1.P80-million fund for NAIA's VOR not included in P4-billion deal — CAAP
MANILA, Philippines (PNA) — Civil Aviation Authority of the Philippines (CAAP) Director-General Ramon Gutierrez on Thursday said that the P80-million would-be fund to purchase new aviation equipment is not included in the P4-billion aviation deal.
Gutierrez said the P4-billion aviation deal between the government and the Thales-Sumitomo Group that Senator Estrada had questioned was accorded in 1998. “Ours is different. The P80-million fund was only meant to buy a new very high frequency omni-directional range (VOR) for the Ninoy Aquino International Airport (NAIA).”
According to him, the P4-billion contract was intended for the modernization of the whole air traffic control system of the country.
He said since the CAAP has diminutive resources and cannot be able to procure such device, the Manila International Airport Authority (MIAA) will make the financial arrangement while the aviation agency takes care of the services. From its original P120-million funds they requested, the budget was slashed to P80-million.
However, the P80-million is P2-million short of the VOR’s original price in the foreign market. He disclosed that he was considering a Korean company that was offering a VOR that is worth P80-million. “But we could not grab it until we know that it is the same brand that we are currently using,” Gutierrez said.
Another foreign company has offered the CAAP of equipment leasing which cost only P50-million. “Malaki ang matitipid, sa open bidding, but, we are inclined to buy a new one because its life span is approximately 10 to 12 years.”
The old VOR made headlines when it conked out on June last year that triggered the cancellation of at least 50 domestic and international flights at the three terminals of the Ninoy Aquino International Airport.
The glitch was additional burden to the Philippines when it was working out for getting back the category 1 status after the United States Federal Aviation Administration downgraded the Philippine aviation to category 2 in 2008.
Asked if he is optimistic that the European Union would lift restrictions once the foreign evaluators resume inspection in September, this year, he said they are still preparing for such assessment.
The Philippines is one of the countries in the world that has been blacklisted by the European Community where the country’s all airlines are banned from flying to any European bloc because of “serious safety deficiencies” in the Philippines’ regulation of carriers.
2.Air Philippines seeks approval of SEC to restructure its capital
MANILA, Philippines – Air Philippines Corporation is seeking the permission of the Securities and Exchange Commission to use its additional paid in capital (APIC) to partially wipe out its deficit of P6.83 billion.
Documents show, the SEC’s financial analysis and audit division has already recommended the approval of the airline’s capital restructuring plan.
Under the plan, the airline will use its APIC amounting to P6.16 billion to wipe out a significant portion of its P6.83-billion capital deficit based on its interim audited financial statement as of September 30, 2010.
Air Philippines has undertaken that if its deficit as of December 31, 2010 turns out to be less than P6.16 billion, the difference will be reverted to the APIC.
The airline plans to open more new air routes by expanding its aircraft fleet to compete in the country's competitive aviation industry.
Air Philippines chief executive Cesar Chiong said they will increase the airline’s Airbus A320 aircraft from just three to 18 by 2012 and add more domestic and regional routes.
"We're looking at destinations like the Republic of Korea, Bangkok and maybe Hong Kong," Chiong said. Domestic routes like Vigan and Marinduque are also being considered.
Chiong said the company expects six new A320s to arrive this year while six more will be delivered in 2012. Air Philippines' first two A320s were given to it by sister company Philippine Airlines (PAL) while six arrived last year.
Aside from the Airbus jets, Air Philippines also has eight turbo propeller planes used to fly on domestic routes. A total of $250 million will be spent for the lease of the new aircraft.
Chiong said the company preferred to acquire A320 jets, which are the same planes used by its sister PAL, to keep expenses down since a fleet with just one type of airline is easier and cheaper to maintain.
Air Philippines is already the country's third largest airline, behind Gokongwei-led Cebu Pacific and PAL, at the end of the first half of the year after carrying 676,686 passengers.
3.Cebu Pacific expects to fill NAIA-3 by 2012, wants expansion
MANILA, Philippines - Cebu Pacific said it has opened discussions with government for the expansion of the capacity of the NAIA Terminal 3, the base of the Gokongwei-owned budget airline's operations in Manila.
In an aviation summit in Manila, Cebu Pacific vice president for commercial planning Alex Reyes said they have initiated talks with the Manila International Airport Authority to expand NAIA-3's capacity to 20 million passengers a year from the current 13 million.
He noted the facility is starting to look "inadequate," hence the need to firm up plans for an annex to the terminal.
"That way, T3 can accommodate not just Cebu Pacific's growth but the entry of additional foreign carriers. If foreign carriers operate at T3, we will benefit as the long-haul carriers will provide feed to our domestic network into the country's tourist spots," he said.
Cebu Pacific is one of the 2 local airlines operating in NAIA-3. The other international airlines remain wary of transferring their Manila operations to NAIA-3, a controversial but much-needed facility.
Capacity limits expansion
Reyes went on and disclosed that Cebu Pacific intends to fill up the entire NAIA 3 by late 2012 or early the next year, but the plan is anchored on the expansion of the terminal.
"First, we wish for infrastructure that stays ahead of the curve. In other words, terminals, runways, and navigation systems...that are more than adequate for the next 5 years. Having the infrastructure in place means companies will have the confidence to invest billions to further grow their business," he added.
President Aquino earlier identified tourism and infrastructure as the target drivers for economic growth in the coming years, with an aim to double Philippine tourists to 6 million by 2016.
"This is a welcome development for commercial airlines, but it will be an added strain on our airport infrastructure," said Reyes.
By the end of 2011, Cebu Pacific is expected to operate a fleet of 37 aircraft, from 32 today. Between 2012 and 2014, it will take delivery of an additional 16 Airbus A320 aircraft.
Reyes said other airlines are also growing and beefing up their fleets.
"We are going to see much busier skies around the country. If we don't act quickly, we will see grid lock on our ramps, on our airways, in our terminals."
Open skies
Aside from improvement of the physical structure, Reyes stressed the need for "soft" infrastructure at NAIA-3. These are rules, procedures, and highly skilled aviation personnel who manage the airways and check whether everyone is operating under international safety standards.
"By soft infrastructure, we also mean the air rights or entitlements between our country and our major trading partners. Today, there are no more air rights available between Manila and the major capital cities such as Tokyo, Singapore, Jakarta, Kuala Lumpur, Bangkok, as well as Hong Kong. This means no new international services can be started between Manila and those cities, which are a major source of tourists for the country. Removing constraints such as the lack of air rights will boost the growth rate of the industry," he said.
Most of the over 3 million tourists and Filipinos working overseas arrive in the country through the Manila airport, still the country's main gateway.
However, aside from the capacity of the 3 airport terminals handling international flights at NAIA, the capacity of the existing runways has also stifled the capacity growth of the airport.
Ninoy Aquino International Airport, which was named after the late father of President Benigno Aquino III, is located right smack in the middle of the metropolis, making runway expansions impossible.
President Aquino is set to finalize an open skies regime within the month. This aviation policy allows for a relaxed regulatory environment that paves the way for more international airlines to mount flights to the Philippines sans the usual bilateral air agreements with other countries.
However, Manila airport will not be included among the secondary international airports that will be part of the open skies regime.
The fate of the Manila airport -- and NAIA-3 terminal in particular -- will be partly dependent on how the Aquino government will support the open skies policy with the necessary infrastructure, including roads and rails, to make visits to the the country's capital stress-free.
Controversial NAIA-3
The dramatic business growth of the Gokongwei-led budget carrier reached a tipping point when it consolidated its local and regional flight operations at NAIA 3.
It took the risk when the controversial terminal facility opened at half of its 13 million capacity in July 2008 despite the legal, financial, structural and safety issues that hounded it.
The risk paid off. Two years after, it clinched the top spot in the domestic airline market from decades-long industry leader Philippine Airlines.
There were instances when Cebu Pacific would be reminded of the many issues that haunt NAIA-3. It has received eviction notices from Piatco, the Filipino-German consortium that built NAIA-3.
After German airport firm Fraport AG won a favorable decision from an international arbitration court in December, the German ambassador to the Philippines echoed Piatco and said the NAIA-3 concessionaires -- including Cebu Pacific -- are illegal tenants.
The Gokongweis remained determined to stick it out at NAIA-3.
Cebu Pacific Air chief executive officer Lance Gokongwei had even earlier said that the Gokongwei group, through parent firm JG Summit, is interested in bidding for a contract to operate NAIA-3.
Despite its budget and no-frills business model, Cebu Pacific seems bent on not letting go of a key terminal originally designed to cater to the needs of legacy airlines.
Budget airlines' needs
CEO Lance Gokongwei had said that some of the country's airports in destinations outside Metro Manila have yet to fit the requirements of a budget airline operations.
Reyes echoed this during the summit. "We have about 85 airports around the country. Often, what we find is that the basics just don't get done. We find perimeter fences unfinished. We find safety markings incomplete. We find x-ray machines that breakdown more often than they should."
"When our perimeter fences are not completed, when airport security is compromised because of budget constraints - these are unacceptable for an industry that prides itself in putting the safety of the riding public above all else," he added.
"We do look for simple terminals requiring little maintenance - warehouse-type single-storey structures such as the Budget Terminal in Singapore - that can comfortably move thousands of passengers in a day. These are the types suited for Philippine conditions.
"We are also in need of airports with night-landing capabilities, especially for the fast-growing tourist spots such as Naga, Butuan, and Legazpi. More night-capable airports will mean airlines can schedule flights beyond sunset, helping to decongest Manila's runways during the noon to early afternoon peaks.
4.P80M pledged for new NAIA navigation aids
MANILA, Philippines—The Manila International Airport Authority has pledged to allocate P80 million for the acquisition of new navigational aids at the Ninoy Aquino International Airport following a series of malfunctions by the old equipment at the country’s prime airport.
Civil Aviation Authority of the Philippines director general Ramon Gutierrez said he would meet with MIAA officials in a week or two to draw up the terms for the acquisition of the very high omni-directional radio range (VOR).
Although the piece of equipment costs P120 million, Gutierrez said the two agencies would try to “work within” the budget, and would negotiate with the same manufacturer of the old unit.
Once the terms of reference has been drawn up, a bidding would be called, he said, adding that the old VOR would not be put out of commission.
“Our technicians said the old unit could still be used as backup, or in warm-up mode, so that if problems with the new one cropped up, we could revert to using the old one,” Gutierrez said.
The VOR transmits signals to the pilot from origin to destination, helping the aircraft navigate and land safely, especially at night when visibility is poor.
Early this month, the VOR beside the NAIA runway broke down for two hours due to a power supply problem, affecting two domestic flights that had to be diverted to Clark International Airport.
In June last year, the equipment also malfunctioned, forcing the cancellation of several international and domestic flights, particularly evening flights.
NAIA was compelled at the time to borrow equipment from Subic International Airport until the defective parts of the VOR were replaced.
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