ICSID did not say pay Fraport

By Tetch Torres

January 5, 2011

MANILA, Philippines— Solicitor General Anselmo Cadiz on Tuesday said the decision of an international arbitration body on the construction and operation of the Ninoy Aquino International Airport Terminal 3 was based on a procedural ground and did not say that the Philippine government should compensate Fraport AG Frankfurt Worldwide Services.

Cadiz said that the ad hoc committee’s decision did not say that Philippine government should compensate Fraport.

“Rather the decision merely provides Fraport the opportunity to commence a new arbitration and to present its claims again. Likewise, the Philippine government is entitled to present the evidence against Fraport again,” the chief state lawyer said.

An ad hoc committee of the US-based International Centre for Settlement of Investment Disputes (ICSID) annulled on December 23 the ICSID Award of August 2007 based on the Committee’s conclusion that the ICSID Tribunal failed to provide enough opportunity for the parties to comment upon the evidentiary record before the DOJ Special Prosecutor in the Anti-Dummy Law criminal proceedings.

Fraport is the primary investor in PIATCO, which bagged the contract to construct and operate the NAIA Terminal 3.

“With the annulment decision, the parties are brought to the situation prior to the filing of Fraport’s request for arbitration,” Cadiz clarified.

Since 2002, the construction and operation of the NAIA Terminal 3 have been the subject of a string of civil and criminal investigations due to allegations of violations of Philippine laws by PIATCO and Fraport.

The Senate Blue Ribbon Committee issued a report in December 2002 concluding that the Terminal 3 concession was void because PIATCO violated the Build-Operate-Transfer (BOT) Law and attempted to buy government approvals through a consultant.

Then, in 2003, the Supreme Court ruled that the Terminal 3 concessions were null and void ab initio due to PIATCO’s violations of the Constitution, BOT Law, banking laws and public policy.

Palace unfazed by NAIA-3 setback

Decision not Unfavorable to the Gov't

By Aurea Calica

January 04, 2011

MANILA, Philippines - Malacañang is unfazed by a recent decision of a Washington-based international arbitration body, which gave German firm Fraport AG a legal victory in the dispute over the Ninoy Aquino International Airport Terminal 3 (NAIA-3).

The ruling of the International Center for Settlement of Investment Disputes (ICSID) allows Fraport AG to initiate another case against the government because it was not given a chance to review a Department of Justice (DOJ) decision on the anti-dummy case filed against the company.

Presidential spokesman Edwin Lacierda said the decision would not affect the government’s possession and operation of the NAIA-3.

Malacañang has not yet been furnished a copy of what Lacierda said appeared to be a “procedural” rather than “substantive” decision.

Lacierda emphasized that the government had earlier won its case against the Philippine International Air Terminals Co. (Piatco) before the Singapore-based International Chamber of Commerce.

“The decision in Washington… first of all, we don’t have a copy yet but our understanding (is) it was more procedural than substantive,” he said.

“So it will not affect our right of possession of NAIA 3. Remember that the Singapore decision has not been reversed. We received a legal victory in Singapore so it does not affect our right to possess and operate NAIA 3.”

Lacierda said the government would not stop the operations of NAIA 3 because of the ICSID decision.

“There’s a Singapore decision and Piatco was the complainant in that Singapore decision,” he said.

Lacierda said the government was still studying the full operations of the terminal because of problems in maintenance.

“In fact, we’re in the process of repairing some of the areas which were found to be defective so we’re working on that,” he said.

Lacierda said Transportation Secretary Jose de Jesus would have to discuss the timetable as regards NAIA 3’s full operations.

“What we have right now in the Pasay court is only the issue of fair value, of just compensation,” he said.

“That’s the only issue that we are aware of, so it does not affect our right, in fact, that’s part and parcel of expropriation.”

Sources privy to the ICSID decision said the German firm Fraport AG could be allowed to initiate another case against the government because it was not given a chance to review a Department of Justice decision on the anti-dummy case filed against the builder of NAIA 3.

“So the ICSID decision is not necessarily unfavorable to the government,” a source said.

“The ball is now in the court of Fraport. It can file another case, file the necessary fees and the government can present stronger evidence against it, that it conducted business here not in accordance with law.”

Fraport and Piatco are seeking payment of expenses incurred in the construction of NAIA Terminal 3.

The ICC decision is final and executory and should pave the way for the full operation and grant of legal right by the government to airport terminal concessionaires.

Three foreign airlines are currently building their business lounges at the international wing of Terminal 3.

Presidential Communications Secretary Ricky Carandang said the NAIA 3 case has different aspects and these were not “directly related.”

“So those are rulings on three different aspects of the case, which don’t necessarily contradict each other,” he said. “We want to see it opened this year but it’s difficult to pin down the exact dates because there are many things that need to be ironed out.

“But with the major rulings in our favor, then we can express some confidence. And again, as Secretary Lacierda said, we’re hopeful that it can be opened within this year. Whether it’s the beginning of the year, middle of the year, or end of the year is difficult to say.”

The ICSID had ruled in favor of the Fraport in a case involving NAIA 3.

Sources privy to the ICSID decision said its was voided, but it was not yet known if in whole or in part since a copy was not yet available.

Then Justice Secretary Raul Gonzalez had ruled that Fraport was not covered by the anti-dummy law but this decision remained under review.

Last Aug. 16, 2007, the ICSID dismissed the claim for compensation over the NAIA 3 project, clearing the way for the eventual operation of the facility. The ICSID decided it lacked the jurisdiction to hear Fraport’s claim brought against the Philippines in 2003.

But this was annulled in a Dec. 23, 2010 decision, the sources said.

Fraport, principal investor in the Piatco consortium that built NAIA 3, went to the World Bank-ICSID to recover the $425 million that it said it had invested in the project after the Philippine government seized the terminal in December 2004 following the Supreme Court’s voiding of the Piatco contract to build and operate the terminal.

The German firm also claimed protection for its investment under a bilateral investment treaty between Germany and the Philippines.

ICSID is an arbitration body set up by the World Bank to facilitate the settlement of investment disputes among member countries.

Then Solicitor General Agnes Devanadera said the moral victory which the government won in the eyes of the world was “the bigger victory” as Fraport had made the allegation that it was the Philippine government, its institutions and officials that had committed fraud.

“But in this case, the allegations of the Philippine government were actually affirmed and upheld by the ICSID, saying that the case filed by Fraport must be dismissed because in the first place, Fraport made a lot of violations of the laws of the Philippines,” she said.

German envoy wants to revive negotiations on NAIA 3

Negotiation the best option

January 4, 2010

MANILA, Philippines - Germany's ambassador on Tuesday urged the Aquino administration to put an end to the ownership dispute over the Ninoy Aquino International Airport Terminal 3 (NAIA 3) by reviving negotiations among the parties involved in the case.

In a statement, German Ambassador Christian-Ludwig Weber-Lortsch said the legal battle over the Manila airport terminal could run for years, "leaving the infrastructure project shelved by lawyers instead of being finished by engineers."

"As a way out of this impasse, I am still optimistic that the new administration, in line with its investment priorities, will bring the parties involved to the negotiating table in order to facilitate a legal, fair and timely solution for an inherited problem," he said.

An ad hoc committee of Washington-based International Centre for Settlement of Investment Disputes (ICSID) recently overturned an August 2007 decision which dismissed German firm Fraport AG's $425 million claim over NAIA 3.

Fraport filed a case with ICSID in September 2003 to seek protection for its investments in NAIA 3 after the Philippine government unilaterally cancelled the contract awarded to airport builder Philippine International Airport Terminal Co. (Piatco), the consortium where Fraport has a 30% stake. Piatco and Fraport officials have been accused of violations of the Anti-Dummy Law and the Anti-Graft and Corrupt Practices Act.

The ad hoc committee of the ICSID said Fraport was not given a chance to review a Department of Justice decision on the Anti-Dummy case filed against the company.

With the recent ICSID ruling, Fraport may again sue the Philippine government.

Malacañang said, however, it was unfazed by the legal setback, and that it was still eyeing NAIA 3's full operation this year.

NAIA 3 operations illegal

The German ambassador said current operations and tenant agreements on NAIA 3 are "illegal" as Piatco, Fraport and the German government, as guarantor, reserve all rights over the airport terminal.

"The Philippine Supreme Court clearly stated that no acts of ownership are allowed until full payment of just compensation by the government to PIATCO and its investors," Weber-Lortsch said.

However, the government said ongoing expropriation proceedings grant it the right to take over NAIA 3.

"Ang rule sa expropriation, once the government files its expropriation proceedings, entitled na siya to possession. Meron nang deposit of so much amount. 'Yun ang ginawa even before our time kaya na-operate ang NAIA 3 partially," Executive Secretary Paquito Ochoa told reporters.

Ochoa added that the recent ICSID ad hoc committee's decision has no impact on NAIA 3 operations.

"It has no effect as far as we are concerned. That decision has no effect on the operations of NAIA 3," Ochoa noted.

Ochoa said the Palace is still studying whether the government would file an appeal.

In a separate statement, Solicitor General Joel Cadiz said the ICSID decision was based on a procedural ground and does not validate Fraport's claim for compensation.

"The decision merely provides Fraport the opportunity to commence a new arbitration and to present its claims again."

"The Philippines therefore retains the right to reassert all of its defenses against Fraport's claims, including its arguments relating to Fraport's violation of the Anti-Dummy Law and anti-corruption laws."

NAIA 3's was opened in July 2008, and is currently operating at only half capacity. Only Philippine Airlines and Cebu Pacific are using the terminal.

The opening was supposed to have been held in March 2006, but a 100-square meter part of NAIA 3's arrival area collapsed.

Fraport wins NAIA 3 appeal

As Saga Continues

By Lala Rimando and Willard Cheng

January 3, 2010

MANILA, Philippines – An international tribunal has favored German firm Fraport AG in a case involving its reimbursement claim for its $425-million investment in NAIA-3, an international airport terminal facility in Manila.

According to the website of Washington-based International Center for the Settlement of Investment Disputes (ICSID), the decision was handed out last December 23, 2010.

According to abs-cbnNEWS.com sources intimately familiar with the case, the new decision favored Fraport which asked for the annulment of a previous ICSID decision that set aside Fraport’s $425 million claim from the Philippine government.

This brings the case back to square one.

This could also mean another legal setback to the Aquino government, which has been raring to fully operate the airport terminal to improve airport services in the country’s main gateway.

Solving NAIA 3’s many problems was one of the priorities of President Benigno Aquino III and his economic team who have vowed to show they can get their act together as they woo foreign investors to participate in funding and building key infrastructure projects.

Square one

Fraport AG Frankfurt Services Worldwide may opt to sue the Philippine government one more time at ICSID, a World Bank arm based in Washington DC that serves as an impartial forum for disputes between foreign investors and their host countries.

Fraport, a leading airport operator from Germany, filed a case with ICSID in September 2003 to seek protection for its investments in NAIA-3 citing the bilateral investment treaty between Germany and the Philippines. It said it had already spent $425 million in equity and shareholder loans.

The Philippine government unilaterally cancelled the contract it awarded in 1997 to Philippine International Airport Terminal Co. (Piatco), the consortium where Fraport, the foreign partner, has a 30% stake. A month after, in May 2003, the Supreme Court upheld the contract cancellation, citing irregularities in the contract amendments, among others.

The latest ICSID decision overturns the August 2007 decision by another set of arbitrators who had favored the Philippine government then.

The original set of arbitrators – composed of 3 individuals from Canada, Spain and US – had ruled that ICSID has no jurisdiction over the case since Fraport was found to have violated Philippine laws that limit foreign ownership and control of a facility like an airport terminal.

In a strongly worded decision, the arbitrators then wrote, “An investor that contravenes the law of the Host State of the investment must expect to suffer the consequences prescribed by law."

However, Fraport questioned that 2007 decision and asked the tribunal for a second set of arbitrators – an ad hoc committee – to review and annul the 2007 decision.

The ad hoc committee – composed of 3 individuals from Slovakia, France and New Zealand – reportedly found that there was a procedural lapse when the first set of arbitrators allegedly failed to allow Fraport to produce documents pertaining to agreements among Piatco shareholders.

These secret agreements between the Filipino shareholders (the Cheng family) and the foreign partner (Fraport) discussed how the German firm, which took care of most of the financing requirements during the building phase, would eventually assert financial and managerial control of the airport facility.

The Philippine Constitution and the Anti-Dummy Law require that only Filipinos could control a public facility such as an airport terminal.

Gov't to continue operating NAIA 3

Meanwhile, the government will continue to operate NAIA 3 despite the nullification of the ICSID decision that Fraport and Piatco violated the Anti-Dummy Law, presidential spokesperson Edwin Lacierda said Monday.

“We maintain and continue to possess NAIA 3. The decision in Washington— first of all, we do not have a copy yet—but our understanding, it was more procedure than substantive. So it will not affect our right of possession on NAIA 3."

Lacierda said Malacañang is hoping that NAIA 3 will be fully operational within this year.

Costly battle

The legal cases that have hounded NAIA-3 have made this terminal facility one of the government’s most expensive – if not the most expensive – legal battle.

The Arroyo government has hired individuals and a foreign law firm with expertise in international arbitration proceedings. Aside from Fraport’s $425 million suit (est. P18 billion) at ICSID, Piatco also made a $565 million compensation claim (est. P25 billion) before the International Chamber of Commerce (ICC) in Singapore.

Last July, barely a month after the Aquino government took over, ICC handed a decision in favor of the Philippine government.

Based on several accounts, the Philippine government, through different agencies, has spent about P2 billion since the local and international cases commenced in 2003.

Bolstered by the ICC decision in July 2010 and ICSID’s in 2007, the Aquino government has been proceeding with efforts to settle the “just compensation” issue with Piatco and Fraport. Talks between the government, Piatco and Fraport are part of the local court-supervised valuation of the terminal building.

The Aquino government hopes to complete the repair of some parts of the facility that are not strong enough to withstand tremors, and to fully operate the terminal by end-2011.

After repairs have been completed, the transportation department plans to bid out the operation and management of NAIA-3 to a private firm.

But as legal and compensation issues remain pending, Piatco continues to assert itself. It has asked the tenants, including Cebu Pacific, one of the two local airlines operating at NAIA-3, to remit lease payments to Piatco or face eviction.

Sumitomo wins $100 Million Radar Deal

December 28, 2010

Tokyo - Japan’s Sumitomo Corporation has won phase one of the ¥9-billion ($220 million) contract to upgrade air traffic control systems for the Philippines along with the construction of the Air Traffic Control Center at the NAIA Complex.

Sumitomo Corporation has formed a consortium with Thales Australia Ltd. , the Australian subsidiary of leading French electric company Thales SA, to deliver $100 millions worth of next-generation air traffic control systems for the Philippines' Department of Transportation and Communication (DOTC)'s Communications, Navigation, Surveillance/Air Traffic Management System (CNS/ATM) project.

The company won from among three other bidders that were invited by DOTC for the supply/installation of new communications/navigation and air traffic management systems .

The invited bidders were Kanematsu Corp. and Selex Sistemi Integrati of Italy; Marubeni Corp. and Indra Sistemas, a Japanese-Spanish joint venture; Sojitz Corp. and Raytheon, also of Japan; and Sumitomo Corp. and Thales Systems, another Japanese joint venture, this time with a French group.

The introduction of the next-generation air traffic control systems has been divided into two packages and to be implemented in a phased manner.

Package one costs $100 million that covers for the supply and installation of air traffic management automation system and ATM automation center; communications; navigation signal monitoring system and meteorological system.

Components in Package 1 are Construction of a new air traffic control center building within the Ninoy Aquino International Airport in the Philippines, and delivery of air traffic control systems (including systems for communications, aeronautical information processing, satellite signal monitoring, and weather) at the new air traffic control center and major airports in the Philippines (about 25 sites).

The project is set for completion within 30 months, or by May 2013. Sumitomo Corporation said it will aim to also win the contract for Package 2.

The second part that will cost $120 million is for the supply and installation of automatic dependant surveillance-broadcast (ADS-B) ground station; en-route radar mode; terminal radar; VHF terminal and remote control air-ground communication facility; microwave link and very small aperture terminal or VSAT.

Components in Package 2 includes Installation of radars at major airports in the Philippines (about 10 sites), and delivery of communications equipment to connect the air traffic control center introduced in Package 1 with major local airports.

The International Civil Aviation Organization (ICAO) has recommended a shift from traditional air traffic control systems, dependant on voice and radars, to a new system mainly based on digital data that uses geolocation satellites including GPS satellites.

In the meantime, the Philippines has been faced with the issue of aging air traffic control systems despite being in an extremely important position connecting Japan, China and South Korea with the ASEAN nations.

In the late 1990s, the Philippine Government decided to introduce a next-generation air traffic control system. The Japanese Government also considered this an ODA issue.

In 2002, the Japan International Cooperation Agency (JICA) concluded a contract to provide yen loans amounting to approximately 22.0 billion yen to the DOTC.

The completion of a safe and advanced air traffic control system with the support of the Japanese Government, preparing for the forecast increase in demand for air travel, will have great significance in terms of safety and efficiency not only for the Philippines, but also for nations around the world, including Japan.

Thales is the world's number one distributor of air traffic control systems. In fact, about half the airplanes flying worldwide are controlled by Thales' air traffic control system. With this project, Sumitomo Corporation will actively enter the field of air traffic control systems development, partnering Thales and contributing to airline safety and efficiency across Asia.

DOTC says Panglao still best location for airport

Despite Consultants contrary stand

By Ronnel Domingo

December 27, 2010

MANILA, Philippines—Despite opposition by civil-society groups, the Department of Transportation and Communications is keen on building a new international airport on Panglao Island instead of any other location in Bohol as based on requirements of navigational safety.

Rolando G. Tungpalan, deputy director general of the National Economic and Development Authority, said in an interview that the DOTC was reviewing the feasibility studies on the proposed airport—something that critics and even NEDA itself have asked to be done.

“The review is ongoing, but as of today [the DOTC] believes Panglao is the best possible location for the airport,” Tungpalan said. “It has something to do with the terrain and wind patterns.”

Even then, Tungpalan—who is responsible for investment programming—said there was no final and definite decision on the location yet.

In 2009, the NEDA’s investment coordination committee-Cabinet committee gave the green light to the proposed increase in the cost of the Panglao Island airport development project.

Changes in the design, increased prices of needed supplies and the acquisition of an additional 14.5 hectares of land pushed up the project cost to P7.54 billion, or 76 percent more than the original P4.27 billion.

According to the Neda ICC-CC, the project was approved on condition that the provincial government of Bohol was to conduct another multisectoral consultation to address ecological or environmental issues.

Earlier, a group of academics, lawyers and religious Bohol natives based in Metro Manila renewed its call for the government to “not rush” the planned international airport on Panglao Island as the state prepared to bid out a contract as part of a package of partnerships with the private sector.

In a letter to Transportation and Communications Secretary Jose P. de Jesus, University of the Philippines economics professor Ernesto M. Pernia said public consultations were not properly carried out and the feasibility study on the geologically unsound plan was done poorly.

Pernia, who represents the group called Concerned Boholano Professionals in Metro Manila, said there was a risk that the runway and buildings would collapse due to the sinkholes and caves, which government engineers failed to consider when they conducted a feasibility study because tests using ground-penetrating radar were apparently not done.

“We have reviewed the feasibility study done by the TCGI Engineers, the consulting firm hired for the purpose and we found the study’s quality and rigor markedly below par,” he said. “For instance, the economic forecasts are overly optimistic based on questionable assumptions.”

Is 60 too old to be a flight attendant?

By Judith Balea

December 24, 2010

MANILA, Philippines - Was the Philippine Airlines (PAL) being biased when it enforced the retirement age of 45 for its female flight attendants hired over the last decade?

Or was it just being consumer-friendly, thinking passengers might not find so appealing women in their 60s -- the prime retirement age -- serving them on board.

Labor Secretary Rosalinda Baldoz thought the former.

On Thursday, she gave members of the Flight Attendants’ and Stewardesses’ Association of the Philippines (FASAP) the best gift this Christmas by pegging their compulsory retirement age at 60, for women and men alike.

Baldoz said the different retirement ages for PAL's cabin crew, who are performing the same services, "constitute a clear discrimination of their right to equal work opportunity."

The public was quick to comment on the issue, airing out what they felt about it on social networking sites.

The tone of Twitter and Facebook posts in reaction to FASAP's sweeping win over the PAL management ranged from congratulatory, humorous to plain sarcastic.

Some users welcomed the news and said they were happy for FASAP members. Others were curious about how PAL would fare against closest rival Cebu Pacific in giving passengers the best value for their money, especially since the latter's "dancing flight attendants" were a big hit.

Here is a sampling of what they have to say about this:

"Given that DOLE's ruling sets a precedent, I demand to see 60-year-old dancing flight attendants on Cebu Pacific as well." -- Dax Lucas on Facebook

"PAL fares will go up. Cebu Pacific is happy." -- Jake Antig on Facebook

"Ballroom dancing ang gagawin nila daw. ;p" -- Stella Arnaldo

"I'm srsly dying of jealousy with the Philippine airlines cabin crew. They're soooo lucky!" -- Twitter user YumiArchie28

"Really happy for my PAL friends. Suck it, Lucio. Pay up." -- Twitter user AndrewdeCastro

"Wow, so PAL flight attendants can now work til they are 60 years old. To my friends, determining which F.A. is hottest will now be useless." -- Twitter user empylan

"BEST XMAS GIFT! :D DOLE resolves PAL row. Now - retirement age for flight attendants is 60." -- Twitter user katelopezdee

"DOLE rules that PAL flight attendants can work 'til 60. Wow! Haha. Good luck guys." -- Twitter user HecklerForever. abs-cbnNEWS.com

AirAsia Philippines to cost bus like fares

By Daxim Lucas

December 22, 2010

MANILA, Philippines—“Mr. Fernandes has to fly to another meeting in Jakarta this afternoon, so we will wrap up in two minutes,” the organizer tells reporters during last week’s press conference to unveil the joint venture deal of Air Asia in the Philippines. “Any final questions?”

The owner of the giant budget carrier politely countermands him with a casual wave of his hand: “No, it’s ok. [We’re using] our own plane anyway. It can wait.”

Local reporters—most of them seriously covering the short visit of the international celebrity to the country—erupt in a wave of laughter.

Indeed, Tony Fernandes’ mien is often compared to that other rock star of the airline industry, Sir Richard Branson.

They are both perceived as brash and aggressive, and rarely take no for an answer once they’ve set their sights on something in the field of business.

Thus, when word got around that Air Asia would start a Philippine-based airline in a joint venture deal with local partners, not a few eyebrows were raised.

After all, isn’t the global airline industry—both legacy carriers and their so-called low-cost carrier cousins—struggling due to weak demand for travel by passengers hard hit by the recent economic crisis?

And with several carriers like Philippine Airlines and Cebu Pacific already fighting tooth and nail for the relatively small number (as compared with peers around the Asean) of flyers, isn’t the Philippine market too small for a regional giant like Air Asia?

So is the local aviation industry saturated?

“Oh no! It’s anything but!” Fernandes says. “I think the Philippines has been starved for connectivity.”

To illustrate his point, he explains that he had to take one of Air Asia’s Airbus A320s out of circulation just to fly eight passengers from Kuala Lumpur to Manila at the time of his preference—a difficult decision for the cost-conscious former accountant.

For other major cities, no such private flight would have been necessary as would-be passengers could have easily booked themselves on multiple flights available throughout any given day.

“There is a massive amount of connectivity that is required in the Philippines,” he says. “If you look at Malaysia, Thailand and Indonesia, the growth [of airline passenger traffic] has really come out of low-cost carriers.”

Under the announced plan, Air Asia will start operating out of either the Diosdado Macapagal International Airport in Clark Field, Pampanga, or the Subic Bay International Airport in Olongapo, Zambales, by August 2011, with the first flight possibly coming in September.

The administrations of both special economic zones are presently lobbying aggressively to woo the new joint venture airline to make them its hub, although Clark supposedly has a slight advantage since the parent Air Asia airline already operates regular flights to and from the former US airbase.

Malaysia’s Air Asia Berhad will own 40 percent of the local joint venture, while the trio of Antonio “Tony Boy” Cojuangco, Michael “Mikee” Romero and Maan Hontiveros will own 60 percent.

Seen through local eyes, the airline’s owners are an unusual mix, but probably par for the course for the brash and aggressive Malaysian entrepreneur.

“I’ve known Tony Boy for a long time now and I’ve known Maan for many years through the music industry,” says Fernandes, whose past career includes working for a major recording company.

Most surprisingly, however, Fernandes’ decision to partner with Mikee Romero of Manila North Harbor fame is a vote of confidence for the young businessman who has been gradually stepping out of the shadow of his father, Reghis II.

“I met Mikee through basketball (Air Asia is a major sponsor of the Asean Basketball League where the team run by Romero is the defending champion), and I like his style,” Fernandes says. “He is young and aggressive. Sometimes too aggressive. If it were up to him, we would have had our [initial public offering] yesterday.”

But given that Philippine Airlines already serves the needs of more affluent travelers while Cebu Pacific is marketed toward budget flyers, what’s in it for the Filipino consumer?

The principal owners of what will be called “Air Asia Philippines” predict nothing less than what was previously thought impossible: Cheaper airfares—much cheaper than where they stand now.

“If you go to Air Asia’s terminal in Kuala Lumpur, you’ll see passengers in slippers,” says the joint venture’s chairman, Cojuangco. “This airline has been taking away business from the bus companies. That’s how cheap the airfares are.”

Company president Hontiveros also stresses that Air Asia Philippines’ operations will be patterned after its Malaysian parent: a flat organization that will keep costs to a bare minimum—with many of its ancillary services outsourced—in a move that will translate to cheaper airfare for end-users.

Amid the promises of cheaper fares, however, Fernandes believes that the best thing about having Air Asia come to the Philippines is its potential to generate more jobs for the local tourism industry.

“We can create 8,000 jobs in the Philippines, and that means 8,000 less who have to go abroad to work,” he says. “And all those jobs will also translate to more jobs in the tourism and service industries.”

Indeed, Fernandes, who professes a love for Filipino hospitality (warmer than anywhere else in the world, he says), already speaks like his interests are tied closely with those of the country’s.

“One of the key aims we have is to create more economic activity and more jobs for more Filipinos,” he says. “There’s so much talent in this country, it’s unbelievable.”

This early, it’s already starting to sound like a good partnership in the making.