The Politics of Category II May 2, 2013
By Conrado R. Banal III
When the country’s flag carrier, Philippine Airlines, or PAL, launched last week its 12 new routes, seated beside each other at the table were PAL president Ramon S. Ang and Tourism Secretary Ramon Jimenez.
Hmmm… Do you think Jimenez might be the first tourism secretary in quite a long time that, as an avowed mission in life, would not be directly hostile to the ever-struggling flag carrier?
After all, among the priorities of Jimenez at the Department of Tourism, or the DOT, as spelled out in his comprehensive tourism program, was what the DOT called “market accessibility.”
For the sake of our brilliant senatorial candidates, it means that Jimenez simply applied tourism economics, which has been telling us all this time that the 100 percent value-added sector called “tourism” would only take off if the government would put up modern infrastructure called airports that, on their own, with no need for incentives such as tax breaks and all sorts of freebies, would naturally attract airline expansions.
In the past, with the false pretense of supporting tourism, certain bosses at the DOT pushed to the government a bright idea to give away the main market of PAL. This was of course the bulk of overseas Filipinos who as of last count already numbered more than 10 million. Former DOT big shots wanted to open our country to all—I mean “all”—foreign airlines under a free-for-all scheme. The bright idea naturally came from some foreign governments in cooperation with their own troubled airlines. They obviously wanted the humongous OFW market.
In the PAL launch last week, PAL president RSA, who also happens to be the COO and president of the country’s biggest conglomerate, San Miguel, announced the airline’s 12 new destinations, namely Kuala Lumpur (Malaysia); Darwin, Brisbane and Perth (Australia); Guangzhou (China); Abu Dhabi (United Arab Emirates); Doha (Qatar); Riyadh, Jeddah and Dammam (Saudi Arabia); and Dubai (United Arab Emirates).
In November this year, PAL also intends to resume domestic flights to the pristine Basco in Batanes, which is already the most fascinating destination for both domestic and foreign tourists.
Take note that six of those new routes, or half of them, were planned to be in the Middle East. To serve the multitude of OFWs in that part of the world, PAL must nevertheless compete with heavily subsidized airlines.
Well, the world airline industry knows fully well that the root of the problem in the Middle East routes was the government subsidy extended to Middle East-based airlines. OK, subsidized fuel and scandalously cheap petroleum!
That was, in fact, the reason offered by a number of European airlines that already dropped their non-stop direct flights to Manila. They could not compete with Middle East airlines unconstrained by the exorbitant cost of fuel.
Still, the business-math wizard RSA figured that, despite the subsidized fuel of its competitors, PAL would still make money on its new Middle East routes through a combination of secret moves, although between us girls, I could say that RSA would rely chiefly on PAL’s new fleet of aircraft.
As a rule of thumb in the airline business worldwide, fuel accounts for about 40 percent of the airplane fare, making it the most fuel-demanding, cost-challenging transport business in the entire universe.
With the entry of San Miguel into PAL last year, plus the $500-million injection of fresh capital, the airline was able to embark on fleet modernization, acquiring the latest models of US aircraft maker Boeing and the European alliance called Airbus, which were known in the airline business as the new generation of fuel-efficient aircraft.
At an average fare of $800 one-way, the Middle East Market would perhaps remain attractive to RSA, considering that PAL already took delivery of 75 of the 100 new aircraft in its planned fleet modernization.
It cannot be denied that the presence of PAL in the new Middle East routes may trigger the “fare war” much desired by OFWs for so long now, since the Middle East airlines must contend with the other “special” services of PAL, such as warmth, familiar cuisine and beautiful flight attendants.
But RSA figured that Middle East airlines could only enjoy fuel subsidy in their home base. In other countries such as the Philippines, they would have to pay the same rate for fuel as other airlines. Meaning, really, half of the problem solved!
PAL nevertheless must contend with other problems such as the refusal of the governments of South Korea and Japan to grant PAL additional flights, which PAL felt to be rather underserved, as airline ticket prices have been flying through the roof because of big demand with short supply.
Reason for their refusal has always been our CAT-II problem, courtesy of the US Federal Aviation Authority, or the FAA, which a few years ago downgraded its rating of the Philippines for airport safety to Category II. As a result, PAL could not add new routes to the United States or even replace its existing aircraft serving the US routes with new ones.
From what I heard, our salvation from the damning CAT-II has been a moving target for the Aquino (Part II) administration, as the FAA insisted on some measures that would perhaps take more than a lifetime for us to meet. For instance, the FAA insisted that the government should not rely on PAL experts for pilot training, meaning, the government should train its own instructors, which would only take years and years of flying experience, and where would you get that except from PAL?
Hmmm, maybe there is something more in the CAT-II problem than just the airport “safety.” After all, US airlines are also having a grand time flying here, serving those 10 plus million OFWs.
Hmmm… Do you think Jimenez might be the first tourism secretary in quite a long time that, as an avowed mission in life, would not be directly hostile to the ever-struggling flag carrier?
 |
| "FAA insisted that the government should not rely on PAL experts for pilot training" |
For the sake of our brilliant senatorial candidates, it means that Jimenez simply applied tourism economics, which has been telling us all this time that the 100 percent value-added sector called “tourism” would only take off if the government would put up modern infrastructure called airports that, on their own, with no need for incentives such as tax breaks and all sorts of freebies, would naturally attract airline expansions.
In the past, with the false pretense of supporting tourism, certain bosses at the DOT pushed to the government a bright idea to give away the main market of PAL. This was of course the bulk of overseas Filipinos who as of last count already numbered more than 10 million. Former DOT big shots wanted to open our country to all—I mean “all”—foreign airlines under a free-for-all scheme. The bright idea naturally came from some foreign governments in cooperation with their own troubled airlines. They obviously wanted the humongous OFW market.
In the PAL launch last week, PAL president RSA, who also happens to be the COO and president of the country’s biggest conglomerate, San Miguel, announced the airline’s 12 new destinations, namely Kuala Lumpur (Malaysia); Darwin, Brisbane and Perth (Australia); Guangzhou (China); Abu Dhabi (United Arab Emirates); Doha (Qatar); Riyadh, Jeddah and Dammam (Saudi Arabia); and Dubai (United Arab Emirates).
In November this year, PAL also intends to resume domestic flights to the pristine Basco in Batanes, which is already the most fascinating destination for both domestic and foreign tourists.
Take note that six of those new routes, or half of them, were planned to be in the Middle East. To serve the multitude of OFWs in that part of the world, PAL must nevertheless compete with heavily subsidized airlines.
Well, the world airline industry knows fully well that the root of the problem in the Middle East routes was the government subsidy extended to Middle East-based airlines. OK, subsidized fuel and scandalously cheap petroleum!
That was, in fact, the reason offered by a number of European airlines that already dropped their non-stop direct flights to Manila. They could not compete with Middle East airlines unconstrained by the exorbitant cost of fuel.
Still, the business-math wizard RSA figured that, despite the subsidized fuel of its competitors, PAL would still make money on its new Middle East routes through a combination of secret moves, although between us girls, I could say that RSA would rely chiefly on PAL’s new fleet of aircraft.
As a rule of thumb in the airline business worldwide, fuel accounts for about 40 percent of the airplane fare, making it the most fuel-demanding, cost-challenging transport business in the entire universe.
With the entry of San Miguel into PAL last year, plus the $500-million injection of fresh capital, the airline was able to embark on fleet modernization, acquiring the latest models of US aircraft maker Boeing and the European alliance called Airbus, which were known in the airline business as the new generation of fuel-efficient aircraft.
At an average fare of $800 one-way, the Middle East Market would perhaps remain attractive to RSA, considering that PAL already took delivery of 75 of the 100 new aircraft in its planned fleet modernization.
It cannot be denied that the presence of PAL in the new Middle East routes may trigger the “fare war” much desired by OFWs for so long now, since the Middle East airlines must contend with the other “special” services of PAL, such as warmth, familiar cuisine and beautiful flight attendants.
But RSA figured that Middle East airlines could only enjoy fuel subsidy in their home base. In other countries such as the Philippines, they would have to pay the same rate for fuel as other airlines. Meaning, really, half of the problem solved!
PAL nevertheless must contend with other problems such as the refusal of the governments of South Korea and Japan to grant PAL additional flights, which PAL felt to be rather underserved, as airline ticket prices have been flying through the roof because of big demand with short supply.
Reason for their refusal has always been our CAT-II problem, courtesy of the US Federal Aviation Authority, or the FAA, which a few years ago downgraded its rating of the Philippines for airport safety to Category II. As a result, PAL could not add new routes to the United States or even replace its existing aircraft serving the US routes with new ones.
From what I heard, our salvation from the damning CAT-II has been a moving target for the Aquino (Part II) administration, as the FAA insisted on some measures that would perhaps take more than a lifetime for us to meet. For instance, the FAA insisted that the government should not rely on PAL experts for pilot training, meaning, the government should train its own instructors, which would only take years and years of flying experience, and where would you get that except from PAL?
Hmmm, maybe there is something more in the CAT-II problem than just the airport “safety.” After all, US airlines are also having a grand time flying here, serving those 10 plus million OFWs.
Oh wow. This is a badly written, poorly researched op-ed. And it's a pity it went out on a national paper like the Inquirer.
ReplyDeleteFor starters, I am confused on what he was trying to allude to when he wrote "free-for-all". If he meant "open-skies", it's not a free-for-all. If he meant deregulation, it's not a free-for-all either. There are certain mechanisms that come into play with both systems, and these include, but are not limited to, competition. "Open Skies" is an agreement between the host country and another country or group of countries. It is not opening up the Philippine aviation sector to everybody. That also implies that if other countries were to freely fly into ours, we can into theirs. Fourth, fifth (etc.) freedom rights also come into play, which were grossly and ignorantly omitted by the writer.
Second, an open declaration that Middle Eastern airlines are heavily subsidized, does not hold water. We can theorize all we want, but no one has proof the Middle Eastern governments grant fuel subsidy to their airlines. Perhaps what the writer meant was that fuel might be cheaper in the Middle East because it is produced there. That is not subsidy. That just is. Unless we come up with our own fuel wells, we are pretty much edged out by Middle Eastern airlines.
Third, a widebody jetliner can, correct me if I'm wrong all you pilots out there, fly from Dubai to Manila and then back on a full tank without refueling. Or at the very least, fly with a full tank to manila, and then still have more than half of its fuel left. So no, the problem is not half-solved.
Fourth, Category II is not an airport safety issue. If it were, then why couldn't we have PAL fly from Cebu or Davao instead? It is a regulatory issue, and airport safety is merely a part of it, as are fleet maintenance, regulatory inspections, pilot training, etc.
Also, I am extremely confused with the writer's contention that some prerequisites to a category upgrade such as pilot training, would take more than a lifetime to achieve. Putting up a pilot training school does not take a lifetime. In fact, there are a couple schools that train pilots already. CAE already has a pilot training school in the boondocks, if you want better reputation than PAL's. The government already trains pilots in the military. And if that weren't enough, what about the countless pilot training schools in southern Florida and the rest of the world? It is quite typical for countries without the infrastructure to send their pilots to other places for training, ie Singapore to Australia (although Singapore has lots of pilot training schools), even India to the Philippines. So why is this guy ranting as though Filipino pilots are immobile and can only train in the Philippines?
Lastly, there is something more than just "airport safety" that CAT-II implies. And that is the adherence to an international aviation standard that the Philippines badly needs. If anything, our compliance is not for the good of the US airlines flying into the Philippines. It is for our own people flying in safety as international aviation standards dictate. If we had not been downgraded, we wouldn't have been whipped into shape. Shouldn't we think about those benefits? Also, US airlines are not having a grand time flying into the Philippines. There's probably just three who do. Delta, United and Hawaiian. Hawaiian is pulling out in June or July. United flies a 737 from Guam. PAL flies to San Francisco, LA, Vegas, Honolulu and Guam. And it carries more people between the US and the Philippines, than all of these three American airlines combined. So categorically, PAL is having a grand time flying to the US, not the other way around.
I hope someone could send this reaction to this writer. Such a terrible, terrible writer.
A classic biased and poorly written article indeed. I agree with you, CAT-II is a regulatory issue, and it doesn't necessarily concerns airport safety. The only thing that the FAA/ICAO is concerned of regarding airports are the navigation aids, runways, aviation security etc. not the airport terminal itself. Airport terminal issues are handled by the IATA.
ReplyDeleteWith regards with pilot training, the media clearly underestimated the capabilities of Philippine aviation schools. Foreigners (mostly from India, Europe and US) choose to take up their training here not only because it is cheap because majority of our instructors are highly experienced pilots with thousands of hours of flying time some of them are from the military before taking up civil aviation. When I took up a licensure exam at CAAP, I was surprised that there are few Filipinos lining up on the waiting area most of us are foreigners. Foreign aviation schools, despite the modern infrastructure have few students compared here in the Philippines, because in abroad you spend most of your time in a simulator unlike here you spend more time in actual flying than in a simulator.
And look what foreigners are saying if there are emergency situations and Filipino pilots successfully solved it, "Filipinos are not only good pilots they are also good landers" for example the PAL 747 emergency landing in LAX. Despite some of the tires burst before landing, our pilots landed it safely and smoothly with no damages at all.
To our Philippine media, do your research first, maybe interview some highly experienced aviators, don't be just an airline passenger be an observer also.
The article posted above is not a news story but an opinion expressed by the writer. While comments posted have basis, the man is also entitled to present his own view on what he perceived to be as the problem sans technical merit. Perhaps you can give him some slack.
ReplyDeleteRSA and his team incl. Lester Ingram who comes from General aviation, do not know what they are talking about! PAL will become the Waterloo of RSA sooner than later!
ReplyDeleteoh whatever. you don't cut slack on people who voice opinions with very little factual basis. and on national newspaper too. if that were the case, my next door neighbor should have a recurring article for the inquirer then.
ReplyDelete