POSTSCRIPT / November 5, 2006 / Sunday


Philippine STAR Columnist

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GMA misled into signing order on Clark flights?

CLARK FIELD – Many cabalen of President Gloria Arroyo are bristling over one of her Executive Orders that restricts flights to this underutilized international airport ironically named after her late father.

While there is unanimity that there is need for stepping up arrivals of passengers and cargo into the heart of Luzon via the Diosdado Macapagal International Airport here, there is disagreement on how best to do it.

The inconclusive debate raged at the first Kape@Balita forum at the Mimosa Leisure Estate here sponsored by the Society of Pampanga Columnists and the Capampangan in Media Inc.

Focus was on EO 500A, the amended version of the original EO 500 intended to expand air services to DMIA, and on the draft EO 500B that would supplant EO 500A supposedly to correct its defects.

One delicate question raised was if President Arroyo had been tricked into signing EO 500A and is about to be misled into signing EO 500B.

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BACKGROUND: The speakers included Lyndon Daz, Subic-Clark Alliance for Development Council; Liberato “Levy” Laus, president and CEO, Clark Development Corp.; Victor Jose Luciano, president and CEO, Clark International Airport Corp.; Administrator Armand Arreza, Subic Bay Metropolitan Authority; Regional Director Ronaldo Tiotuico, Department of Tourism; Capt. Ben Solis who talked on regional trends and opportunities; and Dr. Ather Sajid who discussed competitiveness in trade.

As far as I understand the background of the EOs and the discussions here and in the industry, EO 500 was intended to implement a unilateral “Open Skies” policy in Clark/DMIA.

  1. EO 500 mandated the Civil Aeronautics Board to allow passenger and cargo air services to Clark without any restrictions on frequencies and routings (except cabotage, or the right to operate within the domestic borders of the country).

The EO allowed the airlines of Country A to operate between Country A (its homeland) and Clark (3 rd/4 th freedom rights), to operate from its homeland to Clark and beyond to a third country (5 th freedom rights), and to base operations in Clark to third countries B, C, D, etc. (7 th freedom rights).

  1. EO 500A amended EO 500 based on inputs from the CAB. Only 3 rd and 4 th freedom rights are automatically granted, while 5 th and 7 th freedom rights are subject to more qualifications. But reciprocity is still not a requirement and reciprocal benefits to Philippine carriers are not guaranteed.
  2. EO 500B is a draft Executive Order to replace EO 500A. It reiterates the CAB’s mandate to unilaterally grant unlimited 3 rd, 4 th, 5 th and 7 th freedom rights to foreign air carriers. It expands EO 500 by including the implementing rules and regulations that were not in EO 500.

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CLARK-SUBIC AXIS: The tandem of Clark Field as an international air gateway and Subic Bay seaport to which it is being linked by a dedicated highway is the key that would unlock the full economic potentials of Central and Northern Luzon.

Such development will relieve pressure from the overcrowded national capital region. The Ninoy Aquino International Airport has no more room for growth despite the upcoming opening of its Terminal-3. In contrast, the DMIA here has abundant space for expansion.

The NAIA has only one runway that is not wide or long enough to handle the bigger jets and their increased loads that are sure to come. With its tiny 600-hectare area, it has no more space for expansion.

In contrast, DMIA has 2,500 hectares for its use, boasts of two parallel runways built to exacting standards by the US Air Force when it once used Clark. Each of the two landing strips is 1.2-kilometer-long.

With its almost boundless potential, DMIA is not being served regularly by the major airlines, and yet the smaller carriers bringing in passengers are to be restricted by EO 500B.

Planners are faced with the reality that existing air treaties allow 68 foreign carriers to operate to Clark, but only five have been actually availing themselves of their rights. There are less than 500 hotel rooms of international standard here, barely enough for one jumbo jet planeload.

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NOT HOPELESS: But former congressman Rene Diaz, a presidential adviser, said at the kapihan that the scenario is not a total disaster. There is still a window of opportunity that all stakeholders pooling their ideas could exploit, he said.

The mere fact that the small carriers are able to come in, and do business although on a limited scale, shows that EO 500B does not totally shut them out.

He stressed that the big airlines that have not bothered to service DMIA have no right to complain of the tight situation in Clark or that they were being squeezed out of the picture.

Among the smaller carriers flying into Clark are Tiger Airways of Singapore and Air Asia of Malaysia. In 2004, almost 50,000 passengers arrived via Clark, their number representing a 529-percent increase over arrivals of the previous year.

Overseas Filipino workers from Central and Northern Luzon departing or returning through Clark have remarked that motoring all the way to Manila when there is DMIA right where they live does not make sense. I agree.

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DEFECTIVE EO: As for EO 500B, which is being proposed to replace EO 500A, obviously it needs closer scrutiny or probably massive rewriting, if not outright rejection.

While it seeks to grant 7th freedom rights to foreign airlines, it does not guarantee similar or reciprocal rights to Philippine carriers.

Under EO 500B, Thai Airways or Japan Airlines, for example, can base airplanes in Clark and fly from Clark to various airports in Asia, Middle East, Europe and the United States. But Philippine Airlines, Cebu Pacific or Asian Spirit cannot just open an international base from Clark and fly to other countries — not even to Thailand or to Japan (the home countries of Thai Airways and Japan Airlines).

The Philippine carriers will have to first beg or fight for similar or reciprocal rights. In the event that other countries give new, even if limited, privileges to Philippine carriers, they will surely extract new concessions in the process. Experience attests to this.

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UNCONSTITUTIONAL: The proposed EO 500B may even be unconstitutional. The charter mandates that trade policy be based on equality and reciprocity. Section 13, Article XII, of the Constitution provides:

“Sec. 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity.”

Moreover, by granting 7th freedom rights to foreign airlines, EO 500B would in effect be allowing them to run a public utility operating out of the Philippines.

They are thus allowed to circumvent the usual 60-40 equity arrangement under the charter. In fact, the Constitution restricts to Filipino citizens the operation of public utilities.

Without the balancing factor of negotiated reciprocal exchange of rights and adequate safeguards against unfair competition, a runaway “Open Skies” policy could lead to cut-throat competition, loss of investments, jobs and tourism revenues.

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(First published in the Philippine STAR of November 5, 2006)

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