Sep 192014
Reference ID Created Released Classification Origin
2005-09-20 01:28
2011-08-30 01:44
Embassy Manila

This record is a partial extract of the original cable. The full text of the original cable is not available.




E.O. 12958: N/A
SUBJECT: Aviation Safety Raised with Transport Secretary

REF: A) Manila 3760
B) Manila 3838
C) Manila 3955

Sensitive but Unclassified – Not for Internet – Protect


¶1. (SBU) During the Charge’s call, Department of
Transportation and Communications (DOTC) Secretary
Mendoza addressed concerns on aviation safety, pledged
continued support for transportation security
initiatives, and expressed commitment to infrastructure
construction. Mendoza admitted that the 40% or 300-
person shortfall in air traffic controllers was
“dangerous” and said he had asked President Arroyo to
fund an additional 150 controllers. The long-stalled
aviation bill would provide a permanent solution to
staffing shortages and salary concerns by allowing an
independent civil aviation authority to determine
spending needs. Mendoza said a local firm had agreed to
buy out the German investor in the new airport terminal,
paving the way for its completion and opening. Japanese
contractors had agreed to finish and refurbish the
terminal by early 2006; the government would be the
operator. Mendoza did not oppose negotiating an Open
Skies agreement, but did not appear convinced there were
clear benefits for either side. End Summary.

Air Traffic Controllers Under Control

¶2. (SBU) In a meeting with Charge September 12,
Department of Transportation and Communication Secretary
Mendoza admitted that budget constraints and emigration
have led to a 40% deficit in the number of air traffic
controllers (ATC) needed to sufficiently staff all
airports. He is trying to address this 300-person
shortfall by bringing in 40 ATCs from the Philippine Air
Force. Mendoza recognized that having the ATCs work
overtime to make up the deficiency is “dangerous” so
other solutions eventually must be found. He said he
wrote a letter to the President asking for a supplemental
budget to hire 150 new air traffic controllers, even if
he must forego infrastructure funds. In particular, the
country needs additional ATCs to manage the new radar
system recently installed at the international airport at
Clark. According to Mendoza, following his appeals to
their patriotism, ATCs for now are not planning any
strikes or work slowdowns (ref a-b).

¶3. (SBU) Mendoza believes Congress should expedite
passage of the Civil Aviation bill to resolve this issue.
The Philippines is one of the few countries in the
International Civil Aviation Organization (ICAO) without
an independent Civil Aviation Authority (CAA), he noted.
The Civil Aviation bill would allow the Air
Transportation Office (ATO), which earns twice as much as
it spends, to hire and pay controllers from its own
revenues. Mendoza said that under a restructuring plan,
the government would downsize some DOTC divisions but
would increase the size of the ATO to meet international
standards of aviation. At present, the government is
constrained by its salary standardization scheme that
keeps controller salaries at less than 10% of their
counterparts in other countries. He said that nobody
should be surprised that many newer and younger
controllers try to emigrate. In response to the Charge’s
question, Mendoza said there was no direct opposition to
the bill, but Congress has not treated it as a priority.

¶4. (U) ATCs serve seven international and fifteen
domestic airports in total, Mendoza said. The airport
that needs more staff is Clark, which is becoming the
“new gateway” to the Philippines. It currently serves 37
flights with 22,000 passengers each week. He expected
the number of flights to increase to 50 per week by
October. Clark serves the new discount airlines bringing
in less affluent tourists from Korea, Taiwan, Hong-Kong,
and Macau. They may choose to stay at gambling and golf
resorts at Clark, connect by plane to Palawan, Cebu, and
Bohol, or shuttle to Manila by car on the tollway.

Terminal Completion Underway

¶5. (SBU) Mendoza confirmed that the Manila Hotel
Corporation (MHC) had purchased all the shares of the
German investor Fraport in the new airport terminal at
Ninoy Aquino International Airport in Manila (ref c). He
said despite proposals by private sector firms, the
government has decided to operate the new terminal,
though “maybe in time” the GRP would privatize the
operation. Mendoza said he understood the MHC’s
agreement with Fraport and the Philippine International
Airport Terminal Company (PIATCO) called for the
cancellation of arbitration involving the GRP initiated
in Washington, D.C. and Singapore that sought “just
compensation.” He said he had not seen a copy of the
agreement. Mendoza said the government signed a contract
with Japanese contractor Takenaka last week to finish the
construction and refurbish the new terminal’s computer
systems. The contract is subject to the court’s
approval, but the DOTC already received clearance from
the Supreme Court to fund the construction, so Mendoza
did not foresee any problems moving forward. The DOTC
received a loan from the Development Bank of the
Philippines to fund the project. Mendoza also suggested
the government could withdraw unused funds from an ADB
loan for this purpose.

¶6. (SBU) Mendoza said the new terminal would be ready
to open in four months. He expected the government to
start signing lease agreements with the airlines for
space in the new terminal. According to Mendoza, the
owner of Philippine Airlines (PAL), Lucio Tan, visited
the new terminal site for the first time recently, was
favorably impressed, and agreed to move PAL international
operations to NAIA Terminal Three. Eventually, the
government plans to relocate all international flights to
Terminal Three, move all domestic flights to Terminal
Two, close Terminal One, and build a Terminal Four for
Philippine Air adjacent to Terminal Three.

No Lift-off for Air Transport Talks

¶7. (SBU) As chairman of the panel responsible for
aviation negotiations, Mendoza said that he recently
wrote a letter to the Department of Foreign Affairs (DFA)
requesting another round of talks. Now that the cargo
carriers have their Open Skies agreement, future
negotiations should focus on “more services and points of
entry” for passenger flights. Despite the Charge’s
explanation that the US does not allow cabotage (domestic
service by a foreign carrier), Mendoza said he hoped the
US would allow Philippine air carriers to fly passengers
beyond original points of entry in Guam and Honolulu to
final destinations at other US cities.

Support for Port Security

¶8. (SBU) Charge complimented the DOTC for its
cooperation in transportation security areas, including
its support for a US Department of Energy “Megaports”
program in Manila to screen for nuclear materials.
Mendoza noted that the Philippines has a fledgling Office
of Transportation Security (OTS) modeled after the US
Transportation Security Administration with the
Department of Homeland Security. OTS Undersecretary
Cecilio Penilla, who joined the meeting, praised efforts
by the US Transportation Security Agency (TSA) to
encourage compliance among airport officials with
international standards. He admitted, for example, that
Philippine culture normally disallows security checks of
VIPs, but this attitude is changing, in large part
because of training of investigators and quality control
screeners through TSA. Penilla also told the Charge his
office had achieved 70% compliance under the STAR
Initiative, which aims to enhance security while
increasing trade among APEC countries by protecting
cargo, ships, planes, and people in transit. The OTS
embraces security issues and has fully applied the
International Ship and Port Facility Security (ISPS) Code
to domestic shipping.

¶9. (SBU) Charge noted that President Arroyo has
indicated that she is prepared to sign the Proliferation
Security Initiative. Penilla said OTS supports the
initiative and is coordinating with the DFA to work out
the language for the Letter of Agreement.

Telecom Progress and Digress

¶10. (SBU) In response to the Charge’s query on moving
the National Telecommunications Commission (NTC) back
under the supervision of DOTC, Mendoza demurred that it
was not his area. When pressed, he argued that the move
will have little impact on the NTC. He said there is
confusion regarding supervisory authority already since
the NTC is a regulatory body that already reports to
another regulatory body – the Commission on Information
and Communications Technology (CICT). The operational
side of NTC will remain under CICT, he said, but DOTC
will oversee the administration. Mendoza said the GRP
will conduct competitive bidding for 3G frequency band
licenses soon, but he expected domestic telecom
companies, faced with international competition, to seek
a temporary restraining order.

¶11. (SBU) Regarding both the recent promotion of Voice
Over Internet Protocol (VOIP) and the upcoming 3G
licensing tender, Mendoza said there is great excitement
among families with overseas foreign workers (OFW) about
the expected reduction in international phone charges.
Mendoza said some Philippine OFWs in Hong Kong spend 30%
of their salaries on phone calls home. Mendoza said the
Philippines welcomes US companies to participate in this
sector, especially because they operate “above board”
with no strings attached. The telecom industry is
booming, with 32 million subscribers already.

Rolling out the Roads and Rails

¶12. (U) Mendoza noted that the Arroyo Administration
considers the Roll-On, Roll-Off (RoRo) or “nautical
highway” system very successful. Since implementation,
the cost of commodities has dropped 30-40% and tourism
has increased to 18,000 passengers per day. Mendoza
noted that a trip to Boracay Island now costs $13 using
the public bus system and RoRo.

¶13. (U) Mendoza said the Subic-Clark highway
construction is already underway; projects to widen the
Southern Luzon Expressway and connect it to the port in
Batangas should be completed by 2010. Work on the North
Rail stalled over the relocation of “squatters,”
estimated in the hundreds of thousands, but Mendoza
expects to settle this issue soon so work can continue.
In the future, the urban rapid transit lines, the North
Rail, and the National Railroad will all meet at a rail
terminus in Manila.


¶14. (SBU) Although Secretary Mendoza was frank and
informative, he did not completely dispel our concerns on
aviation safety. Even if the funding request for
additional air traffic controllers is approved, the
Philippines would still have 150 fewer ATCs than
necessary, even fewer if attrition continues because it
takes many months to train new controllers. Secretary
Mendoza appeared overly optimistic on the new airport
terminal as well. Airlines will be unwilling to relocate
and risk interrupting business during the upcoming peak
travel season (December – April), pushing the start up
date to mid-year 2006 at the soonest. The incorporation
of NTC back into the DOTC could set back liberalization
of the telecommunication sector with VOIP and 3G

¶15. (SBU) In view of Mendoza’s characterization of the
ATC shortage as “dangerous” and other discussions with
GRP officials (refs A and B), post continues to work with
regional FAA officers to monitor safety issues to ensure
that the Philippines is meeting International Civil
Aviation Organization standards.




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