IATA’s cautious optimism for PH air transport sector

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Ben D. Kritz

Ben D. Kritz

ON Thursday, Roberto Lim, who is the Philippines Country Manager for the International Air Transport Association (IATA), paid us a visit here at The Manila Times to share some insights about the state of the local and regional air industry. As it turns out, issues like small-time extortionists planting contraband in passengers’ luggage and bathrooms that are out of order are the least of this country’s problems.

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As a little background, IATA is an industry organization that comprises about 85 percent of the world’s scheduled air traffic—airlines, airport operators, travel agencies, and other related businesses. The organization has two broad functions. First, it serves as a governance body, establishing and maintaining standards for safety and operational processes throughout the entire industry; any business in the sector that has any aspirations for growth or long-term stability adheres to these standards.

Second, it serves as a financial clearing house for airline and air service transactions; for example, IATA handles the transfers involved when you pay a full fare to a travel agent for a trip, ensuring that the money is distributed to the airline or airlines involved, the various airports that might attach fees, and others with a stake in that transaction.

The first function of IATA is the one that is more relevant here, obviously, given the dubious state of the Philippines’ air transport infrastructure, and finding rapid solutions to the country’s various ills will become even more critical in the coming years, as IATA is forecasting that Asia will lead the world in air industry growth. For the Philippines, that means by 2035, the local sector could be handling up to 140 million passengers annually, provide between 2 million and 3.4 million jobs, and contribute up to $23 billion—nearly as much as OFW remittances, Lim pointed out—to annual gross domestic product.

Those rosy numbers, however, are only possible in a best-case “unconstrained” scenario, when infrastructure and operational capabilities are maximized. In a “constrained” scenario—one that will exist if the Philippines basically does nothing to improve the sector—the potential is greatly diminished.

The most severe constraint the country now faces is the lack of an adequate main airport. IATA’s Lim put the issue in rather stark terms: “Some new airport has to exist in 10 years.” Exactly where that airport would be is subject to further debate; Lim seemed to think the two best proposals so far are the ones that locate the airport on reclaimed land in Manila Bay west of Las Piñas, or along the southwestern shore of Laguna de Bay.

What is relatively certain is that the long-cherished idea of relocating the capital’s main airport to Clark is a non-starter, and any significant expansion of NAIA is simply impossible. Clark is simply too far (at nearly 100 km) from Metro Manila to be of much use as a major passenger hub; Lim pointed out that Tokyo’s Narita (which is about 46 km from the city) is still considered too distant despite being served by a dedicated rail line and several expressways, to the extent that the older, centrally-located Haneda Airport is undergoing a bit of a renaissance.

Clark would serve well for passenger traffic to and from the northern parts of Luzon, particularly if OFW agencies such as the POEA and OWWA would establish branches there to serve their clients, and Lim suggested Clark would also be a good location for much of the cargo and private air traffic that now clutters the ground and air around NAIA. Another promising opportunity for Clark is its potential attractiveness as a base for aircraft repair and maintenance operations.

Although IATA and its local chief seem to be optimistic about the Philippines’ potential in the air transport sector, given the history of futility in efforts to launch a new airport project, tapping that potential is going to have to come from other initiatives, at least for the foreseeable future. In this context that IATA has been able to provide specific guidance to the country; getting the country’s leadership to exercise enough political will to follow it, however, is another matter.

As Lim sees it, many of the current problems could be greatly relieved, if not completely solved, by simply improving the basic management of the existing infrastructure. To some extent, that requires new construction in the form of upgrades to physical infrastructure—for example, equipping some important or potentially important regional airports with lighting and other equipment to allow night operations, and building a rapid exit taxiway at NAIA to improve aircraft ground movement there.

To a greater extent, however, it is simply a matter of exercising greater rigor in basic management. Lim provided several examples, but the one that perhaps epitomizes the performance gap best is the frustrating lack of effectiveness of a position called a “slot coordinator.” The slot coordinator is a third-party manager (i.e., not employed by the government or IATA) that oversees the assignment of aircraft landing, departure and parking slots. In other words, he ensures that the aircraft belonging to various commercial carriers are where they are supposed to be in relation to NAIA when they are supposed to be in order to safely maximize the capacity of the airport, and he has the authority to impose penalties on airlines that are not cooperating. The government acceded to IATA’s recommendation to have a slot coordinator, but so far, according to Lim, his function has been handicapped by the inconsistent provision of data from airport authorities.

IATA remains optimistic that some improvements can be made by the incoming Duterte Administration, and will hold a conference with the government in the near future in order to try to convince Duterte to make a priority of air transportation infrastructure and regulation. Having a President who apparently plans to spend much of his time in his hometown—and therefore a lot of time in the Philippines’ skies—may make a difference.

ben.kritz@manilatimes.net.

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