Satellite firm goes to Subic

Transfers Control Centre

January 31, 2010

by Jeremiah F. de Guzman

Asia Broadcasting Systems, a major satellite operator in Asia, is transferring the control of $800 million worth of equipment to its Subic facility this year.

ABS chief executive Tom Choi said in a statement that the company would beef up its workforce by over 50 percent in two years and train staff for the transfer of the control operations to the Subic center from the southern part of Hong Kong.

“In short, an $800 million worth of satellite equipment will be controlled in our operating center in Subic,” Choi said.

The Subic center, he said, would control five of the company’s satellites—ABS 1, ABS 1-A, ABS 2, ABS 5 and ABS 6.

The satellites serve the firm’s markets in Asia-Pacific, Russia, Africa and the Atlantic. ABS recently acquired Mabuhay Satellite Corp. of the Philippines, which operated the Agila-2 satellite, now renamed ABS-5.

Choi said ABS would invest over $5 million for training and additional infrastructure in its ground facility in Subic, adding that the firm would hire a minimum of 20 new employees this year.

“The investment will include new control equipment, new software, big antennas and satellite control equipment that will all be located in our Subic control center,” he said.

Choi added the company would spend an additional $300 million for another satellite to replace Agila 2 in preparation for its retirement in five years.

“Our investments in the Philippines will be long term,” he said.

ABS, whose control operations are in Hong Kong, said its main clients in the Philippines are telecommunication and broadcasting firms, including Philippine Long Distance Telephone Co., Bayan Telecommunications Inc., GMA Network Inc. and ABS-CBN Broadcasting Corp.

ABS in November signed an agreement for the purchase of Mabuhay Satellite’s business.

“ABS will maintain all of Mabuhay’s operations in the Philippines and the staff will be integrated with the ABS team,” Choi said.

He said revenues from the Philippines would account for 15 percent to 20 percent of the total after the merger.

The Curse of the Nomad

The widowmaker tag
January 29, 2010


By Jorge Cariño and Ricky Carandang
ABS-CBN News

MANILA, Philippines - The Australian-made Nomad bush plane that crashed Thursday morning in Cotabato City, killing all 8 passengers on board, has had a problematic history.

Nomads were first built in Australia in the 1970s for short trips. Production was discontinued in 1995 after reports that the plane was unsafe because of numerous design flaws, including a tendency to develop stress cracks when flying.

The problems were detailed in a 2004 report by the Australian Broadcasting Company. (Transcript of report here)

According to the ABC report, first broadcast on the program 7.30 Report on July 27, 2004, the plane was nicknamed the “Widowmaker” after 19 of them crashed over a 20-year period, causing 56 deaths.

The ABC report told the story of an Australian aircraft fitter named Michael Paul who discovered the design flaws as far back as 1989.

But when he reported the problems to his superiors, he was threatened with disciplinary action.

Paul kept quiet until 1991 when a Nomad carrying a friend crashed in Australia. Paul committed suicide in 2004.

The ABC story became known in Australia as the Nomad Scandal.

As recently as November 2009, a Nomad owned by the Indonesian Navy crashed in East Kalimantan province.

The Philippine Air Force had 4 Nomads, including the one that crashed today. They were acquired in 1975.

Prior to Thursday’s accident, the last accident involving a Nomad in the Philippines was when a plane flying to Tawi-Tawi experienced problems.

In July 2000, another Nomad plane crashed off the Palawan coast. Among the victims was the then-Commander of the Armed Forces' Western Command, Gen. Santiago Madrid.

Aside from an investigation into the latest incident, the PAF is also prioritizing the welfare of the family of the victims. The remains of the victims are now being prepared to be brought to Manila as of posting.

PAF Nomad crashed

Kills Nine

January 29, 2010








Cotabato – A Philippine Air Force Nomad N22B plane with tail number 18, crashed Thursday morning killing eight of its passengers, including a senior air force commander and seven other people aboard while one person died on the ground and two others were injured.

Police said among those killed were Maj. Gen. Butch Lacson, commanding general of the Philippine Air Force's (PAF) 3rd Wing Division based in Zamboanga City. The 7 other PAF personnel who died were:

+ Lacson's staff officer Maj. Prisco Tacoboy;
+ Aide-de-camp 2nd Lt. Alexander Ian Lipae;
+ Sgt. Maria Rose Lamera;
+ Sgt. Ian Mejia;
+ Pilot Captain Gaylord Ordonio;
+ Co-pilot 1st Lt. Angelica Valdez; and
+ Crew chief Staff Sgt. Jeffrey Gozon.

A civilian, Inday Mondrano, died after a wall reportedly fell on her when the military aircraft crashed around 11:30 a.m. at Virgo Subdivision, Rosary Heights 9, in Cotabato City.

Meanwhile, Gela Gumiton, a resident in the area, was also brought to the Cotabato Regional Medical Center for head and body injuries she sustained during the incident.

Cotabato Mayor Muslimin Sema said that one fireman also was injured while responding to the emergency.

The 35 year old twin-prop Nomad aircraft left Davao City around 9:00am for Zamboanga City when it landed Cotabato airport to dropped off Tactical Operations Group chief Col. Cris Tumanda before taking-off again for Edwin Andrew airbase at 11:35 am.

The plane was gaining altitude when cotabato tower received a message from the pilot at 11:37 am saying that they would return to the station as they were experiencing engine failure and decided to turn back to the airport. It was on approach to the runway when it lose altitude and crashed, Civil Aviation Authority deputy director Ed Kapunan said a radio interview.

The lucky passenger, Cris Tumanda, group commander of the Air Force’s Tactical Operations Group 12 (TOG-12) based in Cotabato City, stressed that the aircraft showed no signs of engine trouble during the early stages of their flight from Davao reporting that it was all smooth before he disembarked from the plane.

Brig. Gen. Carlix Donila, wing commander of the 530th Air Base Wing said the pilot of the Nomad plane was able to contact the tower minutes before the plane crashed to the ground and burst into flames, setting fire to two houses that it had hit and killing one person on the ground.

"There are four remaining Nomad planes but only three are in service, and they will be grounded pending results of an investigation that will be headed by Brig. Gen. Jesus Fajardo, the PAF’s chief of staff" says air force spokesman Lt. Col. Gerardo Zamudio.

The Nomad plane was manufactured by Government Aircraft Factories (GAF) in Melbourne, Australia. It was ordered by the PAF in 1975 and first delivered in 1976. They were the most reliable and trusted utility plane in the air force inventory mainly based in Mindanao transporting commanders to remote areas including Jolo, Sulu and Basilan.

RP aviation demotion: who is to blame?

GOTCHA
By Jarius Bondoc

In Nov. 2007 the US Federal Aviation Administration downgraded RP to Category-II in air safety and security. This barred RP airlines from setting up new or spreading old services to the US, among other sanctions. The rating came after four months of FAA review of its RP equivalent, the Air Transport Office. Applying international safety standards, FAA found the RP government wanting in basic infrastructures, logistics, and systems. Most telling, there was no skill upgrading for ATO personnel who check airline flight crew.

In response RP rushed creation in Mar. 2008 of a fiscally autonomous Civil Aviation Authority of the Philippines. Like a corporation it has a seven-man board, six of them Cabinet secretaries: of transportation and communications (as chairman), justice, foreign affairs, finance, interior, and labor. The seventh is vice chairman and director general, retired Air Force general Ruben Ciron, appointed in July 2008. CAAP’s job is to upgrade civil aviation facilities and personnel.

Since then, however, the Category-II grade has not improved to I. Worse, the International Civil Aviation Organization has issued its own bad review. Clustering RP with such backward or failing states like Angola, Bangladesh, Congo, Djibouti, Kazakhstan, Rwanda and Zambia, the United Nations agency said CAAP has “significant safety concerns.”

What caused this? There are two versions.

Immediately upon Ciron’s entry, court and media fighting erupted between the old ATO and new CAAP leadership. The old timers accused the newcomers of amateurism. Allegedly Ciron’s team didn’t even know that the ICAO grade of 28.17 percent meant “compliance,” and took it to mean “findings”. Consequently, they missed the global average of 40.31 percent compliance; thus the unsavory ranking. Blamed on Ciron too was a radar breakdown in Sept. 2009, the first in RP aviation history, closing the country’s airspace for hours. Of 191 navigational facilities nationwide, only 16 are reliable and eight are due for recalibration by end-Feb. 2010. The rest allegedly are in disrepair, although 90 percent of CAAP revenues come from navigational charges on airlines.

Money is also at issue. Supposedly Ciron has hired 104 consultants as of Aug. 2009, mostly military retirees like him, costing P2 million a month and duplicating regular positions. The runway extension at the Boracay Airport allegedly was contracted for P32 million without public bidding. Even Ciron’s giveaway desk calendars last Christmas, costing half-a-million pesos, have been raked up.

CAAP managers counter that the law that created the agency forced them to absorb even the incompetents from the defunct ATO. Of the 104 consultants, 71 were hires of their accuser Daniel Dimagiba, the last ATO chief. These were the same ATO check pilots, cabin crew examiners, airworthiness inspectors, librarians, and medical workers whom the FAA had found inefficient. Ciron did hire 30 or so new consultants, they admit. But these are aviation professionals whose legal, technical and managerial expertise enabled CAAP to take over without hitches.

CAAP’s worst irony is with check pilots for Boeing 747s and Airbus 340s, managers say. It allegedly inherited from ATO men whose flight know-how is only with single engine planes, derided as tutubi (damselflies). A favorite joke among wide-body jet pilots is that their CAAP checker was late for the test because he got lost in the cockpit. The remedy is to lure back Filipino pilots working overseas for monthly pays equivalent to P300,000-P500,000. But the CAAP has yet to raise such money. So in the meantime it relies on Air Force retirees.

ICAO lists RP aviation unsafe

Affirms FAA finding on Cat II rating

January 28, 2010

By Rainier Allan Ronda

MANILA, Philippines - The Philippines is in a list of countries with unsafe civil aviation systems drawn up by the International Civil Aviation Organization (ICAO).

ICAO has listed the Philippines among countries whose civil aviation was found with “significant safety concern” (SSC), according to the Civil Aviation Authority of the Philippines-Employees Union (CAAP-EU).

Cesar Lucero, CAAP-EU vice president, said that this was not surprising in view of the CAAP’s failure to address deficiencies of the country’s airport network.

“As we have said time and again, the Philippines will continue to fail to regain Category I status with the US FAA (United States Federal Aviation Authority) and get a satisfactory rating with the ICAO until the leadership of the CAAP, especially the director-general, Ruben Ciron, is replaced,” he said.

In an electronic bulletin last Dec. 18, the ICAO listed the countries with SSC findings as Angola, Bangladesh, Cambodia, Congo, Djibouti, Guinea-Bissau, Kazakhstan, Malawi, Philippines, Rwanda, and Zambia.

“The safety oversight audit of the Philippines under the comprehensive systems approach revealed a Significant Safety Concern which remains unresolved by the State,” the ICAO said.

The SSC finding for the Philippines is a double whammy for the country’s local civil aviation industry after the US FAA downgrade of the country from a Category I to a Category II rating due to deficiencies in its civil aviation systems in December 2007.

The US FAA downgrade had caused the Arroyo government to rush passage of Republic Act 9497 which created the CAAP.

Whose to blame?
Lucero said Ciron, as CAAP director-general, had mainly attended to the hiring of his fellow retired military officers to vital and highly technical positions at the CAAP even without having civil aviation experience and expertise.

“We blame Mr. Ciron and his hiring binge of his fellow retired military generals and colonels and his fellow comrades in the Reform the Armed Forces of the Philippines Movement at the expense of organic ATO personnel who have civil aviation experience and expertise,” he said.

It will be recalled that the CAAP-EU has questioned Ciron’s appointment of retired military officers with no civil aviation management expertise in the CAAP since its creation in late 2008.

The group stressed under RA 9497, the CAAP was supposed to absorb the regular employees of the Air Transportation Office to retain the experienced air traffic controllers and other crucial technical employees of the agency.

Another reason for the creation of the CAAP was to enable it to retain its more than P2 billion income raised from the collection of landing and navigation fees to raise salaries of employees such as air traffic controllers, he added.

Sought for comment, Ciron downplayed the ICAO issuance of the SSC on the Philippines.

“We are addressing that already,” he said.

Ciron said that the reason for the SSC rating by the ICAO was the finding of ICAO inspectors that CAAP lacked technical personnel.

Air safety not a one-man job

The chief of the Civil Aviation Authority of the Philippines (CAAP) said he was not entirely to blame for the poor rating given to the country’s aviation sector by the International Civil Aviation Organization (ICAO).

Ruben Ciron, CAAP director general, was reacting to the CAAP-Employees Union’s pronouncement that he should take the blame for ICAO’s issuance of a significant safety concern or SSC rating on the country’s civil aviation network.

Ciron pointed out that ensuring aviation safety is not a one-man job and that it requires full cooperation of all CAAP personnel.

Ciron also lashed out at Cesar Lucero, vice president of the CAAP-EU, for pushing for his ouster.

“But with CAAP employees like Cesar Lucero - who, from day one, wanted me out of the job - the task of ensuring aviation safety in 80 CAAP-controlled airports all over the country has become doubly difficult,” he stressed.

He said he was not washing his hands of responsibility, but stressed that most of the problems plaguing CAAP - formerly the Air Transportation Office - were due to years of corruption and mismanagement.

“Ironically, these problems were accumulated during the time of previous ATO administrations which Lucero was part of,” Ciron said.

“I merely inherited the burden of repairing the damage when I was appointed director general after the CAAP law was passed in 2008. However, we encountered a lot of birth pains along the way, not to mention uncooperative staff like Lucero,” he said.

He also emphasized that ICAO does not give “pass” or “fail” marks but only “ratios” of compliance with certain protocols.

He said most of the “significant safety concerns” are being decisively addressed and properly communicated with concerned agencies. He said no less than Mohamed Elamiri, chief of the ICAO’s Safety and Security Audits Branch, acknowledged the corrective actions taken by the CAAP.

Potential potholes hinder Clark's expansion plan

Suffers connection and likability problems

January 27, 2010

Manilla's Clark International airport has embarked on a 550 million pesos ($12 million) expansion plan to attract more carriers and become the second international gateway into the Philippines.

To be completed in May, the expansion will add a second storey, arrival and departure lounges, and three aerobridges to the terminal building. "We want to attract more airlines, particularly full-service carriers, but they want amenities like lounges," says Clark's president and chief executive Victor Jose Luciano.

Most of the seven passenger airlines serving Clark are low-cost carriers. The expansion will boost Clark's capacity to five million from two million.

A second terminal for Clark is also planned. The airport is evaluating proposals from potential joint venture partners and expects to make an announcement soon. It will take two years to construct a second terminal, says Luciano.

Clark is hoping to become the country's second international gateway. Manila's Ninoy Aquino International airport handled 22 million passengers in 2008, and the industry believes it will soon reach its capacity of 32 million.

However, there are potential potholes on Clark's journey to become the alternative airport.

The airport is a 2 hour drive along congested streets from Manila's business district. While the government has plans to build a high-speed railway to link the two airports, this will take 10 years.

"The railway needs to be there to make Clark into a premier airport. There should be a serious effort from the government to ensure that another international airport is constructed within three to five years," says Philippine Airlines' president Jaime Bautista.

Others have pointed out that launching a wide-ranging expansion might not be the way to go, and they have questioned how quickly Clark will be able to expand its capabilities.

Cebu Pacific chief executive Lance Gokongwei says: "I will be cautious against expanding Clark to something that will not generate adequate returns."

Ninoy Aquino International airport's assistant general manager Tirso Serrano says: "For it to be a viable gateway, you need two major successes: better connectivity to Clark, and industry acceptance."

Subic International airport to close

As SBMA mulls converting airport
to logistics center

January 26, 2010

Quick Facts:

• 250 million pesos annual expense for airport operations;
• 200 million pesos annual income in 2008, 150 of which comes from Fedex;
• earns 30 million pesos only in 2009, 25 million of which comes from Fedex until February;
  

SUBIC -- The Subic Bay Metropolitan Authority (SBMA) is thinking of giving up its international airport as it has reduced itself into a white elephant since the departure of US transportation giant Federal Express.

SBMA administrator Armand C. Arreza told reporters here that SBMA is eyeing the conversion of the Subic international airport into a logistics center because of the massive development of the much bigger Clark airport.

Arreza said Subic’s seaport facilities would complement the airport services of Clark which is just an hour away with the Subic-Clark-Tarlac expressway. "We cannot have two airports in areas which are just an hour apart," Arreza said.

Arreza said SBMA shoulders up to P250 million annually to have the airport running, P150 million in debt service and another P100 million for maintenance cost.

To break even, he said, the airport should be able to mount 12 to 15 flights a day.

"Even when Fedex was here, we were breaking even, and now with Fedex gone, the airport is losing money," he said.

Another advantage of Clark airport is that its landing and parking fees are free.

"We cannot compete with Clark. It is acceptable that there is another airport, so we are looking at it on the economic point of view. We are evaluating the airport," Arreza added.

Fedex pulled out its AsiaOne hub in Subic in February last year to transfer to China.

Subic airport now caters to very few charter flights and training schools.

The airport served as a secondary airport and a main diversion airport of the Ninoy Aquino International Airport. This airport used to be the Naval Air Station Cubi Point of the United States Navy.

What lies ahead for PAL?

Shining Through!

January 25, 2010

2010 has been dubbed by Centre for Asia Pacific Aviation as the year of the Asian Airline bailout headed by Japan Airlines, China Eastern Airlines and Air India in guise of a financial term called "restructuring program".

Garuda Indonesia, Thai Airways and Malaysia Airlines are also seeking government assistance A.K.A "bailout" of its huge financial losses to help them support fleet expansion and operations.

All these six airlines are set to receive well over USD10 billion in bailouts in the first three months of 2010, according to the Centre for Asia Pacific Aviation's estimates.

Lucio Tan owned Philippine Airlines on the other hand is happy where it is, except for some indifferent labor unions who does not know the word "recession","globalization" or "job outsourcing strategy" which could potentially make or break the airline for good.

PAL’s union members have been hoping for a similar bailout strategy from the Philippine government to infuse funds with same losing structure to keep PAL flying. Unfortunately, the government, with its huge fiscal deficit, cannot gamble its limited financial resources to an inefficient airline, like what the Japanese government is now doing to support JAL or other government airline such as Thai and Malaysia airlines. It did not do so in 1998 when it filed for bankruptcy, it will not intervene now even if President Arroyo wants to.

PAL has been Lucio Tan's biggest headache despite the wealth he generates for his business empire. He has been quoted by Boo Changco saying that "airline is bad news" for him. And he is not into spending mode unless management fixes its loopholes that drains his investments away. With Cebu Pacific profits soaring and his profits diving, there must be something wrong with the airline which need fixing fast.

Jaime Bautista, PAL President, found a pill for its nagging headache, a fixed labor cost, which could potentially cut half their expenditure for ground related services.

Philippine Airlines announced their plans to outsource non-essential jobs in the airline in an attempt to improve its profitability and chances of survival against the growing treat of low cost airlines.

Despite the union's vigorous opposition to the plan, they have no choice but face the reality that PAL or Lucio Tan for that matter isn't bluffing on the state of legacy airlines around the globe.

In fact, it was Philippine Airlines union president Edgardo Oredina who broke the bad news to the members of the Philippine Airlines Employees’ Association (PALEA) last year that most legacy airlines around the world, among others labor unions from Cathay Pacific, Malaysian Airlines, Thai International Airways, Air India and Garuda Indonesia are resorting to pay cuts, retrenchment, reduction of working hours, and job outsourcing to survive the business downturn and compete to the challenges of low cost airlines.

“Ironically, ITF’s presentation also dealt with the great impact to the operating revenues made by the so-called ‘low-cost and no-frills’ airlines in the region like Cebu Pacific, Air Asia and the likes, leading to the heavy losses on the legacy airlines and flag carriers like PAL,” Oredina said

It took the International Transport Workers Federation meeting in Sri Lanka to convinced Oredina that they are working indeed on borrowed time. He said that “unions worldwide, especially in the aviation industry, must be more dynamic, proactive, innovative and aggressive adapting to the current changes in the industry, within the framework of maintaining the essence of unionism...,”

Now, the union is starting to cooperate with the airline and its plan for survival. New planes are coming and passengers are growing. Certainly, it should be a win-win situation for the airline and its soon to be dismissed employees as jobs would still be available for them and to others, only that they will be working with a new employer other than acceptance of pay and benefits cuts. According to Labor Secretary Marianito Roque, that should be the best deal for some PALEA members rather than having no work at all.

The recession that hit the airline industry worldwide changed operating dynamics drastically taking its first toll to the most inefficient one, Japan airlines. There is only one rule of the game, and that is stay competitive or your out. Legacy airlines must adapt to the new rules of the game by changing their business models to match the efficiency of budget airlines or suffer the ignominy of history.

Its been incredible already that PAL weathered the crisis without the government's assistance, financial or otherwise. There should be no other way but up. Tan promised new investments if its resolved. There is no doubt that PAL's future is shining through.