Take care of your local airlines
DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - April 15, 2013 - 12:00am

“Your open skies policy is nice but it is one way (not reciprocal) and in the end it will still be your local airlines that will build up passenger traffic to your airports because it is in their interest to do so,” Fil-Am aviation expert Ben Lao told me last week. Ben said it is a mistake to think foreign airlines will come here just because of open skies.

“Major urban centers in the world are served and supported by a strong home-grown carrier or two. The Philippines should not be an exception. Every effort must be made to support Philippine Airlines and Cebu Pacific. These are two homegrown airlines with solid management teams and presumably infused with sufficient capital and strong determination to compete successfully on a global scale.”

Airports, Ben explained, need a certain base volume to viably operate. Even in the US, some airlines have their major hubs in home cities, American in Dallas-Fort Worth or Delta in Atlanta, and they drive traffic in the terminals there. For the Philippines, only the locals like PAL and Cebu Pacific have the strong business case to provide that and also the non-stop flights from foreign airports passengers prefer.

Citing the case of Singapore, Ben pointed out that part of the strategy of the city state when it decided to make Changi a regional hub is to help Singapore Airlines grow. It helps that Singapore’s sovereign wealth fund is a major shareholder of Singapore Airlines.

The decision of Hawaiian Airlines to stop flying from Honolulu to Manila proves Ben’s point. Hawaiian explained that it is not a question of load factor because they have a lot of passengers on their flights but the lack of profitability. The prices of the tickets are just too low. They don’t have the lower cost structure of our locals. Hawaiian has no ties that bind them here… no long term big picture that PAL and Cebu Pacific have.

During a free ranging discussion over breakfast at the Horizon Lounge of Edsa Plaza Shangri-La last Friday, the visiting Fil-Am aviation industry professional originally from Sorsogon commented on our efforts to attract visitors and about the growing public frustration over the quality of our airports.

I was surprised he doesn’t feel hopeless about our airports. The way he puts it, “the Philippine airport situation is at an important crossroad. I see people like yourself (as well as Mr. Magno and Ms. Pamintuan) ‘pounding’ on airport issues and I thought it was time for me to say something too that may help.”

Ben said that as a Filipino, “I felt compelled to say something now because I sense some mistakes of the past (like mistakes made at other foreign airports) may be rearing their ugly heads again.” He has, after all, gained international professional recognition on airport design, construction and management and has something to give back to his country.

“To meet the country’s aviation needs now and into the future, it is time to get things sorted and reset in the right direction. There is still a little window of opportunity left in P-Noy’s term to make the right decisions and take immediate action.”

I asked him what a good airport should be like. Ben replied that he can only make general observations because every location is unique. “In general… good functioning, efficient airports must start off with a good efficient layout. From the few airports I’ve been through in the Philippines, it seems that most if not all, suffer from poor planning and poorly executed designs.”

But he said, this problem is not unique to the Philippines. “Many airports in Europe, Asia, South America and North America built in the early 1960’s and 1970’s have a similar deficiency. A few however, were able to recognize their shortcomings and had the resolve to rebuild. Examples are the airports in Malaysia, Hong Kong, Atlanta, Nashville, Denver, Savannah, etc. just to name a few.”

Ben explained that “many airports were built in the 1960’s (the advent of the jet age in the late 50’s and early 60’s) and the 70’s as a testament to ‘flight’ that is why a lot of roof designs resemble birds in flight or wings of jet planes.

“The trend started with the design of TWA’s terminal (now JetBlue’s) by Eero Saarinen at JFK in New York; PanAm’s terminal (now Delta’s); American’s Terminal (by Kahn & Jacobs); and the International terminal (by SOM originally and completely rebuilt in the late 1990’s also designed by SOM) at JFK (ldlewild) in New York.

“Well-known architects were commissioned to design those buildings but the structures became the architects’ monuments to themselves. Over the years, those structures unfortunately became obsolete and unable to function efficiently as passenger terminals. Many had to be torn down or completely gutted and renovated.

“NAIA 1 built in the 1970’s may fit into this type of airport where aesthetic considerations trumped functional priorities. I have worked on the redesign of at least 5 of those monumental structures at JFK in the 1990’s and 2000’s and know those issues and arguments (function & esthetics) all too well.”

I figured Ben will laugh if I told him about the DOTC view that airlines should be out of airport design and management due to supposed conflict of interest. Feeling embarrassed for my government, I kept quiet.

Ben explained “in the USA, airlines typically have a major say in the workings and development of the airports they serve because of the impact on their bottom lines. This applies also to airlines in Singapore, Malaysia, UK, France, etc. Airports in general are not subsidized by Governments particularly in the USA.”

How are airports financed? “Revenue bonds are sold and guaranteed by the airlines through landing fees and charges including concession revenues.”

Ben is not too sure the PPP route works well on airports. He admits that “there were many PPP advocates in North America, but only a few airports in the USA have gone that route. Indianapolis, Pittsburgh, and the rebuilt International Terminal at JFK are examples of some variations of PPP at work.”

Ben advises countries moving in that direction “should weigh PPP programs cautiously and explore different variations of PPP that will yield real benefits to all parties involved. Airports, if properly planned, implemented and well-managed, are great revenue generators and their economic impact substantial.”

As to the hotly debated question of where to site the country’s gateway airport, Ben says “searches for a new airport site should be based on the premise that NAIA can still be retained to co-exist with the new airport and serve as a secondary airport for Metro Manila.”

Ben pointed out that because of its population base, the Metro area has sufficient capacity to accommodate a multi-airport system similar to what we see in such metropolitan centers as Tokyo (Narita/Haneda), Seoul (Incheon/Gimpo, Shanghai (Pudong/Hongqiao), London (Heathrow/Gatwick), Paris (Charles DeGaulle/Orly), San Francisco (SFO, San Jose & Oakland), New York (JFK/ La Guardia & Newark), and many others.

Ben thinks we should probably have just one terminal building for NAIA that will take in both international and domestic passengers. He has designed such airports in the US and sees no reason why it cannot be done here.

The thing to do, he said, is to undertake the airport planning equivalent of an open heart surgery where the new facility is being put in place without affecting the operations of the existing terminals. Eventually, some or all of the existing terminals may be torn down as required.

“Oh no,” he emphasized, “the situation here is not hopeless at all. You only have to put the best minds together to make the best outcome for NAIA.”

He believes there are enough Filipinos who have attained some level of expertise in airport design, construction and management in the international stage other than him. And I think it would be a waste not to get them involved in one way or another to help us out of our messy situation.

I suppose the next move is government’s. But that means the lawyers running DOTC and the retired generals at NAIA must, out of a sense of patriotism, be ready to admit they don’t have the technical expertise to get their job done right.

So, it has to be P-Noy’s call because the buck stops with him. No, Mr President, the PH aviation sector is not yet ready to fly again… so many things still must be done and your boys don’t seem up to the job but too proud or insecure to ask for professional help.


From my colleague, Ichu Villanueva.

Customer: Excuse me… may wifi ba kayo ditto?

Waiter: Naku sir, wala po. Pero try our apple-fi and mango-fi.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

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