The Philippines’ air transport sector is in for a nasty surprise by year end or early next year if the government and the private sector can’t get their act together.
This week’s special report in The Manila Times is an introduction to the Asean Economic Community (AEC), which will come into being —on paper, at least—on December 31 this year. For a variety of reasons, the actual work of building the AEC framework is not going as smoothly or quickly as planned, so its impact is going to be gradual.
One of the sectors likely to be affected fairly soon, however—perhaps as soon as the early part of next year—is the air transport sector. And right now the two major components of that sector, the airlines and the infrastructure, are in no way prepared to compete in the AEC.
Two editorials on Tuesday took up the subject of the Philippines’ lousy airport infrastructure; BusinessMirror addressed the multi-agency squabble that has stalled the Mactan-Cebu airport expansion project, while Boo Chanco in the Philstar held forth on the lack of any effective action on the part of the Department of Transportation and Communications to address congestion at NAIA.
Both of them reveal some alarming things we should probably be concerned about. The Mactan-Cebu project has hit a snag because of the need to relocate part of an air base; apparently, the DOTC, the airport’s management, the Philippine Air Force, and the Bases Conversion and Development Authority did not actually talk about it before the contract for the project was awarded.
In the case of NAIA, there has been no progress in relieving NAIA’s air traffic stress. Since the government seems unable to decide on a replacement for the country’s outdated and overworked international gateway, the next best option is a third runway. Not, as Boo Chanco pointed out in an amusing way, the recent proposal to build a fifth terminal.
The airlines have their own dramas as well. The transition of Philippine Airlines back to the control of Lucio Tan after San Miguel Corp. gave up on its foray into the airline business seems to have gone smoothly, but there are indications PAL is reeling in its ambitions to some degree; at the end of last month, PAL Holdings head Jaime Bautista disclosed the airline is seeking to defer the purchase of 38 aircraft it has ordered from Airbus.
Cebu Pacific, on the other hand, seems to have trouble avoiding being newsworthy for the wrong reasons. The havoc the Philippines’ busiest airline caused with its breakdown in staffing over the Christmas holiday resulted in a P52 million fine and a public apology. Cebu Pacific is entitled to the benefit of the doubt with respect to its assurances that corrections will be made quickly, but any succeeding problem, even a small one, is going to be pounced on by the public.
Among other airlines, AirAsia Zest had the misfortune of suffering a minor accident—a flight from Manila overshot the runway upon landing in Kalibo—the same day its sister airline in Indonesia suffered the loss of Flight QZ8501 in stormy weather off Borneo.
And UAE-based Emirates Airlines has been embroiled in a dispute with the Civil Aeronautics Board (CAB) for months over an unauthorized extra flight the airline added to its Dubai-Manila schedule. At the end of last week, Emirates raised a complaint to the Office of the President after the CAB rejected an extension of a grace period (which expired on January 26) it granted to Emirates at the end of last year.
The progress towards the AEC is going to put stress on the Philippines’ infrastructure, and competitive stress on its airlines. Even under a realistically conservative scenario, AEC-related measures in the run up to the December 31 deadline and beyond are going to increase air traffic; the country on the whole is not at all prepared for it, which is probably why, even though the CAB is holding air service talks with Singapore this week and is planning talks with the United Arab Emirates as well, the government is sounding a distinctly protectionist note.
That effort is futile; the Philippines is going to be dragged into the regional competitive environment for the air transport sector whether it likes it or not. For one thing, the recent high-profile crashes of two Malaysia Airlines flights and the aforementioned AirAsia plane have probably guaranteed that work towards creating harmonized standards and an integrated Asean-wide air traffic control system will be accelerated. Reciprocity in access, already a concept the Philippines struggles with, is going to become even more exacting. If the Philippines is unwilling or unable to get with the program, it is going to find itself at a grave disadvantage in the regional market.