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Really good news… at last

It was the talk during the cocktail reception at the French Embassy residence Monday last week. No one was willing to say anything on the record but people seemed certain that the FAA was about to restore our Category 1 rating.

Not only that… the Europeans were also about to allow Cebu Pacific to fly to Europe. Lance Gokongwei wouldn’t confirm it but his face betrayed the good news. Tourism Secretary Mon Jimenez seemed the most excited among the guests.

When I read the tweet of US Ambassador Goldberg early Thursday morning announcing the restoration of our Cat1 rating, I felt joy and relief. Maybe I had just been too impatient and here it is now, a long sought reaffirmation of our government’s ability to run a safe aviation industry.

More than just a seal of Good Housekeeping, being in Cat1 has serious business implications. Indeed, the business plan of Philippine Airlines this year that projects a profit hinges on its ability to change the ageing 747s with the new and more fuel efficient 777s.

The 747s use 30 percent more fuel on the trans Pacific route of PAL to San Francisco and Los Angeles. That spells the difference between profits at last for PAL or losses as usual.

The 777s, already in use for flights to Canada, Australia and in the region are not being maximized to justify their acquisition. PAL couldn’t change plane models as long as the country is in Cat2.

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PAL was also losing competitiveness by continuing to use the old 747s whose amenities on board no longer compare with Cathay Pacific, Nippon Air and other competitors for the lucrative Filipino market to the US West Coast.

I took the 777 inaugural flight of PAL to Toronto the other year and the 747 coming home from Los Angeles. If you are paying full fare business class, you will definitely feel cheated on the 747. For instance, the outmoded personal entertainment system simply died on me.

Now all that is over. The ambitious business plan of Ramon Ang for PAL can now start in earnest. He can add new gateway cities too like New York and Chicago but I guess he will be more careful this time after the Toronto experience.

Theoretically, Cebu Pacific can now fly to the US too. But I doubt that will happen anytime soon.

John Gokongwei had long dreamed of flying to the US but his son who runs the airline is more conservative about it. From the way Lance sounded during the French Embassy reception, I think he has not changed his mind that a US run makes little business sense for CebuPac now.

For one thing, he doesn’t have the proper aircraft for a non-stop trans Pacific flight. CebuPac will probably stick to Guam and Saipan, a three hour flying distance.

Indeed, Lance doesn’t think flying to Europe makes sense at this time too. But he wanted the clearance to go there anyway more as an affirmation of CebuPac’s status as a major Philippine carrier. The earlier announcement of the Europeans only allowed PAL.

For now, Lance is still trying to digest CebuPac’s foray into the Middle East market, a major deviation from their proven business model of providing budget fares within the region. He said he is not disappointed with the performance so far but acknowledged the reality that the highly subsidized Middle Eastern airlines are tough competitors.

Sec MonJ of Tourism told me he is sticking to his 10 million target for tourist arrivals by 2016 and that is why getting Cat1 is important. The potential right now is actually at 12 million, Sec MonJ told me but he admitted he faces an infra bottleneck.

He reportedly asked P-Noy if he should lower the targets due to congestion in NAIA and the delay in getting major regional airports out of the DOTC study mode. But P-Noy reportedly ordered him to keep the aggressive target.

I know Sec MonJ is realistic enough to moderate his glee with the good news of Cat1. He knows that NAIA is not going to get the CNS/ATM navigation facilities at NAIA up until about 2016. Without that, the congestion remains as air traffic controllers space out landings and departures more widely than they have to if the proper facilities were available.

We just have to keep pushing, Sec MonJ told me. Heaven knows I have been pushing DOTC from Day One. I used to be pretty good friends with the two predecessors of current Sec Jun Abaya. But I am afraid it is no longer the same between me and both former Sec Ping de Jesus and specially Sec Mar Roxas now of DILG. I pushed too hard.

Looking back, I think I shouldn’t have pushed Sec Ping that hard because he was already moving. Indeed, among the three who had headed DOTC in P-Noy’s term, Sec Ping is the best and should have remained. If Sec Ping didn’t quit, we would have that CNS/ATM system up and running by now.

I found out that Sec Ping had already reviewed that system and cleared it for implementation before he resigned. But SecMar decided to freeze it for review and took too long. Since the contractor had already mobilized, the taxpayers had to pay the costs that made the project cost a billion pesos more than it should.

But the worse part of the delay is opportunity loss. We needed that system yesterday given the ancient radar based system currently being used that is always on the blink.

The airport congestion forced the domestic airlines to use their newly bought aircrafts less efficiently. Foreign airlines also cannot add new flights and thus limiting the entry of tourists and the chances of meeting Sec MonJ’s targets.

But at least we are starting to move. I congratulated Sec Jun Abaya when I learned about the Cat1 upgrade. But I also pointed out the difficult task of sustaining it is on. I suspect the deal is partly political, tied to the Obama visit. FAA also served notice they will strictly monitor compliance and progress.

Indeed, there are still a number of items cited by the FAA awaiting more permanent solutions on the technical aspects of regulating the local aviation industry. Congressional action may even be needed as in the case of salaries of highly technical staff so young people will choose a career at CAAP.

And if Sec MonJ’s program is to achieve its target 10 million visitor arrivals, all airports must be upgraded and facilities modernized. This is why I thought awarding Mactan to the Megawide/GMR consortium should already be allowed just so we get something started.

I still doubt GMR can do better than Changi but the alternative is a long legal battle which does us no good. In any case, I didn’t see a conflict of interest problem until I read the rules promulgated by the DOTC lawyers. Now it seems the DOTC bids and awards committee are ignoring their own rules.

The Puerto Princesa airport should also get going but to the right bidder. I heard there is an inclination to award it to a company in financial rehabilitation on recommendation of DOTC’s technical consultant who happens to be this company’s partner in many other projects.

There was the attempt of DOTC Usecs during a recent Senate hearing to claim that because the project is Korean aid funded they are supposedly following Korean rules. That does not make sense.

We are paying for it eventually and our rules should prevail. Besides, the conflict-of- interest problem is so glaring a DOTC lawyer had to warn the DOTC BAC about it.

We must also make sure the winning contractor has the financial means to carry out the project. Awarding to a company in bankruptcy makes no sense by whatever rules as the project could be left undone.

In the meantime, any celebration over finally winning Cat1 should be cut short. The Cagayan de Oro airport still does not have proper instrument landing facilities so that a little rain and flights are cancelled. It also does not have night landing facilities so that passengers get stuck when afternoon flights are delayed.

Construction of the Bicol International Airport has already started but is not moving fast enough for DOTC to deliver it before P-Noy leaves office.

And Bohol is a mess. Only one plane at a time can land. The next plane cannot be cleared from originating airport until the earlier plane has taken off from Tagbilaran. And there is that absolutely horrible Kalibo airport, the gateway to our principal tourist destination. Shameful!

Now that we are starting to have honest to goodness good news, not one concocted by PR people, let us make sure tuloy tuloy na. We can all celebrate later. There is still too much work to do as of now.

Boo Chanco’s e-mail address is Follow him on Twitter @boochanco


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