka three times weekly. We have been asking for additional flights to Osaka which the Philippines is entitled to under the current Philippine-Japan Air Services Agreement. However our request, to this day, has not been approved. In the meantime, All Nippon Airways (ANA) was recently allowed to come in and operate flights from Tokyo to Manila under the very same Air Services Agreement. This is another example of the lack of reciprocity.
Example where reciprocity worked

A notable success story that we think we can build on and use as model is Korea:

In 2007, the Philippines negotiated a new air services agreement with South Korea, raising the capacity limit for each country to 19,000 seats a week almost a three-fold jump from the previous limit of 6,800.

As a result, today, we compete with Korean carriers on Incheon and Busan routes, and airlines such as Korean Air, Asiana, Air Busan, and Jeju Air are adding flights into the Philippines. Korea today is the country’s No. 1 source of tourists.
Moving forward

We propose that we move on these three fronts to realize quick wins:

Japan open skies—Japan had signed open skies agreements this year with Singapore, Malaysia, and South Korea; and with the US late last year. It took their respective governments an average of just more than a month to finalize these agreements. Japan is open to more such agreements with ASEAN and this presents an opportunity the Philippines must grab quickly.

Asean open skies—There are currently efforts to have an Asean Open Skies regime but the Philippines and Indonesia remain as holdouts. If we sign this, the region will be open to each country’s carriers on an equal footing. This is a regional effort which I think will work better than a unilateral approach.

Middle East and Europe open skies—We also support reciprocal open skies agreements with regions like the Middle East and Europe where Philippine carriers don’t fly to today provided of course we can, if and when we are ready.

CEB position

Let me just quickly repeat our position:

We welcome and support EO 29, the opening of all Philippine airports, except Manila, to all foreign carriers. However, we would like, to also be given the opportunity to compete with these foreign carriers on those same routes, and offer our trademark low fares not only to their nationals/tourists but to our own OFWs as well who live or work there. This is reciprocity and is most fair.

EO29 also offers to foreign carriers unlimited ‘fifth freedom rights’. We have no issue with this provided their governments allow us the same opportunity. We believe the requested reciprocity can be accommodated in EO 29’s implementing rules and regulations.

We are not asking for special favors. We became the Philippines’ largest National Flag Carrier without any. We have invested heavily in the country, employ more than 4,000 Filipinos and we have given every Juan the opportunity to fly with our low fares. All we ask for is the opportunity to compete on a level playing field.

Let us have Open Skies for all, not Open Skies for foreign airlines and Closed Skies for Filipino carriers.

(Gokongwei, president of Cebu Pacific, made this statement in a recent forum.)

Sleepless at NAIA Control

By Rudy Santos

April 18, 2011

MANILA, Philippines - US air traffic controllers falling asleep on the job are not the only airport workers feeling overworked.

The Ninoy Aquino International Airport (NAIA) Terminal 2 management is having difficulty getting ramp air controllers to report for work as they dont’t know when they can next sign off.

It was learned that some ramp controllers work continuously for days without any replacement – the same predicament of some of their counterparts in the US.

Overworked and harassed air controllers are accident baits, aviation experts have warned.

The root of the problem is low salary.

Ramp controllers are licensed air traffic controllers doing the no less risky but unglamorous job of assigning aircraft their proper parking berth, preparing schedules when planes have to be towed out of the terminal to find their proper slot in a maze of departing and arriving airplanes.

Modern passenger air terminals have become so complex that ramp control is now a necessity.

Sometimes there are four of them --as in the NAIA -- untangling ground traffic, giving coherence to the crisscrossing traffic, and avoiding disaster on the ground.

The problem came into view following reports of air traffic controllers in the US sleeping on the job while airplanes land unassisted.

It turned out that many US airports are employing only one technical expert in the graveyard shift, putting in peril the lives of the flying public.

The uproar exposed what had been a long-kept secret in US aviation, that usually one air controller rules the night shift, roughly from 11 p.m. to 7 a.m. the next day.

The idea is to have at least two air controllers during the graveyard shift.

The problem was highlighted by the incident where an Airbus 380 taxiing at the New York Kennedy Airport clipped the tail of a twin-engine commuter jet improperly parked.

At the NAIA 2 last Friday, one ramp controller had to stay on duty for 24 hours because his relief had either refused to report for work, was late, or many of them felt burned out.

The NAIA has four sets of ramp controllers, one each at NAIA 1, 2 3 and the Manila Domestic Airport. All of them operate 24 hours a day.

Regular air controllers, the top guns of the lot, are assigned at the control tower or radar duty, actually directing air traffic to avoid collision, or getting planes through the maze of airways and air routes, safely and with the least delay.

Tardiness or absenteeism at the ramp control has been going on for some time but authorities, instead of addressing the problem, threatened the truant workers that they would be replaced by Air Force personnel doing the same job in obscure military air fields.

The threat doesn’t discourage the ramp workers, knowing that Air Force personnel couldn’t cope with the job. It has been done before, when air controllers went on strike years ago and Air Force controllers had to give up, overwhelmed by the volume of traffic and the necessary skills of running a commercial airport, where at least 1,000 landing and takeoffs a day are part of the territory.

Currently, NAIA 2 ramp controllers receive P13,000 monthly. They are requesting the Manila International Airport Authority (MIAA) to ratchet up their salary to the level of their colleagues’ at the Civil Aviation Authority of the Philippines (CAAP), whose lowest entry salary is P28,000 a month.

Ramp controllers are asking at least P22,000 a month.

Most of the ramp controllers at NAIA 2 are former employees of the defunct Air Traffic Transportation Office (ATO).

After years of work abroad, they offered their services and expertise to the MIAA, even at lower wages.

The MIAA, on the other hand, could not get outsiders, because the law requires licensed air traffic controllers, which are not readily available.

“Air Traffic Controllers are the most difficult job to get locally,” one study shows. Most of them have gone abroad and are getting about $1,000 to $1,500 monthly income.

The problem needs a speedy solution, experts pointed out. Delays are now common, part of the perceived slowdown by ramp controllers apparently to force the authorities to act on their demands.

One of their demands is to increase the personnel on duty to five. Currently there are three air controllers per shift, two on duty, and one or two on standby, resting or sleeping. They take turns on the job after every two hours to ease the pressure.

When one of two of them is absent, only one is left with a daily reality to prevent aircraft collision on the ground, such as what happened recently in the US.

Open skies

The Real Deal

By Artemio V. Panganiban
First posted at the Philippine Daily Inquirer

April 15, 2011

TO BOOST tourism, investments and the economy in general, President Aquino recently issued Executive Order (EO) 29 “authorizing the Civil Aeronautics Board (CAB) and the Philippine Air Panels to pursue more aggressively the international civil aviation liberalization policy.” Popularly known as “open skies,” this policy allows foreign carriers to access our “country’s airports other than the Ninoy Aquino International Airport (NAIA).”

Tourism and civil aviation. Immediately, the country’s air carriers – notably Philippines Airlines and Cebu Pacific – declared that while they fully support the tourism industry, the opening of our skies should not impoverish Philippine aviation. It should be subject to the principle of reciprocity. Simply stated, reciprocity means that the advantages granted to foreign carriers should be matched or reciprocated by similar benefits given to local airlines by the home state of the alien carrier.

Tourism and aviation are natural partners. The colossal tourism success of our neighbors was achieved in close collaboration with their national carriers. The phenomenal growth of tourist arrivals in Singapore, Hong Kong, Malaysia and Thailand is matched only by the spectacular rise of Singapore Airlines, Cathay Pacific, Malaysian Air and Thai International as the very best airlines of the world. Statistics show invariably that national carriers always bring in the most arrivals to their home countries.

By itself, open skies has no track record of automatically bringing in tourists in any country. Several other factors must be concurrently undertaken. For example, do we have enough hotels, resorts and lodging houses of the quality and price appropriate for the type of tourists open skies will bring? Do we have the infrastructures, like airport terminals and roads, to support the arrivals? Is there peace and security in the tourist destinations we want to open up?

Reciprocity and fairness. This paper’s editorial on March 26 stressed that reciprocity, while not mentioned in EO 29, is “only fair and just” and “the country’s representatives [who will implement the EO] must be clear and unwavering on that one condition.”

In his letter to the Inquirer published on March 30, CAB Deputy Executive Director Porvenir P. Porciuncula clarified that EO 29 “clearly recognizes” the constitutional principle mandating “equality and reciprocity” in “all forms and arrangements of exchange.”

He added that Republic Act 776 bars “unjust discrimination, undue preferences or advantages or unfair or destructive competitive practices… Hence, the local air carriers are rest assured that in the implementation of EO 29, the CAB will be fair and just…”

Freedoms, frequencies, etc. Aviation agreements are normally negotiated between countries by “air panels.” After concluding their negotiations, air panels execute Air Services Agreements (ASAs). EO 29 authorizes the Philippine Air Panels to “offer and promote third, fourth, and fifth freedom rights… without restriction as to frequency, capacity and type of aircraft, and other arrangements that will serve the national interest.”

“Third freedom” refers to the right given foreign carriers to disembark passengers coming from their home state to the Philippines. Example: a US carrier brings traffic from the United States to the Philippines. “Fourth freedom” refers to the right given foreign carriers to board passengers from the Philippines to the carriers’ home state. Example: a US carrier carries passengers from the Philippines to the United States.

Most highly desired, “fifth freedom” refers to the right given foreign carriers to pick up passengers in the Philippines destined for a third state and vice-versa. Example: a US carrier bound for the Philippines picks up passengers from Japan and brings them to the Philippines; and then picks up passengers in the Philippines and disembarks them in Japan.

These third, fourth and fifth freedom rights are normally exchanged between countries on strict reciprocity. However, EO 29 allows the Philippine Air Panels “to offer and promote” these freedoms “without restriction [i.e., without reciprocity] as to frequency, capacity, and type of aircraft, and other arrangements that will serve the national interest as may be determined by the CAB.”

Example: Say an ASA with state XX grants designated carriers from both the Philippines and XX third and fourth freedom rights with one frequency a week, via narrow body aircrafts with 100 seats. Despite these limitations and without asking any reciprocal rights, the Philippines may – in the national interest – unilaterally grant XX carriers several more frequencies a week, via wide-body jumbo jets with 400 seats.

As part of the President’s program to enhance the economy, open skies aims to boost tourism and investments. Foreign airlines that bring new tourists untapped by Philippine carriers are truly welcome. However, if they merely pouch on the markets already fully served by local carriers, it would be foolhardy to welcome and reward them via EO 29.

Highfalutin’ rhetoric in praise of reciprocity there will always be. But the reality is in the implementation, given the complexities of aviation freedoms, frequencies, capacities, routes, etc. Like natural resources, civil aviation rights form part of the nation’s wealth that must be carefully and strategically used. Ultimately, the “national interest” standard will be invoked vis-à-vis the ability of a foreign carrier to increase traffic to the Philippines from untapped new markets and routes, and not from stealing the existing traffic painstakingly developed by local airlines.

Comments are welcome at chiefjusticepanganiban@hotmail.com

What Reciprocal Rights?

We can't even fly more to Japan - Lance

April 15, 2011

Cebu Pacific CEO Lance Y. Gokongwei questioned yesterday the draft implementing rules of Executive Order 29 adopting a pocket open skies policy which did not incorporate truly their concern over the lack of reciprocal rights under the said order which declared an Open Skies policy for all our airports, except Manila.

He said that while the Philippines should pursue open skies, specifically with Japan, the Asean, Middle East and Europe it has to be under the principle of reciprocity, Cebu Pacific CEO Lance Y. Gokongwei declared Thursday.

But “Let us have Open Skies for all, not Open Skies for foreign airlines and Closed Skies for Filipino carriers.” Gokongwei said.

He added that the provisions of Rule IV under the draft IRR EO 29 (transformation of operating rights into traffic rights) tend to contradict each other.

For example, Rule 4.1 of the draft IRR provides that the Philippine Air Panels (PAR) and the Civil Aeronautics Board (CAB) shall hold talks with the respective states of registry of the carriers operating under EO 29 for the conversion of operating rights into traffic rights. This, the rule said, shall include the inclusion of reciprocal grant to Philippine carriers of equivalent traffic rights by the said states.

Rule 4.2, meanwhile, provides that the CAB, in case of failure to reach mutual agreement to grant reciprocal rights to Philippine carriers within 12 months from the grant mentioned in the preceding rules, may revoke the conversion of operating rights into traffic rights.

"The contradiction however lies under Rules 4.3 and 4.4." Gokongwei said.

According to Rule 4.3, notwithstanding the non-inclusion of traffic rights mentioned in Rule 4.1 in the relevant air service agreement (ASA), the CAB may continue to allow operation of traffic rights under EO 29 if it deems it to promote national interest and/or mutual benefits.

Rule 4.4, on the other hand, says the CAB reserves the right to revoke, suspend, or restrict operations granted in the event the state of registry of the foreign carrier operating under this grant failed to extend reciprocal rights and/or equal opportunity to Philippine carriers.

Gokongwei said the government has to explain why it had to include in the draft IRR Rules 4.3 and 4.4 which contradict the reciprocity rule provided in Rules 4.1 and 4.2

The Air Service Agreements (ASA), or bilaterals, governs the civil aviation relationship between states that are parties to it. Traffic rights, meanwhile, is a market access right which specifies who or what may be transported over an authorized route or parts thereof in the aircraft.

A foreign air carrier’s permit (FACP) is a permit issued by the CAB and approved by the President which authorizes a foreign carrier to engage in foreign air transportation. A temporary operating permit (TOP), on the one hand, is the authorization issued by the CAB for a fixed term for the operation of scheduled or non-scheduled services by an air carrier pending the issuance of a FACP.

An FACP or TOP is a condition before any foreign carrier is granted operating rights under EO 29.

EO 29 seeks to further liberalize civil aviation in the Philippines, specifically to airports other that the Ninoy Aquino International Airport (NAIA) and “to promote a more liberalized policy for the expansion of direct air services, both passenger and cargo to secondary gateways outside of Metro Manila in order to advance domestic tourism…”

It provides that the Philippine Air Panel may offer third, fourth or fifth freedom traffic rights without restrictions on frequency, capacity and type of aircraft and other arrangements in the consideration of national interest as may be determined by the CAB.

The third freedom gives the right to fly from one’s own country to another while the fourth freedom covers the right to fly from another country to one’s own. The fifth freedom is the right to carry passengers from one’s own country to a second country, and from that country to a third country.

"If foreign carriers are given unlimited access on routes to and from the Philippines, we believe it is only fair, that CEB and other local airlines be given unlimited access to and from the Philippines to these carriers’ home countries, on an equal opportunity of access; on a level playing field" Gokongwei stressed.

"We should be allowed to compete with these foreign carriers on those same routes, and offer our trademark low fares not only to their nationals/tourists but to our own OFWs as well who live or work there. This is reciprocity and is most fair".

"But with Japan blocking our way to do that, where is reciprocity there?" Gokongwei said.

He complained that they cannot even get an authority to fly more flights to Osaka yet the Philippine government did not protest on the flight of ANA into the country.