FedEx adieu

FedEx flies out to China

Written by Henry Empeño / Correspondent

Monday, 09 February 2009 22:30

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

Cebu Pacific is the biggest domestic carrier

February 10, 2009

MANILA, Philippines- Civil Aeronautics Board declared the Gokongwei led Cebu Pacific as the biggest domestic carrier in the Philippines flying 5.4-million domestic passengers in 2008.

The airline carried half a million passengers more than the combined traffic of both Philippine Airlines and its low-fare carrier PAL Express at 4.9 million passengers. Air Philippines carried 913,570; Zest Air, formerly known as Asian Spirit had 374,145 passengers; and Seair flew 217,885 passengers, respectively.

Cebu Pacific had a 45.6-percent market share last year which is better by 2.6-percentage points from the previous year’s 42.9 percent made in 2007. Airline CEO, Lance Gokongwei, previously declared that they intended to fly 6 million passengers for 2008. Philippine Airlines counter offer to the passengers made that projection almost impossible to met.

Candice Iyog, Cebu Pacific vice president for marketing and distribution, said her company expects to continue expansion as it takes delivery of six more aircraft this year, with three Airbus A320 and three ATR 72-500. The airline took delivery of 10 brand-new aircraft in 2008, which were used to fly to new domestic and international destinations, as well as adding frequencies to existing routes. It also opened operational hubs in Clark and Davao.

The airline increased its total number of domestic destinations to 27 in 2008 from 20 in 2007 and it also added routes from 28 in 2007 to 39 in 2008. Cebu Pacific hopes to carry more than 9 million passengers with the arrival of six brand-new aircraft this year.

The airline has the youngest aircraft fleet in the Philippines and it flies to 15 international cities and 27 domestic destinations.

The CAB earlier projected that the domestic air travel would expand between 8 percent and 11 percent this year.

PAL picks Leo Burnett

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JAIME BAUTISTA, PAL president and CEO (sixth from right), and Raymond Arrastia, Leo Burnett managing director (seventh from left).

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Marjorie Teresa R. Perez (joyetteperez@yahoo.com)

Monday, 09 February 2009 22:43

Philippine Airlines, the country’s primary flag center, has appointed Leo Burnett Manila to handle creative duties for the airline, following a pitch that included BBDO and O&M.

Leo Burnett will develop through-the-line communication solutions that will focus on the extraordinary competitive advantage that PAL currently enjoys.

As PAL’s creative partner, Leo Burnett is expected to address the airline’s challenge of finding a compelling, unique and differentiating space in the minds of air travel consumers.

Jaime J. Bautista, PAL president and COO, said: “We are excited to partner with Leo Burnett as we retool our marketing strategy to emphasize the truth—PAL gives the consumer so much more value for the same prize. We were impressed by the agency’s deep understanding of the air traveler and the consumer environment we are in right now.”

On joining the select agency roster of PAL, Raymond Arrastia, Leo Burnett managing director, said: “The strategic thinking we presented was anchored on our new Humankind philosophy. We developed communications solutions always with the human purpose in mind.”

Philippine Airlines, Asia’s first airline, has a 68-year history steeped in tradition and modernity. As the national flag carrier of the Philippines, PAL exudes the best of Filipino hospitality—warm smiles, attentive service and sincere friendship.

PAL serves 54 destinations—30 domestic and 24 international points in 13 countries and territories, and has code-share arrangements with nine regional airlines to allow it to link Manila and Cebu with 16 domestic and 11 international points.

PAL operates one of the youngest and best-maintained fleets in the region with a total fleet of 47 Boeing, Airbus and Bombardier aircraft.

In May 2008, PAL broke new ground when it launched a sub-brand for the first time in its history: PAL Express. The new unit flies a fleet of eight Bombardier Q400 and Q300 turbo-props to mostly island destinations and secondary routes throughout the Philippines.

Today’s PAL’s service had been enhanced to an even higher level. Passengers can look forward to reliable schedule punctuality, thoughtful inflight service, award-winning cuisine, and one of the industry’s most generous frequent-flyer programs in Mabuhay Miles.

Philippine Airlines looks back at a proud legacy of service to the nation and to a future where it will soar once more among the leading airlines of Asia. - Businessmiror

Subic bids farewell to Fedex Asian hub

Politics killed FedEx Subic dream!

February 6, 2009

SUBIC BAY, Philippines — US cargo giant FedEx closed its Asian hub early Friday with the last flight, an Airbus 310, leaving for Taiwan just before dawn.
It will relocate to its new $150 million investment on an 82,000 square meter Guangzhou facility, which sits on 63 hectares Guangzhou Baiyun International Airport hub in Southern China.
Subic Bay administrator Armand Arreza said that February 5 was the last night of its full operation as an Asian hub. The FedEx hub, which began operations in May 1995, earned the Subic Bay authority about 150 million pesos (3.2 million dollars) from landing fees and warehousing in 2008 alone. It occupied 300,000-square foot facility and employed close to 800 people at its peak operation in 2004. Its final transition will be effected in April.

David Cunningham Jr., FedEx Express President for Asia Pacific, announced plans for a new FedEx Asia-Pacific Hub in Guangzhou in 2005. The company's lease contract in Subic expired in 2005 but was extended for another 5 years and was supposed to expire in 2010 but Fedex opted to end the contract earlier in 2007 as it wanted to consolidate its business operation in the Asia Pacific region in its planned China hub.

FedEx's has been one of the first locators in Subic Bay in Zambales province since the former American base was rehabilitated after the Mount Pintubo eruption in 1991. Senator Richard Gordon, then SBMA Chairman, lured Fedex to relocate in Subic after the United States closed its military bases in the Philippines in 1992. From its strategically located main hub in the Philippines, FedEx served more than 14,000 stations across Asia.

Its growing operational capacity for long term operations proved inadequate for Subic airport. As it plan for major expansion in 2004, Fedex was caught in a political struggle between SBMA and CIAC with the latter wanting them to relocate to Clark for its expansion. Meanwhile, SBMA wanted to expand its airport but was shutdown by Malacanang in favor of Clark airport. In the end political disputes led FedEx to consider alternative locations according to its local representative in the Philippines.

Chairman Arriza declared that the main reason for relocation is operational efficiency, as the market in China is way bigger than the entire market of Southeast Asia, and with plenty of space to grow Guangzhou airport fits the bill from the large cargo volume in China alone which Subic doesn't have.

The new Guangzhou hub will be FedEx's largest overseas facility outside the US. It will connect 24 major cities in more than 220 countries in the region where FedEx has had operations.

Kingfisher seeks to delay delivery of A380s

Is PAL A380 on the cue?

February 5, 2009

Indian carrier Kingfisher Airlines Ltd. has been speaking to Airbus since early last year to try and defer again by two years the delivery of its huge Airbus orders, including that of the A380s amidst huge losses sustained by its fuel hedging strategy as a result of global fuel and financial crisis that swept the airline industry.

According to Flightglobal, A spokesman for Kingfisher in Mumbai officially broke the news that it wants to delay the deliveries of A380. He did not made comment when asked if Airbus has agreed to this request. The aircraft was proposed to be operated non-stop from India to the USA.

In 2005 the airline ordered five A380s for delivery in 2010 but production delays at Airbus slipped its delivery dates to 2011. Last year, Kingfisher's chairman Vijay Mallya told Indian media that the delivery date had been pushed back again to 2012 at the behest of the airline.

The airline already announced late last year that it would be scaling back its international expansion plans and would instead codeshare some of the international flights with its Indian rival Jet Airways. It has already delayed the delivery of some other aircraft from Airbus such as Airbus A320s and Airbus A340s.

It flies internationally to London Heathrow and Colombo. Kingfisher was hoping to launch services to San Francisco and several other international destinations, mostly in South Asia and Southeast Asia.

The Kingfisher slot was offered to Philippine Airlines in December at the time when it denied rumors of delivery deferment. Offers to Asia's first Airline is yet to be answered as its President continue to be mum about it.

A recent report of the International Air Transport Association (IATA) had said Asia Pacific airline losses might reach $1.1 billion in 2009, with 2009 described in wire reports by Iata director-general Giovanni Bisignani as “the toughest revenue environment”.

The Philippines however managed to be the single bright spot in Asia Pacific as it managed to grow by almost 10% as of September last year. CAB was upbeat that it would probably be more than that since the last quarter is always the peak season in Philippine Aviation.

John Leahy, Chief Operating Officer of Airbus said that if PAL were to place an order for A380 in December it would only get delivery of the plane in 2014. But with numerous deferments of delivery from Malaysia Airlines to China Eastern, PAL might have it by 2012 if orders are made within the next 6 months. With interest so low, the A380 might not be too far fetched for PAL. "So I’m very hopeful about the future, [and] expect that, especially in Asia Pacific, the market will stay stronger than ever.” said Leahy.

Philippine Airline was favored by unprecedentedly low interest rates in airline finance, and got a 2.3 percent rate from Calyon/Credit Lyonnais, for 12 years, to fund acquisition of the 156-seater, $77-million A320. The airline’s single-aisle fleet now has 22 aircraft, with 11 brandnew A320s, four A319s and seven older A320s. The delivery completed PAL’s $840-million order of 15 aircraft from Airbus over three years. It is also exercising its option for two more A320s for delivery in 2010, with a further option of three more planes for delivery in 2011.

With one piece of the puzzle solved, the ball is now with the captain that runs it.

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Philippine Airlines loses sight on Saipan

Hopes dim for Northern Marianas service

By Moneth Deposa
Saipan Tribune
Reporter

Philippine Airlines may not be extending air services to the Commonwealth of Marianas Islands, according to the Marianas Visitors Authority.

MVA managing director Perry Tenorio said the CNMI has not received any communication from the Philippines' flag carrier regarding the revival of the flight service.

Although it may help CNMI tourist arrivals, Tenorio said the agency is not banking too much on the idea because the CNMI “lost” its potential market from the country when Manila opened its testing facilities for the National Council Licensure Examination for nurses last year.

Last year, PAL president and chief executive officer Jaime J. Bautista was quoted in a newspaper report that the airline company plans to have flights to Saipan, San Diego, Chicago, New York, and Seattle.

“MVA is not aware of any plan [of Philippine Airlines].and if that opportunity comes up, we need to evaluate fully well the impact on our tourism,” he said, noting the decline in arrivals from the Philippines, which usually sends hundreds of nurses to the island to take the NCLEX.

“Our goal [for the Philippine market] is like educational tourism for NCLEX.but since Manila opened its testing facilities we lost the only important component in keeping that market,” Tenorio said.

The CNMI recorded a 71-percent drop in arrivals from the Philippines after the nursing test was offered in Manila beginning August 2007. Before that, MVA posted 461 nurses who took the exam on Saipan the previous year.

Between August 2007 and July 2008, only 130 Filipino nurses took the exams at PearsonVue testing center in Garapan.

Nurses from the Philippines and other foreign countries need to take and pass the NCLEX to be eligible to practice in the U.S. and its territories, including Guam and the CNMI.

Between 2002 and 2008, the CNMI nursing board recorded 1,557 foreign nurses taking the exams on Saipan.

Barely a year after NCLEX was offered in the Philippines, the number of nurses who opted to take the test in Manila shot up to 20,410, resulting in the lower number of nurses taking the NCLEX on Saipan and in other areas like Hong Kong.

The drastic drop in the number of Saipan-bound nursing graduates from the Philippines was one of the major reasons cited by Continental Micronesia when it discontinued direct flights between Manila and Saipan effective July 16, 2008.

Delta to reduce Manila frequencies

Written by Ma. Stella F. Arnaldo
Special to the Business Mirror

Monday, 03 February 2009



DELTA Air Lines Inc. will keep the Manila route it inherited from its merger with Northwest Airlines, but reduce its frequencies.

Maria Schnabel, external publicist of the Atlanta-based airline, said: “Delta/Northwest plans on maintaining the [Manila] service from both Narita and Nagoya [Japan].”

But flight frequencies between Manila and Nagoya will be reduced from seven to five times weekly starting on Tuesday. According to Hiroko Tanaka, manager for Pacific corporate communications of Northwest Airlines, the Manila-Nagoya flights are now available on Monday, Thursday, Friday, Saturday and Sunday, while Nagoya-Manila flights are on Monday, Tuesday, Friday, Saturday and Sunday. “The Narita-Manila flights remain daily,” she stressed.

Reductions are also imminent for Delta Air’s other Asian markets, Schnabel said, “to adjust to the new economic outlook and its effect on air travel. Other Asian markets will experience reductions in gauge or frequency.” The World Tourism Organization has projected international travel to grow between zero and 2 percent this year.

Continental Airlines and Hawaii Airlines are the other US carriers, which fly to Manila from Guam, and Honolulu, respectively.

Delta Air merged with Northwest in October 2008, with the former as the surviving entity. Complete integration of both carriers’ systems is seen lasting until the end of 2009. With the merger, Delta Air is now considered the largest carrier in the world.

About 6,000 jobs were cut after the merger last year, with Delta Air eyeing another 2,000 by the end of February. Delta Air announced last week that it would be decreasing its flight capacity to 8 percent this year by eliminating about 50 aircraft from its fleet. Travel demand is projected to slacken this year as the global economic crisis deepens.

Schnabel said the Manila office of Northwest, which Delta Air will takeover, is not expected to be affected by any ongoing staff cuts. “While full integration of Northwest into Delta will take time and will be completed through a thoughtful integration process over the next 12 to 24 months, Delta does not anticipate the need for involuntary furloughs of current Northwest employees in Manila as a result of the merger.” There are 200 employees in Northwest’s offices in Manila.

Pending the complete integration, Delta Air and Northwest will continue to operate as separate airline systems, with their own web sites, reservation systems and mileage membership clubs.

“During the integration period, Delta and Northwest will continue to operate their own branded aircraft until the integration process is complete,” said Tanaka.

For her part, Schnabel assures Northwest’s Philippine customers that “it’s business as usual, as we combine to create a premier global airline with a leading presence in the world’s major markets and a best-in-class loyalty program. We’re working hard to ensure that the merger is smooth, seamless and delivers even more benefits to [our passengers].”

She added: “Delta Air is very pleased with the current Manila-Narita and Manila-Nagoya flights. Besides Manila-Nagoya going to five times weekly, Manila customers should not expect major changes to the flight schedule or fleet in the short term.”

According to Delta Air’s web site, Northwest’s frequent flyer program called WorldPerks will continue to operate separately from Delta Air’s SkyMiles, but “will eventually be consolidated into one best-in-class loyalty program by the end of 2009.”

Schnabel said the merger is expected to boost Delta’s edge over other US carriers operating in Asia. “Delta is committed to growing our number one position in Asia [among US carriers],” adding that the carrier “has an accelerated timetable to implement network changes in the Asia-Pacific region. Most gauge changes will take place between April and June.”

RP, UAE expand flight frequencies

Written by Lenie Lectura
Business Mirror
Friday, 30 January 2009 01:41

THE Philippines and the United Arab Emirates (UAE) agreed on Thursday to expand their flight frequencies, an official of the Philippine air panel said.

Civil Aeronautics Board (CAB) executive director Carmelo Arcilla, in a text message, said there is a need to amend the air-services agreement between the Philippines and the UAE to service the growing demand for flights from the tourism and business sectors between the two countries.

The two-day air talks resulted in additional five flight frequencies a week to Manila from the current nine flights, said Arcilla. The current flights are broken down to five flights between Manila and Dubai and four between Manila and Abu Dhabi.

The Philippine Airlines’ (PAL) total entitlements are under code share with Emirates and Etihad, bringing up their weekly flights to 10 and eight, respectively.

From the current five, both panels agreed to add 42 weekly flights to Clark and with fifth-freedom rights. Fifth-freedom flight basically 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.

Fifth freedom traffic rights on 14 weekly frequencies to and from the Diosdado Macapagal International Airport in Clark were given to the two UAE airliners. Each one was granted seven weekly frequencies. Air Arabia was given 14 frequencies.

Meanwhile, flights to Cebu total 21 a week.

The Philippines was also granted 21 more flight frequencies to be used to other points other than Manila, Clark and Cebu.

An item in the Confidential Memorandum of Agreement signed following the conclusion of the air talks states that “in the case of the UAE, the two delegations agreed to allocate the above 42 additional weekly frequencies to and from Clark as follows: 14 frequencies for Category 1 Route 1 to which Emirates Airlines is entitled to; 14 frequencies for Category 1 Route 2 entitled to Etihad Airways; and, 14 frequencies for Category 1 Route 3 allotted for Air Arabia.

“The delegations further agreed that the designated airlines of the UAE shall have the right to exercise full fifth freedom traffic rights only up to 14 weekly frequencies between any intermediate point or points and DMIA (Clark) only, and any point or points beyond, except Japan, the US and Canada.”

Arcilla led the Philippine air panel, with representatives from the Departments of Foreign Affairs, Tourism and Trade, as well as from the Diosdado Macapagal International Airport in Clark. It also includes representatives from PAL and Cebu Pacific for passenger carriers and PEAC for cargo carriers.

The UAE panel was composed of representatives of the UAE civil aviation authority and its designated carriers—the Dubai-based Emirates and the Abu Dhabi- based Etihad airlines.

Business groups earlier welcomed the aviation talks, saying this will enable businesses, particularly in the Philippines, to flourish while serving overseas Filipino workers.

Elizabeth Lee, chairman of the Management Association of the Philippines’ Trade and Industry Committee, had said the air talks is good news because “air travel serves as a vital medium for business.”